Jeremiah R. Blocker
HIUS 713: American Entrepreneurship Since 1900
Introduction –
In the immediate aftermath of the American Civil War, the Northern States went through a sustained period of rapid economic growth that was mostly driven by industrial expansion throughout Northern states. In contrast, the Southern states, including those from the old Confederacy as well as regional, border states impacted by the Civil War, faced decades of long economic collapse and stagnation. The Northern economy was mostly industrial while the economy of the South was overwhelmingly agrarian. The Southern economy was devastated by the triple factors of over reliance of slavery for labor, a war ravished communities and primarily agrarian economic outlook. Post Antebellum there was an effort restore the economy of the South, called the “New South” by modeling after the Northern Industrial economic model. As Alfred Chandler notes in his article on organization capabilities in the Industrial Age, that the 19th Century witnessed old industries being transformed with, at the same time, new industries emerging.[1] One can see this unfolding with both the Northern and Southern economies during this period.
Methodology of Assessment –
The methodology for assessing the economic growth in the Post Antebellum Southern states compared to the Northern states can be established through a number of sources. Primary sources that identify the economic conditions, measure the income of residents of the states and examine GDP. Secondary, scholarly sources can be helpful in providing analysis of the data and provide important indicators of economic conditions that were present during this period. In addition, non-market activities and other factors that are harder to capture through the standard economic measures can be assessed through secondary sources such as newspaper and journal articles.
Northern Economic Growth –
There was very little economic damage or destruction to Northern economic infrastructure during the Civil War. The overall economic infrastructure remained largely intact and fully functional in the immediate aftermath of the conflict. For the most, the industrial capacity of the North was primed and ready for significant growth and expansion with an expanding labor market available to build the economy.
The economy of the Northern states prospered and grew during the Post Antebellum period as its industrial base grew and expanded. The demands of the war stimulated manufacturing industries such as textiles and iron through a process that expanded after the Civil War. At this time, the Northern states produced the vast majority of the nation’s manufactured goods and products. The war stimulated the growth of railroads, and post-conflict government subsidies assisted in expanding the transportation nodes, rail network, international trade and expanded settlement in the Western territories.[2]
Population increase and urbanization of Northern states were enhanced through large scale immigration from Europe. This population growth, along with migration from war ravished Southern states provided a significant labor pool for industrial growth in the North. Agriculture in Northern states was mostly mechanized before the war and continued on that trajectory leading to increased production.[3]
Overall, the Northern economy experienced tremendous growth in the Post Antebellum period in comparison to the Southern economy. The diversification of the labor market along with a mixed economy that included agriculture, manufacturing and commerce created a resilient, dominant economic outlook. Older industries such as manufacturing grew and improved while newer industries such as new steel manufacturing methods.
Southern Economic Growth –
The Civil War altered the economy of the Southern states in a dramatic fashion creating significant economic upheaval post-Civil War. Most battles were fought on Southern soil, leading to widespread destruction of cities, factories and economic infrastructure. Being that the South’s economy was reliant on an agricultural, slave-based system, the devastation of the Civil War made recovery even more challenging.[4]
The freeing of the slave population through abolition led to a massive loss of wealth and completely uprooted the South’s primary resource for labor. Sharecropping became the primary means of labor for the Southern agrarian economy. Though replacing slavery, sharecropping and tenant farming systems did significantly benefit the agrarian economy by creating a long-term system of poverty. There was little motivation or incentive for innovation in agricultural methods and soil conservation. All of these factors created obstacles to a diversified economy that could emerge from the Civil War.[5]
In the Post Antebellum Southern economy, there was little incentive for capital investment from outside of the region. Most of the South was under military occupation for a period of time following the Civil War and most economic investment was politicized and directed to helping former slaves integrate into society. The South’s banking system completely collapsed and failed to attract Northern investors who financial interest was more focused on growing the economy in the new Western territories and states.[6]
Efforts were made to change the economic outlook and to diversify the Southern economy through proponents such as Henry W. Grady, an Atlanta journalist. Calling for a “New South” based on industry that could grow the manufacturing, textiles and commerce of Southern states in response to the economic upheaval of Reconstruction. Increasing the infrastructure and transportation nodes was emphasized along with stabilizing the labor force. These efforts attracted widespread attention but were largely focused on larger cities in the South such as Atlanta, Birmingham, Jacksonville and Memphis.[7]
In contrast to the North, the South was unable to emerge successfully from the Post Antebellum era by improving its economic growth in any significant way prior to 1900. The South remained mostly agrarian, small in its industrial base and limited in its economic diversification.
Conclusions –
The North and South were economically unequal prior to the Civil War and, for the most part, remained unequal in the Post Antebellum period. War devastation, the overreliance on slavery for labor, an overwhelmingly agrarian economy with a very limited manufacturing created the conditions that stunted economic growth. In Northern states, the economic base was rapidly expanded with all the conditions for a dominant economy in place. Free of political restraints, war devastation and benefiting from a diversified economy, the North states grew economically stronger as the Southern states struggled.
Bibliography
Bhat, Vasanthakumar N. “Economic Conditions of the States Before and After the American Civil War.” Journal of Social Sciences 10, no. 3 (2014): 97–103.
Burton, Vernon. “Review: Economics as Postbellum Southern History.” Reviews in American History 16, no. 2 (June 1988): 233–40.
Chandler, Alfred D. “Organizational Capabilities and the Economic History of the Industrial Enterprise.” The Journal of Economic Perspectives 6, no. 3 (Summer 1992): 79–100.
Dixon, Rob. “New South Era.” Encyclopedia of Alabama, May 5, 2009. https://encyclopediaofalabama.org/article/new-south-era/.
Rust, Owen. “The Economic Impact of the American Civil War.” The Collector, July 18, 2022. https://www.thecollector.com/economic-impact-of-the-american-civil-war/.
[1] Alfred D. Chandler, Organizational Capabilities and the Economic History of the Industrial Enterprise.” The Journal of Economic Perspectives 6, no. 3 (Summer 1992): 79–100.
[2] Vasanthakumar N. Bhat, “Economic Conditions of the States Before and After the American Civil War.” Journal of Social Sciences 10, no. 3 (2014): 97–103.
[3] Owen Rust, “The Economic Impact of the American Civil War.” The Collector, July 18, 2022. https://www.thecollector.com/economic-impact-of-the-american-civil-war/.
[4] O’Brian, James Irwin &. Anthony. “The Post-Bellum Recovery of the South and the Cost of the Civil War.” Explorations in Economic History 38, no. 1 (January 2001): 166–80.
[5] Harriet Friedman, “Review: Economic Analysis of the Postbellum South: Regional Economies and World Markets. A Review Article.” Comparative Studies in Society and History 22, no. 4 (October 1980): 639–52.
[6] Vernon Burton, “Review: Economics as Postbellum Southern History.” Reviews in American History 16, no.2 (June 1988): 233-40.
[7] Rob Dixon, “New South Era.” Encyclopedia of Alabama, May 5, 2009. https://encyclopediaofalabama.org/article/new-south-era/.
Jeremiah Blocker - HIUS 713 
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