THE Church Commissioners are proposing to establish a £1-billion reparations fund as penance for their historic links to the South Sea Company and transatlantic slavery (News, 8 March). The irony is that the managers of the Church’s 18th- century “Bounty” (fund) avoided this abhorrent trade and did not profit from it.
In 1713, the South Sea Company acquired the notorious Asiento Contract from Spain, which required it to export 4800 slaves annually to Spain’s American colonies. Appallingly, the Company estimated that, to meet this target, it might have to purchase 7000 slaves annually, after allowing for losses from suicide, illness, shipwrecks, and piracy.
It was widely recognised at the time that slave-trading under the Asiento Contract was likely to be unprofitable — so much so that many proprietors of the South Sea Company opposed taking on the commitment when it was put to the vote (878 in favour, 358 against).
In his history, published in 1764, Adam Anderson, Clerk to the Company, reported the proceedings of a meeting in 1733 between the Company and the Court of Spain to review the contract: “It was admitted on all sides that the Asiento Contract for the supplying of Spanish America with negroes was not only a great losing trade to this company but was well known to have been so for all former Asientists.” In final recognition of the losses incurred, the South Sea Company was awarded £100,000 by Spain in 1750.
The attraction of the Asiento was not, therefore, the slave trade, but, rather, the potential for highly lucrative merchandise trade with the Spanish colonies permitted under the agreement. As things turned out, however, this trade, though intermittently profitable, was hampered by constant disputes with Spain over permissible tonnage and destinations, as well as conflicts arising from profit-sharing. It was eventually discontinued in 1733.
THE South Sea Company and its investors did not, therefore, benefit financially from the slave trade, although this does not, of course, diminish the iniquity of the activity. More important, perhaps, is the fact that the Church Bounty employed an investment strategy that avoided economic exposure to the slave trade.
According to research undertaken by Grant Thornton for the Church Commissioners, the Bounty’s South Sea investments were almost exclusively in the form of annuities. By 1739, when the Company’s slave-trading ceased, the Bounty had invested more than £200,000 in annuities, equivalent to about £440 million today, and it is this figure that is bandied around as a measure of the Church’s profiteering from the South Sea slave trade (see, for example, the 10 March edition of The Sunday Times: “The billion pound question. . .”).
The South Sea Company was divided into two quite separate activities, however: commercial trading and financial intermediation. The South Sea Company had taken over the Government’s debt, on which it received interest, and this income was, in effect, passed through to the holders of South Sea annuities.
The income stream from this source had nothing to do with the slave trade. If the Bounty managers had wished to benefit from the slaving business, they would have invested in the Company’s shares; but, with one minor exception in 1720 — when the slave trade was shut down owing to war with Spain — they chose to avoid the risks and rewards of the commercial business and invested, instead, in what were essentially government-backed debt instruments. Indeed, because of the South Sea Company’s dominance as a financial institution, its annuities represented the obvious choice for investors with a low-risk preference.
GIVEN the above background, it is rather startling to read in Grant Thornton’s research report “that anyone investing in the [South Sea] Company before 1740 . . . was consciously investing in these [slave-trading] voyages”. On the contrary, by confining their investments to annuities, the Bounty managers studiously avoided investing in the slave trade.
The Commissioners conclude that “. . . a significant portion of the Bounty’s income during the 18th century was derived from sources that may be linked to transatlantic slavery, principally interest and dividends on South Sea Company annuities. . .”
This conclusion is misleading on several fronts. First, no investor in the South Sea Company benefited financially from the slave trade, since it was consistently loss-making.
Second, the Church Bounty did not even stand to benefit from the trade, because it declined to buy shares in the Company.
Third, the investments that it did make, in South Sea annuities, represented, at one remove, claims on the Government which had no connection with the trade in slaves.
Finally, it is grossly misleading to suggest, as the church report does, that all South Sea investors were consciously investing in slave-trading voyages.
Dr Richard Dale is an Emeritus Professor of the University of Southampton and a Fellow of the Royal Historical Society. His books include The First Crash: Lessons from the South Sea Bubble (Princeton University Press, 2016).