Why did the South lag behind the North in manufacturing during the Civil War?
Manufacturing had always taken a back seat in the South. The northern colonies and later states did not have the climate and soil for vast commercial farming, and so had always been a society of small farms and towns with more manufactories than the South. The North needed grain from the Mid-Atlantic region, which needed the business of the North for it's grain production, but the South was self-sustaining in food production. The big business of the South was tobacco farming until the invention of the cotton gin, and then cotton became an economically viable mass product.
The real problem for the South was the manpower problem of mass cash crop farming in the 19th century, in other words, slavery. But since slaves were not machines they had to be fed, clothed, housed and otherwise taken care of. They were expensive to buy and expensive to maintain, and as human beings could not be simply treated as farm machinery. Plus large Southern farmers and plantation owners were always in debt to banks in the North for funds for the next year's farming. Capital was simply not available for investment in large manufacturing concerns.
Complicating this was the fact that Southerners preferred to buy manufactured goods from Europe, whose quality was higher than American made articles, and whose cost was lower. Unfortunately, the import tariffs on such goods were so high that the cost became much higher than Northern goods, and so Southerners were essentially forced by protectionist legislation to support the economy of the North. This funded the increasing manufacturing capability of the North, as did the monies flowing into Northern banks from the South. This, plus the fact that eighty percent of America's income derived from export duties on Southern agricultural products, crippled the South's manufacturing ability and was the real cause of the Civil War.
The South lagged behind the North in manufacturing long before the Civil War began. In fact, many historians ascribe the differences in the economies of the two sections to be one of the major causes of the war. The South had sunk more and more money into cash crops such as cotton, and the slaves required to produce it over the years, while Northern investors had made factories a growing phenomenon, which was drawing increasing numbers of people from the farms to the new jobs in the cities. Although the Confederate government offered incentives to potential weapons manufacturers, the South still lagged way behind in number of weapons produced for the bloody conflict. Manufacturing, or lack thereof also occasioned fewer miles of railroad track, fewer cannons, fewer cannonballs, and less food and other supplies for the troops, including uniforms and shoes. Those things had to be purchased from Britain, an iffy proposition at best, as Abraham Lincoln had placed a blockade on Southern ports almost immediately after the war began; of course the South couldn't do much about that either because no manufacturing effectively equals no navy.