Elisabeth Ndour History of American capitalism

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Elisabeth Ndour

History of American capitalism

TF: Noam Maggor.
Cotton King’s banks outlasted the King!
In order to truly understand the place of slavery in the history of American capitalism, two fundamental aspects of this history must be examined: the global economic system and the transition from a slave to free labor economy. The movement of the United States from being just another slave country within a slave world, producing raw materials for British manufacturing to being an economic powerhouse in the world depended on slavery but also on the capacity of the American economy to leave slavery behind.
Up to the 1850s, the US economy was heavily reliant on Southern agriculture and its slave labor. Cotton had replaced earlier crops such as sugar, rice and indigo and was driving the export-oriented economy of the US. Even in the North where slaves were not found, merchants and financiers were implicated in the slave economy of the South by providing markets, transportation and credit for cotton.
Port cities in the North flourished as transit points in the South- Europe trade axis. In fact in “The Monied Metropolis”, historian Sven Beckert argues that “the ever-expanding cotton kingdom and the slave labor that produced it, remained the primary engine of profits for merchants since the early 19th century. Indeed, it was above all, New York’s intense commitment to cotton that helped it leave Philadelphia, Baltimore and Boston behind.” Those links between Southern agriculture and the Northern financial and trading sectors gave the confidence to Southern Senator James Hammond to declare that cotton was King. James Hammond argued in the same speech that the exports of the South sustained the American economy and the Northern financiers. Whereas credit for the Southern farmers in the South was initially done through merchants, by the 1850s, a banking sector had already sprung up in cities such as New York. This banking sector was initially developed to support Southern slavery and agriculture. Financiers such as August Belmont initially made a fortune providing credit to Southern farmers. Belmont himself was opposed to trying to abolish slavery in the South seeing slavery in the South and capitalism in the North as complementary, which they were at the time.
Yet New York City boomed more after the Civil War than it did under the slave era. Indeed Cotton King’s support institutions outlasted cotton and flourished even more under manufacturing King. The United States economy was very distinct from other New World economies in the West Indies and Latin America whose transitions from plantation economies were not as successful. The United States managed to shift from an agricultural economy producing raw material for British manufacturing to a manufacturing economy with strong financial institutions as shown by the Wall Street stock market. Slavery had created supporting institutions that could survive without it. During the Civil War, Belmont predicted that the South would collapse financially soon because its finance was based in the North. This financial sector illustrated the reality of the diversity of the American economy which made Cotton King’s hold on the American economy not as strong as the South thought.
Post Civil War, finance and trade in port cities shifted to support manufacturing. August Belmont remained a successful banker even after the Civil War. Whereas readjustments were not easy and indeed some merchants failed to transition from agriculture to manufacturing, as a system, the financial and trading sectors of the US economy survived the Civil War. More recently these sectors survived the transition from a manufacturing to a service based economy. The flexibility of the US economy distinguished it from that of Cuba, Jamaica or Barbados which collapsed after the reign of Cotton or Sugar Kings.

Word count: 600

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