Chapter 5: Fear and Greed, Pricing Humans
Chattel slaves were mortgaged to international finance, so it was crucial to price them correctly.
What makes West Indian chattel slavery different from the millennia of slavery which humanity has inflicted/endured was its foundational role in the expansion of global finance and trade. Since the sugar trade needed finance, finance needed security, so the chattel slaves themselves were mortgaged.
This meant everyone had to know how price humans, and to get it right. So it’s time to think about this aspect of the economics of West Indian chattel slavery. We have to start imagining human lives as goods, as a resource, as investments. As livestock. It’s uncomfortable, but necessary for understanding.
For the planters, there were conflicting thoughts about their slaves as property. The first was bluntly economical: viewed as a capital asset, the return on that asset would rise sharply the longer it could be kept in service. Once the asset had been ‘fully depreciated’ - say over the first three years - the return on investment would soar.
The British Privy Council heard that 'Rough calculations show that if a prime field hand in Jamaica laboured for 12 years he returned 6% per annum, whilst 15 yrs yielded 9%, and 20yrs nearly 11%.’ (Sugar and Slavery). Meanwhile, British consols during the 17th and 18th century would typically yield 3.5%-4%.
This is probably an underestimate, since the return on investment in plantations in the 2nd half of the 17th century is said to typically have been about 20% pa (Craton, Sinews of Empire). Since slaves were a plantation’s biggest single asset the ‘return’ on that asset must have been higher than 11% - see below).
Still, a Committee of the Privy Council in 1789 heard that planters yearly replaced their slaves 'with what they term Healthy new Negroes, rather than breed them, and look forward to from 16-18yrs for their full and actual services.’
Henry Drax, one of Barbados’s most notable planters, and one who by the standards of the time would be judged an unusually paternalistic slave-owner (he literally wrote the book on how to treat your slaves), reckoned on having to replace 5-8% of his workforce every year. In other words, he expected his slaves to survive between 12.5 and 20 yrs.
But on the other hand, a fit and healthy slave was a dangerous slave. The planters had a justified fear of their slaves, so it made sense to keep them overworked, underfed, in a state of exhaustion and physical weakness. A quarter could be expected to die during the Middle Passage, and a further third within three years of being sold in the West Indies.
It is obvious which of these two motivations won out: we know fear trumped greed because the slave ships kept arriving, to replenish and expand the stock. So, between 1708 and 1735, Barbados planters imported 85,000 new slaves in order to lift the black population from 42,000 to 46,000. (The Sugar Barons: Matthew Parker.)
Nevertheless, slaves were typically a plantation’s single largest asset. A survey of medium-sized Jamaican sugar plantations in 1774 found that African slaves, valued at £14 a head, accounted for 38% of the inventory-assets, compared with 31.5% for the value of the land, and 22.5% for the sugar factory works.
What this meant is that when planters had to take out a mortgage to raise capital, what was put under mortgage was precisely the slave workforce.
The fact that African slaves were a plantation’s principle asset is also reflected in prices. The price of a slave was not determined by supply and demand, but rather their prices shifted to reflect the sort of revenue that he could be expected to generate. In this case, the determining factor was the changes in the sugar price, with movements in slave prices responding, with a lag, to sugar prices. This is typical capital-asset pricing behaviour.
The second thing is to note that the price of slaves rose quite dramatically through the 18th century relative to the agricultural wage typically earned in Britain. For example, in 1718-19 the average price of a slave in the British West Indies was 240 shillings, whilst in Britain, an agricultural worker would earning around 390 shillings a year - so a slave cost the equivalent of about 60% of a worker’s annual wage.
By 1738, the slave price had risen to around 500 shillings, whilst agricultural workers in Britain could expect to earn roughly 350 shillings - so a slave cost about 1.5x a workers’ wage. By 1755, slave prices rose to 710 shillings, then equivalent to around 2x an agricultural workers’ annual wage. As the market for sugar exploded, so the rise in price of slaves outstripped the rise in income of those who were to buy their product.
One might have expected the rising slave price asset to act as an incentive for the planters to take better care of their ‘assets’. But once again, the evidence for this is slight, with only a relatively small fall in slave mortality rates during the 18th century.
Why were slaves not treated less murderously as it became clear that they were not only only a plantation’s main asset, but also an appreciating asset which was increasingly expensive to replace? Was it simply a case of fear endlessly trumping greed?
Or was it also a case that financial markets also played a part. After all, the sugar business depended on credit, and the terms on which credit would be lent would include a valuation of the security on offer.
Since the plantation’s principle asset was its slaves, creditors would assess a mortgage value on that captive population. And, regardless of what was happening to slave prices at the docks, the mortgage value of a slave with a potential decade’s productive output ahead of him would be far greater than the value of an elderly slave with few productive years left in him. In short, the tendency of slaves to die from overwork, combined with a credit market to introduce a classic ‘bad equilibrium’ which dovetailed neatly with planters’ prime motive of fear.