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Metropolitan Development, Regional Financial Centers, and the Founding of the Fed in the Lower South

Published online by Cambridge University Press:  03 March 2009

Kerry A. Odell  and
David F. Weiman
Kerry A. Odell
Affiliation:
Associate Professor, Department of Economics, Scripps College, Claremont, CA 91711-3948.
David F. Weiman
Affiliation:
Program Director, Social Science Research Council, 810 Seventh Avenue, New York, NY 10019 and Professor, Department of Economics, Queens College, Flushing, NY 11367.
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Extract

The Lower South remained a financial outlier in postbellum America, partly because it lacked developed metropolises. As focal points of regional economic networks, metropolises spawn externalities necessary for financial intermediaries. This cumulative process was constrained in the Lower South by the plantation system and staple monoculture. Only after 1880 did metropolitan networks form around new wholesale distribution centers, notably Atlanta and Dallas. Unlike coastal ports, these cities mediated more diverse commercial and financial transactions and attracted more correspondent banks. Consequently, Atlanta and Dallas were the most likely Federal Reserve cities in their districts, a view shared by local banks.

Type
Articles
Information
The Journal of Economic History , Volume 58 , Issue 1 , March 1998 , pp. 103 - 125
Copyright
Copyright © The Economic History Association 1998

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