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The Slave Trade and British Capital Formation in the Eighteenth Century: A Comment on the Williams Thesis*

Published online by Cambridge University Press:  11 June 2012

Stanley L. Engerman
Stanley L. Engerman
Affiliation:
Professor of Economics and History, University of Rochester
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Abstract

Professor Engerman constructs estimates of relevant data in order to test the assertion that profits from the slave trade provided the capital which financed the Industrial Revolution in England.

Type
Research Article
Information
Business History Review , Volume 46 , Issue 4 , Winter 1972 , pp. 430 - 443
Copyright
Copyright © The President and Fellows of Harvard College 1972

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References

1 Williams, Eric, Capitalism and Slavery (Chapel Hill, N.C., 1944).Google Scholar

2 Davies, K. G., “Essays in Bibliography and Criticism, XLIV: Empire and Capital,” Economic History Review, 2nd series, XIII (1960), 110.Google Scholar

3 This argument has had a rather long history in writings since the eighteenth century. As discussed below, there are at least two variants. One emphasizes the particular contribution of the slave trade to the growth of Liverpool and to Lancashire, and thus the role of cotton textiles in the Industrial Revolution. A second, which will be examined here, is a more general statement of the role of the slave trade and its profits in the financing of the capital requirements of industrialization. For a related discussion of the role of the French slave trade in French economic growth see James, C. L. R., The Black Jacobins (New York, 1963).Google Scholar

4 See, e.g., Christopher Hill's criticism of T. S. Ashton for his virtual ignoring of the role of the slave trade in the start of the Industrial Revolution, in Hill, Christopher, Reformation to Industrial Revolution (Harmondsworth, 1969), 230Google Scholar. The slave trade is not the only “immoral” source of “primitive capital accumulation” cited for the Industrial Revolution. See, e.g., Paul Baran's discussion of the contribution of India in Baran, Paul A., The Political Economy of Growth (New York, 1957), Ch. 5.Google Scholar

The importance of “primitive capital accumulation” in the “origins of the Industrial Revolution” means that primary attention should be paid to the years in the early part of the eighteenth century. Although the relative contribution of the slave trade may have increased towards the end of the period, it then is relevant for a different argument than that often inferred from Williams.

5 Both quotes are from the same sentence in the preface to Williams, Capitalism. For recent discussion of the politics of abolition see two papers by Anstey, Roger T.: “Capitalism and Slavery: A Critique,” Economic History Review, 2nd series, XXI (August, 1968), 307–320CrossRefGoogle Scholar, and “A Re-interpretation of the Abolition of the British Slave Trade, 1806–07,” English Historical Review, LXXXVII (April, 1972), 304–332CrossRefGoogle Scholar. For an interesting benefitcost analysis of the gains (and losses) to England of the suppression of the transatlantic slave trade, see LeVeen, E. Phillip, “British Slave Trade Supression Policies, 1821–1865: Impact and Implications” (Ph.D. Thesis, University of Chicago, 1971)Google Scholar.

6 Williams, Capitalism, 105. On p. 63 Williams does claim that “it was only the capital accumulation of Liverpool which called the population of Lancashire into existence and stimulated the manufactures of Manchester,” and “that capital accumulation came from the slave trade.” In several other places, also, the triangular trade and the slave trade seemed to be interchangeable.

7 Ibid., 52 and 98 (italics added in both).

8 See the comments on Williams' use of this method in Flinn, Michael, The Origins of the Industrial Revolution (New York, 1966), 45–46Google Scholar, and in Minchinton, Walter, “The Economic Historian and Slavery” (unpublished paper presented to the University of London Seminar on Comparative, Slavery, 1971), 10Google Scholar. In addition the detailed discission by K.G. Davies of the work of Richard Pares (Davies, “Essays”) notes the paradox that whatever substantial flow of investment from West Indian profits into industry there was occurred after emancipation, not before. Pares, himself in an article written before Williams' book dismisses the influence of wealth generated on the West Indian plantations upon the financing of the Industrial Revolution. Pares, Richard, “The Economic Factors in the History of Empire,” Economic History Review, VII (May, 1937), 119–144.Google Scholar

9 See Richardson, Patrick, Empire and Slavery (New York, 1968), 77Google Scholar for the argument that “a much greater proportion of colonial money transferred to Britain went to finance the ostentatious expenditure of the absentee proprietors and their political ambitions.” Of course some may have also been resource-absorbing consumption expenditure, not just payment for previously existing assets or transfers among individuals.

10 This approach to measuring the benefits of the slave trade presumes that the total profits are the only benefits to be attribute to the trade which would not arise in its absence. However, even within the neoclassical framework this will not be, strictly speaking, the appropriate number. It may be too high, if it is argued that the trade used only a small portion of available resources, including capital, and that alternative uses of this capital were available at similar rates of return. On the other hand, given factor supply cruves, part of the benefits might be reflected in higher wages as well. Given the emphasis on slave trade profits, the measurements presented will provide a rough answer to the problem.

11 The aggregation implied by this question thus assumes away the argument that all gainers from the slave trade invested in industrial capital while losers would not have spent any profits in that manner. In that case, one would want to look at the total gains without deducing losses, and could get a large effect of slave trade profits. It is not clear, however, why the argument could not as well go the other way and give a negative number.

This phrasing of the question also ignores arguments which make the profits of the slave trade profits, the measurements presented will provide a rough answer to the problem. contributor in others. While this answer may appear historically accurate, it would suggest that factors other than the slave trade itself need to be considered. In what follows the interest is in what, under a plausible set of assumptions, would be the effect, leaving to the social historian the explanation of the sufficient conditions for the linkage of slave trade profits and industrial development in specific areas.

12 Curtin, Philip D., The Atlantic Slave Trade: A Census (Madison, Wis., 1969)Google Scholar. The British figures for 1761–1807 have been raised by about 10 per cent by Roger Anstey, and I shall use these for the relevant period. See Roger T. Anstey, “The Volume and Profitability of the British Slave Trade, 1761–1807,” (forthcoming in a collection of papers presented at the M.S.S.B. Conference on Systems of Slavery). Raising the Curtin estimates by this amount for the earlier periods would not affect the conclusions, and therefore no adjustments were made.

13 Williams, Capitalism, 33 places imports of slaves into British colonies between 1680 and 1786 at over 2,000,000. Curtin sets the comparable estimate for 1676 to 1780 at about 1,500,000, while the total for 1626–1807 was about 2,000,000. (Curtin, Atlantic Slave Trade, 119 and 216. These include some imports into the United States.) Williams pointed out that the British carried slaves “not only for their own plantations but for those of their rivals,” but no estimates are provided.

14 See Williams, Capitalism, 35–39 for the discussion of the profits of the slave trade. Attempts to measure profits bog down on problems of data interpretation as well as accounting complexities, while the large variance in returns from operations makes reliance on a small number of observations uncertain. For discussion of some of these difficulties see, in particular, Anstey, “Volume and Profitability;” Hyde, Francis E., Parkinson, Bradbury E., and Marriner, Sheila, “The Nature and Profitability of the Liverpool Slave Trade,” Economic History Review, 2nd series, V (1953), 368–376CrossRefGoogle Scholar; and Sheridan, R. B., “The Commercial and Financial Organization of the British Slave Trade, 1750–1807,” Economic History Review, 2nd series, XI (1958), 249–263.Google Scholar Anstey computes a rate of return for 1761–1807 in excess of the consol rate, but only about one-quarter of that 30 per cent figure. For recent discussions of the slave trade by economists, who conclude both that entry could not have meant anything but “normal profits” in the long-run, and that any “excess profits” could be justified as the return to a risky business, see Bean, Richard Nelson, “The British Trans-Atlantic Slave Trade, 1650–1775” (Ph.D. Thesis, University of Washington, 1971)Google Scholar; LeVeen, “British Slave Trade;” and Rottenberg, Simon, “The Business of Slave Trading,” South Atlantic Quarterly, LXVI (Summer, 1967), 409–423Google Scholar.

15 See the classic study by Davies, K. G., The Royal African Company (New York, 1970)Google Scholar. Failure may have been due in part to the providing of certain externalities (forts, trading posts, etc.) to the benefit of other traders, so that a complete calculus including the interlopers and the Royal African Company might still yield a net profit for all British traders. These costs are omitted in Table II, which might account, in part, for the high level of profits per slave.

16 For an important, and accessible, presentation of this information on the supply side of the African slave trade, see the essays by Kilson, , Davidson, , and Curtin, in Huggins, Nathan I., Kilson, Martin, and Fox, Daniel M. (eds.), Key Issues in the Afro-American Experience (New York, 1971), I, 39–93.Google Scholar A more explicit economic presentation is in LeVeen, “British Slave Trade.” See also Fage, J. D., “Slavery and the Slave Trade in the Context of West African History,” Journal of African History, X (1969), 393–404.CrossRefGoogle Scholar

17 See Curtin, Atlantic Slave Trade, Ch. 10, and K. G. Davies, “The Living and the Dead: White Mortality in West Africa, 1684–1732,” (forthcoming in a collection of papers presented at the M.S.S.B. Conference on Systems of Slavery). Davies estimates that six of ten Englishmen sent to Africa died within their first year there.

18 Deane and Cole, British Economic Growth, 259–264.

19 Ibid., 269–277. The ratio would have been under 10 per cent at the start of the eighteenth century.

20 This is based upon the income measure derived from the Deane and Cole indexes, and with industrial capital formation absorbing I per cent of national income. Another plausible comparison, of total net investment in cotton textiles from 1783–1802 (ibid., 262) with Anstey's measure of total slave trade profits for the period “centered” in 1800, shows the latter to be about one-quarter the former.

21 As discussed in footnote 11, it remains that the particular regional incidence of these profits could have been important. This argument is dependent upon the existence of capital market imperfections which affect the flow of investment funds. The examination of this aspect of the capital market would be itself a major contribution to the literature on the Industrial Revolution.

22 Sheridan, Richard B., “The Plantation Revolution and the Industrial Revolution, 1625–1775,” Caribbean Studies, IX (October, 1969), 5–25.Google Scholar

23 The references here are to: Sheridan, R. B., “The Wealth of Jamaica in the Eighteenth Century,” Economic History Review, 2nd series, XVIII (August, 1965), 292–311CrossRefGoogle Scholar, and “A Rejoinder,” ibid., XXI (April, 1968), 46–61; Thomas, R. P., “The Sugar Colonies of the Old Empire: Profit or Loss for Great Britain?,” Economic History Review, 2nd series, XXI (April, 1968), 30–45Google Scholar; and Coelho, Philip, “The Profitability of Imperialism: The British Experience in the West Indies, 1768–1772,” (unpublished paper, St. Mary's University, 1971)Google Scholar.

24 R. B. Sheridan, “A Rejoinder,” 56.

25 Sheridan omits the latter on grounds that the observed price differentials were due to quality differences between British and other sugar, plus various tax and duty differentials. Sheridan's calculations do include an allowance for profits on the slave trade, which his accounting has placed at about £ 8.61 per slave.

26 See, in particular, Chambers, Edward J. and Gordon, Donald F., “Primary Products and Economic Growth: An Empirical Measurement,” Journal of Political Economy, LXXIV (August, 1966), 315–332CrossRefGoogle Scholar, and Kravis, Irving B., “The Role of Exports in Nineteenth-Century United States Growth,” Economic Development and Cultural Change, XX (April, 1972), 387–405.CrossRefGoogle Scholar

The arguments relating to the “export-base” include allowances for various linkages, externalities, and dynamic effects. While it is difficult to comfortably dismiss such effects, one must also avoid the tendency to regard their mention as proofs and not as hypotheses to be further tested. One possible important linkage, generated by the import of slave-produced commodities from the British West Indies and North American colonies, must be given somewhat skeptical treatment for the “origins” argument. It is important to note that by far the largest part of these imports, both retained and re-exported, were of sugar and tobacco, with cotton being of minor importance even at the very end of the eighteenth century.