Banks, Building Societies, and Speculators: Profiting from Human Collateral in Nineteenth-Century South Carolina

Although slaveowners in British, French, and Spanish colonial America mortgaged their human property along with land, livestock, carpenter’s tools, and featherbeds, it was in 19^th-century that a new twist appeared: the use of slave mortgages by depositor banks and building societies—along with institutions with funds to invest but not usually thought of as “financial institutions.”  Private speculators joined into the mix, buying and selling slaves mortgages for profit.  South Carolina is an especially intriguing case study.   The Bank of State of South Carolina, the Hamburg Building & Loan Association, and the Vestry and Wardens of the Parish of St. Thomas and St. Dennis—all are examples of the kinds of institutions that made loans secured by human collateral.   Borrowers spent some of the cash and credit that they had invested in slaves, releasing it into local economies, accelerating economic growth and increasing the personal prosperity both of those who owned mortgaged slaves and of those who did not.   This financial strategy also increased the chance that families of enslaved Americans would be separated if the loans were not repaid.  These were hidden risks for seizure and sale not usually taken into account by historians.  This paper is based on the stories of more than 1300 slaves mortgaged to institutional lenders in the South Carolina Lowcountry and two back country counties during 15 years sampled in the pre-Civil War era.