Crop Lien System of Credit

The crop lien system allowed farmers to receive commodities such as food, supplies, seeds, etc. on loan (or credit) and pay this debt back after their crop was harvested and sold. Therefore, there was a lien against the crop. The amount of credit that was received was based on the estimated value of the crop.

Some disadvantages of this system included mistakes in valuing the crop, a bad crop year meant longer indebtedness and merchants could often control the prices of the supplies and therefore, the debt.

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