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Christopher Calvo, Banking on Slavery: Financing Southern Expansion in the Antebellum United States, Journal of American History, Volume 111, Issue 2, September 2024, Page 354, https://doi.org/10.1093/jahist/jaae123
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Sharon Ann Murphy's Banking on Slavery is as much a history of southern banking as it is about antebellum slavery. By the 1820s, planter entrepreneurs migrated into the southern frontier demanding from banks favorable and creative lending practices. Banks responded by manipulating or simply ignoring their charters, offering planters short-term loans (with the option to renew seemingly into perpetuity) or unconventional and riskier long-term mortgages. To facilitate lending, plantations and slaves were redefined as capital assets. And through nepotism, political favoritism, or outright fraud, southern banks helped establish plantation slavery across the region.
Murphy reminds us that antebellum banks were almost always backed by the full faith and credit of state governments. The finance-slave-state matrix is highlighted in Murphy's discussion of New Orleans's banks, which are at the center of her story. Directors at the city's banks—typically state officials and almost always slave owners and bank clients themselves—grew receptive to imaginative schemes that transformed slaves and plantations into fungible assets, collateralized and exchanged for capital or shares of corporate stock. In some cases, slaves were used as the collateral for loans on their original purchase. Across the region, so-called plantation banks applied for charters and the state legislatures obliged. The Consolidated Association of the Planters of Louisiana (Capl) was the most innovative. At its founding in 1827, mortgaged plantations and slaves were traded for bank stock. To lure investors and furnish Capl with its capital reserve, the state sold taxpayer-backed bonds in places such as New York and London, the proceeds later exchanged for bank stock. Voila, the bank could now make loans and issue notes. Whether investors understood their responsibility in bankrolling slavery is unclear; even less is known about whether enslaved people appreciated their role as financial abstractions in bank ledgers. Either way, by 1830 the region's banks were fully vested in plantation slavery.
