Why after the devastation of the Civil War, was it so important for America to address the economic situation of the nation?

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rrteacher | College Teacher | (Level 2) Educator Emeritus

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The most important outcome of the Civil War from an economic standpoint was the massive expansion of the federal government in economic spheres. This was a direct consequence of the war itself, and of the devastation and expansion that are referenced in the question. In order to assure economic growth and revitalization, government took an unprecedented role in business.

The economic face of the United States after the Civil War was complex. On the one hand, the former Confederacy was shattered economically. Its infrastructure, which lagged far behind that of the North before the world, was completely destroyed, many of its largest cities lay in ruins, and the slave labor force, which accounted for the majority of Southern capital, was free. The Reconstruction of the South would involve government in economic matters through the Freedman's Bureau and government contracts to an extent unimaginable before the war. On the other hand, the reestablishment of an agrarian economy was largely undertaken through sharecropping, which sometimes involved the Freedman's Bureau (in negotiating contracts on behalf of former slaves) but often did not. And the influx of northern capital into the South was largely not driven by the government.

On the other hand, the Northern economy expanded through the war, as industrialization continued apace. The war effort stimulated much of this development through government contracts, but the pattern of industrial expansion and growth did not stop immediately with the war. The end of the war did, however, introduce new challenges. Considerable inflation took its toll on the Northern economy, raising issues related to currency reform that would persist for more than three decades. Additionally, the end of the war, as well as runaway gold speculation, contributed to the economic climate that brought a recession beginning in 1869. The war also ushered in a period of major westward expansion, which involved immense government investment in the form of subsidies. Government involvement in providing cheap land, subsidizing railroads, forcing aside Native Americans, and granting land rich in natural resources was one of the most important trends in a period inaccurately remembered as the height of laissez-faire capitalism. Government indeed did not regulate big business, but investors and entrepreneurs in industry, railroads, and other projects were hardly left to their own devices.

Source: Rebecca Edwards, New Spirits: Americans in the "Gilded Age," 1865-1905 (New York: Oxford University Press, 2011)13-99.


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