Here’s a critical passage from John Alexander Williams’ Appalachia: A History which explains how Appalachia, regardless of whether its people fought for the Union or the Confederacy, suffered a crushing defeat in the “Civil War,” which led to the subsequent impoverishment of the region and its colonization by Northern industrial and railroad interests in the postwar era:
Note: In the antebellum era, we have already seen that Appalachia had an economy on par with the rest of the South.
“Though there were other causes of the region’s impoverishment, the effects of the war were significant. The impoverishment of the defeated South generally hurt Appalachia in several ways. The plantation market for Appalachian livestock and foodstuffs was drastically reduced after the war, as were livestock herds in districts where the armies had forged. The state-owned or state-subsidized railroad systems were substantially wrecked. Railroad corporations in the North gradually gathered up the financial wreckage as the roads were rebuilt and thereafter operated most of the roads as subsidies of northern systems. Although mountain resorts emerged from the war largely intact, the upper-class southern patrons were damaged beyond the extent that even General Lee, who made a point of visiting White Sulphur Springs during the immediate postwar years, could repair.”
Appalachia’s economy in the antebellum era had been strongly tied to the economy of the plantation belt. The destruction of slavery in the lowlands landed an immediate blow to the tourism industry. Northern financiers took over and rebuilt the railroads and charged exorbitant rates that strangled commerce. The Union Army turned Appalachia into a war zone and destroyed its livestock.
“Wartime congressional initiatives that granted free land to western railroads and free homesteads to settlers of the trans-Mississippi West in effect subsidized competing producers of agricultural commodities that had underpinned Appalachia’s antebellum prosperity. Although the region’s relative prosperity had been compromised as farmers and herdsmen moved ever more deeply into the Appalachian Plateau, the profits of the antebellum era had borne fruit in the form of several promising local initiatives that were subsequently damaged or disrupted by the war. Two examples are offered in the Burning Springs oilfield near Parkersburg, West Virginia, and the emerging ironmaking districts around Chattanooga and in northern Alabama. When these institutions eventually did flourish, it would be as subsidiaries or junior partners of northern firms.”
By staying in the Union, the wrecked farm-and-forest economy of antebellum Appalachia was thrown into competition with subsidized agriculture in the Midwest and Great Plains. Appalachian industry was brought under the control of northern firms.
“With the impediment of southern congressmen and senators nullified, Congress enacted other legislation that placed the South generally and Appalachia in particular at a disadvantage vis-à-vis the North and West. The National Banking Act of 1863 created a banking system that dried up credit in the South and West and allowed regional developers to operate only on terms laid down by metropolitan financial interests. Added to lowland resentment at real or imagined mountain disloyalty during the war, the impoverishment of southern state governments meant that the public funding that had financed the canals, turnpikes, and railroads – not to mention the puny educational funding of the antebellum era – was no longer an option for needful mountain communities.”
The Union Army’s destruction of the slave-based economy of the lowlands dried up the resources for internal improvements and education in the mountains. The National Banking Act of 1863 sucked credit out of Appalachia and put the region at the mercy of the Northeastern “Money Power.”