The Economics of the American Civil War

The Civil War has been something of an enigma for scholars studying American history. During the first half of the twentieth century, historians viewed the war as a major turning point in American economic history. Charles Beard labeled it “Second American Revolution,” claiming that “at bottom the so-called Civil War – was a social war, ending in the unquestioned establishment of a new power in the government, making vast changes – in the course of industrial development, and in the constitution inherited from the Fathers” (Beard and Beard 1927: 53). By the time of the Second World War, Louis Hacker could sum up Beard’s position by simply stating that the war’s “striking achievement was the triumph of industrial capitalism” (Hacker 1940: 373). The “Beard-Hacker Thesis” had become the most widely accepted interpretation of the economic impact of the Civil War. Harold Faulkner devoted two chapters to a discussion of the causes and consequences of the war in his 1943 textbook American Economic History (which was then in its fifth edition), claiming that “its effects upon our industrial, financial, and commercial history were profound” (1943: 340).

In the years after World War II, a new group of economic historians — many of them trained in economics departments — focused their energies on the explanation of economic growth and development in the United States. As they looked for the keys to American growth in the nineteenth century, these economic historians questioned whether the Civil War — with its enormous destruction and disruption of society — could have been a stimulus to industrialization. In his 1955 textbook on American economic history, Ross Robertson mirrored a new view of the Civil War and economic growth when he argued that “persistent, fundamental forces were at work to forge the economic system and not even the catastrophe of internecine strife could greatly affect the outcome” (1955: 249). “Except for those with a particular interest in the economics of war,” claimed Robertson, “the four year period of conflict [1861-65] has had little attraction for economic historians” (1955: 247). Over the next two decades, this became the dominant view of the Civil War’s role industrialization of the United States.

Historical research has a way of returning to the same problems over and over. The efforts to explain regional patterns of economic growth and the timing of the United States’ “take-off” into industrialization, together with extensive research into the “economics” of the slave system of the South and the impact of emancipation, brought economic historians back to questions dealing with the Civil War. By the 1990s a new generation of economic history textbooks once again examined the “economics” of the Civil War (Atack and Passell 1994; Hughes and Cain 1998; Walton and Rockoff 1998). This reconsideration of the Civil War by economic historians can be loosely grouped into four broad issues: the “economic” causes of the war; the “costs” of the war; the problem of financing the War; and a re-examination of the Hacker-Beard thesis that the War was a turning point in American economic history.

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