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Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850–1920

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  • James Feigenbaum
  • James Lee
  • Filippo Mezzanotti

Abstract

Using General Sherman's March through Georgia, South Carolina, and North Carolina during the Civil War, we study the effect of capital destruction on medium- and long-run local economic activity, and the role of financial markets in recovery. We show that the march's capital destruction led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity compared to neighboring counties. Elements of the decline in agriculture persisted through 1920. Exploiting variation in local access to antebellum credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery.

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  • James Feigenbaum & James Lee & Filippo Mezzanotti, 2022. "Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850–1920," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 301-342, October.
    • Handle: RePEc:aea:aejapp:v:14:y:2022:i:4:p:301-42
    DOI: 10.1257/app.20200397
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    6. Valencia Caicedo, Felipe & Tur-Prats, Ana, 2020. "The Long Shadow of the Spanish Civil War," CEPR Discussion Papers 15091, C.E.P.R. Discussion Papers.
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    9. Edward L Glaeser, 2022. "Urban resilience," Urban Studies, Urban Studies Journal Limited, vol. 59(1), pages 3-35, January.
    10. Philipp Ager & Leah Boustan & Katherine Eriksson, 2021. "The Intergenerational Effects of a Large Wealth Shock: White Southerners after the Civil War," American Economic Review, American Economic Association, vol. 111(11), pages 3767-3794, November.
    11. Valencia Caicedo, Felipe & Riano, Juan Felipe, 2020. "Collateral Damage: The Legacy of the Secret War in Laos," CEPR Discussion Papers 15349, C.E.P.R. Discussion Papers.
    12. Sanford C. Gordon & Hannah K. Simpson, 2020. "Causes, theories, and the past in political science," Public Choice, Springer, vol. 185(3), pages 315-333, December.
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    More about this item

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N51 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: Pre-1913
    • N52 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: 1913-
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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