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Redemptioner Immigration to Pennsylvania: Evidence on Contract Choice and Profitability

Published online by Cambridge University Press:  03 March 2009

Farley Grubb
Farley Grubb
Affiliation:
The author is Assistant Professor of Economics at the University of Delaware, Newark, Delaware 19716
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Abstract

The evolution from indentured to redemptioner servitude as a means of financing immigration to late eighteenth-century Pennsylvania is documented. The compensating differences between methods are used to explain contract choice. The rate of return to shipping redemptioners is estimated and compared with the default rate needed to make it a competitive return. The expected incidence of defaults and the implications for risk pooling among families and risk spreading across voyages are investigated.

Type
Papers Presented at the Forty-Fifth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 46 , Issue 2 , June 1986 , pp. 407 - 418
Copyright
Copyright © The Economic History Association 1986

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References

The author is Assistant Professor of Economics at the University of Delaware, Newark, Delaware 19716. He wishes to thank Gary Becker, David Galenson, Henry Gemery, Claudia Goldin, Gary Libecap, Robert Margo, Jacob Price, Ralph Shlomowitz, and the members of the University of Pennsylvania Economic History Seminar for helpful comments on earlier drafts.

1 See Davies, K. G., The North Atlantic World in the Seventeenth Century (Minneapolis, 1974), pp. 96–97;Google ScholarDickson, R. J., Ulster Emigration to Colonial America 1718–1775 (London, 1966), p. 95;Google ScholarGalenson, David W., White Servitude in Colonial America (Cambridge, Mass., 1981), pp. 97–98;Google ScholarSee Geiser, Karl F., Redemptioners and Indentured Servants in the Colony and Commonwealth of Pennsylvania (New Haven, 1901), p. 47;Google ScholarHerrick, Cheesman A., White Servitude in Pennsylvania (Philadelphia, 1926), pp. 175, 184–87;Google ScholarHofstadter, Richard, America at 1750 (New York, 1973), p. 33;Google ScholarHughes, J.R.T., Social Control in the Colonial Economy (Charlottesville, 1976), p. 108;Google ScholarLebergott, Stanley, The Americans: An Economic Record (New York, 1984), p. 185;Google Scholar and Smith, Abbot E., Colonists in Bondage (New York, 1947), pp. 35–42, 209.Google Scholar

2 Grubb, Farley, “The Incidence of Servitude in Trans-Atlantic Migration, 1771–1804,” Explorations in Economic History, 22 (07 1985), pp. 316–39.CrossRefGoogle Scholar

3 In America there were no legal or practical distinctions in the sale or operation of the two contract types. The key difference was in how they financed the voyage. Finance methods of lesser importance were serving according to the “customs of the country” and convict transportation.

4 See Galenson, David, “The Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis,” this JOURNAL, 44 (03 1984), pp. 1–8.Google Scholar

5 Smith, , Bondage, p. 21.Google Scholar

6 For example see Galenson, , White Servitude, pp. 14–15;Google ScholarMorris, Richard B., Government and Labor in Early America (New York, 1946), pp. 319–22;Google Scholar and Smith, , Bondage, pp. 39–41.Google Scholar

7 For a discussion of competition in the trade see Grubb, Farley, “Was the Shipping of German Immigrants to Colonial Pennsylvania Monopolized?” (unpublished manuscript, University of Delaware, 1985).Google Scholar

8 See the assessment in McCusker, John J. and Menard, Russel R., The Economy of British America, 1607–1789 (London, 1985), p. 243.Google Scholar

9 See Galenson, , White Servitude, pp. 8–15, 97–113;Google Scholar and Grubb, Farley, “The Market for Indentured Immigrants: Evidence on the Efficiency of Forward-Labor Contracting in Philadelphia, 1745–1773,” this JOURNAL, 45 (12. 1985), pp. 855–68.Google Scholar

10 See Geiser, , Redemptioners and Indentured Servants, pp. 59–76;Google ScholarMorris, , Government and Labor, pp. 315–22;Google Scholar and Smith, , Bondage, pp. 20–25.Google Scholar

11 See Grubb, Farley, “Immigrant Servant Labor: Their Occupational and Geographic Distribution in the Late Eighteenth-Century Mid-Atlantic Economy,” Social Science History, 9 (Summer 1985), p. 256.Google Scholar

12 Derived from “Book of Redemptioners, 1785–1804” (unpublished manuscript, Pennsylvania Historical Society, Philadelphia). Galenson, , White Servitude, p. 14;Google Scholar and Smith, , Bondage, p. 22 also note the preference by families for the redemptioner method. However, the reasons given for the preference, that families wanted to partially prepay the passage, have contracts where the whole family was freed at the same time, or have children serve for their parents, are not supported by the contract evidence, see also fn. 17. Only husbands and wives had joint contracts.Google Scholar

13 Shippers carrying indentured contracts with infrequently used employment or sale restricts failed to correctly forecast the colonial value of the contracts, Grubb, , “Market for Indentured Immigrants,” p. 867.Google Scholar

14 Smith, , Bondage, p. 39.Google ScholarDickson, , Ulster Emigration, p. 95, used the same method to conclude that merchants received twice the money on servants relative to shipping free immigrants. These estimates do not match a given individual's contract price and passage cost, making the measure very speculative. The reliance on servant prices as the proper comparison to passage costs may also be misleading. Servant prices contained returns other than to transporting servants, such as implicit interest for purchasers who bought on credit and in the case of indentured servants returns to guaranteeing the contract terms before leaving Europe.Google Scholar

15 Strassburger, , Pioneers, vol. 3, pp. 131–34.Google Scholar

16 Most German immigrant ships carried both types of passengers who shared the same quarters and provisions during the voyage.

17 Extra cash advances were interest free loans added to the passage loan. This increased the total debt but decreased the implicit interest on the investment. It was the most popular way of adjusting passage fares; 80 percent received them on the Belvidere. Few partially prepaid, the largest was 8.3 percent on the Elizabeth. Discounts off the quoted fare were also used, the largest was 35 percent of the free passengers on the Elizabeth. See also the descriptions in Mittelberger, Gottlieb, Journey to Pennsylvania in the Year 1750 and Return in the Year 1754 (Cambridge, Mass., 1960), pp. 16–18;Google Scholar and Strassburger, , Pioneers, vol. 1, p. xxxvii.Google Scholar

18 The estimated return is similar to what John Dick, a redemptioner merchant, reported in 1750. He claimed it was customary to add about 15 percent to the passage fare “as an Indemnity for the Charges and laying out of the money,” Smith, , Bondage, p. 40.Google Scholar

19 The redemptioner method provides the best evidence for measuring the returns to shipping servants because it was a pure loan agreement. Returns to shipping indentured servants included interest on the implicit passage loan, a return to risk, and also a return to guaranteeing the contract's labor terms before sailing or speculating in forward-labor contracts.

20 See Homer, Sidney, A History of Interest Rates (New Brunswick, 1963), p. 165;Google Scholar and Officer, Lawrence H., “Dollar-Sterling Mint Parity and Exchange Rates, 1791–1834,” this JOURNAL, 43 (09 1983), pp. 599–600. Given a two-month voyage and a month or two for transaction time, the annualized return to shipping redemptioners would be around 45 to 60 percent. This is not to say that merchants could invest the same resources at this rate annually. At best two round-trip voyages could be made a year. Annualizing this rate simply aids in comparing it to the returns of other investments which are expressed as annual interest rates.Google Scholar

21 This calculation used the credit and cash prices from the Commerce, see Table 3, and assumed an opportunity cost of capital ranging between a 3 to 5 percent annual interest rate on a two to four month investment. The formula used was: [b;(1 – default rate)(credit price) – cash price]/ cash price = opportunity cost of capital per voyage.

22 See Grubb, Farley, “Morbidity and Mortality on the North Atlantic Passage: Evidence from Eighteenth-Century German Immigration to Pennsylvania,” Journal of Interdisciplinary History (forthcoming).Google Scholar Others have suggested a voyage mortality of 10 percent or more which would explain all of the premium charged redemptioners, see Gemery, Henry A., “Emigration From the British Isles to the New World, 1600–1700: Inferences From Colonial Populations,” Research in Economic History, 5 (1980), pp. 186–87.Google Scholar The shipwreck rate was derived from Strassburger, , Pioneers, vol. 1;Google Scholar and Wokeck, Marianne, “The Flow and Composition of German Immigration to Philadelphia, 1727–1775,” Pennsylvania Magazine of History and Biography, 105 (07 1981), pp. 254–55 for the German passenger trade to Philadelpia from 1727 to 1775.Google Scholar

23 For example, Ludwig Gall brought 13 redemptioners to Philadelphia in 1819. Two refused to repay their passage loan. Gall had them thrown into prison and recovered only part of his loans in court, see Trautmann, Frederic, “Pennsylvania Through a German's Eyes: The Travels of Ludwig Gall, 1819–1820,” Pennsylvania Magazine of History and Biography, 105 (01 1981), pp. 40–41. However, the frequency of such events is unknown.Google Scholar

24 See Diffenderffer, Frank R., “The German Immigration into Pennsylvania Through the Port of Philadelphia, and ‘The Redemptioners’,” Pennsylvania German Society, 10 (1899), p. 192;Google ScholarMittelberger, , Journey, pp. 17–20; and Grubb, “Morbidity and Mortality.”Google Scholar

25 Periods of slack demand also slowed the recovery of passage loans. For example Muhlenberg commented in 1764: “Four shiploads of German immigrants have arrived again this fall, but since money is scarce, the people are not being sold very fast,” Muhlenberg, Henry Melchior, The Journals of Henry Melchior Muhlenberg (Philadelphia, 1942), vol. 2, p. 121.Google Scholar

26 See Mittelberger, , Journey, pp. 16–20;Google Scholar and Diffenderffer, , “The German Immigration into Pennsylvania,” pp. 188–93.Google Scholar

27 The standard deviations in passage mortality and debarkation morbidity per voyage in the German immigrant trade were as large as their expected mean values. And the yearly standard deviation in post-voyage mortality was about 77 percent of its yearly average, Grubb, , “Morbidity and Mortality.”Google Scholar

28 The servant-per-ton ratio was not known. Because servants were the risky freight and free passengers were relatively safe, comparing passenger-per-ton ratios within the trade or with the slave trade, understates the relative diversification of risky versus less risky freight.

29 Derived from 324 German immigrant voyages to Pennsylvania between 1727 and 1775, Strassburger, , Pioneers, vol. 1; and the sources cited in Table 4.Google Scholar

30 Merchants with many vessels may have also obtained some scale economies in information and reputation thus becoming specialized in the business.