American Finance Grew on the Back of Slaves

Last weekend we watched the Oscars and, like most people, were pleased that “Twelve Years a Slave” won Best Picture. No previous film has so accurately captured the reality of enslaved people’s lives. Yet though Twelve Years shows us the labor of slavery, it omits the financial system — asset securitization — that made slavery possible.

Most people can see how slave labor, like the cotton-picking in “Twelve Years A Slave,” was pure exploitation. Few recognize that a financial system nearly as sophisticated as ours today helped Solomon Northup’s enslavers steal him, buy him, and market the cotton he made. The key patterns of that financial history continue to repeat themselves in our history. Again and again, African-American individuals and families have worked hard to produce wealth, but American finance, whether in the antebellum period or today, has snatched black wealth through bonds backed by asset securitization.

Recently, the assets behind these bonds were houses. In the antebellum period, the assets were slaves themselves.

Every year or two, somebody discovers that a famous bank on Wall Street profited from slavery. This discovery is always treated as if the relationship between slavery and the American financial system were some kind of odd accident, disconnected from the present. But it was not an accident. The cotton and slave trades were the biggest businesses in antebellum America, and then as now, American finance developed its most innovative products to finance the biggest businesses....