The Half Has Never Been Told: Slavery and the Making of American Capitalism

by Edward E. Baptist

Already in 1830, Jackson and his allies in Congress had proposed the Indian Removal Act, which forced southwestern Indians into present-day Oklahoma. Although some northerners criticized conquest and displacement as immoral, Congress passed the act, authorizing Jackson’s government to evict the remaining eastern nations. By the end of his second term, the vast majority of the Native Americans who had lived in the southwestern cotton states in 1828 had been driven from their homes.

specie

bank-created money has to be paper (or mere numbers on paper) because only then can money be created out of nothing. And thus only paper money can lead to real economic growth. Imagine an economy that uses only gold and silver, also known as “specie.” A bank in such an economy could lend no more than it received in deposits, and that bank would simply be a glorified mattress.

The price of goods would drop, and the price of loans would rise, disincentivizing investment in new production.

everyone would know that they could take a B.U.S. bank note to one of the B.U.S.’s twenty-five branches and receive a gold dollar in exchange. Consequently, no one ever did.

And other simmering energies also led entrepreneurs to dislike the B.U.S. precisely because it prevented runaway speculation.

Slavery permitted unchecked dominance and promised unlimited fulfillment of unrestrained desire. That made the behavior of entrepreneurs particularly volatile, risky, profitable, and disastrous. Then, in the 1830s, as white people, especially men, tried to build southwestern empires out of credit and enslaved human beings, they sought out more and more risk. This behavior planted the seeds for a cycle of boom and bust that would shape the course of American history, and one cannot understand it without studying both careful calculation and passionate craving.

We don’t know whether Jefferson thought his morals depraved when he fathered his first child with an enslaved teenager named Sally Hemings. And we can imagine reasons for his desire. Perhaps she looked something like his dead wife, who was, after all, Sally’s half-sister.

South Carolina Governor James Henry Hammond bought a woman and her daughter. The mother became his sexual partner. When her daughter reached twelve, he made the girl his victim as well. (He also molested his four white nieces, creating a scandal that ruined their marital prospects. Its effects on him were temporary, however, and he was elected to the US Senate.)

circumspect

lemans,

pla

For many white southern men, and not just slave traders, the existence of “fancy girls” put a piratical middle finger in propriety’s face, which mattered not only because it irritated meddling abolitionists but because it irritated white southern women. Calls for sexual morality implied that women were the arbiters of domestic moral authority. This struggle over who would rule was the real meaning of the “Petticoat War” in Jackson’s Cabinet, and in it the president leveraged male resentment of female claims to power. Who were politicians’ wives to say whether or not John Eaton was a moral man for marrying Peggy, a former waitress who had, rumors suggested, offered more than drinks? There was no better way to show pious white women that they governed nothing than by buying a woman for sex.

inchoate

profligacy.

they owned the biggest pool of collateral in the United States: 2 million slaves worth over $1 billion. Not only was that almost 20 percent of all the wealth owned by all US citizens, but it was the most liquid part of that wealth, thanks to the efficiency of markets manned by professional slave traders and supplied with credit by a B.U.S.-governed financial system

even as Britain was liberating the slaves of its empire, a British bank could now sell an investor a completely commodified slave: not a particular individual who could die or run away, but a bond that was the right to a one-slave-sized slice of a pie made from the income of thousands of slaves.

After the passage of Indian removal, the US government imposed the Treaty of Dancing Rabbit Creek on the Choctaws, opening 11 million Mississippi acres to sale. Federal treaty-makers’ agreements with the Chickasaw, meanwhile, transferred another 7 million.

pecuniary

By late 1833, Mississippi banks had twenty times as much paper floating around the economy as they had gold in their vaults to back it up.

apostate.

quail.

Walker had depicted Poindexter as the servant of the Monster Bank, an arrogant opponent of white male equality. Now he and Plummer encouraged the Mississippi legislature as it chartered so many banks that by 1839 the state’s total on-paper bank capitalization was $63 million—more than the national B.U.S. at its largest.

While some charters required new institutions to distribute loans in a more geographically equal fashion than had predecessor banks, the new banks did nothing different from the B.U.S. when it came to distributing credit to lower-class men. Thus, those who had derived political benefit from common white men’s insistence on equal manhood replaced the B.U.S. with an insider-favoring banking system.

By the end of 1835, almost 5,000 enslaved Africans and African Americans lived in Texas, making up 13 percent of the non-Indian population. After a half-hearted 1829 attempt to enforce its emancipation laws in Texas, the central government in Mexico City signaled in 1835 that this time it was serious about ending slavery. Texas enslavers began to arm themselves, and in October, shooting broke out between American settlers and Mexican soldiers.

Beginning in 1835, many of these abolition societies—composed, in many cases, primarily of churchly white women who saw slavery as an affront to morality—sent petitions to Congress, asking representatives to ban slavery in the federally administered District of Columbia. Southern congressmen reacted with fury, insisting that the petitions could not be read into the public record.

Adams argued that the right of citizens to petition their legislature went back to England’s Magna Carta, and that the petitions should be read into the congressional record. Southerners, with many northern representatives concurring, responded by passing a “gag rule” that automatically tabled any petition referring to slavery.

the supply of money in circulation rose by 50 percent between 1834 and 1836

The first such condition is the elimination of market regulation.

the second cause of bubbles: financial innovations that make it easier to expand the leverage of borrowers.

one more factor makes a bubble run wild, and that is the euphoric belief that the rules of economics have changed, that somehow “this time is different” and asset prices will not return to their mean.

There was much more cotton in 1836 than there had been in 1828. Over eight years of seedtime, the US government, the states, banks, private citizens, and foreign entities had collectively invested about $400 million, or one-third of the value of all US economic activity in 1830, into expanding production on slavery’s frontier. This includes the price of 250,000 slaves moved, 48 million new acres of public land sold, the costs of Indian removals and wars, and the massive expansion of the southwestern financial infrastructure.

One after another in the last week in March, the ten largest cotton buyers in New Orleans announced that they were insolvent. Some allegedly owed $500 for every $1 that they held in cash or collectible debts. The smaller firms were next. On April 20, the New Orleans Picayune wrote that there were “no new failures to announce,” for by then “nearly all [firms] have gone.

By 1841, the residents of Mississippi would owe twice as much money—$48 million—to the state’s banks as they had at the beginning of 1837.

Van Buren took almost 47 percent of the popular vote in the presidential election, which turned out 80 percent of eligible voters—still the highest ever. But the Whigs swept the panic-devastated southwestern core of Old Hickory’s support, taking Louisiana, Mississippi, Georgia, and even Tennessee, hauling in 234 electoral votes to Van Buren’s 60.

What mattered was to matter—to count, to be essential in the life of another person.

uncounted others chose to shelter under their wings far-off futures that might only arrive long after their own deaths. They hoped that in that future, children or children’s children—their own blood—would be free. For this future to arrive, however, someone had to survive.

pecuniary

causuistic

In Florida, for example, the amount owed to the holders of the state-issued “faith bonds” worked out to approximately $120 per man, woman, and child in the territory, white or black. This meant that the average slaveless farmer would have to pay more in taxes than his farm was worth.

Privatizing the gains of investment, socializing the risk. This is a classic strategy for politically powerful entrepreneurs.

After this, southwestern entrepreneurs would never again participate as equal partners in the worldwide expansion of capitalism. These elites had used popular anger to turn the power of the state into a shield against foreclosures—but at the cost of losing future control over their own credit.

Families, new and old, were broken on the block, like the one whose seven-year-old Nathan was sold off on his own to a bidder named A. J. Paxton for $300. Another couple—Nelson and Prissy—were sold together, but their son, Jefferson, a boy of less than ten, was sold to a different buyer.

In 1834, Parliament—persuaded by powerful bureaucrats who insisted that free labor would prove more efficient than slave labor—imposed emancipation in all the empire’s far-flung domains. Still, southern enslavers might have taken comfort in the fact that even as Britain freed 700,000 Caribbean slaves, slavery continued to expand, not only in the United States, where statehood was on the docket for Arkansas and Florida, but in two other places—Cuba and Brazil.

in almost every year of the 1830s, slave traders carried between 80,000 and 100,000 enslaved Africans across the Atlantic to Havana and Rio de Janeiro.

Had Daniel Webster (or John Quincy Adams) been making foreign policy, slavery’s expansion in the New World might have been definitively halted in 1842.

Statistics from the 1840 federal census supposedly proved that a high proportion of free African Americans in the North were insane, so “experience has proved” that slavery must be the proper state for people of African descent.

Tyler suggested a fine-print measure called a “joint resolution” that would require a simple majority in each house. The constitutionality was suspect, but (surprisingly) Tyler and Calhoun did not bring up their usual strict-interpretation principles.

manumission

bourgeois