With the end of the War of 1812, few people in the United States envisioned a civil war in the future. With a developing Western section of the country, the future looked bright for a stable growing economy based on extraction of resources (agriculture, timber, and various resources in the ground). With the shipping resources of New England and financial centers in the North, agriculture and extraction of resources seemed to be the foundation to base the country's economy on. Within a short period of time, however, the North was beginning to industrialize while the Southern states stayed agrarian. A reason why the South did not industrialize was that cotton provided an economic system for the whole country that was as rewarding to the Southern farmers as to the Northern industrialists.

An example of the Southern attitude toward the Northern way of life is illustrative. A white Alabaman during this period exclaimed, "We have no cities. We don't want them. We want no manufactures; we desire no trading, no mechanical or manufacturing classes. As long as we have our rice, our sugar, our tobacco, and our cotton, we can command wealth to purchase all we want." Factors

Table 1 shows per-capita income prior to the Civil War.

Northeast 129 181 130 183

Even though the price of cotton was high in the early years, the cotton grower had challenges to making money. Between goods bought from the outside for the farmer's family and slave labor, the farmer managed a subsistence living. The steamboat provided a way for the farmer to make a living. Prior to the steamboat, goods purchased had to come over the Appalachians at a large premium. As an example, army garrisons in Illinois used flour costing $100 a barrel and pork $127 a barrel. This compares to $10 and $20 on the East Coast. The steamboat helped solve this problem by reducing the freight rates going to and from New Orleans. By the Civil War, freight rates upriver had dropped to 5 to 10 percent of what they were in 1815.

Some rich Southerners could see the need to industrialize. By diversifying the economy, the South could recoup some of the money going to Northern interests. As much as a fifth of the cotton price went to merchants in the Northeast for loans, insurance, warehousing, and shipping to Europe. By the 1850's 100 to 150 million dollars a year in commissions were going to the North. This was in addition to the money made making the textiles. In 1860, the value added by textile makers to the raw materials was 55 million dollars. As much as the cotton growers were making money, Northern interests were making a lot of money too. When factories were built in the South, the owners tried to use slave labor. When slaves were used in a factory, the wage scale was lower than it would be otherwise. Very few factories could get along without free labor. With slaves employed, the factory owner had a low wage base on which to base subsequent employees. This gave free labor an incentive to look elsewhere for work. Without productive labor available to work, southern factories were not able to grow to any large size. Conclusion

Bruchey, Stuart. The Wealth of the Nation: An Economic History of the United States (New York: W.W. Norton, 1984).

The money saved on goods provided a margin that could be used for investment. The investment made by the farmers was in more land and slaves. By 1840, two-thirds of the cotton produced in the U.S. came from Tennessee, Alabama, and Mississippi up! from one-sixteenth in 1811. The productivity of the land in pounds per acre in 1850 follows: Tennessee, 300; South Carolina, 320; Georgia, 500; Alabama, 525; Mississippi, 650; Texas, 750. The income received by the Cotton South residents reached levels greater than the average person in the North.

East South Central 69 89 92 124

As can be seen, the free population in the West South Central states had a per-capita income far above the

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