?Between 1820 and 1860 there were a few fundamental differences between the economies of the North and South. How far do you agree? Between 1820 and 1860 there were problems in America that resulted in the civil war in 1861, the economy affected the North and South during the civil war, and some major differences helped win the civil war. However this does not mean that the economy had many fundamental differences. For example the methods of earning money were different, but overall both earned roughly the same amount of money.
Firstly, the main difference was that the North relied much more on money from industry and manufacturing, as they had more connections with foreign countries, and more factories were built. In the North in 1860 there were 74,000 factories producing two thirds, of goods for America. Whereas in the South there were only 2 major factors: Textiles factory in South Carolina and an Iron works in Virginia set up in 1840. Although they had fewer factories, the Iron works was vital, as it supplied the North with weaponry during the Civil war.
In 1850 the South only produced 10% of the nations manufactured output. However the South did lack the industrialisation because their agricultural methods were so effective they had no need for change. The South was also very traditional and disliked change, whereas seven out of eight immigrants had chosen to settle in the North, and they had seen new ideas in other places in Europe so were welcome to change. This is shown by the South’s labour force being reduced from 82% to 81% over 60 years, on the other hand, the North’s labour force was reduced from 68% to 40% over the 60 years.
This is however not a reflection on the North rapidly reducing agriculturally, because they still relied on agriculture, and a lot of the North was still rural. Around the urban areas, the population was increasing as towns and cities were developing swiftly. As the North had smaller but still prosperous farmers known as yeomen, they did not earn as much money through agriculture, because they did not have many or any slaves at all, so they could not produce the high quantities that the south did.
Farmers that had lots of land were called plantation owners; there were many more plantations in the south, and when the cotton gin was created in 1793, there was a boom in cotton, and the benefit of having slaves increased. This made Southern plantation owners invest their capital in the Slaves, because they produced so much cotton, which was very lucrative. 55% of slaves worked in cotton which shows how much money was made out of it.
The South needed to transport their goods to the North so that it could be transported abroad, but there was a lack of transport in South, as they only had 35% of the train tracks, which affected them in the Civil war. This meant it was fairly expensive to transport the cotton, but they still received a good amount of money if they lived near a train track. When the cotton arrived in the North the Lowell factory system meant the manufacturing of it was very cheap, which meant the North earnt a large margin on it.
Although the danger of the South investing all their money in Slaves was that when slavery got banned, they lost a lot of money, which was partly why they were so keen to keep slavery. However only one quarter of the population owned a slave, as they were expensive (in 1860 they were $1800 which was double the price in 1820). The North’s economy was based on free labour whereas the South’s was based on slave labour, which meant that the North’s economy was more stimulated by the presence of workers with money who could buy products, which would make money for the company, which in turn would increase wages or hire more workers.
The South’s economy was largely devoid of this benefit. Essentially, the economy in the South was weaker and only based on a few important exports (cotton, tobacco, and sugar). This made the South less diversified, as they focused their sales on cotton. Another difference is tariffs; in 1828 congress passes a controversial high protective tax. This majorly benefitted the North as they were the main distributors. However the South were very worried about this because they believed that if they stopped buying the expensive foreign goods, then foreign countries would stop buying their goods, as they would have tax on them too.
This affected the economy until the tax was promised to be reduced after the law in 1833. In contrast the North and South didn’t have many fundamental differences. They both created a lot of money, and were not lacking at all, the only difference was the method in which was used to make the money. The economic diversification was similar too, as 10% of Northerners owned 68% of the wealth, and the wealth was dominated by the plantation owners, called oligarchies, as there were few free-soilers. 12% of the plantation owners owned half the slaves.
This shows that there were few farmers, but the big plantations owned many slaves. Even though the North seems to be more industrial, the South also made efforts to modernise industrially, but they just lacked because of the closed opinions of the southerners. Also not many people in the North and the South owned slaves, it was more of a rare thing, and the main owners, owned a large amount of slaves. However there was a larger need for slaves in the South, because there was cheap labour force from Europe settling in the North which meant slaves were more expensive so were not deemed as important.
Overall I think there were many differences between the North and South between 1820 and 1860. Some affected the outcome of the Civil war such as the transport boom, and the industrialisation in the North, but a fundamental point is that numerically they have equal amounts of income; there were just different methods to earning the money. However the differences were major; the amount of industrialisation, and amount of agriculture, the manufactured output, and the need for slaves, was all very different for the North and South. The main similarity was the economic diversification.