The Impact and Malleability of Money Design

[Law and Political Economy]. Finance during reconstruction:

We pick up the story…. in the post-Civil War South, a monetary wasteland by any measure. Banks there collapsed along with the Confederacy and its currency. According to Lawrence Goodwyn, the per capita money supply in Arkansas was thirteen cents; in Rhode Island, it was $77.16. Bridgeport, Connecticut had more banks than the states of Texas, Alabama, North Carolina, and South Carolina combined, while Massachusetts alone had a national bank circulation that was five times that of the entire South.

Behind the numbers rose the system of debt peonage that came to shape production for millions of poor Southerners, white and black. Bereft of cash, farmers turned to “furnishing merchants” for supplies: everything from clothes to tools, seeds to hardware. The goods came on credit and that credit was extremely expensive—merchants routinely charged exorbitant rates, 100 to 200% annually. In return, each merchant took a lien on the farmer’s crops. Once the lien attached, the merchant virtually monopolized that farmer’s connection to the market. As to consumption, the farmer could buy only from the merchant who held the crop lien because no other lender would advance credit without collateral. And as to production, the farmer had to turn over his crop to the merchant for sale to pay off his debt.

The trap was, in fundamental ways, a monetary one. The devastation of the South’s financial infrastructure was only the beginning. After the Civil War, the federal government settled on a long-term deflationary policy; by limiting the amount of money in circulation, it aimed to drive down prices so that it could resume convertibility of the fiat currency that still circulated.

From Mehrsa Baradaran, The Color of Money.

The "furnishing merchant" ... or "furnishing man"...later shortened to "the man" often charged interest for goods purchased on credit that would make a payday lender blush.The lack of money was not helped by Lincoln withdrawing the greenbacks with which he fought the war. There's a reason the South hates the Northern Banks.

In addition to money shenanigans, merchants also colluded to monopolize transportation, so crops could go to market only on authorized rail connections...which further extracted rent from the debt peons.

This was the origin of the Farmers' Alliance and the People's Party, which elected congressmen and lots of state officers, particularly in the Midwest. It also coincided with William Jennings Bryan's "Cross of Gold" campaign for the presidency. Bryan lost to McKinley (the banks' candidate), and is now known mostly as the guy who prosecuted the Scopes trial. (see Inherit the Wind).