Reconstruction, Expansion, and the Triumph of Industrial Capitalism 17industry was emerging as the dominant economic activity–in textiles, iron,
steel, oil, and especially railroads. By the beginning of the 20th Century,
Americans would be living in a nation that would have been unimaginable in
1800, with factories, national and then international transport systems and
markets, and huge new forms of business organization–as well as incredible
wealth and larger gaps in socio-economic class than ever before. In the after-
math of the Civil War, the United States was on its way to becoming not just
a world power, but the world power!
The South as Economic Colony
While we almost always associate colonization as an external process–one
nation taking control of a less developed place abroad–the northern indus-
trial elite practiced “internal” colonization after the Civil War. Northern
business and political leaders made the South subordinate to their own region
and their power, and used its resources and labor to build up their industrial
base. As the power elite was able to stop radical reconstruction and place the
old ruling class back in charge in the South, northerners also created a climate
in which they could invest and build businesses in the areas of the old
Confederacy. Moreover, many “new” southern leaders, wanting to escape
their agrarian past and enter the “modern” world, hoped to link their future
to northern Capitalism, to develop a “New South” with cities, immigration,
finance, business, and industry.
Development in the South was not like that in the North; it would be
shaped by northern domination, and the legacy of shortcomings of the Old
South [agriculture and slavery]. Northern businesses controlled the southern
economy and banking after the war. Southern capital had been wiped out
with the devastation of wartime, so most southern banks had failed outright
and Confederate money printed for the war was worthless. Also, as it had for
close to a century already, the government and ruling class, those who con-
trolled U.S. capital, favored industry over agriculture. As they knew, the great
powers [Britain, France, Germany, for example] had industrialized. Agriculture
was the past, factories were the future. So northern Capitalists established
low-wage operations to extract raw materials or control processed products
from South such as lumber, coal, turpentine, or seafood, and especially cotton
for their textile mills.