Atlantic Slave Trade - Economics of Slavery

Economics of Slavery

The plantation economies of the New World were built on slave labor. Seventy percent of the enslaved people brought to the new world were used to produce sugar, the most labor-intensive crop. The rest were employed harvesting coffee, cotton, and tobacco, and in some cases in mining. The West Indian colonies of the European powers were some of their most important possessions, so they went to extremes to protect and retain them. For example, at the end of the Seven Years' War in 1763, France agreed to cede the vast territory of New France (now Eastern Canada) to the victors in exchange for keeping the minute Antillean island of Guadeloupe.

In France in the 18th century, returns for investors in plantations averaged around 6%; as compared to 5% for most domestic alternatives, this represented a 20% profit advantage. Risks—maritime and commercial—were important for individual voyages. Investors mitigated it by buying small shares of many ships at the same time. In that way, they were able to diversify a large part of the risk away. Between voyages, ship shares could be freely sold and bought.

By far the most financially profitable West Indian colonies in 1800 belonged to the United Kingdom. After entering the sugar colony business late, British naval supremacy and control over key islands such as Jamaica, Trinidad, the Leeward Islands and Barbados and the territory of British Guiana gave it an important edge over all competitors; while many British did not make gains, a handful of individuals made small fortunes. This advantage was reinforced when France lost its most important colony, St. Dominigue (western Hispaniola, now Haiti), to a slave revolt in 1791 and supported revolts against its rival Britain, after the 1793 French revolution in the name of liberty. Before 1791, British sugar had to be protected to compete against cheaper French sugar.

After 1791, the British islands produced the most sugar, and the British people quickly became the largest consumers. West Indian sugar became ubiquitous as an additive to Indian tea. It has been estimated that the profits of the slave trade and of West Indian plantations created up to one-in-twenty of every pound circulating in the British economy at the time of the Industrial Revolution in the latter half of the 18th century.