The Economics of Slavery Before the Civil War
From the early 1820's to just before the start of the American Civil War in 1861, there were many large scale investors in the slavery market. These people are much like the investors today on Wall Street who work the stocks and bonds, buying and selling, to make a profit. Then, these investors really did not care about about the humanitarian aspects of owning another person, even if they did, profit and loss would always overrule any personal opinion.
Of course, working the stock market was for commodities, bonds, securities not human beings, but for those slavery investors, they were just another commodity. Back then, there were many British and American abolitionists, those who found slavery a horrible human condition regardless of skin color. They thought it should be eradicated regardless of the economic costs to the USA.
And what were those costs? A few hundred bucks, thousands? Mostly in the southern part of America. Far from it. In the 1820's, slave owners owned two million men and women worth $1,000,000,000. At that time, it comprised of 33% of the US economy! Slavery was no small economic thing, losing it would be a blow to all of America. It was not just in the southern part of the USA where large plantations existed. It extended via banking institutions and loans deep into New York, Boston, Philadelphia and other centers of commerce then. It was just business. A landowner needed more workers for the harvest and went to a local bank for a loan to buy slaves. The loan approval was backed by banks based in these cities. Buying a slave was no different than getting a car loan today.
Like the stock exchange, slave prices went up and down based upon season and demand. In the summertime, demand and prices skyrocketed, and during the winter, the opposite. To slavery investors, who made large profits, to the owners, the morality of this business never really was considered, again, like sex trafficking. If it was, it was always a "lofty" or "passing" moment because everyone in the slavery train wanted a profit. By 1861, the market has exploded from only one million when 1800 began, to four million.
Slavery allowed many farmers to acquire credit based on their slave property to buy farm equipment, seeds, etc., this led growth for the whole Mississippi area and in the southern parts of the USA. The real estate market was also tied to slaves. Farms or land when sold had higher value if slaves were included with the purchase, and most of the time, slaves were always included in the sale of any real estate. Real estate had little value by itself then.
There were many professional slavery brokers in the South. There was a market wherever you went. A slave could be sold, leased, rented. They could be easily moved to different locations and the biggest selling point was they could reproduce, increasing the value- buy a pregnant woman and get two or maybe three for one low price. Strong men were also high value.
Even though investment money for slaves was disbursed locally in the South, the loan origination was in banks located in states opposed to slavery. The Bank of the United States, based in Philadelphia, PA., was the main bank who supported the slave owners needs in the entire Mississippi Valley between 1824-32. Loans to farmers increased at an astonishing rate. The bank was part of the federal government. By 1932, 40% of this one bank's loans and capital investments went to slave traders, owners, merchants and growing into the Southwest part of America. The bank was SO successful on profit returns, caught the eye of European banks, who also wanted "in" on the economic boom. Most banks from across the Atlantic were British. They began to market and sell American bonds to their clients in England.
The boom years for slavery economics was from 1830-40. Slavery economics made the whole South America's highest valued real estate area for its crops produced and sold, the slave business. All businesses saw the benefits as income trickled down prosperity levels. The rich got richer, while the poor became less poor or lower middle class. The South was wealthy and many unregulated banks or financial people flooded the area making loans to farmers and businesses. Some 16 banks began and had $46 million dollars to loan out.
Slave owners were not not farmers. The largest slave owners were politicians , judges, and state officials. Ironically, the same people who controlled banking policies. By 1837, the amount of money for slavery loans grew to $80 million. Again, one-third of the money the USA could loan. Many of the loans were also used to build local infrastructure to facilitate the large farming plantations that provide cotton for clothes, food for people. But, the bulk did go to buying and selling of slaves because without them, who would work the farms?
The slave product also produced slavery brokers, like Franklin & Armfield, the largest. This broker would spend $40,000 to buy whole lots of slaves that were surplus to a region and then move them to a region where the market was lacking. The bank who provided the loan for the wholesale purchase was the US bank in Philadelphia.
By the 1850's, slave prices had doubled. So, the interest in demolishing this economic engine was less. While a slave cost more, banks and brokers were making even more money. The rise in cost was related to the price of other goods, that also rose. By 1860, slavery was only dying in two states, Maryland and Delaware. In all of the other slave states, it was business as usual and slaves were vital to personal and national economics.
During the presidential election in 1861, Lincoln's challenger, James Buchanan, expressed that slavery could grow even more if the USA purchased Cuba, which was a long term goal of investing banks to expand the slavery market.
Thank God he lost and so did the institution of slavery. Yet, if one removes the morality of it, one can see why the South resisted as much as they did. It was pure economics.