The hellship Neptune and perverse incentives

The winning bidder for the Second Fleet contract was Camden, Calvert and King, a very successful old slave-trading company that, having lost its business across the Atlantic, was making an agile pivot to carrying convicts to the Antipodes. The Neptune sailed in a fleet of three, alongside the Scarborough and the Surprize, from London on 19 January 1790. Trouble began before the ships had even made it to the ocean.

Click image to zoom Tap image to zoom

Pic: The Neptune

We are on the docks outside the Fountain Tavern in Plymouth where a crowd has gathered, hushed expectantly. Two men stand back-to-back. Upon the signal they begin: ten deliberate strides before turning and pulling the triggers on their long-barrelled pistols.

"While incentives agitate neural networks of reward, those neural networks will nevertheless operate in the absence of incentives.”

The two men are John Macarthur, an officer of the New South Wales Corps, and Thomas Gilbert: captain of the Neptune, veteran of the First Fleet, and employee of Camden, Calvert and King.

Both Macarthur and Gilbert survived the duel, likely to the disappointment of the dispersing crowd but not to their surprise – the incentive to agree to a duel would change very rapidly later when guns that shot straight were invented.

Why did they fight? Macarthur and his wife were unhappy about conditions aboard. Stomach infections among the convicts were already rampant – remember, Plymouth was only the last stop in England before they plunged down through the Atlantic. 

Click image to zoom Tap image to zoom

Several convicts had died below decks already, despite the mostly estuarine journey so far. Macarthur wanted, not unreasonably, someone to clean up the s**t. The captain seemed disposed to leave the hundreds of unfortunates chained together below decks to wallow in it.

Complaints about harsh treatment of convicts seemed justified. William Hill, a captain in the NSW Corps aboard the Surprize, wrote in a letter home about what he saw on the Neptune:

The irons used upon these unhappy wretches were barbarous … they could not extend either leg from the other more than an inch or two at most; thus fettered, it was impossible for them to move, but at the risk of both their legs being broken.

After the duel, the slave-trading company swapped Captain Gilbert out for a new one, Donald Trail. Macarthur and his wife eventually transferred to another ship in the fleet and went on to pioneer the Australian wool industry and instigate the 1808 Rum Rebellion to overthrow the governor of the colony.

But the arrangements under Captain Trail appear to have remained unchanged: not only was there no bonus payment for keeping his new charges alive, but there was also a rule that said any unused provisions aboard the boat could be sold upon arrival in Australia (on top of the contractual reserve provided for the successful delivery of stores to the new colony). This was an exceedingly dangerous combination. Fewer mouths to feed would leave more provisions unused.

Would a captain really starve the convicts? In his letter, Captain Hill implied such a plan existed.

The slave trade is merciful compared to what I have seen in this fleet… In this fleet, the more they can withhold from the unhappy wretches, the more provisions they have to dispose of in a foreign market; and the earlier in the voyage they die, the longer they can draw the deceased’s allowance for themselves.

If Captain Trail was starving the convicts – and multiple sources attest to it – it is in part because selling leftover food and goods to the people of Sydney upon his arrival would be lucrative. The colony was starved for goods. They had not had a supply ship since the First Fleet. And thanks to an awfully northerly iceberg, they would not have one again for some time.

A store ship, Guardian, left London ahead of the convict ships only to hit an iceberg near the southern tip of Africa. It only just limped to shore at Cape Town. When the Neptune pulled in a little later the crew of the Guardian were eager to hand off the stores bound for Australia, but the captain of the Neptune seemed surprisingly unwilling to take on board any of the stores. Those were not stores they could sell, you see. Those were stores that belonged to the colony and would compete with the goods Trail hoped to sell.

Of course, a convict ship would always expect a few deaths. Sea travel was very dangerous. The British Navy assumed a death rate of one in 30 whenever it went to sea during the Napoleonic wars – and that’s without any battle casualties. Those trips were just short jaunts compared to travel to the continent of Australia. The First Fleet set sail without knowing if it would make it at all. By the time it arrived in Port Jackson, 48 funerals had been held at sea, leaving the convict death rate at approximately 5 per cent. Those losses were costly. While these criminals were detested in England, taking up increasingly scarce space in the jails, they were crucial to the development of England’s new colony in Australia. Convicts were labour.

In total the Neptune would spend 159 days at sea, killing an estimated 150 of its 502 convicts along the way. Upon arrival in Australia, some 350 were still living - just. Many of those would die soon after arrival. The First Fleet chaplain Richard Johnson depicts the state of the convicts upon their arrival:

I beheld a sight truly shocking to the feelings of humanity, a great number of them laying, some half, others nearly quite naked, without either bed or bedding, unable to turn or help themselves. Spoke to them as I passed along, but the smell was so offensive that I could scarcely bear it… The landing of these people was truly affecting and shocking; great numbers were not able to walk, nor to move hand or foot; such were slung over the ship side in the same manner as they would a cask, a box, or anything of that nature. Upon their being brought up to the open air some fainted, some died upon deck, and others in the boat before they reached the shore.

Note that the shocked author of this description himself had arrived in Australia on a convict ship just two years earlier. He was hardly unaware of the usual hazards of sea travel. But the incentives on the Second Fleet were far more dangerous than was usual. While the Neptune had the highest death rate of nearly one third, the other two ships in the fleet saw mortality rates of 15–30 per cent. And the death did not stop upon arrival. If you measure survival within eight months of arrival in Sydney, the mortality rate of Second Fleet convicts was 40 per cent.

The slightly higher survival aboard the Scarborough and the Surprize suggests that no matter how powerful they may be, the presence or absence of external incentives is not the be all and end all. While incentives agitate neural networks of reward, those neural networks will nevertheless operate in the absence of incentives. Morals do exist. Absent a good contract, the only force that could have kept convicts in better shape was the conscience of the captain, and the captains of the other two ships in the fleet succeeded in killing fewer of their charges than Captain Trail, despite the same incentives being in operation.

Clearly, the incentives of the Second Fleet were a disaster. The £17, seven shillings and sixpence paid to the slave traders per convict needed to have some component reserved for successful delivery of cargo. The sad thing was that the contract included such a reserve for the successful delivery of stores, including rations and clothes, hammers and nails. But there was no such reserve for the people. Trail could have thrown all the convicts into the sea just off Penzance and collected his money. (Perhaps that happened to some of them. Records do not show where or when in the journey convicts died.)

And what of the two Marys? Surely one made it at least? I’m pleased to report both Ms Butler and Ms Desmond arrived in Sydney alive, and both promptly married (which is another story – there were 529 men on the First Fleet and a paltry 188 women, so the Second Fleet, while still only carrying roughly 300 women to 850-odd men, was welcomed with open arms by the male population).

This article is an extract from economist Jason Murphy’s new book Incentivology.  Incentives take more forms than you might expect and they can be hard to spot, but they shape our lives in ways that we rarely examine.

In Incentivology, Murphy uncovers the huge incentive systems we take for granted and turns them inside out. In lively, entertaining prose he explores the mechanisms behind many spectacular failures and successes in our history, culture and everyday lives, and shows us how to use (or lose) incentives in our world at large.

Jason Murphy publishes Thomas the Think Engine and is a bluenotes contributor and former writer for The Australian Financial Review.

This is an edited extract from Jason Murphy’s new book Incentivology published by Hardie Grant Books available for $A32.99 where all good books are sold.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks

05 Jul 2018

The gothic bank and the rise and fall of Marvellous Melbourne

James Wilson | History editor

ANZ’s Queen St branch represents a fascinating time in the history of not just the bank but Victoria and Australia.

14 Sep 2017

On history and breaking into your own bank

James Wilson | History editor

ANZ isn’t a 200-year old startup, but has a similar story of humble origins.