Slavery's Invisible Engine: Mortgaging Human Property

Abstract

IN 1864 AUGUSTUS BALDWIN LONGSTREET PUBLISHED THE LATEST IN A series of humorous sketches on southern life. While this novel, Master William Mitten: or, A Youth of Brilliant Talents, Who Was Ruined by Bad Luck, was farce, it can help introduce a serious, powerful, but little understood engine of slavery: the mortgaging of human property. (1) The relevant scene takes place on the Alabama frontier during the cotton boom. Confidence man John Carp entices a gullible estate administrator named Curt to borrow money at the exorbitant interest rate of 2 percent per month. Curt eventually owes Carp $10,000, a debt secured by mortgages on the fourteen slaves belonging to the estate. Finally, Curt turns these slaves over to Carp, who disappears with them--and with Mrs. Curt. (2) Longstreet knew his audience would be familiar with the use of slaves, land, and other property as collateral--a financial strategy little discussed by historians. This article analyzes 8,840 mortgages recorded in the eighteenth and nineteenth centuries and demonstrates that southerners used human collateral to raise large amounts of cash and credit. Data collected from mortgages in the public records of Virginia, South Carolina, and Louisiana shows that, with the reassurance of slave mortgages, neighbor borrowed from neighbor and friends endorsed the debt contracts of friends. As a result, those buying slaves were able to expand their holdings in slaves more quickly because they did not have to save the entire purchase price before making their acquisitions. For sellers, credit sales using mortgages expanded the pool of potential buyers, whether those sellers were the factors of international firms, large planters, small farmers, or artisans. Southerners who owned slaves outright and who wanted to retain their workforce used human collateral to convince merchants to make cash advances and to sell supplies on credit. This research supports three arguments: that mortgages on enslaved people allowed the resources so central to the expansion of local and regional economies to grow and to circulate more easily; that this circulation, whether of slaves, goods, cash, or credit, was especially important on agricultural frontiers; and that there were human as well as economic consequences of this practice. The initial goals of this broad comparative research are to discover whether slaveholders in the Euro-American colonies and the pre-emancipation United States used human property as collateral on a regular basis and, if so, to determine how much capital was generated by such mortgages. The data leads to several important conclusions. Both before and after the American Revolution, slaves were mortgaged in various geographical regions within Virginia, South Carolina, and Louisiana, suggesting that the practice was widespread in the South. (3) Human collateral was used to raise a significant amount of cash and credit; however, the mortgage contracts were dispersed in courthouses and commandants' headquarters across the colonial South, camouflaging the power and scope of the financial engine created. A web of local credit networks anchored by mortgages began to grow in the colonial period. In the nineteenth century these informal community credit networks expanded. The networks apparently operated alongside, but not directly through, the emerging banking system: banks were used as facilitators and as places for repayment, rather than as the primary lenders. In addition, there was no centralized collection and compilation of mortgage statistics. For example, the census did not require counties or parishes to report totals of land, slaves, or other property mortgaged. Year in and year out, therefore, private mortgage contracts were quietly filed across the South, but no published tallies exposed the number of mortgages made or the amount of capital raised. Nor was there a calculation of the value of human collateral when slaves were liberated. In Barbados, Brazil, and South Africa, where slavery was ended by a compensation scheme rather than war, public debates about the economic costs of emancipation included an accounting of the use of human collateral. …

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