The term "Tar Heel" has two meanings: it is a nickname for the U.S. state of North Carolina, and it is also the nickname of the University of North Carolina athletic teams, students, alumni, and fans. The origins of the term are not entirely clear, but there are several theories:
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Production of naval stores: The term "tar heel" dates back to North Carolinas early history when the state was a leading producer of supplies for the naval industry. Workers who distilled turpentine from the sticky sap of pine trees and burned pine boughs to produce tar and pitch often went barefoot during hot summer months and undoubtedly collected tar on their heels. To call someone a "rosin heel" or "tar heel" was to imply that they worked in a lowly trade.
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Civil War: During the Civil War, North Carolina soldiers flipped the meaning of the term and turned an epithet into an accolade. They called themselves "tar heels" as an expression of state pride. Others adopted the term, and North Carolina became widely known as the "Tar Heel State".
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Lord Cornwallis's troops: A story that may be considered folklore states that when Lord Cornwallis's troops forded the Tar River in early May 1781 en route to Yorktown, they emerged with tar on their feet. This marked their passage through North Carolina as tar heels. The tar reputedly had been hastily dumped into the river to prevent the British from capturing it.
In Congress in 1878, the name Tar Heel was derogatory, just as Tar Boilers had been earlier. However, it eventually became a badge of honor.