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

When did the divergence begin?

mid 17th 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 economyDependent on agricultural staples for export

to northern Europe40% 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.

OutcomesWeak institutional

development and slow growth of:Transportation NetworksUrban systemsEducational organizationReligious organization

The Northern Economic Path

“Lacked economic definition”Did not have exports of high

importance for EnglandNO 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

New EnglandOvercame limitations in natural

resources

Combined subsistence activities with local, regional, and international trade Led to strong export earnings and good flow

of importsSteady economic growthHigher living standards for a large portion

of the population

Middle Colonies

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 YorkExcellent harborsGreat trading postsGenerated 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