> I know there's a theory that the northern economy depended on the southern slave economy, but when it was cut off from the southern economy in 1860, it prospered while the slave economy crashed.

The Confederacy crashed economically because they tried to pull a 19th century equivalent of the Arab Oil Embargo, cutting off their main export crop in the hopes of compelling Europe to intervene. The Confederacy suffered from what we'd call in modern times the resource curse--ironically, one enabled entirely by industrialization.