How Slavery Led to Modern Capitalism: Echoes

[ND-Dem]

When the New York City banker James Brown tallied his wealth in 1842, he had to look far below Wall Street to trace its origins. His investments in the American South exceeded $1.5 million, a quarter of which was directly bound up in the ownership of slave plantations. Brown was among the world's most powerful dealers in raw cotton, and his family’s firm, Brown Brothers & Co., served as one of the most important sources of capital and foreign exchange to the U.S. economy. Still, no small amount of his time was devoted to managing slaves from the study of his Leonard Street brownstone in Lower Manhattan.

Brown was hardly unusual among the capitalists of the North...The story we tell about slavery is almost always regional, rather than national. We remember it as a cruel institution of the southern states ... Slavery, in this telling, appears limited in scope, an unfortunate detour on the nation's march to modernity, and certainly not the engine of American economic prosperity.

Yet to understand slavery's centrality to the rise of American capitalism, just consider the history of an antebellum Alabama dry-goods outfit called Lehman Brothers or a Rhode Island textile manufacturer that would become the antecedent firm of Berkshire Hathaway Inc...

America's "take-off" in the 19th century wasn't in spite of slavery; it was largely thanks to it. And recent research in economic history goes further: It highlights the role that commodified human beings played in the emergence of modern capitalism itself...Those best situated to take advantage of these new opportunities -- those who would soon be called "capitalists" -- rarely started from scratch, but instead drew on wealth generated earlier in the robust Atlantic economy of slaves, sugar and tobacco...

http://www.bloombergview.com/articles/2012-01-24/how-slavery-led-to-modern-capitalism-echoes

[JonLP24]

1. Certainly

and they still use it. Private defense contractors are among the worst violators of human trafficking & slave labor. They import workers called 'Third-Country Nationals'.

[Ichingcarpenter]

2. Important thread .. written by Harvard Historians.......read this part

A major financial crisis in 1837 revealed the interdependence of cotton planters, manufacturers and investors, and their collective dependence on the labor of slaves. Leveraged cotton -- pledged but not yet picked -- led overseers to whip their slaves to pick more, and prodded auctioneers to liquidate slave families to cover the debts of the overextended.

The plantation didn't just produce the commodities that fueled the broader economy, it also generated innovative business practices that would come to typify modern management. As some of the most heavily capitalized enterprises in antebellum America, plantations offered early examples of time-motion studies and regimentation through clocks and bells. Seeking ever-greater efficiencies in cotton picking, slaveholders reorganized their fields, regimented the workday, and implemented a system of vertical reporting that made overseers into managers answerable to those above for the labor of those below.

The perverse reality of a capitalized labor force led to new accounting methods that incorporated (human) property depreciation in the bottom line as slaves aged, as well as new actuarial techniques to indemnify slaveholders from loss or damage to the men and women they owned. Property rights in human beings also created a lengthy set of judicial opinions that would influence the broader sanctity of private property in U.S. law.

[ND-Dem]

3. Plantations Practiced Modern Management

The finding: Slaveholding plantations of the 19th century used scientific management techniques—and some applied them more extensively than the factories thought to be their originators.

The challenge: Did historians get the genesis of management wrong? Professor Rosenthal, defend your research.

Rosenthal: I was surprised by what we uncovered in these account books. The mythology is that on plantations, management was crude and just amounted to driving enslaved people harder and harder. These documents show that plantations used highly sophisticated accounting practices more consistently than many contemporary northern factories, which are often considered the birthplace of modern management. In some ways the conditions of slavery permitted a more scientific approach than the factories did.

Is there a direct link between slave management and Frederick Taylor?

I’m researching that. Plantations were tied reasonably directly to the types of textile mills that figure in the prehistory of scientific management—cotton came from plantations. This is not new; scholars have been debating the links between slavery and the Industrial Revolution for years. Whether there is a more direct link is still unclear. Right now I’m studying two of Taylor’s close associates who were born on plantations, including Henry Laurence Gantt, inventor of the Gantt chart.

https://hbr.org/2013/09/plantations-practiced-modern-management

[bemildred]

4. The same basic deal: because they control money/property, they get to exploit those who don't.

Instead of having to work like the rest of us. A class system based on property. Nothing is really new.

[moondust]

5. I still have to wonder

if slave plantations had been incorporated and publicly traded on stock markets--allowing larger numbers of (anonymous) "shareholders" to profit off slavery rather than just the one slave owner--might those plantations still be around today? Similar to third-world sweat shops run by corporations seeking maximum profits on behalf of shareholders?

[Starry Messenger]

6. They are in the form of privatized prisons.

Many corporations contract their labor out to the incarcerated.

[moondust]

7. Yes, prison labor is pretty close.

[starroute]

8. And we know what became of Brown Brothers & Co.

http://en.wikipedia.org/wiki/Brown_Brothers_Harriman_%26_Co.

Brown Brothers Harriman & Co. (BBH) is the oldest and largest private bank in the United States.[2][3] In 1931, the merger of Brown Brothers & Co. (founded in 1818) and Harriman Brothers & Co. formed the current BBH.

Brown Brothers Harriman is also notable for the number of influential American politicians, government appointees, and Cabinet members who have worked at the company, such as W. Averell Harriman, Prescott Bush, George H. W. Bush, Robert A. Lovett, Richard W. Fisher, Robert Roosa, and Alan Greenspan.


http://www.theguardian.com/world/2004/sep/25/usa.secondworldwar

While there is no suggestion that Prescott Bush was sympathetic to the Nazi cause, the documents reveal that the firm he worked for, Brown Brothers Harriman (BBH), acted as a US base for the German industrialist, Fritz Thyssen, who helped finance Hitler in the 1930s before falling out with him at the end of the decade. The Guardian has seen evidence that shows Bush was the director of the New York-based Union Banking Corporation (UBC) that represented Thyssen's US interests and he continued to work for the bank after America entered the war. . . .

In 1924, his father-in-law, a well-known St Louis investment banker, helped set him up in business in New York with Averill Harriman, the wealthy son of railroad magnate E H Harriman in New York, who had gone into banking.

One of the first jobs Walker gave Bush was to manage UBC. Bush was a founding member of the bank and the incorporation documents, which list him as one of seven directors, show he owned one share in UBC worth $125.

The bank was set up by Harriman and Bush's father-in-law to provide a US bank for the Thyssens, Germany's most powerful industrial family.

[jwirr]

9. Very interesting. This needs to be taught in colleges as the real history of the US. One question:

was there any link to other parts of the US such as Iowa, Minnesota and other western states? Mostly what this study (as much of it as I read here) refers to is the south and the east coast. Capitalism is something we all have in common regardless what area we live in. How did this spread to other areas?