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I've created this thread to discuss the potential industrialisation of an independent CSA, and separated out into a separate thread to avoid derailing the previous discussion here.

For the purposes of this thread, I'm focusing on the potential future of Confederate industrialiation where the CSA wins independence in late 1862 or early 1863 due to unspecified military victories. This does not include foreign intervention. Instead, the series of military victories makes the Union's military position difficult, and Lincoln's administration untenable. The Congressional elections of 1862 return the sort of legislature which won't spend any more blood or treasure try to force the seceding states to return to an allegiance they no longer want to hold [1 point for the reference].

Yes, I know this PoD is endlessly arguable, but the focus of this thread is on broad trends of Confederate industrialisation or lack thereof, not the minutiae or even probability of a CS victory. For myself, I think that a CS military victory is extremely low probability, but I'm running with it for the sake of broader counterfactual analysis.

For now, I'll treat the core CS territory as the eleven seceding states with all of their pre-war territory. In other words, Virginia includes West Virginia, but the CSA's various claims on Maryland, Missouri and Kentucky amount to nothing. They may or may not win *Oklahoma, which will have some implications for later industrialisation once petroleum becomes important, but the effects of those can be considered downthread. They definitely don't have part of Arizona/New Mexico.

The effects of other borders can be discussed as subthreads, too. For instance, if anyone wants to discuss the effects of West Virginia and/or East Tennessee in the Union, Missouri in or out, Kentucky in or out, etc, that can all be discussed as subpoints. (Not that I think that either Missouri or Kentucky are likely to end up in the CSA.)

Due to their military success, the CSA extracts a small amount of war indemnity from the Union. This isn't a huge amount; nowhere near enough to pay even their much lower war debt of 1862 (as opposed to what it would be by 1865 in OTL). Still, together with the restoration of international trade and exports of cotton, tobacco etc, the CSA's economy stabilises a bit. Things are far from perfect, of course, but the worst of the wartime inflation is over as confidence starts to get restored, and in any case it never got anywhere as bad as it did in OTL after Gettysburg and Vicksburg.

Paying off the war debt will take a long time, but then even in OTL the US government didn't really pay off its Civil War debt until around the turn of the century [source]. The Southern banking system, such as it was, is not completely destroyed by the war, though the CSA still has many of the same liquidity problems it experienced before the war.

Some slaves have been freed, particularly in parts of Tennessee, but most of those fled north with the retreating Union armies rather than risk re-enslavement. A few holdouts remain in parts of Tennessee, and there are strong Unionist sympathies in parts of eastern Tennessee too, but the only notable guerrilla campaign will be in the secessionist counties of West Virginia, which will last for a couple of years but eventually peter out.

Anyway, that's the background for the thread.

Now, what does this mean for industrialisation?

To start with, it's important to note that the rich slaveholders were not, as a whole, opposed to industrialisation. (I'll refer to all of the big slaveholders as planters for convenience, since the term was murky even in OTL.) Indeed, when infrastructure and industrialisation were developed in the pre-war Confederate states, it would usually be planters who were at the forefront of it; the biggest opposition to internal improvements and industrialisation usually came from poor farmers, not slaveholders.

Naturally, this doesn't mean that a majority of planters wanted to put their slaves into industry themselves, though a few did. What it means is that they usually won't oppose another slaveholder doing so, or for that matter a non-slaveholder developing industry. A few planters may oppose industrialisation in individual cases, but such opposition will not be a CSA-wide phenomenon.

On a related note, historically speaking, attitudes to industrialisation varied considerably based on agricultural prices. During cotton boom times (1820s and 1850s, broadly speaking), there were fewer planters calling for industrialisation. They did exist, but there weren't as many of them, and this is the era when people like James Henry Hammond declared that "Cotton is King".

During agricultural bust times, rather more slaveholders called for industrialisation, both because it offered greater profits in itself, but also because they viewed manufacturing for an internal market as more stable than vagaries of foreign demand. James H. Hammond was among those, during the early 1840s, and demonstrates that attitudes to manufacturing can and will change over time even for people who might seem to be entrenched agriculturalists.

The relevance of this to the future of the CSA is that cotton was due for a price crash due to overproduction. The outbreak of the ACW delayed that cotton price crash, but it's still happening soon after the war is over. Once cotton exports resume - which will be pretty quick given that the main cotton-producing areas haven't been severely affected by a shortened war - then the high cotton prices of the ACW will fall pretty soon thereafter.

Such a cotton price crash will be severe for cotton planters, naturally. What will happen is similar to what happened during previous cotton busts. Some planters will shift their slave labour into industrial and proto-industrial pursuits, either by directly setting up such activities or, more commonly, selling off or hiring out some of their slaves to other people who have uses for them. Some of the less efficient planters will go broke, in which case their slaves will be auctioned off to other buyers, and this is when there will be a considerable increase in the available labour pool for manufacturing.

As something of an aside, the 1860s cotton bust will be different from the late 1830s/early 1840s agricultural bust, because in that one both cotton and tobacco prices plunged. Here, demand for tobacco is ramping up, and people are switching to cigarettes instead of chewing tobacco. So a significant chunk of manufacturing will focus on flow-on effects from tobacco planting, both tobacco processing and cigarette-rolling.

More broadly, I expect that this means that from the mid-1860s to around 1880, there will be significant growth of industrialisation in the CSA. Not on the same scale as the Union, of course, but still substantial. Cotton prices will not really recover until around 1880, and there will be a lot happening during that period.

As was demonstrated in both the North and South in OTL (and in many European countries), industrialisation was a process that in many cases fed off itself. Development of one sector of industry had flow-on effects elsewhere. In the pre-war Confederate states, that was most notably demonstrated in Virginia and parts of Alabama between 1850-1860, and the same kinds of processes will continue in an independent CSA.

In particular, many industries will develop where transportation goes through first, which usually means railroads. (Occasionally, canals or improving navigability of rivers). Railroad construction was going gangbusters in the proto-CSA before the war, and, allowing for some years of disruption, will resume after the war.

Funding for these railroads will come from domestic capital, with perhaps some British capital to supplement it. Most pre-war CS railroads were funded by domestic capital (and in OTL, after about 1871, so were most of the post-ACW ones, too). If foreign capital is needed, Britain will supply it; British investors were pouring money into all sorts of projects over much of the world during this period, and as history shows, investing in a slaveholding country didn't really faze them (eg British investment in Brazil, or in the pre-war USA, which was also a slaveholding country).

The effects of railroad construction will thus flow on to other industries. Textiles, mostly cotton with a little wool. Tobacco factories. Lumber and its products - furniture, paper, etc. Ancillary industries related to those (machine shops and so forth.) Again, this won't be on the same scale as the Union, but it will still represent a substantial growth when compared to the pre-war CSA.

Notably, most of the industry which I've described will be light industry, rather than heavy. It will also tend to be rather decentralised, partly because it will be close to the sources of production, and because there aren't many big cities in the CS of A anyway.

But then, this had been most of the pattern before the ACW, too. History also shows that there is more than one successful path to industrialisation, too. Decentralised light industry was also how Japan started its parth to industrialisation (for reasons of its own), and Japan ended up industrialising just fine. Pretty damn successfully, in fact. (Of course, Japan also had a bigger domestic market than the CSA would have.)

Also, just as notably, light decentralised industry isn't particularly amenable to become a military superpower. It does have some opportunities for adaption to military uses - light industry is pretty easy to convert to small arms, for instance - but on the whole this does not turn the CSA into a military-industrial superpower that goes rampaging across Mexico and the Caribbean.

An independent CSA will have some heavy industry, though. For the first few decades, this will be concentrated in Birmingham, Alabama (and nearby parts of the state, eg Selma), plus whatever is developed from the coal-producing regions of Virginia (including West Virginia) and Tennessee. This will include steel, railroad industries (track-rolling, some rolling stock, etc), and so forth. Whatever armaments industries are developed in the CSA will be concentrated in those regions. It's arguable exactly how much in the way of armaments production there will be, but the Confederate efforts in the first couple of years of the *ACW will lead to something.

Birmingham, Alabama deserves a special note since it really is the best site for significant heavy industry in the CSA. Its concentration of natural resources (iron ore, coal, limestone) in close proximity made it a prime site which had been recognised since well before the ACW. (The first efforts to develop the site date to the 1840s.) Its development in OTL was stifled by a variety of factors, most notably the Pittsburgh plus pricing system which meant that steel prices were set based on distance from Pittsburgh, which meant that Birmingham steel was sold for higher prices than the Pittsburgh product, and so was uncompetitive. From an actual production cost basis, Birmingham steel would have been cheaper.

In an independent CSA, Birmingham will be a cheaper steel producer than Pittsburgh, at least for the Confederate domestic market. (Revenue) tariffs will apply to US steel, which will exacerbate the difference. Of course, Birmingham will mainly be producing only for the Confederate domestic market; US tariffs will affect exports there, and in most other places, British exports will out-compete any Confederate exports. (Maybe not in, say, Mexico, if transport costs are cheaper from Birmingham, but Mexico ain't exactly a big market.)

For other heavy industries, once petroleum starts to become important in Texas (and Oklahoma, if present), then there'll be the spin-offs of oil extraction. The profits of this may not necessarily run much to the Confederate government in taxes or anything like that, as was shown in some oil booms in various countries in OTL. But there's going to be a lot of industrialisation which perforce needs to happen near the source. Oil refineries at the very least, a lot of ancillary construction, and petrochemicals are an obvious development. Past that, it's harder to say, but Texas petrochemicals and related industries are probably the CSA's most likely place to develop thriving chemical-related heavy industry.

I'd also add a couple of further notes about the CS economy. As mentioned upthread, it did have a banking system before the war, albeit much inferior to that of the North. Domestic capital was enough to develop most pre-ACW railroads, and some other small-scale industrialisation.

The pre-war CSA was thus quite wealthy. However, as has been pointed out by others, the pre-war Confederate states often had liquidity problems. In short, they were asset-rich, but cash-poor. Most of their capital was locked up in slaves and land, which were valuable, but didn't mean that there was always cash on hand. This causes problems if a planter, say, need to pay a $100 bill today - it's not always convenient to sell 10% of a $1000 slave.

Still, there were some ways around this. Mortgages can be, and were, taken out on either land or slaves. Here, for instance, is a list of slaves employed at the Cumberland Iron Works in Tennessee in 1859, many of whom had mortgages taken out against them - and who were also slaves working in what for the time was heavy industry, too.

The other economic note is that tariffs in the CSA will be relatively low - 20%, perhaps, or maybe 15% - which will have some mild protective effects, but hardly massive ones. Tariffs will be where the Confederate government gets most of its money, probably. Excises will also exist, but how much money they will raise is another question.

And lest anyone think I'm trying to ignore potential problems with Confederate economic development, those certainly existed too. Probably the biggest one is the abysmal literacy rate in the CSA - and that applies to free whites, not slaves. Officially the slave literacy rate was zero, of course, although a few slaves were taught to write anyway. The low literacy rate and generally pathetic public education (even for whites) will have considerable consequences for the CS workforce, and in time for their economy. It won't stop economic development, but it will be a considerable drag.

Overall, I'd expect the CSA to develop into a mid-ranked industrial power. It will be less industrialised per capita than the US of A, and largely falling further behind over time. It will also be incredibly far behind Britain, and behind the leading Continental European powers (France, Germany) but in per capita terms it will still be ahead of some European powers (eg Spain, Italy, though Austria-Hungary is more arguable).
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