Economic differences between the North and South, namely the North’s tremendous economic superiority, played perhaps the decisive factor in the outcome of the Civil War. The North’s economy was largely based around production and manufacturing. The North East was the most industrialized area of the country at the time, so it was filled with factories which were quickly converted to produce arms, ammunition, uniforms, and other supplies for use by soldiers. Because the areas of the North that were still largely rural produced food crops, the North was able to feed its entire population throughout the entirety of the war. The bank accounts and gold and silver reserves of the federal government were located in the North, so they remained in possession of the entirety of these after succession and these reserves, along with effective financial policies including an income tax and printing paper money that was declared legal tender, allowed the North to fund the war effectively, keeping interest rates below 80%.
The North’s inflation rate of 80% may sound like a lot when compared to current rates (the highest rate over the last 10 years was 4.1%) but compared to inflation in the Confederacy, 80% is next to nothing. The South was not nearly as economically equipped for war as the North. The economy of the Southern United States was centered around cash crops, like cotton and tobacco, and slavery. One of the first things the Union did at the start of the war was blockade Southern ports, preventing the shipment of cotton to Europe and other areas of high demand, and causing the South’s main source of income to disappear. With no source of income to fund their war effort, the South resorted to the only option they had; printing colossal amounts of paper money. The amount of paper money in circulation in the South at the start of the war was about $1,000,000. By the second year of the war, there was $700,000,000 of paper money in circulation. With no gold or silver to back the value of this money, and the national government unable to collect taxes according the the Confederate Constitution, inflation skyrocketed to heights that are unfathomable today. By the end of the war, the inflation rate in the South was around 9000% per year.
Families in the South fell on extremely hard times during the war. With the demand for cotton all but non existent, the economy fell to pieces, rendering many men unemployed. This forced most men to enlist in the Confederate army, whether they believed in the cause or not. Enlisted soldier’s wages were barely sufficient (and later entirely insufficient) to feed and take care of their families. If there had been work to do, soldier’s wives and children probably would have gotten jobs to help feed, clothe, and shelter themselves, but there were no factories for them to work at like there were in the North. This also meant that the Confederacy was unable to adequately equip its soldiers. In fact, the Confederate soldiers had to bring their guns to war from home. These trying circumstances led to great unrest amongst families in the South, culminating in a minor class struggle between those who were so poor that they were unable to feed themselves and those who were just uncomfortably poor. This “class struggle” consisted mostly of the starving residents of some towns joining together to take food from those who had it. These uprisings were called “bread riots”, the most famous of which took place in Richmond and ended when Jefferson Davis, the President of the Confederacy, came and told the rioters to disband.
In the last years of the war, Confederate desertion increased due to the economic difficulties experienced by soldier’s families. Many of the poorer soldiers felt they had little stake in the war, seeing as they did not own slaves and were relatively happy with life before the war. This disinterest in the conflict, combined with starving wives and children, led many to make the decision to leave the war and go home to take care of their families.
Soldier’s families in the North also felt the effects of the war, but not nearly to the degree that those in the South did. Although Union soldier’s pay was comparable to that of Confederates, they did not suffer as much, partially because inflation rates were much lower and partially because women went to work. With most of the men fighting in the war, the factories that were used to supply equipment for the soldiers were understaffed, so to solve this problem, as well as supplement their husband’s incomes, many soldier’s wives went to work in factories.
Women also took jobs as secretaries and government workers, which at the time were almost entirely male dominated. Although this was one of the first pushes into the workforce that women made in the United States, the majority had little desire to remain there. Many working women’s greatest desire during the war was for their husbands to return so things could go back to how they were before the war.
Families on both sides of the conflict were put into varying degrees of economic discomfort as a result of the Civil War. Many throughout the South faced a period of extreme poverty equal to, if not worse than, the Great Depression. The majority of Northerners faced situations that ranged from annoyance to real economic discomfort, but very few experienced anything that rivaled the conditions in the South. This is one of the main reason why the North was able to outlast, and eventually defeat, the South.