The Economic Vestiges of Slavery in the United States

The first permanent group of English settlers in North America settled in Jamestown, Virginia, in 1607. By 1609, those settlers found themselves in a very grave situation, enduring the starving time. Historians describe the English settlers as being unfamiliar with hard agricultural labor. In addition, they found it difficult to deal with the seasonal changes in North America. That year, in the throes of desperation, English settlers resorted to eating their horses, dogs, cats, and wild mice.1 Douglas Owsley, a Smithsonian forensic anthropologist has even found proof that, in the effort to stave off starvation, the settlers resorted to cannibalismeating other human beings.

Fast-forward a brief 166 years, on the eve of the American Revolutionary War, and we find that the English settlers were enjoying one of the highest standards of living in the world. What could have occasioned such an unprecedented rise from desperation to real wealth in such a short time? To answer that question, we must realize that the land the settlers arrived on had been kept in pristine condition for thousands of years by nature and its indigenous inhabitants. This was a land of tremendous resources. The settlers were for the most part unabashed in their aggression for land. In their quest to have as much land as possible, they utilized negotiation, trickery, and, when all else failed, unparalleled levels of violence. Thus, the European American rise in the new land was in part born out of the decline of various indigenous, Native American nations.

In fact, Native Americans and indebted or criminal Europeans were the first people whom the English settlers used as their servants (indentured servants). It was not long, however, before the settlers took note of the tremendous financial success that their mother country Britain was gaining from enslaving African people in the Caribbean. There, the plantations were so profitable that an enslaved African paid for himself or herself after only eighteen months. 2 Although Africans first came into the colonies as indentured servants, for reasons of cost, lower death rates, their unfamiliarity with the land and language of the Europeans, and their prized agricultural and vocational skills, African people ended up making up the bulk of the permanently enslaved persons in colonial America.

1 Stromberg, Joseph, Starving Settlers in Jamestown Colony Resorted to Cannibalism,

downloaded from http://www.smithsonianmag.com/history/starving-settlers-in-jamestown-colony-resorted-to-cannibalism-46000815/?no-ist

2 Wilder, Craig Steven, Ebony and Ivy: Race, Slavery, and the Troubled History of Americas

University (New York: Bloomsbury, 2013), 30.

It can be argued that it was a combination of Native American land and crop knowledge and African agricultural science and back-breaking labor that first lifted the English settlers from desperation to a financial plateau where they could produce a commodity that could be sold for profit on the world market. Making Cash from Cotton

While colonial America was under the British, the products they brought to market were primarily tobacco, rice, and indigo. After independence, with the invention of the cotton gin in 1793, cotton became king. Slavery quickly shifted its geographical focus from the Northern states to the growing Southern states. By 1850, there were an estimated 2.5 million people enslaved in the United States.3 On Southern farms and plantations, enslaved Africans produced more than 60 percent of the cotton used in the world!

Of the 2.3 million pounds of cotton produced by captive Africans in the United States, more than half went to Britains cotton factories, of which there were over 2,000. The desire for cotton also spurred the industrial revolution, specifically textile factories in France, the Netherlands, Switzerland, Germany, Austria, Russia, Italy, Spain, Belgium, and Boston.4

When a Southern plantation owner wanted to produce cotton, or expand his operation (obtain more enslaved Africans) he had to obtain loans from the large banks in New York or London.5 These loans were paid back with considerable interest, making banking an extremely profitable business. Banks such as Bank of America, Wachovia, Citibank, JP Morgan Chase, and Barclays Bank (London) have all profited from human bondage in North America.

Enslaved African persons were legally considered property in the United States, so an enslaved person could be used as collateral to obtain the loans necessary for plantation life. When calculating the value of the estates (plantations), the estimated value of each slave was included. This became a source of tax revenue for local and state governments. Taxes were also levied on slave transactions.6

Every portion of the slave economy was insured, making insurance an enormously profitable business. The ships that left America and various European ports to procure Africans were all insured. Individual enslaved persons were insured, as were the crops being produced. The value of each enslaved person was carefully calculated, in some cases even before they were born. Furthermore, plantation owners meticulously depreciated the value of their enslaved persons as they aged, and they readily sought insurance compensation

3 Dodson, Howard, How Slavery Helped Build a World Economy, downloaded from

http://news.nationalgeographic.com/news/2003/01/0131_030203_jubilee2.html 4 Farrow, Anne, Joel Lang, and Jenifer Frank, Complicity: How the North Promoted, Prolonged,

and Profited from Slavery (New York: Ballantine Books, 2005). 5 Ibid.

6 Dodson, How Slavery Helped Build a World Economy, 3.

for any enslaved African who died unexpectedly.7 Insurance companies such as Lloyds of London, Aetna, and New York Life have firmly cemented connections with slavery in the United States.

Cotton grown in the South was usually not directly exported. It was first shipped to New York, making New York the financial and shipping hub of the nation. Middlemen such as the Lehman Brothers cashed in by helping rural Southern farmers get the best price for their cotton from the investment and shipping firms in New York. It is estimated that forty cents of every dollar made by Southern plantation owners was spent in the Northern states for goods. Northern firms seeking to get a portion of the overwhelming profits being made in the South manufactured hats and hoes for plantation owners. They also imported fine china and cutlery and made fine furniture, candles, soaps, French plate glass, pumps, fire hoses, pianos, pickles, liquors and account room weighing books specifically for cotton, grain, sugar and molasses.8 Northern textile mills were even making the clothes worn by enslaved African people!

New York soon became a shoppers paradise. It was advertised as the place for Southerners to spend their summers away from the sweltering heat of the South. Fancy hotels and retailers of fine linen, perfumes, and precious stones all vied for their blood-soaked dollars made from human bondage.9 Historians from the Gilderman Institute firmly assert, It is inconceivable that

European colonists could have settled and developed North and South America without slave labor. Other historians add that learning how to control the Atlantic world and its slave economy gave Europe and America the template for later world dominance.

Referring to the ease of Americas entrance into the industrial age, historians

Beckert (of Harvard) and Rockman (of Brown University) state, Those who would soon be called capitalist . . . rarely started from scratch but instead drew on the wealth generated earlier in the robust economy of slaves, sugar and tobacco. Fathers who made their fortunes outfitting ships for distant voyages begat sons who built factories, chartered banks, incorporated canal and railroad enterprises, invested in government securities and speculated in new financial instruments.10

7 Johnson, Katie, The Messy Link between Slave Owners and Modern Management,

downloaded from http://hbswk.hbs.edu/item/7182.html 8 Farrow, Lang, and Frank, Complicity, 23.

9 Ibid.

10Beckert, Sven, and Seth Rockman, How Slavery Led to Modern Capitalism: Echoes,

downloaded from http://www.bloombergview.com/articles/2012-01-24/how-slavery-led-to-modern-capitalism-echoes

Activities for Economic Vestiges of Slavery Activity One Historical Recall

Once students have completed the reading, they should be able to answer the following questions:

1. What were social conditions like in Jamestown, Virginia, in 1607, where the first English settlers created the first permanent English settlement?

2. What factors led to the swift change in the economic outlook for the English settlers?

3. Write a two- to three-paragraph reflection on what you may have found new or shocking in the readings.

Activity Two Historical Research

1. Students should view the film Traces of the Trade: A Story from Deep North, directed by Katrina Brown.

2. Immediately following the above film, students should choose one of the wealthy families, corporations, or banks/financial institutions to research. The complete list of these families and businesses is found in appendix. The focus of the students research should be on tracing how money made during Americas period of enslavement was invested over time. An example of this research on the Lehman Brothers can be found in appendix B.

3. Students should present their findings to the class.

Activity Three Math and Statistics

1. Using the recent report issued on the Annie Casey Foundation, Race for Results, students should be guided to examine how poverty, poor health care, and inadequate education leads to measurable disparities between African Americans and members of other racial groups. Although the report is quite extensive, on page ten of the official report the researchers give an easy-to-follow chart of the twelve indicators of success that they measure. Students should be led to create their own line graphs, bar graphs, or pie charts from the statistics that are given in that article. The article can be found at http://www.aecf.org/~/media/Pubs/Initiatives/KIDS%20COUNT/R/RaceforResults/RaceforResults.pdf

2. Allow students to offer their own speculations on how disparities in wealth that were established at the beginning of American history are still relevant today.

Follow That Money!

How Money Made in the US Economy of Enslavement Led to Intergenerational

Wealth: The Lehman Brothers as a Case in Point

Mayer Lehman Emanuel Lehman

In 1844 Henry Lehman emigrated from Germany to Montgomery, Alabama, where slavery was well under way and cotton was king. There he started a small shop that sold groceries, dry goods, and farm tools to plantation owners.

The shopkeeping efforts were so successful that in 1850 Lehmans two other brothers, Emanuel and Mayer, joined the business. From this union came the name Lehman Brothers.

Lehman Brothers quickly saw that real money was not in shopkeeping but in buying captive-produced cotton from small rural farmers and selling that cotton at a profit to larger shipping firms in Northern states such as New York. Thus, Lehman Brothers evolved from retailers to a commodities broker (buying and selling cotton).

Briefly combining their efforts with John Wesley Durr, Lehman Brothers was able to build a cotton warehouse so that it had a place to store cotton while it negotiated for the best price or waited for price of cotton to rise. By 1858, it was able to open a New York office, which fully established it as a player in major US financial circles.

Even after the Civil War, cotton was still king in the United States. In fact, well into the 1900s cotton was the leading export from the United States. The growth of the cotton business enabled = Lehman Brothers to be a leader in the creation of the New York Cotton Exchange.

For, the next couple of decades, Lehman Brothers had extreme vertical financial growth. It became the fiscal agents for the state of Alabama. It was able to tap into the tremendous wealth being generated by the growth of the railroad industry by giving financial advice and underwriting loans for railroad construction. Lehman Brothers also branched into selling stocks, bonds and securities for up and coming companies.

In 1906, Lehman Brothers began business with Henry Goldman (of Goldman and Sachs). Together they provided funding and underwrote securities for the retail giants of that era, including Sears, Roebuck & Co.; F. W. Woolworth Co.; and R. H. Macy & Co.

During the 1920s Lehman Brothers entered the airline and motion picture industries. Lehman Brothers would help fund Paramount Pictures, Twentieth Century Fox, and Radio Corporation of America.

Lehman Brothers also funded the oil industry, backing giants such as Halliburton and the construction of the Trans-Canada pipeline.

From the 1950s to the 1990s, Lehman Brothers invested in the digital markets and developed a global market that helped large US companies negotiate cross-border transactions (Chrysler/American Motors, General Foods/Phillip Morris).

It was Lehman Brothers engagement with subprime mortgage lending that caused the company to finally close down on September 15, 2008. At the point of bankruptcy, Lehman Brothers listed $639 billion dollars in assets. A portion of its assets were sold to Barclays Bank, a bank that also originated in the era when Europeans freely and legally trafficked and forced African people into profitless labor.

Sources History of the Lehman Brothers downloaded from

http://www.library.hbs.edu/hc/lehman/history.html

Business consultation for the lesson provided by Bernard Afrifa (business analyst

consultant) Certified Competency in Business Analysis (International Institute of

Business Analysis), B.A. Economics, Illinois Wesleyan University

MBA, Lewis University

Additional Resources

For Teachers Christopher Columbus and the Afrikan Holocaust: Slavery and the Rise of European Capitalism

by John Henrik Clarke The Half Has Never Been Told: Slavery and the Making of American Capitalism by Edward E.

Baptist Racism: From Slavery to Advanced Capitalism by Carter A. Wilson River of Dark Dreams: Slavery and Empire in the Cotton Kingdom by Walter Johnson Slavery in New York edited by Ira Berlin and Leslie M. Harris

Articles Wall Street Was a Slave Market Before It Was a Financial Center by Alan Singer. Download from http://www.huffingtonpost.com/alan-singer/wall-street-was-a-slave-m_b_1208536.html 9 White Celebs, World Leaders Whose Families Owned Black Slaves by Atlanta Black Star staff. Download from http://atlantablackstar.com/2013/08/21/10-celebs-whose-family-owned-black-slaves/

Film Slavery and the Making of America

The Economic Vestiges of Slavery in the United States of America

Banks and Investment Firms

JP Morgan Chase (1799): Between 1831 and 1865, two of its predecessor banks (Citizens Bank and Canal Bank in Louisiana) accepted approximately 13,000 slaves as loan collateral and seized approximately 1,250 slaves when plantation owners defaulted on their loans. Bank of America (founded in 1904 as Bank of Italy): Two of its predecessor banks (Boatman Savings Institution and Southern Bank of St. Louis) had ties to slavery, and another predecessor (Bank of Metropolis) accepted slaves as collateral on loans.

Barclays Bank (1690; founders Thomas Gould and John Freame)

Wachovia Bank (1879; acquired by Wells Fargo in 2008): Two institutions that became part of Wachovia (Georgia Railroad and Banking Company and the Bank of Charleston) owned slaves or accepted them as collateral on mortgaged property or loans.

Royal Bank of Scotland (1727 [first charter])

Lehman Brothers (1850) Railroads Boston and Lowell (1835) Union Pacific Corp (1862) Norfolk Southern (Mobile & Girard and the Central of Georgia) became part of

Norfolk Southern. Mobile & Girard paid slave owners $180 to rent their slaves to the railroad for a year. The Central of Georgia owned several slaves.

Newspapers Hartford Courant (1764) USA Today: Its parent company, E.W. Scripps and Gannett, was linked to the slave trade. Virginia Gazette (1736 and 1780) Georgia Gazette (est. by James Johnston, a Scot, in 1733) Maryland Journal (1773) Shipping

Names of slave ships: Creole, Jesus of Lubeck, La Amistad, Desire, Hope, Wanderer Mary (James Brown), Sally (Nicholas Brown)

Insurance Companies Aetna Insurance Co. (1850) Manhattan Life Insurance (1850) Lloyds of London (1688)

New York Life: A predecessor, Nautilus Insurance Company, sold slaveholder policies during the mid-1800s.

AIG: purchased American General Financial, which owns US Life Insurance Company. AIG found documentation that US Life insured the lives of slaves.

United States Life Insurance Company of New York Educational Institutions Harvard University (1636) Yale University (1701)

Founders: Timothy Woodbridge, Samuel Andrew, James Noyes, Joseph Webb, Israel Chauncy, Abraham Pierson, Samuel Mather, James Pierpont, Thomas Buckingham, Noadiah Russell

Princeton University (College of New Jersey, 1746) Founders: John Witherspoon, Jonathan Dickinson, William Tennent, Aaron Burr, Sr. Brown University (Rhode Island College, 1764) Rutgers University (1766) Dartmouth College (1769) University of North Carolina (1789) Williams College (1793) Columbia (1754) Others

Tiffanys (1837): Charles Lewis Tiffany originally financed with profits from a Connecticut cotton mill. The mill operated from cotton picked by slaves

DeBeers (initially financed by the Rothschilds in 1887) Royal African Company (British, 1660) Dutch West India Company (1621) Brooks Brothers: The suit retailer started out in the 1800s selling clothes for

slaves to slave traders. Leading Slave Merchants and Prominent Families

Cabots of Massachusetts Browns of Rhode Island (Brown University) Champlins of Rhode Island Whipples of New Hampshire Eastons of Connecticut Willings of Philadelphia Morrises of Philadelphia Stantons of Narragansett, Rhode Island Other families: Fanueils, Royalls, Wantons Note: Ezra Stiles imported African captives while president of Yale University

Slave Ports in Northern States

Rhode Island New Port, Bristol, Providence Sources Ebony and Ivy: Race, Slavery, and the Troubled History of Americas University (2013)

by Craig Steven Wilder Complicity: How the North Promoted, Prolonged, and Profited from Slavery (2005) by

Anne Farrow, Joel Lang, and Jenifer Frank How Slavery Led to Modern Capitalism: Echoes by Sven Beckert and Seth Rockman,

downloaded from http://www.bloomberg.com/news/print/2012-01-24/How -slavery-led-to-modern-captialism-echoes.html

The Messy Link between Slave Owners and Modern Management by Katie Johnson, downloaded from www.forbes.com/sites/hbsworkingknowledge/2013/01/16/the-messy-link-between-slave-owners-and-modern-management/print/

Lesson Plan The Economic Vestiges of Enslavement

Grade Level(s) 1112

Unit and Time Frame

Three 60-minute periods

Common Core State Standards

CCSS. ELA-Literacy. CCRA. R.1: Read closely to determine what the text says explicitly and to make logical inferences from it; cite specific textual evidence when writing or speaking to support conclusions drawn from the text.

CCSS. ELA-Literacy. CCRA. R.7: Integrate and evaluate content presented in diverse media and formats, including visually and quantitatively, as well as in words.

CCSS. ELA-Literacy. CCRA. W.1: Write arguments to support claims in an analysis of substantive topics or texts using valid reasoning and relevant and sufficient evidence.

CCSS. Math Practice. MP.1 Make sense of problems and persevere in solving them.

Lesson Goals After completing this lesson, students should be able to demonstrate understanding of economic vestiges of slavery in the United States by doing the following:

Demonstrate knowledge of the complex social, economic, political, and environmental factors that create and perpetuate precariousness.

Analyze the ways that processes of inequality and differences in access and power are shaped by complex interactions of local and international dynamics.

Recognize how meanings of justice and reconciliation are mediated by identity, historical experience, and future imaginaries.

Identify some of the economic and social advantages of being involved with the slave trade.

Research the American corporations and institutions that directly or indirectly trace their wealth to the slave trade era.

Research the current status of the reparations movement.

Materials/ Resources

For Teachers:

computer

smart board/projector

handouts (attached to lesson plan)

Interactive Timeline of the History of Reparations (http://www.tiki-toki.com/timeline/entry/257213/Chronology-of-the-Reparations-Movement-of-Africans-in-America/#vars!date=1838-10-20_17:54:24!)

videos (Traces of the Trade)

For Students:

pen/pencil

paper

handouts

Key Terms and Concepts

Ivy League schools: a group of long-established colleges in the eastern United States having high academic and social prestige. Emissary (-ies): a person sent on a special mission, usually as a diplomatic representative. Endow: to give or bequeath an income or property (to a person or institution). Indigenous: originating or occurring naturally in a particular place; native. Commodity: something that is bought and sold; something or someone that is useful or valued. Indentured servant: a person who came to America and was placed under contract to work for another person over a period of time, usually seven years, especially during the seventeenth to nineteenth centuries. They generally included victims of religious persecution, people kidnapped just for the purpose of working, and/or convicts and paupers. Textile: any cloth or goods produced by weaving, knitting, or felting. Capitalism: an economic system in which trade, industry, and the means of production are controlled by private owners with the goal of making profits in a market economy. Reparations: repair; amends for a wrong that was done; atonement. Internal reparations: all actions taken by victims of the system of slavery and their descendants to in any way grant themselves a greater sense of humanity than that which was/is offered to them by an unjust system. External reparations: redress that people receive from governments or corporations. Repatriation: the process of returning a person to his or her place of origin or citizenship.

Interdisciplinary Connections

Geography/History: Have the students research different ethnic groups and what they receive as reparations and compare/contrast with African Americans.

Writing: Students can write a letter to their local congressman/senator asking for the passage of the bill H.R. 40 (Commission to Study Reparation Proposals for African-Americans Act).

Math: Students can use their research to calculate how much the descendants of a slave should be compensated monetarily. They can also research companies that can trace their wealth to the slave era and try to estimate how much money they made from the slave trade.

1. Opening: Teacher can use a PowerPoint presentation showing the companies that have benefited from slavery and Ivy League colleges and ask the students, What do all of these companies and institutions have in common? Get some responses from the students; then let them know that ALL of these companies/institutions have directly benefited from slavery.

2. Introduction to New Material: Have the students discuss what happens to them when they do something wrong or when someone does something

wrong to them. They can talk about how they apologize and whether they have to compensate for the wrong that they committed. Let them discuss whether that is the right way to handle an issue. Teacher can then segue into the concept of reparations.

KEY CONCEPTS:

Americans made huge amounts of money from the transatlantic slave trade.

Many of the financial advantages gained from slavery are still evident in Americas social classes and economy today.

3. Discussion:

Have the students debate whether the descendants of slaves should receive reparations. Also, they should discuss what type of reparations would be appropriate and how much should be disbursed (ex. free education, land, money, or a combination of those items).

Students can research and discuss the effects of slavery on African Americans today.

4. Critical Reflection Activity: Students can conduct research on their own. Have them interview three to five people to see if they are in favor of reparations. The students could come back to class to discuss their findings, or use their research to write a paper.

5. Closing: Have the students do an exit slip or the 3-2-1 activity. (After the

lesson, have each student record three things he or she learned from the lesson. Next, have the students record two things that they found interesting and that theyd like to learn more about. Then have students record one question they still have about the material.)

Assessment Observation, critical reflection activity, class discussion/participation, writing, geography, and math activities

Extensions (Homework, Projects)

Observation, critical reflection activity, class discussion/participation, writing, geography, and math activities