By Gary W. Gallagher, University of Virginia
The northern economy boomed in the course of the Civil War. The lost business with the South was more than made up for by the demand for war-related materials—the demand for materials to clothe, feed, and arm the more than two million men who served in the United States armies. Agriculture also did very well during that time.
Increase in Agricultural Production
The North produced more wheat in 1862, and again in 1863, than the whole country had produced in the previous record crop year of 1859. Corn, beef, and pork production also shot up, and all of this despite the absence of about a third of the agricultural labor force, which was serving in the army.
Of course, recent technology helped in this regard: reapers, mowers, and rakers that did the work of many men. This wasn’t new technology developed during the war to meet a crisis; this was recent technology that had been developed before the war, but that was applied on a much broader scale in the course of the war, as well as other technological advances from the 1850s, such as the ability to can fruits and other things to eat so that they would have a longer shelf life. A perfect example is condensed milk, produced by Gail Borden, the man who established the company that we still have.
The Borden’s food label began with Gail Borden during the Civil War. His production of condensed milk in 1862, for example, was about 17,000 quarts a month. One year later, he was producing 17,000 quarts a day, and that milk was going to the United States army. It’s that kind of impact that the war had in some sectors of the northern economy.
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Expansion of Transportation
Transportation also expanded during the war in the United States. Railroad mileage was extended; rolling stock was improved. The railroads got better in the North at the same time as the transportation structure in the South was falling apart.
The largest railroad in the world at the end of the war in 1865 was the United States Military Railroad; this was a railroad put together across much of the South by United States’ military engineers who took over the Confederate roads and put them to United States’ use. More than 2,000 miles of track were operated by the United States Military Railroad at the end of the war.
Traffic on canals in the North also rose. It was a time of great activity and expansion, in many ways. Mechanism in factories speeded production in the North, in shoes and firearms, for example. The sewing machine was put to use on a wide scale for the first time, because there was an enormous need for standardized clothing and shoes to serve the needs of all of these men in the army.
The war marked a radical shift in national wealth toward the North. While the South lay largely in ruins in 1865, northern production was healthy and growing, and that disparity would continue for many decades.
Enactment of Legislative Program
The war allowed the Republicans to enact their legislative program that they had had in mind since the 1850s. With southern members of Congress gone, they were able to pass all of the bills that they had long wanted to pass. This legislation gave tremendous impetus to free labor and to capitalist growth.
The Republicans looked toward a national banking system as they wanted to get away from the chaos of state banks. They needed a national currency which would enhance business transactions—a stable, national currency to promote economic growth. This act that they passed in 1863, the National Bank Act, provided for a chartered national bank that could issue these kinds of national bank notes.
Benefits for All
The Homestead Act of 1862 offered 160 acres of free, government land to anyone who had lived on the land for five years. Eventually 80 million acres were given out under this act.
The Land-Grant College Act of 1862—called the Morrill Act—gave each state an amount of federal land to be used to establish new agricultural and mechanical colleges. This was the single most important piece of education legislation in United States history.
Many of the great universities of the United States were established under this act—schools such as Penn State, Michigan State, Texas A&M, and Cornell.
The Pacific Railroad Act of 1862 provided for building the transcontinental railroad that would begin in Omaha, Nebraska, and go to Sacramento. Government grants were provided for each mile of the road. For each mile built, 6,400 acres of land and $16,000 in federal loans were made available; those numbers went up, subsequently. The Union Pacific, the Central Pacific, and later the Northern Pacific railroads came out of this legislation, and more than 120 million acres of government land was allocated for this purpose.
Hopes for Future
All of these things, from the Republican point of view, pushed forward an agenda that envisioned a powerful United States economy that would step into a major position on the world’s stage as the 19th century went along. The ability of the North to fight an immense war, and pursue economic development at the same time, engendered a feeling of great optimism throughout the northern states.
When the war ended, the sky seemed to be the limit to many northerners, who looked toward the later decades of the 19th century with an expectation that United States fortunes would prosper. That attitude provided a stark contrast to the attitude in a South wracked by four years of wearying combat, utterly defeated on the battlefield, and facing enormous economic problems in the postwar era.
Common Questions about the American Civil War and the Northern Economy
The largest railroad in the world at the end of the war in 1865 was the United States Military Railroad.
The Homestead Act of 1862 offered 160 acres of free, government land to anyone who had lived on the land for five years.
The Land-Grant College Act of 1862—called the Morrill Act—gave each state an amount of federal land to be used to establish new agricultural and mechanical colleges.