The economic impact of the American Civil War: An empirical examination

The Civil War is the defining event in American History. It is also an event with great economic significance. Economic historians have learned a great deal about the economy in the 19th century in both the North and South. This dissertation shows that additional work can be done by economists to explain historical phenomena.; The first chapter discusses the impact of War on economies, focusing specifically on the Civil War. Both the destruction of the War and the end of slavery had an impact on the Southern economy. The functioning of the Southern slave based economy is examined, including the short and long run impact of emancipation. In addition, the destruction of physical and human capital by the Civil War is explored. The Northern economy is also examined, along with the hypothesis that Northern states grew faster after the Civil War than before.; The second chapter is an empirical deconstruction of the fall in state incomes between 1860 and 1870. Some economists suggest that the destruction of physical capital that occurred during the Civil War was responsible for postwar Southern poverty. Others suggest that the fall in income was brought about by emancipation and the end of the prewar slave based economy. This paper attempts to examine these two Civil War related shocks and to determine their relative magnitude. The results presented here indicate both destruction and slavery are significant. However, it seems that the damage done to Southern state incomes by the end of slavery is much larger than that done by capital destruction for all states except Virginia.; The third chapter deals with convergence during the reconstruction period. Neoclassical economic models and empirical work suggest that states or regions with similar institutional structures should have incomes that converge. After the Civil War, both Northern and Southern incomes had fallen, but Southern incomes fell much further. Over the next 30 years, intra-regional convergence occurred in both the North and the South, but inter-regional convergence did not. This lack of inter-regional convergence can be explained by the South's institutional structure in the immediate postwar era.