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Nation-building, American-style, has typically involved a military occupation after a conflict as well as efforts to promote democracy that are accompanied by other interventions, such as creating or reforming security forces and the civil administration, economic reconstruction, and so on. In most respects, American Reconstruction in the South after the Civil War is a straightforward case of nation-building. Why did it fail? In this paper, we develop a broader theory for explaining the relative success of nation-building efforts. This theory is rooted in state capacity and its effects on the coalitional possibilities in the 'nation' undergoing occupation. Nation-building succeeds when its intervention contributes, directly or indirectly, to solving problems whose resolution had previously been blocked by local power structures. By local power structures, we refer to concentrations of economic and military power, sometimes reinforced by ideological or administrative power. Drawing primarily on secondary literature, we apply this theory to the case of Reconstruction. In doing so, we demonstrate that white supremacy was not the primary obstacle to the construction of an American social-democratic moment. Rather, understanding the failure of Reconstruction requires greater attention to the ways in which weak state capacity failed to support the emergence of coalitions necessary to sustain Reconstruction's gains after military occupation.