created by enslaving others ), the rest of the world suffers from it .
The fact that slavery created huge social costs was so well understood as recently as the 1970s-80s that it rarely came up in the great slave debates of the era touched off by the publication of Robert Fogel and Stan Engerman ’ s Time on the Cross ( 1974 ). Instead , the debates centered on enslaver profitability and slave efficiency . Many historians were outraged to learn that Fogel , Engerman and other economic historians believed that slavery could be profitable and that in some situations , like on cotton plantations utilizing the gang system , slaves could be more efficient ( more output from a given input ) than free laborers . The economists eventually won the debate , and historians scampered off to study how slaves resisted their bondage .
Today , historians of capitalism , like Baptist , minimize the impact of slave resistance in order to maximize exploitation and hence profit and hence , in their minds , investment available to spark the Industrial Revolution . As Richard Sylla and other scholars have shown , however , America ’ s economic growth spurt was not touched off by mid-19th century industrialization , but rather by the financial revolution masterminded by Alexander Hamilton in the 1780s and 1790s .
By the time Hamilton ’ s reforms were made law , the new United States of America had a Constitution that was strong enough to create a government that was energetic enough to protect Americans from foes foreign and domestic , but yet internally checked enough to prevent tyranny . Aided by the Mint Act ( which defined the US dollar unit of account in terms of gold and silver ), funding and assumption of the Revolutionary War debt ( which brought America and its constituent states out of bankruptcy ), the Bank of the United States ( which solidified the new nation ’ s credit standing ) and corporation formation ( which allowed entrepreneurs excited by the new system of political economy to pool their resources to start banks , insurers , transportation infrastructure concerns , manufacturers , utility companies and even service companies ), the US economy began to grow at modern rates starting in 1790 , not the antebellum period .
The other major problem with the new history of capitalism ’ s claim that slavery induced economic growth is that its
“ Desperate Conflict in a Barn ,” an illustration of escaped slaves fighting for freedom , 1872 .
adherents forgot about ( or , more likely , never learned about ) slavery ’ s negative externalities . Throughout the 1850s and 1860s , writers like Cassius Clay , Hinton Helper and J . E . Cairnes catalogued the huge costs that slavery imposed on nonslaveholders . Their claims were so compelling that it gave rise to a second reason , after immorality , for abolishing slavery . Many Americans stirred against slavery for the first time not in response to a religious or humanitarian calling , but because they saw , for the first time , that enslavers
“ White Slavery in the East — Exposed for Sale ,” 1875 .
were stealing from everybody , not just their slaves .
To keep their slaves hard at work , enslavers had to enlist poor Southern whites to patrol at night , Northerners to return runaway slaves , Northern mail users to subsidize the US Postal Service ( which ran a profit in the North but a deficit in the infrastructure-poor South ) and Northern taxpayers to maintain armed services sufficient to put down slave rebellions and to win new territories for enslavers to master .
The New York Public Library The New York Public Library www . MoAF . org | Summer 2017 | FINANCIAL HISTORY 13