ABSTRACT
WHEN the Civil War broke out, America was still predominantly a land of small-scale, local, handicraft industry. The commencement of the war was a shock to confidence; but its continuation soon generated a demand for, and created conditions vastly stimulating to, industrial development. Specie payments were suspended and prices became based on ‘greenbacks’—prices which rose continuously with the amount of issue but also varied with sagging or reviving confidence to the northern cause. Taking the war period as a whole, prices soared; between 1860 and 1865 they rose between 110% and 130%, while money wages rose only between 45% and 60%. Mostly cause, but partly effect, the government’s expenditure rose from $60 million in 1860 to $1,218 million in 1865; allowing for the depreciation of the currency, this was an increase of over eight fold, and it is not surprising to find that by the end of the war government demand accounted for about one fifth of the total sale of American manu. Moreover, the Federal armies by 1865 consisted of almost 1 million men, and just as the necessity to feed them caused an agricultural boom, so the necessity to clothe them caused the woollen industry to double in size, although only commencing its expansion after $1 million worth of cloth had been imported from Europe in 1860. This industry was assisted by the Morrill Tariff of 1861, which embarked America on her career of high protection; by 1864 the average level of duties was 47%. No session of Congress during the Civil War did not raise tariff rates, and scarcely any protectionist claim—and there were many—was left unsatisfied; the plea was often that of the desirability of the government’s supporting its own manufactures, so that if patriotism is the last resort of a scoundrel it was also one of the first resorts of the American business man. Some industries could not be helped. Cotton manufacture suffered severely from raw material shortage, but managed to carry on at about 45% of its usual volume; the workers suffered less than in Britain, because alternative employment in America was easier to find. The petroleum industry, born in 1859, was exporting $16 million worth by 1865. The export of sewing machines rose almost as rapidly, while locomotives were sent to Brazil and steam engines to Mexico. As for the railroads, they especially boomed. Many roads besides the Union Pacific were begun or expanded, and many of these already established—including the Erie and the Illinois Central—paid dividends for the first time. Between 1860 and 1870 the number of industrial establishments was increased by almost 80%, and the number of wage-earners in industrial establishments rose from 1.3 million to 2 million; these are percentage increases unequalled in any other decade of American history. Such prosperity in spite of war was possible because the as yet unused resources of the country were so great, because the average age of the population was so low that the Union army was almost ‘an army of boys’, and because immigration flagged but never stopped. America made for 5 years an ‘enormous and unexampled expenditure’ of men, money and material on the prosecution of war, and yet emerged with wealth visible ‘in new furnaces, mills, factories, tanneries... new railroads and countless oil-wells... new vessels on lakes, rivers and canals... in the extraordinary increase of elegant and costly buildings in country and town. 1
