From what I’ve read, the origins of the word “Dixie” as it relates to the South are murky.
I also seem to recall that the first appearance in that context was in New York in a play back in the 1850’s or so.
My question is this: Do we know whether the lyrics that are known today were the original lyrics that appeared in the play?
http://www.fortunecity.com/tinpan/parton/2/dixie.html
Gives the story of composing ‘Dixie’ which was done by Daniel D. Emmett in 1859, and gives the original lyrics, including the never used first stanza.
According to the story, ‘Dixie’ is so named because it is south of the Mason & Dixon line, the traditional border between the industrial northern states and the farming south (Mason and Dixon surveyed the Pennsylvania border around 1767).
According to Brewer, it could have originated from the name Dix, or from Dixieland, the estate of a kind slave-owner (Dixie) on Manhattan, whose slaves lamented Dixie when they were transferred south.
Another explanation I’ve seen is that ten-dollar bills issued by banks in New Orleans were labeled “Dix” for the French word for “Ten.” The bills were called “dixies” and hence “Dixieland.” (This does match the fact that “Dixieland” jazz comes from the New Orleans area.)
Deriving it from the Mason-Dixon line, if not proved, has the additional side benefit of giving the origin of the prominent Northern department store, Macy’s. 