In 1836 was nearly 50% of all economic activity in the U.S. derived from slavery? This figure has been quoted by the New York Times 1916 project and many other “New History of Capitalism” writings.  The “New History of Capitalism” is a historical movement that bases the development of the modern industrial revolution on the slave cotton industry in the 1800’s. In the New York Times words it “aims to reframe the country’s history.. .placing the consequences of slavery and contributions of black Americans at the very center of the story”.

Where does it come from?

This figure comes from Cornell University historian Ed Baptist’s 2014 book The Half Has Never Been Told: Slavery and the Making of American Capitalism. The figure is derived by starting at ~5% or $77 million of the 1836 GDP.  Baptist then continues to add intermediate transactions used in the cotton industry such as purchasing land, tools, insurance or transportation.

Why is this misleading?

Intermediate transactions are not added to GDP – only final goods are added to GDP, making this an egregious error. Perhaps in some form of economical expression they may not be as offensive if he had also added all economic intermediate transactions into the denominator. It would not be an expression of GDP but at least it would be true expression of something.

Many economists, economic historians and experts on slavery have picked up on this error including Bradley Hansen of Mary Washington University (blog), Alan Olmstead (UC-Davis) and Paul Rhode (University of Michigan) (paper) and Stanley Engerman (paper).