Profitability of Slavery

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Economic History Topic Report
ECO 3183

Topic title: Profitability of Slavery

Briefly state the two opposing views.
A. Abolitionists condemned slavery based on moral, social, and economic reasons. Many believed that slaves were mistreated and were often subjected to corporal punishment. Others argued that the forced labor of blacks was inefficient and unproductive for various racial and economic reasons. Ulrich Phillip’s studies from the antebellum slavery in the south claimed that although plantation slavery produced great wealth, even without the civil war, slavery was economically on a dead end due to the rising cost of factor prices (slaves) increasing faster than the product prices (cotton).

B.Economists approached slavery as a business matter and tested its profitability. They perceived slaves as a capital investment and argued it was not in an owner’s interest to enforce severe corporal punishment because it would lower their rates of return. Alfred Conrad and John Meyer calculated the price of a slave along with their rates of return to determine profitability. They concluded that the rapid increase of factor prices (slaves) was mainly due to the fact that output per slave was also increasing.

Outline in some detail the more traditional view. Where did it come from? What was it based upon?
In 1905, historian Ulrich Phillips wrote a study based primarily on slave prices relative to cotton prices. Ulrich claims that American-born slaves were sold at a higher cost than fresh African slaves, because of their training in plantation labor and domestic service. Slave prices were low in the late 1780’s and early 90’s until Eli Whitney’s invention of the cotton gin came in 1793. Due to the increasing demand for labor, slave prices steadily increased and spiked after the prohibition of the African trade in 1807. Despite prohibition, between 1800 and 1860, the slave growth rate averaged about 2.4 percent per year (W.R. 222).

Based on Phillip’s table of slave and cotton prices in Georgia, it shows the average price of a prime field hand, in 1800, was approximately $450. At the same time, the average New York price of upland cotton was 30 cents; however, in 1860 we see a significant difference in prices. The average cost for a prime field hand is now $1,800 and the average New York price of upland cotton is 11 cents. Phillips explained, “The decline in the price of cotton was due to improvements in cultivating, ginning and marketing. The advance of the slave prices was due in part to increasingly intelligence and ability of Negroes and to improvements in the system of directing their work on the plantations, also to the decline in the value of the money.” (Phillips, 268) With factor prices (slaves) rising by 600 percent from 1805-1860 (Weiher), and product prices (cotton) declining by 63 percent, Phillips concluded that slavery was becoming unproductive and unprofitable due to overcapitalization in the labor force. He saw planters as bad business people, because they purchased slaves for conspicuous consumption. Furthermore, he believed the Civil War was unnecessary because slavery was doomed to fail within the generation without emancipation.

Outline in some detail the revisionist view.

In 1958, economists Alfred Conrad and John Meyer conducted a study by testing the hypothesis of taking appropriate variables and computing the rate of return over cost of a slave in a lifetime. Conrad and Meyer’s studies were based on four key aspects: the life expectancy of a slave, the price of a prime field hand (fixed cost) along with the of supplies necessary to maintain a slave (variable cost), land and cotton prices, and annual returns from a slave based on field labor and procreation.

By understanding these variables, Conrad and Meyer were able to calculate the yearly-expected output values by taking “the price of cotton times the marginal physical product of the slave, minus yearly maintenance...
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