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The Economic Impact of Slavery in the South

The Economic Impact of Slavery in the South

With its mild climate and fertile soil, the South became an agrarian society, where tobacco, rice, sugar, cotton, wheat, and hemp undergirded the economy. Because of a labor shortage, landowners bought African slaves to work their massive plantations, and even small-scale farmers often used slave labor as their means allowed. As the region developed, industries developed too, particularly those needed to process the local crops or extract natural resources. These industries often employed nonlandowning whites as well as slaves, either owned or leased. In urban areas, most slaves were employed in domestic service; yet, some worked in transportation, manufacturing, and food processing.

Whereas farmers in Virginia, Kentucky, and Missouri focused on growing tobacco and hemp, wheat was a staple in Maryland and Virginia. In South Carolina and Georgia, farmers grew rice, and Louisiana was the primary sugar-growing state. Above all, cotton was the primary crop throughout the South, with the growing cotton region stretching from the Carolinas to Texas. In addition to large plantations that spanned hundreds of acres, smaller farms dotted the countryside.

The owners of plantations and large farms grew crops for the market, as well as for home use. From the earliest days of the nation until the 1850s, cotton was the most important of all the market crops, not just from the South but from the entire nation. By the time the Civil War (1861–1865) erupted, 4.9 million bales of cotton were being harvested annually, and most of it was exported through Northern ports (Starobin 1970, p. 4). Yet cotton sapped the soil of its nutrients. Because there was not enough manure to fertilize fields on plantations with 500 to 600 acres under cultivation and because the new commercial fertilizers were prohibitively costly, crop yields gradually decreased (Genovese 1965, p. 95).

From the earliest days of the American colonies, African slaves played an important role in the South because there was a shortage of workers throughout the fledgling nation. Yet as the use of slaves diminished in the North over time, it increased in the Southern states. This was because it was advantageous for the landowners to use slaves instead of hiring white free laborers who might cost more, strike, or quit. Their plantations depended on increased production of export crops on increasingly tired soil.

Thus, the long-held view that slaves were poor workers due to such reasons as a lack of desire, poor-quality tools, and an insufficient diet has been challenged by a number of historians, including Roger Ransom, who maintains:

Contrary to views espoused by critics of the system at the time, slave labor was productive. Slaveholders in the South extracted sufficient labor from their slaves to produce a considerable surplus each year. They did this with a combination of coercion and incentives that implies a very close control of labor by the master. Even the smallest task was organized and supervised by the master or his "driver," and little regard was given to the desires of the slave for leisure time (1989, p. 45).

Considered under law to be both person and property, the slaves had no control over their lives as laborers. In 1860 approximately 400,000 white families owned 4 million slaves, which amounted to 12 percent of the white population controlling more than half of the slaves and creating a "power elite" (Starobin 1970, p. 5).

Purchasing records demonstrate how plantations varied in the extent to which they were self-sufficient. In addition to those slaves who were trained to accomplish household chores, such as spinning, weaving, and sewing, other slaves learned blacksmithing, barrel making, and tanning. Each slave received an allotment of clothing annually. If the fabric was not woven at the plantation, it had to be purchased, usually from the North. The same held true for shoes and other necessities. Slaves augmented their food rations with gardens, and made herbal remedies. In certain cases a doctor might be called to tend to a valued slave. Despite the cost of maintaining slaves, particularly during the off-season, if gauged over the slave's lifetime, a slave owner would accrue a profit. In addition, female and child slaves, as well as adult males, were often leased to industrial employers during idle times. If profits lagged because of unforeseen developments, surplus slaves might be sold, because from 1805 to 1860 there was "a well-established market for slaves, which meant that the slave was a highly 'liquid' asset that could easily be converted to cash if the owners wished to sell the slave for any reason" (Ransom 1989, p. 46). Owning female slaves of childbearing age also meant an increase in the number of slaves, as all children of slaves belonged to the slaves' owners.

States Holders with 1-9 Slaves Holders with 10-20 Slaves Holders with 20-50 Slaves Holders with 50-100 Slaves Holders with 100-500 Slaves Holders with 500-1000 Slaves Holders with Over 1000 Slaves Total Slave-Holders Total Slaves
Source: United States Census, Agriculture of the United States in 1860, p. 247.
North Carolina24,5206,0733,32161113334,658331,059
South Carolina16,1995,2103,6461,1974417126,701402,406

Although on even footing with Northern progress prior to 1815, industrialization in the South lagged behind that of the North afterward, with only 20 percent of the nation's manufacturers being located in the Southern states. Not coincidentally, wages were lower in the South as well, with per capita income in 1860 measured at $103 in the South, compared with $141 in the North (Kolchin 1993, p. 175). Southern industry did not develop as rapidly as that of the North for a number of reasons, including a lack of investment capital, well-trained managers, and up-to-date technology, and the absence of reliable transportation. Most entrepreneurial start-ups were funded by plantation owner's funds, not the conglomerates of shareholders found in the North. In addition, plantation owners often had difficulty hiring expert managers, who were in short supply nationally, and were frequently deterred by the South's withering climate; thus, they had to pay a premium to convince managers to come south. Furthermore, because of insufficient knowledge and capital, entrepreneurs were not necessarily able to use the most efficient methods that would allow them to create goods that could compete well in the North and abroad. Finally, the slow pace of railroad construction, which was not well funded by state and local governments, made for inefficient—thus costly—transportation routes. The businesses that had the most success in marketing their products in the North were located in the border states.

Most Southern businesses selling raw materials and products had to either sell locally or through the Northern middlemen who controlled shipping. Urban markets in the South were limited, because only 10 percent of the population lived in urban areas, with New Orleans and Baltimore being the largest cities. The 1860 census indicated that there were eight cities in the South with populations of more than 22,000 people: Louisville, St. Louis, New Orleans, Mobile, Savannah, Charleston, Richmond, and Baltimore (Starobin 1970, pp. 7-8). Even had there been larger population centers, earning power was low among poor whites and slaves, and plantations to some degree or another tried to be as self-sufficient as possible. Yet the products made in many of the manufacturing industries were tied to the needs of the plantations, so that other items still had to be purchased from the North. This need caused a trade imbalance, for Southern industries were largely not able to successfully market their products to the North and abroad.

Despite the difficulties inherent in doing business in the South, such industries as textiles, mining, lumbering, ironmongering, and gristmilling did develop because they served the needs of plantation owners. Furthermore, slave owners were sometimes required to supply slave laborers for public works projects, such as building railroads, repairing roads, and improving waterways (Starobin 1970, pp. 16-31). During the 1850s, from 160,000 to 200,000 bondmen and women of the approximately 4 million slaves in the United States worked in industry. Of these industrial slaves, 80 percent were owned by the business owner and 20 percent rented from their masters by the month or year (Starobin 1970, pp. 11-12).

As with the profitability of plantation slaves, the profitability of enslaved urban workers depended on a number of factors. One factor was the business owner's willingness to risk using slaves in anything other than fieldwork, as the prevailing notion was that the Africans could not learn to do complex tasks. Although some entrepreneurs did not believe slaves capable of doing industrial work, others, such as this visitor to a textile factory, noted, "The superintendent and overseers are white, and … principally from the manufacturing districts of the North, and although strongly prejudiced on their first arrival at the establishment against African labor, from observation and more experience they testify to their equal efficiency, and great superiority in many respects" (De Bow's Review 1850, pp. 432-433). Yet many employers faced not only an overall labor shortage, but a pool of uneducated and undisciplined white workers who often resented working in industry because it lacked the status of being a landowner, or even a subsistence farmer. Thus entrepreneurs opted to risk using slaves, including women and children who cost less to purchase than prime male slaves. White managers often trained and oversaw the work of the slaves, but that was not all. They also trained slaves to become managers.

Business owners soon realized that even when rented from a planter, slaves cost significantly less than did their free counterparts. As historian Robert Starobin explains: "The cost of free labor … totaled about $355 per annum, including supervision. The annual average maintenance cost per industrial slave was … less than one-third the annual cost of wages and supervision of free common labors [sic]" (1970, p. 149). Some business owners ran enterprises using both free and enslaved laborers, whereas others, upon realizing that the bondmen and women were capable of accomplishing the same tasks as white workers, bought their slave workers outright and fired the white employees. Records show slaves acting as business agents, mill and locomotive engineers, and ferryboat operators—and all at a fraction of the cost of white skilled labor. It is not surprising, then, that nonlandholding whites may have felt resentful of slaves for having displaced them in the workplace.

It is estimated that 10,000 slaves were employed at ironworks, 5,000 at hemp (rope) factories, 20,000 in fishing and fish processing, and 30,000 at gristmills (for sugar, rice, corn, and flour processing). They also worked in coal, iron, lead, gold, and salt mines, and as lumberjacks, sawing trees and extracting turpentine. Tobacco factories used slave laborers (some 7,000) almost exclusively; they also used many women and children because, as in other light industries, they could be just as productive as the men and in some industries, where small and agile hands were needed, even more productive (Starobin 1970, pp. 11-28).

Profits varied from enterprise to enterprise. For example, "[t]he records of southern textile mills employing slave labor indicate that they usually earned annual profits on capital ranging from 10 to 65 percent and averaging about 16 percent." Commenting on the slave-owning enterprises for which records are still available, Starobin noted that the average annual rate of return on investment matched or exceeded 6 percent (1970, pp. 148-149). Moreover, the trend held true whether the slaves were owned or leased.

Planters took advantage of the opportunity for additional income from renting out slaves; yet, they wanted to keep the most able men to work in the fields. Most urban slaves worked as domestic servants (who were primarily women), though others worked as skilled craftsmen, dockworkers, washerwomen, factory workers, and day laborers. Planters also wanted to keep their slaves from the corrupting influence of the city, for as Frederick Douglass (1817–1895) wrote, "A city slave is almost a freeman, compared with a slave on the plantation" (1960, p. 50). A moderate amount of capitalism satisfied the Southern landholders: "The slave regime could tolerate and even embrace limited urbanization and industrialization, but it could never accept the ideals that underlay capitalist transformation, because central to those ideals was economic 'freedom,' including the freedom of laborers to contract for wages" (Kolchin 1993, p. 179).


De Bow's Review 9 (1850): 432-433.

Douglass, Frederick. Narrative of the Life of Frederick Douglass, an American Slave, Written by Himself [1845]. Cambridge, MA: Belknap Press, 1960.

Genovese, Eugene D. Political Economy of Slavery: Studies in the Economy & and Society of the Slave South. New York: Pantheon, 1965.

Kolchin, Peter. American Slavery, 1619–1877. New York: Hill and Wang, 1993.

Ransom, Roger L. Conflict and Compromise: The Political Economy of Slavery, Emancipation, and the American Civil War. New York and Cambridge, U.K.: Cambridge University Press, 1989.

Shore, Laurence. Southern Capitalists: The Ideological Leadership of an Elite, 1832–1885. Chapel Hill: University of North Carolina Press, 1986.

Starobin, Robert S. Industrial Slavery in the Old South. New York: Oxford University Press, 1970.

Tocqueville, Alexis de. Democracy in America, trans. Arthur Goldhammer. New York: Penguin Putnam, 2004.

                                Jeanne M. Lesinski

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