“Financing the Crop Cycle:  Seasonality, Southern Financial Underdevelopment, and the Founding of the  Federal Reserve System” Scott A. Redenius and David F. Weiman

Abstract:  The postbellum South lagged the rest of the nation in terms of financial development.  Interest rates were comparatively high, per capita bank assets were low, and regional interbank networks were slow to develop.  We attribute these features of the Southern economy to highly seasonal credit demands arising from the region's extreme specialization in cotton production.  The crop cycle created a mismatch between local deposit supply (high in the off season) and local loan demand (high in the production season).  Banks borrowed in the production season (at high rates) and invested surplus funds during the off-season (at low rates).  Thus, the mismatch between local deposit supply and loan demand reduced bank profits and lowered the equilibrium number of banks and bank assets in the region.  Though more formal, our analysis is consistent with that of contemporary reformers who hoped to use the Federal Reserve Act to improve Southern credit arrangements. Link to paper:  http://www.brynmawr.edu/Acads/Econ/Redenius

“Technology Choice: Cotton Picking Machines or Mechanical Strippers in Texas?” Wayne Grove and Craig W. Heinicke

Abstract:  Few economists would dispute the notion that new technology is a key concept in understanding economic growth, or that new technologies can have important implications for labor markets. Our paper links these issues with questions concerning the private and public contributions to new technology in cotton harvesting in the U.S. South after World War II  The social consequences were significant and had implications for racial and ethnic changes  The fact that public institutions - in particular the southern land grant experiment stations --   aided in perfecting technology raises the question of whether better a policy might have been carried out. Our data allow us to test an important hypothesis.  Public resources may have been channeled into an area where the benefits were by-and-large private. Public policy may also have adversely affected African-Americans as the  cotton "spindle" picker tended to displace these workers relative to others.

“The Political Bases of the New Economic South” Gavin Wright

Abstract:  This paper examines the changing economic character of the American South, seeking to address a puzzling historical phenomenon: Why has regional distinctiveness persisted in the face of sweeping changes in the regional economic base and political economy?  By many indicators – income, wage rates, urbanization – the South has converged towards national norms since World War II.  But for alternative political-economic indicators – such as corporate taxes, environmental standards, and spending on education – the states of the South clustered together in the second half of the twentieth century, nearly as closely as in the first half. The paper identifies and evaluates a number of plausible and perhaps complementary hypotheses.

Page by Meredith Beechey
Prepared  06/27/02