Perhaps this is a morbid question. Obviously, after the US Civil War, people who had been legally enslaved and literally owned by others were freed and made full US Citizens, at least in theory.
Anyway, how did the business/accounting world treat these legal emancipations? E.g. if Conglom-O’s accounting books listed 10 Slaves each with a Book Value of $5000, what entries would have been made to account for their emancipation after the war? Was it treated as a capital loss with the sale price as zero? Was it treated as an immediate 100% depreciation?
Similar to the sort of one-time loss caused by a fire or a flood, would be my guess.
Closer in time, US corporations owned property in Cuba that was seized after Castro’s revolution. I assume it would have been written off as a one-time loss in much the same way.
Given the damage done throughout the south, I suspect the casualty losses for the slaves were the least of the accounting issues, but it would just be a simple casualty loss from the perspective of the books.
Why would there be any acounting? The slave owner would know that he did not own any slaves anymore. So if he had books listing assetts, after the war he would not list any slaves.
I suspect this was the likely method. There may have been some more sophisticated plantations that performed some formalized cost accounting, but, in general, I doubt there was much proper double-entry accounting going on. I guess there could also be some interesting accounting issues regarding the valuation and depreciation methodology of slaves given that slaves are long-lived capital assets which reproduce themselves.
This was more of an issue during the Civil War, before the Emancipation Proclamation. Escaped slaves were still considered property in the North, and were subject to return under the Fugitive Slave Act of 1850. A creative Union general, Benjamin Butler, found away around the federal law by classifying escaped slaves as “contraband of war” under the Confiscation Act of 1861, the same as captured rifles or ammunition. Contraband that was considered necessary to the support of the Confederate Army could be confiscated, and slaves fell under that definition.
Escaped slaves that made it Fort Monroe in Virginia were protected by Union forces, and housed in a settlement known as the Grand Contraband Camp, and more than 10,00 escaped slaves were housed there between 1861 and 1865.
The OP is a technical accounting question. In accounting, there is a method called “double-entry accounting.” That means that if you have a change to assets (or liabilities), you make two entries, one of which usually is reflected as a revenue or expense. For example, if a company has office supplies on the books as an asset and then uses them, they reduce the value of office supplies on the books, and have an offsetting entry for expense. (I think in reality office supplies are expensed as soon as you buy them but this example illustrates the point.) In a more complicated example, if a car dealer sells a car, they have cash coming in and a car going out. They record the cash as increase in cash (asset) and have an offsetting entry under revenue. The car is recorded as a reduction in an asset (inventory), and also recorded as an expense (cost of goods sold).
So you don’t just change what you list as assets and be done with it.
Nobody of any importance. Mostly just banks, shareholders and the government.
Someone else has already brought up the technical nature of proper accounting and its double-entry nature. To people who understand accounting and use financial information on a regular basis, depreciation provides valuable information.
I’ve used this fact to refute the claim I’ve seen that the Emancipation Proclamation didn’t free any slaves. Leaving aside the point that it eventually freed millions of slaves, it immediately freed all of the escaped slaves who were in federal territory.
I don’t know the full history of the depreciation concept. But I do know that the idea was in place by the 1830’s, when railroads were using it to calculate dividends payable to shareholders.
I can’t think of any slave-holding businersses as such. Every slave I’ve ever heard of had a specific individual who owned them, and plantations, while businesses, were not known for strict accounting practices in that sense. Double-entry bookeeping existed, yes, but it wasn’t being used in Southern Plantations any more than it was being used in prarie farms. And in the post war, you wouldn’t update your books if you kept them for some insane reason; you’d just make completely new ones.
Frankly I loathe accounting even when doing my own business’s finances, so I couldn’t be further from an accounting historian. Just typing this makes me chuckle at the idea of how awful learning about the history of accounting must be.
That said, double entry accounting was first introduced in the 1300s by Italian merchants. I believe the Medicis also helped popularize it. So that’s 500 to 600 years of double entry accounting before the civil war.
Obviously planation owners didn’t use GAAP but I’d guess their accounting was a lot more similar to ours than most people would think.
Double entry accountancy dates back from the Renaissance. I don’t know when the concept of depreciation entered it, but I would guess fairly early, since it’s an obvious issue that must be…err…accounted for. And it’s a pretty useful tool, even without shareholders, to get a general picture of a bussiness’ situation.
I believe that it was impossible for a corporation to own a slave. Slavery was a social institution, not just an economic one. A slave had to have a master.