The South remained agrarian even after the abolition of slavery. Both class and race politics played into this. The Republican Party decided to enfranchise the freedmen—now available to counter southern planters—and attempt to protect them through Reconstruction. But eventually the southern whites come back into power. This meant that the upper classes in the South were all Democrats, while the lowest classes, the freedmen, were Republicans.
This is the reverse of what happened in the North. There, the upper classes were Republicans, and, to the extent that workers and immigrants were aligned to the major party system, they were Democrats. Within the northern working class, there were, of course, many divisions—key among them, religious—that undermined labor solidarity. That being said, northern politics largely turned on the tariff and military pensions, both of which aligned much of the native-born, Protestant, industrial working class with the sectional interests of their employers against the South. So, this disjunction in cross-regional class coalitions frustrated the sort of class-based politics we would expect in national politics.
The lower-classes in both regions were subordinated to their respective upper classes and the latter, in turn, dominated their respective national party organizations. In sum, the national bases of the party system were incoherent in terms of class interests and, thus, lower-class insurgencies had no way, in a sectionally polarized politics, of shaping, or even entering, national political competition. Working-class parties were always going to be small and, accordingly, so was their contribution to the national debate.
Once these southern whites came back into power, they posed a problem for northern development because their interests were contrary to that of the North. They had to be bought off somehow, they had to be assuaged. In the Political Economy of American Industrialization, I argued that the bargain was struck via the Supreme Court; it legitimated segregation in the South and struck down civil rights legislation. That was the concession to the South in exchange for the development of a national market. This national market gave rise to national industrial corporations that finally, by 1900, could compete in the international market. You can’t find an open declaration of this bargain, but it was a tacit agreement between the parties.
That in part explains how the developmental coalition was facilitated. The unique combination of democracy and rapid industrial development was not the product of virtue but of the compromises born out of political-economic considerations. On the one hand, this tacit agreement was a fairly transparent accommodation of sectional interests: the North got market-centered industrial expansion and the South received political autonomy, which facilitated upper-class dominance. On the other hand, American industrial expansion rested, in very important ways, on the political and social suppression of southern freedmen.