Joshua R. Greenberg

December 20, 1995

Go To Economics of Slave Trade Endnotes

The Economics of the Slave Trade

An overall look at the economic situation of the United States between 1790 and 1860 sees amazing growth and expansion. Market dynamics and sensibilities switched from small and localized, more personal relationships to large and impersonal interregional relationships. These larger and less personal trade networks were developed within a framework that contained less barter and more currency, credit, and interest. Much of the economic growth in the period was due to the discovery of cotton, which accounted for about half of the nation’s overseas exports in the period from 1830 to 1860, as a cash crop. Older cash crops, such as tobacco, were at the mercy of boom and bust cycles of demand and had to be cautiously exploited. Cotton, however was the building block for industrial expansion in Britain and the North and continual increasing demand meant that Southern planters could gamble on the amount of land and labor they poured into its production. The sale of Southern cotton had a multiplier effect which enriched both the Northeast and West. In the South, cotton brought economic attention and mass demographic movement away from Virginia, Maryland, Delaware and North Carolina and to the new Southwest in Mississippi, Louisiana, Alabama, Florida, Arkansas, and Texas. This expansion and the subsequent cotton empire that was created was only made possible by the massive slave labor system that was used to make it work.

Within this structure, slave trading grew and became a complex and interregional industry both as propagator and a result of the system. One way of looking at this growth (that I have attempted) is by comparing the economic terms of slave sales in the early and late antebellum period and the factors that decided those terms. Through examining newspaper advertisements, a popular method of selling slaves, a change in the terms of sale and the flexibility of those terms is seen. These observations can only be seen within an understanding of the economy of the period, which shows the factors behind the sale terms. Combining these newspaper trends with a synthesis of contemporary economics point to the idea that the slave trade before 1815 was dominated by personal interactions on a local level and the late antebellum slave trade functioned in a complex, interregional nature. The later period was composed of a large number of forces, both economic and non-economic that also complicated the slave market. This transition from locally based, personal market relations to interregionally based, impersonal market relations in the domestic slave trade industry paralleled the growth and maturing of the United States economy as a whole.

The period between 1790 and 1815 was a tenuous one for United States economics. The farmers and few artisans that populated the Northern and Western countryside were economically isolated and limited to local markets for transactions due to high transport costs. Within these local markets, most trading occurred without the use of currency and relied on barter and slips of paper with amounts written on them. Trading networks did exist, but functioned like spokes on a wheel where market dynamics were geared almost exclusively from the hinterland toward the nearest urban seaport. Even those producers that lived near enough to an urban coastal center were at the mercy of British trade restrictions. In the South, tobacco crops lacked their booming pre-Revolutionary market and plantations were in a state of transformation, looking for alternate products.1 The structure of the economy in this period left little opportunity for major capital accumulation which was necessary to build the type of industrialized system that was developing in Britain. Writing about this situation in 1792, Tench Coxe noticed that the nation was

not yet traversed by artificial roads and canals, the rivers of which above their natural navigation have been hitherto very little improved, many of whose people are at this moment closely settled upon lands which actually sink from one-fifth to one-half of the value of their crops in the mere charges of transporting them to the seaport towns . . .2

However, this time period saw the seeds of the coming economic expansion that would flower after 1815.

The Louisiana Purchase of 1803 opened the Mississippi River Valley to a steady stream of southbound trade. In the Northeast, rapid urbanization nearly tripled the size of New York between 1790 and 1810 and expanded the market sensibilities of the hinterland population striving to supply the growing cities.3 These developments were coupled with the conclusion of the war with Britain in 1815, the establishment of unrestricted trade with most of Europe and the beginning of the exportation of cotton to Britain as a major cash crop. The decision by Southern planters to start growing cotton was influenced by forces that pulled the planters to cotton just as they pushed the planters away from tobacco and some other crops like indigo. The break with Britain basically dealt a death sentence to indigo production in the South. Colonial indigo production had been subsidized by British manufacturers who were playing a part in the empire’s mercantile triangular trade. As part of a separate nation, indigo producers in the new United States lost their benefits. Demand for Chesapeake tobacco also slowed after 1790 because tobacco, as a luxury item, was expendable in the economic tough times. The Napoleanic Wars basically killed whatever remained of the industry in the early 19th century. While 1792 saw 30,000 hogshead of tobacco exported to France, only a few hundred were sent in some of the years from 1800-1816.4

A solution to these economic problems was found in short staple cotton. The invention of Whitney’s cotton gin in 1793 gave Southern planters a new cash crop to grow and a productive reason to keep and accumulate slaves. Short staple cotton usually contains seeds which cling tightly to its fiber, but were separated easily by the new gin. The fiber or cotton "lint" that remained after the seeds were taken out could be easily spun into thread and then made into a cheap and durable cloth.5 Thanks to the expanding British textile industry with a fully mechanized spinning and weaving process which used cotton cloth as its main product, there was no drop in demand for Southern cotton in the entire antebellum period. In order to keep producing all planters had to do was increase their land and slaveholdings, as a land and labor intensive crop, bigger was better. The land for this production was in the newly settled Southwest that only really started taking shape by the 1820’s, and the labor was supplied by slaves either brought or sold to this region. The numbers showing how cotton expanded are staggering. Negligible amounts of cotton were exported in the 1790’s as the gin just started to take effect. By 1815 there were 150 thousand bales produced and this number increased to 4541 thousand bales by 1859.6 So by 1815, the structure was in place for the beginning of a vigorous cotton trade that Douglass C. North says funded the economic growth of the nation in the antebellum period.

North says, that because of the idea of a multiplier effect, any income made from the development of a single lucrative crop (cotton) based on the labor of slaves in the South would have left the region.7 The form in which cotton revenue filtered through the economy occurred in transportation charges to Northern and foreign merchants, import of foodstuffs and supplies from the West to feed slaves and planters, and import of manufactured goods from the North for luxury and practical purposes. The South’s income became capital for the North and West and allowed them to use that capital on infrastructure improvements in the form of canals and railroads and industrial improvements in the form of factories.8

Under this structure, banks and currency gained in importance throughout the antebellum period. There were two types of banks in the antebellum United States: state chartered and federally chartered banks. Although these banks differed in who controlled them and who their customers were, they both functioned to print paper notes in exchange for promises to pay and acted as creditors in a wide variety of loans. The paper money printed by state and federal banks acted like a cashiers check and could be devalued when in use at a distance from the branch that held its corresponding funds. Although it was used to trade and exchange goods, it could only be "cashed" for gold or silver at the place it was printed. The growth of these banks was unstable during the early antebellum period due to a lack of faith in their solvency and political obstruction over the legality and power dynamics of controlling the money institutions. However, the number of banks, which had stood at less than 200 up until about 1815, had skyrocketed to about 1600 in 1860. Since paper money was printed by these banks, the increased number and location of these banks meant an increase in the use of paper money throughout the period.9

Within the South the growing importance of cotton as a major export had significant demographic repercussions. The land in the Southwestern states of Alabama, Arkansas, Florida, Louisiana, Mississippi, and later Texas became important for its ability to produce high cotton yields at low land and production costs. Both planters and slaves moved to these areas in massive numbers between the years of 1810 and 1839, not only creating new societies, but changing the ones in the old South that they left.10 These moves were financed with money and credit from the Northeast and Great Britain who, thanks to growing textile production, could use every bale of cotton that was produced.11

The labor system that fueled westward expansion and led to the rise of the cotton empire was African-American slavery. The supply of labor within this system was provided through the domestic slave trade which functioned in a cycle to both cause the system based on supply and result from the system based on demand. Slaves were either transported from one state to another by their owners or by slave traders. Although it is difficult to know how many slaves were transported by either of these groups, it is possible to get a picture of where slaves were moving from and where they went. It is no surprise that states like Virginia, Maryland, Delaware, and North Carolina had net losses of slaves in every decade between 1800 and 1850. At the same time states like Alabama, Louisiana, Arkansas, Mississippi, and Texas saw nothing but net gains in slave amounts.11 The fact that the numbers of slaves moving to the Southwest increased through the period meant that even if the percentage of slaves being transported by slave traders remained low and constant, the aggregate number of slaves being traded increased greatly. In addition to this interregional trade there was also a booming market for intrastate trade. These numbers again are hard to secure, but once a slave was transported to the west or Southwest, they were not necessarily kept in the same place. All of this moving around meant that the slave trading industry had to mature and become more complex through the period to deal with the demand. If cotton was stabilizing the economy for the whole nation and slave labor was needed to produce that cotton then the supply of that slave labor was of the utmost importance to the people involved. Frederic Bancroft was valid in ending his influential 1931 work with the statement that "slave-trading was vastly more important than (numbers and dollar amounts) suggests: it was absolutely necessary to the continuance of this most highly prized property and to the economic, social and political conditions dependent on it."12

A look at the domestic slave trade in the period before 1815 shows a small and very regionalized industry, paralleling the country’s economy at the time. In the period before 1807 most large slave purchases were still done via the Atlantic trade. Cities like Savannah and New Orleans existed as domestic slave trading centers, but were not yet fully linked as part of an interregional network. Slave owners engaged in the markets had a diverse number of reasons for the purchases and the sales they made. Bancroft has written that at the time, a popular belief was that slaves that were American born "were the only slaves fit for house-servants or even partially skilled laborers."13 Regardless of the validity of the statement, the fact that Creoles usually had more experience with the English language made them prized as house slaves. Even in those early days, Southern planters had started to move West. Many of the slaves sold domestically before 1815 were eventually brought to areas like Georgia, Kentucky and Tennessee. However, the trade was usually conducted locally between slaveholders and not over long distances through impersonal professional brokers, whose numbers were just beginning to grow as they moved from international trading to domestic trading.14 There were also many sales that just occurred within a town or county. These sales did not count as part of a migratory pattern, but only as part of the redistribution of wealth within the society. Most slave owners only had one or two slaves and the purchases they made were rare events. In this time period the arrival of a new town or the growth of a local market might enable a farmer to sell more and subsequently might buy a slave in order to increase production. So, everything from a beginning of major population migration to a small farmer wanting to increase production output might account for purchase motivation in the period before 1815.

For all of the sales made to those people moving to the West or increasing their role in market production, there was someone trying to gain financially by making a sale and their motivation was just as varied. In this period there was trade going on between slave owners in the North who were attempting to sell off their slaves before gradual emancipation laws took effect. The growing legal restrictions on slavery in the North were seen as an opportunity for a few people to make a profit from a losing situation. The number of sales from this group is debatable, but the sales did occur and were coupled with the sale of some kidnapped freedmen to account for a significant number being traded to the South.15 Within the South there was also selling motivation for planters. The ever quickening end of the tobacco boom saw a change in crop production. As tobacco, a labor intensive crop, was replaced with grains and other less intensive crops, the labor need was diminished.16 If a planter was in debt and needed to raise money, the selling of slaves was often a decision that allowed other resources like land to be kept. Some sales were simply due to dynamics between the slaves and masters. One advertisement for the sale of a slave said that "the cause of [the slave’s] being sold is that he does not like to live with his present master."17 So, everything from economic and demographic trends to interpersonal relationships helped to create a domestic slave market. Once the decision to buy or sell a slave was made by a planter, there were a few options to be taken. Newspapers of the time, which were readily available to the majority of populace, were full of advertisements for both public auctions of many slaves and private individual or group sales. Even those planters that lived away from a town could have easy access to the news. In 1818 the Carter family on the Shirley plantation received at least one newspaper, The Richmond Enquirer in their home. The year’s subscription cost only $6.00.18

In this early period, domestic sales still might have to compete with foreign ones. A New Orleans advertisement in 1807 read, "For Sale, Two likely American Negro BOYS. One about 20, and the other about 24 years of age."19 In a busy port like New Orleans the domestic market had strong competition. Not all sales at this time were being orchestrated by slaveholders themselves, increasingly domestic trading was being taken over by professional brokers and agents who for years had been controlling the foreign trade. An ad in a paper in Charleston, South Carolina in 1814 for "A prime likely African Negro Wench 18 years of age . . ." was ended "Apply to Samuel Browne, Commission Broker, No. 232 King-street."20 Samuel Browne was one of the growing number of professional brokers that had acquired enough capital to set up a business (and an office) based solely on buying and selling. He even ran his own advertisement in the paper that day(traders used newspapers to set up meetings as well as sales), but it is interesting to note that slave trading was just one of the roles that Browne played as an all-purpose merchant. 21 He had acquired enough capital to open a trading business, but his market was not large or developed enough to specialize in one task. However, just running a newspaper advertisement as a sales tool did not always ensure a buyer. On May 9, 1814 a notice was posted reading:

For Sale, A NEGRO WOMAN and her two Boy Children about 5 and 1 year old, also a Boy about 13 and a Girl about 11 years of age. The whole are prime country born negroes brought up about the House and very smart, will be sold low and on easy terms. Also an excellent Chair Horse, remarkable gentle, which would be bartered for 1 or 2 good Milch Cows accustomed to the city.22

The advertisement was still running in the paper in late November of that year, there had been no buyer yet. This occurrence is telling about the early antebellum domestic slave trade; there were those who had a demand to be met and those who had a supply to release, but these sides were still in the process of creating a stable market in a time when market relations were new.

The instability and immaturity of the trade can be seen in the terms of payment and pricing that occurred once the sides did come together. An ad from 1814, where barter is still being used along with cash to negotiate market relations read:

Negroes wanted. A liberal price, and CASH payment will be given for 15 or 20 prime young negroes of both sexes, who have been accustomed to field work. A greater number will be purchased, payable in Cash, and balance paid in prime UPLAND COTTON, delivered in Augusta, (Georgia) . . .23

This advertisement showed that the early antebellum slave trade still contained some pre-capitalist dynamics and at the same time a tendency by these early traders to compensate for the lack of complex banking and currency structures in the economy in order to add maturity to the market. These early sales were still relatively local and personal events in the lives of the slaveholders and they were willing to make accommodations that a larger and less personal market would not. One trader announced that "sixty valuable slaves, will be exchanged for cotton which will be taken at fair valuation; to be delivered in Augusta or Savannah, as may best suit the purchaser."24 This trade, while not local in origin, showed the localized view of the traders at the time by understanding that travel (to and from the market) was time and energy consuming.

When these sales were made in cash, the immaturity of banking and currency relations was evident. The average price of a slave in the period from 1800 to 1815 was between $250 and $300. At the same time however, a prime field hand in the New Orleans market varied from $500 to $800.25 These prices are highly subjective though, because of the small amount of currency that was actually being traded. Currency notes were only able to be redeemed at their bank of printing and the small number and dispersed nature of the banks at the time meant that bills were being traded at a distance from their home. This allowed for a devaluation of the bills and an inflation of prices in some luxury items like slaves. While cash could usually be obtained(at least in part) for the sale of a slave, that cash meant different things in different places.26 The lack of published prices in many of the newspaper advertisements of the time was in part a recognition of the contemporary instability and flexibility of market dynamics. Following the boom of cotton and economic activity in the post 1815 period these relations would become more complex as the industry of slave trading matured.

If purchase and sale motivation in the early antebellum period reflected a small regional system that was beginning to expand, the late antebellum period saw a multifaceted and diverse interregional system with endless motivations. The moves to Kentucky and Tennessee in the period before 1820 were only the beginning of Southern expansion as Mississippi, Alabama, Louisiana, Arkansas, Florida, and Texas were added to the society. The cotton production that supplied both the impetus and the finances for these moves needed to be supplied with a labor source and it was the domestic slave trade industry that supplied it. The profits that came with the production of cotton were placed back into the factors that made that profit and the prestige that came from it. Land and slaves created wealth that paid for more land and slaves. Within this cycle, the buying and selling of slaves became an important and complex industry in which slaves were bought and sold for many reasons including the paying of debts, investment, personal conflicts between masters and slaves and providing emergency cash.27

The expansion of the slave market saw different groups enter into the formula as buyers and sellers. For instance the courts and sheriff’s offices in South Carolina were the largest property salesmen in the antebellum period. The auctions run by these groups, usually on the first Monday of each month, were called Sale Days and could last for one or two days. The nature of these sales ranged from probate sales to debtor auctions, but all involved law enforcement officers in charge of selling slaves for revenue. These auctions included both individual and group sales and involved both local and regional trade. However, while the number of court and non-court sales was about equal from 1820 to 1860, non-court sales were over three times more likely to be interregional. These court run Sale Days account for some of the growth of the slave market in the period, but it was the expansion of professional slave traders that dominated the scene.28

The moves out West were orchestrated by land speculators that made large profits capitalizing on demographic shifts. Many of these men also speculated in the labor that would work this land and turned their capital into a business. Slave traders were still providing planters and small farmers with individual sales to increase their productivity or solve a labor shortage, but they were also setting up large trading networks and holding that required a large capital investment. Due to the larger, interregional nature of the industry in the late antebellum period, these traders took a different approach to their business than their predecessors of twenty or thirty years earlier. These traders were no longer all purpose merchants like Samuel Browne nor did they offer to make selling accommodations "as may best suit the purchaser." Professional traders had to be aware of transportation and market changes that would affect the movement and prices of their large capital investments. In a letter on January 23, 1855 to slavetraders Z.B. Oakes and A.J. McElveen, one of their business associates says:

Cotton is down which you Know is our only chance and the rivers are down so if cotton was worth any thing we could not get it into market; but I (mark?) you to be patient as I will effect a sale as soon as pissible and you should hear from me immediately afterwards You both Know it requires a man of a deal of patience to trade in negro property.29

As the slave trade grew and became especially interregional, the intersection and tie in between transportation and markets became important to men like this whose fortunes could be dependent on whether the river was high or low. Railroads also became a factor in the growing industry both because of the large amounts that they could carry and the pace and ease of the travel. While in Virginia in the mid-1850’s, Frederick Law Olmsted observed that a freight car on his train was filled with about 40 or 50 slaves bound for the Southwest. They had been purchased by traders who were then transporting them to be sold in a distant market.30 Preserving the health and condition of large numbers of slaves in transit was always in the traders best interest, and transportation advancements, like the five railroad lines that began operations in South Carolina in the period from 1833-1855, were always utilized.31

The growth of cotton as a cash crop and the huge profits that came out of its exportation funded an expansion of the banking system and economic structure of the South in the late antebellum period. It is not surprising that as the number of banks increased in the South, the amount and variety of banking functions in place in the society increased. So, economic arrangements became more complex as banking and market relations became more an everyday part of people’s lives. Barter and slips of paper signifying debt were eventually replaced with cash, interest, mortgages, payment plans, and bonds. This trend can be seen in the slave advertisements of the time. The terms for sales during the 1850’s in South Carolina reflect a complicated and thoroughly mature economic structure. One ad for a "prime gang of one hundred and nine NEGROES" were given the following terms of sale:

Conditions--one-third cash, balance by bond in one, two, three, and four years, equal successive annual instalments with interest to be paid annually from the date, secured by mortgage of the negroes and approved personal security.32

Here the sale is a lot more complex than just a trade of slaves for cotton. A payment schedule was set up, in cash, where the balance of the sale would be paid off over a four year period while interest accrued. These terms of payment show up in many contemporary advertisements in Charleston indicating they may have been relatively standard. However, while some advertisements did not include such complex terms, they nonetheless showed the maturity of the market. These ads simply stated, "conditions cash; purchasers to pay for papers."33 This term meant that the seller believed(and probably was right to do so) that cash was being circulated widely and regularly enough that a buyer would be able to present many hundreds of dollars in currency at the time of purchase. While trading networks and the payment terms of slave sales were becoming more complex, the setting of the sale prices themselves had contributing factors that were both new and old.

At work at the same time as these factors were more conventional economic determinants like the price of cotton and land. The slave trading and cotton industries went hand in hand so the same page of the newspaper that contained an advertisement for slaves also contained a report on yesterday’s cotton prices.34 While traveling in the lower Mississippi in the late 1850’s, Frederick Law Olmsted searched in vain for a newspaper with news in it and not just economic information. He finally finds a copy of The Natchez Free Trader, but it contained "nothing but cotton and river news."35 The expansion of slave trading offered more of an opportunity for regional variance in slave pricing, but these regions were united by the underlying assumption that a system being made rich by cotton and the labor of slaves could always use more slaves. This idea accounted not only for the steady climb of antebellum slave prices, but the growing complexity of antebellum slave trading.

While average early antebellum prices for slaves remained constant in the two to three hundred dollar range, the remainder of the antebellum period saw a major price inflation and prices reaching well over $1000. With the expansion of interregional slave trading, the local market dynamics and activities that work to set merchandise prices were linked together to establish an interdependent market. Events in one area could raise the price of slaves in an another. For example the 1849 outbreak of cholera in some Southern areas saw a death toll among slaves that might have been about ten thousand. This caused a small economic panic in some of the slave markets that feared a drop in supply and a growth in demand. Subsequently the price of slaves went up all over the South.36 The setting of prices also had factors that were not even related to economic trends. The establishment of what have been called "fancy-girl" markets is one example of this. Some big cities, like New Orleans and Louisville had special markets where "girls, young, shapely, and usually light in color, went as house servants with special services required."37 These slaves were officially sold as house servants, but both buyers and sellers understood that sexual motivation lay behind the purchase and the (forced or consentual) sexual service of female slaves was really being sold. These girls could be sold for as much as $5000 at the same time that skilled male laborers were valued at only half as much. The special nature of these sales made the "fancy girl" markets a very glaring example of how as the slave system expanded in the antebellum period, there was much more than a economic labor market involved in the trading of slaves.38 Late antebellum domestic slave trading had become so interregional and complex as an economic venture that the factors contributing to it were more numerous and more than just economic supply and demand of labor was involved .

The growth of the United States economy in the period from 1790 to 1860 can be seen in terms of an expansion and a growing complexity. The local market relations that existed before canals and railroads were personally run on trade and a mixture of cash and barter. With the growth of the South’s cotton industry in the period after 1815, the country branched out and developed an interregional trade system that was structured around a growing number of banks and currency. By the 1850’s a complex and mature United States economy was strong enough to do things like put hundreds of millions of dollars into the building of the interstate railroad network. Within the South these economic changes were most easily seen in demographic changes. A massive number of people moved from the old economic centers in Virginia, Maryland, Delaware, and North Carolina to new fertile lands in Arkansas, Alabama, Mississippi, Florida, and Texas. They moved to accumulate land and slaves in order to produce the cotton that would fund the country’s growth.

As market relations became interregional, businesslike, and impersonal so did the slave trade, with the help of professional traders. As the country’s economy moved to incorporate more cash and banking techniques in the place of barter and trade; the slave trade took the same steps. The transportation and industrial advancements of the period were not lost on slavetraders who used the advancements to increase business. The general trend of the slave trade in the antebellum period was toward growth. Prices grew, purchase and sale motivation factors grew, and the physical area that traders were working within grew. This growth made late antebellum slave trading a complex and interregional occurrence that was driven by a multitude of factors both economic and non-economic. While personal economics and whim on a local level had structured the slave trade before 1815, the complex interregional nature of the later trade was composed, not only of the sum of these local factors, but also a number of larger economic and non-economic forces. By moving from personal market places into a larger impersonal market economy the growth and maturing of the domestic slave trade industry paralleled the growth and maturing of the United States economy as a whole.

Go To Economics of Slave Trade Endnotes