Civil War, Economic Causes of (Issue)

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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 quickly spread to the rest of the South. In South Carolina Africans were important not only as a source of labor but for their knowledge of cattle herding in the subtropical climate as well as their knowledge of the cultivation of rice. Tobacco was a crop that was hard on the soil, and from the beginning expansion into new land was an important part of the tobacco economy.

Cotton appeared in the South as a decorative, novelty plant during the colonial era. 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 culture.

The northern economy had moved in a very different direction from the South. While all of the northern colonies allowed slavery and merchants from several played important roles in the slave trade until it was abolished in 1808, slave labor was not a major element in any northern colony's economy. Northern climate and topography were ill suited for the use of slave labor and the system never became an essential part of the economy.

New England quickly focused its energies on shipbuilding and mercantile shipping, fishing, finance, and other urban occupations. 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 invest.

In 1790 Samuel Slater, an English millwright, offered such an opportunity to Moses Brown. Using Brown's capital and Slater's knowledge of the revolutionary new textile machinery that had transformed the industry in England, they built a textile mill at the great falls of the Pawtucket River in Woonsocket, Rhode Island. Quickly the new industry spread through New England and the Mid Atlantic states. Within a generation steam power became widely available and industry was free to locate wherever there were raw materials and labor. While industrialization began with the textile industry, many other industries emerged. Increased demand led to major advances in the iron industry, including the development of new technology for making steel and the development of coal as a fuel to replace charcoal, first in making iron and steel and later in industry generally. The railroad and the steam boat brought steam power to transportation.

The northern economy quickly became industrial during the first few decades of the nineteenth century, just as the South was becoming increasingly committed to cotton cultivation. The industrial economy attracted large numbers of people who sought work in the mills. Industrialists needed a reliable source of cheap food for this new industrial work force. The Midwest became the breadbasket of the industrial northeast, especially after the Erie Canal and, later, the railroad made it possible to move bulk cargoes east efficiently. The expansion of the industrial northeast required more and more territory for foodprimarily wheat, corn, and beef. None of which were well suited to slave labor. These divergent economies were the basis for increasing sectional conflict over the territories in the West which both sections saw as essential to their continued development.

The tariff caused sectional conflict prior to conflict over territorial expansion. When Alexander Hamilton proposed the first tariff in 1790 it was not clearly a sectional issue. As the North industrialized, however, and the South became increasingly committed to cotton and other staple cultivation, the tariff was seen clearly as more beneficial to the North than the South. In response to large scale dumping of British manufactured goods in the United States after the War of 1812 (18121814), Northern manufacturers pushed for higher and higher tariffs as protection. Southern opposition grew slowly at first, but accelerated rapidly after 1820 as tariff duties pushed higher.

The tariff remained a long-standing bone of contention between North and South. For the North, tariffs protected its industries and jobs from foreign competition. For the South the tariff was little more than a transfer of wealth from them to the north through the higher prices for manufactured goods, both foreign and domestic. Thus they called the 1824 Tariff the "Tariff of Abominations."

Southern anger over tariff policies became issue that sparked a new and threatening weapon of southern states' rights advocates: nullification. Led by John C. Calhoun, South Carolina nullified the Tariff of 1832." Nullification was a states' rights solution to a contentious issue within the Republic. According to its southern advocates, if the leadership of a state found that it could not abide the imposition of a particular piece of legislation, it had the right to call a state convention and to "nullify" the act. This would take the act out of operation until Congress could debate the matter and add an amendment to the Constitution specifically allowing the act to become law. If this happened, the protesting state then had the right to peacefully secede from the Union.

The nullification crisis came to a head when Congress passed a tariff increase in 1832. South Carolina nullified the law and tried to convince the other southern states to support its position. But President Andrew Jackson, who on other issues favored the states' rights position, perceived nullification to be a threat to the sovereignty of the federal government, however, and moved quickly to quash the rebellion. This was a dicey issue because the leading theorist of nullification was John Calhoun from South Carolina, Jackson's Vice President.

Even though the tariff issue produced the theory of nullification, opposition to the tariff was never as volatile as the issue of the expansion of the slave or the wage labor system into new territories and the formation of slave- or wage-labor states. This was because the creation of new statesslave or free stateswas on the order of a foot-race between the competing labor systems. If the states adhering to one labor system became more numerous than the other, Congress could conceivably pass laws that would abolish the labor system of the less numerous block of states. This became the nightmare of the Republic.

It was during the debate over the Missouri Compromise of 1820 that the nation confronted the whole issue of this equilibrium between slave and free states for the first time. The Missouri Compromise allowed Missouri to enter the Union as a slave state (and balanced that admission with the recognition of Maine as a free state) but prohibited future slave states north of Missouri's southern boundary. This was the first limitation on slavery in the territories since the emergence of cotton as a major crop and the revitalization of slavery that had followed from that. The Northwest Ordinance of 1785 had prohibited slavery north of the Ohio River, but it had been passed when the economic future of slavery was questionable and debate over the institution acceptable within the South. By 1820 the economic future of slavery appeared strong, provided new land for cotton could be brought into the system.

The territories were becoming increasingly important to the South after 1830 as the North's population surged past the South's and the North gained control of the House of Representatives (whose members were apportioned by population). The industrial economy of the North was attracting immigrants, while the South was not. The limitations on slavery that had been acceptable in 1820, when the populations of the two sections were more in balance and the economic potential of cotton still unclear, were no longer acceptable in the 1840s and 1850s. Cotton had proven very profitable and the demand for slaves in cotton producing areas provided economic benefits to older southern states where slaves were bred for sale to these new areas to supplement income.

The opposition between the North and South was becoming consolidated over more issues. Economically the slave economy needed as much room to expand as possible. Some southern leaders toyed with the idea of turning the Gulf of Mexico into a reserve for future slave states. The same thinking informed their view of expansion into the West. Balance was seen as necessary in the face of increasing opposition to slavery in the North on moral as well as economic grounds. As long as the number of slave states equaled the number of wage-labor states in the Senate, the South could block any Northern action to eliminate slavery.

The North, however, was also increasingly unwilling to compromise on the expansion of slavery. A plentiful supply of cheap cotton was desirable, but the cotton textile industry was only one of a large number of expanding industries. A dependable source of cheap food was more important and the railroad would soon be allowing the development of territory ever further west. The Spanish had used slaves to mine silver back in the sixteenth century. Would the South employ slave labor in western mining? Southern opposition served as a brake on tariff increases and held up approval of subsidies for further expansion of the railroad system. But compromise with the South was increasingly unpopular in the North.

In 1854 opposition to compromise with the South led to the formation of the Republican Party. Republicans represented the economic interests of the North and Mid-West, supporting higher tariffs, subsidies for railroad expansion, and uncompromising opposition to the expansion of slavery in the territories. The differences between the two sections over the tariff, railroad policy, and the expansion of slavery into the territories became more sharply drawn with every election. Each section saw its future economic prosperity threatened by the other's political success. The election of Republican Abraham Lincoln (1861-1865) as president in 1860 on a platform that was entirely pledged to support northern economic needs convinced Southern states that secession was their only hope to preserve their economies. Lincoln and the North's refusal to accept secession led directly to the Civil War.

See also: Andrew Jackson, Missouri Compromise, Samuel Slater, Tariff of Abominations, Eli Whitney


Barney, William L. The Road to Secession: A New Perspective on the Old South. New York: Praeger, 1972.

Potter, David. The Impending Crisis 18481861. New York: Harper and Row, 1976.

Stampp, Kenneth M., ed. The Imperiled Union: Essays on the Background of the Civil War. New York: Oxford University Press, 1980.

. America in 1857: A Nation on the Brink. New York: Oxford University Press, 1990.

Wyatt-Brown, Bertram. Yankee Saints and Southern Sinners. Baton Rouge: Louisiana State University Press, 1985.

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Civil War, Economic Causes of (Issue)

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