Civil War

Economy Before the Civil War

On the eve of the Civil War, the United States was a nation divided into four quite distinct regions: the Northeast, with a growing industrial and commercial economy and an increasing density of population; the Northwest, a rapidly expanding region of free farmers; the Upper South, with a settled plantation system and (in some areas) declining economic fortunes; and the Southwest, a booming frontier-like region with expanding cotton economy.

During the first half of the 19th century, economic differences between the regions also increased. By 1860 cotton was the chief crop of the South, and it represented 57 percent of all U.S. exports. The profitability of cotton, known as King Cotton, completed the South's dependence on the plantation system and its essential component, slavery.

The North was by then firmly established as an industrial society. Labor was needed, but not slave labor. Immigration was encouraged. Immigrants from Europe worked in factories, built the railroads of the North, and settled the West. Very few settled in the South.

The South, resisting industrialization, manufactured little. Almost all manufactured goods had to be imported. Southerners therefore opposed high tariffs, or taxes that were placed on imported goods and increased the price of manufactured articles. The manufacturing economy of the North, on the other hand, demanded high tariffs to protect its own products from cheap foreign competition.

As a result, although both the South and the West were agricultural, the West allied itself with the Northern, rather than the Southern, point of view. Economic needs sharpened sectional differences, adding to the interregional hostility.