This'll be fun.
I've often thought the Confederacy wouldn't have held up for long as an independent nation, at least not if it didn't develop a more robust economy not dependent on cotton, be willing to give up some states rights for a more effective federal government, and change some other opinions such as being willing to develop infrastructure like railroads. Anyway, here's a few thoughts off the top of my head regarding the OP questions.
I think some type of peace would have had to have been reached by 1863 or too much of the confederacy would have been ruined and too many men killed and crippled for them to do much. It's possible that with secession accepted (if begrudgingly) that one or two of the border states might have decided to throw their luck in with the confederacy even if they hadn't been willing to secede initially. That's because they might have thought they'd get a better economic deal than staying with the Union. I'm not sure about Missouri - it might have split into two states, one going south as that might have presented a solution to their division (but I realize it was very complicated so that might not have been as easy as a simple split). Anyway, I don't see any confederate states abandoning the cause.
I agree that expansion - including into things not agricultural - would have been necessary for the confederacy to be something other than what we would now call a third world nation. Cotton was on the way out as Europe was already finding other sources. It certainly would have remained a very important crop but it wouldn't have been king. Also, cotton needs new land so even a cotton-based economy would require expansion. Fighting another war over U.S. territories doesn't seem like a winning strategy so I think the confederacy would have acted on their plans to go to places like South America. They could use the French Mexican model and set up puppet governments and continue using slave labor on plantations. For money they could do what the U.S. was doing - tax imports but that'd only work for a while. That's another change they'd have to make to be viable: tax something. But if they developed other commodities such as mines and were successful in South America they could just extract and exploit natural resources by nationalizing. They could have also exported slaves to South America if such became not as needed on domestic plantations.
I think some place more central with rail and/or river connections (e.g. Nashville or Memphis) - or maybe a port city like Charleston - would have made a better capital than Richmond but I suppose for a while Richmond would do. A navy and development of ports would have been necessary for not only defense but to allow for all the importing and exporting they'd need from both continents. I also think they'd really need to build those railroads or they would have a hard time just getting stuff to and from the ports. A well-developed shipping industry, similar to what the northeast had,could have developed and would have been another source of tax income. If ports and an import-export economy took off insurance and banking houses would have been close behind. I'd bet there would have been a lot of northern investors looking to get pieces of the action in the new country who could have provided capital for a number of things.
All that said, I think it more likely that an independent confederacy would have floundered because they'd not have been willing to make the social and political changes necessary to get beyond a small, privileged slavocracy and an individual state mindset. They could have got by for a time as a third world country but not developed into anything more and that, in turn, could have resulted in some of the more successful states eventually petitioning the Union to re-join.
The U.S. would, of course, compete economically as it did with all other countries but would certainly have protected the territories. I doubt they'd have got involved in trying to prevent south American expansion though; another reason for the confederacy to go that route.
Thread Medic
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