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How Did The Civil War Affect The North And South Economy

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Before the Civil War began, the United States had two distinct economies. Although farming was a staple throughout the United States, from an economic standpoint the Northern and Southern farmers were fundamentally diverse from each other. Unfree labor and staple crops were an essential part of Southern life. While their counterparts to the North comprised of an economy that contained finance, a wide range of industries, and commerce; wage earners and small business owners. The Civil War drastically changed this way of life for both the North and South. The South after the war was left in decimated, while the Northern economy boomed. Southern farmers between 1859-1860 were harvesting a record number of cotton crops. Cotton was America’s most …show more content…

This led Congress to pass the first federal income tax in 1862 along with raising tariffs. In late 1861, specie payments were suspended; payments that were made in silver or gold in place of currency notes. This allowed Congress to create “greenbacks” the United States first fiat currency. From 1862-1863 there was an uptick in business thanks to the expansion in currency and government expenditures. Like the South, as the war dredged on the North to suffered from inflation. With rises in rent, necessities, and goods under inflation, workers demanded higher wages to sustain their way of life. At the same time small businesses were suffering under their new tax burdens. However, in contrast to the South, the North never impressed upon its citizens for food or provisions. Northern factories and farms were able to successfully keep the Union troops supplied and fed. The Confederacy was left in ruins in the wake of the war, with little to no monetary funds to reconstruct the region. With the loss of their slaves, white plantation owners, lost most of their wealth, state governments were also hindered by crippling debts. Enormous plantations were broken up into lesser farms that could be tended to as single-family farms in exchange for a portion of the crop, this gave birth to the term sharecropping. Cotton remained the foremost crop, but the war forever changed how cotton was grown and sold. Once the production of cotton recommenced, Americans found that their cotton crop now competed with new cotton plantations all over

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