Economic Differences Between the Northern & Southern Colonies

In searching for early causes for the American Civil War, many historians point to the dramatic differences between the Northern and Southern colonies in the late 17th and 18th centuries. During this period, each region developed a distinctive identity that would dramatically affect the manner with which it participated in the American economy. For the South, this meant agricultural production, for the North, this meant a rapid collection of resources for the purpose of industrial manufacturing.

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Though the South is historically known for its cotton production, primarily it produced tobacco as its main crop during the colonial years. The rich soil and mild winters allowed this crop to be grown throughout the entire year, quickly making the Southern colonies the principal supplier of tobacco in the English empire. Given the low cost and low risk of establishing a farm in the South, this region quickly became dominated by both small farms and enormous plantations.

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Although the Northern colonies also had many farms, these were relatively few in number and never competed with the Southern markets such as tobacco. Instead, the North focused on trade and manufacturing, building ships to transport Southern harvests, and advancing industries such as light machinery and advanced production of textiles. Because starting businesses like these was more risky than farming in the South, the Northern economy lagged behind until enough capital could be built for more investments.

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In the agrarian South, larger workforces brought the potency for larger harvests and greater profits. As a result, plantation owners sought the cheapest form of labor possible and usually settled on quantities of Negro slaves. A booming British slave trade made it easy for Southern plantation owners to acquire Negro slaves, making this form of labor both cheap and profitable. Already-large plantations expanded, and several cities sprung up merely as trading centers in the midst of otherwise rural regions.

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Despite their massive Atlantic slave trade, Britain itself utilized very few slaves, preferring indentured servants when the need called instead. In this way, men and women were given a large favor, such as a loan or passage to America, in return for several years of minimal wages. Mostly due to its similarities with Britain, New England businessmen used indentured servants, rather than slaves, when they needed cheap labor. Interestingly, the indentured servants quickly earned their freedom, and began small businesses of their own, helping to shape the complexion of the Northern colonies as an ambitious and industrial economy.