The domestic slave trade, also known as the Second Middle Passage and the interregional slave trade, was the term for the domestic trade of slaves within the United States that reallocated slaves across states during the antebellum period. It was most significant in the early to mid-19th century, when historians estimate one million slaves were taken in a forced migration from the Upper South: Maryland, Delaware, Virginia, Tennessee, Kentucky, North Carolina, South Carolina, and the District of Columbia, to the territories and newly admitted states of the Deep South and the West Territories: Georgia, Alabama, Florida, Louisiana, Mississippi, Arkansas, and Texas.
Economists say that transactions in the inter-regional slave market were driven primarily by differences in the marginal productivity of labor, which were based in the relative advantage between climates for the production of staple goods. The trade was strongly influenced by invention of the cotton gin, which made short-staple cotton profitable for cultivation across large swathes of the upland Deep South (the Black Belt). Previously the commodity was based on long-staple cotton cultivated in coastal areas and the Sea Islands.
The disparity in productivity created arbitrage opportunities for traders to exploit, and it facilitated regional specialization in labor production. Due to a lack of data, particularly with regard to slave prices, land values, and export totals for slaves, the true effects of the domestic slave trade, on both the economy of the Old South and general migration patterns of slaves into southwest territories, remain uncertain. These have served as points of contention among economic historians.
The internal slave trade among colonies emerged in 1760 as a source of labor in early America. In the early years, some colonists traded in Native Americans, but began to favor the use of imported slaves from Africa. Following the American Revolutionary War, expansion of settlement into areas west of the Appalachians, and the abolition of transatlantic slave trade in 1808, the domestic trade became increasingly important, especially as settlers flowed into the Deep South in the 19th century. Some people already established as planters took droves of slaves with them when they moved. Others bought slaves from regional markets to develop and staff plantations.
It is estimated that between 1790 and 1860 approximately 835,000 slaves were relocated to the American South (economists describe them as being "imported" from the Upper South, but they were being relocated within US territories.) Historians most widely use the figure of one million slaves relocated during this Middle Passage.
Analysis by Robert Fogel and Stanley Engelman suggested that 16 percent of the total migration of slaves was due to sale of slaves through domestic trade. Their conclusions were strongly criticized by other economists.
The biggest sources for the domestic slave trade were "exporting" states in the Upper South such as Virginia, North Carolina, Maryland, and Kentucky. From these states most slaves were imported into South Carolina, Georgia, Alabama, Mississippi, Louisiana, and Arkansas. Fogel and Engelman attribute the larger proportion of interregional slave migration (i.e. migration not due to slave trade) to movement as planters relocated their entire slave populations to the Deep South to develop new plantations or take over existing ones (in later years). The new lands in the South attracted many land hungry settlers.
Historians who argue in favor of soil exhaustion as an explanation for slave importation into the Deep South posit that exporting states emerged as slave producers because of the transformation of agriculture in the Upper South. By the late 18th century, the coastal and Piedmont tobacco areas were being converted to mixed crops because of soil exhaustion and changing markets. Because of the deterioration of soil and an increase in demand for food products, states in the upper south shifted crop emphasis from tobacco to grain which required less slave labor. This decreased demand left states in the Upper South with an excess supply of labor.
With the forced Indian Removal by the US making new lands available in the Deep South, there was much higher demand there for workers to cultivate the labor-intensive sugar cane and cotton crops. The extensive development of cotton plantations created the highest demand for labor in the Deep South. At the same time, the invention of the cotton gin in the late 18th century transformed short-staple cotton into a profitable crop that could be grown inland in the Deep South. Settlers pushed into the South, displacing the Five Civilized Tribes and other Native American groups. The cotton market had previously been dominated by the long-staple cotton cultivated primarily on the Sea Islands and in the coastal Lowcountry. The consequent boom in the cotton industry, coupled with the labor-intensive nature of the crop, created a need for slave labor in the Deep South that could be satisfied by excess supply further north.
The increased demand for labor in the Deep South pushed up the price of slaves in markets such as New Orleans, which became the fourth-largest city in the country based in part on profits from the slave trade and related businesses. The price differences between the Upper and Deep South created demand. Slave traders took advantage of this arbitrage opportunity by buying at lower prices in the Upper South and then selling slaves at a profit after taking or transporting them further south. Some scholars believe there was an increasing prevalence in the Upper South of "breeding" slaves for export. The proven reproductive capacity of enslaved women was advertised as selling point and a feature that increased value.
Although not as significant as the exportation of slaves to Deep South, farmers and land owners who needed to pay off loans increasingly used slaves as a cash substitute. This also contributed to the growth of the internal slave trade.
Using an admittedly limited set of data from Ulrich Phillips (includes market data from Richmond, Charleston, mid-Georgia, and Louisiana), Robert Evans Jr. estimates that the average differential between slave prices in the Upper South and Deep South markets from 1830-1835 was $232. Although this differential deals only with price and does not account for transport costs and other operating costs (e.g. clothing, medical costs), the price gap displays a potential arbitrage opportunity (assuming costs were low enough).
Evans suggests that interstate slave traders earned a wage greater than that of an alternative profession in skilled mechanical trades. If skilled mechanical trades can be considered a reasonable alternative occupation for slave traders, then it appears that inter-regional slave traders are made better off, at least in monetary terms.
However, if slave traders possessed skills similar to those used in supervisory mechanics (e.g. skills used by a chief engineer), then slave traders received an income that was not greater than the one they would have received had they entered in an alternative profession. But most traders likely did not possess the skills of a railroad president or chief engineer.
Irish economic theorist John Elliot Cairnes suggested in his work The Slave Power that the inter-regional slave trade was a major component in ensuring the economic vitality of the Old South. Many economic historians, however, have since refuted the validity of this point. The general consensus seems to support Professor William L. Miller's claim that the inter-regional slave trade "did not provide the major part of the income of planters in the older states during any period."
The returns gained by traders from the sale price of slaves were offset by both the fall in the value of land, that resulted from the subsequent decrease in the marginal productivity of land, and the fall in the price of output, which occurred due to the increase in market size as given by westward expansion. Kotlikoff suggested that the net effect of the inter-regional slave trade on the economy of the Old South was negligible, if not negative. Speculators created slave trading companies which operated on both ends of the market, with firms such as Franklin and Armfield, based in Alexandria, Virginia, with offices in Louisiana, enjoying immense profits.
The profits realized through the sale and shipment of enslaved people were in turn reinvested in banking, railroads, and even colleges. A striking example of the connection between the domestic slave trade and higher education can be found in the 1838 sale of 272 slaves by Jesuits to Louisiana when Georgetown University was facing financial instability. The flow of slaves from the upper to lower south continued to run until the outbreak of the Civil War. Slaves were sold south even during the hostilities, as plantations, businesses and households continued to operate.
The primary issue that faces such analysis is determining the westward migration of the inter-regional slave trade from that incidental to the relocation of a slave's master.
Robert William Fogel and Stanley L. Engerman estimated that the slave trade accounted for 16 percent of the relocation of enslaved African Americans, in their work Time on the Cross. This estimate, however, was severely criticized for the extreme sensitivity of the linear function used to gather this approximation. A more recent estimate, given by Jonathan B. Pritchett, has this figure at about 50 percent, or about 835,000 slaves total between 1790-1850.
Without the inter-regional slave trade, it is possible that forced migration of slaves would have occurred naturally due to natural population pressures and the subsequent increase in land prices. Professor Miller contends that, "it is even doubtful whether the interstate slave traffic made a net contribution to the westward flow of the population."
The argument has been made that the inter-regional slave trade was one that resulted in "superprofits" for traders. But Jonathan Pritchett points to evidence that there were a significant number of firms engaged in the market, a relatively dense concentration of these firms, and low barriers to entry. He says that traders who were exporting slaves from the Upper South were price-taking, profit-maximizers acting in a market that achieved a long-run competitive equilibrium.
Within this market, the demand for prime-aged slaves, given by the ages 15-30, accounted for 70 percent of the slave population relocated to the Deep South. However, due to the fact that the ages of slaves were often unknown by the traders themselves, physical attributes such as height often dictated demand in order to minimize asymmetric information. With slaves moving further south through the slave trade, conditions and treatment of slaves were understood to decline as they moved further south. In comparison to working in relatively small groups and perhaps alongside some farming families in the Upper South, they were forced to do field work in large gangs under close white supervision, and had less control over their time. The dense trees and underbrush of many riverfront areas in Louisiana and Mississippi were being cleared for the first time to develop plantations, adding to their struggles.
Slaves most feared being sold to planters in Louisiana. The state's grueling climate, with high heat and humidity, as well as the pressures of cultivating and processing the labor-intensive crops of sugar cane and cotton, resulted in harsh conditions for labor. With demand high for both commodity crops, planters and overseers were known to be physically abusive to slaves. The slaves feared being sent to Louisiana as a "Death sentence".