Danisha Kazi, senior economist at Positive Money

A wave of protests took hold over the summer in the UK following the killing of George Floyd in America and in solidarity with Black Lives Matter. Days after the statue of prominent slave trader Edward Colston was pulled down in Bristol, a number of financial institutions including the Bank of England, Barclays, and Lloyds of London all issued public apologies for their respective ties to the slave trade and key figures who amassed large fortunes as slave owners. But as many have articulated before us at Positive Money, apologies are not enough.

Some positive steps have been announced. The Bank of England will remove all images of former directors with links to the slave trade, and commercial banks have pledged to do more to fund opportunities for Black and ethnic minority people while donating money to organisations tackling racism.  Yet, these measures fall far short of the concrete actions which are needed to address the UK’s glaring racial wealth gap. As Runnymede’s recent report highlights, stark ethnic disparities in financial outcomes emerge from historical racial inequalities and our shared colonial history. As evidenced by  Black African and Bangladeshi households holding 10 times less wealth than white people, and persistent inequalities across educationhealthemployment, poverty and housing.

Britain’s slave trade spanned the 16th to the 19th century and involved the enslavement of over three million African’s, trafficked to the Americas to work for free under violent conditions on plantations producing sugar, tobacco and other crops. The Royal African Company (1663) established a monopoly for the port of London to trade with Africa under royal charter, which gave rise to the City of London becoming the world’s financial centre as we know it today. The evolution of banks and the financial sector helped to make Britain one of the most dominant slave trading countries. This included the development of long-term commercial credit to help slave merchants raise capital in advance of securing profits from the sale of their captured slaves and exports of plantation output. It also enabled the expansion of plantation estates and the funding of private armies that went on to secure British colonies.

Enslaved people cutting the sugar cane on the Island of Antigua, 1823 | Image: British Library, Unsplash

The brutal truth is that today's major banks  grew rich from a system in which “financial value was secured on human bodies”, while the Bank of England, helped to stabilise our national finances to  enable the State to engage in multiple wars during the 18th century wars in large part aimed at securing slave colonies. The large-scale capital needed to finance long and risky slave voyages was raised on the basis of future profits from enslaved Africans used as collateral for loans. The numbers of Africans killed during these inhumane slave voyages is unknowable, but is estimated at around 15-25% of the total 12 million transported. And so, insurance companies in the City of London also grew rich, from a system in which trafficked Africans were equally profitable in death.

The 1833 Slavery Abolition Act formally banned the ownership of other human beings. Yet profiting from slavery and the slave trade remained engrained in society. A final insult to injury saw 46,000 British slave owners compensated for the loss of their ‘property’ to the tune of £20 million equivalent to £17 billion today. While slaves were forced to work for free for a further six years to help pay for this compensation to slave owners, the sum was only fully repaid by the government in 2015. This amounts to the biggest bailout in UK history prior to the 2008 crash, and effectively means taxpayers have been paying to compensate slavery for 182 years.

The Legacies of British Slave-ownership (LBS) database published by University College London details the businesses, big banks, and bank directors that directly shared in the £20 million compensation to slave owners.  This new found wealth was reinvested in many facets of the British economy through infrastructure, property, acquiring new assets and expansion of plantations and colonies abroad still based on slavery.  This was all conducted through the City of London, the profits from these investments fuelled the growth of today’s big banks including Lloyds, RBS, HSBC, the Bank of England.   

The exploitative dynamics of these financial innovations remain prevalent in many aspects of contemporary finance and banking today. The global financial crisis of 2008 saw private investors leveraging the future debt obligations of ordinary people into tradable products. High risk subprime mortgages which were disproportionately targeted at Black and minority groups were packaged into complex securities and endorsed as safe by ratings agencies to extract higher returns. When the crisis hit, governments stepped in to bail out the banks and insurance companies while people lost their homes and livelihoods. All this reveals that being far from neutral, our financial system continues to reproduce racial inequalities and systemic racism in society.

More concrete actions include reparations as a form of “Marshall Plan” and for the cancellation of national debts for countries that were devastated by slavery, as outlined by Dr Hilary Beckles, chairman of the regional alliance for Caribbean countries (CARICOM).  Others have called for climate reparations for the Global South, recognizing the disproportionate responsibility colonial powers have had in greenhouse gas emissions. Recognition and compensation to those countries and descendants of those who suffered is long overdue. What form this takes should be decided on the basis of dialogue and consent from those most affected.

Protests calling for racial justice in 2020 | Photo: James Eades, Unsplash

Additionally we need a more diversified financial ecosystem with different models of banking that support disadvantaged communities, with inbuilt ethical standards that can help counter the systemic racism that determines people’s life chances.  While much more work needs to be done to understand and expose the structures of oppression and power imbalances built into our key banking and financial institutions, that is certainly a place to start. 

It was the ideology of racism that was used to justify atrocities committed through the slave trade and colonialism, that sits at the root of racial inequalities that persist today. In the face of that, the banks and financial institutions that benefitted and grew rich from this legacy owe a far greater debt than mere apologies. 

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