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Slave prices and productivity at the Cape of Good Hope from 1700 to 1725: did all settler farmers profit from the trade?

Listed author(s):
  • Sophia du Plessis

    ()

    (Department of Economics, University of Stellenbosch)

  • Ada Jansen

    ()

    (Department of Economics, University of Stellenbosch)

  • Dieter von Fintel

    ()

    (Department of Economics, University of Stellenbosch)

This paper analyses the economic viability of slavery in the Cape Colony of southern Africa. It has been extensively documented that the affluence of elites was built on the importation of slaves. However, the Dutch East India Company or Verengide Oost-indische Companje (VOC), which administrated the colony, expressed concerns that free settlers had invested too much capital in the trade, so that some indications exist that profitability was not certain for all farmers. In this paper hedonic slave price indices and the value of their marginal productivity have been estimated, to construct annual returns, which are in turn compared with returns on other investments for the period 1700-1725. Hedonic price functions were estimated to remove the anticipated lifetime returns that slaves would yield, and to isolate buyers’ perceived depreciation of the slave for one year. Cobb-Douglas production functions were estimated for average farmers, as well as at various quintiles along the distribution, to evaluate scale effects. Large farmers enjoyed high returns to slavery over most of the period, confirming the assertions that the elite used slaves profitably. Small farmers, however, did not recoup slave costs from agricultural production: this suggests either that they overinvested in slavery relative to other capital goods (e.g. ploughs or wagons), or that they used slaves profitably outside of agriculture.

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File URL: https://www.ekon.sun.ac.za/wpapers/2014/wp172014/wp-17-2014.1.pdf
File Function: Revised version (version 2), 2014
Download Restriction: no

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 17/2014.

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Date of creation: 2014
Date of revision: 2014
Handle: RePEc:sza:wpaper:wpapers222
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  1. Nathan Nunn, 2008. "The Long-term Effects of Africa's Slave Trades," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 139-176.
  2. Johan Fourie & Dieter von Fintel, 2010. "The dynamics of inequality in a newly settled, pre-industrial society: the case of the Cape Colony," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 4(3), pages 229-267, October.
  3. Kotlikoff, Laurence J, 1979. "The Structure of Slave Prices in New Orleans, 1804 to 1862," Economic Inquiry, Western Economic Association International, vol. 17(4), pages 496-518, October.
  4. Chenny, Shirley & St-Amour, Pascal & Vencatachellum, Desire, 2003. "Slave prices from succession and bankruptcy sales in Mauritius, 1825-1827," Explorations in Economic History, Elsevier, vol. 40(4), pages 419-442, October.
  5. Johan Fourie & Dieter von Fintel, 2010. "A History With Evidence: Income inequality in the Dutch Cape Colony," Working Papers 184, Economic Research Southern Africa.
  6. J. R. Ward, 1978. "The Profitability of Sugar Planting in the British West Indies, 1650-1834," Economic History Review, Economic History Society, vol. 31(2), pages 197-213, May.
  7. Sophia du Plessis & Stan du Plessis, 2012. "Happy in the service of the Company: the purchasing power of VOC salaries at the Cape in the 18th century," Working Papers 01/2012, Stellenbosch University, Department of Economics.
  8. Alfred H. Conrad & John R. Meyer, 1958. "The Economics of Slavery in the Ante Bellum South: Reply," Journal of Political Economy, University of Chicago Press, vol. 66, pages 442-442.
  9. Johan Fourie, 2011. "Slaves as capital investment in the Dutch Cape Colony, 1652-1795," Working Papers 21/2011, Stellenbosch University, Department of Economics.
  10. Fourie, Johan & von Fintel, Dieter, 2010. "The Fruit of the Vine? An Augmented Endowments-Inequality Hypothesis and the Rise of an Elite in the Cape Colony," WIDER Working Paper Series 112, World Institute for Development Economic Research (UNU-WIDER).
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