Why did the Confederacy exist? That is a good question. By the mid 19th century, the north and south had effectively become two separate nations. The South was an agricultural society that depended on slave labor that exported cash crops. It had little liquid capital, minimal manufacturing, opposed high tariffs and direct taxation. On the other hand, the North was an industrial economy that favored protective tariffs, direct taxation and had an elaborate financial system, and wanted to expand into the West through homesteading and railroads. Things came to a head after Lincoln was elected President in the fall of 1860 as a candidate of the new Republican Party. The Democratic and Republican parties had fundamentally different economic policies. The Republicans and the North wanted economic expansion which consisted of free land, free labor, a free market, a high protective tariff for manufacturers and a central bank. The South opposed all of these policies and they saw Lincoln and the Republicans as making continuation of their way of life impossible in the future. Therefore, the South decided to secede from the Union to form the Confederacy.