Crop-lien system


Crop-lien system

The crop-lien system is a credit system that became widely used by farmers in the United States in the South from the 1860s to the 1920s

After the American Civil War, farmers in the South had little cash. The crop-lien system was a way for farmers to get credit before the planting season by borrowing against the value for anticipated harvests. Local merchants provided food and supplies all year long on credit; when the cotton crop was harvested farmers turned it over to the merchant to pay back their loan. Sometimes there was cash left over; when cotton prices were low, the crop did not cover the debt and the farmer started the next year in the red. The credit system was used by land owners, sharecroppers and tenant farmers.[1]

The merchants had to borrow the money to buy supplies, and in turn charged the farmer interest as well as a higher price for merchandise bought on such credit. The merchant insisted that more cotton (or some other cash crop) be grown—nothing else paid well—and thus came to dictate the crops that a farmer grew. When farmers suddenly left the area, the bills went unpaid and the merchant had to absorb the loss, as well as the risk that cotton prices would fall so the raw cotton he was given at harvest time was worth less than the amount he loaned during the year.

In the early 20th century, because of automobiles, higher cotton prices and growing consumerism, city department stores gradually played a more important role than isolated country stores in Southern economic life. Women shopped in increasing numbers, paying with cash or in monthly installments. With the increasing importance of advertising, Southern economic life became more modernized.

See Also

  • Sharecropping, a related system of agriculture that also developed in the post-war South

Further reading

  • Thomas D. Clark, "The Furnishing and Supply System in Southern Agriculture since 1865," Journal of Southern History, Vol. 12, No. 1 (Feb., 1946), pp. 24–44 in JSTOR
  • Steven Hahn. The Roots of Southern Populism: Yeoman Farmers and the Transformation of the Georgia Upcountry, 1850-1890 (2006)
  • Roger L. Ransom and Richard Sutch. "Debt Peonage in the Cotton South After the Civil War," Journal of Economic History, Vol. 32, No. 3 (Sep., 1972), pp. 641–669 in JSTOR
  • Roger Ransom and Richard Sutch. " The "Lock-in" Mechanism and Overproduction of Cotton in the Postbellum South," Agricultural History, Vol. 49, No. 2 (Apr., 1975), pp. 405-425 in JSTOR
  • Woodman, Harold. King Cotton and His Retainers (1967)
  • Harold Woodman. New South, New Law: The Legal Foundations of Credit and Labor Relations in the Postbellum Agricultural South (1995)
  • Gavin Wright and Howard Kunreuther. "Cotton, Corn and Risk in the Nineteenth Century," Journal of Economic History, Vol. 35, No. 3 (Sep., 1975), pp. 526–551 in JSTOR

References

  1. ^ Thomas D. Clark, "The Furnishing and Supply System in Southern Agriculture since 1865," Journal of Southern History, Vol. 12, No. 1 (Feb., 1946), pp. 24-44 in JSTOR

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