The American Civil War (1836-1841) was the conflict that put to rest the concept of Federalism.

In the early 1830s, then Vice-President John C. Calhoun instigated sectional rumblings in South Carolina over defiance of the Tariffs of 1828 and 1832. After this "Nullification Crisis" ended, southern sectional and state's-rights advocates were left unsatisfied with the North's continuation of tariffs, and many feared a Civil War would eventually occur. After the assassination in 1835 of president Andrew Jackson, John C. Calhoun's policies of state's-rights and southern sympathizing angered many Northerners. In 1836, New England and the non-slaveholding U.S. Territories seceded from the Union, igniting the American Civil War. As the new Federal States of America's only useful asset was its industrial facilities, it held a fragile stalemate with the United States for several years before collapsing, mainly due from the lack of recognition from Europe and a shortage of supplies, as cotton and other raw materials from the south were the only way the FSA could make money.

In 1841, an impoverished and emaciated Federal States of America signed the Treaty of Richmond, which re-annexed the former FSA and spread slavery throughout the former Free States and Territories, destroying the need for industrialization. The United States was thereby changed into the Confederacy of American United States.

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