ISOT WI select Union and Confederate states and forces ISOT from Jan 1863 to Jan 1823?

Couldn't the two American countries simply agree on a 38N border (latitude of southern Wee-Vee)?

They could do that theoretically, if sufficiently committed to achieving peace, even on secessionist terms, as quickly and simply as possible. Perhaps Peace Dems could pursue this policy under the self-delusion that generous dealing with the CSA on territorial questions of this nature would encourage re-Union sooner or later.

But, I suspect Dems would be dooming themselves to a short ascendancy in the north by signing such a peace. Even peacemaking Dems could easily calculate that they need to show they have fought for the best interests of the northern section, and that includes things like controlling maximal territory for white farmers and the whole length of the banks of the Mississippi. Even if they've given up on subduing the Atlantic Confederate States and areas their forces strongly hold, Union strength in rails, shipyards, the Navy, and riverboats should make controlling the Mississippi and part of the Gulf Coast seem pretty achievable.
 
All true.
The best land for yeomen would be north of that line.
As to the Mississippi - by 1863, as I've written elsewhere, the precedent of rivers being international waters like the High Seas already exists. And with the ease of grabbing Canada in 1785 the St. Lawrence Seaway could come almost a century earlier. In 1863 the technology for a canal servicing at least coasters should exist. Even if not - then big barges through a Welland Canal (dissapeared, together with Lachine canal in Montreal, with the ISOT) would be a viable alternative (in emergencies) for the Mississippi.
 
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