The Emancipation Proclamation and US Economics Report

October 14, 2020 by Essay Writer


The origin of the Emancipation Proclamation was based on the progressive movement in the North. It began as a social movement within various local areas, which slowly progressed towards the national level. It attempted to address issues such as poverty and the treatment of slaves under the assumption that most of society’s problems could actually be “fixed” by initiating social and political reforms.


For those in the South, their rural agricultural culture was entwined significantly with the concept of slave labor. This means that the use of slaves, their presence in society as well as the general attitude of people towards them was an indelible aspect of who they were as compared to the North. It is due to this that when the North proposed freedom of slaves, the South violently reacted since it would have denied them an aspect of their culture.


The involvement of the South in the slave trade came as a result of three distinct factors: the expansion of the U.S. into new territories, the need for manpower in order to operate newly established farms, and the economics of free labor that came with owning a slave. Basically, the slave trade was merely the result of economics at work wherein the demand for labor was supplied with slaves captured from Africa. Behind the continued use of the slave trade in the South was the overwhelming demand of Europe for cheap sugar exports wherein slave labor was the means by which the South was able to meet the demand for its products.

Seeing males, females, and children brought from the ships chained and shackled to each other and sold on an open block was often viewed negatively by various colonial residents as such slave ports needed to be located in areas where the processes behind slavery were not immediately seen. This was one of the reasons why the Civil War started in the first place since there was a difference of opinion regarding the morality of treating human beings like cattle.

The Economics Behind the Use of Slaves

The economics of the slave trade focused around the perceived cost of production without slaves and the actual cost of production with slaves.

The Importance of Slave Labor to the South

The various plantations in the South primarily relied on slave labor as a form of manpower in order to produce various agricultural products such as cotton, which was then subsequently shipped off to other countries around the world.

As the South expanded, so did the number of its farms and communities, which produced primarily agricultural goods to be shipped to Europe and other regions. The inherent problem with this scenario lies with the fact that agricultural operations require extensive amounts of manpower in order to properly grow crops, which, unfortunately, the various colonies lacked.

The actual cost of a product with slaves is exponentially lower since slaves are not paid wages, and the cost required for keeping them sheltered and fed is much lower as compared to hiring the same amount of people to do the same type of work.

Profit and Slave Labor

In terms of profitability, slave labor resulted in considerable profits for various sectors in the Fledgling American economy, which contributed immensely towards its growth.

Slave owners often reached profit margins exceeding 20 to 50% on most trips due to the amounts made from the sale of goods traded for slaves (Austin 61). However, despite the inherent benefits associated with the practice, it was the way in which the slaves were treated and the various stories of torture and abuse coming from escaped slaves from the South that caused a cultural and political divide that created the initial division between the North and the South.

The Origin of the Emancipation Proclamation and the start of the Civil War

Since slaves were not paid for their services, the South able to sell products at a lower cost. The lack of slave labor when the emancipation proclamation was put into effect translated into rising costs for agricultural products, which severely affected the South.

One of the main differences between the North and the South involved the trade of products such as cotton, sugar, molasses, rum, tobacco, basically any manner of agricultural product. These products from the South (created through the slave trade) were then subsequently shipped back to various European countries. The reason why such products are grown outside of Europe instead of within Europe itself is based on the fact that it is simply cheaper and easier to grow such crops in the U.S. rather than in Europe. This is based on the land being much more fertile, having a more constant temperature, and the fact that slaves can be easily brought in to grow crops.

Understanding the Differences in Economic Development

The two regions diverged when it came to the concept of manpower and its place in the grand scheme of production. One focused almost primarily on agricultural production while the other developed its industrial capacity.

Dependence on Slaves

Plantations that did not use slaves in the South could not compete with the prices of their counterparts that did. As a result of basic economics, plantations simply chose to utilize slave labor because of their inherent cost-saving measures. The dependence of the region on slave labor was due to its lack of focus on mechanized production as compared to the North and, as such, had to entirely rely on slaves as their primary method of production

Aside from utilizing slaves as a workforce, the South also actively sold slaves to other places around the world where slavery was still considered legal. Thus, with its plethora of valuable slaves, large plantations, and arable land, the wealth of the South was inextricably linked to the practice of slavery. Based on value alone, the sheer number of slaves in the South actually eclipsed the value of all the railroad’s banks and businesses within the North combined due to slaves effectively being viewed as commodities instead of people.

Industrial Nature of the North

The industrial North focused more on processed goods and products, which enabled them to be more independent of a trade centered on agricultural products.

Due to greater levels of efficiency, the North actually accounted for more than half of the country’s corn products, 4/5ths of its wheat, and 7/8ths of its oat production. This shows that despite the level of importance placed on slave labor, mechanized production methods were superior. Just as modern-day processing creates industrial products that are worth more than agricultural goods, the same aspect was also present at the time wherein products from the North were more expensive and sought after as compared to products from the South.

Economic Impact of the Emancipation Proclamation

Economic Impact of the Emancipation Proclamation on the North

The economic impact of the emancipation proclamation on the North was actually more positive since slavery was not widely utilized in the region.

With the devastation of the economy in the South, this enabled farms and industries in the North to “pick up the slack” so to speak when it came to international trade. Exports of cotton and processed materials boomed in the North, resulting in a considerable expansion of the region’s economy. It should also be noted that through the emancipation proclamation, the U.S. was effectively cast in a new and more positive light by the various European countries that had similarly abolished slavery resulting in the creation of more trade agreements. This yielded even greater wealth for the North, which enabled it to recover quite quickly from the ill effects it had suffered during the Civil War.

It is also important to note that while the North had a smaller agricultural sector as compared to the South, it actually outpaced the production of the latter by 17 times when it came to cotton and woolen textiles production. While the increase in labor cost was understandable after the Civil War was over, given the change in production methods (i.e., no slaves), what must be understood is that the South did not account for the entirety of the nation’s production of agricultural products and, as such, could not unilaterally raise the price of the products to such an extent that it would make up for the increased cost of production. The end result was that the South had a great deal of difficulty recovering economically from the end of the war whereas the North’s industrial and agricultural industries were barely affected

Economic Impact of the Emancipation Proclamation on the South

The economic impact of the emancipation proclamation on the southern states after the war was the subsequent increase in the cost of labor associated with growing essential agricultural products and exported goods.

Slavery, in essence, acted as a form of subsidy for southern plantation owners due to the lower cost of labor. With slaves effectively-being freed from the control of the plantation owners, this created a considerable lack of manpower for the South, which prevented its economic recovery from progressing. The sale of agricultural goods in the South that came as a result of free labor in the region through the purchase of slaves actually made the price of basic commodities far cheaper than what they should have been. This, of course, directly benefited the consumers in the South and contributed to the expansion of their consumerist society. However, once the Civil War ended, the South found itself in a situation where there was subsequent rapid inflation of prices, which severely curtailed its capacity to recover economically.

Economic Correlation between Slavery and the Civil War

One of the primary justifications the South had in continuing the Civil War was connected to the high price of cotton and the value of slaves in the global market at the time

The distinct lack of mechanized industrial processes in the region resulted in agricultural operations requiring extensive amounts of manpower (i.e., slave labor) in order to properly grow crops. Thus, the Emancipation Proclamation was, in effect, interpreted by people in the South as an affront to their wealth and businesses due to their dependence on slave labor practices. Once the Civil War was over, the economic dependence that the South had on the use of slaves manifested itself in the form of a declining economy. The South simply did not have sufficient alternative measures in place to deal with the possibility that slave labor would no longer be available to them.


One of the main reasons behind the different economic effects of the Emancipation Proclamation between the North and the South was the level of economic dependence the latter had on the slave trade.

  1. The South relied heavily on slaves as a means of cheap labor, while the North utilized advanced farming methods in order to grow crops because.
  2. The North focused on the use of mechanized industrial processes; this enabled the North to far outpace the South when it came to production due to greater levels of efficiency.

The economic differences between the regions resulted in more people being interested in migrating to the North, and, as a result, this further impacted the capacity of the South to recover economically. It was due to this that when the Emancipation Proclamation was announced along with their defeat during the Civil War, this, in effect, wiped out large portions of the South’s wealth.

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