The Economic Impact of the Transatlantic Slave Trade

The Atlantic slave trade (AST) was a trade in human slaves that took place across the Atlantic Ocean from the 16th and on through the 19th century. It was a trade predominantly in African slaves from mainly the central and western regions of the continent, who were sold by African slave merchants and tribal leaders to European slave traders (Stearns 2001). The slaves were then transported to colonies in North and South America and were forced to work on plantations of coffee, tobacco, cocoa, cotton and sugar; in rice fields; in the construction industry; in silver and gold mines; or, in houses working as servants.
The Atlantic slave trade was a result of among other factors, the shortage of labor in the American colonies and later in the United States which had large amounts of cheap land for European immigrants (Eltis 2000). These colonists of the New World sought to exploit these lands for export of produce from the New World to Europe among other resources for capital profit. A vast amount of labor was needed in the creation and sustenance of plantations as they required intense labor to grow tropical crops, harvest and process them. With the challenge of finding a sufficient workforce among the native peoples and a large number dying from overwork and diseases, alternative sources of labor were sought resulting in this trade (Williams 1944).

Herein we delve into the long term impact of this slave trade on the economic development of capitalism. Capitalism, in basic terms, is an economic system in which investment of capital (or money) is used to produce profits. Factors of production such as land, communications, factories and transport systems are privately owned by either individuals or corporations trading in a “free market” whose main feature is competition. The history of capitalism points to a number of possible sources, among them the Atlantic slave trade (Dobb 1946). Prior to its development, the world was under a system referred to as “feudalism” which was characterized by legal and military customs that flourished between the 9th and the 15th centuries, which structured society around relationships that were derived from the holding of land in exchange for labor or service (Hobsbawm 1999).
Historians debate on the economic contributions of the Atlantic slave trade to economic development of Europe with some having the view that the capital required came from within solely through industrial development and trade, arguing that profits from the slave trade were minimal, not enough to finance the economic development to industrial capitalism. The enslavement of Africans in this transatlantic trade, others however argue, was an essential component in the development of capitalism in the Western world of Europe and America and which now dominates as a global economic system (Richardson 1998). To this latter group, Europe’s economic development, to its height today (its modern level) was based, largely, on the slave trade which made international trade across the Atlantic viable for European nations (Eltis 2000).
Slaves from the African coast were shipped to the plantations in the American colonies and the Caribbean, their labor used to produce raw materials which were shipped to Europe for Industrial processing and manufacture, and finally the products of European industry were distributed back to the African market or to the plantations for the purchase of slaves and their owners. However minimal the contribution of the trade in slaves was, its contribution to this international (transatlantic) trade as described cannot be downplayed and was a major contributor to the whole since, apart from slaves being bought and sold as a commodity for profit, their labor in the plantations was essential for the production of raw material benefiting the European industry (Eltis 2000).
Sea ports
The Atlantic slave trade can be directly linked to the rise of many sea-ports, mainly Bristol and Liverpool in Britain; Nantes and Bordeaux, France; and Seville in Spain. These sea ports grew as a direct result of shipping and international trade (Rosenberg 1986). The transatlantic trade through shipping and ship building directly led to the growth of the great sea ports of Bristol, Liverpool and Glasgow which were trading centers as well, and by mid 18th century, there was hardly any British town without a connection to the Atlantic slave or colonial rule, with interlinks in trade and manufacture of goods for export to various markets across the Atlantic including the colonies in the Americas (Williams 1944). These sea ports were the gateways to the world markets essential for early trade especially across the Atlantic later inducing industrialization which also gained from the established trading patterns and channels (North 1973).
Industrial revolution
The accumulation of capital (wealth) in Britain that fueled the industrial revolution was made on the back on this slave trade beginning in the late 17th century (North 1973). The Atlantic slave trade also enhanced Europe’s development in technology such as the evolution of shipbuilding which was a consequence of their monopoly of sea commerce. The triangular trade gave a direct stimulus for the ship building industry in England with ships built for the slave trade seeking to combine capacity with speed in an effort to reduce mortality which was the main challenge for the slave traders (Williams 1944).
Manufacturing centers or towns grew often in places that had connections to sea ports consequently leading to the Industrial revolution. An example is Manchester which was the first center of the revolution, and which grew on the back of the growth of the sea-port of Liverpool, a port from which slave trading ships set off from and through which it could reach the world market (Eltis 2000). The capital accumulation in Liverpool from the slave trade profits led to the existence of Lancashire and thereby stimulated the rapid extension of Manchester as a manufacturing hub. This capital was poured back to Manchester to finance its industrialization whose strength lay in the manufacture of cotton goods for the African market and West Indies, for purchase by slaves. Goods manufactured were ferried to Atlantic markets by the slave vessels which also brought back raw materials that enabled such industrialization (O’Brien 1982).
Cargo to Africa is illustrated to have included finery and ornaments, all kinds of cloth, hardware items, iron and other metal goods, guns and powder, household utensils, paper, spirits and tobacco from Britain and foreign nations, among other goods (O’Brien 1982). This assortment typified slave trader’s cargo exchanged for slaves and their production stimulated capitalism by bringing great profits to England and providing employment for British labor. This trade also provided opportunities for allied trades including distribution which required ships and wagons for transport inland and between the continental coasts (North 1973).
Processing of raw materials sourced from colonial territories also gave rise to new industries and further created employment. Among these raw materials was sugar that gave rise to the sugar refining industry which transformed crude brown sugar manufactured on plantations into white sugar for the world market which was more durable and could be better preserved (O’Brien 1982). The importance of the sugar refining industry increased with the spread of tea and coffee as a necessity of life rather than a luxury of kings. It was the slave and sugar trade that brought Bristol to the level of the second city of England in the 18th century (Eltis 2000).
Profits from plantations that had slaves providing the labour was of major assistance to economic development in many ways such as the increasing of the general prosperity of the economy which became a boost to the industrialization process (Rosenberg 1986). This happened through the easing of credit difficulties of the new industrialists suffering from the lengthy turnover time (time to realise profits from an investment) with credit offerings, which were a vital factor to success and the profits from slavery and plantation farming (Hobsbawm 1999). These offerings enabled the industrialization process with financial bills, backed by plantation products like sugar and tobacco, which became a form of money and went into circulation. This plantation funds scenario helped to fill the absence of institutions offering credit in sufficient volumes (Rosenberg 1986).
The maintenance of the slaves and their owners in the plantations provided a significant market as well for British industry, agricultural produce of New England and fish produce from Newfoundland. The profits obtained from the triangular trade were one of the main streams to the accumulation of capital to finance the Industrial revolution in England (O’Brien 1982).
Banking and insurance
With regard to the banking and insurance sector, Eric Williams (Williams 1944) cites several examples of immense personal wealth derived directly from the slave trade. David and Alexander Barclay, for instance, made vast amounts of money from the trade, later using this to set up Barclays Bank. Also directly associated and having its roots in the transatlantic slave trade is the Lloyds of London, which grew through profits from the trade from a small London coffee house to the world’s largest banking and insurance houses. In “Capital and Slavery” he wrote: “Many of the 18th century banks established in Liverpool and Manchester, the slaving metropolis and the cotton capital respectively, were directly associated with the triangular trade. Here, large sums were needed for the cotton factories and the canals which improved the means of communication between the two towns” (p. 99, 1944).
Insurance houses grew to cover risks in the international business related to shipping with merchants insuring their cargoes of goods and slaves against loss, as well as the perils in the harbors and colonial plantations (Williams 1944). Insurance against fires in the West Indies was done at Lloyd’s from very early on, and this house also covered slaves and slave ships. Growth in the insurance sector led to the formation of the Liverpool Underwriter’s association in 1802 with its chairman being a prominent West Indian merchant. Banks, through their involvement in the trade, also financed the adoption of modern techniques in the agricultural enterprise in Europe enabling the practice of extensive agriculture and large scale production (Williams 1944).
There was a typical transition from trader to merchant and then on to banker in the time, transitions that came about as individuals who made profit from the slave and allied trade sought further investments and diversification of business (Hobsbawm 1999). Banking and insurance grew primarily through links with shipping and the international trade. Examples of these include the Heywood bank founded in 1773 in Liverpool and purchased by the Bank of Liverpool a decade later and which later, also, set up the Manchester bank. Its founders had success in the merchant business, later elected to the chamber of commerce while its directors were also involved in the African and West Indian trade. Another individual merchant-turned-banker was Thomas Leyland of Leyland and Roscoe and later Leyland and Bullins (later amalgamated into the North and South Wales Bank Limited in 1901) setting up in the early 19th century, who had investments in the African slave trade in the late 18th century considered as one among the most active traders of slaves in Liverpool with immense profits (Williams 1944).
Away from Britain, the financial effect of the Atlantic slave trade ranged wide even touching the French St. Malo fishing industry which saw a revival with the opening up of markets in the French plantations that flourished through the labor of African slaves (O’Brien 1982). The triangular trade brought back indigo dyes from Africa, as well, heavily depended upon by the Portuguese (North 1973). The “ripple effect” of the Atlantic slave trade had consequences far and wide with Brazilian dyewoods, for example, being re-exported from Portugal into the Mediterranean, North sea and Baltic which were then passed on to the continental cloth industry in the 17th century. Despite the Portuguese making enormous profits from the slave trade, it was unfortunate for Portugal that much of this money rapidly passed on to the hands of the more developed nations to the west of Europe. This happened through the imbalance of trade with supply of loans, ships and trade goods to Portugal from these more developed nations which included Germany, Britain, Holland and France (Hobsbawm 1999).
Unequal terms of trade and plunder
By 1800, the dominance of Europe on the increasingly global economy was quite well established and organized under capitalism. The “upper” capitalist class in Europe with their control of trade internationally ensured that Africa specialized in exporting captive slaves through the 17th to the 19th century, and, through their exploitation in labor made huge profits that continued to be re-invested in Western Europe in the formation of companies, shipping, capitalist agriculture, technology, insurance and the manufacture of machines including the steam engine (Rosenberg 1986).
The economic philosophy over this time had no open door policy and the colonial trade was a monopoly of the home country administered rigidly (Richardson 1998). The colonies were under obligation to send their produce to England and to only use English ships. They were not allowed to manufacture anything, even refine the sugar they produced and could buy nothing but British commodities, or foreign products only if they were imported from England. The colonies were confined mainly for their agricultural exploitation with the only concession being the access to the home market (Richardson 1998).
In America, the New York City slave trade involved the building and maintaining of ships that were involved in the trade between it, Europe, the Caribbean and Africa; financial service provision which entailed borrowing, lending and insuring the transport vessels; as well as advertisements of slave sale and purchase which was a major source of revenue for New York newspapers in the 18th century (North 1973). New York was made a prime center for the slave trade mainly due to its strategic geographical position, its network of inland waterways, as well as, its proximity to the colonial settlements in America. It, thus, was well placed for the accumulation of capital very early in the trade and was a significant nexus in a web commanded by the Dutch East India company which involved a base in Angola on the shores of west Africa, one in Brazil in South America, and another in Curacao in the Caribbean territory of the Dutch (North 1973). The first slaves to the city arrived in the then New Amsterdam in the early 17th century working for the Dutch West India Company and were involved in bringing it to become what it is today (Rosenberg 1986).
Virtually all New York businesses were involved with slavery from the beginning, with the enterprise comprising a myriad of activities including the direct trading in slaves; use of slave labor in workshops engaged in various crafts; and in agriculture where slaves were involved in harvesting, processing and packaging foodstuffs for use in the Atlantic slave trade. It also involved the supply of grains, tools and manufactured foods to plantations in the West Indies and North America for the consumption of slaves (North 1973). The economy of the city in its entirety was built on slavery with almost everything grown or produced a result of slave labor. Products entailed luxury items such as cheese, tobacco, rum, sugar, cloth and butter and were carried on ships owned by slave traders. The system of unpaid labor in its enormity kept the stores well stocked and prices fairly low (Rosenberg 1986).
With Britain and France far ahead, they ushered in industrial development and parliamentary democracy with attendant liberties (Rogowski 1989). Accumulation in Britain was later fed by the trade with India, though this foreign stream was secondary to the Atlantic slave trade and its exploitation was strengthened only with its loss of the American colonies (O’Brien 1982).
Growth in capitalism during this period of the Atlantic trade reflects the combined influence of growth opportunities generated by the Atlantic slave trade in addition to the emergence of economic institutions which provided security to property rights to the broader society, enabling the freedom to gain entry into profitable businesses and ventures (Rogowski 1989). These economic (capitalist) institutions were also a result of the development of political institutions which constrained the power of the monarchies and allied groups. For these institutions to gain strength needed to bring about the economic change, there was need for a nascent bourgeoisie and this was contributed indirectly through the enriching of segments of the bourgeoisie (Rogowski 1989).
The rise in trade across the Atlantic strengthened their commercial interests enabling them to demand and thereby obtain changes in the institutions which were a necessity for growth of capitalism (Eltis 2000). Profits from this international trade were substantial with the recipients becoming very rich going by the standards of the time, thereby gaining power in the political and social spheres, and challenging the dominance of the monarchies (Rogowski 1989). This was a significant contributor to development economically and for capitalist growth.
The Atlantic slave trade’s contribution to the development of capitalism has resulted in the nations that previously engaged in it still retaining their dominance of international trade and politics, with very strong economies and political maturity. The Atlantic slave trade was not entirely responsible for the economic development of capitalism but is considered to have contributed to the accumulation of capital ploughed-back to generate further capital that drove the industrial revolution.
The slave trade was just one of the components of the transatlantic trade which featured an exchange of a variety of goods and plantation produce for slaves on the African coast who were later exchanged for raw materials in plantations on the American colonies and mainly the West Indies. Economic change is gradual and has a cumulative effect and the commercial capitalism in the 18th century developed Europe’s wealth contributed through slavery and monopoly. This further helped to create industrial capitalism characteristic of the 19th century, which undid much of the dependence on the slave trade. The Atlantic slave trade both directly and indirectly gave rise to the capitalism that still dominates in the world economy to this day.
Dobb, M., 1946. Studies in the Development of Capitalism. London: Routledge & Kegan Paul.
Eltis, D., and S. Engerman, 2000. “The Importance of Slavery and the Slave Trade to Industrializing Britain.” In: Journal of Economic History, 60, 123-144.
Hobsbawm, E., 1999. Industry and Empire: From 1750 to the Present Day. New York: The New Press.
North, D., and R. Thomas, 1973. The Rise of the Western World: A New Economic History. Cambridge University Press, Cambridge UK.
O’Brien, Patrick K., 1982. “European Economic Development: The Contribution of the Periphery.” In: Economic History Review, 2nd ser., 35, 1-18.
Richardson, R., 1998. The Debate on the English Revolution, 3rd Edition. Manchester; University of Manchester Press.
Rogowski, R., 1989. Commerce and Coalitions: How Trade affects Domestic Political Alignments. Princeton; Princeton University Press.
Rosenberg, Nathan and L. Birdzell Jr., 1986. How the West Grew Rich: The Economic Transformation of the Industrial World. New York; Basic Books.
Rud?e, G., 1972. Europe in the Eighteenth Century: Aristocracy and the Bourgeois Challenge. Cambridge MA; Harvard University Press.
Stearns, P., 2001. The Encyclopedia of World History, Sixth Edition. Houghton Mifflin Company, Boston.
Williams, E., 1944. Capitalism and Slavery. University of North Carolina Press, Chapel Hill.

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