Financing Movement--10/21/24

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Today's selection -- from Banking on Slavery by Sharon Ann . Southern bankers treated slave traders as they would any other interstate merchant.

“Just as for any other merchant, access to credit was critical for the numerous slave traders who transported hundreds of thousands of surplus enslaved individuals from the states of the old South to the booming cotton and sugar plantations of the frontier. As Allen Gunn of Yanceyville, North Carolina, complained in 1835 to his slave-trading partner Joseph Totten, who was then traveling in Alabama: ‘[E]very man that can get credit in the Bank and his situation will let him leave home is a negro trader.’ Yet as far as southern bankers were concerned, slave traders were little different from any other interstate merchant. Traders discounted their own sixty-day promissory notes at a Virginia or North Carolina bank and purchased enslaved individuals with the proceeds. They then transported the people to Mississippi or Louisiana, selling them at a profit-sometimes for cash but often receiving another promissory note as payment, which they discounted at a local bank. With the balance, they repaid their original promissory note and began the cycle anew. As Isaac Franklin of the slave-trading firm Franklin & Armfield advised his Richmond, Virginia, associate Rice Ballard ( of the firm of R. C. Ballard & Co.) in January 1832, ‘should you stand in need of funds you may borrow from your Banks at 60 or ninety [days] with full confidence that the money will be remitted to meet it.’  And in June, when Franklin reported that his partner John Armfield was ‘considerably in debt and the banks have all stop[p]ed discounting in’ Natchez, he instructed Ballard that he and Joseph Alsop (another trading associate) ‘must sustain [Armfield] through the Fredericksburg and Richmond Bank for from sixty to ninety’ — again not needing to indicate that he meant days. ‘[I]n that time I have no doubt I will be able to forward you funds to meet any engagement you may make[;] you must sustain his credit for that time.’

“Yet in an economy without a uniform currency, this interstate trade in remitting money was not quite so straightforward. Banknotes declined in value based both on the reputation of the issuing bank and the distance the banknote traveled from that bank. Mississippi banknotes would be worth far less once they arrived back in Virginia. On one occasion in 1834, an associate of Rice Ballard who was then in charge of preparing ‘40 odd Negroes suitable for shipping’ complained that he had tried to cash a check of Ballard's from the Bank of Virginia but ‘they did not want Virginia funds.’ One alternative to this interstate movement of funds was for a merchant to obtain a bill of exchange from one bank, payable at another bank with which the bank had a correspondent relationship. For example, several southern banks solicited agreements with the private Girard Bank in Philadelphia during the 1830s. The Girard arranged with the Bank of Louisiana in June 1834 to accept foreign exchange in each other's name for up to $250,000. At the same time, the bank was willing to discount notes arriving in Philadelphia of the Planters' Bank in Natchez for up to $50,000. The Girard Bank reached other correspondent agreements during the 1830s with the Northern Bank of Kentucky, the Mechanics' and Traders' Bank of New Orleans, the Commercial Railroad Bank of Vicksburg, the Union Bank of Mississippi, the Grand Gulf Banking and Railroad Company of Mississippi, and the New Orleans Gas Light and Banking Company.

“Once these agreements were in place, banks and their customers could more easily move funds between locations. In April 1832, the Planters' Bank of Mississippi issued a bill of exchange for $7,000 payable ‘at sight’ at the Phenix Bank in New York, to the order of R. C. Ballard & Co. Two months later, Ballard received another bill of exchange from the Planters' Bank, payable at the Phenix Bank for $10,000. Presumably, Ballard or one of his associates had discounted $7,000 and then $10,000 in promissory notes with the Planters' Bank—the proceeds of slave sales in Mississippi. Ballard or a representative of his firm could then present each bill at the Phenix Bank to receive New York banknotes. When payments due to the Planters' Bank arrived in New York—perhaps from the sale of cotton in England—these funds would be deposited at the Phenix Bank to the credit of the Planters' Bank, canceling its debt from the bill of exchange. R. C. Ballard & Co. similarly received bills of exchange from the Union Bank of Louisiana payable at the Merchants' Bank in New York for $15,000 in December 1832, for $10,000 in April 1833, for $5,000 in November 1833, and for $15,000 in December 1833. Although the issuing bank would typically charge a fee to customers like R. C. Ballard & Co. for this service, it was more economical for the firm than making transactions in less desirable banknotes.

"Price Birch & Co Dealers in Slaves", Alexandria, Virginia, 1862

“Whereas the reputation and location of these New York and Philadelphia banks made their funds highly valuable in trade, the most sought-after banknotes were those of the Bank of the United States, which circulated at par throughout the United States during the bank's existence. In May 1832, the Bank of Orleans issued R. C. Ballard & Co. a bill of exchange for $6,000 payable at the ‘Philadelphia Bank’—the main office of the Second Bank of the United States. Even better, it obtained a bill of exchange directly from the New Orleans branch of the Second Bank, payable at the Philadelphia office, for $5,000 in February 1832. Whenever possible, banks tried to establish these correspondent relationships directly with the Second Bank, in order to increase the desirability of their own services. Stephen Duncan, president of the Bank of the State of Mississippi, traveled to Philadelphia in 1826 with a charge from the bank board to ‘affect any operation with the U.S. Bank here, “greatly to the advantage” of our institution.’ Although the bank had a relationship with the Louisville branch bank, Duncan believed that ‘the enlargement of our credit’ with the main bank would be beneficial, especially among ‘the negro traders & large dealers’ who ‘w[oul]d always prefer checks’ drawn on Philadelphia banks over Louisville ones.

“In many ways, the short-term renewable notes of traditional banks fit the needs of the slave traders quite well, but slaveholders moving to the frontier often required much-longer credit terms for the expansion of their labor force. As Isaac Franklin reported to Rice Ballard from Natchez, Mississippi in the summer of 1832, ‘nothing has kept the prices up this season but [that] the Branch US Bk[,] the Planters Bank [of Mississippi] and the old State Bank [ of Mississippi] in the early part of the Season loaned out at twelve months.’ The banks of the old South, in contrast, were less willing to bend their lending restrictions to fit these needs, yet the movement of their existing customers to the frontier often unwittingly pulled them into longer-term contracts secured by enslaved lives.

“In July 1833, former bank cashier Marcus Cicero Stephens of North Carolina begged his onetime boss—Bank of Newbern president William Gaston-to deal leniently with his son Godfrey, who was past due on several notes to the bank, notes for which the father and Robert Primrose (a director of the New Bern branch of the State Bank) were endorsers. Godfrey had migrated to Florida and was now ‘in possession of a considerable property in land, stock and negroes’ The son was planning to return to North Carolina ‘prepared to satisfy his friends here, by which I understood him to mean, furnished with means to discharge his bank debt past due since 1 April last, concerning which I had repeatedly and urgently written;' but he had fallen ill on the trip and was delayed. The father was particularly concerned that the bank would no longer be willing to grant his son ‘a long indulgence’ since its charter was expiring, and it might be ‘under the necessity of dosing its business very soon.’ Regardless, the father thought that ‘his [son's] past conduct gave him no right to expect’ an indulgence.

“While Stephen's long-term plan was to have Godfrey ‘transfer the debt to the Bank in Tallahassee, where he could attend to it with less trouble and expence [sic],' that would not solve the immediate issue. ‘I wish if possible that the Board will forbear taking ultimate and decisive steps in this matter until I can go to Florida and bring things to a close in some way or other.' While he hoped to ‘save my son without disposing of his capital,’ he was prepared ‘to sell the negroes and bring or remit the money for the liquidation of the debt.' Stephens believed that this would be a better outcome than ‘if the Bank of Newbern tired, as they may indeed, ... with waiting,’ and consequently ‘order[ed] judgment to be taken, and execution to follow’ on the father's North Carolina property, which would leave the family ‘destitute and houseless.’”