Harman Patil (Editor)

Crop lien system

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The crop-lien system was a credit system that became widely used by cotton farmers in the United States in the South from the 1860s to the 1930s. Sharecroppers and tenant farmers who did not own the land they worked obtained supplies and food on credit from local merchants. The merchants held a lien on the cotton crop and the merchants and landowners were the first ones paid from its sale. What was left over went to the farmer. The system ended in the 1940s as prosperity returned and many poor farmers moved permanently to cities and towns, where jobs were plentiful because of the war.

After the American Civil War, farmers in the South had little cash. Cotton prices were low. The crop-lien system was a way for farmers–both black and white–to get credit before the planting season by borrowing against the value of 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. Sharecroppers had no mules or tools; tenant farmers did have them and commanded a larger share of the crop. The owner took the rest. At harvest time the merchant collected his debts from the sale of the crop.

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.

References

Crop-lien system Wikipedia


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