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

64 Pages Posted: 26 Dec 2018

Date Written: December 2018

Abstract

Using General William Sherman’s 1864–65 military march through Georgia, South Carolina, and North Carolina during the American Civil War, this paper studies the effect of capital destruction on medium and long-run local economic activity, and the role of financial markets in the recovery process. We match an 1865 US War Department map of Sherman’s march to county-level demographic, agricultural, and manufacturing data from the 1850-1920 US Censuses. We show that the capital destruction induced by the March led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity. Elements of the decline in agriculture persisted through 1920. Using information on local banks and access to credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Feigenbaum, James and Lee, James and Mezzanotti, Filippo, Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920 (December 2018). NBER Working Paper No. w25392. Available at SSRN: https://ssrn.com/abstract=3306101

James Feigenbaum (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

James Lee

Cornerstone Research ( email )

1000 El Camino Real
Menlo Park, CA 94025-4327
United States

Filippo Mezzanotti

Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
6
Abstract Views
72
PlumX Metrics