Prevention externalities: private and public responses to the 1878 yellow fever epidemic

Abstract

Standard economic theory suggests that government is a cheaper way to internalize prevention externalities than private entities. This paper argues that this view depends on unexamined assumptions about transaction costs and the costs of improving state capacity. Public and private entities might be cheaper ways to internalize prevention externalities depending on differences in transaction costs, state capacity, and the willingness to improve public health. The 1878 yellow fever epidemic throughout the lower Mississippi Valley—one of the worst epidemiological disasters in the United States during the nineteenth century—provides ample context to examine this argument. Primary responses include municipal quarantine, flight from towns and cities, and the formation of refugee camps. Whereas municipal governments cheaply provided some quarantine services, individuals and private actors cheaply fled from infected areas and governed refugee camps. Responses in Memphis, one of the worst affected areas, further demonstrate that differences in these costs influence prevention externalities and how public and private entities respond to complex disease problems.

Appendices

Appendix 1: Epidemiology of yellow fever

See Fig. 2 and Tables 3, 4.

Fig. 2

The Yellow Fever epidemic in Memphis, 1878. Note: Figure shows the death roll of Keating (1879: 209–238) number of daily reported deaths from yellow fever and a 7-day rolling average between August and December 1878

Table 3 The largest yellow fever outbreaks in 1878

Table 4 Yellow fever epidemics in Memphis, 1828 to 1879

Appendix 2: Reports on flight from yellow fever

In Grenada, MS, “All that could hurried away” (Smith via Keating, 1879: 377). J. B. Townsend noted that around August 16, one week after the first death, Grenada was almost depopulated (Smith’s report in Keating, 1879: 379). Keating (1879: 174) provides one of the earliest accounts of the “hegira” from Memphis. After a short-lived municipal quarantine imposed on July 27, telegrams about yellow fever in Grenada, MS, on August 11, the announcement of the first case in Memphis around August 13, and subsequent cases and deaths over the next couple of days, people in Memphis began to leave the city. Keating (1879: 147) states that “The trains on the Charleston and Louisville Railroads, as a consequence, went out crowded, and every seat and berth was taken for the trains on both roads for the next two days.” Keating estimates that 15,000 to 20,000 people fled by August 18. To facilitate this exodus, Keating (1879: 183) notes the rise in pawning, e.g., of watches, diamonds, and silver spoons, as well as bank withdrawals. People also “rapidly occupied” homes in the suburbs of the town (Memphis Daily Appeal, August 16, 1878). Following Keating’s (1879: 183) remarks on pawning, he states, “Lengthy, populous streets in Memphis were left without a dozen families residing thereon. The occupants disappeared as if by magic. Some streets were wholly deserted by their white inhabitants, only colored servants—not deemed liable to the disease—remaining.” In late September, Thomas Porteous saw that much of the area between Louisville and New Orleans was desolate (Ellis, 1992). Atlanta received approximately 3000 refugees between August 1 and the end of October, presumably from many cities throughout the southern United States (Ellis, 1992).

Appendix 3: Public notices in Memphis

August 16

Citizens’ Meeting To-Day

The undersigned citizens, who intend to remain in the city during the prevalence of the fever, invite all of our people similarly inclined to meet at the Greenlaw Opera House at eleven o’clock, for consultation and action with regard to assisting each other through the scourge, and providing ways and means for removing form the city to a place of safety such of our people as are pecuniarily unable to do so without assistance. It is expected that answers to telegrams sent to President Hayes will be placed before the meeting.

Source: Keating (1879: 390)

August 24

The Father Matthew Camp

Is established. It is for the benefit, first, of the members and families of the Father Matthew society; second, as far as its means shall permit, for all Catholics who are in danger of contracting the fever, and also for all in need of protection from the fever. No persons shall be admitted who have not permits. Permits may be secured by applying at St. Bridget’s, St. Peter’s and St. Patrick’s churches. All who are admitted to the camp will have to submit to its rules and regulations. So far, we have been giving free transportation to all, and providing for their every necessity. We have already provided for about one hundred and ten persons. We have received no assistance from abroad as yet. The camp is on Cyprus creek, on Fontaine & Co.’s place. Mr. Consadine is in charge. The priests of St. Bridget’s shall attend it regularly. Holy mass will be celebrated there to-morrow at nine o’clock. The whole camp regulations are under the charge of the Father Matthew society. Until a certain number of days shall have elapsed, no one shall be given a permanent place. Dr. Cavanagh is the attending physician.

W. Walsh,

President

Source: Memphis Daily Appeal, August 24, 1878.

Appendix 4: Municipal debt and public health in Memphis, TN, 1850 to 1880

Municipal state capacity in Memphis varied, but it was rarely sufficient to clarify, finance, and enforce public health rules between the late 1860s and 1878. The city’s original charter of 1826—and revisions in 1867—states the government’s legitimate public health powers, i.e., “free power and authority to enact and pass all by-laws and ordinances necessary and proper to preserve the health of the town” (Bridges, 1867: 73 and 201). The city’s fiscal state capacity began to deteriorate in the 1850s because city leaders began to issue over 1000 bonds for various railroad endeavors, grading and graveling projects, cash, and for indebtedness, which added over $1 million to municipal debt (Keating & Vedder, 1888: 350). In 1860, Young and James (1912) note poor management, indignant citizens, and a debt of $596,742. The city’s bonded or long-term debt continued to increase because of tax delinquencies, cash shortages, disruptions from the civil war, and intermittent financial crises (Wrenn, 1988). By 1877, the city government held assets of $882,488 and debts of approximately $4,500,000. Deficit spending was common for similarly sized cities in the 1850s and 1870s, but was peculiar for southern cities (Legler et al., 1988).

The Civil War and reconstruction each had negative marginal effects on the city’s legal and financial state capacity. At the onset of the Civil War, a band of 700 vigilantes, known as the Committee of Safety, the minute men, and/or the vigilance committee, discouraged union sympathies within local and state officials; the Confederate Congress also acquired debts to northern creditors and requested a cessation of courts for 12 months; after the ratification of secession in June 1861, the Tennessee legislature requested that courts delay cases involving debts (Keating & Vedder, 1888; Lanier, 2012). During the spring of 1862, Memphis courts ceased operations, and the city was placed under a combination of martial law, rule by the Union Army, and/or military and civil commissions until fall 1864. Such factors would have blemished the legitimacy of the city’s legal system and its ability to protect property rights. Even city leaders and police officers varied in their legitimacy and willingness to uphold their duty, which became apparent during the 1866 race riots (Carden and Coyne 2013). Still, during the war, many advocated for the resumption of the city’s laws and police enforcement, and the city had acquired a growing legal community and a bar association (Lanier, 2012).

Tennessee avoided some of the harms associated with military and radical Reconstruction, in part, because ex-Confederate soldiers and sympathizers had been disenfranchised. With a Republican-controlled state government, the state legislature ratified the 13th and 14th Amendments, they repealed their ordinance of secession, and rejoined the Union in 1866. The value of real and personal property indicates that Memphians might have quickly recovered from the war if it hadn’t been for the 1867 yellow fever epidemic and occasional fires. Such values were approximately $16.8 million in 1860; they fell to a low of $15 million in 1864, increased to a peak of $30.8 million in 1867, and fell to $24.7 million in 1870 (Young & James, 1912: 153).

After the city regained its government, its state capacity seems to have been trending upwards. In 1870, for example, the city government added a common council, which became a part of the general council, along with the mayor and board of aldermen; each ward elected one alderman for a two-year period and two councilmen for a one-year period. Following Piano (2019), these entities provided some intragovernmental competition and could have encouraged local politicians to improve governance. That is, they could have made improvements if it weren’t for the city’s debts. Additional spending, e.g., on public health, would have stretched city budgets and debts further, and it might have incurred the displeasure of citizens, especially wealthier merchants, homeowners, and taxpayers. Such motives make more sense considering (1) falling price levels during the 1870s, which indicate higher real costs of borrowing and higher tax burdens, and (2) falling cotton prices and growing competition from rail transportation, which would have lowered incomes for many merchants in Memphis (Burdekin & Siklos, 2013; Clotfelter, 1973). Thus, paying down the city’s debt obligations, reforming the structure of city government to prevent excessive spending, and limiting future tax burdens became valuable ends people wanted elected officials to pursue. In an address to the general council, Mayor Flippin is reported to have said that funding the city debt was “our only present salvation” (Memphis Daily Appeal, June 11, 1878).

Merchants and wealthier citizens were growing in their concern about the city’s debt. Generally, merchants advocated for a so-called business-like government, and many formed minor, albeit vocal groups to constrain city leaders and their spending (Clotfelter, 1973). More explicitly, jurists, lawyers, merchants, and concerned citizens inquired about abolishing the city government in the late 1860s, but such goals never advanced until the late 1870s and after the yellow fever epidemics of 1878–1879. For example, a bill to repeal the city’s charter was read to a joint meeting of the Chamber of Commerce and the Cotton Exchange in February 1877, which did not pass (Bejach 1950). These debt and financing problems, along with the desire to abolish the city government entirely, led local citizens to petition the state government to abolish its municipal charter. The request was granted in 1879 and the area became a taxing district until 1891 (Bejach 1950).

Related to and because of the city’s debt problems, the city government faced legal challenges to its authority to tax and finance public health-related goods. In 1871, for example, the city had its right to build a waterworks system revoked by the Tennessee supreme court. As the city had not built a waterworks and had not made plans to do so, the state legislature granted a corporate charter to the Memphis Water Co., a private firm (see Memphis v. Memphis Water Co., 52 Tenn. 495). Local and state courts also issued writs of mandamus that compelled the city to pay parties who had provided services related to paving and stone work. An 1872 Tennessee Supreme court case limited the city’s ability to collect taxes, which led to property owners requesting relief for expenses already incurred (Wrenn, 1988). In reference to the 1873 epidemic, Dr. Mallory, a former member of the board of health, states:

It is true the streets were not as clean as they should have been, that the back alleys were much neglected at a time when the health of the city seemed to demand the greatest cleanliness. The garbage from private houses, and especially from public boarding houses, was not removed with the expedition that was proper under the circumstances…two things must be remembered – the epidemic was not yet developed, and the city treasury was not encumbered by a very large amount of money. Within the last few years extensive and costly improvements have been made at the expense of the city government, all of which are in the highest degree important as sanitary agents, and for which the city is still in debt. (Mallory, 1874: 356)

Mallory’s statement belies a belief that sanitation is a primary means of prevention. Despite some improvements in public health, people were allowed to pollute unimpeded. Young and James (1912: 163) suggest that such improvements were less helpful due to lax enforcement:

After the experience of 1873, the place should have been put in thorough sanitary condition, but as one summer passed after another and the fever did not return, premises, alleys, vacant lots and other localities became unclean and general neglect grew from bad to worse with only an occasional spurt of activity on the part of the Board of Health.

After the 1878 and 1879 epidemics, Waring suggests that the Gayoso bayou was an “eroded channel of a stream ordinarily small, but, under occasional sudden showers, subject to an enormous increase in volume. Its sides are steep and irregular, and its depth is quite uniformly from 12 to 15 feet below the general level of its banks” (Waring, 1881: 3). Privies of local residences and commercial buildings—there were 5914 by 1879—drained into places such as the Gayoso bayou, which became pools of standing waste by the 1870s; there were also 84 cesspools in 1879 (Annual Report of the National Board of Health, 1879; Capers, 1938). Capers (1938: 458) claims that sanitation in Memphis was no better than the “poorest medieval borough.” Poor sanitation also contributed to the yellow fever and cholera outbreaks of 1873 (Bruesch, 1952).

Mortality rates also indicate the ineffectual health department, in addition to the many other factors that negatively influenced health in the nineteenth century—for example, population growth put more people and diseases together, and the germ theory of disease was still developing. Comparing the lower urban mortality rates in the early 1850s with the higher rates in the 1870s, shown in Fig. 3 and Table 5, reveals a stark difference in the health of the city.

Fig. 3

Overall mortality rate in Memphis, monthly, 1851 to 1853. Note: Keating and Vedder (1888: 341). Assumes a mean population between 1850 and 1854 of 10,764

Table 5 Major causes of mortality in Memphis, 1875 to 1879

With population growth and the commensurate nuisances that arise, e.g., there were 3000 dray carts in 1871 (Wrenn, 1988), local cemetery records indicate there were 46 deaths per 1000 people in 1872 (Ellis, 1974). Depending on the source, Memphis had 23–33 deaths per 1000, one of the highest mortality rates in 1875 (Annual Report of the National Board of Health, 1879; Harris, 1875). Such data suggest that health in Memphis was poor but perhaps not unusually poor (on the nineteenth-century urban mortality penalty, see Bleakley et al., 2018). Table 6 presents urban mortality rates in Memphis and cities of comparable size.

Table 6 Urban mortality rates in cities of comparable size to Memphis, 1873 and 1875