One major economic result of the war was that it helped change the U.S. from a country with an essentially agrarian society to one dependent on mechanization and a national market system. Only the North possessed an industrial base, small as it was, before the shooting started. During the fiscal year ending 1 June 1860, the country possessed some 128,300 industrial establishments. Of these, 110,274 were located in states that remained in the Union. The most heavily industrialized states, New York and Pennsylvania, each had more industry than all the seceding states combined. In 1860, too, America had a total of $1,050,000,000 invested in real and personal property devoted to business, with $949,335,000 concentrated in the North; Pennsylvania, New York, and Massachusetts each had a larger investment than the South as a whole. Finally, the North contributed 92.5% of the $1.9 billion that comprised the total value of annual product in the country in 1860.
One body of evidence indicates that the war widened this sectional disparity by destroying the South's minute industrial base and expanding that of the North to prodigious dimensions. Statistics on specific industries provide what appears to be convincing proof. While the loss of the Southern crop produced a steep war-long decline in production in the North's largest industry, cotton textiles, its woolen industry enjoyed a 100% production rise during the conflict. The second largest consumer industry in the Union, shoes and leather, also enjoyed tremendous growth, thanks to army contracts that more than offset the loss of the Southern market. Other war related industries, especially firearms, gunpowder, and wagon manufacturing, grew rapidly on the strength of military contracts. Meanwhile, iron production in the North experienced a slump early in the war but boomed 1863-64, in the latter year reaching a production level 29% higher than that of the entire country in the busiest prewar year, 1856. The coal industry experienced similar growth, in 1861-65 enjoying an expansion rate 21% higher than that for the nation as a whole during the 4 years immediately preceding civil strife.
The war years stimulated production of new inventions and accelerated the growth of established technology. Due to a deluge of government contracts, sewing machines became an integral part of the clothing industry, and the 50-year-old system of machine-made interchangeable parts became firmly entrenched in the production system. Agriculture-related industrial goods also witnessed production spurts attributable to the war: Gail Bordens condensed-milk process, patented in 1856, became essential to the diets of many Union soldiers, while implements including the thresher and the rotary plow experienced sales booms as machinery took over work abandoned by farm hands gone to war. In other ways, such as by easing unemployment and by promoting the enactment of protective tariffs, the war encouraged wide-scale industrial expansion. No wonder that by 1864 the Unions manufacturing index had risen to a level 13% greater than that of the country as a whole in 1860.