Hamilton and the Economics of Slavery
Robert E. Wright, Nef Family Chair of Political Economy, Augustana University
Prepared remarks given 7/10/17 at Fraunces Tavern Museum:
http://www.frauncestavernmuseum.org/evening-lecture-series/
I don’t
think that Alexander Hamilton lived long enough, or did enough in the cause of
antislavery, to quite deserve the label ABOLITIONIST, i.e., a person who
actively sought to end slavery throughout the United States. While his hands
were not entirely clean when it came to the ownership of other human beings,
they were much, much cleaner than those of most of the Founders, including
those of his mentor, George Washington. Part of this was the mere luck of being
born poorer than any other Founder, or certainly any of the major Founders,
with the possible exception of Franklin, who probably not coincidentally also
came to hold antislavery views. But Hamilton’s brushes with slavery as an adult
were also due more to chance than design. I’m thinking here of his marriage
into one of New York’s wealthiest families and his long residency in Manhattan,
that part of his adopted state most amenable to the peculiar institution.
Had more of
his correspondence survived, or indeed if Hamilton himself had lived long
enough to find the leisure time to wax eloquent about his views, we would enjoy
a much more definitive understanding of Hamilton’s views on slavery. As matters
actually stand, we have to piece together the most plausible story we can,
which I think would conclude that Hamilton, had he lived, would have developed
economic abolitionism decades before Hinton Helper did.
Economic
abolitionism is much less studied and understood than its moral cousin, or what
we might call mainstream abolitionism. For most abolitionists, slavery was
immoral, plain and simple, because it was an abomination unto the Lord and/or
unto natural reason or natural law. Many mainstream abolitionists did not, and
would not, discuss the economic aspects of slavery. Most were not deep economic
thinkers and intuited that they would lose any economic argument with
slaveholders. Others grudgingly conceded that slavery was an economic good but
found it repulsive to even think about exchanging material well-being for the
suffering of the enslaved.
The great
classical economist Adam Smith took a stab at economic abolitionism and failed
badly. He argued that, regardless of race, free people were always more
productive than slaves because the latter had but paltry incentive to work hard
or smart. All they would do was the bare minimum to avoid punishment and they
would resist and steal at every opportunity, views also held by Franklin. Smith,
a careful student of history, had to concede that the world had always been
full of enslavers, which he explained proved only that people really liked to
enslave others. Nobody who saw firsthand the large profits produced by many
slave plantations could follow Smith’s weak brand of economic abolitionism.
What
finally convinced people that slavery was bad for the economy, that it reduced
real per capita output and stymied development, was the concept of pollution,
or what economists today call negative externalities. Everyone knew that, say,
a tannery could be fabulously profitable but destroy a sizable town downstream.
Total economic activity was therefore not the sum of private profits, it was
the sum of private profits minus the costs of pollution, and other negative
externalities. Ergo, slave plantations could be profitable but actually hurt
the overall economy by creating costs borne by the rest of society. Enslavers’
profits were, in essence, stolen not only from the enslaved but from non-slaveholders
as well.
The notion that slavery created
large negative externalities percolated for centuries before culminating in
Hinton Helper’s 1857 opus, The Impending
Crisis of the South. That the enslavement of others enriched a few at the expense of
the whole can be dated to sixteenth century French philosopher Jean Bodin, who
argued that the profits created by slaves were offset by the fear induced by
the institution in both slaves and the general population. As Bodin put it, slave
societies were quote always in daunger of trouble and ruine, by the conspiracie
of slaves combining themselves together: All Histories being full of servile rebellions
and warres. unquote Johann Gottfried Herder, an eighteenth century German
scholar, also clearly saw that slavery created social costs not borne by enslavers.
His major example of a negative externality caused by slavery was the spread of
syphilis, which devastated three continents.
The idea that slavery imposed large costs on
non-slaveholders gained traction in early nineteenth century America. In 1805, Philadelphia’s
Thomas Branagan compared slavery quote to a large tree planted in the south,
whose spreading branches extends to the North; the poisonous fruit of that tree
when ripe falls upon these states, to the annoyance of the inhabitants, and
contamination of the land which is sacred to liberty. unquote George Mason had
also likened slavery to a quote unquote slow Poison and in 1832, following a
slave rebellion, fellow Virginian Henry Berry argued that slavery was akin to
raising tigers, something the state certainly had an interest in arresting,
even if it was quote a very lucrative business. unquote Virginians
would not be allowed to raise the Upas tree or Tree of Death, Berry argued,
even if it grew entirely on their own private land. In that same debate, Charles
James Faulkner stated the matter directly: quote Slaves are injurious to the
interests and threaten the subversion and ruin of this Commonwealth. Unquote
In 1833 British abolitionist Joseph Conder
argued that free laborers cost society less than slaves did because slavery
encouraged quote a wasteful and deteriorating husbandry unquote due to its
reliance on monoculture and primitive tools as well as quote contingent social
evils, which demand a precautionary provision unquote. The ultimate cost of
slavery, he concluded, also included quote the state expenditure which it
renders necessary in order to provide against the dangers inseparable from the
existence of a servile class. Unquote
Former Kentucky
slaveholder Cassius Clay converted to the antislavery cause after he took up a
methodology, first tried in 1824, of comparing the economies of free and slave
states. Despite Virginia’s natural advantages over New York, he noted, the
latter exceeded the former in quote the elements of National prosperity and
glory; wealth, numbers in new countries, literature, industry, the mechanic
arts, scientific agriculture, &c. unquote Slavery, Clay concluded, was
clearly to blame for Virginia’s economic retardation. Quote The twelve hundred
millions of capital invested in slaves is a dead loss to the South, unquote he
declared, predicting, accurately, that the free North would defeat the slave
South in a civil war.
Helper took those hints and ran
with them. Although his execution proved poor in places, Helper showed in
devastating detail that the free states were economically superior to
comparable slave states and then convincingly argued that slavery was the
culprit because of the pollution necessarily created when holding millions of
human beings in abject bondage. Republican politicians soon extended Helper’s
ideas to claim that enslavers effectively taxed Northern workers in several
ways, only the most palpable of which was the Fugitive Slave Act. The South’s
poor whites were probably the biggest non-slave victims of slavery because
enslavers did not support public education or quality transportation systems
that would have allowed Buckram, as they were derisively known, from having a
shot at bettering their condition. Who then would man the nightly slave patrols
that allowed enslavers to sleep?
So slavery was not just a moral
atrocity, it was economic theft en masse,
one well worth fighting to end. During the Civil War, bona fide economists like John Elliott Cairnes adopted the negative
externalities view of slavery. Cairnes argued:
QUOTE Those who are
acquainted with the elementary principles which govern the distribution of
wealth, know that the profits of capitalists may be increased by the same
process by which the gross revenue of a country is diminished, and that
therefore the community as a whole may be impoverished through the very same
means by which a portion of its number is enriched. The economic success of
slavery, therefore, is perfectly consistent with the supposition that it is
prejudicial to the material well-being of the country where it is established.
UNQUOTE
That remained the orthodox view until about 2010. The debate
sparked by Time on the Cross in the
1970s was more about the relative efficiency of free and slave labor. All Fogel
and Engerman did was to re-establish that Smith and Franklin were wrong, that
slaves could be more efficient than free laborers under certain circumstances. In
the twenty teens some so-called historians of capitalism began to argue something
much broader, that slavery made the U.S. and U.K. wealthy. Economic historians
have successfully attacked their sloppy work, which hopefully has been
completely put to bed by my book The Poverty
of Slavery: How Unfree Labor Pollutes the Economy, which came out of
Palgrave this spring and copies of which are available for sale here.
Killing off the notion that slavery
can cause economic growth and development will be an important victory for the
modern antislavery movement. Slavery, you see, did not end in the nineteenth
century in the U.S., or anywhere else for that matter, it merely changed names
and forms into debt peonage, bonded labor, white slavery, and child
exploitation. Today, we call it by such euphemisms as sex trafficking and
unfree labor. Although the percentage of people enslaved today globally is less
than it probably has been at any point in world history, 30 to 40 million
people remain enslaved worldwide and that is 30 to 40 million too many. We did
not need some Ivory Tower, Ivy League historians to strengthen modern slavery
by claiming, more out of ideological conviction to support reparations claims
than an understanding of economic growth processes, that slavery can stimulate
economic growth and development.
Of course,
those are the same types of scholars who don’t understand Alexander Hamilton’s
contribution to modern America very well. Hamilton wasn’t a royalist, he was a republican,
of the constitutional monarchist variety at times, but not because he was an
aristocrat. As noted earlier, he came from a very humble background. He wanted
strong checks on each of the three branches of government in case a demagogue
ever became president (as if!),
Speaker of the House, or chief justice of the Supreme Court. Even when he spoke
of constitutional monarchy, Hamilton did not advocate an authoritarian state, but
rather sought bulwarks against tyranny, specifically the tyranny of the
majority.
As I show in One Nation Under Debt: Hamilton, Jefferson, and the History of What We
Owe, copies of which are available for sale here, what Hamilton ultimately
wanted was an energetic government that provided public goods as efficiently as
possible. That meant providing national defense and protection of citizens’
lives, liberty, and property at the lowest possible cost. Hamilton did not want
a big government by today’s standards, he wanted one bigger than that desired
by Thomas Jefferson, which Hamilton believed would be too weak to protect the
young United States from foreign threats. Jefferson did not want an energetic
federal government because it threatened slavery; he and his slaveholding
followers hated Hamilton because they feared that he was the man most capable
of threatening the peculiar institution.
Hamilton did not want any person to
be under the absolute control of another, even a political leader. So at the
end of his pamphlet The Farmer Refuted,
Hamilton made clear that he was convinced that quote the whole human race … [was]
intitled [to] civil liberty, … [which he considered] in a genuine unadulterated
sense … [to be] the greatest of terrestrial blessings. unquote Importantly, Hamilton believed that people of all
races were fully human. When he said that all men had the right to the
administration of justice, there was no implied asterisk by the word men. I
can’t credibly argue that Hamilton held no racial prejudices but belief in the
systematic exclusion of any group of citizens from civil society was not among
his shortcomings.
In a letter to John Jay in 1779, Hamilton
believed that “negroes,” a polite term for African-Americans at the time, would
quote make very excellent soldiers, with proper management … [because] their
natural faculties are probably as good as ours unquote. Whites, Hamilton
lamented, were quote taught … contempt … for the blacks [which made them] fancy
many things [about Negroes] that are founded neither in reason nor experience
unquote. One might dismiss such sentiments as so much fodder in favor of Hamilton’s
desire to enlist African-American troops for the cause but Hamilton also wrote
that quote the dictates of humanity and true policy equally interest me in
favour of this unfortunate class of men unquote. He thought that arming blacks
would not only allow them to defend themselves but also spur slaves to shake
off their shackles.
In 1785,
Hamilton helped to form the New York Society for Promoting the Manumission of
Slaves, an NGO that encouraged New Yorkers to let their slaves go free and that
hoped to prevent their re-enslavement, or the kidnapping and enslavement of
free blacks, through registration. Three years later, Hamilton’s good friend,
the Marquis de Lafayette, updated Hamilton on France’s new policies quote
Respecting the Negroe trade, and slavery unquote. He then begged Hamilton to
subscribe him to the anti-slavery societies in New York and elsewhere. Hamilton
remained a member of the society until his death, and was elected counsellor of
the society in 1803, but he was active only in spurts because his overriding
goal was preservation of the precarious Union that he had helped forge. Without
the Union, the liberties of all Americans, black and white, would be
endangered.
When commenting
on the Jay Treaty, which he generally favored, Hamilton approved of the
emancipation of American slaves during the Revolution by the British because
quote it would have been still more infamous to have surrendered them [freed
slaves] to their Masters unquote. The peace treaty, Hamilton noted, did not
require the British to restore property, just to not carry any away. But once
captured by the British, slaves were freed and hence stopped being property.
In addition
to opposing slavery on moral grounds, Hamilton clearly understood the concept
of externalities, both positive and negative. In his report on manufactures,
Hamilton noted that manufacturing created positive economic spillovers,
specifically an increase in quote unquote ingenuity. Hamilton also noted that
alcohol consumption created negative externalities, like decreased productivity,
which is why he personally preferred strong coffee over arduous spirits. In his
report on the Bank of the United States, Hamilton argued that by printing too
much fiat paper money, governments could create negative externalities in the
form of an inflationary bubble quote incompatible with the regular and
prosperous course of the political economy unquote.
All that
remained for Hamilton to become an economic abolitionist was to observe the
economic differences between slave and non-slave states and to explain their
differences by referencing negative externalities. When he died in 1804, the
differences between North and South, and free and slave, were not yet as
palpable as they would become. Had he lived into the 1820s or 1830s, as
Jefferson, Adams, and Madison did, Hamilton would certainly have learned of the
increasing economic differences between the two sections and put his keenly
analytical mind to explaining why. As I show in One Nation Under Debt, Hamilton was nothing short of an economic
genius. There is no doubt that he was economically more astute than any of the
economic abolitionists, including Cassius Clay, Hinton Helper, or even J. E.
Cairnes. It is difficult to believe that he would have missed the application
of negative externalities to slavery.
Albert Gallatin, America’s second
greatest treasury secretary, was born just a few years after Hamilton, and lived
until 1849. Although a member of Jefferson’s entourage, Gallatin long opposed
slavery.[1]
Like Hamilton, Gallatin was a member of his adopted state’s abolition society
in the 1790s. While lamenting the loss of innocent lives in the Haiti uprising,
he believed the uprising itself just retribution for “the crimes of so many
generations of slave-traders and slave-holders,” a sentiment similar to one
that Hamilton expressed during his 1789 eulogy of Revolutionary War General
Nathanael Greene that rendered him persona
non grata with the Jeffersonian slaveholding elite. Unsurprisingly,
Gallatin did what he could to stop the expansion of slavery into new U.S.
territories but at the same time admitted he was tempted to buy slaves to help
build his estate in western Pennsylvania. He resisted the temptation, though,
and in one of his last public acts he opposed the annexation of Texas, and the
subsequent war with Mexico, on general antislavery grounds.
Although antislavery in principle,
Gallatin was no abolitionist because, like Edward Everett, he ultimately valued
the Union over the lives of slaves.[2]
Gallatin therefore spent his last years studying the plight of American Indians
instead of slaves. Moreover, slavery remained simply a moral problem for Gallatin
as well as for Everett. Hamilton was too astute an economist not to have
discovered economic abolitionism. Although he, too, would have been loath to
endanger the Union, he would have seen, as Helper and others later did, that
slavery was not only a political threat to the Union, it was an economic threat
because it created two economies – not one slave and one capitalist, whatever
that means – but one a horrid Southern vampire that sucked resources out of the
other by imposing massive negative externalities on it. The most telling
evidence of that fact is that the Confederate states seceded not because
Lincoln threatened to free the slaves but because he threatened merely to
remove federal subsidies for slavery. Without those subsidies, slavery would
have unraveled, and perhaps in an ugly way. Now imagine Hamilton during the
Missouri or Nullification crisis arguing, in his usual indomitable way, that federal
subsidies for slavery, which ranged from the postal service to river clearing
to fugitive slave laws, had to cease. I think the South would have capitulated
but worst case scenario the North would have won the Civil War in the early
1820s or 1830s instead of the 1860s.
Thank you!
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