учебный год 2023 / (Encyclopedia of Law and Economics 5) Boudewijn Bouckaert-Property Law and Economics -Edward Elgar Publishing (2010)

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century, Seville and Lisbon two centuries later. Ship captains reporting to Prince Henry the Navigator brought the first black slaves to Portugal in the 1440s. This act was a portent of things to come, as the Portuguese helped instigate the cross-Atlantic trade in Africans shortly thereafter.

The African slave trade

Perhaps the most highly developed market of its time was the lucrative African slave trade. From 1500 to 1900, an estimated 12 million Africans left their homes to go west to the New World, with about 10 million of them completing the journey. The first African slaves in North America arrived in Virginia in 1619 on a Dutch ship. Yet very few imported slaves ended up in the British colonies and the young American republic. By 1808, when the trans-Atlantic slave trade to the US officially ended, only about 6 per cent of African slaves landing in the New World had come to North America (Anstey, 1975; Manning, 1990 and 2006; Evans and Richardson, 1995; Blackburn, 1997; Eltis et al., 1999).

Africans were sold east as well as west: millions of them made the long trek across their own continent to Arab, Asian, and even some European countries. Some 6 million African slaves were sent from sub-Saharan Africa eastward; another 8 million remained enslaved on their own soil (Lovejoy, 1983).

One feature particularly distinguished New World slavery: its association with race. Early Spanish settlers enslaved native Americans, who soon perished in droves from smallpox and punishingly hard work. Via licensing arrangements, Portugal and Spain began importing African slaves into their colonies in the early 1500s to replace the dying native population. In 1517, Charles I began to import Africans, first to the West Indies, then to the Spanish-controlled mainland. Brazil commenced legal importation of black slaves in 1549. Traders could acquire slaves in specific African zones, then sell them in America – up to 120 per year per Brazilian planter, for example. Because prices for Brazilian licenses were cheaper than other licenses, traders applied for these, then rerouted their vessels in search of extra profits (Anstey, 1975; Blackburn, 1997).

The evils of the trade expanded when Britain replaced Spain and Portugal as the major trafficker in African slaves. Elizabethan-era captain Sir John Hawkins had transported slaves, but England did not figure large in the African trade until the seventeenth-century Royal African Company became the biggest slaver in the world (Galenson, 1982; Watson, 1989).

Many parties were involved in the infamous ‘trading triangle’: European captains plied the chieftains of West Africa with liquor, guns, cotton goods, and trinkets. In exchange, Africans supplied slaves to suffer through the arduous middle passage across the Atlantic Ocean. Over

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40 per cent went to Brazil. Slaves worked on sugar plantations in the West Indies, grew coffee and mined precious metals in Brazil, and grew tobacco, sugar, rice, and eventually cotton in North America. These goods, along with molasses and rum, went back to England (Sheridan, 1947; Solow and Engerman, 1987). One innovative study even links the rise in tooth decay in Britain to the slave trade (Austen and Smith, 1990). It suggests that sugar in one’s tea increasingly signified respectability, so even workingclass folks could enjoy rotting teeth in their quest for social standing as sugar flowed freely and cheaply back to England.

Profitability of the Atlantic slave trade

Commanders of slave vessels and their financial backers made fortunes from the Atlantic trade. Transporting slaves was a major industry in the seventeenth and eighteenth centuries, with the Royal African Company a principal player for at least five decades. David Galenson (1982), in his study of the Company, unveiled a picture of closely connected competitive economic markets in Africa and America that responded quickly to economic incentives.

Despite its size, the Company was hardly a monopoly – hordes of small ship captains found the trade worthwhile, with the principal costs being those associated with capturing and transporting Africans, and the prospective profits at least comparable to returns on other sorts of ventures. Many researchers have devoted themselves to ascertaining the exact rate of return that these captain-traders earned, with the most plausible estimates being about 9 to 10 per cent. Among these scholars are David Eltis (1987, 2000), Seymour Drescher (1999), David Richardson (1987, 1989), William Darity (1985, 1989), Joseph Inikori (1981), Roger Anstey (1975), and E.W. Evans (with Richardson, 1995).

But other interests also made much from the Atlantic trade. European banks and merchant houses helped develop the New World plantation system through complicated credit and insurance mechanisms, enjoying substantial returns as part of the bargain (Engerman, 1972; Menard, 2006). Well-placed African dealers also benefited. In sickening cycles, Sudanic tribes of the fifteenth and sixteenth centuries sold slaves for horses, then used the horses to obtain more slaves. Tribes of the seventeenth and eighteenth centuries similarly traded slaves for guns, then used guns to hunt down more slaves (Lovejoy, 1983).

But of all who reaped rewards from the Atlantic trade, British and US citizens stand out. In the 1940s, West Indian scholar Eric Williams (1944) went so far as to suggest that British industrialization was intimately linked to slavery. Without the slave trade to fuel growth in her colonies, Williams claimed, Great Britain could not have become the industrial

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superpower of the eighteenth and nineteenth centuries that she was. Although Williams’s thesis has since largely been discarded, other scholars nevertheless agree that the slave trade benefited England (Dunn, 1972; Engerman, 1972; Engerman and Genovese, 1975; Eltis and Engerman, 2000). Even Elizabeth I made money by investing in slaving ships and captains. David Eltis (1987) speculates, in fact, that Britain would have enjoyed higher living standards by continuing as a slave trader rather than becoming an abolitionist power. Early industry in New England – cotton textiles, shipbuilding, and the like – also had strong connections to the slave trade and slavery (Bailey, 1986 and 1990). Among those who benefited were the New England families of Browns, Cabots, and Faneuils.

Internal slave markets

Several early societies set up thriving internal markets for trade in slaves. Greek slaves sold like other commodities, in the agora (Westermann, 1943; Finley, 1961). Many Roman slaves started out as prisoners of war; because field commanders could dispose of prisoners as they wished, Roman slave dealers simply began traveling along with the army to snap up likely specimens (Phillips, 1985; Watson, 1987). Judging from the distribution of Italian wine jars in Gaul, wine evidently exchanged for Gallic slaves in the first and second centuries BC. The slave trade generated so much gold for Western Europe – necessary for trade with the East – that the early ninth-century Church made little headway in its abolition campaign. In his writings, Hernando Cortés left a description of the large number of slaves brought to auction at the great marketplace near Tenochtítlan (presentday Mexico City) (Watson, 1989; Meltzer, 1993).

Slave markets also existed across the antebellum US South. Even today, one can find stone markers like the one next to the Antietam battlefield, which reads: ‘From 1800 to 1865 This Stone Was Used as a Slave Auction Block. It has been a famous landmark at this original location for over 150 years.’ Private auctions, estate sales, and professional traders facilitated easy exchange. Established dealers like Franklin and Armfield in Virginia, Woolfolk, Saunders, and Overly in Maryland, and Nathan Bedford Forrest in Tennessee prospered alongside itinerant traders who operated in a few counties, buying slaves for cash from their owners, then moving them overland in coffles to the lower South (Bancroft, 1931; Pritchett, 1997). Over a million slaves were taken across state lines between 1790 and 1860 with many more moving within states. Some of these slaves went with their owners; some were sold to new owners. In his monumental study, Michael Tadman (1990) found that slaves who lived in the upper South faced a very real chance of being sold by their owners for speculative profits. Along with US slave sale markets came farseeing methods for

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coping with risk, such as explicit – and even implicit – warranties of title, fitness, and merchantability (Wahl, 1998).

Slave prices

Scholars have gathered slave prices from a variety of sources, including censuses, probate records, plantation and slave-trader accounts, and proceedings of slave auctions. The largest source of information is a New Orleans data set compiled by Robert Fogel and Stanley Engerman (1974), but people have analyzed the structure of slave prices for many societies.

The exchange prices for slaves – often substantial – reflect their economic value. Healthy male slaves sold for an entire date plantation grove in Sumeria in 2000 BC. Eight oxen bought a slave among the AngloSaxon tribes in the mid-400s (Jones, 1956). Prime field hands went for four to six hundred dollars in the US in 1800, thirteen to fifteen hundred dollars in 1850, and up to three thousand dollars on the eve of the Civil War. Even controlling for inflation, slave prices rose significantly in the six decades before secession. Slavery remained a thriving business on the eve of the Civil War: by some estimates, average slave prices by 1890 would have increased more than 50 per cent over their 1860 levels (Fogel and Engerman, 1974; Schmitz and Schaefer, 1981; Fogel, 1989; Mancall et al., 2001). No wonder the South rose in armed resistance to protect its enormous investment.

Individual characteristics

Prices reflect the characteristics of particular slaves. Studies of ancient Rome, fifteenth-century Spain and Portugal, and the antebellum US South all reveal that the prices of slaves varied by their sex, age, skill level, and physical condition (Fogel and Engerman, 1974; Schmitz and Schaefer, 1981; Phillips, 1985; Fogel, 1989; Friedman and Manning, 1992; Newland and San Segundo, 1996). Important individual features also included temperament and childbearing capacity for females. In addition, the supply of slaves, demand for products produced by slaves, and seasonal factors helped determine market conditions and therefore prices.

Prices for both male and female slaves tended to follow similar life-cycle patterns. Infant slaves sold for a positive price in the antebellum South because masters expected them to live long enough to make the initial costs of raising them worthwhile. Prices rose through puberty as productivity and experience increased. In nineteenth-century New Orleans, for example, prices peaked at about age 22 for females and age 25 for males (Kotlikoff, 1979). In the Old South, boys aged 14 sold for 71 per cent of the price of 27-year-old men, whereas girls aged 14 sold for 65 per cent of the

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price of 27-year-old men. After the peak age, prices declined slowly for a time, then fell off rapidly as slaves’ ability to work disappeared. Girls cost more than boys, up to age 16 in Brazil, Cuba, and the US and up to age 20 in Peru. The genders then switched places in terms of value. Compared to men, women were worth 90 to 95 per cent as much in Cuba, 80 to 90 per cent as much in the US and West Indies, and 70 to 80 per cent as much in Brazil (Mintz, 1974; Engerman and Genovese, 1975; Margo and Steckel, 1982; Fogel, 1989; Moreno Fraginals et al., 1993; Newland and San Segundo, 1996).

One characteristic in particular set females apart: their ability to bear children. In the US, fertile females commanded a premium. But, in medieval Italy, men who impregnated slaves had to pay their masters compensation because of the high likelihood of childbed death. Genoan men could even buy indemnification insurance against this possibility. The mother-child link also proved important in a different way: people sometimes paid premiums for intact families (Wahl, 1998).

Besides age and sex, skills helped determine a slave’s price. Premiums paid for skilled workers interacted with mortality rates and rates of depreciation for different characteristics. The US had a relatively low slave mortality rate and skilled workers sold for premiums of 40 to 55 per cent. Slaveowners in areas with higher death rates could not reap as large a benefit from their skilled workers, due to shorter life spans. In Peru, the skill premium was about 35 per cent; in Cuba, about 10 to 20 per cent. Because the human capital associated with strength drops off more quickly as people age than the human capital associated with skills and training, prices for unskilled slaves in the Spanish colonies fell more rapidly with a slave’s age than prices for skilled slaves (Fogel and Engerman, 1974; Engerman and Genovese, 1975; Newland and San Segundo, 1996).

Physical traits, mental capabilities, and other qualities contributed to price differentials as well. Crippled and chronically ill slaves sold for deep discounts. Slaves who proved troublesome – runaways, thieves, layabouts, drunks, slow learners, and the like – also sold for lower prices. Taller slaves cost more, perhaps because height acts as a proxy for nutritional status. In New Orleans, light-skinned females (who enjoyed greater popularity as concubines) sold for a 5 per cent premium (Kotlikoff, 1979; Fogel, 1989; Wahl, 1998).

One pricing variant appeared in the West Indian ‘scramble.’ Here, owners and agents devised a fixed-price system, dividing slaves into four categories, penning them up accordingly, and assigning a single price per pen. Potential buyers then jumped into the pens, attempting to pick off the best prospects for the given price (Dunn, 1972).

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Market conditions

Slave prices fluctuated with market conditions as well as with individual characteristics. Supply factors mattered, for example. Slave prices dropped dramatically in fourth-century Egypt when the sale of babies became legal. In the Old World, slave prices rose sharply after the Black Death decimated the population, particularly the servile portion (Meltzer, 1993). US slave prices fell around 1800 as the Haitian revolution sparked the movement of slaves into the Southern states. Less than a decade later, slave prices climbed when the international slave trade was abolished, cutting off legal external supplies.

Many Southern slaveholders actually supported closing the Atlantic trade because the resulting reduction in supply drove up prices of slaves already living in the US and, hence, their masters’ wealth. US slaves had high enough fertility rates and low enough mortality rates to reproduce themselves, so Southerners did not worry about having too few slaves to go around. Unlike elsewhere in the New World, the South did not require constant infusions of immigrants to keep its slave population intact. In fact, by 1825, 36 per cent of the slaves in the Western hemisphere lived in the US (Fogel, 1989).

Demand helped determine prices as well. In most slave societies, the demand for slaves derived from the demand for the commodities and services that slaves provided. Changes in slave occupations and variability in prices for slave-produced goods therefore created movements in slave prices. For example, a slave cost about a year’s keep in early Athens, but prices rose significantly as the use of slaves expanded to include managerial and civil-service work (Westermann, 1943). As slaves replaced increasingly expensive indentured servants in the New World, their prices went up. In the period 1748 to 1775, slave prices in British America rose nearly 30 per cent (Menard, 1977; Galenson, 1984; Grubb, 1994). As cotton prices fell in the 1840s, Southern slave prices also fell. But, as the demand for cotton and tobacco grew after about 1850, the prices of slaves increased as well (Fogel and Engerman, 1974). The connection between commodity and slave prices is not confined to the US South. Some scholars have speculated that abolition in Cuba occurred because sugar prices had fallen too low to make slavery worthwhile (Moreno Fraginals et al., 1993).

Demand sometimes had to do with the time of year a sale took place. For example, slave prices in the New Orleans market were 10–20 per cent higher in January than in September (Kotlikoff, 1979). Why? September was a busy time of year for planters: the opportunity cost of their time was relatively high. Prices had to be relatively low for them to be willing to travel to New Orleans during the harvest.

Differences in demand across regions led to transient regional price

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differences, which in turn meant large movements of slaves. Yet because planters experienced greater stability among their workforce when entire plantations moved, 84 per cent of slaves were taken to the lower South in this way rather than being sold piecemeal (Tadman, 1990; Pritchett, 1997).

One additional demand factor loomed large in determining slave prices: the expectation of continued legal slavery. As the American Civil War progressed, slave prices dropped dramatically because people could not be sure that the peculiar institution would survive. In New Orleans, prime male slaves sold on average for $1381 in 1861 and for $1116 in 1862. Burgeoning inflation meant that real prices fell considerably more. Not surprisingly, by war’s end slaves sold for a small fraction of their 1860 price (Kotlikoff, 1979; Wahl, 1998).

Profitability of ancient and antebellum slavery

Slavery was a profitable enterprise, at least in antiquity and in the New World. As classical scholar Moses Finley (1961) put it, Greek and Roman slaveowners went on for centuries believing they were making profits

– and spending them. Americans and West Indians found slaveowning lucrative as well (Dunn, 1972; Fogel and Engerman, 1974; Higman, 1976; Solow and Engerman, 1987). Slavery never generated superprofits, because people always had the option of putting their money elsewhere. Nevertheless, investment in slaves offered a rate of return – about 10 per cent – that was comparable to returns on other assets (Fogel, 1989).

That slavery in the American South was profitable seems almost obvious. Yet scholars have argued furiously about this matter. On one side stand antebellum writers such as Hinton Rowan Helper (1857) and Frederick Law Olmstead (1861), and contemporary scholars like Eugene Genovese (at least in his early writings), who speculated that American slavery was unprofitable, inefficient, and incompatible with urban life. On the other side are those who contend that slavery was profitable and efficient relative to free labor and that slavery suited cities as well as farms, industry as well as agriculture (Yasuba, 1961; Starobin, 1970; Aitken, 1971; Fogel and Engerman, 1974; Goldin, 1976; Barzel, 1977; Dew, 1991 and 1994). These researchers stress the similarity between slave markets and markets for other sorts of capital.

The significance of Time on the Cross

Perhaps the most controversial book ever written about American slavery is Robert Fogel’s and Stanley Engerman’s Time on the Cross (1974). These men were among the first to use modern statistical methods, high-speed computers, and large datasets to answer a series of empirical questions

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about the economics of slavery. Building on earlier work by Alfred Conrad and John Meyer (1958 and 1964), Fogel and Engerman used data from probate and plantation records, invoices from the New Orleans slave-sale market, coastwise manifests for shipped slaves, and manuscript census schedules to find profit levels and rates of return. Fogel and Engerman pioneered the use of an index they called ‘total factor productivity,’ which measures the ratio of output per average unit of all inputs.

Among Fogel’s and Engerman’s findings are these: antebellum Southern farms were 35 per cent more efficient overall than Northern ones and slave farms in the cotton South were 28.5 per cent more efficient than free farms. Moreover, slavery generated a rate of economic growth in the US South comparable to that of many European countries. Fogel and Engerman also discovered that, because slaves constituted a considerable portion of individual wealth, masters fed and treated their slaves reasonably well. Although some evidence indicates that infant slaves suffered much worse conditions than their freeborn counterparts, juvenile and adult slaves lived in conditions similar to – sometimes better than – those enjoyed by many free laborers of the same period (see also Steckel, 1986a and 1986b).

Despite criticism (notably a collection of articles entitled Reckoning with Slavery edited by Paul David and others, 1976), Time on the Cross and Fogel’s subsequent Without Consent or Contract (1989) have solidified the economic view of Southern slavery. Even Eugene Genovese (1989), long an ardent proponent of the belief that Southern planters held slaves for prestige value, finally acknowledged that slavery was probably a profitable enterprise. Much like any businessmen, New World slaveowners responded to market signals – adjusting crop mixes, reallocating slaves to more profitable tasks, hiring out idle slaves, and sometimes selling slaves for profit. One instance well-known to labor historians shows that contemporaneous free labor thought that urban slavery may even have worked too well: workers at the Tredegar Iron Works in Richmond, Virginia, went out on their first strike in 1847 to protest the use of slave labor at the Works (Fogel, 1989).

Labor practices contributing to profitability

The value of Southern slaves arose in part from the value of labor generally in the antebellum US. Scarce factors of production command economic rent, and labor was by far the scarcest available input in America.

But a large proportion of the reward to owning and working slaves results from innovative labor practices (Fogel and Engerman, 1974; Metzer, 1975; Licht, 1983). Certainly, the use of the ‘gang’ system in agriculture contributed to profits in Roman times as well as in later time periods. Treating people like machines pays off handsomely. In the West

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Indies, for instance, sugar slaves worked in three separate gangs: one harvesting the crop, a second cleaning up after the first, and a third bringing water and food to the others (Sheridan, 1947; Dunn, 1972; Higman, 1976; Menard, 2006). Planters in the US South also used the gang system to their advantage.

Integral to many gang-oriented operations across the Americas were plantation overseers, who served as agents for oft-absent plantation owners. Overseers certainly had some authority so they could elicit work from their charges (Scarborough, 1966). Yet law and custom alike circumscribed overseers’ abilities to administer correction, because slaves represented such a large chunk of their masters’ wealth (Wahl, 1998). This balance between authority and accountability worked well enough to turn handsome profits for many planters, particularly those who entrusted reliable slave drivers as liaisons. By the mid-1820s, slave managers actually took over much of the day-to-day operations in the West Indies (Dunn, 1972; Higman, 1976).

Antebellum slaveowners experimented with a variety of other methods to increase productivity. Masters developed an elaborate system of ‘hand ratings’ in order to improve the match between the slave worker and the job. Slaves could sometimes earn bonuses in cash or in kind, or quit early if they finished tasks quickly. Slaves – in contrast to free workers – often had Sundays off. Some masters allowed slaves to keep part of the harvest or to work their own small plots. In places, slaves could even sell their own crops and produce. To prevent stealing, however, many masters limited the crops that slaves could raise and sell, confining them to corn or brown cotton, for example (Wahl, 1998).

Masters capitalized on the native intelligence of slaves by using them as agents to receive goods, keep books, and the like (Wahl, 1998). In some societies – for example, ancient Rome and her offspring, antebellum Louisiana – slaves even had under their control a sum of money called a peculium. This served as a sort of working capital, enabling slaves to establish thriving businesses that often benefited their masters as well (Schafer, 1994). Yet these practices may have helped lead to the downfall of slavery, for they gave slaves a taste of freedom that left them longing for more.

The potential profits from reproduction

In the US, masters profited from reproduction as well as production. Southern planters encouraged slaves to have large families because US slaves lived long enough (past about age 27) to generate more revenue than cost over their lifetimes. But researchers have found little evidence of slave breeding; instead, masters encouraged slaves to live in nuclear or

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extended families for stability (Fogel and Engerman, 1974). Lest one think sentimentality triumphed on the Southern plantation, one need only recall the willingness of most masters to break up families by sale if the bottom line was big enough.

In contrast to US slaves, the average West Indian slave did not live past his or her mid-twenties. Masters in Jamaica, Haiti, Barbados, and Trinidad therefore behaved differently, establishing much longer periods of breastfeeding (which helped provide natural protection against subsequent pregnancy). As a result, birth rates among West Indian slaves were relatively much lower (Sheridan, 1947; Dunn, 1972; Engerman and Genovese, 1975; Higman, 1976; Solow and Engerman, 1987).

Society’s role in the profitability of antebellum slavery

The great sugar plantations in the eighteenth century and cotton plantations in the nineteenth were the largest privately owned enterprises of their time, and their owners among the richest men in the world. During the three centuries of New World slavery, slave-produced goods – especially sugar – dominated world trade. Accordingly, slaveowners were not the only ones to reap rewards. French, Spanish, Portuguese, Dutch, and Danish citizens also thrived on buying from or selling to slave colonies. So too did cotton consumers who enjoyed low prices and Northern entrepreneurs who helped finance plantation operations (Fogel, 1989; Menard, 2006). As James de Bow said in reply to a query by the London Times in 1860, without slavery ‘ships would rot at [the New York] docks; grass would grow in Wall Street and Broadway, and the glory of New York . . . would be numbered with the things of the past’ (quoted in Foner, 1941, p. 4).

Society at large shared in maintaining the machinery of slavery as well as enjoying its yields (Wheeler, 1837; Goodell, 1853; Stroud, 1856; Hurd, 1858; Wiecek, 1977; Finkelman, 1988, 1989a; Wahl, 1998). All Southern states save Delaware passed laws to establish citizen slave patrols that had the authority to round up suspicious-looking or escaped slaves, for example. Patrollers were a necessary enforcement mechanism in a time before standing police forces were customary. Essentially, Southern citizens agreed to take it upon themselves to protect their neighbors’ interests as well as their own so as to preserve slavery as an institution.

Northern citizens often worked hand-in-hand with their Southern counterparts, returning fugitive slaves to masters either with or without the prompting of national and state law. Yet not everyone was so civicminded. As a result, the profession of ‘slave-catching’ evolved – often highly risky (enough so that insurance companies denied such men life insurance coverage) and just as often highly lucrative (Campbell, 1968; Wahl, 1998).