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By 1860, when Abraham Lincoln was elected president, 16 percent of the population lived in urban areas and a third of the nation's income came from manufacturing. Funds were flowing into large-scale industrial development and into railroads. Urbanized industry was limited primarily to the Northeast. Cotton cloth production was the leading industry, and the manufacture of shoes, woolen clothing and machinery was also expanding.
Equally important to urbanization, the nation's population was increasing. Between 1845 and 1855, European immigrants arrived at a rate of 300,000 annually. Most were poor and remained in Eastern cities, often at ports of arrival.
In contrast, the old South remained rural and dependent on the North for capital and manufactured goods. Southern economic interests, including slavery, could be protected by political power only as long as the South controlled the federal government.
The newly organized Republican Party expressed the interests of the industrialization that was sweeping the North. In 1860 Republicans and their presidential candidate, Lincoln, were speaking hesitantly on slavery, but clearly on economic policy. In 1861 a protective tariff was adopted. In 1862 the first Pacific railroad was chartered. In 1863 and 1864 a national bank code was drafted. Northern victory in the Civil War (1861-1865) and Republican victories in national elections assured that future economic policy would be determined by Northern industrialists rather than by Southern planters.