(July 30, 2021) Although many elite activists urge reparations for slavery, few are aware that ex-Confederates and their descendants have already paid a form of reparations, for losing the Civil War, if not for slavery. Examination of federal budgets during Reconstruction reveal they paid their share of federal taxes for sizable items that if funded by an independent defeated foe would have constituted reparations.
The following table summarizes federal tax revenues and spending for a quarter century following the Civil War. As may be observed, more than half of federal tax revenues were applied to three items: (1) interest on the federal debt, (2) budget surpluses used to retire federal debt, and (3) Union veterans’ pensions, none of which aided former Confederates.
The first budget item of no benefit to Southerners was the interest on the federal debt. During the Civil War the federal debt swelled from $65 million in 1861 to $2.7 billion in 1865 translating to a 42-fold increase. The debts were incurred when the federal government issued bonds to finance the War. Since ex-Confederated did not own any of the bonds, they collected none of the interest payments. During the first twenty-five years after Appomattox, interest payments represented 23% of the accumulated annual budgets.
Second, ex-Confederates derived no benefit from the budget surpluses used to pay-off the principal amount of the federal bonds. Unlike today, the nineteenth century Washington government reduced the federal debt gradually. During the first twenty-five years after the end of the war, the surpluses used to retire the debt represented 17% of the accumulated annual budgets.
A third reason that the larger federal spending in North understates the fiscal penalties paid by Southerners involves Union veterans’ pensions. Annual pension disbursements for Union soldiers and their dependents grew far beyond the first quarter-century after the war when they represented 12% of the annual budgets.
For the thirty years from 1880 to 1910, Union veterans’ pensions averaged more than 25 percent of the federal budget. They peaked at more than 40 percent in 1893. By 1917, the accumulated pensions totaled over $5 billion, which was more than twice the amount spent by the federal and Northern state governments to fight the entire war. By 1942, a total of $8 billion had been paid. The last payment was made in May of 2020.
As members of the opposing army, ex-Confederates received no federal pension, although they admittedly collected smaller pensions from their respective states.
Republicans also used the pensions as a political bribe to enlist voter support for high tariffs, which were the chief source of pension funding. The result was an unholy alliance between Northern military retirees on one side and Northern domestic manufacturers on the other. The retirees got generous pensions and the manufacturers got domestic monopolies. In 1866, for example, railroad iron was priced at $32 a ton in Liverpool whereas domestic manufacturers charged $85 because of protective tariffs. The differential was a significant penalty to Southerners desperate to rebuild their railroads after the war. Prior to the wartime destruction, the Confederate states had more railroad mileage than any other country in the World except the United States.
As a consequence of all the above, the Florida legislature declared in 1866, “Beyond the postal service our people derive no benefit from our existence as a State of the Union. We are denied representation even when we elect a man who . . . never . . . sympathized with [the Confederacy]. . . . We are at the same time subject to the most onerous taxation; [and our] civil law . . . is enforced . . . only when it meets the approval of the local [military] commanders.”