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DID THE WAR HELP OR IMPEDE
THE ECONOMIC GROWTH
OF THE UNITED STATES?
DOES WAR HELP OR HURT AN ECONOMY?
When considering the economic effects of the
Civil War or any other war, there is one key
question to consider:
HOW WOULD THE ECONOMY HAVE
DIFFERED IF THE WAR HADN’T BEEN
FOUGHT?
Could the Civil War have prevented the United
States economy from pursuing a superior path
of economic growth?



Many individuals believe that the Civil War
brought unprecedented economic growth to
industry.
Stimulated 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
war seem to affect a nation’s economy? Does
war foster economic growth or stunt it?




New war factories
Labor saving machines were invented
 Sewing machine
Agriculture production increased
 Reaper
Railroads expanded
Benefits of the U.S. Civil War
 End of slavery
 Protection of the Constitutional structure
of U.S.
 Increased industrial production of warrelated goods
 Higher military employment
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.




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.
The Costs of the Civil War
(Millions of 1860 Dollars)
South
North
Total
Direct Costs:
Government Expenditures
1,032
Physical Destruction
1,487
2,302
3,334
1,487
Loss of Human Capital
767
1,064
1,831
Total Direct Costs of the
War
3,286
3,366
6,652
376
148
212
6,190
1,149
7,339
2,560
1,149
3,709
293
51
118
5,846
4,515
10,361
670
199
330
8.73
27.71
31.43
Per capita
Indirect Costs:
Total Decline in
Consumption
Less:
Effect of
Emancipation
Effect of Cotton Prices
Total Indirect Costs of The War
Per capita
Total Costs of the War
Per capita
Population in 1860 (Million)
1,960
1,670