Split the country in two and be done with it

[haele]

166. The south was going economically downhill just before the Civil War...

And that was due to their income inequality and reliance on Slavery.
The political elite were not going to give up their slaves, and even though there was the potential for robust manufacturing in the South, the use of slaves to provide cheap labor over hiring free workers tended to stifle manufacturing innovations that could have decreased the reliance on subsistence farming. The majority of the people who settled in the South during the 1840's and 1850's either stayed where they were or went out of the South - to the North or out to the frontier territories instead of Southern cities because there was very little opportunity for most free worker in the South if an employer could just "rent" a slave whenever s/he needed one instead of hiring someone outside the family full time and investing in their advancement to improve the business.

This was one of the keys to the success of Northern businesses. Northern businesses tended to look at action within a market of other businesses as a means of maintaining profit and growth. If a business failed - you picked yourself up and started off somewhere else. A typical Northerner had the ability to start out at the ground floor anywhere, learn a trade, and then strike out on his or her own to compete with anyone and everyone else.
However, antebellum Southern businesses - primarily the plantations, commodity traders and transportation organizations, and most their downstream and upstream chains - tended to focus on maintaining costs as a means of profits; their businesses were not so much part of a larger market economy one could easily enter or exit; businesses were seen as part of a family net worth that needed to be maintained.
And if a potential worker didn't already have a connection to be able to walk into a skilled or semi-skilled position - or the funds to start one's own business, s/he was competing with slaves that were made available to work for a small rental fee or for barter by a slave-owner looking to make some extra money. A business owner didn't have to worry about treating a slave with dignity or screwing him/her over - or the slave making any trouble. S/he only had to worry about the person the slave was rented from.

Unlike in the North or out in the Territories, there were few "walking in on the ground floor" positions available to an average immigrant or economic migrant looking for work anywhere in the South. If the South had won the Civil War and was able to "maintain it's particular institution", Southern economy was still going to take a severe nosedive within a couple decades that it wouldn't be able to pull out of until it finally got rid of slavery and started opening up its workforce. However, I shudder to think of how the South would handle all the people that were enslaved prior to that point...I suspect it would have been by sending any non-white "back to Africa" or with a KKK-like organization on steroids.

Haele