Slavery and the American Economy
by Waldron H. Giles, Ph.D.
Slavery raises a host of negative images for Black people; so much so, they fail to realize the tremendous economic contributions they made, albeit forced, to the development of the United States into a world power. This lack of realization stems from the national shame of slavery and the concomitant national denial, which in reality has become a weak defense mechanism. To a large degree Blacks and whites have bought into this denial, albeit for different reasons. In spite of this contribution Blacks continue to vie for respect and acceptance by the very country that they practically own via a down payment with their own blood, sweat, and tears. Through the shame of slavery African Americans continue to increase the “Debt” they are owed instead of steadfastly demanding payment.
The resulting hypothesis of this economic analysis of slavery is that the current “Debt” is too large to foster healthy discussions with whites and continued avoidance of such discussions has been and will continue to be disguised under a variety of racist manipulations. The purpose of this economic analysis is to enlighten African Americans and end the impotence produced by this shame and to undo those stereotypical images of laziness, ignorance, criminal behavior, and incompetence.
The form of superiority imposed by self-pity continues to defeat the positive self-images and hinders the increased racial creativity and accomplishments that African Americans need in today’s jingoistic climate. Whether African descendants will be justly compensated for their sacrifices is not the principle issue, here. The paramount issue is that African Americans appreciate their contributions and constantly remind their heirs of the trillions of unpaid dollars earned by their ancestors. They and they alone made the largest national loan in history and financed the world’s greatest power. Most of that “loaned” money is still in circulation today and the “Debt” is still alive and real!
The first African slaves hit the shores of the United States in 1619 and were constantly imported into the US until 1860 even though importation had been outlawed in 1808. Over those intervening 246 years they contributed more than 605 billion hours of free labor, which funded the Industrial Revolution, financed most of the fortune 500 companies, helped finance two World Wars, and left a negative sociological impact on an entire race of people.
Slaves born in the US since slave importation started decreasing in 1810 supplied most of the labor. Importation as a source of free labor was replaced by forced breeding because it was a lot more profitable. However, the profits obtained from slave importation were phenomenal since slaves could be purchased in Africa for less than $40 and sold in the US for between $500 and $1,000. Profits obtained from a single ship traversing the golden triangle passage averaged greater than $175,000 even though as many as one in three of the slaves died during the middle passage. Commodities (cotton, tobacco, Bibles, and guns) were the cargoes on the other two legs of the triangle.
To determine the economic value of slavery, the population of slaves in the US was obtained from the US Census Bureau. It was assumed that, on average, slaves worked some 60 hours per week for 51 weeks during the years with the average pay rate over the 164 years at $.10 per hour. All of these assumptions are conservative since underreporting was a common practice since state and local taxes had to be paid on the number of slaves. This practice was offset since congressional representation counted slaves as 3/5 of a person.
The results of the economic value of this free labor are, when inflated conservatively at 3% to 2006 dollars, a staggering value of 20.3 trillion dollars or to put this number in a more visual perspective; it amounts to $563,450 per African American currently living in the US. This amount is low since slave labor was counted from the year 1700 instead of 1619 and, as mentioned previously, the census data, in all likelihood, is low for various taxing demands and for those members of the Black race that were able to pass for white or elude the census. The undercounting of Blacks still is a major problem for adequate representation, particularly in the South.
The 19.7 trillion dollar slave contribution is still within the US economy since the dollar has constantly inflated in value, and money like matter in never destroyed; it can be wasted but not destroyed, in an inflationary economy. This slave-induced contribution is still working and funding new ventures, within the US economy as we speak. Those who made this contribution, albeit forced, have been largely denied access to the very capital and business accouterments they developed.
Following the thread of these dollars would be another interesting aspect of black economic research since even without detailed research it is known that Aetna Insurance Co., E.I. Dupont, and J.P. Morgan, Brown University, to name a very, very few, reaped substantial benefits from the grim business of slavery. For example, Pierre Bauduy purchased 4 out of the original 16 shares issued for the E.I. DuPont Company for $8,000. Pierre Bauduy obtained his money from the profits of a Haitian plantation which he was forced to vacate during the Haitian revolution.
The manufacturers of slave ships and cotton merchants heavily financed Brown University in its early beginnings. Aetna Insurance Co. sold insurance policies on slaves to protect slave owners from the losses of run away slaves. The original capital for J.P. Morgan was derived from its cotton trading company in the South. So much fortune was amassed off the backs of the cotton, tobacco, and rice-picking slaves that J.P. Morgan loaned money to the US government during the Civil War.
Another way to view the economic contribution of slavery to the US economy would be to assume that only 5% of the value of the slave labor was invested in the stock market in the year the labor was accrued. Five percent was chosen since this is the most common bottom line that is found in Fortune 500 income statements. Using market growth data provided by the Rittenhouse Trust data and the moneys are accumulated from 1700 through 1830 (the beginning of the Rittenhouse data), yields a value of $6.42 trillion current dollars. The subsequent moneys are invested at the time they accrued yields an additional $1.44 trillion.
Combining these values leads to a staggering $7.86 quadrillion in 2006 dollars! With these staggering capital gains, we begin to gain insight into the US national avoidance on the subject of slave labor, reparations, and why African Americans are constantly being placed on the defensive around their monumental economic contribution. When one reflects on the magnitude of this capital, denial becomes a pitiful and yet effective excuse for continued domination of the people and nations that have been exploited.
Whereas, only four major institutions and corporations have been mentioned here, considering the vast sums of money most, if not all, major corporations have benefited in varying degrees from the $7,860 trillion of profits accrued from slavery. Major endowments to universities that have reluctantly, at best, supported Affirmative Action are another major financial thread yet to be unwound. Education and the business of education are another twist of irony for those who have struggled long and hard to escape the yoke and stigma of slavery.
The economic yields from slavery presented herein are for the United States only and covers only the period from 1700 through 1865. One must keep in mind that the first slaves came to North America almost 100 years prior to the time period of this economic evaluation. The majority of the slaves were imported to the Caribbean, Brazil, Columbia, the Guyanas, and other parts of South America, which more than doubles the economic figures, presented here when viewed on a global scale. Brazil alone has close to 100 million descendants of African slaves!
The capital gained from slavery in the Americas was invested in colonialism, which further compounded the current economic enslavement of the African descendants on both sides of the Atlantic. The problem was further compounded considering some 20 to 25 million young souls (mostly male) were taken from the continent of Africa, leaving that continent devoid of military protection and agricultural productivity. This human capital deficit from slavery and its evil offspring, colonialism, is still being felt in all African countries and the Diaspora.
On a global scale the magnitude of the total “Debt” is so huge as to possibly destabilize capitalism as opposed to the continued economic exploitation of Africa. Under the enormity of this “Debt,” reparations, which in the future may be the cheapest way out, will be vigorously resisted by the former colonial powers. Continuing demands for a return on investment of $7.86 quadrillion will force African nations (ironically, the original unwilling investors) further into debt leading to deeper poverty, depravation, political instability and exploitation of their natural resources.
The tragic irony of African national debts is that they were the original investors who should be seeking compensation for the egregious crimes of slavery instead of merely seeking debt relief. The sheer increasing weight of this global “Debt” is the force that must be reckoned with and surely will change world history in this the 21st century. The repayment will be extracted in one way or the other. As the saying goes, “What goes around, comes around!”
U.S. Department of Commerce, Bureau of Census, Negro Population, 1790-1915 (Washington, D.C., 1918), 29, 53.
U.S. Department of Commerce, Bureau of Census, (1975), Historical Statistics of the United States, (Washington, D.C.. 1975) 2:1168.
Carr, William H. A. (1964), The Duponts of Delaware, (Mead Co. 1964).
Hedges, J.B. (1999), Browns of Providence Plantation, (Harvard University Press,1952).
Strouse, Jean (1999), Morgan, American Financier, (Random House NY, April 1999).
The Rittenhouse Trust Co., The Market Keeps Going, (Ibottson Associates, 2001).
Robinson, Randall (2000), The Debt, (Penguin Putnam, Inc., NY, Jan 2000).
Originally posted 17 February 2006]]>