We would like to acknowledge the helpful comments of Frank McCormick, Eugene Smolensky, Claudia Goldin, an anonymous referee, and the editor. All are naturally absolved from the burden of any errors.

¹ “Debt Peonage in the Cotton South After the Civil War,” The Journal of Economic History, XXXII (September 1972), 641–69.Google Scholar

² Ibid., pp. 642–43.

³ Ibid., p. 665.

⁴ Ibid., Table 1, p. 645.

⁵ Ibid., Table 2, p. 649.

⁶ Cf., Friedman, Milton, “The Demand for Money: Some Theoretical and Empirical Results,” The Journal of Political Economy, LXVII (August 1959), 227–51.Google Scholar

⁷ Money is usually defined as currency plus demand deposits. If the income elasticity of demand deposits were somewhat higher than the income elasticity of money, predicted deposits in the South would be even closer to the actual.

⁸ R & S, “Debt Peonage …,” p. 650.

⁹ Ibid., fn. 20, pp. 650–51.

¹⁰ For related discussions about interest rate differentials among regions, see Davis, Lance, “The Investment Market, 1870–1914: The Evolution of a National Market,” Journal of Economic History, XXV (September 1965), 355–99CrossRefGoogle Scholar; Stigler, George J., “Imperfections in the Capital Market,” Journal of Political Economy, LXXV (June 1967), 287–92CrossRefGoogle Scholar; Frederickson, E. Bruce, “The Geographic Structure of Residential Mortgage Yields,” in Guttentag, Jack M., ed:, Essays on Interest Rates, Vol. II, New York: National Bureau of Economic Research, Columbia University Press, 1971.Google Scholar

¹¹ R & S, “Debt Peonage …,” p. 652.

¹² Ibid., p. 653.

¹³ Ibid., p. 659.

¹⁴ “Ibid., p. 653.

¹⁵ Twenty-five farms multiplied by 150 acres per farm equals 3,750 acres, or six square miles.

¹⁶ R & S, “Debt Peonage …,” p. 652.

¹⁷ Ibid.

¹⁸ “The business of a money-lender, though only among Christians and in Christian times a proscribed profession, has nowhere, nor at any time, been a popular one. Those who have the resolution to sacrifice the present to lie future, are natural objects of envy to those who have sacrificed the future to the present.” See Bentham, Jeremy, Defence of Usury, Showing the Impolicy of the Present Legal Restraints on the Terms of Pecuniary Bargains (first published in 1787), London: Simpkin, Marshall & Co., 1843, p. 17.Google Scholar

¹⁹ Federal Trade Commission, “Economic Report on Installment Credit and Retail Sales Practices of District of Columbia Retailers,” Washington, D.C.: Superintendent of Documents, 1968Google Scholar; quoted in Sturdivant, Frank D., ed., The Ghetto as Marketplace, New York: The Free Press, 1969, p. 79.Google Scholar

²⁰ Friedman, Milton, A Program for Monetary Stability, New York: Fordham University Press, 1959, p. 11Google Scholar; or Friedman, M. and Schwartz, Anna, A Monetary History of the United States, 1867–1960, Princeton: National Bureau of Economic Research, 1963Google Scholar, Chapter 2.

²¹ Technically, it is net monetary creditors who gain and net monetary debtors who lose wealth from an unanticipated deflation. See Kessel, Ruben A. and Alchian, Armen A., “Effects of Inflation,” Journal of Political Economy, LXX (December 1962), 521–537.CrossRefGoogle Scholar

²² R & S, “Debt Peonage …,” p. 656.

²³ Ibid., p. 656. The alleged lower risk and protection from price fluctuations in cotton is not easily verified. The table below shows the coefficients of variation in prices for selected crops:

²⁴ William Parker confirms the declining southern share of U.S. production in corn, oats, and wheat during this period; cf. Davis, , Easterlin, , Parker, et al. , American Economic Growth, New York: Harper and Row, 1972, pp. 379–82.Google Scholar

²⁵ Cf. North, Douglas C., Growth and Welfare in the American Past, Englewood Cliffs: Prentice-Hall, Inc., 1966, pp. 76–78Google Scholar; or Davis, Lance E., Hughes, Jonathan R. T., and McDougall, Duncan M., American Economic History, Homewood, Illinois: Richard D. Irwin, 1961, pp. 382–83.Google Scholar

²⁶ R & S, “Debt Peonage …,” p. 663, Table 6.

²⁷ Additionally, monopoly coercion must have intensified from 1860 to 1890 because per capita corn and hog production declined in the South during this time. Growing monopoly power would be extremely difficult to establish.

²⁸ Davis, Easterlin, Parker et al, American Economic Growth, p. 382.

²⁹ A basic difficulty in their analysis, which we have deliberately ignored, is the methodological confusion arising from the lack of a precise definition of debt peonage and a discussion of its general implications. For example, if the notion is that credit is extended on competitive terms but compulsory provisions are monopoly priced, then we would except the “cream-skimming” of regulatory lore. That is, new entrants would only sell provisions, not credit, to realize the monopoly profits. Of course, this process would eliminate profits and monopoly prices in the long run. See Hilton, George W., “The Basic Behavior of Regulatory Commissions,” American Economic Review, LXII (May 1972), 47–55.Google Scholar

³⁰ R & S, “Debt Peonage …,” p. 665.

³¹ William Parker also argues that the natural agricultural advantages of different regions became increasingly important after 1830; in Davis, Easterlin, Parker, et al., American Economic Growth, p. 378.