Anaconda Plan and Blockade- American Civil War 1861: Winfield Scott, the commanding general of the U.S. Army, devised the Anaconda Plan to win the war with as little bloodshed as possible. His idea was that a Union blockade of the main ports would weaken the Confederate economy; then the capture of the Mississippi River would split the South. Lincoln adopted the plan in terms of a blockade to squeeze to death the Confederate economy, but overruled Scott's warnings that his new army was not ready for an offensive operation because public opinion demanded an immediate attack.

In April 1861, Lincoln announced the Union blockade of all Southern ports; commercial ships could not get insurance and regular traffic ended. The South blundered in embargoing cotton exports in 1861 before the blockade was effective; by the time they realized the mistake it was too late. "King Cotton" was dead, as the South could export less than 10% of its cotton. British investors built small, fast blockade runners that traded arms and luxuries brought in from Bermuda, Cuba and the Bahamas in return for high-priced cotton and tobacco. When the Union Navy seized a blockade runner the ship and cargo were sold and the proceeds given to the Navy sailors; the captured crewmen were mostly British and they were simply released. The Southern economy nearly collapsed during the war. Shortages of food and supplies were caused by the blockade, the failure of Southern railroads, the loss of control of the main rivers, foraging by Northern armies, and the impressment of crops by Confederate armies. The standard of living fell even as large-scale printing of paper money caused inflation and distrust of the currency. By 1864 the internal food distribution had broken down, leaving cities without enough food and causing bread riots across the Confederacy.

On March 8, 1862, the Confederate Navy waged a fight against the Union Navy when the ironclad CSS Virginia attacked the blockade. Against wooden ships, she seemed unstoppable. The next day, however, she had to fight the new Union warship USS Monitor in the Battle of the Ironclads. Their battle ended in a draw. The Confederacy lost the Virginia when the ship was scuttled to prevent capture, and the Union built many copies of Monitor. Lacking the technology to build effective warships, the Confederacy attempted to obtain warships from Britain. The Union victory at the Second Battle of Fort Fisher in January 1865 closed the last useful Southern port and virtually ended blockade running.