u

4AI—————————!F-————————————————————————————

234 / PARADOXES OF FORCED LABOR

held the titles (the masters) were virtually unrestricted by
law in the ability to sell them. And ownership of a female
slave brought with it title, in perpetuity, to all her de-
scendants. " I
How did the special way in which the antebellum South
eated the matter of property rights in man affect the eco-

gnomic behavior of that society? What special economic

advantage, if any, did the system of property rights which
prevailed under slavery give the slaveowners? How did this
system of property rights affect the real income of the
masters, of slaves, of free Southerners, and of free North-
erners? While these are not new questions, certain of the
findings of the cliometricians suggest new answers. Two
findings of particular importance are that:

1. Economies of scale in southern agriculture were achieved
exclusively with slave labor.

2. While the urban demand for slave labor was quite elastic,
the agricultural demand was very inelastic.

The first finding is not new. Olmsted realized that econ-
omies of scale were achieved only with slave labor, and
specifically addressed himself to that question. Characteris-
u'ca]ly,'0l.msted concluded that the failure of small free
farmers to combine into large units through the medium of
“a joint-stock cotton plantation” was due to their ignorance
and lack of enterprise. But as we have seen, small free
southern farmers were not bunglers. Nor were they lacking
in enterprise. Many small free farmers became the masters
of large slave plantations. If there had been no special
advantage to slave labor, one would expect at least some of
these enterprising individuals to have based their planta-
tions on free labor. The fact that economies of scale were
achieved exclusively with slave labor clearly indicates that
in large—scale production some special advantage attached to
the use of slaves.

Interestingly enough, there is no evidence that slaves pos-

 

PROPERTY mar-rrs IN MAN / 235

sessed any special advantage or disadvantage for large-scale
production in urban industries. While some large-scale fac-
tories were based exclusively on slave labor, others were
based exclusively on free labor. Many urban firms, perhaps
most, employed a combination of the two types of labor.
For example, in the Tredegar Iron Works, the largest iron
manufacturer in the South and the fourth largest in the
nation, slaves sometimes made up as much as half of the
labor force. The second finding — the relatively high urban
elasticity of demand for slaves — means that in the urban
context slaves and free laborers were quite good substitutes
for each other. When the price of slaves rose relative to free
wages, urban enterprises shifted away from the employment
of slave labor and increased the employment of free labor.
And when the prices of slaves fell relative to free wages,
these urban enterprises shifted back into slave labor.

‘In agriculture, however, the demand for slaves was highly
inelastic. This means that in the slave-using agricultural
sector, free labor was a very poor substitute for slave labor.
Variations in the ratio of slave prices to free wages had
virtually no effect on the preferences of large‘ plantations
for slave labor. Even when slave prices rose quite sharply
relative to free wages, the labor force of the large plantations
remained overwhelmingly slave. Whatever special advan-
tage attached to slave labor was, therefore, confined exclu-
sively to the use of that labor in large—scale agricultural
enterprises. .

To identify the unique advantage of slaves to large-scale
agricultural enterprises, it is necessary to make use of the
economists’ distinction between “pecuniary” and “nonpecu-
niary” income. Pecuniary income is tangible income of some
sort, whether received in money or ‘in kind. Pecuniary in-
come enters into national income accounts and hence is also
referred to as “measured” income. Nonpecuniary income is
of an intangible nature and it is not measured in national
income accounts. Nonpecuniary income can be either posi-