Eight Economic Things You Don’t Know About The Pre-Civil War South & Slavery

Slavery and the Civil War are considered dark times in American history for sure.  However just because things were bad it doesn’t mean we should ignore the history, and economics, of the day.  History books are filled with all the awful things that occurred during this era, but very little research and even less mainstream attention have been directed towards what the economics of all these events looked like.  Here are just a few tidbits and facts from the economics of America’s slavery past.

  • The price of slaves varied by region:  It would have been hard to comparison sharp slaves in different cities, but prices were cheaper in places like Richmond and Charleston than they were in New Orleans.  Perhaps the cost of shipping was a factor?  And like any market, prices fluctuated through the years, spiking as we neared the Civil War.
  • The north benefited from slavery: Not just from growing their food, but many people in the north built their wealth from shipping and financing the slave trade. The namesake for Brown University owed part of his wealth to the slave trade.
  • Slaves were financed: Plantation owners didn’t always pay cash for new slaves. If you think of a slave the way they did, which is a business asset that will produce future income, it makes sense to finance it and pay off the loan with income produced by the asset. Here are a couple of ads for auctions from the 1850s:

Slave auction lending terms 2

Slave auction lending terms


  • Things were prized over wealth: Plantation owners often bragged not about how much money they had or had made, but were more focused on how many slaves they had. So much of their wealth was tied up in assets (essentially farm equipment) and not actual money.
  • Slavery could have held back capitalism: Capitalism thrives on innovation.  Independent actors are always looking for a market force to exploit.  And it’s usually the people that did the work that had the ideas.  But a slave had no incentive to innovate.  Nothing they created would have really benefited them, especially financially.
  • Estimates for the return on investment of slavery exist: The estimates are varied of course, but as work producing assets the return could have been as high as 13%, which was better than what railroad bonds paid.
  • Slave productivity was tracked: An early form of data collection and management, the productivity of slaves was tracked so that stronger workers could be identified and weaker ones perhaps reassigned.  Though we know whipping and torture existed, slaves were expensive and so getting the most out of them was important.
  • Bonuses and positive incentives were given: Teams and individuals competed for top production in some instances.  Bonuses and prizes (including money) were paid out for the best producers.  Even the pre-Civil War South understood incentives.

In some instances slaves were almost treated like people.  Traders understood that keeping a family together could improve output.  And owners understood that beating their slaves into submission may not get the most productivity out of them.  However, for the most part slaves were treated as a subspecies and lesser animal to be exploited.  More simply, they were seen as business assets.  Thankfully, those times are long gone; but there’s still plenty to be learned.


  • The Economics of American Negro Slavery (NBER)
  • “Wait a Cotton Pickin’ Minute!” A New View of Slave Productivity (Penn History)
  • Did slavery make economic sense? (Economist)