Profitability of Slavery Essay

Briefly state the two opposing views. A. Abolitionists condemned slavery based on moral, social, and economic reasons. Many believed that slaves were mistreated and were often subjected to corporal punishment. Others argued that the forced labor of blacks was inefficient and unproductive for various racial and economic reasons. Ulrich Phillip’s studies from the antebellum slavery in the south claimed that although plantation slavery produced great wealth, even without the civil war, slavery was economically on a dead end due to the rising cost of factor prices (slaves) increasing faster than the product prices (cotton). B.Economists approached slavery as a business matter and tested its profitability. They perceived slaves as a capital investment and argued it was not in an owner’s interest to enforce severe corporal punishment because it would lower their rates of return. Alfred Conrad and John Meyer calculated the price of a slave along with their rates of return to determine profitability. They concluded that the rapid increase of factor prices (slaves) was mainly due to the fact that output per slave was also increasing. Outline in some detail the more traditional view. Where did it come from? What was it based upon? In 1905, historian Ulrich Phillips wrote a study based primarily on slave prices relative to cotton prices. Ulrich claims that American-born slaves were sold at a higher cost than fresh African slaves, because of their training in plantation labor and domestic service. Slave prices were low in the late 1780’s and early 90’s until Eli Whitney’s invention of the cotton gin came in 1793. Due to the increasing demand for labor, slave prices steadily increased and spiked after the prohibition of the African trade in 1807. Despite prohibition, between 1800 and 1860, the slave growth rate averaged about 2.4 percent per year (W.R. 222). Based on Phillip’s table of slave and cotton prices in Georgia, it shows the average price of a prime field hand, in 1800, was approximately $450. At the same time, the average New York price of upland cotton was 30 cents; however, in 1860 we see a significant difference in prices. The average cost for a prime field hand is now $1,800 and the average New York price of upland cotton is 11 cents. Phillips explained, â€Å"The decline in the price of cotton was due to improvements in cultivating, ginning and marketing. The advance of the slave prices was due in part to increasingly intelligence and ability of Negroes and to improvements in the system of directing their work on the plantations, also to the decline in the value of the money.† (Phillips, 268) With factor prices (slaves) rising by 600 percent from 1805-1860 (Weiher), and product prices (cotton) declining by 63 percent, Phillips concluded that slavery was becoming unproductive and unprofitable due to overcapita lization in the labor force. He saw planters as bad business people, because they purchased slaves for conspicuous consumption. Furthermore, he believed the Civil War was unnecessary because slavery was doomed to fail within the generation without emancipation. Outline in some detail the revisionist view. In 1958, economists Alfred Conrad and John Meyer conducted a study by testing the hypothesis of taking appropriate variables and computing the rate of return over cost of a slave in a lifetime. Conrad and Meyer’s studies were based on four key aspects: the life expectancy of a slave, the price of a prime field hand (fixed cost) along with the of supplies necessary to maintain a slave (variable cost), land and cotton prices, and annual returns from a slave based on field labor and procreation. By understanding these variables, Conrad and Meyer were able to calculate the yearly-expected output values by taking â€Å"the price of cotton times the marginal physical product of the slave, minus yearly maintenance costs summed over the expected remaining length of life of the slave† (W.R. 225). Based on the calculation above, they were able to explain the reasons as to why slave prices would increase. If the price of cotton increases, then the demand for labor also increases which ultimately drives up slave prices. If cotton prices stay the same but there is an increase in output per worker, then the price of slaves will increase. If the cost to maintain a slave decreases, then the difference will eventually offset once slave prices increases to its equilibrium. Conrad and Meyer found Phillip’s table involving the relationship between the prices of prime field hands compared to the prices of cotton accurate; however, they explained that Phillips was missing key data to support his claims of slavery being unprofitable. Phillips completely left out the overall productivity of a slave, which was the ultimate difference in the revision of 1958. A major factor Conrad and Meyer took into consideration concerning production was the reproduction rates for females. Their researched showed that â€Å"prime hand wenches produced anywhere between 5-10 kids, and was one-half to two-thirds productive as prime field hands† (C.M. 106-107). However, an average 3 months time is lost due to pregnancy. After calculating return rates they found that women bearing 10 children would have an 8.1 percent rate of return and a women with 5 children will have a 7.1 percent rate of return. Furthermore, the rate of return per slave averaged out to 10 percen t (Weiher). In what ways do the differences in views hinge on economic interpretation? On differences in empirical evidence? On anything else? For over 50 years, Ulrich Phillip’s interpretation of slavery set precedence. His results concluded that after the mid 1850’s, slavery was increasingly becoming unproductive and unprofitable, because of overcapitalization of labor due to the rising costs of slave prices. He also believed slaves were a fictitious form of wealth based off of conspicuous consumption, and slavery was doomed to fail even without the Civil War. His studies were precedent until 1958, when economists Conrad and Meyer published an article overturning Phillips. Evidence from Conrad and Meyer implies that Phillip’s findings were inaccurate because he failed to calculate the rates of return on investments in slaves. Phillip’s relationship table between slave prices and cotton prices were accurate, and were also used in Conrad and Meyer’s studies; however, Phillips used speculation and overlooked productivity advance. Eventually Conrad and Meyer came up with a table of their own, only this time they included output. Their data shows that during the 1840’s through 1860 (the same time period Phillips said overcapitalization was steadily increasing) â€Å"slave prices rose about one and one-half times, while the value of cotton production per hand increased rose more than three times since 1842† (C.M. 116). This data supports the overturn of the overcapitalization of labor theory, because it shows that slave prices were increasing due to the fact that production was increasing more rapidly. From the rising trend of slave prices and the slave population growth suggests evidence implicating the profitability of slavery. Phillip’s believed slave prices were increasing because of conspicuous consumption, which ultimately lowed the rates of return. Conrad and Meyer countered his hypothesis with evidence showing rates of return averaging out to 10 percent, which was good or better than New England textile mills, southern railroads, and corporate bonds (Weiher). Phillip’s also suggested that diminishing returns was occurring in the late 1850’s and that slavery was going to fail soon even without emancipation. According to Dr. Weiher, from 1860-90, cotton land planted increased 2 percent per year, which was faster than the slave population growth. Land planted doubled again by 1925, which is evidence that suggests slavery was not going away in the short-term, unless emancipated. Contrast what the belief in each view can mean to the picture we have of the past and/or present. In other word, why does this difference matter? These two beliefs play a critical role in American history. The difference factor in these two views matters significantly. The traditional view claims that the Civil War was an unnecessary bloodshed to protect a system that was economically doomed; on the other hand, the revisionist’s implicates evidence suggesting the root cause of the Civil War was indeed to protect slaveholders’ investments. After Phillip’s study came out in 1905, which claimed that slavery was economically ending in less than a generation, controversy over the Civil War suggested that the reasons for fighting the war was not because of slavery, but instead, states rights. In Conrad and Meyer’s research conducted in 1958, they were able to overturn Phillip’s hypothesis and proved that slavery was not economically doomed. Their evidence showed that the rates of return for a slave was actually increasing after the 1860’s due to increased production and expansion of land planted. These results implicate conclusive evidence that shows slavery was neither unprofitable nor dying in the near future. Slaves produced much more than the cost of actually maintaining them, so it made perfect business sense for slaveholders to want to protect their assets by all means, even if it meant war.