From the late 16th century, a “triangular trade” developed between Europe, Africa and North America. British goods were shipped to Africa, slaves were shipped to the new world, and cash crops such as sugar and tobacco returned to Britain.
The 1772 Somerset case established that slavery was not supported by English law, effectively freeing all slaves in England, but it remained legal in the colonies. In 1807, William Wilberforce and his allies persuaded parliament to outlaw the trade. However, slavery itself remained legal in the British Empire.
In 1831, a Jamaican slave and Baptist preacher, Samuel Sharpe, inspired a major slave revolt. Sharpe was executed, but parliamentary enquiries focused attention on the brutality of the slave owners and the ongoing threat of revolt. In 1833, the Slavery Abolition Act was passed, receiving royal assent on 28 August.
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It banned slavery in the Empire, except for India and St Helena (it was fully abolished in 1843). However, £20m (nearly £17bn in today's money) was provided to compensate slave owners – 40% of the Treasury budget for a year. It's been described as the largest “bailout” in British history, prior to the 2008 bank bailouts.
Some of Britain's wealthiest families gained huge payouts. John Gladstone (father of William) got £83m in today's money, while ancestors of George Orwell and David Cameron were also compensated.
The funds were reinvested in Britain's booming industries, financing the early railways. The cost of paying for the compensation came from consumption taxes, whose burden fell disproportionately on the poor. Ex-slaves, of course, got nothing.
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