Equality of Agriculture: Robert L. Owen, Country Banks, and the Populist’s Federal Reserve

Recovering Senator Robert Owen’s role in creating the Federal Reserve System, this article reclaims the original vision of the Federal Reserve as an institution in which state democratic power checked private expertise. Populist-minded Southern farmers and country bankers embraced the Reserve as a politically palatable vehicle to ease credit, protect against bank runs, and ensure seasonal liquidity. However, the perception of a “populist Federal Reserve” eroded with the onset of the 1920 postwar recession and the ensuing agricultural depression. We show that Federal Reserve officials prioritized combating inflation and made several decisions between 1920 and 1921 that aggravated the agricultural crisis by artificially contracting rural credit access, alienating farmers and country bankers from “their” central bank. This estrangement was further compounded by Reserve failures during the Great Depression, which encouraged Southern farmers and their representatives to re-embrace old populist nostrums that would become centerpieces of the New Deal.