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Invest Money Because: GRESHAM'S LAW, gresh'amz, in economics, is usually stated as "bad money drives out good." The law stems from the fact that money has a value both as money and as a commodity in the open market. The former value is set arbitrarily by law and is relatively fixed; the latter is determined by supply and demand and varies from time to time, "Good money" has a higher value as a commodity than as money and will disappear from circulation.
Industry, hemmed into undesirable sections of the city, unable to expand, its flow of materials hindered by traffic, also realized that outlying areas were more satisfactory places in which to locate. The effects of these various movements were interacting and cumulative. The cities were left with developed but obsolete areas, into which no one would invest money because no single enterprise could reverse the trend. Not only were the land valuations very high—paradoxically often the most badly decayed areas were valued the highest—but also the multiplicity of small holdings made the acquisition of large plottage a virtual impossibility.
Somewhat belatedly the railroad developed the South. Before the Civil War, Southerners had preferred to invest their executive skill and money in managing land and slave forces; the Souti had consequently lagged in railroad building. By 1860 only one route connected the seaboard with the Mississippi River, the Charleston and Memphis, an expansion of the Charleston and Hamburg. To rebuild the economy devastated by the war and to participate, albeit belatedly, in the progress of the times, the Southern states after Appomattox incurred large state debts in behalf of railroad construction, and held out inducements to Northern capital. |
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