It's not totally true that there was more unity between blacks and whites before white textile owners started fomenting racial violence. There was never a halcyon period of good relations between poor whites and blacks--as there probably has never been between any two groups which both perceived they were fighting for the same jobs.   Race is just another element that can be added to the mix--albeit a very potent one--since it allows playing on deep fears, including sexual fears--as reflected for instance in "Birth of a Nation". (Which is definitely a movie your students should see--with your guidance as to how propaganda works--unless you think they know already.)

And the economic competition aspect is not restricted to the the South. The New York draft riots were partly over the perception of the poor-- (Irish to a large extent)-- that they were being asked to fight the Confederacy on behalf of blacks who would then come north and take their jobs. This fear was heightened by the use of blacks to break a stevedore's strike shortly before the draft notices were posted. And unscrupulous politicians--not just in the South-- have always been ready to play the card of fear of competition--which is always close to the surface--thus readily available.