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It can be argued that it was a combination of Native American land and crop
knowledge and African agricultural science and back-breaking labor that first lifted the
English settlers from desperation to a financial plateau where they could produce a
commodity that could be sold for profit on the world market.
Making Cash from Cotton
While colonial America was under the British, the products they brought to
market were primarily tobacco, rice, and indigo. After independence, with the invention
of the cotton gin in 1793, cotton became king. Slavery quickly shifted its geographical
focus from the Northern states to the growing Southern states. By 1850, there were an
estimated 2.5 million people enslaved in the United States.3 On Southern farms and
plantations, enslaved Africans produced more than 60 percent of the cotton used in the
world!
Of the 2.3 million pounds of cotton produced by captive Africans in the United
States, more than half went to Britains cotton factories, of which there were over
2,000. The desire for cotton also spurred the industrial revolution, specifically
textile factories in France, the Netherlands, Switzerland, Germany, Austria,
Russia, Italy, Spain, Belgium, and Boston.4
Enslaved African persons were legally considered property in the United States,
so an enslaved person could be used as collateral to obtain the loans necessary
for plantation life. When calculating the value of the estates (plantations), the
estimated value of each slave was included. This became a source of tax
revenue for local and state governments. Taxes were also levied on slave
transactions.6
Dodson, Howard, How Slavery Helped Build a World Economy, downloaded from
http://news.nationalgeographic.com/news/2003/01/0131_030203_jubilee2.html
4
Farrow, Anne, Joel Lang, and Jenifer Frank, Complicity: How the North Promoted, Prolonged,
and Profited from Slavery (New York: Ballantine Books, 2005).
5
Ibid.
6
Dodson, How Slavery Helped Build a World Economy, 3.
for any enslaved African who died unexpectedly. 7 Insurance companies such as
Lloyds of London, Aetna, and New York Life have firmly cemented
connections with slavery in the United States.
Cotton grown in the South was usually not directly exported. It was first shipped
to New York, making New York the financial and shipping hub of the nation.
Middlemen such as the Lehman Brothers cashed in by helping rural Southern
farmers get the best price for their cotton from the investment and shipping firms
in New York. It is estimated that forty cents of every dollar made by Southern
plantation owners was spent in the Northern states for goods. Northern firms
seeking to get a portion of the overwhelming profits being made in the South
manufactured hats and hoes for plantation owners. They also imported fine china
and cutlery and made fine furniture, candles, soaps, French plate glass, pumps,
fire hoses, pianos, pickles, liquors and account room weighing books specifically
for cotton, grain, sugar and molasses.8 Northern textile mills were even making
the clothes worn by enslaved African people!
New York soon became a shoppers paradise. It was advertised as the place for
Southerners to spend their summers away from the sweltering heat of the South.
Fancy hotels and retailers of fine linen, perfumes, and precious stones all vied for
their blood-soaked dollars made from human bondage.9
Johnson, Katie, The Messy Link between Slave Owners and Modern Management,
downloaded from http://hbswk.hbs.edu/item/7182.html
8
Farrow, Lang, and Frank, Complicity, 23.
9
Ibid.
10
Beckert, Sven, and Seth Rockman, How Slavery Led to Modern Capitalism: Echoes,
downloaded from http://www.bloombergview.com/articles/2012-01-24/how-slavery-led-to-moderncapitalism-echoes
Mayer Lehman
Emanuel Lehman
The shopkeeping efforts were so successful that in 1850 Lehmans two other
brothers, Emanuel and Mayer, joined the business. From this union came the
name Lehman Brothers.
Lehman Brothers quickly saw that real money was not in shopkeeping but in
buying captive-produced cotton from small rural farmers and selling that cotton at
a profit to larger shipping firms in Northern states such as New York. Thus,
Lehman Brothers evolved from retailers to a commodities broker (buying and
selling cotton).
Briefly combining their efforts with John Wesley Durr, Lehman Brothers was able
to build a cotton warehouse so that it had a place to store cotton while it
negotiated for the best price or waited for price of cotton to rise. By 1858, it was
able to open a New York office, which fully established it as a player in major US
financial circles.
Even after the Civil War, cotton was still king in the United States. In fact, well
into the 1900s cotton was the leading export from the United States. The growth
of the cotton business enabled = Lehman Brothers to be a leader in the creation
of the New York Cotton Exchange.
For, the next couple of decades, Lehman Brothers had extreme vertical financial
growth. It became the fiscal agents for the state of Alabama. It was able to tap
into the tremendous wealth being generated by the growth of the railroad industry
by giving financial advice and underwriting loans for railroad construction.
Lehman Brothers also branched into selling stocks, bonds and securities for up
and coming companies.
In 1906, Lehman Brothers began business with Henry Goldman (of Goldman and
Sachs). Together they provided funding and underwrote securities for the retail
giants of that era, including Sears, Roebuck & Co.; F. W. Woolworth Co.; and R.
H. Macy & Co.
During the 1920s Lehman Brothers entered the airline and motion picture
industries. Lehman Brothers would help fund Paramount Pictures, Twentieth
Century Fox, and Radio Corporation of America.
Lehman Brothers also funded the oil industry, backing giants such as Halliburton
and the construction of the Trans-Canada pipeline.
From the 1950s to the 1990s, Lehman Brothers invested in the digital markets
and developed a global market that helped large US companies negotiate crossborder transactions (Chrysler/American Motors, General Foods/Phillip Morris).
Sources
History of the Lehman Brothers downloaded from
http://www.library.hbs.edu/hc/lehman/history.html
Business consultation for the lesson provided by Bernard Afrifa (business analyst
consultant) Certified Competency in Business Analysis (International Institute of
Business Analysis), B.A. Economics, Illinois Wesleyan University
MBA, Lewis University
Additional Resources
For Teachers
Christopher Columbus and the Afrikan Holocaust: Slavery and the Rise of European Capitalism
by John Henrik Clarke
The Half Has Never Been Told: Slavery and the Making of American Capitalism by Edward E.
Baptist
Racism: From Slavery to Advanced Capitalism by Carter A. Wilson
River of Dark Dreams: Slavery and Empire in the Cotton Kingdom by Walter Johnson
Slavery in New York edited by Ira Berlin and Leslie M. Harris
Articles
Wall Street Was a Slave Market Before It Was a Financial Center by Alan Singer. Download
from http://www.huffingtonpost.com/alan-singer/wall-street-was-a-slave-m_b_1208536.html
9 White Celebs, World Leaders Whose Families Owned Black Slaves by Atlanta Black Star
staff. Download from http://atlantablackstar.com/2013/08/21/10-celebs-whose-family-ownedblack-slaves/
Film
Slavery and the Making of America
Insurance Companies
Aetna Insurance Co. (1850)
Manhattan Life Insurance (1850)
Lloyds of London (1688)
New York Life: A predecessor, Nautilus Insurance Company, sold slaveholder
policies during the mid-1800s.
AIG: purchased American General Financial, which owns US Life Insurance
Company. AIG
found documentation that US Life insured the lives of
slaves.
United States Life Insurance Company of New York
Educational Institutions
Harvard University (1636)
Yale University (1701)
Founders: Timothy Woodbridge, Samuel Andrew, James Noyes, Joseph Webb, Israel
Chauncy, Abraham Pierson, Samuel Mather, James Pierpont, Thomas
Buckingham, Noadiah Russell
Lesson Plan
The Economic Vestiges of Enslavement
Grade Level(s)
1112
Lesson Goals
Materials/
Resources
CCSS. ELA-Literacy. CCRA. R.1: Read closely to determine what the text
says explicitly and to make logical inferences from it; cite specific textual
evidence when writing or speaking to support conclusions drawn from the
text.
CCSS. ELA-Literacy. CCRA. R.7: Integrate and evaluate content
presented in diverse media and formats, including visually and
quantitatively, as well as in words.
CCSS. ELA-Literacy. CCRA. W.1: Write arguments to support claims in an
analysis of substantive topics or texts using valid reasoning and relevant
and sufficient evidence.
CCSS. Math Practice. MP.1 Make sense of problems and persevere in
solving them.
Interdisciplinary
Connections
pen/pencil
paper
handouts
Ivy League schools: a group of long-established colleges in the eastern United
States having high academic and social prestige.
Emissary (-ies): a person sent on a special mission, usually as a diplomatic
representative.
Endow: to give or bequeath an income or property (to a person or institution).
Indigenous: originating or occurring naturally in a particular place; native.
Commodity: something that is bought and sold; something or someone that is
useful or valued.
Indentured servant: a person who came to America and was placed under
contract to work for another person over a period of time, usually seven years,
especially during the seventeenth to nineteenth centuries. They generally
included victims of religious persecution, people kidnapped just for the purpose of
working, and/or convicts and paupers.
Textile: any cloth or goods produced by weaving, knitting, or felting.
Capitalism: an economic system in which trade, industry, and the means of
production are controlled by private owners with the goal of making profits in a
market economy.
Reparations: repair; amends for a wrong that was done; atonement.
Internal reparations: all actions taken by victims of the system of slavery and
their descendants to in any way grant themselves a greater sense of humanity
than that which was/is offered to them by an unjust system.
External reparations: redress that people receive from governments or
corporations.
Repatriation: the process of returning a person to his or her place of origin or
citizenship.
Geography/History: Have the students research different ethnic groups
and what they receive as reparations and compare/contrast with African
Americans.
Writing: Students can write a letter to their local congressman/senator
asking for the passage of the bill H.R. 40 (Commission to Study
Reparation Proposals for African-Americans Act).
Math: Students can use their research to calculate how much the
descendants of a slave should be compensated monetarily. They can also
research companies that can trace their wealth to the slave era and try to
estimate how much money they made from the slave trade.
1. Opening: Teacher can use a PowerPoint presentation showing the
companies that have benefited from slavery and Ivy League colleges and
ask the students, What do all of these companies and institutions have in
common? Get some responses from the students; then let them know that
ALL of these companies/institutions have directly benefited from slavery.
2. Introduction to New Material: Have the students discuss what happens to
them when they do something wrong or when someone does something
wrong to them. They can talk about how they apologize and whether they
have to compensate for the wrong that they committed. Let them discuss
whether that is the right way to handle an issue. Teacher can then segue
into the concept of reparations.
KEY CONCEPTS:
Americans made huge amounts of money from the transatlantic slave
trade.
Many of the financial advantages gained from slavery are still evident in
Americas social classes and economy today.
3. Discussion:
Have the students debate whether the descendants of slaves
should receive reparations. Also, they should discuss what type of
reparations would be appropriate and how much should be
disbursed (ex. free education, land, money, or a combination of
those items).
Students can research and discuss the effects of slavery on African
Americans today.
4. Critical Reflection Activity: Students can conduct research on their own.
Have them interview three to five people to see if they are in favor of
reparations. The students could come back to class to discuss their
findings, or use their research to write a paper.
5. Closing: Have the students do an exit slip or the 3-2-1 activity. (After the
lesson, have each student record three things he or she learned from the
lesson. Next, have the students record two things that they found
interesting and that theyd like to learn more about. Then have students
record one question they still have about the material.)
Assessment
Extensions
(Homework,
Projects)