Saturday, March 07, 2009

Reading between the numbers

Further to yesterday's post, I've been delving into the accounting of that sale of slaves imported to Virginia aboard the ship The Prince of Wales back in 1772.

I am finding it is just another sad example of how cold accounting can be, and how much information cannot be conveyed by strict columns and numbers.

In this case, the compiler failed to note the ship actually began its voyage in Africa with a human cargo numbering 400.

Only 280 survived the trip.

Of that number, 266 were sold on the auction block.

What happened to the other 14? For that matter, what happened to the 266 after they were purchased?

What we do know is that folks back then were an awful lot like folks today. They bought on credit, promising to pay the sales agents Richard Randolph and John Wayles (father-in-law of Thomas Jefferson) when their tobacco crops came in.

But, tobacco prices plummeted that year, and the debtors failed to pay-up, reluctant to take the loss on their devalued crop. (To put it in modern terms, it would be like having to pay based on your home equity or 401(k) balance.)

To add to the mess, Mr. Wayles dropped dead in 1773. Mr. Randolph was left holding the bag. So, when the slaves' consignor John Powell & Company of Bristol, England, demanded payment, he had to get a "bail-out" from the firm of Farrell & Jones.

Unlike modern bailers, though, F&J went after both Randolph and the Wayles estate to try to recoup their losses. The case dragged on for many years, and I haven't yet found out how it was resolved. But, I doubt we will see such doggedness when it comes to recovering any of the bail-out money being so recklessly issued up in DC nowadays . . .

To borrow an accounting term, the "bottom line" for ye socks here is that you've got to appreciate that there's almost always a lot more going on behind the numbers on a financial statement--be it an historical one or a modern-day example.

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