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Cotton Gin

William H. Phillips, University of South Carolina

The cotton gin developed by Eli Whitney in 1793 marked a major turning point in the economic history of the Southern United States. Prior to this time, the major commodities produced and exported by the South were tobacco and rice. Only with the ability to quickly separate short-staple cotton fiber from its seed was the future of the Southern economy, and its use of slave labor, tied to cotton production.

Whether slavery in the American South would have withered away without the cotton gin and expanded cotton production has not been given a definitive answer. Almost certainly it would have altered the development of sectional conflict prior to 1861. Nonetheless, as shown in Table 1, the South was already a major slave economy prior to the cotton gin, and would have remained so for some time. The table shows that the percentage of slaves in the Southern population remained at about one-third from 1790 down to the eve of the Civil War. There was a notable decline in the border-states, offset by the increasing weight of the Lower South’s population expansion.

Table 1
Percent of Slave Population to Total Population, Southern States, 1790-1860

Year Southern States Border States Lower South
1790 33.5 32.0 41.1
1800 32.7 30.8 40.3
1810 33.4 30.1 44.7
1820 34.0 29.6 45.6
1830 34.0 29.0 46.0
1840 34.0 26.7 46.0
1850 33.3 24.7 45.4
1860 32.3 22.3 44.8

Sources: Adapted from Table 21 in Lewis Cecil Gray, History of Agriculture in the Southern United States to 1860, vol. 2 (Gloucester, MA: Peter Smith, 1958), 656. Original Data from United States Census, 1860, Population, 599-604. Border States are Delaware, Kentucky, Maryland, Missouri, North Carolina, Tennessee and Virginia, while Lower South states are Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, South Carolina and Texas.

Cotton Ginning before Eli Whitney

Devices for separating cotton fiber from seed have existed since antiquity. This process is considerably easier to perform for smooth seed long-staple cotton varieties, which dominated total cotton production prior to the popularization of Whitney’s machine. In 1788, Joseph Eve patented an improved machine for this purpose, using a method that is now referred to as “roller” ginning.

The problem faced by planters in the Southern United States was that long-staple cotton could only be grown at that time in a narrow band along the Carolina and Georgia coast (hence the term “sea island” cotton). Demand for cotton by English textile factories was increasing, but interior areas of the Southern states could only grow “upland” short-staple cotton. This cotton variety was marked by two characteristics: it had cotton fibers which were shorter in length (the short staple), reducing yarn and cloth quality, and it had a “fuzzy” seed since the fibers were tightly attached to the entire seed surface. This attachment of fiber to seed meant that removing the fiber without damaging it was time consuming and labor intensive.

Eli Whitney’s Design

While visiting a plantation (Mulberry Grove) near Savannah, Georgia, Connecticut native Whitney used his familiarity with New England textile machinery to construct his engine (shortened to “gin”). It used wire teeth hammered into a rotating wooden cylinder to snare the cotton fibers and pull them through a grate. The slots in this grate were too narrow for the cotton seed to pass, so that the fibers were pulled away from the seed.

The quick adoption of Whitney’s original design and its subsequent modifications contradicts the common perception that slavery prevents labor-saving technical change. The opportunity cost of slaves, as represented by their purchase or potential sale price to the slaveowner, was significant. Southern planters jumped at the chance to reduce the labor time needed to prepare picked cotton for market.

In fact, the primary barrier that the new cotton gin faced was that it sacrificed fiber quality for quantity, and so met with some resistance from English buyers of cotton fiber. Due to its short staple and damage caused by Whitney-style gins, the upland cotton varieties consistently sold for half the price received by long-staple cotton prior to the Civil War. Because undamaged fiber was so crucial to the high price received by sea-island cotton, it continued to be roller ginned.

Despite these drawbacks, short staple cotton was the only option if cotton production was to expand. With low-cost ginning assured by Whitney’s design, the Southern economy moved westward and planted cotton. Table 2 shows that American cotton production expanded 1000-fold from 1790 to 1860. In 1790, before the Whitney gin, almost all of the 3,000-plus bales of cotton made were sea-island cotton. By 1860, almost all of the 3.8 million bales grown were short-staple varieties.

Table 2
American Production of Raw Cotton, 1790-1860 (bales)

Year Production Year Production Year Production
1790 3,135 1815 208,986 1840 1,346,232
1795 16,719 1820 334,378 1845 1,804,223
1800 73,145 1825 532,915 1850 2,133,851
1805 146,290 1830 731,452 1855 3,217,417
1810 177,638 1835 1,060,711 1860 3,837,402

Sources: Adapted from Table 40 in Lewis Cecil Gray, History of Agriculture in the Southern United States to 1860, vol. 2 (Gloucester, MA: Peter Smith, 1958), 1026. Original Data from United States Department of Agriculture, Atlas of American Agriculture, V, Sec. A, Cotton, Table IV, p. 18. Crop Year begins October 1 for 1790-1840 and July 1 for 1845-1860. Production is measured in equivalent 500-pound bales, gross weight.

Whitney and the Patent System

The story of the cotton gin is also significant in that it led to the first major test of the newly created United States patent system. The test was not only of the ability of the system to protect the rights of inventors, but also of how the courts would interpret what a patent protected and what it did not protect. In the case of the cotton gin, the patent system was immediately confronted with the reality that new innovations are not born in a state of eternal, or even temporary, perfection.

Almost immediately, Whitney and other gin users encountered problems with the use of his wire teeth, which were difficult to install properly and easily damaged in use. In a development of murky origins, cotton gin technology had quickly switched by 1800 to the use of a series of circular saws attached to the rotating cylinder. These “saw” gins (still the basis of short-staple ginning today) used the teeth of the rotating saws to pull the cotton fiber through the grate, instead of Whitney’s original wire teeth. As these events unfolded, Whitney claimed that he had originally thought of this alternative as well and that it was an obvious variation of his design and thus covered under his patent. The courts eventually ruled in Whitney’s favor, but it was the initial warning that patent law was going to be complicated.

Whitney’s ultimate problem, however, was that his attempt at factory production of his cotton gins in a New Haven, Connecticut facility was not feasible. Given the crude state of cotton gin design at this time, he could not make a machine that was any better than what a local craftsman could make. The alternative was licensing, that is, selling the right to copy Whitney’s patent to would-be cotton gin makers.

This task fell to Whitney’s business partner, Phineas Miller of Georgia, who sold the licenses, printed newspaper notices warning those who would infringe on the patent, and took some of the alleged violators to court. Miller did sell a number of licenses, and his activities undoubtedly at least forced non-licensed ginmakers in South Carolina and eastern Georgia to avoid publicity. Miller’s efforts, however, had little impact in the western cotton market developing around Natchez, Mississippi. Whitney moved on to fire arms production, and his patent expired in 1807 without making either he or Miller rich.

Whitney and Miller, however, would probably have become quite wealthy if factory-made cotton gins had been clearly superior by 1800. Monitoring the patent under these circumstances would have been much less costly, whether they were making the gins in New Haven, or factory licensees were making them in Savannah and Natchez. Even today, patent holders whose innovations are too easily copied will be overwhelmed by the legal costs of taking all the violators to court.

The Arrival of Factory-made Cotton Gins

Table 3 demonstrates that what Whitney was attempting was not impossible in theory, just too early in practice. The earliest successful cotton gin factories appeared in the 1820s, and by 1850 the six largest cotton gin manufacturers were making close to a half-million dollars worth of cotton gins per year. With this amount, these leading factories controlled around half of the total cotton gin market, a market share that was maintained after the Civil War as well.

Table 3
Output Value of the Six Largest Cotton Gin Manufacturing Firms

Year Value($)
1850 $428,250
1860 $703,250
1870 $823,800
1880 $839,777

Sources: Manuscript schedules and published volumes of the U.S. Manufacturing Census, 1850-1880, and information provided on 1850 Georgia production in George White, Historical Collections of Georgia (New York: Pudney and Russell, 1854). Microfilm copies of the surviving schedules for the Southern states found at the microfilm library, University of North Carolina-Chapel Hill. Microfilm copies of schedules for Connecticut and Massachusetts found at the respective state archives.

Small local gin makers continued to survive into the late 1800s, but increasingly they were unable to match the mechanical sophistication of factories that incorporated the latest improvements in gin technology as they appeared. Among the most notable of these early cotton gin manufacturers were: Eleazer Carver of Bridgewater, MA, Samuel Griswold of Jones County, GA, Daniel Pratt of Prattville, AL, Israel Brown of Columbus, GA (later New London, CT), Franklin Lummus of Juniper and Columbus, GA, and Benjamin Gullett of Aberdeen, MS (later Amite, LA). Started largely by New England mechanics who migrated to the South, the Southern cotton gin manufacturing sector was one of the few machinery industries that successfully competed against Northern firms during the nineteenth century.

Plantation Gins

Whether made by a local mechanic or in one of the later factories, cotton gins before the Civil War were primarily sold to farmers who installed them on their own property and used them to gin their own cotton. The newspapers of the time were full of the testimonials of planters discussing the merits of particular gins and how the processed fiber graded for price in the market. Gin makers for their part assured potential buyers in ads that they had thoroughly studied every aspect of proper gin design. They used only the best materials in their premium product, while at the same time offering economy models at a discounted price per saw (the standard measure of a cotton gin’s capacity).

During this period, the Patent Office approved many new patents on various improvements in the technology of cotton ginning, but progress was incremental, with no one innovation making other gins obsolete. The cumulative impact of the search for a better gin, however, was substantial. According to Lakwete (2003, pp. 146-47), early Whitney ginning operations could only turn out a quarter of a bale per day. But by the late 1850s, large-capacity steam powered gins could claim 5 to 6 bales per day.

The Rise of System Ginning

The turbulent Reconstruction era led to an increase in “custom” ginning across the Cotton South. Now tenant and small-acreage farmers did not purchase gins, but took their unginned “seed cotton” to a ginner who removed the seed for a fee. As the ginning operation might be connected to a supply store at which the farmer had run up a debt, crop liens (legal claims on the cotton filed by a lender) could leave the farmer with little or no saleable cotton. However, the concentration by location of the ginning process gave a boost to the new cottonseed industry. Farmers could now get extra cash by selling their surplus seed to nearby oil mills for pressing into cottonseed oil and meal.

But the biggest impact of custom ginning was that it focused the attention of innovators on how to maximize the efficiency of the entire process of ginning, rather than just the cotton gin itself. In the mid-1880s, Robert Munger of Texas developed “system” ginning, as seed cotton was fed continuously to multiple gin stands, from which the fiber went directly into pressing equipment for baling. This eventually ended once and for all the era of plantation gins and small cotton gin makers.

As seen in Table 4, the major cotton gin machinery firms in the late 1800s now patented systems for new ginning plants, sharply increasing patent activity by Southern inventors. Similar increases in ginning patents occurred among the major Northern firms. The possession of key patents was now essential for survival in cotton gin manufacturing, as ginning productivity increased rapidly and made older ginning machinery obsolete. At the ginning plant level, this meant that the most modern plants were now capable of processing all the cotton grown in an ever-widening radius around their location. Ginning operations had to upgrade their equipment or be quickly pushed out of business by more up-to-date competitors.

Table 4
Cotton Gin Patents in the Southern States, 1831-1890

Years Number of Patents
1831-40 5
1841-50 7
1851-60 53
1861-70 21
1871-80 109
1881-90 156
Total 351

Sources: William H. Phillips. “Making a Business of It: The Evolution of Southern Cotton Gin Patenting, 1831-90,” Agricultural History 68 (1994): 82. Original data from U.S. Patent Office, Annual Reports of the Commissioner of Patents (Washington, D.C.). Patents issued by the Confederate Patent Office during the Civil War are not included. The Southern States consist of the eleven states of the Confederacy plus West Virginia and Kentucky.


The modern process of cotton ginning continues across the Southern states where cotton is grown, but is now also located in the major cotton producing areas of the American Southwest and overseas. The machinery that even for small ginning plants costs several million dollars is made by a small number of technologically sophisticated firms, based on the designs of specialized engineers. In 1999 one of those firms, Lummus Corporation, relocated to Savannah, Georgia, bringing the history of short-staple cotton ginning back to its roots at Mulberry Grove Plantation.

Selected Bibliography

Aiken, Charles S. “The Evolution of Cotton Ginning in the Southeastern United States.” Geographical Review 63 (1973): 196-224.

Bennett, Charles A. Cotton Ginning Systems in the United States and Auxiliary Developments. Dallas: Cotton Gin and Oil Mill Press, 1962.

Britton, Karen Gerhardt. Bale o’ Cotton: The Mechanical Art of Cotton Ginning. College Station, TX: Texas A&M University Press, 1992.

DeWitte, Dave. “Lummus Cottons to Savannah.” Savannah Morning News. August 29, 1999.

Evans, Curtis J. The Conquest of Labor: Daniel Pratt and Southern Industrialization. Baton Rouge, LA.: Louisiana State University Press, 2001.

Gray, Lewis Cecil. History of Agriculture in the Southern United States to 1860, 2 vols. Gloucester, MA: Peter Smith, 1958.

Green, Constance McLaughlin. Eli Whitney and the Birth of American Technology. Boston: Little, Brown, and Co., 1956.

Lakwete, Angela. Inventing the Cotton Gin: Machine and Myth in Antebellum America. Baltimore: John Hopkins University Press, 2003.

Mirsky, Jeannette, and Allan Nevins. The World of Eli Whitney. New York: Macmillan, 1952.

Phillips, William H. “Making a Business of It: The Evolution of Southern Cotton Gin Patenting, 1831-90.” Agricultural History 68 (1994): 80-91.

Ransom, Roger L. and Richard Sutch. One Kind of Freedom: The Economic Consequences of Emancipation. Cambridge: Cambridge University Press, 1977.

Wrenn, Lynette Boney. Cinderella of the New South: A History of the Cottonseed Industry, 1855-1955. Knoxville, TN: University of Tennessee Press, 1995.

Citation: Phillips, William. “The Cotton Gin”. EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2004. URL

Inventing the Cotton Gin: Machine and Myth in Antebellum America

Author(s):Lakwete, Angela
Reviewer(s):Phillips, William H.

Published by EH.NET (April 2004)

Angela Lakwete, Inventing the Cotton Gin: Machine and Myth in Antebellum America. Baltimore: John Hopkins University Press, 2003. xiii + 232 pp. $45 (hardcover), ISBN: 0-8018-7394-0.

Reviewed for EH.NET by William H. Phillips, Department of Economics, University of South Carolina.

This book, written by Angela Lakwete, a technological historian at Auburn University, looks at the wonderful historical subtleties that lie behind the school-house phrase: “Eli Whitney invented the cotton gin.” Without belittling Whitney’s accomplishments, Lakwete discusses the devices used to remove cotton fiber from seed before Whitney, as well as the constant experimentation with ginning technology during the South’s rise as the dominant cotton producing region. At every step of the process, those seeking a better way to gin cotton faced tradeoffs with imperfect solutions, while those looking to buy a suitable device faced an array of useful and misleading information about the choices available to them. After the fact, this complex story gets simplified for later generations. Obviously, the source of much of this has been conscientious historians when they must summarize to meet space limitations. At other times it has been done by those who wish to create an unblemished example of a larger theme, such as Yankee ingenuity or the cause of the Civil War. For this reason, we can thank Lakwete, who has grounded her story in the documentary evidence, and where no definitive answer can be found, points out the gaps in our knowledge.

Early cotton ginning devices relied on a pinching principle to remove cotton fiber. By the 1600s, this approach had resulted in what are now called “roller” gins. Hand-cranked and foot powered versions had been used in India, China and the Levant, and were imported into the New World when cotton production was started in the Caribbean. By the end of the seventeenth century, two-thirds of British cotton imports came from this new output source, replacing Levantine supplies. Early experiments at exportable cotton production in the Virginia and Carolina colonies ceased when tobacco, naval stores and rice became the dominant cash crops. The American colonies reentered the cotton market during the Revolution to supply domestic textile producers, and demand received an additional boost afterwards from the expanding British textile industry. Initial attempts to expand ginning output led to the centrally powered “barrel” gin of the 1770s and Joseph Eve’s self-feeding roller gin, which received a patent in 1788 and could be water, wind, or animal powered.

Lakwete explains that Whitney’s 1793 gin forced a dramatic new equilibrium because it sacrificed cotton fiber quality for cotton fiber quantity. Whitney’s design used wire teeth embedded in a wooden roller to pull cotton fiber quickly through a grate that the seed could not pass through. As news of the machine was announced, some of Whitney’s future marketing problems arose from the fact that he and his business partner, Phineas Miller, claimed that their ginned fiber was equal in quality to that turned out by the traditional methods. This inevitably led to customer disappointment and additional debate over the merits of roller gins versus the Whitney design. The eventual judgment of the market was the creation of two niches for cloth and cotton production. A small luxury market retained the emphasis on fiber quality, and continued to rely on roller gin seed removal. Cotton production for this niche remained concentrated along the South Carolina and Georgia coast, where sea-island cotton, a long-staple (and more easily ginned) transplant from South America was grown. The larger mass-production textile market learned to live with lower-quality ginned cotton turned out by Whitney-style gins. It made use of the rapidly expanding production of fuzzy-seed cotton varieties that could be grown in most of the interior South.

The greatest irony of the Whitney gin is that his original embedded wire teeth design for fiber removal had been largely abandoned by 1800, well before his patent expired in 1807. Whitney and Miller soon discovered that the teeth were problematic in actual cotton gin construction and use. Southern mechanics, either in an attempt to find their own solution, or as a way to try to avoid a patent infringement suit, started to substitute circular saws for the purpose of snaring the cotton fiber. Lakwete documents a demonstration model made by a Natchez mechanic, John Barcley, in 1795. The next year, Hodgen Holmes, a mechanic in Augusta, Georgia, received a patent for his “saw” gin. The response of Whitney and Miller was that this modification originated with Whitney, and that Holmes had no right under patent law to substitute one part in the Whitney gin and then get a new patent for the entire machine. The courts nullified Holmes’ patent in 1802, with the verdict upheld in 1807 and 1810 appeals. In the meantime, Whitney and Miller, while publicly insisting that wire teeth were preferable, had begun to supply their customers with saw gins in the late 1790s, if that was their preference.

Subsequently, Lakwete turns to the countless antebellum mechanics and later, factory owners, North and South, who constructed cotton gins and made improvements in design. A search of regional newspapers, city directories, and census records reveals how extensive this service network for the Southern cotton culture was. For example, Lakwete reports 117 gin-makers (Southern, Northern, and foreign born) listed in the 1850 Mississippi Population Census, although only 11 cotton gin firms are reported in the manufacturing schedules, with its $500 reporting cut-off. Eventually a machinery industry developed in which a small number of New England cotton gin factories competed with Southern manufacturers (e.g., Daniel Pratt, Samuel Griswold), who were among the largest business enterprises in the region. The author is particularly interested in documenting the use of slave labor by Southern gin makers. This and the appearance of female and free black ginwrights located in the South, contrast with the exclusively white male New England gin industry.

In the remainder of the book, the author examines patent files to follow technological developments in Whitney-style saw gins and proposed alternatives. Of these alternatives, two stand out. In 1840, a New Yorker named Fones McCarthy patented a reciprocating knife principle to cut seeds from the cotton fiber. Intended as a replacement for the saw gin, it instead became the dominant method for ginning luxury long-staple cotton varieties. As production of this cotton rose in Egypt and other British dominions, the technological leadership for McCarthy gins passed to English machinery firms. Finally, several patents were issued in the 1840s and 50s for what were called “cylinder” or “card” gins. These were a hybrid of Whitney’s wire teeth and roller gins, which pinched fiber from the seed. Versions patented by Stephen Parkhurst of New York created considerable excitement in the early 1850s, as the sought-after successor to the imperfect saw gin. Instead, through its own improvements, the common saw gin prevailed, and remains the principle behind short-staple cotton ginning to this day.

This study provides students a clear example of how technological choices are not the storybook cases of perfected innovations replacing hopelessly outclassed traditional methods. Besides following the actual course of cotton gin technology, Lakwete discusses how stories of the Whitney gin began over time to downplay the roller gin, even to the point that some commentators would claim that seed could only be removed from cotton fiber by hand before Whitney’s invention. Myths replace facts to increase the dramatic impact of the story. Professors will be able to find many short reading selections in the book that provide useful antidotes to this kind of thinking.

William H. Phillips is Associate Professor of Economics at the University of South Carolina. He is currently researching the development of the Southern cotton gin manufacturing industry and more generally, patents issued to Southern inventors before World War I.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):North America
Time Period(s):19th Century

Reform or Repression: Organizing America’s Anti-Union Movement

Author(s):Pearson, Chad
Reviewer(s):Friedman, Gerald

Published by EH.Net (June 2016)

Chad Pearson, Reform or Repression: Organizing America’s Anti-Union Movement.  Philadelphia, University of Pennsylvania Press, 2016. viii + 303 pp. $55 (cloth), ISBN: 978-0-8122-4776-3.

Reviewed for EH.Net by Gerald Friedman, Department of Economics, University of Massachusetts.

Even while the Labor Movement is dying, its history thrives.  For a long time, Labor History was a narrow often sterile discipline focused on the glorious rise of unions and socialist political formations, the formal Labor Movement.  Labor History was populated by advocates whose works often read like sermons, histories of good and honest workers struggling against evil capitalists and their political toadies.  Strikes and unions were good, except where the earnest rank-and-file were betrayed by self-serving union leaders.  Sometimes, these betrayals cost the workers.  But the experience of collective action and struggle always contained good lessons, and task of the labor historian was seen as interpreting these lessons and passing them along to build the labor movement.

While labor historians imagined placing workers and their struggles at the center of historical analysis, by reducing capital, the state, and labor to simplistic Marxist elements, their work was consigned to a leftist ghetto.  Labor History as medieval morality play can contribute little to the broader study of history because it treats all actors as parodies. Ironically, by shrinking all social actors to a simplistic category, this work brought nothing to the understanding of the labor movement or the proper strategy for labor struggles.  In the face of the decline, even the collapse, of the Labor Movement, the old Labor History has had nothing to say except the old mantra of “evil capitalists” and “self-serving union leaders.”

Perhaps it is the crisis of the Labor Movement that has invigorated the field of Labor History.  A new generation of historians has emerged conscious that the old categories are inadequate to understand the current crisis.  They are ready for a much more nuanced approach, one that recognizes the varieties of capital. The experience of the Labor Movement’s rise and decline has forced them to recognize the often-contentious relationship between capital and democratic states, and the role of ideology in shaping not only the Labor Movement, but the response to labor militancy by states and by capitalists.  In short: the new generation recognizes that the making of the capitalist class and any capitalist state is just as challenging as the making of the working class.  By conceiving labor history as a history of contending collective movements, labor historians have enriched our understanding of American employers and their organizations (Ernst 1995; Harris 2006), their bargaining strategies and campaigns against unions (Richards 2008; Sidorick 2009; Cowie 1999), their often-tangled relationship with state officials (Howell 1992; Howell 2005; Friedman 1998; Friedman 2007), and the ideology they developed to sustain their collective action (Phillips-Fein 2009; Harris 1982; Leon 2015).  At its best, this new labor history is contributing, as labor historians have long wanted, to a broader emerging field of the history of capitalism (Beckert 2014).

Chad Pearson’s new book should be seen in the context of this transformation of Labor History into a piece of the larger history of American capitalism. His book uses brief biographies and case studies of local associations to examine the development of the Open Shop movement in American industry before the First World War.  (“Open Shops” are establishments that hire workers without regard for their union membership; in practice, they do not hire union members because they do not sign union contracts.)  In particular, Pearson addresses a question that has often appeared as a paradox to liberal historians eager to portray the American story as a march of progress: the coincidence, both in time and often in personnel, between the Progressive Era “Age of Reform” and the rise of militant anti-unionism and the repression of labor organization.  How to reconcile the seemingly antagonistic positions of progressive reformers like George Creel, who advocated of women’s suffrage, public ownership of utilities, and opposed child labor, while also campaigning for the Open Shop and serving on Citizen’s Industrial Association of America (CIAA) press committee (Pearson 2016, 70)?  What to say of Theodore Roosevelt, bitter critic of both the repressive labor policies of the Anthracite Coal companies and of the closed (union) shop?  Or the liberal hero, Louis Brandeis, who argued that the open shop protected the liberties of both employers and the rights of meritorious unionists and nonunionists alike (Pearson 2016, 83)?

It is the great strength of Pearson’s study that regardless of any personal sympathy with unions and labor militancy, he avoids any cant but evaluates seriously the positions of open-shop employers.  He shows that they, too, were often reformers and their employers’ movement was as much a part of the Progressive Era as was the Labor Movement. In rejecting labor militancy and the closed shop as incompatible with his vision of America’s political traditions, Brandeis, for example, expressed a view of labor relations and the economy that was championed by Progressive Era employers’ organizations, has remained popular in America, and has come to motivate much of our political right.  In this view, free Labor has no social dimension.  It means simply the right of individuals to conduct their businesses and to buy and sell commodities, including their own labor power, untrammeled by the interference of others, either state regulators or other workers or businesses.  An attribute of individuals, freedom is negated by collective action.  Not only does free competition among individuals best promote efficiency, it is fair because it rewards work and merit; and it is just because it represents liberty. Labor unions are a threat to efficiency because they place the lazy and incompetent on equal standing with the hard-working and meritorious.  Worse, through their political action, by promoting regulation and monopoly, they are a fundamental threat to freedom, “the greatest menace” (Pearson 2016, 182).  Far from a selfish battle to increase profits, the campaign for the open shop and the employer in the management of his property, was a noble and generous struggle to protect fundamental principles of justice and fairness.

If the open-shop activists had a general political orientation, Pearson shows that, paradoxically for many historians, it was liberal and progressive rather than reactionary.  Open shop proponents did not see themselves as part of a counter reformist movement; instead, they were part of a tradition of social reform that stretched back to the abolitionists and early Republicans, to Abraham Lincoln rather than Jefferson Davis.  They saw themselves as heirs to the abolitionists, reformers, patriotic and class-neutral proponents of industrial fairness and guardians of ambitious, hard-working individuals. It was natural then for them to oppose monopoly, to favor honest government, municipal efficiency, industrial progress and professionalization. Far from fighting against labor or higher wages, they often condemned abusive managers (like the Anthracite Coal companies), and favored welfare capitalist initiatives and what labor economists today call efficiency wages.

It would be a cheap shot at the open-shop activists to observe that their campaign in defense of individual liberty against collective regulation required collective action, “employer solidarity” and individual sacrifices to benefit the group.  Indeed, their campaigns were often undermined by the actions of self-interested individuals, employers who displayed an inclination not to “give their time to anything that will further the interests of the group. (Pearson 2016, 160, 162).  Like their union opponents, employers’ organizations face a collective action problem, the need to mobilize individual resources to produce public goods. Pearson’s greatest contribution is to show how these organizations addressed this problem, and how they used ideas — the ideology of individual liberty — to mobilize their constituents.  What socialism was for the working-class movement, progressivism became for America’s employers.

Pearson’s work should be read and read carefully by all interested in the history of the Progressive Era, the history of employer organizations, and American political thought.  His work is Labor History in the broadest and finest sense, the history of the development of American capitalist society.


Beckert, Sven. 2014. Empire of Cotton: A Global History. New York: Knopf.

Cowie, Jefferson. 1999. Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor. Ithaca: Cornell University Press.

Ernst, Daniel R. 1995. Lawyers against Labor: From Individual Rights to Corporate Liberalism. The Working Class in American History. Urbana: University of Illinois Press.

Friedman, Gerald. 1998. State-Making and Labor Movements: France and the United States, 1876-1914. Ithaca: Cornell University Press.

Friedman, Gerald. 2007. Reigniting the Labor Movement: Restoring Means to Ends in a Democratic Labor Movement. Abingdon, UK: Routledge.

Harris, Howell John. 1982. The Right to Manage: Industrial Relations Policies of American Business in the 1940s. Madison University of Wisconsin Press.

Harris, Howell John. 2006. Bloodless Victories: The Rise and Fall of the Open Shop in the Philadelphia Metal Trades, 1890-1940. New York: Cambridge University Press.

Howell, Chris. 1992. Regulating Labor: The State and Industrial Relations Reform in Postwar France. Princeton: Princeton University Press.

Howell, Chris. 2005. Trade Unions and the State: The Construction of Industrial Relations Institutions in Britain, 1890-2000. Princeton: Princeton University Press.

Leon, Cedric de. 2015. The Origins of Right to Work: Antilabor Democracy in Nineteenth-Century Chicago. Ithaca: ILR Press/Cornell University Press.

Pearson, Chad. 2016. Reform or Repression: Organizing America’s Anti-Union Movement. American Business, Politics, and Society. Philadelphia: University of Pennsylvania Press.

Phillips-Fein, Kim. 2009. Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan. New York: W. W. Norton.

Richards, Lawrence. 2008. Union-Free America: Workers and Antiunion Culture. The Working Class in American History. Urbana: University of Illinois Press.

Sidorick, Daniel. 2009. Condensed Capitalism: Campbell Soup and the Pursuit of Cheap Production in the Twentieth Century. Ithaca: ILR Press/Cornell University Press.

Jerry Friedman has served as the U.S. editor of Labor History since 2003.

Copyright (c) 2016 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ( Published by EH.Net (June 2016). All EH.Net reviews are archived at

Subject(s):Business History
Labor and Employment History
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

John Allan James: A Scholarly Remembrance

Submitted by: Chris Hanes, Hugh Rockoff, Mark Thomas and David Weiman

John anniversary 2013

John entered the MIT graduate program during the early, lofty days of the “new” economic history, and emerged as one of its most deft, sensible and versatile practitioners.  His PhD dissertation—directed by Peter Temin—exemplifies the promise of this new approach to historical analysis.  It addresses a central issue in American political economic development, the formation of a more integrated (or “perfect”) money market in the late nineteenth-century.  Influenced by the earlier contributions of Lance Davis and Richard Sylla, John set out to document systematically the timing and spatial extent of this financial innovation, and then to explain why it occurred where and when it did.  He adapted current finance theory (CAPM) to the historical context by incorporating possible market imperfections due to spatial factors such as local market power.  He collected mounds of data on national banks across the country to derive average annual loan rates—the key variable to be explained —over the period 1888 to 1911.

John’s results, subsequently published in his early scholarly articles (one of which was awarded the prestigious Arthur H. Cole prize by the Economic History Association) and then masterfully synthesized in his book Money and Capital Markets in Postbellum America, still constitute the received wisdom on this topic.  Part of the staying power of John’s work can be attributed to the wide range of techniques that he mastered and used.  John refined the art of descriptive statistics especially graphical analysis—or “eye balling the data” in his words—but he also built sophisticated models and tested them using the most current econometric methods.  And then true to his calling as both economist and historian, he constructed a compelling narrative showing the interaction between popular (or in the case of regional interest rates, more accurately Populist) politics and banking development.  First, he showed that the convergence of bank rates to levels in the Northeast occurred unevenly across the regions of the U.S.  It was most pronounced in the Midwestern and Pacific Coast states, and least evident in the South.  The latter observation was the subject of a separate article on Southern financial underdevelopment, and resurfaces in his recent co-authored research on the evolution of the American currency-monetary union.  Second, he dated this convergence from the late 1880s, timing which defied the alternative hypotheses based on the formation of a national commercial paper market (which occurred earlier) and passage of relevant federal banking reforms (in 1900).  Finally, his results emphasized the importance of local market power as a factor in explaining the delayed and uneven narrowing of regional interest differentials.  Reinforcing this conclusion, John marshaled statistical and qualitative evidence relating the erosion of bank market power to the liberalization of state banking laws in the 1880s, but only where populist candidates challenged incumbents.  Regional differences in the risks of lending, although present, it turned out were of secondary importance in explaining regional differences in interest rates.

John’s subsequent research shows his continued fascination with the manifold, profound transformations in the American economy from the Civil War era through the Roaring Twenties.  He contributed significantly to the debates over the first and second industrial revolutions in a series of articles on the causes and consequences of technological innovation over the nineteenth century.  He first investigated whether labor scarcity induced American manufacturers to adopt more capital-intensive, labor-saving (that is mechanical) innovations.  His most widely cited paper on this issue, co-authored with then University of Virginia colleague Jonathan Skinner, provided the definitive resolution of the “labor scarcity” paradox, showing that new mechanical technologies substituted for relatively scarce skilled labor but were strategic complements to unskilled labor and natural resources.  In turn, the James-Skinner view corroborates empirically an alternative frontier thesis, which emphasizes America’s relative abundance of natural resources and not the lure of abundant farm land on labor supplies.  Applying a similar production function analysis to the late nineteenth century period, John also furnishes one of the few statistical tests of Alfred Chandler’s influential thesis relating shifts in the pattern of technological innovation to the rise of big business.

The James-Skinner article is also noteworthy for its application of general equilibrium simulation modeling in economic history.  John had first deployed this methodology in his analysis of U.S. tariff policy before the Civil War.  Armed with a new sophisticated—and disconcertingly intractable—technique for deriving general equilibrium outcomes, John corroborates the conventional view on the distributional impacts of antebellum tariffs: all other things equal, they burdened Southern cotton exporters but benefitted Northern manufacturers and their workers.  At the same time he challenges the mainstream by suggesting that average tariff rates across the period may have been economically “optimal.”

John also made many important contributions to the general macroeconomic history of prewar United States. Working solely and with several co-authors including Christopher Hanes, Jon Skinner, and Mark Thomas, John’s program embraced pay and wealth inequality during the first industrial revolution; public and private savings behavior and economic growth; unemployment-inflation dynamics and the shifting Phillips curve relationship; and changes in the sources and extent of unemployment and cyclical fluctuations.  John’s work in these areas appealed to macroeconomists and made use of the latest econometric methods.  His 1993 article in the American Economic Review pioneered the use of structural vector autoregression analysis in economic history.  A decade later he published another paper in the AER, which used nineteenth century wage data to look for evidence of downward nominal wage rigidity, a phenomenon that had only recently become a focus of research in monetary policy (and has become even more relevant in the post-2008 slump).  Though much of John’s work in these areas appeared in general-interest economics journals, it displayed all the virtues of the best economic history.  John was careful to account for peculiarities of historical data and institutions, and to point out the implications of his findings for the larger sweep of American social history.

John’s foray into the history of U.S. savings tackled thorny questions at the macro and micro levels.  Complementing his earlier work on the impact of Civil War debt repayment (or public savings) on late nineteenth century growth, John, in tandem with Skinner, analyzed the dramatic rise in the personal savings rate during the first industrial revolution (published in a volume that placed him among the elite in the profession).  True to form, they identified a novel mechanism operating through changes in the occupational rather than the age distribution of the population.  And ironically (at least for John), their results downplayed the importance of financial market innovations, such as the spread of deposit banking so important in his earlier work.  But typical of John’s commitment to following the lead of the data, he could not and did not resist the apparent paradox.

A number of years later John investigated the microeconomics of saving behavior with former Virginia graduate student Michael Palumbo and colleague Mark Thomas.  Grounded in the historical equivalent of ‘big data’—almost 28,000 observations of late 19th century working-class households from Federal and State Bureau of Labor Statistics surveys—they modeled the distribution of savings by age group, derived estimates of the persistence of family income and savings rates over time, and then simulated wealth accumulation by 10,000 model households.  Their striking conclusions challenged critics of old-age insurance and working-class profligacy: workers did not save at higher rates in the era before Social Security than in the 1980s.  They also showed that few late nineteenth century working class households saved enough before age 65 to meet their living expenses in old age (an expected 10 more years of life), and conjectured that they likely depended on their children, in particular co-habitation with an older son or daughter in the very houses where they had raised their families.  Further research revealed that workers smoothed their consumption over a medium-period time horizon, indicating the influence of precautionary savings motives in response to a world of considerable riskiness from unemployment, illness, incapacity, and premature death of the household head.  Attesting to his growing interest in Japan, John (in work with Isoa Suto) extended this approach to Japanese savings behavior in the era before the social safety net.[2]

John’s other major contributions to the micro-economic foundations of macro-economic outcomes focused on wage and unemployment dynamics in late 19th century labor markets.  In characteristic fashion, he collected all available data on these topics and then framed questions of historical and current import.  Besides challenging earlier research showing signs of nominal wage rigidity, John also investigated and did not find evidence of increasing wage inequality over the period.  On the unemployment front, he estimated flows into and out of jobs based on the 1885 Massachusetts census, and found evidence of significant positive duration dependence, for employment and non-employment spells.  With a vaster dataset (containing over 100,000 observations), John estimated the natural rate of unemployment in 1909 to be just under 6 percent, strikingly similar to estimates today.  To explain this relatively high rate, his simulation analysis, which divided the labor market into stable-primary and floater-secondary workers, pointed to an eclectic mix of factors: seasonal disturbances for many stable workers, lay-offs for workers in cyclically sensitive sectors, and brief, relatively frequent spells for the floaters.  The paper, co-authored with Mark Thomas, won John his second Arthur H. Cole Prize from the Economic History Association.  Their joint work also challenged the findings of Christina Romer by showing that unemployment was more cyclically volatile during America’s first Gilded Age than it was during its Golden Age (in the post-WWII period).  His broader conclusion from these various strands of research is both simple and striking—labor markets and the macro-economy worked differently in the past and historians need to focus on the role of changing institutions and changing policies to try to explain how and why history matters.

Just prior to his sudden and untimely death, John returned to a topic briefly addressed in his dissertation and subsequent book on banking-financial markets in postbellum America.  At a St. Louis Fed conference, he presented data showing the increased efficiency of a largely private, decentralized banking system in greasing the wheels of commerce by moving money from one location to another, even across the country, at relatively low cost.  Teaming up with David Weiman, they explained this trend by the formation of a tiered network of correspondent banks centered on New York.

James and Weiman elaborated this initial paper into a book-length project to explain the evolution of this neglected economic infrastructure from the demise of the Second Bank of the United States to the formation of the Fed.  Informed by current policy debates, they conceived these transformations in terms of the “benefits and costs” of alternative institutional forms—private versus public and hierarchical networks versus bureaucracies.  En route, they decided to write on the Civil War era banking legislation, which institutionalized the emerging private correspondent banking network.  Their initial foray uncovered a striking connection between the adoption of a common currency and a longer-term trend toward a “more perfect” bank money (or payments) union.

Armed with this serendipitous result, James and Weiman have broadened the scope of their project to show the complex interplay between the “punctuated” evolution of the interbank payment network and the American monetary union.  Conceived along these lines, their book (in progress with a manuscript expected by the end of 2015) will complete what for John was a lifetime’s exploration of the development of the banking system in postbellum America.  Banks, we know, are peculiar financial institutions, both credit and payments intermediary.  John’s first book Money and Capital Markets analyzed their former dimension, and his forthcoming book will attend to the latter.

John’s scholarly contributions cannot be measured solely by his outstanding research record.  He was an academic mensch, to use a most fitting Yiddish expression.  John never refused the thankless tasks of a productive scholar—the endless referee reports, book reviews and discussant comments—but even when critical, he always struck a constructive tone sweetened with a good dose of his dry wit.  (In the case of the discussants’ role, we should also note that ever the cosmopolitan John would rarely pass up the opportunity to venture far and wide to see new sites and especially opera productions.)  But John’s spirit truly shone through in his interactions with younger scholars from all walks of intellectual life.  He was an intellectual gourmand ever curious to broaden his own substantive and theoretical-methodological horizons, but also a genuinely gifted mentor who guided others down their own paths, not his own.  And he was always ready to share his data, and willing to explain how to use them.  This aspect of John’s career can be best measured by the outpouring of affection from his “juniors,” who now can proudly call him a colleague, collaborator, and friend.  And they all describe him in virtually identical terms: brilliant, probing, curious, supportive, generous, decent, kind, humane, compassionate and passionate.  We are sure that this list is not complete but can attest to one fact.  John will be sorely missed by all of those whose lives he touched so profoundly.

Selected Highlights from John’s Career

Capitalism in Context: Essays on Economic Development and Cultural Change in Honor of R. M. Hartwell, ed. (with Mark Thomas). Chicago: University of Chicago Press, 1994.

Money and Capital Markets in Postbellum America. Princeton: Princeton University Press, 1978.

“Political Economic Limits to the Fed’s Goal of a Common National Bank Money: The Par Clearing Controversy Revisited” (with David F. Weiman). Research in Economic History.

“Main Street and Wall Street: The Macroeconomic Consequences of New York Bank Suspensions, 1866 to 1914” (with David F. Weiman and James A. McAndrews), Cliometrica,7 (2013), 99-130.

“The National Banking Act and the Transformation of New York Banking after the Civil War” (with David F. Weiman), Journal of Economic History, 71(June, 2011), pp. 340-364

“Early Twentieth-Century Japanese Worker Saving: Precautionary Behavior before a Social Safety Net” (with Isao Suto), Cliometrica, forthcoming.

“From Drafts to Checks: The Evolution of Correspondent Banking Networks and the  Formation of the Modern U.S. Payments System, 1850-1914” (with David F. Weiman), Journal of Money, Credit, and Banking, 42 (April, 2010), pp. 237-265.

“Consumption Smoothing among Working-Class American Families before Social

Insurance” (with Michael Palumbo and Mark Thomas), Oxford Economic Papers, 59 (October, 2007), pp. 606-640.

“The Political Economy of the U.S. Monetary Union: The Civil War Era as a Watershed” (with David F. Weiman), American Economic Review Papers and Proceedings, 97 (May, 2007), pp. 271-275 .

“Romer Revisited: Long-term Changes in the Cyclical Sensitivity of Unemployment” (with Mark Thomas), Cliometrica, 1 (April, 2007), pp. 19-44.

“Have American Workers Always Been Low Savers?” Patterns of Accumulation among Working-Class Households, 1885-1910,” (with Mark Thomas and Michael Palumbo), Research in Economic History, Volume 23, Amsterdam: Elsevier, 2005. Pp. 127-175.

“Financial Clearing Systems” (with David F. Weiman). In Richard Nelson, ed.,

Complexity and Limits of Market Organization, New York: Russell Sage, 2005. Pp. 114-155.

“A Golden Age? Unemployment and the American Labor Market, 1880-1910” (with Mark Thomas), Journal of Economic History, LXIII (December, 2003), pp. 959-994.

“Wage Adjustment under Low Inflation: Evidence from U.S. History” (with Christopher L. Hanes), American Economic Review, 93 (September, 2003), pp. 1414-1424.

“Industrialization and Wage Inequality in Nineteenth-Century Urban America” (with Mark Thomas), Journal of Income Distribution, 9 (2000), pp. 39-64.

“Savings and Early Economic Growth in the United States and Japan,” Japan and the World Economy, 11 (1999), pp. 161-83.

“The Early History of Nominal Wage Rigidity in American Industrial Labor Markets,” Rivista di Storia Economica, XIV (December, 1998), pp. 243-73.

“The Rise and Fall of the Commercial Paper Market, 1900-1930.” In: M. Bordo and R. Sylla, eds., Anglo-American Finance: Financial Markets and Institutions in 20th Century North America and the UK, Homewood, IL: Dow Jones-Irwin, 1996. Pp. 219-59.

“Reconstructing the Pattern of American Unemployment Before World War I,” Economica, 62 (August, 1995), pp. 291-311.

“Job Tenure in the Gilded Age.” In: George Grantham and Mary MacKinnon eds., Labour Market Evolution, London: Routledge Kegan Paul, 1994. Pp. 185-204.

“Economic Instability in Nineteenth-Century America,” American Economic Review, 83 (September, 1993), pp. 710-31.

“The Stability of the Nineteenth-Century Phillips Curve Relationship,” Explorations in Economic History, XXVI (April, 1989), pp. 117-34.

“Sources of Savings in the Nineteenth-Century United States” (with Jonathan Skinner). In: Peter Kilby, ed., Quantity and Quiddity: Essays in U.S. Economic History in Honor of Stanley Lebergott, Middletown, CT: Wesleyan University Press, 1987. Pp. 255-85.

“The Resolution of the Labor Scarcity Paradox,” (with Jonathan Skinner), Journal of Economic History, XLV (September, 1985), pp. 513-40.

“The Use of General Equilibrium Analysis in Economic History,” Explorations in Economic History, XXI (July, 1984), pp. 231-53.

“Public Debt Management Policy and Nineteenth-Century American Economic Growth,” Explorations in Economic History, XXI (April, 1984), pp. 192-217.

“Structural Change in American Manufacturing, 1850-1890,” Journal of Economic History, XLII (June, 1983), pp. 433-60.

“The Optimal Tariff in the Antebellum United States,” American Economic Review, LXXI (September, 1981), pp. 726-34.

“Some Evidence on Relative Labor Scarcity in Nineteenth-Century American Manufacturing,” Explorations in Economic History, XVIII (September, 1981), pp. 376-88.

“Financial Underdevelopment in the Postbellum South,” Journal of Interdisciplinary History, XI (Winter, 1980), pp. 443-54.

“Cost Functions of Postbellum National Banks,” Explorations in Economic History, XV (April, 1978), pp. 184-95.

“The Welfare Effects of the Antebellum Tariff: A General Equilibrium Analysis,” Explorations in Economic History, XV (July, 1978), pp. 231-56.

“Banking Market Structure, Risk, and the Pattern of Local Interest Rates in the United States, 1893-1911,” Review of Economics and Statistics, LVIII (November, 1976), pp. 453-62.

“The Conundrum of the Low Issue of National Bank Notes,” Journal of Political Economy, LXXXIV (April, 1976), pp. 359-67.

“The Development of the National Money Market,” Journal of Economic History, XXXVI  (December, 1976), pp. 878-97.

“Portfolio Selection with an Imperfectly Competitive Asset Market,” Journal of Financial and Quantitative Analysis, XI (December, 1976), pp. 831-46.

[1] Composed by Christopher L. Hanes (SUNY-Binghamton), Hugh Rockoff (Rutgers University), Mark Thomas (University of Virginia), and David F. Weiman (Barnard College, Columbia University)

[2] John had earlier explored the different historical savings patterns in Japan and the U.S. and their implications for economic growth.

Slavery in the United States

Jenny Bourne, Carleton College

Slavery is fundamentally an economic phenomenon. Throughout history, slavery has existed where it has been economically worthwhile to those in power. The principal example in modern times is the U.S. South. Nearly 4 million slaves with a market value estimated to be between $3.1 and $3.6 billion lived in the U.S. just before the Civil War. Masters enjoyed rates of return on slaves comparable to those on other assets; cotton consumers, insurance companies, and industrial enterprises benefited from slavery as well. Such valuable property required rules to protect it, and the institutional practices surrounding slavery display a sophistication that rivals modern-day law and business.


Not long after Columbus set sail for the New World, the French and Spanish brought slaves with them on various expeditions. Slaves accompanied Ponce de Leon to Florida in 1513, for instance. But a far greater proportion of slaves arrived in chains in crowded, sweltering cargo holds. The first dark-skinned slaves in what was to become British North America arrived in Virginia — perhaps stopping first in Spanish lands — in 1619 aboard a Dutch vessel. From 1500 to 1900, approximately 12 million Africans were forced from their homes to go westward, with about 10 million of them completing the journey. Yet very few ended up in the British colonies and young American republic. By 1808, when the trans-Atlantic slave trade to the U.S. officially ended, only about 6 percent of African slaves landing in the New World had come to North America.

Slavery in the North

Colonial slavery had a slow start, particularly in the North. The proportion there never got much above 5 percent of the total population. Scholars have speculated as to why, without coming to a definite conclusion. Some surmise that indentured servants were fundamentally better suited to the Northern climate, crops, and tasks at hand; some claim that anti-slavery sentiment provided the explanation. At the time of the American Revolution, fewer than 10 percent of the half million slaves in the thirteen colonies resided in the North, working primarily in agriculture. New York had the greatest number, with just over 20,000. New Jersey had close to 12,000 slaves. Vermont was the first Northern region to abolish slavery when it became an independent republic in 1777. Most of the original Northern colonies implemented a process of gradual emancipation in the late eighteenth and early nineteenth centuries, requiring the children of slave mothers to remain in servitude for a set period, typically 28 years. Other regions above the Mason-Dixon line ended slavery upon statehood early in the nineteenth century — Ohio in 1803 and Indiana in 1816, for instance.

Population of the Original Thirteen Colonies, selected years by type

1750 1750 1790 1790 1790 1810 1810 1810 1860 1860 1860


White Black White Free Slave White Free Slave White Free Slave
Nonwhite Nonwhite Nonwhite
108,270 3,010 232,236 2,771 2,648 255,179 6,453 310 451,504 8,643 Connecticut
27,208 1,496 46,310 3,899 8,887 55,361 13,136 4,177 90,589 19,829 1,798 Delaware
4,200 1,000 52,886 398 29,264 145,414 1,801 105,218 591,550 3,538 462,198 Georgia
97,623 43,450 208,649 8,043 103,036 235,117 33,927 111,502 515,918 83,942 87,189 Maryland
183,925 4,075 373,187 5,369 465,303 6,737 1,221,432 9,634 Massachusetts
26,955 550 141,112 630 157 182,690 970 325,579 494 New Hampshire
66,039 5,354 169,954 2,762 11,423 226,868 7,843 10,851 646,699 25,318 New Jersey
65,682 11,014 314,366 4,682 21,193 918,699 25,333 15,017 3,831,590 49,145 New York
53,184 19,800 289,181 5,041 100,783 376,410 10,266 168,824 629,942 31,621 331,059 North Carolina
116,794 2,872 317,479 6,531 3,707 786,804 22,492 795 2,849,259 56,956 Pennsylvania
29,879 3,347 64,670 3,484 958 73,214 3,609 108 170,649 3,971 Rhode Island
25,000 39,000 140,178 1,801 107,094 214,196 4,554 196,365 291,300 10,002 402,406 South Carolina
129,581 101,452 442,117 12,866 292,627 551,534 30,570 392,518 1,047,299 58,154 490,865 Virginia
934,340 236,420 2,792,325 58,277 681,777 4,486,789 167,691 1,005,685 12,663,310 361,247 1,775,515 United States

Source: Historical Statistics of the U.S. (1970), Franklin (1988).

Slavery in the South

Throughout colonial and antebellum history, U.S. slaves lived primarily in the South. Slaves comprised less than a tenth of the total Southern population in 1680 but grew to a third by 1790. At that date, 293,000 slaves lived in Virginia alone, making up 42 percent of all slaves in the U.S. at the time. South Carolina, North Carolina, and Maryland each had over 100,000 slaves. After the American Revolution, the Southern slave population exploded, reaching about 1.1 million in 1810 and over 3.9 million in 1860.

Population of the South 1790-1860 by type

Year White Free Nonwhite Slave
1790 1,240,454 32,523 654,121
1800 1,691,892 61,575 851,532
1810 2,118,144 97,284 1,103,700
1820 2,867,454 130,487 1,509,904
1830 3,614,600 175,074 1,983,860
1840 4,601,873 207,214 2,481,390
1850 6,184,477 235,821 3,200,364
1860 8,036,700 253,082 3,950,511

Source: Historical Statistics of the U.S. (1970).

Slave Ownership Patterns

Despite their numbers, slaves typically comprised a minority of the local population. Only in antebellum South Carolina and Mississippi did slaves outnumber free persons. Most Southerners owned no slaves and most slaves lived in small groups rather than on large plantations. Less than one-quarter of white Southerners held slaves, with half of these holding fewer than five and fewer than 1 percent owning more than one hundred. In 1860, the average number of slaves residing together was about ten.

Slaves as a Percent of the Total Population
selected years, by Southern state

1750 1790 1810 1860
State Black/total Slave/total Slave/total Slave/total
population population population population
Alabama 45.12
Arkansas 25.52
Delaware 5.21 15.04 5.75 1.60
Florida 43.97
Georgia 19.23 35.45 41.68 43.72
Kentucky 16.87 19.82 19.51
Louisiana 46.85
Maryland 30.80 32.23 29.30 12.69
Mississippi 55.18
Missouri 9.72
North Carolina 27.13 25.51 30.39 33.35
South Carolina 60.94 43.00 47.30 57.18
Tennessee 17.02 24.84
Texas 30.22
Virginia 43.91 39.14 40.27 30.75
Overall 37.97 33.95 33.25 32.27

Sources: Historical Statistics of the United States (1970), Franklin (1988).

Holdings of Southern Slaveowners
by states, 1860

State Total Held 1 Held 2 Held 3 Held 4 Held 5 Held 1-5 Held 100- Held 500+
slaveholders slave slaves Slaves slaves slaves slaves 499 slaves slaves
AL 33,730 5,607 3,663 2,805 2,329 1,986 16,390 344
AR 11,481 2,339 1,503 1,070 894 730 6,536 65 1
DE 587 237 114 74 51 34 510
FL 5,152 863 568 437 365 285 2,518 47
GA 41,084 6,713 4,335 3,482 2,984 2,543 20,057 211 8
KY 38,645 9,306 5,430 4,009 3,281 2,694 24,720 7
LA 22,033 4,092 2,573 2,034 1,536 1,310 11,545 543 4
MD 13,783 4,119 1,952 1,279 1,023 815 9,188 16
MS 30,943 4,856 3,201 2,503 2,129 1,809 14,498 315 1
MO 24,320 6,893 3,754 2,773 2,243 1,686 17,349 4
NC 34,658 6,440 4,017 3,068 2,546 2,245 18,316 133
SC 26,701 3,763 2,533 1,990 1,731 1,541 11,558 441 8
TN 36,844 7,820 4,738 3,609 3,012 2,536 21,715 47
TX 21,878 4,593 2,874 2,093 1,782 1,439 12,781 54
VA 52,128 11,085 5,989 4,474 3,807 3,233 28,588 114
TOTAL 393,967 78,726 47,244 35,700 29,713 24,886 216,269 2,341 22

Source: Historical Statistics of the United States (1970).

Rapid Natural Increase in U.S. Slave Population

How did the U.S. slave population increase nearly fourfold between 1810 and 1860, given the demise of the trans-Atlantic trade? They enjoyed an exceptional rate of natural increase. Unlike elsewhere in the New World, the South did not require constant infusions of immigrant slaves to keep its slave population intact. In fact, by 1825, 36 percent of the slaves in the Western hemisphere lived in the U.S. This was partly due to higher birth rates, which were in turn due to a more equal ratio of female to male slaves in the U.S. relative to other parts of the Americas. Lower mortality rates also figured prominently. Climate was one cause; crops were another. U.S. slaves planted and harvested first tobacco and then, after Eli Whitney’s invention of the cotton gin in 1793, cotton. This work was relatively less grueling than the tasks on the sugar plantations of the West Indies and in the mines and fields of South America. Southern slaves worked in industry, did domestic work, and grew a variety of other food crops as well, mostly under less abusive conditions than their counterparts elsewhere. For example, the South grew half to three-quarters of the corn crop harvested between 1840 and 1860.


Central to the success of slavery are political and legal institutions that validate the ownership of other persons. A Kentucky court acknowledged the dual character of slaves in Turner v. Johnson (1838): “[S]laves are property and must, under our present institutions, be treated as such. But they are human beings, with like passions, sympathies, and affections with ourselves.” To construct slave law, lawmakers borrowed from laws concerning personal property and animals, as well as from rules regarding servants, employees, and free persons. The outcome was a set of doctrines that supported the Southern way of life.

The English common law of property formed a foundation for U.S. slave law. The French and Spanish influence in Louisiana — and, to a lesser extent, Texas — meant that Roman (or civil) law offered building blocks there as well. Despite certain formal distinctions, slave law as practiced differed little from common-law to civil-law states. Southern state law governed roughly five areas: slave status, masters’ treatment of slaves, interactions between slaveowners and contractual partners, rights and duties of noncontractual parties toward others’ slaves, and slave crimes. Federal law and laws in various Northern states also dealt with matters of interstate commerce, travel, and fugitive slaves.

Interestingly enough, just as slave law combined elements of other sorts of law, so too did it yield principles that eventually applied elsewhere. Lawmakers had to consider the intelligence and volition of slaves as they crafted laws to preserve property rights. Slavery therefore created legal rules that could potentially apply to free persons as well as to those in bondage. Many legal principles we now consider standard in fact had their origins in slave law.

Legal Status Of Slaves And Blacks

By the end of the seventeenth century, the status of blacks — slave or free — tended to follow the status of their mothers. Generally, “white” persons were not slaves but Native and African Americans could be. One odd case was the offspring of a free white woman and a slave: the law often bound these people to servitude for thirty-one years. Conversion to Christianity could set a slave free in the early colonial period, but this practice quickly disappeared.

Skin Color and Status

Southern law largely identified skin color with status. Those who appeared African or of African descent were generally presumed to be slaves. Virginia was the only state to pass a statute that actually classified people by race: essentially, it considered those with one quarter or more black ancestry as black. Other states used informal tests in addition to visual inspection: one-quarter, one-eighth, or one-sixteenth black ancestry might categorize a person as black.

Even if blacks proved their freedom, they enjoyed little higher status than slaves except, to some extent, in Louisiana. Many Southern states forbade free persons of color from becoming preachers, selling certain goods, tending bar, staying out past a certain time of night, or owning dogs, among other things. Federal law denied black persons citizenship under the Dred Scott decision (1857). In this case, Chief Justice Roger Taney also determined that visiting a free state did not free a slave who returned to a slave state, nor did traveling to a free territory ensure emancipation.

Rights And Responsibilities Of Slave Masters

Southern masters enjoyed great freedom in their dealings with slaves. North Carolina Chief Justice Thomas Ruffin expressed the sentiments of many Southerners when he wrote in State v. Mann (1829): “The power of the master must be absolute, to render the submission of the slave perfect.” By the nineteenth century, household heads had far more physical power over their slaves than their employees. In part, the differences in allowable punishment had to do with the substitutability of other means of persuasion. Instead of physical coercion, antebellum employers could legally withhold all wages if a worker did not complete all agreed-upon services. No such alternate mechanism existed for slaves.

Despite the respect Southerners held for the power of masters, the law — particularly in the thirty years before the Civil War — limited owners somewhat. Southerners feared that unchecked slave abuse could lead to theft, public beatings, and insurrection. People also thought that hungry slaves would steal produce and livestock. But masters who treated slaves too well, or gave them freedom, caused consternation as well. The preamble to Delaware’s Act of 1767 conveys one prevalent view: “[I]t is found by experience, that freed [N]egroes and mulattoes are idle and slothful, and often prove burdensome to the neighborhood wherein they live, and are of evil examples to slaves.” Accordingly, masters sometimes fell afoul of the criminal law not only when they brutalized or neglected their slaves, but also when they indulged or manumitted slaves. Still, prosecuting masters was extremely difficult, because often the only witnesses were slaves or wives, neither of whom could testify against male heads of household.

Law of Manumission

One area that changed dramatically over time was the law of manumission. The South initially allowed masters to set their slaves free because this was an inherent right of property ownership. During the Revolutionary period, some Southern leaders also believed that manumission was consistent with the ideology of the new nation. Manumission occurred only rarely in colonial times, increased dramatically during the Revolution, then diminished after the early 1800s. By the 1830s, most Southern states had begun to limit manumission. Allowing masters to free their slaves at will created incentives to emancipate only unproductive slaves. Consequently, the community at large bore the costs of young, old, and disabled former slaves. The public might also run the risk of having rebellious former slaves in its midst.

Antebellum U.S. Southern states worried considerably about these problems and eventually enacted restrictions on the age at which slaves could be free, the number freed by any one master, and the number manumitted by last will. Some required former masters to file indemnifying bonds with state treasurers so governments would not have to support indigent former slaves. Some instead required former owners to contribute to ex-slaves’ upkeep. Many states limited manumissions to slaves of a certain age who were capable of earning a living. A few states made masters emancipate their slaves out of state or encouraged slaveowners to bequeath slaves to the Colonization Society, which would then send the freed slaves to Liberia. Former slaves sometimes paid fees on the way out of town to make up for lost property tax revenue; they often encountered hostility and residential fees on the other end as well. By 1860, most Southern states had banned in-state and post-mortem manumissions, and some had enacted procedures by which free blacks could voluntarily become slaves.

Other Restrictions

In addition to constraints on manumission, laws restricted other actions of masters and, by extension, slaves. Masters generally had to maintain a certain ratio of white to black residents upon plantations. Some laws barred slaves from owning musical instruments or bearing firearms. All states refused to allow slaves to make contracts or testify in court against whites. About half of Southern states prohibited masters from teaching slaves to read and write although some of these permitted slaves to learn rudimentary mathematics. Masters could use slaves for some tasks and responsibilities, but they typically could not order slaves to compel payment, beat white men, or sample cotton. Nor could slaves officially hire themselves out to others, although such prohibitions were often ignored by masters, slaves, hirers, and public officials. Owners faced fines and sometimes damages if their slaves stole from others or caused injuries.

Southern law did encourage benevolence, at least if it tended to supplement the lash and shackle. Court opinions in particular indicate the belief that good treatment of slaves could enhance labor productivity, increase plantation profits, and reinforce sentimental ties. Allowing slaves to control small amounts of property, even if statutes prohibited it, was an oft-sanctioned practice. Courts also permitted slaves small diversions, such as Christmas parties and quilting bees, despite statutes that barred slave assemblies.

Sale, Hire, And Transportation Of Slaves

Sales of Slaves

Slaves were freely bought and sold across the antebellum South. Southern law offered greater protection to slave buyers than to buyers of other goods, in part because slaves were complex commodities with characteristics not easily ascertained by inspection. Slave sellers were responsible for their representations, required to disclose known defects, and often liable for unknown defects, as well as bound by explicit contractual language. These rules stand in stark contrast to the caveat emptor doctrine applied in antebellum commodity sales cases. In fact, they more closely resemble certain provisions of the modern Uniform Commercial Code. Sales law in two states stands out. South Carolina was extremely pro-buyer, presuming that any slave sold at full price was sound. Louisiana buyers enjoyed extensive legal protection as well. A sold slave who later manifested an incurable disease or vice — such as a tendency to escape frequently — could generate a lawsuit that entitled the purchaser to nullify the sale.

Hiring Out Slaves

Slaves faced the possibility of being hired out by their masters as well as being sold. Although scholars disagree about the extent of hiring in agriculture, most concur that hired slaves frequently worked in manufacturing, construction, mining, and domestic service. Hired slaves and free persons often labored side by side. Bond and free workers both faced a legal burden to behave responsibly on the job. Yet the law of the workplace differed significantly for the two: generally speaking, employers were far more culpable in cases of injuries to slaves. The divergent law for slave and free workers does not necessarily imply that free workers suffered. Empirical evidence shows that nineteenth-century free laborers received at least partial compensation for the risks of jobs. Indeed, the tripartite nature of slave-hiring arrangements suggests why antebellum laws appeared as they did. Whereas free persons had direct work and contractual relations with their bosses, slaves worked under terms designed by others. Free workers arguably could have walked out or insisted on different conditions or wages. Slaves could not. The law therefore offered substitute protections. Still, the powerful interests of slaveowners also may mean that they simply were more successful at shaping the law. Postbellum developments in employment law — North and South — in fact paralleled earlier slave-hiring law, at times relying upon slave cases as legal precedents.

Public Transportation

Public transportation also figured into slave law: slaves suffered death and injury aboard common carriers as well as traveled as legitimate passengers and fugitives. As elsewhere, slave-common carrier law both borrowed from and established precedents for other areas of law. One key doctrine originating in slave cases was the “last-clear-chance rule.” Common-carrier defendants that had failed to offer slaves — even negligent slaves — a last clear chance to avoid accidents ended up paying damages to slaveowners. Slaveowner plaintiffs won several cases in the decade before the Civil War when engineers failed to warn slaves off railroad tracks. Postbellum courts used slave cases as precedents to entrench the last-clear-chance doctrine.

Slave Control: Patrollers And Overseers

Society at large shared in maintaining the machinery of slavery. In place of a standing police force, Southern states passed legislation to establish and regulate county-wide citizen patrols. Essentially, Southern citizens took upon themselves the protection of their neighbors’ interests as well as their own. County courts had local administrative authority; court officials appointed three to five men per patrol from a pool of white male citizens to serve for a specified period. Typical patrol duty ranged from one night per week for a year to twelve hours per month for three months. Not all white men had to serve: judges, magistrates, ministers, and sometimes millers and blacksmiths enjoyed exemptions. So did those in the higher ranks of the state militia. In many states, courts had to select from adult males under a certain age, usually 45, 50, or 60. Some states allowed only slaveowners or householders to join patrols. Patrollers typically earned fees for captured fugitive slaves and exemption from road or militia duty, as well as hourly wages. Keeping order among slaves was the patrollers’ primary duty. Statutes set guidelines for appropriate treatment of slaves and often imposed fines for unlawful beatings. In rare instances, patrollers had to compensate masters for injured slaves. For the most part, however, patrollers enjoyed quasi-judicial or quasi-executive powers in their dealings with slaves.

Overseers commanded considerable control as well. The Southern overseer was the linchpin of the large slave plantation. He ran daily operations and served as a first line of defense in safeguarding whites. The vigorous protests against drafting overseers into military service during the Civil War reveal their significance to the South. Yet slaves were too valuable to be left to the whims of frustrated, angry overseers. Injuries caused to slaves by overseers’ cruelty (or “immoral conduct”) usually entitled masters to recover civil damages. Overseers occasionally confronted criminal charges as well. Brutality by overseers naturally generated responses by their victims; at times, courts reduced murder charges to manslaughter when slaves killed abusive overseers.

Protecting The Master Against Loss: Slave Injury And Slave Stealing

Whether they liked it or not, many Southerners dealt daily with slaves. Southern law shaped these interactions among strangers, awarding damages more often for injuries to slaves than injuries to other property or persons, shielding slaves more than free persons from brutality, and generating convictions more frequently in slave-stealing cases than in other criminal cases. The law also recognized more offenses against slaveowners than against other property owners because slaves, unlike other property, succumbed to influence.

Just as assaults of slaves generated civil damages and criminal penalties, so did stealing a slave to sell him or help him escape to freedom. Many Southerners considered slave stealing worse than killing fellow citizens. In marked contrast, selling a free black person into slavery carried almost no penalty.

The counterpart to helping slaves escape — picking up fugitives — also created laws. Southern states offered rewards to defray the costs of capture or passed statutes requiring owners to pay fees to those who caught and returned slaves. Some Northern citizens worked hand-in-hand with their Southern counterparts, returning fugitive slaves to masters either with or without the prompting of law. But many Northerners vehemently opposed the peculiar institution. In an attempt to stitch together the young nation, the federal government passed the first fugitive slave act in 1793. To circumvent its application, several Northern states passed personal liberty laws in the 1840s. Stronger federal fugitive slave legislation then passed in 1850. Still, enough slaves fled to freedom — perhaps as many as 15,000 in the decade before the Civil War — with the help (or inaction) of Northerners that the profession of “slave-catching” evolved. This occupation was often highly risky — enough so that such men could not purchase life insurance coverage — and just as often highly lucrative.

Slave Crimes

Southern law governed slaves as well as slaveowners and their adversaries. What few due process protections slaves possessed stemmed from desires to grant rights to masters. Still, slaves faced harsh penalties for their crimes. When slaves stole, rioted, set fires, or killed free people, the law sometimes had to subvert the property rights of masters in order to preserve slavery as a social institution.

Slaves, like other antebellum Southern residents, committed a host of crimes ranging from arson to theft to homicide. Other slave crimes included violating curfew, attending religious meetings without a master’s consent, and running away. Indeed, a slave was not permitted off his master’s farm or business without his owner’s permission. In rural areas, a slave was required to carry a written pass to leave the master’s land.

Southern states erected numerous punishments for slave crimes, including prison terms, banishment, whipping, castration, and execution. In most states, the criminal law for slaves (and blacks generally) was noticeably harsher than for free whites; in others, slave law as practiced resembled that governing poorer white citizens. Particularly harsh punishments applied to slaves who had allegedly killed their masters or who had committed rebellious acts. Southerners considered these acts of treason and resorted to immolation, drawing and quartering, and hanging.


Market prices for slaves reflect their substantial economic value. Scholars have gathered slave prices from a variety of sources, including censuses, probate records, plantation and slave-trader accounts, and proceedings of slave auctions. These data sets reveal that prime field hands went for four to six hundred dollars in the U.S. in 1800, thirteen to fifteen hundred dollars in 1850, and up to three thousand dollars just before Fort Sumter fell. Even controlling for inflation, the prices of U.S. slaves rose significantly in the six decades before South Carolina seceded from the Union. By 1860, Southerners owned close to $4 billion worth of slaves. Slavery remained a thriving business on the eve of the Civil War: Fogel and Engerman (1974) projected that by 1890 slave prices would have increased on average more than 50 percent over their 1860 levels. No wonder the South rose in armed resistance to protect its enormous investment.

Slave markets existed across the antebellum U.S. South. Even today, one can find stone markers like the one next to the Antietam battlefield, which reads: “From 1800 to 1865 This Stone Was Used as a Slave Auction Block. It has been a famous landmark at this original location for over 150 years.” Private auctions, estate sales, and professional traders facilitated easy exchange. Established dealers like Franklin and Armfield in Virginia, Woolfolk, Saunders, and Overly in Maryland, and Nathan Bedford Forrest in Tennessee prospered alongside itinerant traders who operated in a few counties, buying slaves for cash from their owners, then moving them overland in coffles to the lower South. Over a million slaves were taken across state lines between 1790 and 1860 with many more moving within states. Some of these slaves went with their owners; many were sold to new owners. In his monumental study, Michael Tadman (1989) found that slaves who lived in the upper South faced a very real chance of being sold for profit. From 1820 to 1860, he estimated that an average of 200,000 slaves per decade moved from the upper to the lower South, most via sales. A contemporary newspaper, The Virginia Times, calculated that 40,000 slaves were sold in the year 1830.

Determinants of Slave Prices

The prices paid for slaves reflected two economic factors: the characteristics of the slave and the conditions of the market. Important individual features included age, sex, childbearing capacity (for females), physical condition, temperament, and skill level. In addition, the supply of slaves, demand for products produced by slaves, and seasonal factors helped determine market conditions and therefore prices.

Age and Price

Prices for both male and female slaves tended to follow similar life-cycle patterns. In the U.S. South, infant slaves sold for a positive price because masters expected them to live long enough to make the initial costs of raising them worthwhile. Prices rose through puberty as productivity and experience increased. In nineteenth-century New Orleans, for example, prices peaked at about age 22 for females and age 25 for males. Girls cost more than boys up to their mid-teens. The genders then switched places in terms of value. In the Old South, boys aged 14 sold for 71 percent of the price of 27-year-old men, whereas girls aged 14 sold for 65 percent of the price of 27-year-old men. After the peak age, prices declined slowly for a time, then fell off rapidly as the aging process caused productivity to fall. Compared to full-grown men, women were worth 80 to 90 percent as much. One characteristic in particular set some females apart: their ability to bear children. Fertile females commanded a premium. The mother-child link also proved important for pricing in a different way: people sometimes paid more for intact families.

Source: Fogel and Engerman (1974)

Other Characteristics and Price

Skills, physical traits, mental capabilities, and other qualities also helped determine a slave’s price. Skilled workers sold for premiums of 40-55 percent whereas crippled and chronically ill slaves sold for deep discounts. Slaves who proved troublesome — runaways, thieves, layabouts, drunks, slow learners, and the like — also sold for lower prices. Taller slaves cost more, perhaps because height acts as a proxy for healthiness. In New Orleans, light-skinned females (who were often used as concubines) sold for a 5 percent premium.

Fluctuations in Supply

Prices for slaves fluctuated with market conditions as well as with individual characteristics. U.S. slave prices fell around 1800 as the Haitian revolution sparked the movement of slaves into the Southern states. Less than a decade later, slave prices climbed when the international slave trade was banned, cutting off legal external supplies. Interestingly enough, among those who supported the closing of the trans-Atlantic slave trade were several Southern slaveowners. Why this apparent anomaly? Because the resulting reduction in supply drove up the prices of slaves already living in the U.S and, hence, their masters’ wealth. U.S. slaves had high enough fertility rates and low enough mortality rates to reproduce themselves, so Southern slaveowners did not worry about having too few slaves to go around.

Fluctuations in Demand

Demand helped determine prices as well. The demand for slaves derived in part from the demand for the commodities and services that slaves provided. Changes in slave occupations and variability in prices for slave-produced goods therefore created movements in slave prices. As slaves replaced increasingly expensive indentured servants in the New World, their prices went up. In the period 1748 to 1775, slave prices in British America rose nearly 30 percent. As cotton prices fell in the 1840s, Southern slave prices also fell. But, as the demand for cotton and tobacco grew after about 1850, the prices of slaves increased as well.

Interregional Price Differences

Differences in demand across regions led to transitional regional price differences, which in turn meant large movements of slaves. Yet because planters experienced greater stability among their workforce when entire plantations moved, 84 percent of slaves were taken to the lower South in this way rather than being sold piecemeal.

Time of Year and Price

Demand sometimes had to do with the time of year a sale took place. For example, slave prices in the New Orleans market were 10 to 20 percent higher in January than in September. Why? September was a busy time of year for plantation owners: the opportunity cost of their time was relatively high. Prices had to be relatively low for them to be willing to travel to New Orleans during harvest time.

Expectations and Prices

One additional demand factor loomed large in determining slave prices: the expectation of continued legal slavery. As the American Civil War progressed, prices dropped dramatically because people could not be sure that slavery would survive. In New Orleans, prime male slaves sold on average for $1381 in 1861 and for $1116 in 1862. Burgeoning inflation meant that real prices fell considerably more. By war’s end, slaves sold for a small fraction of their 1860 price.

Source: Data supplied by Stanley Engerman and reported in Walton and Rockoff (1994).


That slavery was profitable seems almost obvious. Yet scholars have argued furiously about this matter. On one side stand antebellum writers such as Hinton Rowan Helper and Frederick Law Olmstead, many antebellum abolitionists, and contemporary scholars like Eugene Genovese (at least in his early writings), who speculated that American slavery was unprofitable, inefficient, and incompatible with urban life. On the other side are scholars who have marshaled masses of data to support their contention that Southern slavery was profitable and efficient relative to free labor and that slavery suited cities as well as farms. These researchers stress the similarity between slave markets and markets for other sorts of capital.

Consensus That Slavery Was Profitable

This battle has largely been won by those who claim that New World slavery was profitable. Much like other businessmen, New World slaveowners responded to market signals — adjusting crop mixes, reallocating slaves to more profitable tasks, hiring out idle slaves, and selling slaves for profit. One well-known instance shows that contemporaneous free labor thought that urban slavery may even have worked too well: employees of the Tredegar Iron Works in Richmond, Virginia, went out on their first strike in 1847 to protest the use of slave labor at the Works.

Fogel and Engerman’s Time on the Cross

Carrying the banner of the “slavery was profitable” camp is Nobel laureate Robert Fogel. Perhaps the most controversial book ever written about American slavery is Time on the Cross, published in 1974 by Fogel and co-author Stanley Engerman. These men were among the first to use modern statistical methods, computers, and large datasets to answer a series of empirical questions about the economics of slavery. To find profit levels and rates of return, they built upon the work of Alfred Conrad and John Meyer, who in 1958 had calculated similar measures from data on cotton prices, physical yield per slave, demographic characteristics of slaves (including expected lifespan), maintenance and supervisory costs, and (in the case of females) number of children. To estimate the relative efficiency of farms, Fogel and Engerman devised an index of “total factor productivity,” which measured the output per average unit of input on each type of farm. They included in this index controls for quality of livestock and land and for age and sex composition of the workforce, as well as amounts of output, labor, land, and capital

Time on the Cross generated praise — and considerable criticism. A major critique appeared in 1976 as a collection of articles entitled Reckoning with Slavery. Although some contributors took umbrage at the tone of the book and denied that it broke new ground, others focused on flawed and insufficient data and inappropriate inferences. Despite its shortcomings, Time on the Cross inarguably brought people’s attention to a new way of viewing slavery. The book also served as a catalyst for much subsequent research. Even Eugene Genovese, long an ardent proponent of the belief that Southern planters had held slaves for their prestige value, finally acknowledged that slavery was probably a profitable enterprise. Fogel himself refined and expanded his views in a 1989 book, Without Consent or Contract.

Efficiency Estimates

Fogel’s and Engerman’s research led them to conclude that investments in slaves generated high rates of return, masters held slaves for profit motives rather than for prestige, and slavery thrived in cities and rural areas alike. They also found that antebellum Southern farms were 35 percent more efficient overall than Northern ones and that slave farms in the New South were 53 percent more efficient than free farms in either North or South. This would mean that a slave farm that is otherwise identical to a free farm (in terms of the amount of land, livestock, machinery and labor used) would produce output worth 53 percent more than the free. On the eve of the Civil War, slavery flourished in the South and generated a rate of economic growth comparable to that of many European countries, according to Fogel and Engerman. They also discovered that, because slaves constituted a considerable portion of individual wealth, masters fed and treated their slaves reasonably well. Although some evidence indicates that infant and young slaves suffered much worse conditions than their freeborn counterparts, teenaged and adult slaves lived in conditions similar to — sometimes better than — those enjoyed by many free laborers of the same period.

Transition from Indentured Servitude to Slavery

One potent piece of evidence supporting the notion that slavery provides pecuniary benefits is this: slavery replaces other labor when it becomes relatively cheaper. In the early U.S. colonies, for example, indentured servitude was common. As the demand for skilled servants (and therefore their wages) rose in England, the cost of indentured servants went up in the colonies. At the same time, second-generation slaves became more productive than their forebears because they spoke English and did not have to adjust to life in a strange new world. Consequently, the balance of labor shifted away from indentured servitude and toward slavery.

Gang System

The value of slaves arose in part from the value of labor generally in the antebellum U.S. Scarce factors of production command economic rent, and labor was by far the scarcest available input in America. Moreover, a large proportion of the reward to owning and working slaves resulted from innovative labor practices. Certainly, the use of the “gang” system in agriculture contributed to profits in the antebellum period. In the gang system, groups of slaves perfomed synchronized tasks under the watchful overseer’s eye, much like parts of a single machine. Masters found that treating people like machinery paid off handsomely.

Antebellum slaveowners experimented with a variety of other methods to increase productivity. They developed an elaborate system of “hand ratings” in order to improve the match between the slave worker and the job. Hand ratings categorized slaves by age and sex and rated their productivity relative to that of a prime male field hand. Masters also capitalized on the native intelligence of slaves by using them as agents to receive goods, keep books, and the like.

Use of Positive Incentives

Masters offered positive incentives to make slaves work more efficiently. Slaves often had Sundays off. Slaves could sometimes earn bonuses in cash or in kind, or quit early if they finished tasks quickly. Some masters allowed slaves to keep part of the harvest or to work their own small plots. In places, slaves could even sell their own crops. To prevent stealing, however, many masters limited the products that slaves could raise and sell, confining them to corn or brown cotton, for example. In antebellum Louisiana, slaves even had under their control a sum of money called a peculium. This served as a sort of working capital, enabling slaves to establish thriving businesses that often benefited their masters as well. Yet these practices may have helped lead to the downfall of slavery, for they gave slaves a taste of freedom that left them longing for more.

Slave Families

Masters profited from reproduction as well as production. Southern planters encouraged slaves to have large families because U.S. slaves lived long enough — unlike those elsewhere in the New World — to generate more revenue than cost over their lifetimes. But researchers have found little evidence of slave breeding; instead, masters encouraged slaves to live in nuclear or extended families for stability. Lest one think sentimentality triumphed on the Southern plantation, one need only recall the willingness of most masters to sell if the bottom line was attractive enough.

Profitability and African Heritage

One element that contributed to the profitability of New World slavery was the African heritage of slaves. Africans, more than indigenous Americans, were accustomed to the discipline of agricultural practices and knew metalworking. Some scholars surmise that Africans, relative to Europeans, could better withstand tropical diseases and, unlike Native Americans, also had some exposure to the European disease pool.

Ease of Identifying Slaves

Perhaps the most distinctive feature of Africans, however, was their skin color. Because they looked different from their masters, their movements were easy to monitor. Denying slaves education, property ownership, contractual rights, and other things enjoyed by those in power was simple: one needed only to look at people to ascertain their likely status. Using color was a low-cost way of distinguishing slaves from free persons. For this reason, the colonial practices that freed slaves who converted to Christianity quickly faded away. Deciphering true religious beliefs is far more difficult than establishing skin color. Other slave societies have used distinguishing marks like brands or long hair to denote slaves, yet color is far more immutable and therefore better as a cheap way of keeping slaves separate. Skin color, of course, can also serve as a racist identifying mark even after slavery itself disappears.

Profit Estimates

Slavery never generated superprofits, because people always had the option of putting their money elsewhere. Nevertheless, investment in slaves offered a rate of return — about 10 percent — that was comparable to returns on other assets. Slaveowners were not the only ones to reap rewards, however. So too did cotton consumers who enjoyed low prices and Northern entrepreneurs who helped finance plantation operations.

Exploitation Estimates

So slavery was profitable; was it an efficient way of organizing the workforce? On this question, considerable controversy remains. Slavery might well have profited masters, but only because they exploited their chattel. What is more, slavery could have locked people into a method of production and way of life that might later have proven burdensome.

Fogel and Engerman (1974) claimed that slaves kept about ninety percent of what they produced. Because these scholars also found that agricultural slavery produced relatively more output for a given set of inputs, they argued that slaves may actually have shared in the overall material benefits resulting from the gang system. Other scholars contend that slaves in fact kept less than half of what they produced and that slavery, while profitable, certainly was not efficient. On the whole, current estimates suggest that the typical slave received only about fifty percent of the extra output that he or she produced.

Did Slavery Retard Southern Economic Development?

Gavin Wright (1978) called attention as well to the difference between the short run and the long run. He noted that slaves accounted for a very large proportion of most masters’ portfolios of assets. Although slavery might have seemed an efficient means of production at a point in time, it tied masters to a certain system of labor which might not have adapted quickly to changed economic circumstances. This argument has some merit. Although the South’s growth rate compared favorably with that of the North in the antebellum period, a considerable portion of wealth was held in the hands of planters. Consequently, commercial and service industries lagged in the South. The region also had far less rail transportation than the North. Yet many plantations used the most advanced technologies of the day, and certain innovative commercial and insurance practices appeared first in transactions involving slaves. What is more, although the South fell behind the North and Great Britain in its level of manufacturing, it compared favorably to other advanced countries of the time. In sum, no clear consensus emerges as to whether the antebellum South created a standard of living comparable to that of the North or, if it did, whether it could have sustained it.

Ultimately, the South’s system of law, politics, business, and social customs strengthened the shackles of slavery and reinforced racial stereotyping. As such, it was undeniably evil. Yet, because slaves constituted valuable property, their masters had ample incentives to take care of them. And, by protecting the property rights of masters, slave law necessarily sheltered the persons embodied within. In a sense, the apologists for slavery were right: slaves sometimes fared better than free persons because powerful people had a stake in their well-being.

Conclusion: Slavery Cannot Be Seen As Benign

But slavery cannot be thought of as benign. In terms of material conditions, diet, and treatment, Southern slaves may have fared as well in many ways as the poorest class of free citizens. Yet the root of slavery is coercion. By its very nature, slavery involves involuntary transactions. Slaves are property, whereas free laborers are persons who make choices (at times constrained, of course) about the sort of work they do and the number of hours they work.

The behavior of former slaves after abolition clearly reveals that they cared strongly about the manner of their work and valued their non-work time more highly than masters did. Even the most benevolent former masters in the U.S. South found it impossible to entice their former chattels back into gang work, even with large wage premiums. Nor could they persuade women back into the labor force: many female ex-slaves simply chose to stay at home. In the end, perhaps slavery is an economic phenomenon only because slave societies fail to account for the incalculable costs borne by the slaves themselves.


For studies pertaining to the economics of slavery, see particularly Aitken, Hugh, editor. Did Slavery Pay? Readings in the Economics of Black Slavery in the United States. Boston: Houghton-Mifflin, 1971.

Barzel, Yoram. “An Economic Analysis of Slavery.” Journal of Law and Economics 20 (1977): 87-110.

Conrad, Alfred H., and John R. Meyer. The Economics of Slavery and Other Studies. Chicago: Aldine, 1964.

David, Paul A., Herbert G. Gutman, Richard Sutch, Peter Temin, and Gavin Wright. Reckoning with Slavery: A Critical Study in the Quantitative History of American Negro Slavery. New York: Oxford University Press, 1976

Fogel , Robert W. Without Consent or Contract. New York: Norton, 1989.

Fogel, Robert W., and Stanley L. Engerman. Time on the Cross: The Economics of American Negro Slavery. New York: Little, Brown, 1974.

Galenson, David W. Traders, Planters, and Slaves: Market Behavior in Early English America. New York: Cambridge University Press, 1986

Kotlikoff, Laurence. “The Structure of Slave Prices in New Orleans, 1804-1862.” Economic Inquiry 17 (1979): 496-518.

Ransom, Roger L., and Richard Sutch. One Kind of Freedom: The Economic Consequences of Emancipation. New York: Cambridge University Press, 1977.

Ransom, Roger L., and Richard Sutch “Capitalists Without Capital” Agricultural History 62 (1988): 133-160.

Vedder, Richard K. “The Slave Exploitation (Expropriation) Rate.” Explorations in Economic History 12 (1975): 453-57.

Wright, Gavin. The Political Economy of the Cotton South: Households, Markets, and Wealth in the Nineteenth Century. New York: Norton, 1978.

Yasuba, Yasukichi. “The Profitability and Viability of Slavery in the U.S.” Economic Studies Quarterly 12 (1961): 60-67.

For accounts of slave trading and sales, see
Bancroft, Frederic. Slave Trading in the Old South. New York: Ungar, 1931. Tadman, Michael. Speculators and Slaves. Madison: University of Wisconsin Press, 1989.

For discussion of the profession of slave catchers, see
Campbell, Stanley W. The Slave Catchers. Chapel Hill: University of North Carolina Press, 1968.

To read about slaves in industry and urban areas, see
Dew, Charles B. Slavery in the Antebellum Southern Industries. Bethesda: University Publications of America, 1991.

Goldin, Claudia D. Urban Slavery in the American South, 1820-1860: A Quantitative History. Chicago: University of Chicago Press,1976.

Starobin, Robert. Industrial Slavery in the Old South. New York: Oxford University Press, 1970.

For discussions of masters and overseers, see
Oakes, James. The Ruling Race: A History of American Slaveholders. New York: Knopf, 1982.

Roark, James L. Masters Without Slaves. New York: Norton, 1977.

Scarborough, William K. The Overseer: Plantation Management in the Old South. Baton Rouge, Louisiana State University Press, 1966.

On indentured servitude, see
Galenson, David. “Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis.” Journal of Economic History 44 (1984): 1-26.

Galenson, David. White Servitude in Colonial America: An Economic Analysis. New York: Cambridge University Press, 1981.

Grubb, Farley. “Immigrant Servant Labor: Their Occupational and Geographic Distribution in the Late Eighteenth Century Mid-Atlantic Economy.” Social Science History 9 (1985): 249-75.

Menard, Russell R. “From Servants to Slaves: The Transformation of the Chesapeake Labor System.” Southern Studies 16 (1977): 355-90.

On slave law, see
Fede, Andrew. “Legal Protection for Slave Buyers in the U.S. South.” American Journal of Legal History 31 (1987). Finkelman, Paul. An Imperfect Union: Slavery, Federalism, and Comity. Chapel Hill: University of North Carolina, 1981.

Finkelman, Paul. Slavery, Race, and the American Legal System, 1700-1872. New York: Garland, 1988.

Finkelman, Paul, ed. Slavery and the Law. Madison: Madison House, 1997.

Flanigan, Daniel J. The Criminal Law of Slavery and Freedom, 1800-68. New York: Garland, 1987.

Morris, Thomas D., Southern Slavery and the Law: 1619-1860. Chapel Hill: University of North Carolina Press, 1996.

Schafer, Judith K. Slavery, The Civil Law, and the Supreme Court of Louisiana. Baton Rouge: Louisiana State University Press, 1994.

Tushnet, Mark V. The American Law of Slavery, 1810-60: Considerations of Humanity and Interest. Princeton: Princeton University Press, 1981.

Wahl, Jenny B. The Bondsman’s Burden: An Economic Analysis of the Common Law of Southern Slavery. New York: Cambridge University Press, 1998.

Other useful sources include
Berlin, Ira, and Philip D. Morgan, eds. The Slave’s Economy: Independent Production by Slaves in the Americas. London: Frank Cass, 1991.

Berlin, Ira, and Philip D. Morgan, eds, Cultivation and Culture: Labor and the Shaping of Slave Life in the Americas. Charlottesville, University Press of Virginia, 1993.

Elkins, Stanley M. Slavery: A Problem in American Institutional and Intellectual Life. Chicago: University of Chicago Press, 1976.

Engerman, Stanley, and Eugene Genovese. Race and Slavery in the Western Hemisphere: Quantitative Studies. Princeton: Princeton University Press, 1975.

Fehrenbacher, Don. Slavery, Law, and Politics. New York: Oxford University Press, 1981.

Franklin, John H. From Slavery to Freedom. New York: Knopf, 1988.

Genovese, Eugene D. Roll, Jordan, Roll. New York: Pantheon, 1974.

Genovese, Eugene D. The Political Economy of Slavery: Studies in the Economy and Society of the Slave South . Middletown, CT: Wesleyan, 1989.

Hindus, Michael S. Prison and Plantation. Chapel Hill: University of North Carolina Press, 1980.

Margo, Robert, and Richard Steckel. “The Heights of American Slaves: New Evidence on Slave Nutrition and Health.” Social Science History 6 (1982): 516-538.

Phillips, Ulrich B. American Negro Slavery: A Survey of the Supply, Employment and Control of Negro Labor as Determined by the Plantation Regime. New York: Appleton, 1918.

Stampp, Kenneth M. The Peculiar Institution: Slavery in the Antebellum South. New York: Knopf, 1956.

Steckel, Richard. “Birth Weights and Infant Mortality Among American Slaves.” Explorations in Economic History 23 (1986): 173-98.

Walton, Gary, and Hugh Rockoff. History of the American Economy. Orlando: Harcourt Brace, 1994, chapter 13.

Whaples, Robert. “Where Is There Consensus among American Economic Historians?” Journal of Economic History 55 (1995): 139-154.

Data can be found at
U.S. Bureau of the Census, Historical Statistics of the United States, 1970, collected in ICPSR study number 0003, “Historical Demographic, Economic and Social Data: The United States, 1790-1970,” located at

Citation: Bourne, Jenny. “Slavery in the United States”. EH.Net Encyclopedia, edited by Robert Whaples. March 26, 2008. URL

Money in the American Colonies

Ron Michener, University of Virginia

“There certainly can’t be a greater Grievance to a Traveller, from one Colony to another, than the different values their Paper Money bears.” An English visitor, circa 1742 (Kimber, 1998, p. 52).

The monetary arrangements in use in America before the Revolution were extremely varied. Each colony had its own conventions, tender laws, and coin ratings, and each issued its own paper money. The monetary system within each colony evolved over time, sometimes dramatically, as when Massachusetts abolished the use of paper money within her borders in 1750 and returned to a specie standard. Any encyclopedia-length overview of the subject will, unavoidably, need to generalize, and few generalizations about the colonial monetary system are immune to criticism because counterexamples can usually be found somewhere in the historical record. Those readers who find their interest piqued by this article would be well advised to continue their study of the subject by consulting the more detailed discussions available in Brock (1956, 1975, 1992), Ernst (1973), and McCusker (1978).

Units of Account

In the colonial era the unit of account and the medium of exchange were distinct in ways that now seem strange. An example from modern times suggests how the ancient system worked. Nowadays race horses are auctioned in England using guineas as the unit of account, although the guinea coin has long since disappeared. It is understood by all who participate in these auctions that payment is made according to the rule that one guinea equals 21s. Guineas are the unit of account, but the medium of exchange accepted in payment is something else entirely. The unit of account and medium of exchange were similarly disconnected in colonial times (Adler, 1900).

The units of account in colonial times were pounds, shillings, and pence (1£ = 20s., 1s. = 12d.).1 These pounds, shillings, and pence, however, were local units, such as New York money, Pennsylvania money, Massachusetts money, or South Carolina money and should not be confused with sterling. To do so is comparable to treating modern Canadian dollars and American dollars as interchangeable simply because they are both called “dollars.” All the local currencies were less valuable than sterling.2 A Spanish piece of eight, for instance, was worth 4 s. 6 d. sterling at the British mint. The same piece of eight, on the eve of the Revolution, would have been treated as 6 s. in New England, as 8 s. in New York, as 7 s. 6 d. in Philadelphia, and as 32 s. 6 d. in Charleston (McCusker, 1978).

Colonists assigned local currency values to foreign specie coins circulating there in these pounds, shillings and pence. The same foreign specie coins (most notably the Spanish dollar) continued to be legal tender in the United States in the first half of the nineteenth century as well as a considerable portion of the circulating specie (Andrews, 1904, pp. 327-28; Michener and Wright, 2005, p. 695). Because the decimal divisions of the dollar so familiar to us today were a newfangled innovation in the early Republic and because the same coins continued to circulate the traditional units of account were only gradually abandoned. Lucius Elmer, in his account of the early settlement of Cumberland County, New Jersey, describes how “Accounts were generally kept in this State in pounds, shillings, and pence, of the 7 s. 6 d. standard, until after 1799, in which year a law was passed requiring all accounts to be kept in dollars or units, dimes or tenths, cents or hundredths, and mills or thousandths. For several years, however, aged persons inquiring the price of an article in West Jersey or Philadelphia, required to told the value in shillings and pence, they not being able to keep in mind the newly-created cents or their relative value . . . So lately as 1820 some traders and tavern keepers in East Jersey kept their accounts in [New] York currency.”3 About 1820, John Quincy Adams (1822) surveyed the progress that had been made in familiarizing the public with the new units:

“It is now nearly thirty years since our new monies of account, our coins, and our mint, have been established. The dollar, under its new stamp, has preserved its name and circulation. The cent has become tolerably familiarized to the tongue, wherever it has been made by circulation familiar to the hand. But the dime having been seldom, and the mille never presented in their material images to the people, have remained . . . utterly unknown. . . . Even now, at the end of thirty years, ask a tradesman, or shopkeeper, in any of our cities, what is a dime or mille, and the chances are four in five that he will not understand your question. But go to New York and offer in payment the Spanish coin, the unit of the Spanish piece of eight [one reale], and the shop or market-man will take it for a shilling. Carry it to Boston or Richmond, and you shall be told it is not a shilling, but nine pence. Bring it to Philadelphia, Baltimore, or the City of Washington, and you shall find it recognized for an eleven-penny bit; and if you ask how that can be, you shall learn that, the dollar being of ninety-pence, the eight part of it is nearer to eleven than to any other number . . .4 And thus we have English denominations most absurdly and diversely applied to Spanish coins; while our own lawfully established dime and mille remain, to the great mass of the people, among the hidden mysteries of political economy – state secrets.”5

It took many more decades for the colonial unit of account to disappear completely. Elmer’s account (Elmer, 1869, p. 137) reported that “Even now, in New York, and in East Jersey, where the eighth of a dollar, so long the common coin in use, corresponded with the shilling of account, it is common to state the price of articles, not above two or three dollars, in shillings, as for instance, ten shillings rather than a dollar and a quarter.”

Not only were the unit of account and medium of exchange disconnected in an unfamiliar manner, but terms such as money and currency did not mean precisely the same thing in colonial times that they do today. In colonial times, “money” and “currency” were practically synonymous and signified whatever was conventionally used as a medium of exchange. The word “currency” today refers narrowly to paper money, but that wasn’t so in colonial times. “The Word, Currency,” Hugh Vance wrote in 1740, “is in common Use in the Plantations . . . and signifies Silver passing current either by Weight or Tale. The same Name is also applicable as well to Tobacco in Virginia, Sugars in the West Indies &c. Every thing at the Market-Rate may be called a Currency; more especially that most general Commodity, for which Contracts are usually made. And according to that Rule, Paper-Currency must signify certain Pieces of Paper, passing current in the Market as Money” (Vance, 1740, CCR III, pp. 396, 431).

Failure to appreciate that the unit of account and medium of exchange were quite distinct in colonial times, and that a familiar term like “currency” had a subtly different meaning, can lead unsuspecting historians astray. They often assume that a phrase such as “£100 New York money” or “£100 New York currency” necessarily refers to £100 of the bills of credit issued by New York. In fact, it simply means £100 of whatever was accepted as money in New York, according to the valuations prevailing in New York.6 Such subtle misunderstandings have led some historians to overestimate the ubiquity of paper money in colonial America.

Means of Payment – Book Credit

While simple “cash-and-carry” transactions sometimes occurred most purchases involved at least short-term book credit; Henry Laurens wrote that before the Revolution it had been “the practice to give credit for one and more years for 7/8th of the whole traffic” (Burnet, 1923, vol. 2, pp. 490-1). The buyer would receive goods and be debited on the seller’s books for an agreed amount in the local money of account. The debt would be extinguished when the buyer paid the seller either in the local medium of exchange or in equally valued goods or services acceptable to the seller. When it was mutually agreeable the debt could be and often was paid in ways that nowadays seem very unorthodox – with the delivery of chickens, or a week’s work fixing fences on land owned by the seller. The debt might be paid at one remove, by the buyer fixing fences on land owned by someone to whom the seller was himself indebted. Accounts would then be settled among the individuals involved. Account books testify to the pervasiveness of this system, termed “bookkeeping barter” by Baxter. Baxter examined the accounts of John Hancock and his father Thomas Hancock, both prominent Boston merchants, whose business dealings naturally involved an atypically large amount of cash. Even these gentlemen managed most of their transactions in such a way that no cash ever changed hands (Baxter, 1965; Plummer, 1942; Soltow, 1965, pp. 124-55; Forman, 1969).

An astonishing array of goods and services therefore served by mutual consent at some time or other to extinguish debt. Whether these goods ought all to be classified as “money” is doubtful; they certainly lacked the liquidity and universal acceptability in exchange that ordinarily defines money. At certain times and in certain colonies, however, specific commodities came to be so widely used in transactions that they might appropriately be termed money. Specie, of course, was such a commodity, but its worldwide acceptance as money made it special, so it is convenient to set it aside for a moment and focus on the others.

Means of Payment – Commodity Money

At various times and places in the colonies such items as tobacco, rice, sugar, beaver skins, wampum, and country pay all served as money. These items were generally accorded a special monetary status by various acts of colonial legislatures. Whether the legislative fiat was essential in monetizing these commodities or whether it simply acknowledged the existing state of affairs is open to question. Sugar was used in the British Caribbean, tobacco was used in the Chesapeake, and rice in South Carolina, each being the central product of their respective plantation economies. Wampum signifies the stringed shells used by the Indians as money before the arrival of European settlers. Wampum and beaver skins were commonly used as money in the northern colonies in the early stages of settlement when the fur trade and Indian trade were still mainstays of the local economy (Nettels, 1928, 1934; Fernow, 1893; Massey, 1976; Brock, 1975, pp. 9-18).

Country pay is more complicated. Where it was used, country pay consisted of a hodgepodge of locally produced agricultural commodities that had been monetized by the colonial legislature. A list of commodities, such as Indian corn, beef, pork, etc. were assigned specific monetary values (so many s. per bushel or barrel), and debtors were permitted by statute to pay certain debts with their choice of these commodities at nominal values set by the colonial legislature.7 In some instances country pay was declared a legal tender for all private debts although contracts explicitly requiring another form of payment might be exempted (Gottfried, 1936; Judd, 1905, pp. 94-96). Sometimes country pay was only a legal tender in payment of obligations to the colonial or town governments. Even where country pay was a legal tender only in payment of taxes it was often used in private transactions and even served as a unit of account. Probate inventories from colonial Connecticut, where country pay was widely used, are generally denominated in country pay (Main and Main, 1988).8

There were predictable difficulties where commodity money was used. A pound in “country pay” was simply not worth a pound in cash even as that cash was valued locally. The legislature sometimes overvalued agricultural commodities in setting their nominal prices. Even when the legislature’s prices were not biased in favor of debtors the debtor still had the power to select the particular commodity tendered and had some discretion over the quality of that commodity. In late 17th century Massachusetts the rule of thumb used to convert country pay to cash was that three pounds in country pay were worth two pounds cash (Republicæ, 1731, pp. 376, 390).9 Even this formula seems to have overvalued country pay. When a group of men seeking to rent a farm in Connecticut offered Boston merchant Thomas Bannister £22 of country pay in 1700, Bannister hesitated. It appears Bannister wanted to be paid £15 per annum in cash. Country pay was “a very uncertain thing,” he wrote. Some years £22 in country pay might be worth £10, some years £12, but he did not expect to see a day when it would fetch fifteen.10 Savvy merchants such as Bannister paid careful attention to the terms of payment. An unwary trader could easily be cheated. Just such an incident occurs in the comic satirical poem “The Sotweed Factor.” Sotweed is slang for tobacco, and a factor was a person in America representing a British merchant. Set in late seventeenth-century Maryland, the poem is a first-person account of the tribulations and humiliations a newly-arrived Briton suffers while seeking to enter the tobacco trade. The Briton agrees with a Quaker merchant to exchange his trade goods for ten thousand weight of oronoco tobacco in cask and ready to ship. When the Quaker fails to deliver any tobacco, the aggrieved factor sues him at the Annapolis court, only to discover that his attorney is a quack who divides his time between pretending to be a lawyer and pretending to be a doctor and that the judges have to be called away from their Punch and Rum at the tavern to hear his case. The verdict?

The Byast Court without delay,
Adjudg’d my Debt in Country Pay:
In Pipe staves, Corn, or Flesh of Boar,
Rare Cargo for the English Shoar.

Thus ruined the poor factor sails away never to return. A footnote to the reader explains “There is a Law in this Country, the Plaintiff may pay his Debt in Country pay, which consists in the produce of the Plantation” (Cooke, 1708).

By the middle of the eighteenth century commodity money had essentially disappeared in northern port cities, but still lingered in the hinterlands and plantation colonies. A pamphlet written in Boston in 1740 observed “Look into our British Plantations, and you’ll see [commodity] Money still in Use, As, Tobacco in Virginia, Rice in South Carolina, and Sugars in the Islands; they are the chief Commodities, used as the general Money, Contracts are made for them, Salaries and Fees of Office are paid in them, and sometimes they are made a lawful Tender at a yearly assigned Rate by publick Authority, even when Silver was promised” (Vance, 1740, CCR III, p. 396). North Carolina was an extreme case. Country pay there continued as a legal tender even in private debts. The system was amended in 1754 and 1764 to require rated commodities to be delivered to government warehouses and be judged of acceptable quality at which point warehouse certificates were issued to the value of the goods (at mandated, not market prices): these certificates were a legal tender (Bullock, 1969, pp. 126-7, 157).

Means of Payment – Bills of Credit

Cash came in two forms: full-bodied specie coins (usually Spanish or Portuguese) and paper money known as “bills of credit.” Bills of credit were notes issued by provincial governments that were similar in many ways to modern paper money: they were issued in convenient denominations, were often a legal tender in the payment of debts, and routinely passed from man to man in transactions.11 Bills of credit were ordinarily put into circulation in one of two ways. The most common method was for the colony to issue bills to pay its debts. Bills of credit were originally designed as a kind of tax-anticipation scrip, similar to that used by many localities in the United States during the Great Depression (Harper, 1948). Therefore when bills of credit were issued to pay for current expenditures a colony would ordinarily levy taxes over the next several years sufficient to call the bills in so they might be destroyed.12 A second method was for the colony to lend newly printed bills on land security at attractive interest rates. The agency established to make these loans was known as a “land bank” (Thayer, 1953).13 Bills of credit were denominated in the £., s., and d. of the colony of issue, and therefore were usually the only form of money in circulation that was actually denominated in the local unit of account.14

Sometimes even the bills of credit issued in a colony were not denominated in the local unit of account. In 1764 Maryland redeemed its Maryland-pound-denominated bills of credit and in 1767 issued new dollar-denominated bills of credit. Nonetheless Maryland pounds, not dollars, remained the predominant unit of account in Maryland up to the Revolution (Michener and Wright, 2006a, p. 34; Grubb; 2006a, pp. 66-67; Michener and Wright, 2006c, p. 264). The most striking example occurred in New England. Massachusetts, Connecticut, New Hampshire, and Rhode Island all had, long before the 1730s, emitted paper money in bills of credit known as “old tenor” bills of credit, and “old tenor” had become the most commonly-used unit of account in New England. The old tenor bills of all four colonies passed interchangeably and at par with one another throughout New England.

Beginning in 1737, Massachusetts introduced a new kind of paper money known as “new tenor.” New tenor can be thought of as a monetary reform that ultimately failed to address underlying issues. It also served as a way of evading a restriction the Board of Trade had placed on the Governor of Massachusetts that limited him to emissions of not more than £30,000. The Massachusetts assembly declared each pound of the new tenor bills to be worth £3 in old tenor bills. What actually happened is that old tenor (abbreviated in records of the time as “O.T.”) continued to be the unit of account in New England, and so long as the old bills continued to circulate, a decreasing portion of the medium of exchange. Each new tenor bill was reckoned at three times its face value in old tenor terms. This was just the beginning of the confusion, for yet newer Massachusetts “new tenor” emissions were created, and the original “new tenor” emission became known as the “middle tenor.”15 The new “new tenor” bills emitted by Massachusetts were accounted in old tenor terms at four times their face value. These bills, like the old ones, circulated across colony borders throughout New England. As if this were not complicated enough, New Hampshire, Rhode Island, and Connecticut all created new tenor emission of their own, and the factors used to convert these new tenor bills into old tenor terms varied across colonies (Davis, 1970; Brock, 1975; McCusker, pp. 131-137). Connecticut, for instance, had a new tenor emission such that each new tenor bill was worth 3½ times its face value in old tenor (Connecticut, vol. 8, pp. 359-60; Brock, 1975, pp. 45-6). “They have a variety of paper currencies in the [New England] provinces; viz., that of New Hampshire, the Massachusetts, Rhode Island, and Connecticut,” bemoaned an English visitor, “all of different value, divided and subdivided into old and new tenors, so that it is a science to know the nature and value of their moneys, and what will cost a stranger some study and application” (Hamilton, 1907, p. 179). Throughout New England, however, Old Tenor remained the unit of account. “The Price of [provisions sold at Market],” a contemporary pamphlet noted, “has been constantly computed in Bills of the old Tenor, ever since the Emission of the middle and new Tenor Bills, just as it was before their Emission, and with no more Regard to or Consideration of either the middle or new Tenor Bills, than if they had never been emitted” (Enquiry, 1744, CCR IV, p. 174). This occurred despite the fact that by 1750 only an inconsiderable portion of the bills of credit in circulation were denominated in old tenor.16

For the most part, bills of credit were fiat money. Although a colony’s treasurer would often consent to exchange these bills for other forms of cash in the treasury, there was rarely a provision in the law stating that holders of bills of credit had a legally binding claim on the government for a fixed sum in specie, and treasurers were sometimes unable to accommodate people who wished to exchange money (Nicholas, 1912, p. 257; The New York Mercury, January 27, 1759, November 24, 1760).17 The form of the bills themselves was sometimes misleading in this respect. It was not uncommon for the bills to be inscribed with an explicit statement that the bill was worth a certain sum in silver. This was often no more than an expression of the assembly’s hope, at the time of issuance, of how the bills would circulate.18 Colonial courts sometimes allowed inhabitants to pay less to royal officials and proprietors by valuing bills of credit used to pay fees, dues, and quit rents according to their “official” rather than actual specie values. (Michener and Wright, 2006c, p. 258, fn. 5; Hart, 2005, pp. 269-71).

Maryland’s paper money was unique. Maryland’s paper money – unlike that of other colonies – gave the possessor an explicit legal claim on a valuable asset. Maryland had levied a tax and invested the proceeds of the tax in London. It issued bills of credit promising a fixed sum in sterling bills of exchange at predetermined dates, to be drawn on the colony’s balance in London. The colony’s accrued balances in London were adequate to fund the redemption, and when redemption dates arrived in 1748 and 1764 the sums due were paid in full so the colony’s pledge was considered credible.

Maryland’s paper money was unique in other ways as well. Its first emission was put into circulation in a novel fashion. Of the £90,000 emitted in 1733, £42,000 was lent to inhabitants, while the other £48,000 was simply given away, at the rate of £1.5 per taxable (McCusker, 1978, pp. 190-196; Brock, 1975, chapter 8; Lester, 1970, chapter 5). Maryland’s paper money was so peculiar that it is unrepresentative of the colonial experience. This was recognized even by contemporaries. Hugh Vance, in the Postscript to his Inquiry into the Nature and Uses of Money, dismissed Maryland as “intirely out of the Question; their Bills being on the Foot of promissory Notes” Vance, 1740, CCR III, p. 462).

In 1690, Massachusetts was the first colony to issue bills of credit (Felt, 1839, pp. 49-52; Davis, 1970, vol. 1, chapter 1; Goldberg, 2009).19 The bills were issued to pay soldiers returning from a failed military expedition against Quebec. Over time, the rest of the colonies followed suit. The last holdout was Virginia, which issued its first bills of credit in 1755 to defray expenses associated with its entry into the French and Indian War (Brock, 1975, chapter 9). The common denominator here is wartime finance, and it is worthwhile to recognize that the vast majority of the bills of credit issued in the colonies were issued during wartime to pay for pressing military expenditures. Peacetime issues did occur and are in some respects quite interesting as they seem to have been motivated in part by a desire to stimulate the economy (Lester, 1970). However, peacetime emissions are dwarfed by those that occurred in war.20 Some historians enamored of the land bank system, whereby newly emitted bills were lent to landowners in order to promote economic development, have stressed the economic development aspect of colonial emissions – particularly those of Pennsylvania – while minimizing the military finance aspect (Schweitzer, 1989, pp. 313-4). The following graph, however, illustrates the fundamental importance of war finance; the dramatic spike marks the French and Indian War (Brock, 1992, Tables 4, 6).



That bills in circulation peaked in 1760 reflects the fact that Quebec fell in 1759 and Montreal in 1760, so that the land war in North America was effectively over by 1760.

Because bills were disproportionally emitted for wartime finance it is not surprising that the colonies whose currencies depreciated due to over-issue were those who shared a border with a hostile neighbor – the New England colonies bordering French Canada and the Carolinas bordering Spanish Florida.21 The colonies from New York to Virginia were buffered by their neighbors and therefore issued no more than modest amounts of paper money until they were drawn into the French and Indian War, by which time their economies were large enough to temporarily absorb the issues.

It is important not to confuse the bills of credit issued by a colony with the bills of credit circulating in that colony. “Under the circumstances of America before the war,” a Maryland resident wrote in 1787, “there was a mutual tacit consent that the paper of each colony should be received by its neighbours” (Hanson, 1787, p. 24).22 Between 1710 and 1750, the currencies of Massachusetts, Connecticut, New Hampshire, and Rhode Island passed indiscriminately and at par with one another in everyday transactions throughout New England (Brock, 1975, pp. 35-6). Although not quite so integrated a currency area as New England the colonies of New York, Pennsylvania, New Jersey, and Delaware each had bills of credit circulating within its neighbors’ borders (McCusker, 1978, pp. 169-70, 181-182). In the early 1760s, Pennsylvania money was the primary medium of exchange in Maryland (Maryland Gazette, September 15, 1763; Hazard, 1852, Eighth Series, vol. VII, p. 5826; McCusker, 1978, p. 193). In 1764 one quarter of South Carolina’s bills of credit circulated in North Carolina and Georgia (Ernst, 1973, p. 106). Where the currencies of neighboring colonies were of equal value, as was the case in New England between 1710 and 1750, bills of credit of neighboring colonies could be credited and debited in book accounts at face value. When this was not the case, as when Pennsylvania, Connecticut, or New Jersey bills of credit were used to pay a debt in New York, an adjustment had to be made to convert these sums to New York money. The conversion was usually based on the par values assigned to Spanish dollars by each colony. Indeed, this was also how merchants generally handled intercolonial exchange transactions (McCusker, 1978, p. 123). For example, on the eve of the Revolution a Spanish dollar was rated at 7 s. 6 d. in Pennsylvania money and at 8 s. in New York money. The ratio of eight to seven and a half being equal to 1.06666, Pennsylvania bills of credit were accepted in New York at a 6 and 1/3% advance (Stevens, 1867, pp. 10-11, 18). Connecticut rated the Spanish dollar at 6 s., and because the ratio of eight to six is 1.333, Connecticut bills of credit were accepted at a one third advance in New York (New York Journal, July 13, 1775). New Jersey’s paper money was a peculiar exception to this rule. By the custom of New York’s merchants, New Jersey bills of credit were accepted for thirty years or more at an advance of one pence in the shilling, or 8 and 1/3%, even though New Jersey rated the Spanish dollar at 7 s, 6 d., just as Pennsylvania did. The practice was controversial in New York, and the advance was finally reduced to the “logical” 6 and 2/3% advance by an act of the New York assembly in 1774.23

Means of Payment – Foreign Specie Coins

Specie coins were the other kind of cash that commonly circulated in the colonies. Few specie coins were minted in the colonies. Massachusetts coined silver “pine tree shillings” between 1652 and the closing of the mint in the early 1680s. This was the only mint of any size or duration in the colonies, although minting of small copper coins and tokens did occur at a number of locations (Jordan, 2002; Mossman, 1993). Colonial coinage is interesting numismatically, but economically it was too slight to be of consequence. Most circulating specie was minted abroad. The gold and silver coins circulating in the colonies were generally of Spanish or Portuguese origin. Among the most important of these coins were the Portuguese Johannes and moidore (more formally, the moeda d’ouro) and the Spanish dollar and pistole. The Johanneses were gold coins, 8 escudos (12,800 reis) in denomination; their name derived from the obverse of the coin, which bore the bust of Johannes V. Minted in Portugal and Brazil they were commonly known in the colonies as “joes.” The fractional denominations were 4 escudo and 2 escudo coins of the same origin. The 4 escudo (6,400 reis) coin, or “half joe,” was one of the most commonly used coins in the late colonial period. The moidore was another Portuguese gold coin, 4,000 reis in denomination. That these coins were being used as a medium of exchange in the colonies is not so peculiar as it might appear. Raphael Solomon (1976, p. 37) noted that these coins “played a very active part in international commerce, flowing in and out of the major seaports in both the Eastern and Western Hemispheres.” In the late colonial period the mid-Atlantic colonies began selling wheat and flour to Spain and Portugal “for which in return, they get hard cash” (Lydon, 1965; Virginia Gazette, January 12, 1769; Brodhead, 1853, vol. 8, p. 448).

The Spanish dollar and its fractional parts were, in McCusker’s (1978, p. 7) words, “the premier coin of the Atlantic world in the seventeenth and eighteenth centuries.” Well known and widely circulated throughout the world, its preeminence in colonial North America accounts for the fact that the United States uses dollars, rather than pounds, as its unit of account. The Spanish pistole was the Spanish gold coin most often encountered in America. While these coins were the most common, many others also circulated there (Solomon, 1976; McCusker, 1978, pp. 3-12).

Alongside the well-known gold and silver coins were various copper coins, most notably the English half-pence, that served as small change in the colonies. Fractional parts of the Spanish dollar and the pistareen, a small silver coin of base alloy, were also commonly used as change.24

None of these foreign specie coins were denominated in local currency units, however. One needed a rule to determine what a particular coin, such as a Spanish dollar, was worth in the £., s., and d. of local currency. Because foreign specie coins were in circulation long before any of the colonies issued paper money setting a rating on these coins amounted to picking a numeraire for the economy; that is, it defined what one meant by a pound of local currency. The ratings attached to individual coins were not haphazard: They were designed to reflect the relative weight and purity of the bullion in each coin as well as the ratio of gold to silver prices prevailing in the wider world.

In the early years of colonization these coin values were set by the colonial assemblies (Nettels, 1934, chap. 9; Solomon, 1976, pp. 28-29; John Hemphill, 1964, chapter 3). In 1700 Pennsylvania passed an act raising the rated value of its coins, causing the Governor of Maryland to complain to the Board of Trade of the difficulties this created in Maryland. He sought the Board’s permission for Maryland to follow suit. When the Board investigated the matter it concluded that the “liberty taken in many of your Majesty’s Plantations, to alter the rates of their coins as often as they think fit, does encourage an indirect practice of drawing the money from one Plantation to another, to the undermining of each other’s trade.” In response they arranged for the disallowance of the Pennsylvania act and a royal proclamation to put an end to the practice.25

Queen Anne’s proclamation, issued in 1704, prohibited a Spanish dollar of 17½ dwt. from passing for more than 6 s. in the colonies. Other current foreign silver coins were rated proportionately and similarly prohibited from circulating at a higher value. This particular rating of coins became known as “proclamation money.”26 It might seem peculiar that the// proclamation did not dictate that the colonies adopt the same ratings as prevailed in England. The Privy Council, however, had incautiously approved a Massachusetts act passed in 1697 rating Spanish dollars at 6 s., and attorney general Edward Northey felt the act could not be nullified by proclamation. This induced the Board of Trade to adopt the rating of the Massachusetts act.27

Had the proclamation been put into operation its effects would have been extremely deflationary because in most colonies coins were already passing at higher rates. When the proclamation reached America only Barbados attempted to enforce it. In New York Governor Lord Cornbury suspended its operation and wrote the Board of Trade that he could not enforce it in New York while it was being ignored in neighboring colonies as New York would be “ruined beyond recovery” if he did so (Brodhead, 1853, vol. 4, pp. 1131-1133; Brock, 1975, chapter 4). A chorus of such responses led the Board of Trade to take the matter to Parliament in hopes of enforcing a uniform compliance throughout America (House of Lords, 1921, pp. 302-3). On April 1, 1708, Parliament passed “An Act for ascertaining the Rates of foreign Coins in her Majesty’s Plantations in America” (Ruffhead, vol. 4, pp. 324-5). The act reiterated the restrictions embodied in Queen Anne’s Proclamation, and declared that anyone “accounting, receiving, taking, or paying the same contrary to the Directions therein contained, shall suffer six Months Imprisonment . . . and shall likewise forfeit the Sum of ten Pounds for every such Offence . . .”

The “Act for ascertaining the Rates of foreign Coins” never achieved its desired aim. In the colonies it was largely ignored, and business continued to be conducted just as if the act had never been passed. Pennsylvania, it was true, went though a show of complying but even that lapsed after a while (Brock, 1975, chapter 4). What the act did do, however, was push the process of coin rating into the shadows because it was no longer possible to address it in an open way by legislative enactment. Laws that passed through colonial legislatures (certain charter and proprietary colonies excepted) were routinely reviewed by the Privy Council, and if found to be inconsistent with British law, were declared null and void.

Two avenues remained open to alter coin ratings – private agreements among merchants that would not be subject to review in London, and a legislative enactment so stealthy as to slip through review unnoticed. New York was the first to succeed using stealth. In November 1709 it emitted bills of credit “for Tenn thousand Ounces of Plate or fourteen Thousand Five hundred & fourty five Lyon Dollars” (Lincoln, 1894, vol. 1, chap. 207, pp. 695-7). The Lyon dollar was an obscure silver coin that had escaped being explicitly mentioned in the enumeration of allowable values that had accompanied Queen Anne’s proclamation. Since 15 years previously New York had rated the Lyon dollar at 5 s. 6 d., it was generally supposed that that rating was still in force (Solomon, 1976, p. 30). The value of silver implied in the law’s title is 8 s. an ounce – a value higher than allowed by Parliament. Until 1723, New York’s emission acts contained clauses designed to rate an ounce of silver at 8 s. The act in 1714, for instance, tediously enumerated the denominations of the bills to be printed, in language such as “Five Hundred Sixty-eight Bills, of Twenty-five Ounces of Plate, or Ten Pounds value each” (Lincoln, 1894, vol. 1, chap. 280, pp. 819). When the Board of Trade finally realized what New York was up to it was too late: the earlier laws had already been confirmed. When the Board wrote Governor Hunter to complain, he replied, in part, “Tis not in the power of men or angels to beat the people of this Continent out of a silly notion of their being gainers by the Augmentation of the value of Plate” (Brodhead, vol. 5, p. 476). These colony laws were still thought to be in force in the late colonial period. Gaine’s New York Pocket Almanack for 1760 states that “Spanish Silver . . . here ‘tis fixed by Law at 8 s. per Ounce, but is often sold and bought from 9 s. to 9 s. and 3 d.”

In 1753 Maryland also succeeded using stealth, including revised coin ratings inconsistent with Queen Anne’s proclamation in “An Act for Amending the Staple of Tobacco, for Preventing Fraud in His Majesty’s Customs, and for the Limitation of Officer’s Fees” (McCusker, 1978, p. 192).

The most common subterfuge was for a colony’s merchants to meet and agree on coin ratings. Once the merchants agreed on such ratings, the colonial courts appear to have deferred to them, which is not surprising in light of the fact that many judges and legislators were drawn from the merchants’ ranks (e.g. Horle, 1991). These private agreements effectively nullified not only the act of Parliament but also local statutes, such as those rating silver in New York at 8 s. an ounce. Records of many such agreements have survived.28 There is also testimony that these agreements were commonplace. Lewis Morris remarked that “It is a common practice … [for] the merchants to put what value they think fit upon Gold and Silver coynes current in the Plantations.” When the Philadelphia merchants published a notice in the Pennsylvania Gazette of September 16, 1742 enumerating the values they had agreed to put on foreign gold and silver coins, only the brazenness of the act came as a surprise to Morris. “Tho’ I believe by the merchants private Agreements amongst themselves they have allwaies done the same thing since the Existence of A paper currency, yet I do not remember so publick an instance of defying an act of parliament” (Morris, 1993, vol. 3, pp. 260-262, 273). These agreements, when backed by a strong consensus among merchants, seem to have been effective. Decades later, Benjamin Franklin (1959, vol. 14, p. 232) recollected how the agreement that had offended Morris “had a great Effect in fixing the Value and Rates of our Gold and Silver.”

After the New York Chamber of Commerce was founded in 1768, merchant deliberations on these agreements were recorded. During this period, the coin ratings in effect in New York were routinely published in almanacs, particularly Gaine’s New-York pocket almanac. When the New York Chamber of Commerce resolved to change the rating of coins and the minimum allowable weight for guineas the almanac values changed immediately to reflect those adopted by the Chamber (Stevens, 1867, pp. 56-7. 69).29


The coin rating table above, reproduced from The New-York Pocket Almanack for the Year 1771 shows how coin-rating worked in practice in the late colonial period. (Note the reference to the deliberations of the Chamber of Commerce.) It shows, for instance, that if you tendered a half joe in payment of debt in Pennsylvania, you would be credited with having paid £3 Pennsylvania money. If the same half joe were tendered in payment of a debt in New York you would be credited with having paid £ 3 4 s. New York money. In Connecticut it would have been £2 8 s. Connecticut money.30

The colonists possessed no central bank and colonial treasurers, however willing they might have been to exchange paper for specie, sometimes found themselves without the means to do so. That these coin ratings were successfully maintained for decades on end was a testament to the public’s faith in the bills of credit, which made them willing to voluntarily exchange them for specie at the established rate. Writing in 1786 and attempting to explain why New Jersey’s colonial bills of credit had retained their value, “Eugenio” attributed their success to the fact that it possessed what he called “the means of instant realization at value.” This awkward phrase signified the bills were instantly convertible at par. “Eugenio” went on to explain why:

“It is true that government did not raise a sum of coin and deposit the same in the treasury to exchange the bills on demand; but the faith of the government, the opinion of the people, and the security of the fund formerly by a well-timed and steady policy, went so hand in hand and so concurred to support each other, that the people voluntarily and without the least compulsion threw all their gold and silver, not locking up a shilling, into circulation concurrently with the bills; whereby the whole coin of the government became forthwith upon an emission of paper, a bank of deposit at every man’s door for the instant realization or immediate exchange of his bill into gold or silver. This had a benign and equitable, a persuasive, a satisfactory, and an extensive influence. If any one doubted the validity or price of his bill, his neighbor immediately removed his doubts by exchanging it without loss into gold or silver. If any one for a particular purpose needed the precious metals, his bill procured them at the next door, without a moment’s delay or a penny’s diminution. So high was the opinion of the people raised, that often an advance was given for paper on account of the convenience of carriage. In the market as well as in the payment of debts, the paper and the coin possessed a voluntary, equal, and concurrent circulation, and no special contract was made which should be paid or whether they should be received at a difference. By this instant realization and immediate exchange, the government had all the gold and silver in the community as effectually in their hands as if those precious metals had all been locked up in their treasury. By this realization and exchange they could extend credit to any degree it was required. The people could not be induced to entertain a doubt of their paper, because the government had never failed them in a single instance, either in war or in peace (New Jersey Gazette, January 30, 1786).”

Insofar as colonial bills of credit were convertible on demand into specie at the rated specie value of coins, there is no mystery as to why those bills of credit maintained their value. How merchants maintained and enforced such accords, however, is relatively inscrutable. Some economists are incredulous that private associations of merchants could accomplish the feat. The best evidence on this question can be found in a pamphlet by a disgruntled inhabitant complaining of the actions of a merchants’ association in Antigua (Anon., 1740), which provides a tantalizing glimpse of the methods merchants used.

Means of Payment – Private debt instruments

This leaves private debt instruments, such as bank notes, bills of exchange, notes of hand, and shop notes. It is sometimes asserted that there were no banks in colonial America, but this is something of an overstatement. There were several experiments made and several embryonic private banks actually got notes into circulation. Andrew McFarland Davis devoted an entire volume to banking in colonial New England (Davis, 1970, vol. 2; Perkins 1991 ). Perhaps the most successful bank of the era was established in South Carolina in 1731. It apparently issued notes totaling £50,000 South Carolina money and operated successfully for a decade.31 However, the banks that did exist did not last long enough or succeed in putting enough notes in circulation for us to be especially concerned about them.

Bills of exchange were similar to checks. A hypothetical example will illustrate how they functioned. The process of creating a bill of exchange began when someone obtained a balance on account overseas (in the case of the colonies, that place was often London). Suppose a Virginia tobacco producer consigned his tobacco to be sold in England, with the sterling proceeds to remain temporarily in the hands of a London merchant. The Virginia planter could then draw on those funds, by writing a bill of exchange payable in London. Suppose further that the planter drew a bill of exchange on his London correspondent, and sold it to a Virginia merchant, who then transmitted it to London to pay a balance due on imported dry goods. When the bill of exchange reached London, the dry goods wholesaler who received it would call on the London merchant holding the funds in order to receive the payment specified in the bill of exchange.

Bills of exchange were widely used in foreign trade, and were the preferred and most common method for paying debts due overseas. Because of the nature of the trade they financed, bills of exchange were usually in large denominations. Also, because bills of exchange were drawn on particular people or institutions overseas, there was an element of risk involved. Perhaps the person drawing the bill was writing a bad check, or perhaps the person on whom the bill was drawn was himself a deadbeat. One needed to be confident of the reputations of the parties involved when purchasing a bill of exchange. Perhaps because of their large denominations and the asymmetric information problems involved, bills of exchange played a limited role as a medium of exchange in the inland economy (McCusker, 1978, especially pp. 20-21).

Small denomination IOUs, called “notes of hand” were widespread, and these were typically denominated in local currency units. For the most part, these were not designed to circulate as a medium of exchange. When someone purchased goods from a shopkeeper on credit, the shopkeeper would generally get a “note of hand” as a receipt. In the court records in the Connecticut archives, one can find the case files for countless colonial-era cases where an individual was sued for nonpayment of a small debt.32 The court records generally include a note of hand entered as evidence to prove the debt. Notes of hand sometimes were proffered to third parties in payment of debt, however, particularly if the issuer was a person of acknowledged creditworthiness (Mather, 1691, p. 191). Some individuals of modest means created notes of hand in small denominations and attempted to circulate them as a medium of exchange; in Pennsylvania in 1768, a newspaper account stated that 10% of the cash offered in the retail trade consisted of such notes (Pennsylvania Chronicle, October 12, 1768; Kimber, 1998, p. 53). Indeed, many private banking schemes, such as the Massachusetts merchants’ bank, the New Hampshire merchants’ bank, the New London Society, and the Land Bank of 1740 were modeled on private notes of hand, and each consisted of an association designed to circulate such notes on a large scale. For the most part, however, notes of hand lacked the universal acceptability that would have unambiguously qualified them as money.

Shop notes were “notes of hand” of a particular type and seem to have been especially widespread in colonial New England. The twentieth-century analogue to shop notes would be scrip issued by an employer that could be used for purchases at the company store.33 Shop notes were I.O.U.s of local shopkeepers, redeemable through the shopkeeper. Such an I.O.U. might promise, for example, £6 in local currency value, half in money and half in goods (Weeden, 1891, vol. 2, p. 589; Ernst, 1990). Hugh Vance described the origins of shop notes in a 1740 pamphlet:

“… by the best Information I can have from Men of Credit then living, the Fact is truly this, viz. about the Year 1700, Silver-Money became exceedingly scarce, and the Trade so embarassed, that we begun to go into the Use of Shop-Goods, as the Money. The Shopkeepers told the Tradesmen, who had Draughts upon them from the Merchants for all Money, that they could not pay all in Money (and very truly) and so by Degrees brought the Tradesmen into the Use of taking Part in Shop-Goods; and likewise the Merchants, who must always follow the natural Course of Trade, were forced into the Way of agreeing with Tradesmen, Fishermen, and others; and also with the Shopkeepers, to draw Bills for Part and sometimes for all Shop-Goods (Vance, 1740, CCR III, pp. 390-91).”

Vance’s account seems accurate in all respects save one. Merchants played an active role in introducing shop notes into circulation. By the 1740s shop notes had been much abused, and it was disingenuous of Vance (himself a merchant) to suggest that merchants had had the system thrust upon them by shopkeepers. Merchants used shop notes to expedite sales and returns. The merchant might contact a shopkeeper and a shipbuilder. The shipbuilder would build a ship for the merchant, the ship to be sent to England and sold as a way of making returns. In exchange the merchant would provide the builder with shop notes and the shopkeeper with imported goods. The builder used the shop notes to pay his workers. The shop notes, in turn, were redeemed at the shop of the shopkeeper when presented to him by workers (Boston Weekly Postboy, December 8, 1740). Thomas Fitch tried to interest an English partner in just such a scheme in 1710:

“Realy it’s extream difficult to raise money here, for goods are generally Sold to take 1/2 money & 1/2 goods again out of the buyers Shops to pay builders of Ships [etc?] which is a great advantage in the readier if not higher sale of goods, as well as that it procures the Return; Wherefore if we sell goods to be paid in money we must give long time or they will not medle (Fitch, 1711, to Edward Warner, November 22, 1710).”

Like other substitutes for cash, shop notes were seldom worth their stated values. A 1736 pamphlet, for instance, reported wages to be 6s in bills of credit, or 7s if paid in shop notes (Anonymous, 1736, p. 143). One reason shop notes failed to remain at par with cash is that shopkeepers often refused to redeem them except with merchandise of their own choosing. Another abuse was to interpret money to mean British goods; half money, half goods often meant no money at all.34


Colonial bills of credit were controversial when they were first issued, and have remained controversial to this day. Those who have wanted to highlight the evils of inflation have focused narrowly on the colonies where the bills of credit depreciated most dramatically – those colonies being New England and the Carolinas, with New England being a special focus because of the wealth of material that exists concerning New England history. When Hillsborough drafted a report for the Board of Trade intended to support the abolition of legal tender paper money in the colonies he rested his argument on the inflationary experiences of these colonies (printed in Whitehead, 1885, vol. IX, pp. 405-414). Those who have wanted to defend the use of bills of credit in the colonies have focused on the Middle colonies, where inflation was practically nonexistent. This tradition dates back at least to Benjamin Franklin (1959, vol. 14, pp. 77-87), who drafted a reply to the Board of Trade’s report in an effort to persuade Parliament to repeal of the Currency Act of 1764. Nineteenth-century authors, such as Bullock (1969) and Davis (1970), tended to follow Hillsborough’s lead whereas twentieth-century authors, such as Ferguson (1953) and Schweitzer (1987), followed Franklin’s.

Changing popular attitudes towards inflation have helped to rehabilitate the colonists. Whereas inflation in earlier centuries was rare, and even the mild inflation suffered in England between 1797 and 1815 was sufficient to stir a political uproar, the twentieth century has become inured to inflation. Even in colonial New England between 1711 and 1749, which was thought to have done a disgraceful job in managing its bills of credit, peacetime inflation was only about 5% per annum. Inflation during King George’s War was about 35% per annum.35

Nineteenth-century economists were guilty of overgeneralizing based on the unrepresentative inflationary experiences and associated debtor-creditor conflicts that occurred in a few colonies. Some twentieth-century economists, however, have swung too far in the other direction by generalizing on the basis of the success of the system in the Middle colonies and by attributing the benign outcomes there to the fundamental soundness of the system and its sagacious management. It would be closer to the truth, I believe, to note that the virtuous restraint exhibited by the Middle colonies was imposed upon them. Emissions in these colonies were sometimes vetoed by royal authorities and frequently stymied by instructions issued to royal or proprietary governors. The success of the Middle colonies owes much to the simple fact that they did not exert themselves in war to the extent that their New England neighbors did and that they were not permitted to freely issue bills of credit in peacetime.

A recent controversy has developed over the correct answer to the question – Why did some bills of credit depreciate, while others did not? Many early writers took it for granted that the price level in a colony would vary proportionally with the number of bills of credit the colony issued. This assumption was mocked by Ernst (1973, chapter 1) and devastated by West (1978). West performed simple regressions relating the quantity of bills of credit outstanding to price indices where such data exist. For most colonies he found no correlation between these variables. This was particularly striking because in the Middle colonies there was a dramatic increase in the quantity of bills of credit outstanding during the French and Indian War, and a dramatic decrease afterwards. Yet this large fluctuation seemed to have little effect on the purchasing power of those bills of credit as measured by prices of bills of exchange and the imperfect commodity price indices we possess. Only in New England in the first half of the eighteenth century did there seem to be a strong correlation between bills of credit outstanding and prices and exchange rates. Officer (2005) examined the New England episode and concluded that the quantity theory provides an adequate explanation in this instance, making the contrast with many other colonies (most notably, the Middle colonies) even more remarkable.

Seizing on West’s results Bruce Smith suggested that they disproved the quantity theory of money and provided evidence in favor of an alternative theory of money based on theoretical models of Wallace and Sargent, which Smith characterized as the “backing theory.”36 According to Smith (1985a, p. 534), the redemption provisions enacted when bills of credit were introduced into circulation on tax and loan funds were what prevented them from depreciating. “Just as the value of privately issued liabilities depends on the issuers’ balance sheet,” he wrote, “the same is true for government liabilities. Thus issues of money which are accompanied by increases in the (expected) discounted present value of the government’s revenues need not be inflationary.” One obvious problem with this theory is that the New England bills of credit which did depreciate were issued in exactly the same way. Smith’s answer was that the New England colonies administered their tax and loan funds poorly and New England’s poor administration accounted for the inflation experienced there.

Others who did not wholly agree with Smith – especially his sweeping refutation of the quantity theory – nonetheless pointed to the redemption provisions in explaining why bills of credit often retained their value (Wicker, 1985; Bernholz, 1988; Calomiris, 1988; Sumner, 1993; Rousseau, 2007). Of those who assigned credit to the redemption provisions, however, only Smith grappled with the key question; namely, why essentially identical redemption provisions failed to prevent inflation elsewhere.

Crediting careful administration of tax and loan funds for the steady value of some colonial currencies, and haphazard administration for the depreciation of others looks superficially appealing. The experiences of Pennsylvania and Rhode Island, generally thought to be the most and least successful issuers of colonial bills of credit, fit the hypothesis nicely. However, when one examines other cases, the hypothesis breaks down. Connecticut was generally credited with administering her bills of credit very carefully, yet they depreciated in lockstep with those of her New England neighbors for forty years (Brock, 1975, pp. 43-47). Virginia’s bills of credit retained their value even though Virginia’s colonial treasurer was discovered to have embezzled a sum equal to nearly half of Virginia’s total outstanding bills of credit and returned them to circulation (Michener, 1987, p. 247). North Carolina’s bills of credit held their value well in the late colonial period despite tax administration so notoriously corrupt it led to an armed revolt (Michener, 1987, pp. 248-9, Ernst, 1973, p. 221).

A competing explanation has been offered by Michener (1987, 1988), Brock (1992), McCallum (1992), and Michener and Wright (2006b). According to this explanation, the coin rating system operating in the colonies meant they were effectively on a specie standard with a de facto fixed par of exchange. Provided emissions of paper money did not exceed the amount needed for domestic purposes (“normal real balances,” in McCallum’s terminology) some specie would remain in circulation, prices would remain stable, and the fixed par could be maintained. Where emissions exceeded this bound specie would disappear from circulation and exchange rates would float freely, no longer tethered to the fixed par. Further emissions would cause inflation.37 This was said to account for inflation in New England after 1712, where specie did, in fact, completely disappear from circulation (Hutchinson, 1936, vol. 2, p. 154; Michener, 1987, pp. 288-94). If this explanation is correct, it would suggest that emissions of bills of credit ought to be offset by specie outflows, ceteris paribus.

Critics of the “specie circulated at rated values” explanation have frequently disregarded the ceteris paribus qualification and maintained that the theory implies specie flows always ought to be highly negatively correlated with changes in the quantity of bills of credit. This amounts to assuming the quantity of money demanded per capita in colonial America was nearly constant. If this were a valid test of the theory, one would be forced to reject it, because the specie stock fell little, if at all, in the Middle colonies in 1755-1760 as bills of credit increased, and when bills of credit began to decrease after 1760, specie became scarcer.

The flaw in critics’ reasoning, in my opinion, is that it assumes three unwarranted facts. First, that the demand for money, narrowly defined to mean bills of credit plus specie, was very stable despite the widespread use of bookkeeping barter; Second, that the absence of evidence of large interest rate fluctuations is evidence of the absence of large interest rate fluctuations (Smith, 1985b, pp. 1193, 1198; Letwin, 1982, p. 466); Third, that the opportunity cost of holding money is adequately measured by the nominal interest rate.38

With respect to the first point, colonial wars significantly influenced the demand for money. During peacetime, most transactions were handled by means of book credit. During major wars, however, many men served in the militia. Men in military service were paid in cash and taken far from the community in which their creditworthiness was commonly known, reducing both their need for book credit and their ability to obtain it. Moreover, it would have to give a shopkeeper pause and discourage him from advancing book credit to consider the real possibility that even his civilian customers might find themselves in the militia in the near future and gone from the local community, possibly forever. In each of the major colonial wars there is evidence suggesting an increase in cash real balances that could be attributed to the war’s impact on the book credit system. The increase in real money balances during the French and Indian War and the subsequent decrease can be largely accounted for in this way. With respect to the second point, fluctuations in the money supply are even compatible with a stable demand for money if periods when money is scarce are also periods when interest rates are high, as is also suggested by the historical record.39 It is true that the maximum interest rates specified in colonial usury laws are stable, generally in the range of 6%-8% per annum, often a bit lower late in the colonial era than at its beginning. This has been taken as evidence that colonial interest rates were stable. However, we know that these usury laws were commonly evaded and that market rates were often much higher (Wright, 2002, pp. 19-26). Some indication of how much higher became evident in the summer of 1768 when the Privy Council unexpectedly struck down New Hampshire’s usury law.40 News of the disallowance did not reach New Hampshire until the end of the year, at which time New Hampshire, having sunk the bills of credit issued to finance the French and Indian War during the 5 year interval permitted by the Currency Act of 1751, was in the throes of a liquidity crisis.41 Governor Wentworth reported to the Lords of Trade, that “Interest arose to 30 p. Ct. within six days of the repeal of the late Act.”42 By contrast, when cash was plentiful in Pennsylvania at the height of the French and Indian War, Pennsylvania’s “wealthy people were catching at every opportunity of letting out their money on good security, on common interest [that is, seven per cent].”43 With respect to the third point, the received theory that the nominal interest rate measures the opportunity cost of holding real money balances is derived from models in which individuals are free to borrow and lend at the nominal interest rate. Insofar as lenders respected the usury ceilings, borrowers were unable to borrow freely at the nominal interest rate. Recent work on moral hazard and adverse selection suggest that even private unregulated lenders forced to make loans in an environment characterized by seriously asymmetric information would be wise to ration loans by charging less than market clearing rates and limiting allowed borrowing. The creditworthiness of individuals was more difficult to determine in colonial times than today, and asymmetric information problems were rife. Under such circumstances, even an unregulated market rate of interest (if we had such data, which we don’t) would understate the opportunity cost of holding money for constrained borrowers.

The debate over why some colonial bills of credit depreciated, while others did not has spilled over into another related question: how much cash [i.e., paper money plus specie] circulated in the American colonies, and how much was in bills of credit, and how much was in specie? Clearly, if there was hardly any specie anywhere in colonial America, the concomitant circulation of specie at fixed rates could scarcely account for the stable purchasing power of bills of credit.

Determining how much cash circulated in the colonies is no easy matter, because the amount of specie in circulation is so hard to determine. The issue is further complicated by the fact that the total amount of cash in circulation fluctuated considerably from year to year, depending on such things as the demand for colonial staples and the magnitude of British military expenditure in the colonies (Sachs, 1957; Hemphill, 1964). The mix of bills of credit and specie in circulation was also highly variable. In the Middle colonies – and much of the most contentious debate involves the Middle colonies – the quantity of bills of credit in circulation was very modest (both absolutely and in per-capita terms) before the French and Indian War. The quantity exploded to cover military expenditures during the French and Indian War, and then fell again following 1760, until by the late colonial period, the quantity outstanding was once again very modest. Pennsylvania’s experience is not atypical of the Middle colonies. In 1754, on the eve of the French and Indian War, only £81,500 in Pennsylvania bills of credit were in circulation. At the height of the conflict, in 1760, this had increased to £446,158, but by 1773 the sum had been reduced to only £135,006 (Brock, 1992, Table 6). Any conclusion about the importance of bills of credit in the colonial money supply has to be carefully qualified because it will depend on the year in question.

Traditionally, economic historians have focused their attention on the eve of the Revolution, with a special focus on 1774, because of Alice Hanson Jones’s extensive study of 1774 probate records. Even with the inquiry dramatically narrowed, estimates have varied widely. McCusker and Menard (1985, p. 338), citing Alexander Hamilton for authority, estimated that just before the Revolution the “current cash” totaled 30 million dollars. Of the 30 million dollars, Hamilton said 8 million consisted of specie (27%). On the basis of this authority, Smith (1985a, p. 538; 1988, p. 22) has maintained that specie was a comparatively minor component in the colonial money supply.

Hamilton was arguing in favor of banks when he made this oft-cited estimate, and his purpose in presenting it was to show that the circulation was capable of absorbing a great deal of paper money, which ought to make us wonder whether his estimate might have been biased by his political agenda. Whether biased, or simply misinformed, Hamilton clearly got his facts wrong.

All estimates of the quantity of colonial bills of credit in circulation – including those of Brock (1975, 1992) that have been relied on by recent authors of all sides of the debate – lead inescapably to the conclusion that in 1774 there were very few bills of credit left outstanding, nowhere near the 22 million dollars implied by Hamilton. Calculations along these lines were first performed by Ratchford. Ratchford (1941, pp. 24-25) estimated the total quantity of bills of credit outstanding in each colony on the eve of the Revolution, and then added the local £., s., and d. of all the colonies (a true case of adding apples and oranges), converted to dollars by valuing dollars at 6 s. each, and concluded that the total was equal to about $5.16 million.

Ratchford’s method of summing local pounds and then converting to dollars is incorrect because local pounds did not have a uniform value across colonies. Since dollars were commonly rated at more than 6 s., his procedure resulted in an inflated estimate. We can correct this error by using McCusker’s (1978) data on 1774 exchange rates to convert local currency to sterling for each colony, obtain a sum in pounds sterling, and then convert to dollars using the rated value of the dollar in pounds sterling, 4½ s. Four and a half s. was very near the dollar’s value in London bullion markets in 1774, so no appreciable error arises from using the rated value. Doing so reduces Ratchford’s estimate to $3.42 million. Replacing Ratchford’s estimates of currency outstanding in New York, New Jersey, Pennsylvania, Virginia, and South Carolina with apparently superior data published by Brock (1975, 1992) reduces the total to $2.93 million. Even allowing for some imprecision in the data, this simply can’t be reconciled with Hamilton’s apparently mythical $22 million in paper money!

How much current cash was there in the colonies in 1774? Alice Hanson Jones’s extensive research into probate records gives an independent estimate of the money supply. Jones (1980, table 5.2) estimated that per capita cash-holding in the Middle colonies in 1774 was £1.8 sterling, and that the entire money supply of the thirteen colonies was slightly more than 12 million dollars.44 McCallum (1992) proposed another way to estimate total money balances in the colonies. McCallum started with the few episodes where historians generally agree paper money entirely displaced specie, making the total money supply measurable. He used money balances in these episodes as a basis for estimating money balances in other colonies by deriving approximate measures of the variability of money holdings over colonies and over time. Given the starkly different methodologies, it is remarkable that McCallum’s approach yields an answer practically indistinguishable from Jones’s.45

Various contemporary estimates, including estimates by Pelatiah Webster, Noah Webster, and Lord Sheffield, also suggest the total colonial money supply in 1774 was ten to twelve million dollars, mostly in specie (Michener 1988, p. 687; Elliot, 1845, p. 938). If we tentatively accept that the total money supply in the American colonies in 1774 was about twelve million dollars, and that only three million dollars worth of bills of credit remained outstanding, then fully 75% of the prewar money supply must have been in specie.

Even this may be an underestimate. Colonial probate inventories are notoriously incomplete, and the usual presumption is that Jones’s estimates are likely to be downwardly biased. Two examples not involving money illustrate the general problem. In Jones’s collection of inventories, over 20% of the estates did not include any clothes (Lindert, 1981, p. 657). In an independent survey of Surry County, Virginia probate records, Anna Hawley (1987, pp. 27-8) noted that only 34% of the estates listed hoes despite the fact that the region’s staple crops, corn and tobacco, had to be hoed several times a year.

In Jones’s 1774 database an amazing 70% of all estates were devoid of money. While the widespread use of credit made it possible to do without money in most transactions it is likely some estates contained cash that does not appear in probate inventories. Peter Lindert (1981, p. 658) surmised “cash was simply allocated informally among survivors even before probate took place.” McCusker and Menard (1985, p. 338, fn. 14) concurred noting “cash would have been one of the things most likely to have been distributed outside the usual probate proceedings.” If Jones actually underestimated cash holdings in 1774 the implication would be that more than 75% of the prewar money supply must have been specie.

That most of the cash circulating in the colonies in 1774 must have been specie seems like an inescapable conclusion. The issue has been clouded, however, by the existence of many contradictory and internally inconsistent estimates in the literature. By using them to defend his contention that specie was relatively unimportant, Smith (1988, p. 22) drew attention to these estimates.

The first such estimate was made by Roger Weiss (1970, p. 779), who computed the ratio of paper money to total money in the Middle colonies, using Jones’s probate data to estimate total money balances as has been done here; he arrived at a considerably smaller fraction of specie in the money supply. There is a simple explanation for this puzzling result: Weiss, whose article was published in 1970, based his analysis on Jones’s 1968 dissertation rather than her 1980 book. In her dissertation, Jones (1968, Tables 3 and 4, pp. 50-51) estimated the money supply in the three Middle colonies at £2.0 local currency per free white capita. Since £1 local currency was worth about £0.6 sterling, Weiss began with an estimated total money supply of £1.2 sterling per free white capita (equal to £1.13 per capita), rather than Jones’s more recent estimate of £1.8 sterling per capita.

Another authority is Letwin (1982, p. 467), who estimated that more than 60% of the money supply of Pennsylvania in 1775 was paper. Letwin used the Historical Statistics of the United States for his money supply data, and a casual back-of-the-envelope estimate that nominal balances in Pennsylvania were £700,000 in 1775 to conclude that 63% of Pennsylvania’s money supply was paper money. However, the data in Historical Statistics of the United States are known to be incorrect: Using Letwin’s back-of-the-envelope estimate, but redoing the calculation using Brock’s estimates of paper money in circulation, gives the result that in 1775 only 45.5% of Pennsylvania’s money supply was paper money; for 1774 the figure is 31%.46

That good faith attempts to estimate the stock of specie in the colonies in 1774 have given rise to such wildly varying and inconsistent estimates gives some indication of the task that remains to be accomplished.47 Many hints about how the specie stock varied over time in colonial America can be found in newspapers, legislative records, pamphlets and correspondence. Organizing those fragments of evidence and interpreting them is going to require great skill and will probably have to be done colony by colony. In addition, if the key to the purchasing power of colonial currency lies in the ratings attached to coins as I personally believe it does, then more effort is going to have to be paid in the future to tracking how those ratings evolved over time. Our knowledge at the moment is very fragmentary, probably because the politics of paper money has so engrossed the attention of historians that few people have attached much significance to coin ratings.

Economic historian Farley Grubb has proposed (2003, 2004, 2007) that the composition of the medium of exchange in colonial America and the early Republic can be determined from the unit of account used in arm’s length transactions, such as rewards offered in runaway ads and prices recorded in indentured servant contract registrations. If, for instance, a runaway reward is offered in pounds, shillings and pence, it means (Grubb argues) that colonial or state bills of credit were the medium of exchange used, while dollar rewards in such ads would imply silver. Grubb then uses contract registrations in the early Republic (2003, 2007) and runaway ads in colonial Pennsylvania (2004) to develop time series for hitherto unmeasurable components of the money supply and draws many striking conclusions from them. I believe Grubb is proceeding on a mistaken premise. Reversing Grubb’s procedure and using runaway ads in the early Republic and contract registrations in colonial Pennsylvania yields dramatically different results, which suggests the method is not useful. I have participated in this contentious published debate (see Michener and Wright 2005, 2006a, 2006c and Grubb 2003, 2004, 2006a, 2006b, 2007) and will leave it to the reader to draw his or her own conclusions.


1. Beginning in 1767, Maryland issued bills of credit denominated in dollars (McCusker, 1978, p. 194).

2. For a number of years, Georgia money was an exception to this rule (McCusker, 1978, pp. 227-8).

3. Elmer (1869, p. 137). Similarly, historian Robert Shalhope (Shalhope, 2003, pp. 140, 142, 147, 290) documents a Vermont farmer who continued to reckon, at least some of the time, in New York currency (i.e. 8 shillings = $1) well into the 1820s.

4. To clarify: In New York, a dollar was rated at eight shillings, hence one reale, an eighth of a dollar, was one shilling. In Richmond and Boston, the dollar was rated at six shillings, or 72 pence, one eighth of which is 9 pence. In Philadelphia and Baltimore, the dollar was rated at seven shillings six pence, or ninety pence, and an eighth of a dollar would be 11.25 pence.

5. In 1822, for example, P. T. Barnum, then a young man from Connecticut making his first visit to New York, paid too much for a brace of oranges because of confusion over the unit of account. “I was told,” he later related, “[the oranges] were four pence apiece [as Barnum failed to realise, in New York there were 96 pence to the dollar], and as four pence in Connecticut was six cents, I offered ten cents for two oranges, which was of course readily taken; and thus, instead of saving two cents, as I thought, I actually paid two cents more than the price demanded” (Barnum, 1886, p. 18).

6. One way to see the truth of this statement is to examine colonial records predating the emission of colonial bills of credit. Virginia pounds are referred to long before Virginia issued its first bills of credit in 1755. See, for example, Pennsylvania Gazette, September 20, 1736, quoting Votes of the House of Burgesses in Virginia, August 30, 1736 or the Pennsylvania Gazette, May 29, 1746, quoting a runaway ad that mentions “a bond from a certain Fielding Turner to William Williams, for 42 pounds Virginia currency.” Advertisements in the Philadelphia newspapers in 1720 promise rewards for the return of runaway servants and slaves in Pennsylvania pounds, even though Pennsylvania did not issue its first bills of credit until 1723. The contemporary meaning of “currency” sheds light on otherwise confusing statements, such as an ad in the Pennsylvania Gazette, May 12, 1763, where the advertiser offered a reward for the recovery of £460 “New York currency” that was stolen from him and then parenthetically noted “the greatest part of said Money was in Jersey Bills.”

7. For an example of a complete list, see Felt (1839, pp. 82-83).

8. Further discussion of country pay in Connecticut can be found in Bronson (1865, pp. 23-4).

9. Weiss (1974, pp. 580-85) cites a passage from an 1684 court case that appears to contradict this discount. However, inspecting the court records shows that the initial debt consisted of 34s. 5d. in money to which the court added 17s. 3d. to cover the difference between money and country pay, a ratio of pay to money of exactly 3 to 2 (Massachusetts, 1961, pp. 303-4). Other good illustrations of the divergence of cash and country pay prices can be found in Knight (1935, pp. 40-1) and Judd (1905, pp. 95-6). The multiple price system was not limited to Massachusetts and Connecticut (Coulter, 1944, p. 107).

10. Thomas Bannister to Mr. Joseph Thomson, March 8, 1699/1700 in (Bannister, 1708).

11. In New York, for instance, early issues were legal tender, but the Currency Act of 1764 put a halt to new issues of legal tender paper money; the legal tender status of practically all existing issues expired in 1768. After prolonged and contentious negotiation with imperial authorities, the Currency Act of 1770 permitted New York to issue paper money that was a legal tender in payments to the colonial government, but not in private transactions. New York made its first issue under the terms of the Currency Act of 1770 in early 1771 (Ernst, 1973).

12. Ordinarily, but not always. For instance, in 1731 South Carolina reissued £106,500 in bills of credit without creating any tax fund with which to redeem them (Nettels, 1934, pp. 261-2; Brock, 1975, p. 123). The Board of Trade repeatedly pressured the colony to create a tax fund for this purpose, but without success. That no tax funds had been earmarked to redeem these bills was common knowledge, but it did not make the bills less acceptable as a medium of exchange, or adversely affect their value. The episode contradicts the common supposition that the promise of future redemption played a key role in determining the value of colonial currencies.

13. Once the bills of credit were placed in circulation, no distinction was made between them based on how they were originally issued. It is not as if one could only pay taxes with bills of the first sort, or repay mortgages with bills of the second sort. Many colonies, to save the cost of printing, would reuse worn but serviceable notes. A bill originally issued on loan, upon returning to the colonial treasury, might be reissued on tax funds; often it would have been impossible, even in principle, for an individual to examine the bills in his possession and deduce the funds ostensibly backing them.

14. Late in the seventeenth century Massachusetts briefly operated a mint that issued silver coins denominated in the local unit of account (Jordon, 2002). On the eve of the Revolution, Virginia obtained official permission to have copper coins minted for use in Virginia (Davis, 1970, vol. 1, chapter 2; Newman, 1956).

15. The Massachusetts government, unable to honor redemption promises made when the first new tenor emission was first created, decided in 1742 to revalue these bills from three to one to four to one with old tenor as compensation. When Massachusetts returned to a specie standard, the remaining middle tenor bills were redeemed at four to one (Davis, 1970; McCusker, 1978, p. 133).

16. New and old tenors have led to much confusion. In the Boston Weekly News Letter, July 1, 1742, there is an ad pertaining to someone who mistakenly passed Rhode Island New Tenor in Boston at three to one, when it was supposed to be valued at four to one. Modern day historians have also occasionally been misled. An excellent example can be found in Patterson (1961, p. 27). Patterson believed he had unearthed evidence of outrageous fraud during the Massachusetts currency reform, whereas he had, in fact, simply failed to convert a sum in an official document stated in new tenor terms into appropriate old tenor terms. Sufro (1976, p. 247) following Patterson, made similar accusations based on a similar misunderstanding of New England’s monetary units.

17. That colonial treasurers did not unfailingly provide this service is implicit in statements found in merchant letters complaining of how difficult it sometimes became to convert paper money to specie (Beekman to Evan and Francis Malbone, March 10, 1769, White, 1956, p. 522).

18. Nathaniel Appleton (1748) preached a sermon excoriating the province of Massachusetts Bay for flagrantly failing to keep the promises inscribed on the face of its bills of credit.

19. Goldberg (2009) uses circumstantial evidence to suggest that Massachusetts was engaged in a “monetary ploy to fool the king” when it made its first emissions. In Goldberg’s telling of the tale, the king had been furious about the Massachusetts mint and officially issuing paper money that was a full legal tender would have been a “colossal mistake” because it would have endangered the colony’s effort to obtain a new charter, which was essential to confirm the land grants the colony had already made. The alleged ploy Goldberg discovered was a provision passed shortly afterwards: “Ordered that all country pay with one third abated shall pass as current money to pay all country’s debts at the same prices set by this court.” Since those with a claim on the Treasury were going to be tendered either paper money or country pay, and since Goldberg interprets this as requiring those creditors to accept either 3 pounds in paper money or 2 pounds in country pay, the provision was, in Goldberg’s estimation, a way of forcing the paper money on the populace at a one third discount. The shortchanging of the public creditors, through some mechanism not adequately explained to my understanding, was sufficient to make the new paper money a defacto legal tender.

There are several problems with Goldberg’s analysis. Jordan (2002, pp. 36-45) has recently written the definitive history of the Massachusetts mint, and he minutely reviews the evidence pertaining to the Massachusetts mint and British reaction to it. He concludes that “there was no concerted effort by the king and his ministers to crush the Massachusetts mint.” In 1692 Massachusetts obtained a new charter and passed a law making the bills of credit a legal tender. The new charter required Massachusetts to submit all its laws to London for review, yet the imperial authorities quietly ratified the legal tender law, even though they were fully empowered to veto it, which seems very peculiar if the legal tender status of the bills was as unpopular with the King and his ministers as Goldberg maintains. The smoking gun Goldberg cites appears to me to be no more than a statement of the “three pounds of country pay equals two pounds cash” rule that prevailed in Massachusetts in the late seventeenth century. In his argument, Goldberg tacitly assumes that a pound of country pay was equal in value to a pound of hard money; he observes that the new bills of credit initially circulated at a one third discount (with respect to specie) and that this might have arisen because recipients (according to his interpretation) were offered only two pounds of country pay in lieu of three pounds of bills of credit (Goldberg, p. 1102). However, because country pay itself was worth, at most, two thirds of its nominal value in specie, by Goldberg’s reasoning paper money should have been at a discount of at least five ninths with respect to specie.

The paper money era in Massachusetts brought forth approximately fifty pamphlets and hundreds of newspaper articles and public debates in the Assembly, none of which confirm Goldberg’s inference.

20. The role bills of credit played as a means of financing government expenditures is discussed in Ferguson (1953).

21. Georgia was not founded until 1733, and one reason for its founding was to create a military buffer to protect the Carolinas from the Spanish in Florida.

22. Grubb (2004, 2006a, 2006b) argues that bills of credit did not commonly circulate across colony borders. Michener and Wright (2006a, 2006c) dispute Grubb’s analysis and provide (Michener and Wright 2006a, pp. 12-13, 24-30) additional evidence of the phenomenon.

23. Poor Thomas Improved: Being More’s Country Almanack for … 1768 gives as a rule that “To reduce New-Jersey Bills into York Currency, only add one penny to every shilling, and the Sum is determined.” (McCusker, 1978, pp. 170-71; Stevens, 1867, pp. 151-3, 160-1, 168, 185-6, 296; Lincoln, 1894, vol. 5, Chapter 1654, pp. 638-9.)

24. In two articles, John R. Hanson (1979, 1980) argued that bills of credit were important to the colonial economy because they provided much-needed small denomination money. His analysis, however, completely ignores the presence of half-pence, pistareens, and fractional denominations of the Spanish dollar. The Spanish minted halves, quarters, eighths, and sixteenths of the dollar, which circulated in the colonies (Solomon, 1976, pp. 31-32). For a good introduction to small change in the colonies, see Andrews (1886), Newman (1976), Mossman (1993, pp. 105-142), and Kays (2001).

25. Council of Trade and Plantations to the Queen, November 23, 1703, in Calendar of State Papers, 1702-1703, entry #1299. Brock, 1975, chap. 4.

26. This, it should be noted, is what British authorities meant by “proclamation money.” Since salaries of royal officials, fees, quit rents, etc. were often denominated in proclamation money, colonial courts often found a rationale to attach their own interpretation to “proclamation money” so as to reduce the real value of such salaries and fees. In New York, for example, eight shillings in New York’s bills of credit were ostensibly worth one ounce of silver although by the late colonial period they were actually worth less. This valuation of bills of credit made each seven pounds of New York bills of credit in principle worth six pounds in proclamation money. The New York courts used that fact to establish the rule that seven pounds in New York currency could pay a debt of six pounds proclamation money. This rule allowed New Yorkers to pay less in real terms than was contemplated by the British (Hart, 2005, pp. 269-71).

27. Brock (1975). The text of the proclamation can be found in the Boston New-Letter, December 11, 1704. To be precise, the Proclamation rate was actually in slight contradiction to that in the Massachusetts law, which had rated a piece of eight weighing 17 dwt. at 6 s. See Brock (1975, p. 133, fn. 7).

28. This contention has engendered considerable controversy, but the evidence for it seems to me both considerable and compelling. Apart from evidence cited in the text, see for Massachusetts, Michener (1987, p. 291, fn. 54), Waite Winthrop to Samuel Reade, March 5, 1708 and Wait Winthrop to Samuel Reade, October 22, 1709 in Winthrop (1892, pp. 165, 201); For South Carolina see South Carolina Gazette, May 14, 1753; August 13, 1744; and Manigualt (1969, p. 188); For Pennsylvania see Pennsylvania Gazette, April 2, 1730, December 3, 1767, February 15, 1775, March 8, 1775; For St. Kitts see Roberdeau to Hyndman & Thomas, October 16, 1766, in Roberdeau (1771); For Antigua, see Anonymous (1740).

29. The Chamber of Commerce adopted its measure in October 1769, apparently too late in the year to appear in the “1770” almanacs, which were printed and sold in late 1769. The 1771 almanacs, printed in 1770, include the revised coin ratings.

30. Note that the relative ratings of the half joe are aligned with the ratings of the dollar. For example, the ratio of the New York value of the half joe to the Pennsylvania value is 64 s./60 s. = 1.066666, and the ratio of the New York value of the half joe to the Connecticut value is 64 s./48 s. = 1.3333.

31. This bank has been largely overlooked, but is well documented. Letter of a Merchant in South Carolina to Alexander Cumings, Charlestown, May 23, 1730, South Carolina Public Records, Vol XIV, pp. 117-20; Anonymous (1734); Easterby (1951, [March 5, 1736/37] vol. 1, pp. 309-10); Governor Johnson to the Board of Trade in Calendar of State Papers, 1731, entry 488, p. 342; Whitaker (1741, p. 25); and Vance (1740, p. 463).

32.I base this on my own experience reviewing the contents of RG3 Litchfield County Court Files, Box 1 at the Connecticut State Library.

33. Though best documented in New England, Benjamin Franklin (1729, CCR II, p. 340) mentions their use in Pennsylvania.

34. See Douglass (1740, CCR III, pp. 328-329) and Vance (1740, CCR III, pp. 328-329). Douglass and Vance disagreed on all the substantive issues, so that their agreement on this point is especially noteworthy. See also Boston Weekly Newsletter, Feb. 12-19, 1741.

35. Data on New England prices during this period are very limited, but annual data exist for wheat prices and silver prices. Regressing the log of these prices on time yields an annual growth rate of prices approximately that mentioned in the text. The price data leave much to be desired, and the inflation estimates should be understood as simply a crude characterization. However, it does show that New England’s peacetime inflation during this era was not so extreme as to shock modern sensibilities.

36. Smith (1985a, 1985b). The quantity theory holds that the price level is determined by the supply and demand for money – loosely, how much money is chasing how many goods. Smith’s version of the backing theory is summarized by the passage quoted from his article.

37. John Adams explained this very clearly in a letter written June 22, 1780 to Vergennes (Wharton, vol. 3, p. 811). Adams’s “certain sum” and McCallum’s “normal real balances” are essentially the same, although Adams is speaking in nominal and McCallum in real terms.

A certain sum of money is necessary to circulate among the society in order to carry on their business. This precise sum is discoverable by calculation and reducible to certainty. You may emit paper or any other currency for this purpose until you reach this rule, and it will not depreciate. After you exceed this rule it will depreciate, and no power or act of legislation hitherto invented will prevent it. In the case of paper, if you go on emitting forever, the whole mass will be worth no more than that was which was emitted within the rule.

38. One of the principle observations Smith (1985b, p. 1198) makes in dismissing the possible importance of interest rate fluctuations is “it is known that sterling bills of exchange did not circulate at a discount.” Sterling bills were payable at a future date, and Smith presumably means that sterling bills should have been discounted if interest made an appreciable difference in their market value. Sterling bills, however, were discounted. These bills were not payable at a particular fixed date, but rather on a certain number of days after they were first presented for payment. For example, a bill might be payable “on sixty days sight,” meaning that once the bill was presented (in London, for example, to the person upon whom it was drawn) the person would have sixty days in which to make payment. Not all bills were drawn at the same sight, and sight periods of 30, 60, and 90 days were all common. Bills payable sooner sold at higher prices, and bills could be and sometimes were discounted in London to obtain quicker payment (McCusker, 1978, p. 21, especially fn. 25; David Vanhorne to Nicholas Browne and Co., October 3, 1766. Brown Papers, P-V2, John Carter Brown Library). In the early Federal period many newspapers published extensive prices current that included prices of bills drawn on 30, 60, and 90 days’ sight.

39. Franklin (1729) wrote a tract on colonial currency, in which he maintained as one of his propositions that “A great Want of Money in any Trading Country, occasions Interest to be at a very high Rate.” An anonymous referee warned that when colonists complained of a “want of money” that they were not complaining of a lack of a circulating medium per se, but were expressing a desire for more credit at lower interest rates. I do not entirely agree with the referee. I believe many colonists, like Franklin, reasoned like modern-day Keynesians, and believed high interest rates and scarce credit were caused by an inadequate money supply. For more on this subject, see Wright (2002, chapter 1).

40. Public Record Office, CO 5/ 947, August 13, 1768, pp. 18-23.

41. New Hampshire Gazette and Historical Chronicle, January 13, 1769.

42. Public Record Office, Wentworth to Hillsborough, CO 5/ 936, July 3, 1769.

43. Pennsylvania Chronicle, and Universal Advertiser, 28 December 1767.

44. This should be understood to be paper money and specie equal in value to 12 million dollars, not 12 million Spanish dollars. The fraction of specie in the money supply can’t be directly estimated from probate records. Jones (1980, p. 132) found that “whether the cash was in coin or paper was rarely stated.”

45. McCallum deflated money balances by the free white population rather than the total population. Using population estimates to put the numbers on a comparable basis reveals how close McCallum’s estimates are to those of Jones. For example, McCallum’s estimate for the Middle colonies, converted to a per-capita basis, is approximately £1.88 sterling.

46. This incident illustrates how mistakes about colonial currency are propagated and seem never to die out. Henry Phillips 1865 book presented data on Pennsylvania bills of credit outstanding. One of his major “findings” was that Pennsylvania retired only £25,000 between 1760 and 1769. This was a mistake: Brock (1992, table 6) found £225,247 had been retired over the same period. Because of the retirements Phillips missed, he overestimated the quantity of Pennsylvania bills of credit in circulation in the late colonial period by 50 to 100%. Lester (1939, pp. 88, 108) used Phillips’s series; Ratchford (1941) obtained his data from Lester. Through Ratchford, Phillips’s series found its way into Historical Statistics of the United States.

47. Benjamin Allen Hicklin (2007) maintains that generations of historians have exaggerated the scarcity of specie in seventeenth and early eighteenth century Massachusetts. Hicklin’s analysis illustrates the unsettled state of our knowledge about colonial specie stocks.


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The South, the Nation, and the World: Perspectives on Southern Economic Development

Author(s):Carlton, David L.
Coclanis, Peter A.
Reviewer(s):Phillips, William H.

Published by EH.NET (November 2003)

David L. Carlton and Peter A. Coclanis, The South, the Nation, and the World: Perspectives on Southern Economic Development. Charlottesville, VA: University of Virginia Press, 2003. ix + 234 pp. $49.50 (cloth), ISBN: 0-8139-2184-8; $19.50 (paperback), ISBN: 0-8139-2185-6.

Reviewed for EH.NET by William H. Phillips, Department of Economics, University of South Carolina.

In this work of collected essays, David Carlton of Vanderbilt University and Peter Coclanis of the University of North Carolina outline the Southern economy’s struggles since colonization. As history professors, they present an argument that Southerners had the same economic motivations as people anywhere, but faced constraints that conditioned their responses in ways detrimental to economic growth. They feel that this is a more satisfying assessment of the South’s past and present than using “pre-modern” or “pre-capitalist” mentality to explain Southern uniqueness. Although this approach will be more attractive to economics-trained economic historians, this is not a story in which every decision collectively made by the Southern economy worked out for the best. It is rather a tale of “lock-in” mechanisms, asymmetric information, unbalanced growth and risk aversion. Readers will likely judge the results based on how much they believe in “path dependence” versus comparative advantage.

After a brief introductory chapter, Coclanis presents an essay comparing Northern and Southern paths to economic development. Slavery and plantation agriculture was initially a profitable choice, but it subsequently locked the South into an economy of high income inequality. It encouraged an over-reliance on producing goods that did not require flexibility to meet changing market conditions. Finally, it discouraged investment in human capital, transportation, and vital urban centers. The next paper by Coclanis switches to the micro issue of why the production of rice in the Carolina and Georgia low-country used a different form of slave organization. The author turns to asymmetric information and high monitoring costs to explain the use of “task” labor rather than the more common gang system.

Carlton then contributes a chapter on Southern antebellum urbanization. The South was not only less urbanized than the North, its cities were different. They were organized around an exporting economy, and as a result, the major cities dwarfed other towns within the tributary area. Plantations did not need a small city nearby, because slave labor could make most of the needed provisions during off-season slack time. Notable is a comment by the author that the ability to expand output through additional slave labor discouraged the development of a Southern agricultural implement sector. One such industry that did develop, however, was the production of cotton gins. Of interest is the fact that the major producers of cotton gins in the South did not locate in the larger towns. Daniel Pratt, Samuel Griswold, and Benjamin Gullett all built factories in rural locations, importing Northern machinists as needed to supply their wares. It would seem that even if Southern plantations had demanded more manufactured goods, it may not have spurred urban growth.

In Chapter 5, Coclanis chronicles the decline of the Carolina-Georgia rice sector. In the vernacular of our time, it was a victim of globalization. British control of Bengal produced an increased supply of Asian rice into European markets that started to push North American exports to Latin America. After the Civil War, Asian rice poured into the Untied States, and survival of the domestic industry required a shift in production to Louisiana, Arkansas, Texas and California. In contrast to the American low-country, Italian rice producers were able to expand in the face of these market developments, while production in South Carolina and Georgia ceased.

Carlton follows with a reprinting of his notable article on North Carolina industrialization. He argues that like the South in general, it followed an unbalanced growth path that concentrated on mature industries that were severely constrained by external markets. Lack of marketing expertise led to reliance on outside selling agents, such as occurred in textiles. A joint article then looks at capital mobilization in the Carolina Piedmont. The authors demonstrate the heavy burden placed on Southern entrepreneurs by the need to raise considerable funds from small local investors. This resulted in a premium placed on steady dividends and avoidance of risk. Industries meeting these criteria were not going to be major growth sectors in the American economy.

The eighth chapter is joint work in which Coclanis and Carlton compare Southern patents with its level of urbanization and share of capital goods manufacturing. As expected, the South is in the “periphery,” although in this instance joined by Maine and Vermont. The geographical approach continues in the next essay by Carlton on unbalanced growth in South Carolina. Just prior to the Southern textile boom, industrialization in South Carolina seemed concentrated along the coast, rather than inland. By 1930 however, the state had clearly formed its own “core” of Piedmont industrialization, while the low-country languished as one of the South’s poorest regions. Besides exogenous factors, Carlton adds the positive feedback of the Duke Power Company, whose search for a high load factor led it to build South Carolina power lines into the emerging core and avoid areas below the fall line.

The work concludes with two new papers by Carlton. First he looks at the historical origins and present-day impact of Southern entry into the American defense industry. The American military initially found the South as a convenient locale of large amounts of unproductive land that could be converted into training facilities. Over time, however, some major industrial contract centers have developed, with their accompanying jobs and spin-offs for the local economy. Finally, Carlton looks at the changing relationship between the Northern manufacturing belt and the South. Initially the manufacturing belt was a source of industrial goods with which Southern firms could not compete. Over time, the relationship evolved, and after World War II, was given the journalistic description of the “Sunbelt” versus the “Rust Belt.” Carlton argues that both regions now face similar problems, which leads to the ultimate question: is the American South still different?

It should be apparent, given the breadth of these essays, that the authors take the South seriously, and no doubt will have more to say on the subject in the coming years. In the meantime, the current book provides an example of a historical approach to the South that is not romantic and not accusatory.

William H. Phillips is Associate Professor of Economics at the University of South Carolina. He is currently researching the development of the Southern cotton gin manufacturing industry and more generally, patents issued to Southern inventors before World War I.

Subject(s):Industry: Manufacturing and Construction
Geographic Area(s):North America
Time Period(s):20th Century: WWII and post-WWII

The New South’s New Frontier: A Social History of Economic Development in Southwestern North Carolina

Author(s):Taylor, Stephen Wallace
Reviewer(s):Phillips, William H.

Published by EH.NET (March 2002)

Stephen Wallace Taylor, The New South’s New Frontier: A Social History of

Economic Development in Southwestern North Carolina. Gainesville:

University Press of Florida, 2001. xix + 186 pp. $55 (cloth), ISBN:


Reviewed for EH.NET by William H. Phillips, Department of Economics, University

of South Carolina.

In this book, Stephen Wallace Taylor, assistant professor of history at Macon

State College, has written a descriptive view of economic conditions in North

Carolina’s southwestern tip since 1880. This mountainous region, bordered by

Asheville on the east and Gatlinburg, Tennessee on the north, is identified

today by its proximity to the Great Smoky Mountains National Park. In the

modern mind, it is a recreational area that was never affected by American

industrialization. However, Professor Taylor recounts the history of an area

that was actively engaged in timber and mining operations, with local boosters

dreaming of future industrialization based on water-generated electrical power.

This future was sidetracked in the twentieth century by wider national

concerns: the rise of the conservation movement in the early 1900s, and the New

Deal showcase of government regional planning, the Tennessee Valley Authority


Taylor gives an important role in his story to postbellum writers who

stereotyped the region as one of isolated mountainfolk. This included the

popular writings of Horace Kephart, who idealized a pioneer lifestyle that had

disappeared from commercialized America. In fact, the inhabitants of the

mountains were survivors, who rotated between agriculture, mining and timber as

economic opportunities warranted. Of necessity, they were more mobile than the

writers imagined, and the region had many seemingly timeless villages that had

once been boomtowns.

In the early 1900s the booming sectors were copper and lumber. Although the

copper expansion was limited by marginal ores, large scale clear-cutting fed

major lumberyards that required company town housing. The future of the area

seemed to ride on Alcoa and the aluminum industry. With massive power

requirements for plants in eastern Tennessee, Alcoa begin buying land in

anticipation of building a massive dam at Fontana, on the Little Tennessee

River. Although the reservoir would result in the loss of precious farmland,

boosters hoped that surplus power from the dam could fuel a local industrial


The 1920s and early 30s were a critical time for the Smokies. Forest depletion

in the most accessible areas led to timber industry decline. Then the Great

Depression reduced mineral demand. Besides the direct impact on the local

copper mines, concern about over-capacity led Alcoa to put its water power

plans on hold. Into this gloomy atmosphere came a national drive by

preservationists and conservationists to create national parks and forests in

the eastern United States. The fascination with America’s mountain regions

began with the health resorts favored by wealthy industrialists. Attention was

further focused on southwestern North Carolina by Vanderbilt’s estate in


Local boosters argued that the region could get tourism dollars now, while

industrial development would come with the eventual construction of Alcoa’s

dam. The first decision to be made was whether to create a national park,

favored by preservationists, or a national forest, favored by conservationists.

The park option would generate the most tourism, while the forest option would

enable the timber industry to continue operations. Despite significant

opposition from lumber companies, who still had large land holdings, Congress

approved the Smoky Mountains Park in 1925.

The park was not actually formed until the onset of the Depression, by which

time another institution with interest in the area entered the scene. The

Tennessee Valley Authority’s business was regional planning. The key to that

planning was complete control over the water flow of the Tennessee River

watershed. This meant that Alcoa’s control of a future dam on the Little

Tennessee River would permanently hamstring its operations. Alcoa’s monopoly

position in the aluminum market further intensified the hostility of TVA’s New

Deal progressives, who sought to purchase the dam site and run the dam in the

agency’s interest.

Before this political battle could completely play out, World War II raised the

stakes. Aluminum for airplanes was now a critical need, and the power from the

Fontana Dam was needed as soon as possible. A bid by Alcoa to retain ownership

and have the Federal Government pay for construction costs backfired

politically. The result was that Alcoa was forced to sell the Fontana site to

the TVA in return for a guaranteed power supply. Professor Taylor believes that

with the TVA in charge of the dam and its uses, the interests of the Smoky

Mountain region and its inhabitants were inevitably given little weight. TVA’s

main contact with the local area was during the dam’s construction, after which

it concentrated on distributing the power into eastern Tennessee. Even the

recreational use of the reservoir was limited, as annual summer draw downs to

meet power needs left docks and boat ramps stranded.

The perception that Tennessee was getting most of the benefits of federal

policy was reinforced by the actions of the Park Service in the Smokies. Many

inhabitants of land included in the park felt that officials misled them over

how long and under what conditions they could continue to reside there. Some of

this was due to changing views of what the park should be. The final policy was

one that attempted to eradicate traces of the land development that had already

occurred within park boundaries. This created more dislocation on the North

Carolina side, where more development had taken place.

The final battle revolved around the “North Shore Road.” This was a road that

the Park Service had agreed to build along Fontana Lake to replace a route

inundated after dam construction. Such a road would have given Bryson City,

North Carolina immediate entry into the park, enhancing its value as a tourist

stop. Park officials came to feel that such a road would create too much damage

to park land, and they successfully lobbied for abandonment of the original

plan. As a result, the Cherokee Reservation became North Carolina’s entryway to

the park, with the subsequent diversion of tourist dollars. Local civic

boosters especially resented the success of Gatlinburg, whose entryway on the

Tennessee side became the most popular destination for visitors.

The only shortcoming in this well written book is the lack of a critical

assessment of the area’s true industrial potential. In the absence of a

concrete proposal of what industries would have moved into the area had not the

TVA diverted the dam’s power, it is difficult to take the dreams of civic

boosters at face value. Unless an industry was to develop around some unique

mineral resource in southwestern North Carolina, the region was only left with

the standard Southern industrialization strategy: labor-intensive

manufacturing. But if labor is mobile, it is easier for Southern manufacturers

to entice the local population to more convenient locations for plant

operation. In their early years, Piedmont textile firms regularly sent labor

recruiters into the mountains offering train tickets. Perhaps a look at the

North Carolina furniture industry or Dalton, Georgia’s carpet industry might

reveal how the region could have forged an industry built around local craft

skills. Despite this reservation, the book will be very useful to historians

interested in the economic development of the Appalachian region.

William H. Phillips is Associate Professor of Economics at the University of

South Carolina. He is currently researching the development of the Southern

cotton gin manufacturing industry and, more generally, patents issued to

Southern inventors before World War I.

Subject(s):Urban and Regional History
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII

Time on the Cross: The Economics of American Negro Slavery

Author(s):Fogel, Robert William
Engerman, Stanley L.
Reviewer(s):Weiss, Thomas

Project 2001: Significant Works in Economic History

Robert William Fogel and Stanley L. Engerman, Time on the Cross: The Economics of American Negro Slavery. Boston: Little, Brown and Company, 1974. xviii + 286 pp.

Review Essay by Thomas Weiss, Department of Economics, University of Kansas.

“It takes a licking, but keeps on ticking.” John Cameron Swayze

It is a rare monograph in economic history that gets reviewed in magazines and newspapers such as Newsweek, Time, The Atlantic Monthly, The New York Times, The Wall Street Journal and The Washington Post among others; or whose authors appear on television talk shows. Robert Fogel and Stanley Engerman’s Time on the Cross was one such book — perhaps the only one.

Perhaps equally rare is the book that could have withstood the onslaught of unrelenting, withering criticism directed at Time on the Cross. The book was described as “simply shot through with egregious errors” (David, et al, 1976, p.339). It was “vulnerable not only to attack — but to dismissal.” Some thought the book should be consigned “to the outermost ring of the scholar’s hell, obscurity” (Haskell, 1975, p. 35). Richard Sutch could only conclude that “Time on the Cross is a failure” (1975, p. 339).

Yet here it stands among those books that still attract attention, a classic in the field. And it was recognized as such by many at the time, especially in the first wave of reviews. Peter Passell, for example, said, “If a more important book about American history has been published in the last decade, I don’t know about it” (1974, p. 4). Even after the first barrage of criticism appeared, Gary Walton ventured to say that “Time on the Cross was destined to become a classic” (1975, p. 333).

Time on the Cross was not the run of the mill book; neither was it that rare book which on its own would have drawn the attention it did. Of course, the subject matter of slavery was of great interest and would have generated a fair amount of attention; the ‘cliometric’ methodology was still somewhat new and would have elicited some additional interest; and the combination of the two, the application of quantitative methods to a morally-laden topic, would have sparked some controversy. Its popularity, however, went way beyond that, in part because the book was written and produced so as to attract an abnormally great amount of attention. As is well-known, the results and interpretation were published in one volume written for the general educated reader, and was not laden with footnotes and technical jargon. That volume, subtitled The Economics of American Negro Slavery, was described on the jacket cover as “a sweeping reexamination of the economic foundations of American Negro slavery.” The text continued in that bold and provocative style. As indicated above, it got the attention it sought. And, it was a topic of conversation at faculty cocktail parties where economic theorists would seek out economic historians and solicit their opinion: what do economic historians make of the book? Did Fogel and Engerman really argue that slavery was profitable? It became clear quickly that most of them had read the reviews and not the book, but still for a brief moment they had noticed what was going on in the field.

All the painstaking details of scholarship were relegated to a second volume, subtitled Evidence and Methods, so that anyone interested in ‘checking the facts’ or the methods of estimation had to go through a process of cross-referencing. That cross-referencing could be done only after one made sense of the condensed presentation in volume II, which itself relied on extensive cross-referencing. Consider the following simple example from Volume II that supports five pages of textual presentation in volume I regarding the decrease in the slave population of cities.

“3.9 (pp. 99-102). figures 30 and 31 are computed from data in Goldin [146; cf. 148]. See 6.6. for a summary of her findings.” (vol. II, p. 87).

Scholars, as you can imagine, were all too eager to plow through that material. And rightly so, for another bold claim of the book was that it would demonstrate the value and superiority of applying mathematical and statistical techniques to history. This was not only a red flag waved in front of the traditional historians, it got the attention of cliometricians as well. Anyone who has attended a cliometrics conference knows how thoroughly the audience combs through the technical details, no matter what the topic. Imagine when the topic is as popular and controversial as slavery.

The book was intended to do more than just straighten out the traditional interpretation of the economics of slavery. It aimed to “strike down the view that black Americans were without culture, without achievement, and without development for their first two hundred and fifty years on American soil” (p. 258). According to Fogel and Engerman this view derived from the traditional interpretation of the economics of slavery, beginning with the debate between the critics and defenders of slavery and continuing through the writings of historians, most especially U.B. Phillips and Stanley Elkins. Fogel and Engerman argued further that even those historians, such as Richard Hofstadter and Kenneth Stampp, who questioned one or more aspects of the traditional view did not do away with the myth of the inferiority of slave labor (pp. 227-31).

The traditional interpretation of the economics of slavery is obviously long and complex, as was brought out by Stampp in his critique of the book. That complexity has influenced the subsequent writings of Fogel and Engerman but in Time on the Cross they summarized it in five main propositions. “1, …slavery was generally an unprofitable investment …; 2, … slavery was economically moribund; 3, … slave labor, and agricultural production based on slave labor, was economically inefficient; 4, … slavery caused the economy of the South to stagnate, or at least retarded its growth …; 5, … slavery provided extremely harsh material conditions of life for the typical slave” (p. 226).

Their chief conclusions were also neatly summarized in a list of 10 “principal corrections of the traditional characterization of the slave economy” (pp. 4-6).

1. Slavery was not a system irrationally kept in existence by owners who failed to perceive or were indifferent to their best economic interests. The purchase of a slave was generally a highly profitable investment which yielded rates of return that compared favorably with the most outstanding investment opportunities in manufacturing.

2. The slave system was not economically moribund on the eve of the Civil War. There is no evidence that economic forces alone would have soon brought slavery to an end without the necessity of a war or other form of political intervention. Quite the contrary; as the Civil War approached, slavery as an economic system was never stronger and the trend was toward even further entrenchment.

3. Slaveowners were not becoming pessimistic about the future of their system during the decade that preceded the Civil War. The rise of the secessionist movement coincided with a wave of optimism. On the eve of the Civil War, slaveholders anticipated an era of unprecedented prosperity.

4. Slave agriculture was not inefficient compared with free agriculture. Economies of large-scale operation, effective management, and intensive utilization of labor and capital made southern slave agriculture 35 percent more efficient than the northern system of family farming.

5. The typical slave field hand was not lazy, inept, and unproductive. On average he was harder-working and more efficient than his white counterpart.

6. The course of slavery in the cities does not prove that slavery was incompatible with an industrial system or that slaves were unable to cope with an industrial regimen. Slaves employed in industry compared favorably with free workers in diligence and efficiency. Far from declining, the demand for slaves was actually increasing more rapidly in urban areas than in the countryside.

7. The belief that slave-breeding, sexual exploitation, and promiscuity destroyed the black family is a myth. The family was the basic unit of social organization under slavery. It was to the economic interest of planters to encourage the stability of slave families and most of them did so. Most slave sales were either of whole families or of individuals who were at an age when it would have been normal for them to have left the family.

8. The material (not psychological) conditions of the lives of slaves compared favorably with those of free industrial workers. This is not to say that they were good by modern standards. It merely emphasizes the hard lot of all workers, free or slave, during the first half of the nineteenth century.

9. Slaves were exploited in the sense that part of the income which they produced was expropriated by their owners. However, the rate of expropriation was much lower than has generally been presumed. Over the course of his lifetime, the typical slave field hand received about 90 percent of the income he produced.

10. Far from stagnating, the economy of the antebellum South grew quite rapidly. Between 1840 and 1860, per capita income increased more rapidly in the south than in the rest of the nation. By 1860 the south attained a level of per capita income which was high by the standards of the time. Indeed, a country as advanced as Italy did not achieve the same level of per capita income until the eve of World War II.

Several of these, such as the matter of the profitability and viability of slavery or the growth of demand for slaves in cities, were already well-known conclusions at the time and were the product of other researchers (Conrad and Meyer, Stampp, Yasuba, and Goldin, among others). Fogel and Engerman may have added a bit to these sorts of issues, but their role was more that of making such results more widely known among the general public and integrating that information into their bold, new vision of the way the slave system functioned.

Other revisionist claims were provocative. Could slave agriculture possibly be more efficient than free? Was the family the basic unit of social organization under slavery? Was the material condition of slaves as favorable as that of free industrial workers? Was the rate of exploitation or expropriation really that small? Did southern per capita income increase faster than that in the rest of the nation? The slave-based, monocultural agricultural system of the South was Douglass North’s archetypal example of an economy that was not going to be successful. Did he get it all wrong?

What followed was an avalanche of criticism. Criticism may be putting it mildly; the book and the authors were lambasted from every direction. There was an outpouring of research, papers, special journal issues, edited volumes, monographs, conference sessions, and indeed an entire conference — the Rochester Conference: “Time on the Cross: A First Appraisal.” There is no question this was a seminal work, if by that one means it was responsible for bringing forth further work. In this case it did so in abundance. In addition to the work by those who questioned many aspects of Time on the Cross, there was the continuing work by Fogel and Engerman and their students, much of which ultimately appeared in Without Consent or Contract: Evidence and Methods, and Without Consent or Contract: Technical Papers (2 vols.). A re-interpretation of all this work culminated in Fogel’s Without Consent or Contract: The Rise and Fall of American Slavery (which appeared in print long before all the supporting material).

Much of the criticism, at least that which materialized in the first wave, was brought together in two edited volumes: a special issue of Explorations in Economic History (October 1975) and Reckoning With Slavery (David, et al, 1976); and a single authored work Slavery and the Numbers Game (Gutman, 1975). In most cases, the articles in these volumes were also published in journals, usually in a more technical style. The Journal of Economic History, for example, had published a long review essay written by Paul David and Peter Temin, which became part of Reckoning With Slavery. Subsequently the American Economic Review published an important exchange between David and Temin (1979) and Fogel and Engerman (1977 and 1980) regarding the relative efficiency of slave agriculture.

Scholars argued about everything — including what the traditional characterization of slavery was. Sutch produced a monograph questioning almost every aspect of the material treatment of slaves; Gavin Wright criticized the argument that the long run prospects of slavery were good; David and Temin, and others examined the efficiency calculation; Richard Vedder and others questioned the definition and measurement of exploitation; Herbert Gutman examined the arguments about the Protestant work ethic and family values among other things. And as expected, Fogel and Engerman, and their students, published articles that defended their findings.

Not everyone agreed on which of the conclusions was most startling, or which was more in error. On the one hand, Richard Sutch saw the “authors’ claim that the physical and psychological well-being of American slaves was much greater than previously believed” as the lightning rod that attracted so much attention to the book (1975, p. 335). Thomas Haskell argued that the ‘book’s central argument, [was] the claim that slaves were more efficient workers than free men.” (1975, p. 36). In a sense it was the conjunction of interrelated claims, or what critics saw as the whole house of cards, that made for so much controversy.

By itself, for example, the finding that farms using slave labor were estimated to have been more efficient than farms using free workers might not have been controversial. It may have been surprising, but that was in part because no one had thought to look before. If that were an isolated finding, only those who worry about the details of estimating production functions would have cared. But it was not an isolated piece of information, it was part of a different view of the slave regime — the centerpiece of it according to Haskell (1975, p.36). In the Fogel-Engerman scheme the efficiency of southern agriculture was the joint product of shrewd capitalistic planters and hard-working slaves. The innovative, and highly controversial point, was that slaves worked hard because they were rewarded for doing so, not because they were driven to it. Critics pointed out that there was little evidence on rewards; to a large extent this was inferred from the economic outcomes, and from the evidence on the slaves’ material standard of living and the hierarchy of occupations in which they were employed, and from the evidence that whipping did not appear to be widely used to motivate the slaves.

Of course, slaves were motivated by a combination of the stick and the carrot. Fogel and Engerman may have exaggerated the role of the carrot, but a more lenient view is that they were attempting to shift the balance towards well-motivated economic behavior and a more reasonable treatment of slaves. In their summary of the traditional view they argued that Kenneth Stampp had come “remarkably close to discovering the true nature of the slave system…” but had overestimated the use of cruelty.” In Fogel and Engerman’s view, force was necessary, and, although it “could, and often did, lead to cruelty” there was less of it than Stampp believed. Planters, being capitalistic businessmen “used force for exactly the same purpose as they used positive incentives — to achieve the largest product at the lowest cost. Like everything else, they strove to use force not cruelly, but optimally” (p. 232).

In the opinion of Fogel and Engerman, it was the traditional view in which slaves were lazy and not well motivated that gave rise to the false stereotype of black labor that still plagues blacks today (p. 215). In their revised view slaves were hard working; slave labor was of superior quality. Indeed, this helps explain why large slave plantations were much more efficient than free southern farms. “This advantage was not due to some special way in which land or machinery was used, but to the special quality of plantation labor” (p. 209). Ordinary slaves were “… imbued like their masters with a Protestant ethic” (p. 231). They could not exercise that work ethic in whichever direction they wished, but within the confines of the slave system they could, and to a large extent did, strive hard. This revised view, as you can see, shifts attention away from the effect of slavery on the conditions and behavior of blacks today, and puts it back on the conditions of black life that took place after the Civil War (p. 260). And one can imagine this revised view would have bearing on the question of black reparations.

Critics addressed as well the question of the proper role of quantitative methods in history. Could cliometrics make a contribution to our understanding of history in general and slavery in particular? Or is it the case that some of the issues related to slavery are not amenable to quantification or economic analysis?

One calculation from Time on the Cross, for example, that got a lot of attention, perhaps more than any other, was the attempt to measure the extent to which slaves were whipped. It may seem like this point was belabored by critics, but it was an important piece of information in the Fogel-Engerman edifice. Whipping was an example of the methods used to socialize and motivate slaves; the less important these incentives of the ‘stick’ variety, the more believable would be the argument about the incentive effect of carrots. According to Fogel and Engerman, whipping was not common; there were only “an average of 0.7 whippings per hand per year.” The quantification alone was an affront to some, while the interpretation bothered many more. The criticism of this one point suggests the extent to which scholars were examining the book’s methodology. Gutman (1975) took the matter up in great detail, pointing out that their argument rested on evidence from a single plantation and one not likely to be representative of the plantation economy. Moreover, they were careless in their use of those limited statistics; they used an “inaccurate count of the number of whippings, [a] greatly exaggerated estimate of the number of hands, and their erroneous measurement of the length of time covered,” to arrive at their estimate. Gutman argues that it is more relevant to ask how often the whip was used, and using the same evidence calculated that “A slave — on average — was whipped every 4.56 days.” Moreover, the precision as to the number of whippings is not as important as the impact, and that depended on the external effects of whipping. Slaves who witnessed the whipping may have altered their behavior.

Historians were all too eager to think that cliometric techniques had led Fogel and Engerman to what historians saw as outlandish conclusions. Perhaps for this reason, cliometricians felt some duty to defend the cliometric methodology and came down harder on the authors, questioning the quality of Fogel and Engerman’s data, analysis and interpretation. Sutch’s work on the material treatment of slaves, was a detailed attempt to replicate the results of Fogel and Engerman and he “found so many errors of computation or citation, data so selective or weak, and the presentation of the results so distorted that I have been forced to conclude that Time on the Cross is a failure” (1975, p. 339) But it was not a failure of the cliometric methodology; “the fault must lie with the authors.” In Sutch’s view, “quantitative methods can help in producing a more accurate and complete portrayal of slavery” (1975, p. 429).

Somehow Time on the Cross has survived all this firepower. Its conclusions are not all intact, but neither have they been completely dismantled. Despite all the criticisms of the calculation of the relative efficiency of southern agriculture, for example, the leading cliometrics textbook says “The bottom line of the debate is that Fogel and Engerman’s measure of relative efficiency seems to be robust, although many scholars remain troubled by quite how to interpret the estimates. [And] The sources of productivity differences remain a mystery” (Atack and Passell, 1994, p. 316). And although slaves are not seen as having been imbued with the Protestant work ethic, there is little question that they were motivated in part by positive incentives and not just by force and cruelty.

The material conditions of slaves were not as good as Fogel and Engerman made them out to be, but they were better than many had imagined. Fogel and Engerman in effect forced others to confront the issue and look more carefully at the variation in treatment across space, time and size of slave holding. Much research was produced as a result of this, and much of it was produced by students of, and under the direction of, Fogel and Engerman. Thomas Haskell thought that Time on the Cross would probably survive in part because “there were dozens of graduate research assistants who are now fiercely loyal to their company and its product” (1975, p. 39). He envisioned that these assistants would work to shore up the various parts of the structure laid out in the book, and it is unlikely he imagined the sort of work on the stature and nutrition of slaves that was carried out by Richard Steckel, Robert Margo and others. That evidence, the quantitative sort that Fogel and Engerman desired and paid attention to, ran heavily against Time on the Cross, and has clearly influenced Fogel and Engerman’s views. According to Time on the Cross, “Slave health care was at its best for pregnant women. ‘Pregnant women,’ wrote one planter, ‘ must be treated with great tenderness, worked near home and lightly” (p.122). In the “Afterword” of the re-issued Norton edition of the book they put it this way: “It now appears that children rather than adults were the principal victims of malnutrition. [and] Much of the new story turns on the overwork of pregnant women” (1989, p. 285). In Without Consent or Contract, Fogel puts it this way “Masters were not generally guilty of working field hands to death, but they were guilty of so overworking pregnant women that infant death rates were pushed to extraordinary levels” (p. 153).

And despite the pronouncements by some historians that the book was a “flash in the pan, a bold but now discredited work” (Kolchin, 1992, p. 492), it remains in publication and on the reading lists in economics as well as history courses. Of course one cannot tell from the reading list what use is made of the book in each course, and it may be that historians use it as an example of methodology that should not be tried. Nevertheless, it is still in use and still being paid attention to. Moreover, many economic historians, in both economics and history departments, agree with the major conclusions put forth by Fogel and Engerman. Robert Whaples (1995) surveyed members of the Economic History Association in order to find out where there is consensus on a broad range of issues, and included four hypotheses taken straight out of Time on the Cross. As one might expect, two of the propositions that were not very controversial in 1974 — those having to do with the profitability and viability of slavery — were still uncontroversial and agreed to by nearly 100 percent of both economists and historians. More surprising is that most economists and historians accept Fogel and Engerman’s proposition that slave agriculture was efficient compared with free labor. Some of those who agreed did so with unspecified provisos, but only 28 percent of economists and 35 percent of historians disagreed. Their proposition about the material standard of living has not fared as well, 58 percent of historians and 42 percent of economists disagreed with the proposition that the material condition of slaves compared favorably with those of free industrial workers. This, I would think should not be too surprising in light of the work cited above on the treatment of slave children and pregnant women. Many of Fogel and Engerman’s students might have disagreed with this claim, and even Fogel and Engerman have backed off somewhat on this claim (1989, p. 285).

Clearly the book had an impact. At the time it seemed that the attention of the field was devoted entirely to this subject; Fogel and Engerman must have been consumed by it. Its impact, however, even if not all of its conclusions, was longer lasting. It led to a large volume of subsequent research, the compilation of data sets, and helped as well to foster new areas of work, such as that on stature and the standard of living. Whether its conclusions are right or wrong, it is a book that has not been ignored.

References Cited:

Jeremy Atack and Peter Passel. A New Economic View of American History, second edition. New York and London: W.W. Norton, 1994.

Alfred Conrad and John Meyer. “The Economics of Slavery in the Antebellum South.” Journal of Political Economy 66 (1958): 95-130.

Paul David, et al, editors. Reckoning With Slavery: Critical Essays in the Quantitative History of American Negro Slavery. New York: Oxford University Press, 1976.

Paul David and Peter Temin. “Slavery: The Progressive Institution?” Journal of Economic History 34, no. 3 (1974): 739-83.

Paul David and Peter Temin. “Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South: A Comment.” American Economic Review 69 (1979): 213-18.

Robert Fogel. Without Consent or Contract: The Rise and Fall of American Slavery. New York: W.W. Norton, 1989.

Robert Fogel, et al. Without Consent or Contract: Evidence and Methods. New York: W.W. Norton, 1992.

Robert Fogel, et al. Without Consent or Contract: Technical Papers. New York: W.W. Norton, 1992.

Robert Fogel and Stanley Engerman. Time on the Cross: The Economics of American Negro Slavery. Boston: Little, Brown and Company, 1974.

Robert Fogel and Stanley Engerman. Time on the Cross: Evidence and Methods. Boston: Little, Brown and Company, 1974.

Robert Fogel and Stanley Engerman. “Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South.” American Economic Review 67 (1977): 672-90.

Robert Fogel and Stanley Engerman. Time on the Cross: The Economics of American Negro Slavery. New York: W.W. Norton, 1989.

Robert Fogel and Stanley Engerman. “Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South: A Reply.” American Economic Review 70 (1980): 672-90.

Claudia Goldin. “The Economics of Urban Slavery: 1820 to 1860,” Ph.D. dissertation, University of Chicago, 1972, subsequently published as Urban Slavery in the American South, 1820-1860: A Quantitative History. Chicago: University of Chicago Press, 1976.

Herbert Gutman. Slavery and the Numbers Game: A Critique of Time on the Cross. Urbana: University of Illinois Press, 1975.

Thomas Haskell. “The True and Tragical History of ‘Time on the Cross.’ The New York Review of Books (October, 1975): 33-39.

Peter Kolchin. “More Time on the Cross? An Evaluation of Robert William Fogel’s Without Consent or Contract.” Journal of Southern History LVIII, no. 3 (1992): 491-502.

Robert Margo and Richard Steckel. “Height, Health, and Nutrition: Analysis of Evidence for U.S. Slaves” Social Science History 6 (1982): 516-58

Peter Passel. “An Economic Analysis of that Peculiarly Economic Institution.” New York Times Book Review (April 28, 1974): 4.

Kenneth Stampp. The Peculiar Institution: Slavery in the Antebellum South. New York: Alfred Knopf, 1956.

Richard. Steckel. “A Peculiar Population: The Nutrition, Health, and Mortality of American Slaves from Childhood to Maturity.” Journal of Economic History 46 (1986a): 721-41.

Richard. Steckel. “Birth Weights and Infant Mortality among American Slaves.” Explorations in Economic History 23 (1986b): 173-98.

Richard Sutch. “The Treatment Received by American Slaves.” Explorations in Economic History 12 (1975): 335-438.

Richard Vedder. “The Slave Exploitation (Expropriation) Rate.” Explorations in Economic History 12 (1975): 453-58.

Gary Walton. “A Symposium on Time on the Cross.” Explorations in Economic History 12 (1975): 333-34.

Robert Whaples. “Where Is There Consensus Among American Economic Historians?” Journal of Economic History, 55 (1995): 139-147.

Gavin Wright. “Slavery and the Cotton Boom.” Explorations in Economic History 12 (1975): 439-52.

Tom Weiss teaches economics at the University of Kansas and is a research associate of the National Bureau of Economic Research. He is a former editor of the Journal of Economic History, and is currently the Executive Director of the Economic History Association. His current research is a collaborative project on economic development in colonial North America being carried out with Joshua Rosenbloom and Peter Mancall.

Subject(s):Servitude and Slavery
Geographic Area(s):North America
Time Period(s):19th Century