Paper: British financial innovation helped slavery flourish

Mayor of London Boris Johnson, left, looks at a model of a statue to be built as a permanent slavery memorial at City Hall in London.
Mayor of London Boris Johnson, left, looks at a model of a statue to be built as a permanent slavery memorial at City Hall in London.
Image: AP Photo/Lefteris Pitarakis
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British slave traders brought tragedy to the Americas. What they took back to England kicked it into high gear.

In an article for latest issue of the Journal of Economic History, Johns Hopkins University PhD candidate Nicholas Radburn examines the role of centralized credit markets (paywall) in strengthening the British slave trade. Essentially, the British slave trade flourished in part because British bankers and their colonial partners were willing to guarantee slave shipments using ”bills in the bottom,” or bills of exchange that could later be swapped for cash.

“It’s basically the precursor to the personal check,” Radburn told Quartz.

Before that, ship captains undertaking slave voyages might get paid in salesman IOUs, planters’ bonds backed by expected crop proceeds, or even the crops themselves. It was a system that got the job done, but left traders feeling financially exposed:

The dangers of receiving unguaranteed credit instruments prompted Edgar Corrie to identify American remittances as the premier risk posed to British slaving merchants, ahead of the purchase of captives in Africa, slave mortality, and shifting slave prices in the West Indies. The latter three, Corrie argued, could reduce the profitability of a voyage, whereas unreliable remittances “involves the entire capital of the Merchant.”

The shift toward bills of exchange meant that slavers tended to have one less thing to worry about on the way to getting paid. It was a slight advantage in good times, when financial systems ran pretty smoothly, but it was a particularly useful practice when things took a turn for the worse.

For instance, Radburn highlights how a 1772 crisis sparked by the collapse of the Glasgow, Scotland, tobacco trade flooded markets like Jamaica and South Carolina with slaves because credit conditions were better there than in other British colonies like Barbados or Virginia:

According to Kingston slave factors Bright & Millward, in June 1773 Jamaica had not been “materially affected” by the credit crisis, “blest as it has been this & two years past with good crops” which would “keep the credit of its bills better than heretofore.”

Radburn created a database of 330 slave voyages and their credit terms by cobbling together data unearthed by previous papers and his own research that examined historical documents. Counting the research he did as part of his Master’s thesis, he said he’s been working on the project for eight or nine years.

The intersection of finance and the business of slavery has become an increasingly popular historical topic in recent years, highlighted by the warm reception (paywall) for historian Edward Baptist’s book The Half Has Never Been Told, which was reviewed in the same Journal of Economic History issue (paywall) as Radburn’s paper.

Baptist has himself made similar connections, implicating in 2010 an overheated, slave purchase-fueled credit market in the US financial panic of 1837. And in June, New York City unveiled a marker in the heart of its financial district to highlight the connection between Wall Street and the slave trade.

Those are the kind of links Radburn wants to highlight, but stretched further back and farther away.

“What I’m trying to show is that the financial innovations of the British and the effect they had on the experience of the captives,” he said.