Coffee, Slavery and a Tax Loophole: Explaining the Cape Colony’s Trading Boom, 1834–1841

Abstract

ABSTRACT At the Cape of Good Hope between 1836 and 1841 there was a remarkable spike in imports and exports. Historians have assumed this was because the financial compensation slave-owners received when slavery was abolished in 1834 encouraged speculation. But our historical research on the imports and exports recorded in the Cape Colony’s blue books suggests another, more intriguing, reason: a tax loophole in the coffee trade which made it possible for producers outside the British Empire to avoid high tariffs for imports into Great Britain by going via the Cape. Coffee imports from places like Java and Rio de Janeiro increased substantially in 1839 because British slave-owning colonies’ production plummeted after forced apprenticeships for former slaves ended in 1838. In 1842, however, the British tax code for coffee was revised and consequently the loophole closed.