Without Slavery in the United States, Would California Still Be in Mexico?
February 9, 2022
Originally published at joefrancis.info
Unless you are Mexican, it is easy to forget that California was not always in the United States, having been a part of Mexico until the Mexican-American War of 1846-48, after which it was annexed. Slavery had much to do with the origins of that war, since white settlers hoping to grow cotton on slave plantations had fought for the secession of Texas in 1836, and then supported its annexation by the United States in 1845; a disagreement over Texas’ western boundary would lead to war with Mexico the following year. My argument here, however, is that slavery was also crucial to the outcome of the Mexican-American war because the goods produced by slaves were essential to the United States’ healthy public finances, which allowed it to defeat its poorer neighbour. This blog post thus makes a small contribution to the ongoing debate about slavery’s role in the development of the United States in the long nineteenth century.1
A lack of resources was the principal reason Mexico lost the war. In his memoir, a Mexican veteran outlined the problems that he and his fellow soldiers faced:
[T]he military state of the Republic was deplorable; when the war began, the army did not even have 12,000 men scattered across a vast expanse: the arms, the artillery, and in general, everything concerned with the army, found itself aged and deteriorated by use, without having been replaced for many years, and when new systems were adopted in other countries, we only received news of them.
There were no arsenals or depots of any kind, so that the losses suffered in the war were impossible to make good.
The 12,000 men of the army, constantly replaced and aided by battalions of auxiliaries and the National Guard […] were the only elements with which the Nation sustained a struggle in extreme inequality, for which it was not prepared.
It has to be added that the Treasury was found to be completely exhausted.2
The general poverty of the Mexican state meant that it failed to fund the armies that were supposed to repulse its neighbour.3 In this, the country’s defeat reflected its long-term inability to construct an adequate system of public finance after independence – a common problem across Latin America.4
The United States, by contrast, was able to muster considerable resources thanks to the healthy state of the federal government’s finances: in 14 of the 20 years prior to the war, it had recorded a surplus, spending less than it took in as revenues. In the 1844/45 fiscal year, for instance, revenues were $30 million, while expenditure was $23 million, giving a surplus of $7 million. Of that year’s revenues, nine tenths came from taxes on imports, especially textiles, iron and steel products, and sugar.5 As shown in Table 1, expenditures went on to greatly outstrip revenues during the years of the Mexican-American war, principally due to spending on the army. In total, around $73 million was spent fighting the war, with the majority of the funds raised through three loans worth almost $49 million.6 In this way, the war was financed by promising investors a share of the federal government’s future revenues, which they assumed would remain in good health due to the tax base provided by the country’s international trade.
Slavery was essential to the United States’ war effort because slaves produced much of the country’s exports, which balanced the imports that were taxed by the federal government. From the mid-1810s up to the civil war, slave-produced goods – above all, cotton, but also others, such as rice and tobacco – accounted for around half of the United States’ exports, so it would not have been possible to afford the same level of imports without them. Figure 1 illustrates this by subtracting the value of the main slave-produced exports from the country’s merchandise trade. During the 1790s and 1800s, the United States had an average annual deficit in its merchandise trade equivalent to roughly 3 per cent of gross domestic product (GDP), which was covered by earnings from shipping and imports of foreign capital, particularly from Britain. The trade deficit then started to narrow, becoming a surplus after 1860. Without the main slave-produced goods, by contrast, the deficit would – all other things being equal – have been around 5 per cent of GDP from the 1790s through the 1830s, only becoming a surplus in the 1890s. Such prolonged deficits would have been unsustainable, not least because shipping earnings would also have been reduced due to the lower level of exports.
Without the slave-produced exports, then, the United States would have suffered from balance-of-payments crises and a poorer government. To pay for imports, specie would have flowed out of the country, leading to increasing issues of paper currency that would have rapidly devalued, bringing inflation. As imports became more expensive, their consumption would have contracted, reducing the federal government’s revenues. Without a stable currency backed by a solvent federal government, the state governments would have struggled to attract the foreign capital that was required to finance the internal improvements that brought about the transportation revolution that facilitated westward expansion. And so on. All other things would not have been equal. Rather than becoming a continental behemoth, the United States would have looked more like one of the Latin American republics. California, meanwhile, would possibly still be in Mexico.
- Much of the recent debate was sparked by the popularity of two books: S. Beckert, Empire of Cotton: A Global History, New York, 2014; and E.E. Baptist, The Half Has Never Been Told: Slavery and the Making of American Capitalism, New York, 2014. For useful discussion, see the blog posts by Pseudoerasmus.
- My translation from M. Balbontín, La invasión americana: 1846 á 1848: apuntes del Subteniente de Artillería, México, 1883, pp. 136-37.
- C. Rodríguez Venegas, ‘Las finanzas públicas y la guerra contra los Estados Unidos, 1846-1848’, in J. Zoraida Vázquez, ed., México al tiempo de su guerra con Estados Unidos (1846-1848), México, 1998, pp. 104-33; and J.W. Cummings, Towards Modern Public Finance: The American War with Mexico, 1846-1848, London, 2009, Ch. 5.
- C.A. Marichal, A Century of Debt Crises in Latin America: From Independence to the Great Depression, 1820–1930, Princeton, NJ, 1989.
- J.J. Wallis, ‘Federal Government Finances: Revenue, Expenditure, and Debt: 1789–1939’, in S.B. Carter, S.S. Gartner, M.R. Haines, A.L. Olmstead, R. Sutch, and G. Wright, eds., Historical Statistics of the United States: Earliest Times to the Present: Millennial Edition, New York, 2006, Series Ea584-85, Ea588-89; also Reports of the Secretary of the Treasury of the United States: December, 1845, Washington, DC, 1851, pp. 28-47.
- Cummings, Towards Modern Public Finance, pp. 159-60, Tables C.1 and C.2.