Capital Destruction and Economic Growth: the Effects of General Sherman?s March to the Sea, 1850-1880
What was the economic impact of General William Sherman?s 1864-65 military march through Georgia, South Carolina, and North Carolina? How does local economic activity respond in both the short- and long-run to capital and infrastructure destruction? We match an 1865 US War Department map of Sherman?s march to detailed county level demographic, agricultural, and manufacturing data from US Censuses, 1850-1930. We show that both agricultural and manufacturing output fell relatively more from 1860 to 1870 and 1880 in Sherman counties compared to non-Sherman counties in the same state. These relative declines do not appear to be driven by differential out-migration, demographic patterns, or long-lasting infrastructure destruction. Instead, by collecting new historical data on local banks, we show that damage to credit markets was more severe in march counties and that these financial disruptions can help explain the larger declines in economic output.
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