How Did The Civil War Affect The Economy

American war and economics have a long history together from the over taxation during the revolutionary war to WWII’s munitions manufacturing and railroad boom, economics played a role in almost every American war, including the Civil War. The Civil War tore the nation apart, pitching brother against brother, North versus South over the critical issue of slavery. Despite excellent military strategy and battle ethics that the South possessed, it was ultimately the North’s economic superiority that won the war. This is observed in the fact that cotton is not king, Northern industry and capitalism faced off against Southern agriculture and socialism, and the power of railroads. The South seemingly possessed economic superiority in one aspect:

The North possessed the majority of iron and steel mills, livestock and packing houses, munitions factories, and other manufacturing locations. This allowed the North to poses a huge technological and industrial advantage over the South. The capitalistic ideas in the North allowed new innovations such as the gatling gun to thrive and speed up the war. In contrast, the South’s economy focused almost exclusively on agriculture (remember, cotton is king) and a socialist and racist plantation system. This system relied on slavery to function and placed most of the economy in the agricultural commodity basket. Because of a lack of major industry the South government instituted socialist policies in order to further the Confederacy’s cause. The Confederate government took control of all the major manufacturing in the South and non agricultural industry and instituted legislation that supported this agenda. This essentially crippled the remainder of the South's private sector economy. Without a strong private sector or currency the Confederate economy collapsed over the course of the war. Soldier payments were delayed, were inconsistently delivered, and the value of Confederate dollars crashed. The Civil War favored Northern industry and capitalism

Both the North and the South identified railroads as quick easy ways of moving troops, supplies, and injured soldiers to and from battles and other strategic areas. Railroads helped win the civil war in two ways: strategically and economically. Strategically the railroads played huge roles both in the movement of troops and supplies, and were used for battle in several occasions. The North possessed the vast majority of American railways and therefore had a distinct advantage. In order to induce cooperation between railroads, speed up the movement of military supplies and troops, and handle the capture and operation of Southern rail lines, President Lincoln enacted the Railways and Telegraphs Act of 1862. This act gave the government authority over private railroads and created the United States Military Railroad (USMRR). The purpose of the USMRR was to oversee and operate all necessary military trains. It operated like any other major railroad only it was a division of the US Army. During its short existence during the war the USMRR would buy, build, or capture, 419 locomotives, 6,330 cars, and over 2000 miles of track. It would be spearheaded by Herman Haupt, a railroad veteran who had a knack for making the best use for the USMRR’s limited selection of supplies and equipment. While the North experienced great success with its