Economic Systems

Locomotive (circa 1870)
[audio]The South After the Civil War

The Economy of the South After the Civil War

  • Three reasons the economy of the South was not very strong before the Civil War:
    1. Profits were made because labor was unpaid.
    2. Limited major crops were planted: cotton, tobacco, and sugar.
    3. Other industry was believed to be unneeded.

The Seven Factors of a Healthy Economy

1. Labor
2. Natural Resources
3. Equipment and Tools
4. Transportation
5. Money and Credit
6. Demand for Products
7. Profit

The Labor Factor

  • The 250,000 dead and possibly the 300,000 wounded decreased the labor force in the South after the Civil War by about a third.

The Natural Resources Factor

  • Fertilizers are materials added to the soil to improve its qualities.
  • Some of the natural resources in the South included: farmland, water power and steam power, coal, iron, and oil.

The Equipment and Tools Factor

  • New farming inventions of the1800's, such as mechanical reapers, combines, and corn planters, were no use to the cotton farmers of the South. The cultivator, another new invention, was too expensive for small time farmers.
  • Agriculture is the primary source of employment (1890, 70% of the people).
  • Textiles and steel are two industries that grew in the South after the Civil War.

[audio]The Transportation Factor- Raliroads

  • Transcontinental means across the continent.
  • Much of the railroad was destroyed during the Civil War including tracks, engines and cars.
  • The southern railroads didn't improve much right after the war because the federal government was building the transcontinental railroad between the east and west coasts of the US.
  • The economy of the South was slow to recover due to the delay in the repairing and the building of the new railroad track.

The Money and Credit Factor


  • Sharecropping is a landowner, or a person who provides the supplies to grow crops and the worker (often poor whites and former slaves) each share 1/3 of the profits from the crops grown.
  • Sharecropping was used by southern farmers because large profits were able to be made using laborers who received very little for their efforts.

    The hardships of sharecropping

  • Sharecropping was not profitable for workers because
    1. They were uneducated
    2. They were easily cheated by the landowners who also owned much of the supplies.
    3. All the landowners agreed to pay the sharecroppers the same "share."

    Large plantations shrink

  • A foreclosure occurs when a borrower cannot pay back money on a loan and the lender obtains ownership of the property. It is a legal process.
  • The three ways a farmer could lose their land through foreclosure
    1. lack of payment to the storekeeper for supplies
    2. lack of payment for a bank loan
    3. inability to pay taxes.

[audio]The Demand Factor

Cotton and cloth

  • Southern cotton was still wanted by both the United States and Europe.
  • Labor was cheaper in the south, and cotton, the raw product, was grown locally making cloth cheaper than in the north.

Other products

  • Fresh produce was in greater demand, in both the north and south, once refrigerated rail cars were introduced.

The Profit Factor

  • The two biggest economic problems that faced the South:
    1. an undeveloped railroad system
    2. little financial resources (money and credit) to invest in industry. Small textile factories started by individuals who had private money were the most profitable industry in the South after the war.