TY - JOUR
T1 - Capital Destruction and Economic Growth
T2 - The Effects of Sherman’s March, 1850–1920
AU - Feigenbaum, James
AU - Lee, James
AU - Mezzanotti, Filippo
N1 - Funding Information:
* Feigenbaum: Department of Economics, Boston University and NBER (email: jamesf@bu.edu); Lee: Cornerstone Research (email: jlee@cornerstone.com); Mezzanotti: Kellogg School of Management, Northwestern University (email: filippo.mezzanotti@kellogg.northwestern.edu). Neale Mahoney was coeditor for this article. We thank Philipp Ager, Francesco D’acunto, Robert Ekelund, Carola Frydman, Claudia Goldin, Andrew Hall, Richard Hornbeck, Matt Jaremski, Peter Koudijs, Robert Margo, Andrea Matranga, David Matsa, Shom Mazumder, Chris Muller, Elisabeth Perlman, Nancy Qian, Jonathan Roth, Richard Steckel, Hui Ren Tan, Gavin Wright, and Nicolas Ziebarth for comments and suggestions, and seminar participants at the NBER Development of the American Economy, Harvard University, Princeton University, Stanford University, Case Western Reserve University, UC Davis, Auburn University, Brown University, University of Copenhagen, and Yale University, and conference participants at ITAM, Minnesota Finance, and the American Finance Association meeting in Atlanta (2019). For financial support, we thank the Harvard Business School Historical Collections at Baker Library, the Lab for Economic and Policy Applications at Harvard University, and the Kellogg School of Management. Grant Goehring, Thomas Pearson, Andrew Kim, and Roey Dushi provided very good research assistance. All errors are our own.
Publisher Copyright:
© 2022, American Economic Journal: Applied Economics. All Rights Reserved.
PY - 2022
Y1 - 2022
N2 - 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.
AB - 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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U2 - 10.1257/app.20200397
DO - 10.1257/app.20200397
M3 - Article
AN - SCOPUS:85130266308
SN - 1945-7782
VL - 14
SP - 301
EP - 342
JO - American Economic Journal: Applied Economics
JF - American Economic Journal: Applied Economics
IS - 4
ER -
