Bullshit.
In the 1830s, powerful Southern slaveowners wanted to import capital into their states so they could buy more slaves. They came up with a new, two-part idea: mortgaging slaves; and then turning the mortgages into bonds that could be marketed all over the world. First, American planters organized new banks, usually in new states like Mississippi and Louisiana. Drawing up lists of slaves for collateral, the planters then mortgaged them to the banks they had created, enabling themselves to buy additional slaves to expand cotton production. To provide capital for those loans, the banks sold bonds to investors from around the globe — London, New York, Amsterdam,Paris. The bond buyers, many of whom lived in countries where slavery was illegal, didn’t own individual slaves —just bonds backed by their value. Planters’ mortgage payments paid the interest and the principle on these bond payments. Enslaved human beings had been, in modernfinancial lingo, “securitized.”
As slave-backed mortgages became paper bonds, everybody profited — except, obviously, enslaved African Americans whose forced labor repaid owners’ mortgages. But investors owned a piece of slave-earned income. Older slave states such as Maryland and Virginia sold slaves to the new cotton states, at securitization-inflated prices, resulting in slave asset bubble. Cotton factor firms like the now-defunct Lehman Brothers — founded in Alabama — became wildly successful. Lehman moved to Wall Street, and for all these firms, every transaction in slave-earned money flowing in and out of the U.S. earned Wall Street firms a fee.
The infant American financial industry nourished itself on profits taken from financing slave traders, cotton brokers and underwriting slave-backed bonds. But though slavery ended in 1865, in the years after the Civil War, black entrepreneurs would find themselves excluded from a financial system originally built on their bodies.
-Edward E. Baptist and Louis Hyman, American Finance Grew on the Back of Slaves
