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Toxic Debt, Liar Loans, Collateralized and Securitized Human Beings, and the Panic of 1873

Toxic Debt, Liar Loans, Collateralized and Securitized Human Beings, and the Panic of 1873

Chapter:
(p.69) 3 Toxic Debt, Liar Loans, Collateralized and Securitized Human Beings, and the Panic of 1873
Source:
Capitalism Takes Command
Author(s):
Edward E. Baptist
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226977997.003.0004

This chapter examines how slaves, as a highly instrumental financial asset, were systematically collateralized in order to raise the operating funds and long-term credit that enable their masters to have more control of the plantation economy. This was an urgent goal for cotton growers looking for hedges against the pernicious booms and busts of the world market. By effectively capitalizing the bodies of slaves, the resulting securities were widely marketed throughout America and Europe. However, this success also contributed to extreme vulnerability during economic crises, such as the one that occurred in the wake of panic in 1837. The subsequent failures of Southern banks, together with Andrew Jackson’s destruction of the Bank of the United States that had provided most of its credit to the plantation economy, made slaveholders increasingly dependent on foreign, including Northern, money.

Keywords:   slaves, credit, plantation economy, cotton growers, hedges, securities, panic, banks, Andrew Jackson

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