Economic Factors Leading to the War of Northern Aggression

                                                                                                                                                 by James W. Jackson

A steamboat bound for New Orleans.

One of the quarrels between the North and the South concerned taxes (tariffs) paid on goods brought into this country from foreign countries. Southerners thought those tariffs unfair and were aimed specifically at them, as the South imported a wider variety of goods than Northern people. Moreover, Southern exporters sometimes had to pay higher amounts for shipping their goods overseas and to pay unequal tariffs imposed by foreign countries on some of their goods. Also, Southern banks paid higher interest rates on loans made with banks in the North. The inequities grew worse after several "panics," including one in 1857 that affected more Northern banks than Southern. Southern financiers found themselves burdened with high payments to save Northern banks that had suffered financial losses through poor investments. These small annoyances were insufficient to cause a major breach between the two parties, with the exception of the tariffs.

As there was no federal income or other direct tax, the federal government depended on indirect taxes as its primary sources of revenue. Most 'duties, imposts, and excises' were collected at ports throughout the United States; ports monitored by Federal garrisons. For the thirty years from 1831 to 1860 the tariffs amounted to about eighty-four percent of federal revenues, but during the 1850s tariffs amounted to ninety percent of federal revenue. As the ports in the South had the most traffic, they paid seventy-five percent of all tariffs in 1859. For example:


"New Orleans was the largest city in the South and was the center of the cotton & sugar export. Trade products of the Mississippi River Valley were shipped for sale to New Orleans and almost 2,000 sea-going vessels and 3,500 river steamers with tonnage of 1,200,000 tons entered the port of New Orleans during the year before the war."

             (Confederate Finance and Supply, W. Power Clancy, Cincinnati Civil War Round Table.)

The tax imbalance which benefitted the North at the expense of the South grew even more lopsided under the Buchanan administration. The Morrill Tariff was passed by the U.S. Congress and signed into law by President Buchanan on March, 1861, just two days before Buchanan left office and Abraham Lincoln was inaugurated. The new law made some significant changes in how duties were assessed on goods entering the country, and it also raised rates. This new tariff had been written and sponsored by Justin Smith Morrill, a Congressman from Vermont. Southern states were opposed to the new tariff, because the law clearly favored industries based in the northeast and further penalize the southern states, heavy importers and exporters of European goods. Moreover, the Morrill Tariff was unpopular in England, which imported cotton from the South, and in turn exported goods to the South, and surprisingly in New York City, the largest port in the North. In 1860, ad valorem taxes — tariffs on imported goods collected at ports — provided $56 million of the $64.6 million of federal revenue, much of which came from New York City. The cities and states with large ports would certainly prefer to keep the tariff revenue for themselves, rather than have the money go to Washington. Secession would allow the states and New York City to do just that. New York City's Mayor Fernando Wood announced that if the country was going to break apart anyway, he would like his city to secede not only from "this foreign power" of the State of New York, but also from the "odious and oppressive connection" with the Federal government.

In 1861, after intense debates and statewide votes, seven states passed secession ordinances, while secession efforts failed in the other eight slave states. Following declarations of secession, South Carolina demanded that the U.S. Army abandon its facilities in Charleston Harbor. South Carolina wanted control of the harbor and of the revenue it produced. U.S. forces occupied Fort Sumter, a fortress controlling the entrance of Charleston Harbor. An earlier attempt by U.S. President Buchanan to reinforce and resupply Ft. Sumter using an unarmed merchant ship, failed when she was turned away by shore batteries on January 9, 1861. South Carolina authorities then seized all Federal property in the Charleston area, except for occupied Fort Sumter.

On January 28, 1861 the Senators from the seceding states made their final speeches in Senate chamber before leaving Washington. Senator Alfred Iverson of Georgia spoke these memorable words:

"You may acquiesce in the revolution, and acknowledge the independence of the new confederacy, or you may make war on the seceding States, and attempt to force them back into a Union with you. If you acknowledge our independence, and treat us as one of the nations of the earth, you can have friendly intercourse with us; you can have an equitable division of the public property and of the existing public debt of the United States. If you make war upon us, we will seize and hold all the public property within our borders or within our reach."

Undoubtedly, Senator Iverson, who retired from the chamber to cat-calls,  was referring to the lucrative ports; the value of exports through the Port of Savannah alone exceed $20 million in 1860.

The resupply of Fort Sumter became the first crisis of the administration of President Lincoln. He notified the Governor of South Carolina, that he was sending in supply ships, which resulted in an ultimatum from the newly formed Confederate government: evacuate Fort Sumter immediately. Lincoln set a trap in the Ft. Sumter standoff by sending the supply ship into harms way, provoking the South to fire the first shot. They did. That first shot fired by the South galvanized Northern support for the Union, but it also caused other southern states to join the Confederacy. On April 13, the fort was surrendered and evacuated. The die was cast. The tidal wave of support for the Union overwhelmed Southern sentiment in the North. New York City, alongside the rest of the North, proclaimed its loyalty to the Government in Washington.

 Five days after the evacuation of Ft Sumter, Lincoln proclaimed a blockade of the seven seceding States (South Carolina, Georgia, Alabama, Florida, Louisiana, Mississippi, and Texas). The proclamation stated that to protect the "combination of persons, public peace and the lives and property of quiet and orderly citizens" Lincoln ordered a blockade of the ports of these states in insurrection. The choice by Lincoln, a lawyer, to use the word blockade was a puzzle to Europeans...a nation blockades it own ports? Blockade is an agency of war only between independent nations, a nation closes it insurrectionary ports and blockades the ports of an enemy nation. Lincoln had raised the ante, the Southern states were not in insurrection but were identified by Washington as belligerent.

 Eight days later, the President issued another decree extending the blockade to include North Carolina and Virginia, making the blockade complete from Cape Henry to the Mexican border. Virginia and North Carolina were cast as belligerent, even though they had not seceded from the Union. They soon did.

 To the question as to why Lincoln simply did not 'let the erring sisters go and depart in peace', the prospect of losing three quarters of the Federal revenue stream obviously played a major role in his decision. Certainly, other factors contributed to the war, but as history is written by the winners, it is totally unsurprising that Northern writers latched on to the high moral issue of ending slavery, rather than more complicated issues, which might favor the Southern cause. For example, in September of 1862, President Lincoln announced the Emancipation Proclamation, to take effect January 1, 1863, and free slaves in those states or regions still in rebellion against the Union. If any southern state returned to the Union between September and January, whites in that state would not lose ownership of their slaves.

Clearly, the federal government was more interested in regaining power over the run-away states than in freeing slaves. The Northern banner of "Preserve the Union," might have more accurately read "Preserve the Taxes".

In conclusion, as the crisis between the North and the South reached the critical stage at Ft Sumter in April, Lincoln could have avoided war by abandoning the fort to the South Carolina government and allowing the seven succeeding states to keep their ports. True, the federal government would have had to find sources of revenue, other than tariffs, to avoid bankruptcy (something the war forced them to do anyway), but certainly a less costly option than the devastating war that followed. Moreover, historians and others who cling to conventional views of the war's causes seem never able to untangle themselves from their contradictions.

The Fall of the Ports The South's economy was dependent on trade with Europe, especially England. The Federal strategy to close the ports in the South was instrumental in defeating the Confederate cause. By 1865, the supply line through Wilmington was the last remaining supply route open to Robert E. Lee's Army of Northern Virginia. When Ft. Fisher fell January 15, 1865, its defeat helped seal the fate of the Confederacy.



Below, the ports are listed as they were attacked and taken by Federal forces. The one exception was Galveston, Texas, which was in Southern hands at the conclusion of the war.

  • Ship Island, Mississippi: the only deep-water harbor between Mobile Bay and the Mississippi River was occupied by Federals in September 1861.                                                                                                                                                           
  • Port Royal Sound: October 29, 1861 - The military and commercial value of Port Royal Sound, located halfway between Charleston and Savannah, South Carolina, has been recognized and fought over for centuries by the English, Spanish, and French. It was the Confederacy’s finest natural port.
  • Fernandina, Jacksonville, Florida: 1862- Confederates evacuate Amelia and Cumberland islands abandoning defenses at Fernandina.
  • Fort Pulaski, Savannah: Georgia's access to the Atlantic Ocean was blocked by Federal's capturing Fort Pulaski downstream from Savannah on the Savannah River.
  •  Roanoke Island: A successful amphibious operation of the Federals fought on February 7–8, 1862, in the North Carolina Sounds, a short distance south of the Virginia border.
  •  Fort Macon: a masonry fort that commanded the channel to Beaufort, 35 miles southeast of New Bern, N.C. Pensacola: The Union army obtained control of Pensacola’s harbor in May 1862--not as a consequence of the battle, but through the Confederates’ decision to abandon the harbor and remove more than 10,000 of their soldiers from the region beginning in February.
  •  Galveston: The First Battle of Galveston was a naval engagement fought on October 4, 1862, during early Union attempts to blockade Galveston Harbor. January 1, 1863, Confederate forces attacked and expelled occupying Federal troops from the city. Although Federal forces did capture the port, as mentioned above, it was back in Southern hands at the end of the war.
  • New Orleans: On July 9, 1863, after hearing of the fall of Vicksburg, the Confederate garrison of Port Hudson surrendered, opening the Mississippi River to Union navigation from its source to New Orleans. Mobile Bay: August, 1864. The three forts around the bay surrendered. Complete control of the lower Mobile Bay thus passed to Federal forces..Mobile was last important port on the Gulf of Mexico east of the Mississippi River remaining in Confederate possession, so its closure was the final step in completing the blockade in that region.
  • Charleston: On February 15, 1865, General Beauregard ordered the evacuation of remaining Confederate forces. On February 18, the mayor surrendered the city and Union troops finally moved into the city, taking control of many sites, such as the United States Arsenal, which the Confederate army had seized at the outbreak of the war. Ft. Fisher kept North Carolina's port of Wilmington open to blockade-runners supplying necessary goods to Confederate armies inland until 1865.


                          For further reading on the Southern ports during the war see:  Cochran, Hamilton. Blockade Runners of the Confederacy. ISBN 0-8173-5169-8