When did the divergence
begin?
Why are the
North and
South so
different in their
economic
practices?
Why are the North and South
so different?
!  Differences:
!  Climate
possibilities
!  Land/ Natural Resources
!  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
How did this influence the
colonists?
!  Behavior
changed due to the way the colony or
region responded to the economic market.
!  Profit
!  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.
!  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 economy
! Dependent on agricultural staples for export
to northern Europe
! 40% 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.
The Northern Economic
Path
Outcomes
! Weak
institutional development
and slow growth of:
! Transportation
Networks
! Urban
systems
! Educational organization
! Religious organization
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
! “Lacked
economic definition”
! Did
not have exports of high
importance for England
! NO
GREAT STAPLE MARKET
few
agricultural slaves
ECONOMIC
IMPROVISATION
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 England
! Overcame
limitations in natural resources
! Combined
subsistence activities with
local, regional, and international trade
!  Led
to strong export earnings and good flow
of imports
! Steady economic growth
! Higher 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,
Philadelphia and New York
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
North
!  Couldn’t
produce
valuable plantation
staples
!  Limited value/use of
slave labor
!  Economic balance
and diversity
!  Constant innovation/
change
!  Creative business
practices
! Excellent
harbors
! Great trading posts
! Generated more jobs for the Middle
Colonies
!  Trading
of goods AND ideas/information
!  Increased productivity
!  Increased wealth
!  =larger middle class
South
!  Early
organization
around plantation
staples
Tobacco, rice, indigo
!  High use of slave labor
!  No
need for creativity
due to the large
profits that came from
plantation agriculture
North
Led to…
!  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
South
!  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
Important Terms
Cash crop- a crop that is in high demand & brings
a high profit EX: tobacco
Plantation sector-business using large plots of land
to mass produce crops
Economy- the wealth & resources of a country or
region, especially in terms of the production &
consumption of goods & services.
Free labor- the freedom to choose where, when
and how you work. You earn money
Profit possibilities- ways to make mone
Indentured labor-a person who works as a servant
for a certain number of years to pay off a debt
Path dependence-each decision made will
influence and limit all future decisions
Slave labor-forced to work without any choice
where, when, or how you work. Do not receive
wages ($)
Economic Improvisation- the need to be flexible
and creative in economic ventures.
* leads to increased profit possibilities
Diverse/Diversity- a large variety
•  EX: a diverse economy has lots of different profit
possibilities
•  *EX: a diverse population has lots of different
types of people
Specialization- division of labor, where individuals
perform & focus on a specific task or role.
Specialization results in more jobs.
Supply- total amount of a good or service that is
available to consumers
Demand- a consumer’s desire or willingness to pay
for a specific good or service
Subsistence activities- the action of only
supporting you & your family.
Not growing crops for sale/profit