How did the Civil War affect social and economic life in the North and South?

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The American Civil War and its social impact

With the passage of the 13th Amendment, slavery was abolished, and 4 million slaves gained freedom. They now shared equal status with their previous owners and could determine their destiny. Racial prejudice, however, increased rather than decreased. Extreme right wing organizations, such as the Ku Klux Klan, came to the fore to maintain white supremacist control. Racial segregation replaced slavery in the South, and Jim Crow laws were enacted to enforce such segregation. This, in turn, led to the creation and organization of civil rights groups to fight white racism and oppression. 

The Freedmen's Bureau was established by Congress in 1865 to help former black slaves and poor whites in the South. The organization was, however, shut down in 1872 due to pressure from white Southerners. Many former slaves received educational opportunities, and schools were established for them to advance and better their prospects. Because so many men went off to fight, women had more responsibilities, and they gained greater respect than they previously enjoyed. Their hard work and commitment ensured that they were trusted to perform more tasks. After the war, women could fill positions which had been reserved for men.

The economic effects of the War 

The economic consequences of the American Civil War (1861–1865) are mostly the result of Northern control of the federal government both during the war and for several decades after. The North could not move forward with its national economic policy objectives because of Southern opposition and the strong position the Southern states held in the Senate. Once the Southern states seceded and the legislators resigned their seats in Congress, the lawmakers from the North began enacting their delayed agenda for economic reconstruction. The North’s victory in the war ensured their control of the federal government and the implementation of their economic policies.

Four pieces of legislation were passed during the Civil War that was essential to the economic development after the conflagration. The Morrill Tariff of 1861 raised tariffs, ending more than thirty years of declining rates. Funding for three transcontinental railroads was enacted in the Transcontinental Railroad Act. The Morrill Land Grant Act (1862) established agricultural and mechanical colleges. Each state that remained in the Union was allotted 30,000 acres of land for each member of Congress. The National Bank Act of 1863 created a set of standards for the banking system. Finally, the Homestead Act (1862) provided 160 Acres (a quarter section) in western territories free to anyone who settled on it for five years and declared their intention to become citizens. Each of these policies profoundly shaped the development of the American economy for the rest of the century.

Another Civil War development with significant implications for the nation's economy was the wartime devastation of the South. The war had been mostly fought there, and much of its wealth was destroyed. Confederate bonds and currency were now worthless, depriving the region of a great proportion of its wealth. Emancipation of the slaves also destroyed a large part of the South's capital, as well as creating the need for a new labor system. The war had destroyed virtually all the banks in the South. There was little capital available for financial reconstruction.

The South remained largely agricultural, producing staple crops for northern factories or export. Economic recovery in the South was slow. Cotton production decreased dramatically. Once production increased, however, the price fell. Tobacco, the other major cash crop in the South, followed a similar pattern. The sharecropping system that replaced slavery had few incentives for soil conservation, innovation, or the cultivation of new crops. The region remained poor and grew slowly in population.

The South failed to attract many immigrants after the war because of limited economic opportunities. Its reliance on staple crop agriculture and its slowly growing population did not create demand for expanded infrastructure, the former the factor driving the rapid expansion of the national economy outside the former Confederate states. For at least two generations after the Civil War, the South remained predominantly agricultural and largely outside the industrial expansion of the national economy.