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Why Wall Street Loves Dixie

When bankers express fondness for the Old South, they ain’t just whistlin’ Dixie.

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Think of Dixie, and your mind probably conjures something like "Duck Dynasty" — bearded men bouncing along dirt roads in pickup trucks, raucously waving rebel flags.

You probably wouldn’t think of black-tied bankers cavorting in the plush ballroom of Manhattan's St. Regis hotel. But were you to peek inside the recent gathering of a secret Wall Street society, you’d have witnessed investment banking tycoon Warren Stephens taking the stage in a Confederate flag hat, performing an ode to finance to the tune of “Dixie." "In Wall Street land we’ll take our stand,” you would have heard him croon, as 200 of his well-heeled brethren nibbled foie gras.

Is this linkage of Wall Street and the slaveholding South merely a coincidence?

Actually, there's a very old affinity. Throughout its history, Dixie has often worn a suit.

Cotton Kings and Sugar Daddies

We tend to think of America as separate regions: the South where slavery happened, and the North that opposed it. But this regional distinction is an illusion in many ways, and one the money men gladly encourage. The truth is that without Wall Street's vigorous support and financing, the system of slavery could not have thrived. Much of the North's economic prosperity rested on the blood-soaked foundation of Southern cotton production. The curators of a fascinating and extensive exhibition series at the New York Historical Society, " Slavery in New York," put it this way: "New York was...the capital of American slavery for more than two centuries."  In her book Disowning Slavery, Joanne Melish notes that one of the North’s greatest cultural achievements in the Civil War was to effectively erase its ties to slavery in the public imagination.

New York City’s slavery connection goes way back to its colonial past. Wall Street was the location of New York’s first slave market, established in 1711. New York never developed a big cash crop like cotton, so it didn’t have plantations on the scale of states further south. But you didn’t have to be a planter to benefit from the business of slavery. Many of New York’s prominent 18th-century families were deeply involved in the slave trade. Philip Livingston, a signer of the Declaration of Independence whose wealth flowed to Yale University, was a major slave trader.

New York passed a gradual emancipation act in 1799, and slavery was officially abolished in the state in 1827— but only officially. As historian Eric Foner has noted, the port of New York continued as the financial center of the illegal transatlantic slave trade up until the 1860s.

New York controlled the South’s cotton trade, which is why most of the city’s merchants and bankers supported slavery during the 1830s, 40s and 50s. Over and over, they used their influence to get concessions for the South in order to maintain their access to cotton: white gold. The South’s cotton production was a key source of profit and employment for the shipping, banking, insurance and textile industries.

As political scientist Thomas Ferguson has explained in his book Golden Rule, the Democratic Party of the 1830s was one in which elite merchants, New York City bankers, and planters like U.S. treasury secretary Robert Walker could find common ground on many items, including their support of free trade and slavery. (Originally from Pennsylvania, Walker moved to Mississippi to become a cotton, slave and land speculator and a politician who staunchly defended slavery on both economic and moral grounds.)

Money flowed into the New York financial world not just from cotton, but from another form of white gold: sugar. Businessman William Havemeyer, elected mayor of NYC in 1845 and 1848 and again in 1872, was from a sugar-refining family that relied on raw materials derived from the plantations of the Deep South and the Caribbean.