Civil War Economy

The economic roots of the Civil War reach almost to the beginning of English settlement in North America. The development of an economy based on the use of slave labor to produce staple crops through a plantation system in the South and a more diverse economy in the North based on free labor set the stage for the development of two economies within one country. Increasingly after 1800 the needs of these two economies were incompatible.
Southern plantations focused initially on tobacco in Virginia, and later in Maryland and North Carolina, and rice, indigo, and livestock in South Carolina. Africans were the major source of labor after 1619 in the Chesapeake and the system of inherited life slavery developed in Virginia and Maryland by 1660 and …show more content…
But, it was well suited for the Southern climate, and the potential market for cotton began to expand dramatically as first Great Britain and then the United States began to industrialize in the eighteenth century. Large-scale cotton farming was not economically viable, however, because of the difficulties involved in separating the seeds from the fiber. The job was extremely labor intensive and the dark, oily seeds easily stained the fiber.
In 1793 Eli Whitney invented a machine that separated the seeds and the fiber quickly and efficiently. Whitney's cotton engine, or gin, made cotton an economically viable crop for the South and revitalized slavery, which had been declining due to the decline of tobacco. Responding to the demand for cotton from the rapidly developing textile industry in both the U.S. and Britain, cotton plantations spread quickly across the lower South. Cotton, too, proved to be a hard crop on the soil and constant expansion into new lands became an essential part of the prosperity of the cotton …show more content…
These industries thrived and led to the accumulation of capital that for investment in an increasingly diversified economy. In Pennsylvania there was a staple crop, wheat, but it was ill suited for slave labor. Pennsylvania also diversified its economy rapidly - processing its wheat into flour and developing its own merchant shipping industry. Throughout the northern colonies there were small-scale industrial operations, many of the using water power in traditional ways. While the South was constantly plowing its earned capital back into new land or additional labor, the North was accumulating capital that was invested in a wide variety of activities and northern investors were always looking for new areas in which to

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