> Michael Hoover responded to my question about the integration of the U.S. > South into the national economy, saying that the government expended > considerable resources to encourage investment there. > Why did they have to expend funds? Why was the investment so slow in > coming. > Michael Perelman Proponents justified the use of subsidies to attract new industries by arguing that areas lacking investment capital, consumer demand, and skilled workers needed special features to make them more attractive to potential investors. As I suggested in my previous post, the incentives often lured competitive sector, low-wage manufacturers most in need of savings. Thus, the South's early development, characterized by poorly paying, slowly growing industries, did not create rapid, self-sustaining expansion that might have generated more capital and demand. The subsidies helped to perpetuate the conditions that justified the use of the subsidies. Post WW2 military spending and the proliferation of military facilities and production plants in the South provided an important infusion of capital. These operations, in turn, led to growing in-migration of people. Later, when US industries such as auto and electronics began to face increasing foreign competition, southern locations that offered low-interest financing, cheaper labor, and lower taxes were attractive because of the aggregate savings they offered. And the enerby crises in the 1970s enhanced some of the South's climatic advantages. Wilbur J. Cash - in his 1941 *The Mind of South* - reflecting upon the half century that had passed since Henry Grady (the Atlanta Constitution publisher who coined the term "New South") had campaigned for industrial growth, wrote that the South had yet to move beyond its plantation past. A decade later, C. Van Woodward argued - in his *The Origins of the New South* - that a post-Reconstruction shift of power away from a weakened planter class to middle-class industrialists had occurred. The latter, however, maintained loyalty to the region's traditional socioeconomic and politcal relations. More recently, Gavin Wright - in his 1986 *Old South, New South* - suggested that the mobility of capital now links the two eras. Many of the forces that contributed to the nationalization of the South's economy also led to the southernization of the US economy...Michael
