Financial Literacy

Predatory Lending Rooted in Antebellum South: Study

A doctoral student at the College of William & Mary in Williamsburg, Virginia, recently compiled evidence that traces predatory lending practices to the pre-emancipated South.

In her research, Amanda Gibson found that in comparison to today’s standards, in the informal financial world of antebellum Virginia, African Americans were often as collateral for loans or sold to pay off debt. African-Americans were also sometimes participants in the personal side of pre-emancipation credit, usually taking out loans in pursuit of freedom.

“Enslaved people borrowed to purchase themselves or family members from slave owners,” Gibson said. “Free African Americans borrowed to pay jail fees to protect themselves from predatory re-enslavement schemes.”

When pursuing these personal loans, African Americans faced two barriers, according to Gibson. The first was finding someone to loan them money, considering most lenders at the time were unsympathetic Whites.

The second, especially for enslaved borrowers, was securing the cash to pay off the loan. Some were able to make arrangements with their owners to be paid for doing more work than required. Others used their small amount of free time to earn money through tending gardens, fishing, sewing, or any other marketable pursuit, Gibson discovered.

Even though a small amount of enslaved people were allowed to pursue extra work, most were not, and, of those who were allowed to earn some money, most received less food and clothing from their owners as a result.

Additionally, it was not uncommon for slave owners to borrow money from their slaves and more often than not, the slaves were never repaid.

“One woman I found in the sources baked late into the night after she had completed her work for her mistress,” Gibson said. “Her breads and cakes were highly sought-after, and she built up a small war chest so she could purchase family members who were in danger of being sold.

“Unfortunately, her mistress found out how much she had accumulated and borrowed the money from her,” said Gibson, who will complete her doctorate next year at William & Mary. “The mistress died, and the enslaved woman was never repaid.”

Gibson’s project, “Credit is Due: African Americans as Borrowers and Lenders in Antebellum Virginia,” won her a two-year predoctoral fellowship at the Carter G. Woodson Institute for African-American and African Studies at the University of Virginia.

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