Tuesday, September 21, 2021

The Financial History of Slavery in the United States


This post was prompted by Sharon Ann Murphy’s recent publication of "The Financialization of Slavery by the First and Second Banks of the United States," in the Journal of Southern History (Murphy 2021). The paper has been getting a lot of attention on twitter. As it should. But it got me thinking more broadly about the progress that has been made in the last decade or so on the financial history of slavery in the United States.

For a long time, claims about slavery and finance in the United States were more likely to be asserted than established with evidence. This has been changing. Richard Kilbourne (1995) is often cited as a pioneer in the study of finance and slavery, and one of the factors he highlighted was the role of local sources of credit in financing slavery in the United States. Kilbourne had focused on one parish in Louisiana. Bonnie Martin, using thousands of mortgages from Virginia, South Carolina and Louisiana found that the use of credit was pervasive and that much of the finance for local sales came from “neighbors,” often the person selling the enslaved people (Martin 2010 and 2016). Clegg (2018) provided further evidence on slave mortgages and foreclosure sales and argued that the reliance on credit and threat of foreclosure were a significant force driving slaveholders toward capitalist behavior. Murphy examined the impact of such foreclosures during the Panic of 1819 on the lives of enslaved people (Murphy 2020).

While these papers frequently emphasized local finance, studies that focused on the westward expansion of cotton production and slavery were more likely to emphasize the role of nation or even international financial networks and institutions.  Schermehorn, for instance, found that slave traders involved in interstate sales often had to rely on long distance business connections, large banks with correspondents in major cities, and the Bank of the United States to move funds from one part of the country to another.  In Murphy’s recent paper on the First and Second Banks, she carefully documents the many instances in which bankers violated general norms of good banking and the rules of the Bank to support the purchase of plantations and slaves (Murphy 2021b).  Similarly, Saunt showed how financiers in New York and Boston were quick to take advantage of the opportunity to speculate in the new cotton territory opened up by the Indian Removal Act.

Life insurance also exhibited a mix of firms from the North and the South. Life insurance for enslaved people appears to have begun with firms in the South, but later firms from the North offered policies as well (Murphy 2005, and Ryder 2012).

While most studies have focused on how slave based production of commodities like cotton and sugar were financed, several authors have examined the ways in which enslaved people were used to finance other types of ventures.  Gonzalez, Marshall and Naidu (2017) showed how slave ownership, being able to provide enslaved people as collateral, facilitated the finance of other businesses in the Chesapeake. Murphy examines a case in which enslaved people were used directly to finance industrial investment in the South (2021a).

Another line of research that has only recently begun to be explored is the use of credit, and limitations on their access to credit, influenced the economic lives of enslaved people (Hilliard 2013, and Edwards 2021)

And there is more on the way, the Columbia University Press Studies in the History of American Capitalism series has two forthcoming books that explore aspect of financial history and slavery (Boodry forthcoming, and Pardo forthcoming).

         Clearly, a lot of work has been done. Still, it is important to note, as Murphy does, that many of the big questions are still unanswered. If you want to make claims about the relative importance of slavery to financial institutions or the relative importance of financial institutions to slavery, or the relative importance of northern institutions relative to southern Institutions we aren’t there yet. In addition, as with much of the literature on slavery in America, the time before the cotton boom could use more attention.

Boodry, Kathryn. Forthcoming. The Thread: Slavery, Cotton and Atlantic Finance from the Louisiana Purchase to Reconstruction.

Clegg, John J. "Credit market discipline and capitalist slavery in antebellum South Carolina." Social Science History 42, no. 2 (2018): 343-376.

Edwards, Justene Hill. Unfree Markets: The Slaves' Economy and the Rise of Capitalism in South Carolina. Columbia University Press, 2021.

Hilliard, Kathleen M. Masters, Slaves, and Exchange: Power's Purchase in the Old South. Cambridge University Press, 2013.

González, Felipe, Guillermo Marshall, and Suresh Naidu. "Start-up nation? Slave wealth and entrepreneurship in Civil War Maryland." The Journal of Economic History 77, no. 2 (2017): 373-405.

Kilbourne, Richard Holcombe. Debt, investment, slaves: credit relations in East Feliciana Parish, Louisiana, 1825-1885. University of Alabama Press, 1995.

Martin, Bonnie. "Slavery's invisible engine: mortgaging human property." The journal of southern history 76, no. 4 (2010): 817-866.

Martin, Bonnie. "Neighbor-to-Neighbor Capitalism." In Slavery's Capitalism, pp. 107-121. University of Pennsylvania Press, 2016.

Murphy, Sharon Ann. "Securing human property: Slavery, life insurance, and industrialization in the upper south." Journal of the Early Republic 25, no. 4 (2005): 615-652.

Murphy, Sharon Ann. "Collateral Damage: The Impact of Foreclosure on Enslaved Lives during the Panic." Journal of the Early Republic 40, no. 4 (2020): 691-696.

Murphy, Sharon Ann. "Enslaved Financing of Southern Industry: The Nesbitt Manufacturing Company of South Carolina, 1836–1850." Enterprise & Society (2021): 1-44.


Murphy, Sharon Ann. 2021. "The Financialization of Slavery by the First and Second Banks of the United States." Journal of Southern History, 87 (3) 385-426.

Pardo, Rafael. The Color of Bankruptcy: Financial Failure and Freedom in the Age of American Slavery.

Ryder, Karen Kotzuk. “Permanent property”: Slave life insurance in the antebellum Southern United States, 1820–1866. University of Delaware, 2012.

Saunt, Claudio. "Financing Dispossession: Stocks, Bonds, and the Deportation of Native Peoples in the Antebellum United States." Journal of American History 106, no. 2 (2019): 315-337.

Schermerhorn, Calvin. "Slave Trading in a Republic of Credit: Financial Architecture of the US Slave Market, 1815–1840." Slavery & Abolition 36, no. 4 (2015): 586-602.



 Its not really relevant to the post, but I found Saunt’s paper particularly interesting because I had written about some of the same New York businessmen using the same sorts of finance to speculate in lands in western New York in the 1830s. Hansen, B. Institutions, Entrepreneurs, and American Economic History: How the Farmers’ Loan and Trust Company Shaped the Laws of Business from 1822 to 1929. Springer, 2009.


And, I apologize in advance to anyone that should have been included but was not and to anyone who was included but whose work I failed to accurately or adequately portray.