DID THE WAR HELP OR IMPEDE THE ECONOMIC GROWTHOF THE UNITED STATES?

DOES WAR HELP OR HURT AN ECONOMY?When considering the economic effects of

the Civil War or any other war, there is one key question to consider:

HOW WOULD THE ECONOMY HAVE DIFFERED IF THE WAR HADN’T BEEN

FOUGHT?Could the Civil War have prevented the United States economy from pursuing a

superior path of economic growth?

Many individuals believe that the Civil War brought unprecedented economic growth to industry.

Stimulated by increased demand for wartime goods, many industrialists charged ahead to produce the goods and services. Production of iron and steel are examples.

Taking the Civil War as one example, how does war seem to affect a nation’s economy? Does war foster economic growth or stunt it?

New war factories Labor saving machines were

inventedSewing machine

Agriculture production increasedReaper

Railroads expanded

Benefits of the U.S. Civil War End of slavery Protection of the Constitutional

structure of U.S. Increased industrial production of

war-related goods Higher military employment

Costs of the U.S. Civil War Human death and dismemberment Destruction of capital (tools, factories) Loss of livestock Reconstruction Economic decline of the South Uncompensated loss of capital investment in slaves Inflation Production inefficiencies Decreased production of civilian goods and services Loss of rights of states to secede or claim

independence from the Union when in disagreement with the President or the Congress.

600,000 lives would not have been lost. Hundreds of thousands of workers would

have been released into the economy. One in four persons in the North went

into military service. They might otherwise have been employed in the private sector.

Without the war, investment would not have been diverted from civilian into military production.

The Costs of the Civil War(Millions of 1860 Dollars)

South North Total

Direct Costs:

Government Expenditures 1,032 2,302 3,334

Physical Destruction 1,487 1,487

Loss of Human Capital 767 1,064 1,831

Total Direct Costs of the War 3,286 3,366 6,652

Per capita 376 148 212

Indirect Costs: Total Decline in Consumption 6,190 1,149 7,339

Less:

Effect of Emancipation 1,960

Effect of Cotton Prices 1,670

Total Indirect Costs of The War 2,560 1,149 3,709

Per capita 293 51 118

Total Costs of the War 5,846 4,515 10,361

Per capita 670 199 330

Population in 1860 (Million) 8.73 27.71 31.43