The Emancipation Proclamation Effects on the Economy


In order to understand the economic impact of the emancipation proclamation, it is necessary to examine the economic framework that was in place during the mid 1800s and how the emancipation proclamation could have influenced it. First and foremost, it is important to note that at the time the U.S. was divided into what was known as the industrial North and the agricultural South. The northern states of the Union focused primarily on the processing of raw materials into industrial products which were then subsequently sold to the predominantly agricultural south or to trading partners located in other countries.

The southern states on the other hand focused primarily in the creation and sale of agricultural products which were then sold to the north or to their respective trading partners. It is important to note though that 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.

The north also focused more on the implementation of mechanized methods of production both in their industrial and agricultural pursuits as compared to their southern counterparts which focused more on manpower as their primary method of production. Miller states that this dichotomy between the two regions is important to take note of when it comes to the emancipation proclamation since it shows how the two regions diverged when it came to the concept of manpower and its place in the grand scheme of production. While manpower was an integral aspect to the economies of both regions, there was a distinct difference in how intensive the labor was (Miller 107).

Origin of the Emancipation Proclamation

The emancipation proclamation has its origins in the Lincoln Address, a speech made by Abraham Lincoln near the conclusion of the war, wherein he emphasized the rights of all men and the abolition of the practice of slavery. The reaction of the South to the proclamation was to ignore it and continue fighting with the implementation of the emancipation proclamation only enforceable once the war was over. It is due to this that many slaves continued to fight for the South despite the proclamation essentially stating that they were free. Do note though that despite the war there was some form of limited trade going on between the North and South in some areas; however, a vast majority of primary trade agreements were not fulfilled due to the impact of the war on the trade routes.

Differences in Labor Orientation

Due to its focus on industrial production, the North favored a more “mechanized” approach when it came to agricultural and industrial operations. This meant that it was not as dependent on having a large host of people working on the factories or fields of a company in order to operate efficiently. In fact, Taylor explains that this focus on the use of mechanized industrial processes enabled the North to far outpace the South when it came to production due to greater levels of efficiency. Statistics from the period showed that even if 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 (Taylor 32).

Furthermore, 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 is despite the fact that only 40 percent of the North was engaged in agricultural production as compared to 86 percent in the South (The Emancipation Proclamation 7). From this, it can be seen that due to the lack of sufficiently intensive labor in the production process of the North, slave labor was not needed in order for operations to continue unhampered.

How were the Plantations Run?

The story is completely different when examining the Southern states where 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. The various plantations in the South primarily relied on slave labor as a form of manpower in order to produce products such as cotton which was then subsequently shipped off to other countries around the world (Tackach 23).

It is due to this that it can be assumed that one of the driving factors behind the continued use of the slave trade in the South was the overwhelming global demand for cotton which, at the time, was at an all time high which incentivized the continued use of slave labor. The economics of slave labor in the South focuses around the perceived cost of production without slaves and the actual cost of production with slaves (Tackach 30).

For the agricultural industry in the South, the cost of agricultural operations without slaves would increase significantly if they were to hire American citizens to work in the fields which would increase the cost of the finished product. This problem was exacerbated by the fact that the South did not have the same focus on mechanized production as compared to the North and, as such, had to entirely rely on slave labor as their primary method of production (Tackach 37). 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.

Economic Reaction of the South to the Emancipation Proclamation

Initially, the emancipation did little to hamper the economic activity of the southern states since it had yet to be fully enforced during the Civil War. It was only after the war was over and the edict was in full effect that the adverse effects were felt in their entirety. One of the first negative economic impacts of the emancipation proclamation on the southern states was the subsequent increase in the cost of labor associated with growing essential agricultural products and exported goods. What must be understood is that slavery, in essence, acted as a form of subsidy for southern plantation owners due to the lower cost of labor (Letzer & Lewis 16).

Since slaves were not paid for their services, they were 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. While the increase in labor cost was understandable 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.

As stated earlier, due to the focus on more efficient mechanized methods of agricultural production, the North was able to keep pace with the South in terms of the amount of essential agricultural products that it could produce (Letzer & Lewis 16). As such, since the North was not overly dependent on the South for agricultural goods, this meant that demand for products was in effect based on their inherent price. This presented itself as a considerable problem for local plantation owners since they lacked the industrial methods of production found in the North that enabled efficient methods of production despite having fewer laborers. The end result was that several plantations went out of business since they could not sustain their business models in the new economy.

Migration of Slaves away from the South – Loss of Labor

Aside from this, there are also issues related to the mass migration of former slaves and citizens of the South into the North. With the implementation of the emancipation proclamation, this elicited a sudden boom in migration wherein former slaves left their plantations in order to seek out better jobs in the industrialized North. There was also a migration of families from the South to the North due to the apparent economic opportunities that were available there as compared to the lack of opportunities in the South (Miller 112). The end result is that the labor force that the South could have potentially used to get back on its feet in effect left for the North and other territories. This further hampered efforts at economic recovery resulting in a gradual decline in the South’s economy which failed to fully recover when combined with the aftereffects of the Civil War.

End of European Business with the South

From an international perspective, it should be noted that the emancipation proclamation also had the effect of having countries disassociate themselves from trading with the South. The reason behind this is connected to the fact that countries such as England and France at the time had effectively abolished slavery within their own borders yet continued to be trading partners with the South (Taylor 37). Once the emancipation proclamation was put in to effect, the South’s trading partners did not want to be perceived as being “pro-slavery” and, as a result, this caused many of the region’s trading partners to shift their interests towards the northern states.

What must be understood is that 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 (Taylor 37). With their trading partners effectively fleeing, this resulted in the South having no one to sell cotton to which in effect demolished its economy to the point where it was unable to sufficiently recover. What should also be noted is the fact that the lack of other large scale industries within the South aside from agriculture meant that the economy of the region would be unable to recover for quite some time.

It simply did not have the necessary large scale industries that were oriented towards manufacturing processed goods. With slaves effectively being freed from the control of the plantation owners, this created a considerable lack of manpower for the region which prevented its economy recovery from progressing (Taylor 37). Another factor that should be taken into consideration is the fact that during the period of transition for the South, there was still a considerable amount of former slaves within the region.

Attempts at hiring them back were made; however, there was still a considerable lack of customers for the South’s products due to its prevailing association with slavery. The end result was that despite attempts at implementing some form of economic recovery, their simply was not enough in terms of agricultural production capability or customers to actually bring it about. Another factor that should be taken into consideration is the fact that the sheer scale of the Civil War which caused significant damage

Connection of Wealth to Slavery

The last economic impact connected to the emancipation proclamation was that upon its implementation it effectively wiped out a large percentage of the wealth of the South. What must be understood is that before the start of the Civil War, the South was actually wealthier than the North based on the number of slaves own in the South. In fact, based on value alone, the sheer number of slaves actually eclipsed the value of all the railroads banks and businesses within the North combined. This was due to the inherent value of slaves which was set at several hundred dollars depending on their capacity for labor (Bolden 21).

What must be understood was that 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. Through the enactment of the emancipation proclamation, the North effectively wiped out vast amounts of South’s wealth. The economic impact of such an action was not felt at first; however, once it was in full effect when the North won, this completely devastated the South’s economy and their concept of wealth.

Plantations that owned vast amounts of slaves in effect found that the resources they “owned” were worthless resulting in the closure of the plantation due to bankruptcy. Many landowners at the time had actually heavily invested into the slave trade by owning many slaves believing them to be a valuable resource to be bought and sold at will (Bolden 22). Through the emancipation proclamation, fortunes were lost in a short period of time resulting in a complete standstill of the local economy. Due to the lack of sufficient wealth, this severely impacted the capacity of the South to recover economically.

Impact on the North

On the other end of the spectrum, 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 (Bolden 43). 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.

Works Cited

Bolden, Tonya. Emancipation Proclamation: Lincoln And The Dawn Of Liberty. United States of America: Abrams Books for Young Readers., 2012. Print.

Letzer, Chelsea, and Elizabeth Lewis. “The Emancipation Proclamation Through The Power Of Reader’s Theater.” Black History Bulletin 75.2 (2012): 16. Print.

Miller, Randall M. “Lincoln’s Hundred Days: The Emancipation Proclamation And The War For The Union.” Library Journal 137.13 (2012): 107. Print.

Miller, Randall M. “The Emancipation Proclamation: Three Views; Social, Political, Iconographic.” Library Journal 131.9 (2006): 112. Print.

Tackach, James. The Emancipation Proclamation: Abolishing Slavery In The South. United States of America: Lucent Bks., 1999. Print.

Taylor, Gilbert. “Lincoln’s Gamble: The Tumultuous Six Months That Gave America The Emancipation Proclamation And Changed The Course Of The Civil War.” Booklist 111.1 (2014): 32. Print.

“The Emancipation Proclamation.” Civil War History 59.1 (2013): 7. Print.

Cite this paper

Select style


Premium Papers. (2022, December 26). The Emancipation Proclamation Effects on the Economy. Retrieved from


Premium Papers. (2022, December 26). The Emancipation Proclamation Effects on the Economy.

Work Cited

"The Emancipation Proclamation Effects on the Economy." Premium Papers, 26 Dec. 2022,


Premium Papers. (2022) 'The Emancipation Proclamation Effects on the Economy'. 26 December.


Premium Papers. 2022. "The Emancipation Proclamation Effects on the Economy." December 26, 2022.

1. Premium Papers. "The Emancipation Proclamation Effects on the Economy." December 26, 2022.


Premium Papers. "The Emancipation Proclamation Effects on the Economy." December 26, 2022.