Why are the North and South so different in their economic practices?

When did the divergence begin?  mid 17 th century- Southern economic development  Establishment of racial slavery  GREAT STAPLE CROP in tobacco and other crops that were important to England and Europe.  Rise of a growing plantation sector

Why are the North and South so different?  Differences:  Climate  Profit possibilities  Land/ Natural Resources  PATH DEPENDENCE: The North and South remained distinctly different because once the first decision was made, all future decisions are limited by those previously made.

How did this influence the colonists?  Behavior changed due to the way the colony or region responded to the economic market.  Example: South  Climate: Warm- Natural Resources: good for agriculture.  The South had little experimentation to do before they realized that the land was an agricultural gold mine.  South became organized economically, socially, politically and culturally around the plantation.

Southern Colonies

Economic Path of the South  Tobacco and Rice  quickly found to be staple, money making crops  Led to the dependency on slavery  Replaced free and indentured labor because they were seen as being too expensive  Plantations went up around the South beginning in the 1620s and dominated the South by the 1770s

Who owned the plantations?  A small group of white planters and merchants  Shaped the region’s economic development  Wealthy, slave-based economy  Dependent on agricultural staples for export to northern Europe  40% of the Southern population were slaves

Distribution of Wealth and Southern “strategy”  Southern colonies had extreme inequalities in wealth  Strategy: Benefit a few by exporting staple crops produced by slaves.  Owners become wealthy because they export (sell) MUCH more than their labor expenses.

Outcomes  Weak institutional development and slow growth of:  Transportation Networks  Urban systems  Educational organization  Religious organization

The Northern Economic Path  “Lacked economic definition”  Did not have exports of high importance for England  NO GREAT STAPLE MARKET few agricultural slaves ECONOMIC IMPROVISATION

Northern Strategy  Economic Improvisation  A strategy based on flexibility and creativity  Flexible business organization  Quick decision making and constant change  Commercial and shipping services  Local AND regional trade

Outcome  Slow growth as compared to the South  Eventually became very wealthy  Made way for future industrialization  BUT:  Some northerners were also trying to make money quickly by developing land, stealing, or trading slaves.

New England

 Overcame limitations in natural resources  Combined subsistence activities with local, regional, and international trade  Led to strong export earnings and good flow of imports  Steady economic growth  Higher living standards for a large portion of the population

Middle Colonies

 Most ethnically diverse region  NO GREAT STAPLE MARKET  Agriculture, manufacturing, and trade all worked and played off of each other  Fertile valleys and great harbors  Thousands of agricultural, manufacturing and commercial activities were pursued

Outcome  Family, wage, and indentured labor were used  Slave labor was used as well, but not to the extent of the South  High domestic demand for wheat  Good opportunities for all economic activities, including craft and artisanal jobs.  Wealth was distributed more evenly than in the other 2 regions

Philadelphia and New York  Excellent harbors  Great trading posts  Generated more jobs for the Middle Colonies  Trading of goods AND ideas/information  Increased productivity  Increased wealth

North South  Couldn’t produce valuable plantation staples  Limited value/use of slave labor  Economic balance and diversity  Constant innovation/change  Creative business practices  Early organization around plantation staples  High use of slave labor  No need for creativity due to the large profits that came from plantation agriculture

Led to… North South  Local and regional trade  Relatively equal distribution of wealth  More established social, educational, political and cultural institutions  These were made available to a wide variety of people  Focused on exports  Very unequal distribution of wealth  Economic and social inequalities  Inflexible strategies  Unskilled slave labor  Low-tech  Unable to develop with the North