By Gary W. Gallagher, University of Virginia
The Civil War disrupted the two economies of the United States and the Confederacy. Military campaigning across the Confederacy dealt severe blows to the South’s industrial and agricultural production, and to its transportation infrastructure. The North, by contrast, proved fully capable of producing all the war material needed and the consumer goods that its people wanted.
Disruption of Railroads
The Confederate economic story is not a pretty one. The southern transportation system broke down fairly early in the war. We had the phenomenon, not of a Confederacy that couldn’t produce much of what it needed, that couldn’t produce enough food to feed its people and its armies, but we had the phenomenon of a Confederacy that couldn’t get the food that was produced to the parts of the nation where it was needed. It was a transportation problem, not a production problem, in many ways.
Armies disrupted the railroads. The Confederacy couldn’t replace rolling stock, and couldn’t build its own locomotives. The railroads deteriorated as the war went on, and that became a tremendous problem.
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Spiraling Inflation
Severe shortages and spiraling inflation imposed cruel burdens on everyone in the Confederacy except debtors and speculators. Everyday necessities eventually became unbelievably expensive as the war went on.
As early as July 1862, a single cabbage cost $1.25 in Richmond. By the end of the war, a diarist in Richmond noted that a barrel of flour was going for $1,000 in the spring of 1865. That is at a time when the Confederate soldiers were earning $18 a month.
There were food riots in Richmond in April 1863, and there were similar episodes elsewhere in the Confederacy—shortages, again, mainly caused by the problem with transportation.
The Confederates found themselves awash in pretty much worthless paper money, long before the end of the war. Many of them turned to a barter economy. The money really didn’t mean anything.
Undermining the War Effort
Many historians have argued that the increasing hardships confronting most Confederates badly undermined the southern war effort.
Opposition to the draft, and the sad letters from home, urging men to come home, and sometimes to avoid service or even to desert, had a deleterious effect on the Confederacy’s ability to mount its national resistance, say many historians. At least 105,000 Confederates deserted, about 13 percent of those in the army. Many other people hid goods from the government agents who came to take them, to impress them for the war effort.
Creating Refugees
Some governors worked against the central government, for example, allowing men to serve in state militias so they could avoid national service. United States armies, as they penetrated into the interior of the South, created thousands of refugees, especially in the parts of the Upper South that first felt the hard hand of the war.
These refugees crowded narrow roads; they jammed their worldly goods onto trains and made their way to safer areas, often going to major cities. Richmond’s population went from about 40,000 in 1860 to more than 100,000 by the end of the war. Many other refugees moved into east Texas, which was not at risk from United States armies, for much of the war.
Condition of the Refugees
Once in their new areas, the refugees were still in terrible shape. They were often crammed together in inadequate housing. At first welcomed, maybe, by the people in the areas to which they moved, they quickly became a burden in areas that would have had a hard time feeding and taking care of themselves; the refugees were viewed as an unwanted intrusion.
When the war was over, the refugees often returned to ravaged—or completely destroyed—homes. In sum, the war brought to the Confederacy things no other segment of white America has ever known: wholesale destruction of property, military occupation, and utter defeat on a grand scale; along with this, the displacement of thousands of civilians.
As they struggled with a deteriorating political system and a shattered economy, a number of the Confederates became disenchanted. The remarkable thing is that most of them did not.
The Northern Home Front
The northern home front presented a far different story. The economy prospered in the United States, and the North successfully fed and supplied its armies, while producing consumer goods at a rapid rate. The two-party system remained vibrant in the course of the war. The Republican Party, in the course of the war, moved to solidify its hold on the region. It did much to enact a legislative program that it had had in mind since the mid-1850s, and to solidify its position in power.
Within the Republican Party, there were three broad factions. There were conservatives, moderates—which were the largest component in the party—and radicals. All of these components of the party, though, generally voted together in terms of the Republican program, and against the Democrats.
As time and the war went on, the radical Republicans who were well in the vanguard on issues relating to African Americans, and who favored a harsh prosecution of the war against the Confederacy, gained more strength. Abraham Lincoln, who was the most prominent of the moderates, moved closer to the radicals as the months and years went by.
Common Questions about How the Civil War Impacted Economy
The southern transportation system broke down fairly early in the war. So, it was not that the Confederacy couldn’t produce much of what it needed, that it couldn’t produce enough food to feed its people and its armies, but that it couldn’t get the food that was produced to the parts of the nation where it was needed. Thus, it was a transportation problem, not a production problem.
Many historians argue that the increasing hardships confronting most Confederates badly undermined the southern war effort. Opposition to the draft, and the sad letters from home, urging men to come home, and sometimes to avoid service or even to desert, had a deleterious effect on the Confederacy’s ability to mount its national resistance.
When United States armies penetrated into the interior of the South, they created thousands of refugees, who made their way to safer areas, often going to major cities. Thus, Richmond’s population increased.
