Economics of Slavery

From the middle of the seventeenth century to the start of the Civil War, slavery and commercial agriculture were intimately associated. During the colonial period, slaves grew much of the tobacco in Virginia and the Carolinas, rice in the low country of South Carolina and Georgia, and sugar on the Caribbean islands—all crops that found their way into world markets. Neither southerners, who used slaves as field laborers and servants, nor northerners, who supplied slaves and food to the southern and Caribbean plantations and consumed the products of slave labor, questioned the economic value of slavery. By the late eighteenth century, however, some southern slaveholders began to have doubts. Deteriorating tobacco lands and declining prices for southern crops seemed to be transforming valuable slaves into what George Washington in 1794 called "a very troublesome species of property."

Ironically, Washington wrote just as Eli Whitney began production of his cotton gin, an innovation that would begin the expansion of cotton production and end any slaveholders' doubts about the economic value of slavery. The growing demand for cotton from European and northern mills drove prices up and drew settlers west seeking new lands on which to grow the staple. Cotton rapidly became far and away the nation's most valuable commercial crop during the antebellum years. Although cotton was grown on family farms, the amount was small, limited by the labor force of family members and their need to produce food also. Those using slaves could increase output and their income, which allowed them to buy more and better land and more slaves to increase production even further. As a result, slaves grew most of the cotton (as well as the other southern staple crops—tobacco, rice, and sugar), the largest proportion on plantations with a slave labor force that numbered in the tens or hundreds.

Slavery seemed enormously profitable. Cotton exports alone constituted 50-60 percent of the value of the nation's total exports, helping pay for imports from abroad. And slave labor provided the raw material for New England's textile mills, helping stimulate the nation's early industrialization. Slave-produced commercial crops required a host of middlemen to sell and transport them to markets and to finance and supply the slave-owning planters. Southern cities such as New Orleans, Mobile, Savannah, Charleston, and Memphis and northern ports such as New York, Boston, and Philadelphia depended heavily on the southern trade. Northern farmers and manufacturers found ready markets for their products in southern towns and cities, but especially on the southern plantations.

If the products of slave labor stimulated the nation's economic development, the slave South itself remained primarily agricultural and did not experience the urban and industrial growth that took place in the North.

A major text on the economics of slavery is: Robert William Fogel and Stanley L. Engerman, Time on the Cross: The Economics of American Negro Slavery. Boston: Little, Brown and Company, 1974. These scholars argued that:

1. Slavery was not a system irrationally kept in existence by owners who failed to perceive or were indifferent to their best economic interests. The purchase of a slave was generally a highly profitable investment which yielded rates of return that compared favorably with the most outstanding investment opportunities in manufacturing.
2. The slave system was not economically moribund on the eve of the Civil War. There is no evidence that economic forces alone would have soon brought slavery to an end without the necessity of a war or other form of political intervention. Quite the contrary; as the Civil War approached, slavery as an economic system was never stronger and the trend was toward even further entrenchment.
3. Slave owners were not becoming pessimistic about the future of their system during the decade that preceded the Civil War. The rise of the secessionist movement coincided with a wave of optimism. On the eve of the Civil War, slaveholders anticipated an era of unprecedented prosperity.
4. Slave agriculture was not inefficient compared with free agriculture. Economies of large-scale operation, effective management, and intensive utilization of labor and capital made southern slave agriculture 35 percent more efficient than the northern system of family farming.
5. The typical slave field hand was not lazy, inept, and unproductive. On average he was harder-working and more efficient than his white counterpart.
6. The course of slavery in the cities does not prove that slavery was incompatible with an industrial system or that slaves were unable to cope with an industrial regimen. Slaves employed in industry compared favorably with free workers in diligence and efficiency. Far from declining, the demand for slaves was actually increasing more rapidly in urban areas than in the countryside.
7. The belief that slave-breeding, sexual exploitation, and promiscuity destroyed the black family is a myth. The family was the basic unit of social organization under slavery. It was to the economic interest of planters to encourage the stability of slave families and most of them did so. Most slave sales were either of whole families or of individuals who were at an age when it would have been normal for them to have left the family.
8. The material (not psychological) conditions of the lives of slaves compared favorably with those of free industrial workers. This is not to say that they were good by modern standards. It merely emphasizes the hard lot of all workers, free or slave, during the first half of the nineteenth century.
9. Slaves were exploited in the sense that part of the income which they produced was expropriated by their owners. However, the rate of expropriation was much lower than has generally been presumed. Over the course of his lifetime, the typical slave field hand received about 90 percent of the income he produced.
10. Far from stagnating, the economy of the antebellum South grew quite rapidly. Between 1840 and 1860, per capita income increased more rapidly in the south than in the rest of the nation. By 1860 the south attained a level of per capita income which was high by the standards of the time. Indeed, a country as advanced as Italy did not achieve the same level of per capita income until the eve of World War II.