King Cotton and the Economy of the Old South

King Cotton was a phrase coined in the years before the Civil War to refer to the economy of the American South. The southern economy was particularly dependent on cotton. And, as cotton was very much in demand, both in America and Europe, it created a special set of circumstances.

Great profits could be made by growing cotton. But as most of the cotton was being picked by enslaved people, the cotton industry was essentially synonymous with the system. And by extension, the thriving textile industry, which was centered on mills in northern states as well as in England, was inextricably linked to the institution of American enslavement.

When the banking system of the United States was rocked by periodic financial panics, the cotton-based economy of the South was at times immune to the problems.

Following the Panic of 1857, a South Carolina senator, James Hammond, taunted politicians from the North during a debate in the U.S. Senate: "You dare not make war on cotton. No power on earth dares make war upon it. Cotton is king."

As the textile industry in England imported vast quantities of cotton from the American South, some political leaders in the South were hopeful that Great Britain might support the Confederacy during the Civil War. That did not happen.

With cotton serving as the economic backbone of the South before the Civil War, the loss of enslaved labor that came with emancipation changed the situation. However, with the institution of sharecropping, which in practice was generally close to enslaved labor, the dependence on cotton as a primary crop continued well into the 20th century.

Conditions Which Led to a Dependence on Cotton

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Historical Significance of the Cotton Gin

By Martin Kelly

When white settlers came into the American South, they discovered very fertile farmland which turned out to be some of the best lands in the world for growing cotton.

Eli Whitney's invention of the cotton gin, which automated the work of cleaning cotton fiber, made it possible to process more cotton than ever before.

And, of course, what made enormous cotton crops profitable was cheap labor, in the form of enslaved Africans. The picking of cotton fibers from the plants was very difficult to work which had to be done by hand. So the harvesting of cotton required an enormous workforce.

As the cotton industry grew, the number of enslaved people in America also increased during the early 19th century. Many of them, especially in the "lower South," were engaged in cotton farming.

And though the United States instituted a ban against importing enslaved people early in the 19th century, the growing need for them to farm cotton inspired a large and thriving internal trade. For example, traders of enslaved people in Virginia would transport them southward, to markets in New Orleans and other Deep South cities.

Dependence on Cotton Was a Mixed Blessing

By the time of the Civil War, two-thirds of the cotton produced in the world came from the American South. Textile factories in Britain used enormous quantities of cotton from America.

When the Civil War began, the Union Navy blockaded the ports of the South as part of General Winfield Scott's Anaconda Plan. And cotton exports were effectively stopped. While some cotton was able to get out, carried by ships known as blockade runners, it became impossible to maintain a steady supply of American cotton to British mills.

Cotton growers in other countries, primarily Egypt and India, increased production to satisfy the British market.

And with the cotton economy essentially stalled, the South was at a severe economic disadvantage during the Civil War.

It has been estimated that cotton exports before the Civil War were approximately $192 million. In 1865, following the end of the war, exports amounted to less than $7 million.

Cotton Production After the Civil War

Though the war ended the use of enslaved labor in the cotton industry, cotton was still the preferred crop in the South. The system of sharecropping, in which farmers did not own the land but worked it for a portion of the profits, came into widespread use. And the most common crop in the sharecropping system was cotton.

In the later decades of the 19th-century prices of cotton dropped, and that contributed to the severe poverty throughout much of the South. The reliance upon cotton, which had been so profitable earlier in the century, proved to be a severe problem by the 1880s and 1890s.