Banking on Slavery: Financing Southern Expansion in the Antebellum United States by Sharon Ann Murphy (review)

Reviewed by: Banking on Slavery: Financing Southern Expansion in the Antebellum United States by Sharon Ann Murphy Katherine Carper (bio) Banking on Slavery: Financing Southern Expansion in the Antebellum United States. By Sharon Ann Murphy. (Chicago: University of Chicago Press, 2023. Pp. 432. Cloth, 105. 00; paper, 35. 00. ) Amid a growing body of literature on slavery and American capitalism, Sharon Ann Murphy's Banking on Slavery proves that there is still room for scholars to grapple with the question of how slavery shaped American economic development. The well-researched, engaging book sheds new light on the connections between the development of commercial banking and the extension of the plantation economy into the southern frontier. Murphy convincingly shows the great extent to which southern banks adapted their banking systems and willingly flouted traditional banking practices to support the needs of slaveholders and uphold the slavery system. In the process, banks facilitated the "financialization of slavery" (7), in which enslaved people were turned into "abstract capital assets" that slaveholders could use to secure loans or expand their financial holdings (9). This process, Murphy argues, ultimately facilitated the expansion and solidification of plantation slavery into the southwestern United States. End Page 257 Murphy traces these ties between slavery and the southern banking industry chronologically, from the first decade of the nineteenth century through the Civil War. In parts 1 and 2, Murphy carefully walks the reader through how the southern banking system evolved to serve the needs of slaveholders. Chartered banks were designed to serve the merchant community by offering small, short-term (usually payable in thirty days, but renewable), unsecured loans through a process known as discounting. However, the post–War of 1812 economic boom in the southern frontier states prompted many plantation owners to seek bigger loans that were payable over a longer period. To meet this demand, banks on the southern frontier went against their state charters and began offering larger, longer-term loans that were secured with collateral. This collateral was often real estate and enslaved lives. When the Panic of 1819 hit, fewer debtors were able to pay back their loans, and banks that pursued foreclosure found it difficult to find buyers for the plantations and enslaved laborers put up as collateral. However, the negative consequences of using enslaved lives as collateral did not deter banks from continuing to offer long-term loans secured by real estate and enslaved lives in the wake of the economic downturn. Indeed, the connection between banking and slavery only deepened in the 1820s and 1830s, a connection that Murphy explores in part 2. Beginning in the 1820s, plantation owners on the frontier lobbied states "to allow banks greater leniency in their lending policies, which … opened up more opportunities for the direct finance of slavery" (82). Southerners could now secure a loan from a bank to purchase a plantation and enslaved laborers, with the same plantation and enslaved laborers as collateral. The plantation banks that emerged in the southern frontier "allowed slaveholders to leverage their stored wealth in enslaved people" to invest more heavily in cotton and sugar production (168). These banks, Murphy explains, facilitated the immense growth and expansion of slavery in the Southwest in the 1820s and 1830s. Part 3 looks at how southern banks dealt with the 1837 and 1839 financial panics. Unlike in 1819, banks did not aggressively pursue foreclosure, instead "providing stability for slaveholders during the depression" (243). When many frontier banks failed, southerners chose to give up on "banking as a viable option for financing a slave economy" and turn to private lenders (243). Murphy does not delve into private finance in detail; the discussion is limited to a few case studies of southern and northern commission merchants and private banks. This shift to private lenders, Murphy argues, showed that by the 1840s "slavery no longer needed the support of banks" to survive on the southern frontier (313). End Page 258 Using bank records, personal papers from plantation owners, newspapers, and court cases, Murphy painstakingly tracks the stories of slaveholders who took out loans, their successes (and failures) at loan repayment, and their navigation of the court system. The discussion of how debtors escaped. . .