When the New York City banker James Brown tallied his wealth in 1842, he had to look far below Wall Street to trace its origins. His investments in the American South exceeded $1.5 million, a quarter of which was directly bound up in the ownership of slave plantations.
Brown was among the world’s most powerful dealers in raw cotton, and his family’s firm, Brown Brothers & Co., served as one of the most important sources of capital and foreign exchange to the U.S. economy. Still, no small amount of his time was devoted to managing slaves from the study of his Leonard Street brownstone in Lower Manhattan.
Brown was hardly unusual among the capitalists of the North. Nicholas Biddle’s United States Bank of Philadelphia funded banks in Mississippi to promote the expansion of plantation lands. Biddle recognized that slave-grown cotton was the only thing made in the U.S. that had the capacity to bring gold and silver into the vaults of the nation’s banks. Likewise, the architects of New England‘s industrial revolution watched the price of cotton with rapt attention, for their textile mills would have been silent without the labor of slaves on distant plantations.
The story we tell about slavery is almost always regional, rather than national. We remember it as a cruel institution of the southern states that would later secede from the Union. Slavery, in this telling, appears limited in scope, an unfortunate detour on the nation’s march to modernity, and certainly not the engine of American economic prosperity.
Yet to understand slavery’s centrality to the rise of American capitalism, just consider the history of an antebellum Alabama dry-goods outfit called Lehman Brothers or a Rhode Island textile manufacturer that would become the antecedent firm of Berkshire Hathaway Inc.
Reparations lawsuits (since dismissed) generated evidence of slave insurance policies by Aetna and put Brown University and other elite educational institutions on notice that the slave-trade enterprises of their early benefactors were potential legal liabilities. Recent state and municipal disclosure ordinances have forced firms such as JPMorgan Chase & Co. and Wachovia Corp. to confront unsettling ancestors on their corporate family trees.
Such revelations are hardly surprising in light of slavery’s role in spurring the nation’s economic development. America’s “take-off” in the 19th century wasn’t in spite of slavery; it was largely thanks to it. And recent research in economic history goes further: It highlights the role that commodified human beings played in the emergence of modern capitalism itself.
The U.S. won its independence from Britain just as it was becoming possible to imagine a liberal alternative to the mercantilist policies of the colonial era. Those best situated to take advantage of these new opportunities — those who would soon be called “capitalists” — rarely started from scratch, but instead drew on wealth generated earlier in the robust Atlantic economy of slaves, sugar and tobacco. Fathers who made their fortunes outfitting ships for distant voyages begat sons who built factories, chartered banks, incorporated canal and railroad enterprises, invested in government securities, and speculated in new financial instruments.
This recognizably modern capitalist economy was no less reliant on slavery than the mercantilist economy of the preceding century. Rather, it offered a wider range of opportunities to profit from the remote labor of slaves, especially as cotton emerged as the indispensable commodity of the age of industry.
In the North, where slavery had been abolished and cotton failed to grow, the enterprising might transform slave-grown cotton into clothing; market other manufactured goods, such as hoes and hats, to plantation owners; or invest in securities tied to next year’s crop prices in places such as Liverpool and Le Havre. This network linked Mississippi planters and Massachusetts manufacturers to the era’s great financial firms: the Barings, Browns and Rothschilds.