Furnishing merchants and the rural credit market of the American South: Alabama, 1870-1920

Economic historians have long acknowledged the critical role played by furnishing merchants in the rural credit market of the American South. This thesis, while focusing on the case of Alabama, explores some of the central issues concerning the Southern furnishing merchants and the evolution of rural credit markets.; First, I develop a systematic definition of furnishing businesses based on Dun's credit reports and then present statistical information on the long-term changes in the furnishing market of Alabama. The evidence shows that the expansion of the furnishing market and of commercial agriculture was an evolutionary process that continued throughout the postbellum years. The evidence, furthermore, raises doubts about the thesis developed by Jonathan Wiener that identifies two separate paths in the economic and social development of the postbellum South. In contrast to Wiener's argument, the findings of this thesis indicate that the growth of furnishing merchants was not limited to a particular region, nor was it greatly affected by the existing class structure. As this expansion proceeded, the Southern furnishing market finally became saturated and most of the regional differences in market density were attenuated.; One of the most controversial issues concerning Southern furnishing merchants has been the alleged territorial monopoly which allowed merchants to charge excessive interest rates on their credit sales. On this issue, I offer evidence which contradicts the notion of territorial monopoly. Based on statistical information as well as evidence about the actual spatial arrangements of the furnishing market, I find the typical market arrangement was far from monopolistic. A great number of firms were concentrated in those rural towns whose growth benefited from extensive railroad construction. This spatial organization is consistent with the pattern of rural transportation costs, which provided a substantial advantage to urban merchants and enabled them to offer lower prices. My thesis, furthermore, highlights essential similarities between the development and spatial structure of the Southern furnishing market and those of the Midwest.; Finally, my dissertation considers the growth of banking in the rural South at the turn of the century and beyond. Here I attempt to identify evidence that merchants' credit was being replaced by bank loans, which indeed took place to a limited extent. In spite of significant expansion of rural banking, however, the Southern credit market was still dominated by furnishing merchants, while rural banks were also charging excessive interest rates for agricultural credit.