Economics of the Civil War

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Economics of the Civil War

• Lesson 18 Why Did the South Secede
• Lesson 19 An Economic Analysis of the Civil War

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Why Fight a War You Know Youll Lose?

• In light of the economic advantages of the North
  over the South, it seems in retrospect almost
  irrational for the South to have engaged the
  North militarily. Why did the South secede?

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Visual 18.1 Why Did the South Secede from the
Union?

• Was the South irrational to fight the Civil War?
  Some people thought so. William Faulker, a
  distinguished novelist from Mississippi, put the
  question in these terms
• Who else would have declared a war against a
  power with
  
• 10 times the area?
• 100 times the men?
• 1,000 times the resources?

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Visual 18.2 Advantages of the North

• At the outset of the Civil War, the North had
  many material advantages over the South.
  
• The North had a population of 22 million.
• The South had a population of 9 million which
  included 3.5 million slaves.
  
• The North had 92 percent of the nations
  industries.
  
• The North had 22,000 miles of railroad track.
  The South had 9,000.
  
• The North controlled the U.S. Navy and the
  merchant marine.

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Visual 18.3 Advantages of the South

• While the South had fewer material advantages,
  some elements were in its favor.
  
• The South had a clear war objective to win
  independence. The North fought for the somewhat
  less definite goals of preserving the union and
  eliminating slavery.
• The South needed only to defend its territory.
  The North had to carry out an invasion.
  
• The South had a strong military tradition. Many
  U.S. Army and Navy officers had been recruited
  from the South. Great arsenals and army bases
  were located in the South.
• The South believed that its cotton trade with
  Great Britain and France would cause these
  nations to provide aid.

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Visual 18.4 Eliminating Slavery Alternative
Approaches and Their Probable Consequences
1. Emancipation of the slaves by the owners
without compensation. How might this alternative
affect slave owners? 2. Emancipation of slaves wi
th compensation paid to slave owners by the
federal government. How might this alternative af
fect slave owners? How might this affect taxpayer
s in the North? In the South?
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Visual 18.4 Eliminating Slavery Alternative
Approaches and Their Probably Consequences

• 3. Fighting to eliminate slavery.
• Did additional compromise on slavery appear to be
  likely?
  
• What might the benefits be of fighting to
  eliminate slavery?
  
• What might the costs be of fighting to eliminate
  slavery?

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Visual 18.5 Was Compromise Possible?

• The Missouri Compromise of 1820 admitted Missouri
  and Maine to the Union. Missouri was a slave
  state and Maine was a free state.
  
• This dual admission - - one slave and one free
  state - - allowed the nation to preserve the
  existing balance between slave states and free
  states.

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Visual 18.5 Was Compromise Possible?

• The Kansas-Nebraska Act of 1854 overrode the
  Missouri Compromise.
  
• It authorized voters in portions of the Louisiana
  Purchase to decide whether or not to permit
  slavery.
  
• In the case of Dred Scott v. Sanford (1857), the
  U.S. Supreme Court ruled that Congress could not
  prohibit slavery in any U.S. territories.

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Economic Analysis of the Civil War

• Lesson 19

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Visual 19.1 Did the U.S. Civil War Cause
Industrialization?

• Many individuals believe that the Civil War
  brought unprecedented economic growth to
  industry.
  
• Simulated by increased demand for wartime goods,
  many industrialists charged ahead to produce the
  goods and services Production of iron and steel
  are examples.
• Taking the Civil War as one example, how does way
  seem to affect a nations economy? Does war
  foster economic growth or retard economy growth?

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Northern Production Increased

• New war factories
• Labor saving machines were invented
• Sewing machine
• Agriculture production increased
• Reaper
• Railroads expanded

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Visual 19.2 Benefits and Costs of the U.S. Civil
War

• Benefits of the U.S. Civil War
• End of slavery
• Protection of the Constitutional structure of
  U.S.
  
• Increased industrial production of war-related
  goods
  
• Higher military employment

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Visual 19.2 Benefits and Cost of the U.S. Civil
War

• Costs of the U.S. Civil War
• Human death and dismemberment
• Destruction of capital (tools, factories)
• Loss of livestock
• Reconstruction
• Economic decline of the South
• Uncompensated loss of capital investment in
  slaves
  
• Inflation
• Production inefficiencies
• Decreased production of civilian goods and
  services
  
• Loss of rights of states to secede or claim
  independence from the Union when in disagreement
  with the President or the Congress.
  

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What Was the Opportunity Cost of War?
16
Counterfactual What if the U.S. Civil War Had
Not Been Fought

• 600,000 lives would not have been lost.
• Hundreds of thousands of workers would have been
  released into the economy.
  
• One in four persons in the North went into
  military service. They might otherwise have been
  employed in the private sector.
  
• Without the war, investment would not have been
  diverted from civilian into military production.