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Historians still seem to be divided when it comes to identifying the causes of the American Civil War (Molho & Wood, 1998, p. 166). One of the major disparities lay in the economic principals of the Northern and Southern colonies. The colonial economy expanded at a dynamic pace throughout the seventeenth and eighteenth centuries primarily because of the spectacular growth of the free white and black slave populations. However, the 19th century saw a shift in the economic conditions of the Northern and Southern states. Economic policies of the Northern and Southern States of America played a significant role in the political system of the nation. Land policies, banking policies and tariff played of both the Northern and Southern colonies were so different, that it is safe to say they greatly contributed to start the military conflict known as the American Civil War of the 1860's.

The Northern states, also called the Union states (Fabbrini, 2005, p. 12), were greatly industrialized and urbanized. The North American colonies developed two major modes of economic production. One type of production was the subsistence economy of small-scale farmers, who were either European immigrants or their descendants. Alongside the subsistence farming economy was a profit-making commercial economy, much of which was rooted in the slave trade, slave plantation, and the commercial businesses essential to the burgeoning slavery economy. The Northern economy, rather than raising cash crops like it was common in the South, relied heavily on the Atlantic Ocean. Shipbuilding, trade, and fishing became leading industries in the region. Trade and import/export contributed to their economy, and Boston, Massachusetts became a blooming urban center for shipping and New England commerce.

The land policy of the Northern states was vastly different from the South. In the North, cheap land in small parcels was offered to free-labor families whereas the Southerners opposed this system of land distribution. They, on the other hand, ran huge plantations and maintained that the smaller parcels of land would make it very difficult to keep open vast areas for slave plantations. The Southern states relied heavily on slave labor for their agrarian economy, based primarily on cash crops including tobacco and cotton. The Homestead Act of 1860 allowed for 160 acres of free land to anyone, for settlement and farming purposes, a bill that was received warmly by the Northern states. The Southerners,

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