At the time of the start of the CW the single state of New York had twice the industrial production of the south.
Fueled by Monopolistic laws that Favored New York as the single dominant trading center. New York was pocketing 40% of all the Southern Trade value with Europe. It dominated the Shipping industry because of the laws favoring Northern Shipping, as well as the subsidies the Fed Gov was pumping into the Northern Shipping industries.
Take away those millions from New York, and take away the Shipping subsidies from the Fed Gov (payed for by the Southern states) and take away the protectionist shipping laws, and you would have seen New York grow more slowly while Charleston grew more rapidly.
New York had population because it had Money, which it had because it was the dominant trade center of the Nation. All that capital in New York paid for the industries that it developed.
If the South had been allowed to secede in peace, you would have seen the vast bulk of European trade shift 800 miles further South to Charleston. Both the Europeans and the Southern states would make far more profits than they otherwise did, and both would have been eager for even more trade.
You can't pump many millions of dollars into a port city economy without it having some economic impact for the area. The increased capital would have financed new industries in the South, and those industries would have been created out of the money lost to the northern industries.
The latter was mostly still agrarian. The north had the population and the industries.
Because of the money earned through trade. Move that south, and eventually the populations and industries would have followed. Tariffs in the north were something like 55%. Tariffs in the South were something like 13%. The South wouldn't have had prohibitions on Foreign shipping as did the Union laws protecting Northern shipping, and foreign ships would have grown rich carrying cargo back and forth to Europe.
The port of Charleston wouldn't catch up to New York over night, but in 10 or 20 years, it would definitely have been a major rival to New York in Wealth and development. The Businessmen of the time could see what an economic threat it would eventually pose.
There was no way the south was going to overtake much less "crush" the north in industry. The idea that the north started the war to inhibit southern industrial development is ludicrous.
Till you look at the details. Northern shipping was subsidized. Union laws prevented foreign ships or crews from carrying cargo between US Ports, and the tariff fees were much higher with foreign ships or crew. The US FedGov gave the packet shipping industry (run out of New York) millions ever year to deliver US Mail.
Take away these (and other advantages) bestowed upon Northern Industry by the Federal Government, and the South would have become richer and richer, at the cost of that very same money to the North.
It is not a coincidence that the very first thing Lincoln did was to throw up an economic blockade of the South. He had to at all costs prevent the Europeans from acquiring greater profits in Southern Markets, because once they realized what kind of economic advantages they would have from trading directly with the South, they would have urged their governments to support the Southern effort at independence.
Did the blockade stop militarily advantageous cargo? Did it stop cannons, gunpowder or men from coming over to join Southern military forces? Maybe, but it seemed as if the South managed to fight along anyways with what was already in their states. If it was intended to stop the armies on the ground from fighting, it doesn't appear to have been very successful.
But economically, it was absolutely necessary.
