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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
Why Fight a War You Know You’ll
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?
Visual 18.1 Why Did the South Secede
from the Union?

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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:

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10 times the area?
100 times the men?
1,000 times the resources?
Visual 18.2 Advantages of the North
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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 nation’s
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.
Visual 18.3 Advantages of the South
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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.
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
with compensation
paid to slave owners by
the federal
government.

How might this
alternative affect slave
owners?

How might this affect
taxpayers in the North?
In the South?
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?
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.
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.
Economic Analysis of the Civil War
Lesson 19
Visual 19.1 Did the U.S. Civil War
Cause Industrialization?
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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 nation’s
economy? Does war foster economic
growth or retard economy growth?
Northern Production Increased
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New war factories
Labor saving machines were
invented
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Agriculture production increased

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Sewing machine
Reaper
Railroads expanded
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
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.
What Was the Opportunity Cost of
War?
Counterfactual: What if the U.S.
Civil War Had Not Been Fought
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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.