Lecture 11 - Transatlantic Trade & Slavery PDF

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The population of colonial America multiplied 20 fold in the 18th century, 275,000 to 5 million. Incomes remained high because of an abundance of land. The British West Indies black population quadrupled in the 18th century, 148,000 to 570,000. Over the same period, trade shifted towards the America...

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Lecture 11 - Transatlantic Trade & Slavery • The population of colonial America multiplied 20 fold in the 18th century, 275,000 to 5.3 million. Incomes remained high because of an abundance of land. The British West Indies black population quadrupled in the 18th century, 148,000 to 570,000. Over the same period, trade shifted towards the American colonies and the industrial regions in Britain, Yorkshire, Lancashire and Birmingham, that made export oriented manufactures for American markets experienced increased growth rates. The Atlantic trade allowed export diversity of manufactures. Exports were almost exclusively woolen textiles before the 18th century; 80% of exports were manufactured and 70% of manufactures were wool. During the 18th century exports diversified into other areas of manufacturing, textiles • composed less than 50% of manufactured exports by the early 18th century. After the 18th century exports were concentrated in new industries. By 1801, cotton and iron exports made up 50% of manufactured exports and 90% of exports were manufactures. The pattern of trade also changed substantially in the 18th century. Before the 18th century, 85% of exports went to Europe and a small amount to the American colonies. During the 18th century exports shifted to transatlantic trade, 50% of • trade was going to American colonies by the late 18th century. After the 1780s, exports shifted to Australia, Latin America and Asia. • The Williams Thesis (1994) linked the slave trade to the beginning of Britain's Industrial Revolution. The slave trade and the sale of sugar provided demand for industrial production; there was profitable business in transporting, clothing, feeding slaves, banking, and insurance. The slave trade generated supernormal profits for plantation owners who consumed European manufactures. Europe generated some investment and demand but the slave trade offered an exogeneous spark during a key phase. • Engerman [1972] attempted to calculate the effect of slave profits on the economy. Engerman assumed the supply of savings was perfectly inelastic and that all slave profits went into investment. The research found that the profits only constituted 0.54% of British National Income. • The profitability of the slave trade for Britain is doubted by various studies. Supernormal profits ignore the risks associated with the slave trade. Triangular trade was incredibly uncertain: there was a reliance on plantation harvests, mortality on voyages was often high, and there were losses of ships to privateers and weather. Moreover, the demographic composition of cargo was not considered in early estimates that claimed that the slave trade generated supernormal profits; nor was the time factor and the different costs of voyages. Studies using wider samples show that returns were extremely variable. Modern studies using better techniques find profit rates between 7-8% during the 18th century. This is similar to the profitability of normal firms during the same time period. There are also historians that believe the market for slaves was perfectly competitive and thus did not allow for supernormal profits. • Inikori argued that there were dynamic gains from slavery. English industry, such as textiles, grew as import substituting industrialisation occurred because the output of countries who previously exported the goods slowed. English textiles stagnated and would have declined without the shift to the export industry. The export marked for English cotton textiles was dependent on the slave

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economy of the Atlantic system. The population of African slaves on plantations fits correlates to English cotton exports. The success of the British cotton market allowed for the selling of cotton to European consumers. Thus, slavery is hard to value as it entered many aspects of Modern Economic Growth. • Despite Spain, Portugal, France, and the Netherlands all engaging in the slave trade, none of them saw sustained economic growth. Britain involved itself in the slave trade when it peaked, around 1770. After the loss of the American colonies, the slave trade was no longer profitable for it was abolished and had only been profitable and dynamic given the interconnections of the Atlantic system. By this point, however, Britain had defeated rival powers, captured colonies and largely controlled shipping. • Fogel and Engerman investigated the profitability of slavery in America. They estimated the geometric

index of relative total factor productivity for the South against the North. where is total facor productivity and is land. They found that unadjusted estimates show a higher . Adjusting for weights of Northern vs Southern livestock TFP in Southern agriculture types, proportion of women and children, land quality, etc… increased the gap to

. Fogel

and Engerman claimed that the efficiency of Southern agriculture was because of slavery as slaves did not work in the Northern states, slaves were more productive for they were worked harder. David and Temin [1982] and Wright [1971] argue that Southern agriculture was more profitable for other reasons: Southern agriculture benefited from economies of scale because of the land dedicated to agriculture in the South, cotton prices surged in the 19th century, land input did not consider land quality or depletion, the hours worked by slaves were much higher (slaves were overworked not overly productive), and the mix of crops produced was different in the South. • Slave plantation production in the USA and British West Indies was highly profitable. These profits were used to purchase some manufactures and invest back in Europe.

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