The Slavery Abolition Act 1833 abolished slavery in the British Empire. (After a 6-year apprenticeship period, and except in certain colonies controlled by the East India company, where slavery was abolished int 1843.) Presumably to make this politically feasible, the act allowed for 20 million pounds to be paid in compensation to slave owners. The payments were managed by the Slave Compensation Commission, and their records form a complete census of slave ownership in the British Empire in the 1830s.
The records from the commission and previous registrations are kept at the Legacies of British Slave-ownership site and at the National Archives) Another source for information is the book “The Price of Emancipation” by Nicholas Draper.
The National Archives site includes this description in their summary of the data:
“In 1834 slavery was abolished in British colonies under the Slavery Abolition Act 1833. This Act also provided for a sum of £20 million to compensate slave proprietors. Its distribution was entrusted to a Slave Compensation Commission which began to meet in October 1833 and included representatives of the Colonial Office and the slave registry. It worked on data collected by assistant colonial boards of compensation nominated by the governor in each colony, and compensation was allowed on slaves appearing on the books of the slave registry on 1 July 1835. Actual payment of the claims was made by the National Debt Office.
The commission was terminated at the end of 1842, but one of the commissioners was appointed as an arbitrator to adjudicate upon outstanding claims. At the end of 1845 all money unappropriated reverted to the public purse. The registry continued in existence until 1848.(Note: according to the Legacies for British Slaveownership organization, £18.7M had been awarded by the end of 1837, and with expected in the intervening years, so it is unlikely there was much, if any, to revert to the public purse in 1845.)
Why do people care?
In February 2018 the British Treasury published a tweet saying the debt for the £20 million was not paid off until 2015. The tweet was later deleted, but memorialized and quoted in articles such as this.“Millions of you helped end the slave trade through your taxes”
“Did you know? In 1833, Britain used £20 million, 40% of its national budget, to buy freedom for all slaves in the Empire. The amount of money borrowed for the Slavery Abolition Act was so large that it wasn’t paid off until 2015. Which means that living British citizens helped pay to end the slave trade.”What does it actually mean for a 1833 debt to be paid off in 2015? Can we follow the money for nearly 200 years? Much of the hype since the tweet has been bemoaning that the money was paid to slave owners, rather that as reparations to slaves themselves. We can chalk that up to unfortunate political expediency at that time. But how and why were we continuing to pay off a debt for that until 2015, and who were we paying all that money to?
FOI question on the payoff in 2015
A 2018 Freedom of Information request asked “Is it true in 1833 Britain used 40% if it budget to buy freedom for slaves in the Empire? Can you confirm that the borrowed money for the Abolition Act was only paid off in 2014?”https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/680456/FOI2018-00186_-_Slavery_Abolition_Act_1833_-_pdf_for_disclosure_log__003_.pdf
The Slavery Abolition Act (1835) Loan was rolled over into the Government’s gilt programme, ultimately into an undated gilt, the 4% Consolidated Loan (1957 or after).
The term ‘undated’ refers to the fact that this gilt was issued with an earliest potential redemption date of 1957, but it was not compulsory for the gilt to be redeemed at this date. The 4% Consolidated Loan was redeemed on 1 February 2015, as part of the Government’s decision to modernise the gilt portfolio by redeeming all remaining undated gilts.
FOI question on interest paid on the 1835 loan.
Another FOI question asked for more details on the loan, including the interest rate and amount of interest paid on it.https://www.whatdotheyknow.com/request/amount_paid_per_year_to_repay_sl
The 4% Consolidated Loan (1957 or after) redeemed on 1 Feb 2015. Its redemption value was ₤218M. This does not include any previous interest payments.
While the Slavery Abolition Act (1833) load was ultimately repaid through the redemption of the 4% Consolidated Loan (1957 or after), between 1833 and 1927 (when the 4% Consolidated Loan was first issued), the Slavery Abolition Act (1833) loan would have been converted into new stock. At this point, holders of the original loan would have been offered a choice of redeeming their holdings or converting it into the new stock. However, we do not hold records of their decisions, so it is not clear how many holders, if any chose to convert their holdings in to the new stock. For this reason, it is not possible for HM Treasury to determine how much of the 4% Consolidated Loan was made up of Slavery Abolition Act (1833) loan, or how much was left on the Slavery Abolition Act (1833) loan in 2015. It is therefore not possible for us to provide the total sum required to repay the Slavery Abolition Act (1833) loan.
HM Treasury does not hold any detailed information on the structure or amounts of repayments made under the original Slavery Abolition Act (1833) loan; however it is likely that this would have been through twice-yearly interest payments, similar to the current structure of gilts. HM Treasury does not hold information on the total interest paid on the Slavery Abolition Act (1833) loan.
What was included in the 4% Consolidated Loan?
https://www.history.com/news/6-longstanding-debts-from-historyIn 2014, the British government announced plans to pay down a chunk of debt dating all the way back to the early 18th century. The bills existed in the form of perpetual bonds left over from the “Four Percent Consolidated Loan,” which Prime Minister Winston Churchill had issued in 1927 to refinance national war bonds from World War I. These “4% Consols,” however, included more than just World War I debt. Thanks to decades of government refinancing and consolidation, the stew of old bills also contained borrowing from the Napoleonic and Crimean Wars, an 1847 loan to assist Ireland during its Great Famine, and even money paid to compensate slaveholders when Britain’s Slavery Abolition Act was passed in 1835. By far the oldest debt was from a government bailout that followed the so-called South Sea Bubble, a 1720 financial panic caused by rampant stock speculation in Britain’s South Sea Company. In a 2014 press release, Britain’s Chancellor of the Exchequer said there were over 11,000 bondholders still collecting interest on the centuries-old debt. At the time, the government had not made an effort to redeem any of its perpetual bonds for 67 years.(The other debts described in this article are also interesting to read about.)
What we know about the original loan
We do know (according to wikipedia) that the British government provided £5 million, and got a loan in 1835 for £15 million from bankers Nathan Mayer Rothschild and his brother-in-law Moses Montefiore. Wikipedia says “£20 million amounted to 40% of the Treasury's annual income or approximately 5% of the British GDP.”We can surmise from their inclusion in the 4% Consolidated Loan, that the gilts issued in 1835 were perpetual bonds, with no maturity date. We don’t know the interest rate originally negotiated, but since being included with the Consolidation Loan in 1927 it was 4%.
The Rothchilds were bankers, practicing fractional reserve finances, so there is no need to assume they actually had that much money to lend. They just have to issue bank notes promising to pay up if anyone asks for the money.
More on consols
https://fredblog.stlouisfed.org/2016/07/consols-the-never-ending-bonds/Consols are bonds without a maturity date. “Consols were first introduced in 1751 at 3.5% and have been in circulation ever since, although interest rates have varied. In 2015, the British government decided to redeem all consols in circulation.” (The FRED site above has information on the interest rates of consols over the years.)
Effects of the loan
https://www.bondvigilantes.com/blog/2017/09/06/2nd-largest-bailout-british-history-economic-effects/This research shows that the slavery compensation payouts resulted in, among other things, 10% inflation in 1836, about 4% in 1837-1839. Economically, this means that while the slave owners were being paid a windfall to invest in various industries (some are listed in the article), the people who did not own slaves paid for that windfall in lost buying power. Adding 5% to the the GDP resulted in 10% inflation.
