The South lost for many reasons. While they knew they were outnumbered, they figured they could whip the Yanks with cornstalks (one crippled Conf. vet. sarcastically reminded a fire-eater who advocated war of that statement and the fire-eater, who was still a politician responded, "Yes we could have, but the Yankees didn't fight us with cornstalks."). After all, the Yankees were viewed contemptuously by the Southerners as mere "shopkeepers." At the outbreak, Porter Alexander, later Gen. Alexander, CSA, Chief of Artillery for Longrstreet, was a second lieutenant of Engineers in the U.S. Army. His C.O., warned him that the South was outnumbered ("Your whole population is only about eight millions, while the North has twenty millions. Of your eight millions, three millions are slaves who may become an element of danger. You have no army, no navy, no treasury, and practically none of the manufactures and machine shops necessary for the support of armies, and for war on a large scale. You are but scattered agricultural communities, and you will be cut off from the rest of the world by blockade. Your cause must end in defeat...") and ultimately would lose. He was was very prophetic.
The South falsely pinned its hope on a quick victory and did not gamble on Northern resolve (both sides thought it would be over within 90 days). It also felt that since it was the largest producer of cotton, foreign recognition (France & England) would be forthcoming along with foreign intervention.