Op-Ed: How Some Founding Fathers Used Slaves As Collateral
Americans are largely unaware that many of the famous Founding Fathers were deeply in debt. Some of them, including Thomas Jefferson, attempted to prevent foreclosure by using their slaves as collateral. The use of humans to repay debt was refined in the years after 1776 – and this helped revive our American financial system.
Slave-backed debt was a depravity that treated black men and women as fodder whose only value was the wealth they generated for others. In honor of Independence Day, consider the founders to be debtors, especially at a time when so many Americans are in debt due to a pandemic that has left them unable to pay their rent, mortgage, and mortgage. credit card bills.
Thomas Jefferson died on July 4, 1826, in debt of nearly $ 2 million in today’s dollars. Mount Vernon, the tobacco-based property of George Washington, failed to keep Washington out of debt, so it switched to wheat in the 1760s, although its debt persisted throughout the World War II. independence and its presidency.
The way the founders got into debt was simple. Each year they sold their tobacco to European (mostly British) merchants, mostly in exchange for the goods that supported their lavish way of life. As tobacco prices fell, but their desire for material comfort remained, they paid for this way of life on credit offered by many of the same merchants.
Before the War of Independence, economic conditions in Europe pressed British merchants, who in turn pressed American planters for debt repayment. This has pushed some American planters into financial collapse and others, like Jefferson and Washington, to the brink of financial ruin. Some slave planters even complained of being enslaved to British creditors.
The Fourth of July patricians bristled at the idea that their independence was being cut off by British creditors – and with that independence being so deeply rooted in tobacco, their primary means of raising money owed to these creditors. Tobacco demanded to grow, and without slaves to raise their crops, Jefferson, Washington, and other planters would have been far too busy cultivating to have time to contemplate the lofty ideals of freedom.
In this way, freedom was directly linked to slavery. While it would be inaccurate to say that the founders went to war with Britain just to get out of debt, their growing debt predisposed them to be open to the idea of separating from Britain, resulting in the declaration of independence and the war of independence.
In the years following America’s victory in this war, Jefferson continued to take on deep debt. He sought repayment plans from his European creditors and used his slaves, which he named by name, as collateral against that repayment. In this regard, Jefferson was at the forefront of a flourishing trend. Although tobacco eventually gave way to cotton, an entire financial services industry emerged from pre-Civil War slave-backed loans – through what one economic historian called an “orgy of bank building. “.
The Citizens’ Bank and the Canal Bank of Louisiana, which both eventually merged with JP Morgan, accepted around 13,000 slaves as collateral for loans between 1831 and 1865. When some of these loans defaulted, the bank ended up own about 1,300 slaves. The Bank of Charleston, which ended up being part of Wells Fargo, also accepted slaves as collateral for loans. The same goes for the Commonwealth Bank of Kentucky, which still exists today.
The planters opened new southern shores. They drew up lists of slaves as collateral, then asked these banks to issue loans to members to buy more land and more slaves. The capital of these loans was raised by selling bonds to investors around the world, in London, New York, Amsterdam and Paris – many places where slavery was illegal.
But the investors did not own individual slaves, they did own bonds backed by the value of the slaves. Of course, insurance was then needed for the slaves who supported the bonds that the investors bought to provide loans to the planters to buy more land and slaves. Aetna, AIG, New York Life and many others have come together to provide this assurance.
“The burgeoning American financial industry,” historians Edward E. Baptist and Louis Hyman wrote, “has thrived on the profits from financing slave traders, cotton brokers, and underwriting back-backed bonds. slaves. Black Americans and their descendants never got anything back from a financial system built on their bodies.
Today, many white Americans claim no part in the slavery or brutality of black Americans. Their ancestors immigrated to this country long after slavery ended, they say, and they worked hard, accumulating neither privilege nor wealth. Yet anyone who has ever bought a home with a mortgage, an installment car, invested in the stock market, purchased insurance, or opened a savings account has enjoyed a systemic lien.
The institutions used in these transactions were built on the bodies of black men and women who never derived anything from the enormous wealth they generated. Family wealth accumulates over many generations, and most black families have never had the opportunity to build it, even though they have helped create wealth for many others. This makes a strong case for reparations.
Before that happens – and on behalf of the founding debtors – the federal government should at least extend the moratorium on evictions and provide debt relief to the millions of people behind on rent and mortgages until the pandemic is over and a full recovery is underway.
Clyde W. Ford is the author of the upcoming book “Of Blood and Sweat: Black Lives, and the Making of White Power and Wealth”. He is a contributing writer for Opinion.