Cotton Gin Extended America’s Abhorrent Practice of Slavery

The 1796 patent signed by George Washington for “new machinery called the Cotton Gin” realized $179,250 at a May 2011 Heritage auction.

By Jim O’Neal

In 1776, Scottish economist, philosopher and teacher Adam Smith wrote The Wealth of Nations, a book that helped create a new understanding of modern economics. A pervasive theme was the idea that any economic system could be automatic and self-regulating if it was not burdened by monopolies or artificial trade barriers. This theory has become widely known as “the invisible hand.” It heavily influenced my favorite economist Milton Friedman and his Free to Choose basic philosophy.

One highly topical insight was that slavery was not economically viable and contributed to inefficient markets. Aside from the obvious moral issue, Smith believed slave owners would benefit by switching to a wage-labor model, since it was much more inexpensive to hire workers than own them and provide decent conditions. Buying slaves was much more costly due to ongoing expenses of feeding, housing and caring for workers with a high mortality rate, workers who eventually would have to be replaced.

In the United States, there was also a major disconnect between the concepts of all men being created equal and the cruel practice of slavery, which was prevalent especially in the agrarian states of the South. Although many sincerely believed that slavery would gradually die out, powerful Southern states needed some kind of assurances before they agreed to the new federal Constitution. Section 9 Article 1 of the Constitution barred any attempt to outlaw the slave trade before 1808. Other provisions prohibited states from freeing slaves who fled from other states, and further required them to return “chattel property” (slaves) to their owners. Kicking the issue down the road 20 years enabled the delegates to reach a consensus.

Historian James Oliver Horton wrote about the power slaveholder politicians had over Congress and the influence commodity crops had on the politics and economy of the entire country. A remarkable statistic is that in the 72 years between the election of George Washington (1788) and Abraham Lincoln (1860), in 50 of those years, the president of the United States was a slaveholder; as was every single two-term president.

The passage in 1807 of the Act of Prohibiting Importation of Slaves in America, and the Slave Trade Act in Great Britain marked a radical shift in Western thinking. Even as late as the 1780s, the trade in slaves was still regarded as natural economic activity. Both U.S. and European colonies in the Caribbean depended on slave labor, which was relatively easily obtained in West Africa.

However, it was really the invention of the cotton gin by Eli Whitney in 1793 that dramatically extended the abhorrent practice of slavery. Cotton was suddenly transformed from a labor intensive, low-margin commodity with limited demand into a highly lucrative crop. Production in Southern states exploded as demand skyrocketed. The number of slaves grew concurrently from 700,000 in 1790 to 3.2 million by 1850. The United States quickly grew into the largest supplier in the world and snagged 80 percent of the market in Great Britain, whose appetite seemed insatiable.

As an economist, Adam Smith was undoubtedly right about hiring workers versus owning them, but everybody was too busy getting rich to worry about optimizing labor costs. And the more demanding abolitionists in the industrializing North denounced slavery the more Southern states were determined to retain it. It would take a bloody four-year Civil War and 630,000 casualties to settle it.

Harry Truman once explained why he preferred one-armed economists: It was because they couldn’t say “On the other hand…”

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Insidious Practice of Slavery Violated Every Principle that Men of Goodwill Supported

thomas-hart-benton-slave-master-with-slaves-study-for-the-american-historical-epic
This crayon with pencil and ink on paper by American painter Thomas Hart Benton (1889-1975), titled Slave Master with Slaves (Study for The American Historical Epic), circa 1926, realized $35,000 at a December 2013 Heritage auction.

By Jim O’Neal

Slavery was the great exception to the rule of liberty proclaimed in the Declaration of Independence and established in the U.S. Constitution. The first African slaves (about 40 in all) were brought to the North American colony of Jamestown, Va., in 1619 to aid in the production of lucrative crops like tobacco.

By the time of America’s founding, the number had grown to 500,000, mostly in the five southernmost states. Slavery was never widespread in the North, but many profited indirectly by the practice. Between 1774 and 1804, all of the northern states had abolished slavery, but the “peculiar institution” remained absolutely vital to the South.

Even as the U.S. Congress outlawed the African slave trade in 1808, domestic trade flourished, and the slave population more than tripled over the next 50 years. By 1860, it was up to 4 million, primarily in cotton-production areas of the South.

One naive hope had been that slavery would slowly die as a simple matter of business economics. In 1776, Adam Smith (The Wealth of Nations) argued that the plantation system was uneconomic since slave labor cost more to maintain than laborers paid a competitive wage. But, in 1793, Eli Whitney invented the cotton gin, making slave-based production lower in cost. The insatiable demand for cotton from Europe was irresistible to the southern agrarian-based economy.

Overlooked in all of this was a brilliant insight by Smith. He noted that slavery ended in the Middle Ages in Europe only after the state and church became separate and strongly independent. His insight was that it is nearly impossible to end slavery in free, democratic forms of government, primarily because many of the legislators would also be slave owners and unlikely to act in ways that were not in their best interest.

Similar arguments later appear in the works of French philosopher Auguste Comte, known for his ideas regarding the “separation of the spiritual and the temporal.”

That was exactly the situation in the United States since many of the founders – most notably George Washington, Thomas Jefferson and James Madison – owned slaves and the South had always been dominated by self-interest. The obvious implication is that war was not only probable, but inevitable and unavoidable.

So the inexorable forces of profit versus human rights continued to accelerate, with only pauses, as the deeply conflicted country tried to find compromises (e.g. 1820) that simply delayed the inevitability of war. Kick-the-can strategies never achieve anything except temporary lulls.

Quite predictably, ours required a bloody civil war to (finally) reconcile the Constitution and an insidious practice of slavery that violated every principle that men of goodwill supported.

Both Smith and Comte tried to warn us, but their theories did not include any useful solutions, except perhaps to implement a kingdom … the very thing we were fleeing.

Even after 620,000 lives were lost in the Civil War, a number that exceeds all our other conflicts combined … and with the passage of 150 years … we are still struggling with race and inequality as our legislators try to find compromises.

Jim O'NielIntelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is President and CEO of Frito-Lay International [retired] and earlier served as Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].