On 3 August 1835, somewhere in the City of London, two of Europe’s most famous bankers came to an agreement with the chancellor of the exchequer. Two years earlier, the British government had passed the Slavery Abolition Act, which outlawed slavery in most parts of the empire. Now it was taking out one of the largest loans in history, to finance the slave compensation package required by the 1833 act. Nathan Mayer Rothschild and his brother-in-law Moses Montefiore agreed to loan the British government £15m, with the government adding an additional £5m later. The total sum represented 40% of the government’s yearly income in those days, equivalent to some £300bn today.

You might expect this so-called “slave compensation” to have gone to the freed slaves to redress the injustices they suffered. Instead, the money went exclusively to the owners of slaves, who were being compensated for the loss of what had, until then, been considered their property. Not a single shilling of reparation, nor a single word of apology, has ever been granted by the British state to the people it enslaved, or their descendants.

Today, 1835 feels so long ago; so far away. But if you are a British taxpayer, what happened in that quiet room affects you directly. Your taxes were used to pay off the loan, and the payments only ended in 2015. Generations of Britons have been implicated in a legacy of financial support for one of the world’s most egregious crimes against humanity.

The fact that you, and your parents, and their parents in turn, may have been paying for a huge slave-owner compensation package from the 1830s only came to public attention last month. The revelation came on 9 February, in the form of a tweet by HM Treasury: “Here’s today’s surprising #FridayFact. Millions of you have helped end the slave trade through your taxes. Did you know? In 1833, Britain used £20 million, 40% of its national budget, to buy freedom for all slaves in the Empire. The amount of money borrowed for the Slavery Abolition Act was so large that it wasn’t paid off until 2015. Which means that living British citizens helped pay to end the slave trade.”

The tweet, which the Treasury says was prompted by a Freedom of Information Act request submitted in January, generated a storm of anger and crowdsourced corrections. First, the British slave trade was not abolished in 1833, but in 1807. Second, slavery was not abolished in all parts of the British empire in 1833. The new law applied to the British Caribbean islands, Mauritius and the Cape Colony, in today’s South Africa, but not to Ceylon (now Sri Lanka) or British India, for instance. Third, no freedom was “bought” for plantation slaves in 1833, as the enslaved were compelled to work in unfreedom, without pay and under the constant threat of punishment, until 1838. Most importantly, the Treasury’s tweet did not mention that generations of British taxpayers had been paying off a loan that had been used to compensate slave owners, rather than slaves.

The tweet, which was hastily deleted, had the stench of British historical amnesia and of institutionalised racism. A few days later, the historian David Olusoga wrote: “[This] is what happens when those communities for whom this history can never be reduced to a Friday factoid remain poorly represented within national institutions.”

The tweet was no aberration. It was emblematic of the way legacies of slavery continue to shape life for the descendants of the formerly enslaved, and for everyone who lives in Britain, whatever their origin. The legacies of slavery in Britain are not far off; they are in front of our eyes every single day.

We can only begin to understand slavery’s influence on Britain today by first allowing 500 years of human history to flash before our eyes. Beginning in the last decades of the 1400s, we see African people kidnapped from their families, crammed into the dark pits of slave forts, and then piled into the bowels of ships. We see voyagers and traders, such as John Hawkins in the 1560s, becoming some of the first British men to make massive fortunes from this trade in kidnapped Africans. By the late 17th century, we see the British coming to dominate the slave trade, having overtaken the Portuguese, Spanish and Dutch. We see tens of thousands of merchant ships making the “middle passage”, the voyage across the Atlantic that transformed captives from Africa into American slave commodities. Half of all the Africans transported into slavery during the 18th century were carried in the holds of British ships.

From the 15th to the 19th centuries, more than 11 million shackled black captives were forcibly transported to the Americas, and unknown multitudes were lost at sea. Captives were often thrown overboard when they were too sick, or too strong-willed, or too numerous to feed. Those who survived the journey were dumped on the shores and sold to the highest bidder, then sold on again and again like financial assets. Mothers were separated from children, and husbands from wives, as persons were turned into property. Slaves were raped and lynched; their bodies were branded, flayed and mutilated. Many slave owners, in their diaries, manuals, newspaper writings and correspondence, readily admitted the punishments and violations they exacted on black people on the cane fields and in their homes. Take, for example, the unapologetic recollections of violence and predation that comprise the diary of Thomas Thistlewood, a British slave owner in Jamaica in the mid-1700s. Thistlewood recorded 3,852 acts of sexual intercourse with 136 enslaved women in his 37 years in Jamaica. In his 23 July 1756 entry, he described punishing a slave in the following manner: “Gave him a moderate whipping, pickled him well, made Hector shit in his mouth, immediately put a gag in it whilst his mouth was full and made him wear it 4 or 5 hours.”

Slave trade routes in the 17th century. Photograph: Alamy

In Barbados, the British established one of the first modern slave societies. Slavery had certainly been practised in many parts of the world since ancient times. But never before had a territory’s entire economy been based on slave labour for capitalist industry. Beginning in 1627, the enslaved were put to work in the intense cultivation of sugar cane, working in chain gangs in shifts that covered a 24-hour production cycle. In one of the greatest experiments in human terror the world has ever known, this system of plantation slavery expanded over the following centuries across the Caribbean, South America and the southern United States. Fear and torture were used to drive black workers to cut, mill, boil and “clay” the sugar, so it could be shipped to Britain as part of a lucrative “triangle of trade” between the west coast of Africa, the Americas and Britain. The trade in slaves, and the goods they were forced to produce – sugar, tobacco and eventually cotton – created the first lords of modern capitalism.

Britain could not have become the most powerful economic force on earth by the turn of the 19th century without commanding the largest slave plantation economies on earth, with more than 800,000 people enslaved. And the legacy of such large-scale, prolonged slavery touches everything that is familiar in Britain today, including buildings named after slave owners such as Colston Hall in Bristol; streets named after slave owners such as Buchanan and Dunlop Streets in Glasgow; and whole parts of cities built for slave owners, such as the West India Docks in London. The cultural legacy of slavery also infuses British tastes, from sweetened tea, to silver service, to cotton clothwork, to the endemic race and class inequalities that characterise everyday life.

Britain’s central role in 500 years of the slave trade and plantation slavery is often dissolved like a bitter pill into the much more palatable tonic of the nation’s role in the story of abolition. This narrative often begins in the pews of Holy Trinity Church in Clapham, where the cherubic William Wilberforce worshipped. Today, he can be seen on the stained glass above the altar of that church, giving the news of the 1807 abolition of the slave trade to a black woman who kneels before him. Around Wilberforce coalesced a group of Church of England social reformers, known as the Clapham Saints, who led the campaign against the slave trade, and then pressed onward to fight for the abolition of plantation slavery in 1833. Over the past few decades, scholars have also stressed the ways in which the antislavery movement depended on expanding democratic participation in civic debate, with British women and the working classes playing a crucial role in the abolitionist ranks. British parliamentarians were inundated with thousands of petitions from ordinary people pressing them to pass laws that eventually brought slavery to an end.

The British abolitionist William Wilberforce. Photograph: Print Collector/Getty Images

Abolitionists in Britain maintained that slavery was a violation of God’s will. Since every human being possessed a soul, they argued that no human being could be made into another man’s possession without also perverting the divine plan. To encourage their fellow citizens to look into the face of the enslaved and see fellow human beings, British abolitionists distributed autobiographies of people who had experienced slavery, such as works by Ignatius Sancho, Olaudah Equiano and Mary Prince. If only the British public could hear the voices of black people through their writing, then they could empathise with their oppression. It would then become possible to look into the eyes of the enslaved and see a person staring back.

But narratives of abolition cannot be reduced to a story of angelic white benefactors gifting freedom to their black wards. (There are 32 images of William Wilberforce in the National Portrait Gallery, but just four images of black abolitionists and antislavery activists from the same period.) In Britain, the popular narrative too often ignores the fact that blacks on the plantations were convinced of their own personhood long before anyone else. Rebellions were endemic to slavery, and by the 1810s and 20s, many slave societies in the British Caribbean were experiencing insurgencies. Enslaved people rebelled in Barbados in 1816, and Demerara (today’s Guyana) in 1823. Shortly after Christmas 1831, an audacious rebellion broke out in Jamaica. Some 60,000 enslaved people went on strike. They burned the sugar cane in the fields and used their tools to smash up sugar mills. The rebels also showed remarkable discipline, imprisoning slave owners on their estates without physically harming them.

The British Jamaican government responded by violently stamping out the rebellion, killing more than 540 black people in combat, and later with firing squads and on the gallows. The uprising sent shockwaves through the British parliament and accelerated the push for the abolition of slavery. Henry Taylor, head of the West India division of the British Colonial Office, later commented, “this terrible event [of the rebellion]… was indirectly a death blow to slavery”.

Not only did blacks mobilise for their own liberation, but by the 1820s slavery was also beginning to clash with an economic principle that was becoming an article of faith for British capitalists: free trade. Eric Williams, a historian of slavery who also became the first prime minister of independent Trinidad in 1962, has argued that slavery in the British empire was only abolished after it had ceased to be economically useful. Many British merchants involved in selling Cuban, Brazilian and East Indian sugar in Britain wanted to see an end to all duties and protections that safeguarded the West Indian sugar monopoly. British capitalists also saw fresh possibilities for profit across the globe, from South America to Australia, as new transportation and military technologies – steamships, gunboats and railways – made it possible for European settlers to penetrate new frontiers. The economic system of British slavery was moribund by 1833, but it still needed to be officially slain.

By 1830, debates were raging in the British parliament, and in the public sphere, about ending slavery. The powerful West India interest – a group of around 80 MPs who had ties to Caribbean slavery – opposed abolition. They were joined by an additional group of some 10 MPs who did not possess slaves themselves, but still opposed any proposal to tamper with slave owners’ right to property – that property, in this case, being human beings. The faction presented “compensated emancipation”, or the payment of money to slave owners at abolition, as a way of upholding property rights. Beyond parliament, many thousands of Britons across the country – slave owners, West India merchants, sugar refiners, trade brokers, ship owners, bankers, military men, members of the gentry and clergymen – actively championed the principle of compensation by attending public rallies organised by various West India Committees.

This notion of “compensated emancipation” was relatively new. When slaves were emancipated in northern US states in the years before 1804, no compensation to their owners was paid. Only in the 1810s did the British government take the unprecedented step of paying compensation to Spain, Portugal and some West African states to solicit their cooperation in the suppression of the slave trade. The attempt failed, however, as Spain and Portugal pocketed British money and continued their slave trading until the later 19th century. British slave owners nonetheless demanded, in the 1830s, that this international precedent be applied to them.

The argument for slave-owner compensation relied on perverse logic. Under English law, it was difficult to claim compensation for the loss of chattel property, since rights to movable things – such as household possessions, or tools, or livestock – were considered inherently unstable, expendable and ambiguous. So, the West India interest in parliament, led by the likes of Patrick Maxwell Stewart, a rich London merchant who owned slaves in Tobago, made fanciful arguments to align the enslaved more with land or buildings, or even with body parts, than with human beings. According to one line of argument, because the government paid money to landowners when it took over fields for public works such as docks, roads, bridges and railways, so too it had to pay slave owners for taking over their slaves. According to another argument, because the government paid soldiers for the injury to organs or the loss of limbs during war, so too it had to provide slave owners aid for cutting them off from their slaves, which maimed slave owners’ economic interests.

West India Quay in London. Photograph: Alamy

Many mainstream abolitionists felt uncomfortable about the compensation of slave owners, but justified it as a pragmatic, if imperfect, way to achieve a worthy goal. Other abolitionists, especially a vanguard group within the Anti-Slavery Society called the “Agency Committee”, railed against the idea. “It would reconcile us to the crime,” wrote one contributor to the Anti-Slavery Monthly Report in 1829. “It would be a sap on public virtue,” wrote another the following year. Some activists even demanded that compensation be paid to the enslaved. “To the slave-holder, nothing is due; to the slave, everything,” said an antislavery pamphlet in 1826. Many antislavery members of parliament, such as Thomas Fowell Buxton and William Clay, spoke out vociferously against slave-owner compensation. Hundreds of petitions were also sent in by the corps of abolitionists beyond the ramparts of the political elite, insisting that no money go to the perpetrators of crimes against God’s will.

The decision to compensate slave owners was not just an inevitable expression of the widespread beliefs of those times. Political decisions reflect who is in the room when the decisions are being made. The Reform Act of 1832 drastically transformed the British electoral system and extended the franchise, to the detriment of the West India interest. But even in the reformed House of Commons, scores of MPs still had close financial or family ties to slave ownership. On the other hand, it bears remembering that the first black Britons were not elected to the House of Commons until near the end of the following century, more than 150 years later.

Other slave-owning states, including France, Denmark, the Netherlands and Brazil, would follow the British example of compensated emancipation in the coming decades. But the compensation that Britain paid to its slave owners was by far the most generous. Britain stood out among European states in its willingness to appease slave owners, and to burden future generations of its citizens with the responsibility of paying for it.

The owners of slaves in British society were not just the super-rich. Recent research by historians at University College London has shown the striking diversity of the people who received compensation, from widows in York to clergymen in the Midlands, attorneys in Durham to glass manufacturers in Bristol. Still, most of the money ended up in the pockets of the richest citizens, who owned the greatest number of slaves. More than 50% of the total compensation money went to just 6% of the total number of claimants. The benefits of slave-owner compensation were passed down from generation to generation of Britain’s elite. Among the descendants of the recipients of slave-owner compensation is the former prime minister David Cameron.

The decision to emancipate slaves by treating them like property, and not like persons, was no mere theoretical exercise. Rather than putting a sudden end to their suffering, the process of emancipation marked a new phase of British atrocities and the terrorisation of blacks.

The emancipation process was minutely orchestrated by government bureaucrats. In September 1835, less than a month after the government received its loan, slave owners began their feeding frenzy as they obtained compensation cheques at the National Debt Office. Payment amounts were determined based on application forms that asked claimants to itemise the number and kinds of enslaved people in their possession, and to provide certificates from the slave registrar. There were some 47,000 recipients of compensation in total.

In addition to money, slave owners received another form of compensation: the guaranteed free labour of blacks on plantations for a period of years after emancipation. The enslaved were thus forced to pay reverse reparations to their oppressors. At the stroke of midnight on 1 August 1834, the enslaved were freed from the legal category of slavery – and instantly plunged into a new institution, called “apprenticeship”. The arrangement was initially to last for 12 years, but was ultimately shortened to four. During this period of apprenticeship, Britain declared it would teach blacks how to use their freedom responsibly, and would train them out of their natural state of savagery. But this training involved continued unpaid labour for the same masters on the very same plantations on which they had worked the day before.

In some ways, the “apprenticeship” years were arguably even more brutal than what had preceded them. With the Slavery Abolition Act, the duty to punish former slaves now shifted from individual slave owners to officers of the state. A state-funded, 100-person corps of police, jailers and enforcers was hired in Britain and sent to the plantation colonies. They were called the “stipendiary magistrates”. If apprentices were too slow in drawing water, or in cutting cane, or in washing linens, or if they took Saturdays off, their masters could have them punished by these magistrates.

Punishments were doled out according to a standardised formula, and often involved the most “modern” punishment device of those times: the treadmill. This torture device, which was supposed to inculcate a work ethic, was a huge turning wheel with thick, splintering wooden slats. Apprentices accused of laziness – what slave owners called the “negro disease” – were hung by their hands from a plank and forced to “dance” the treadmill barefoot, often for hours. If they fell or lost their step, they would be battered on their chest, feet and shins by the wooden planks. The punishment was often combined with whippings. The treadmill was used more during the apprenticeship period than it ever was under slavery, precisely because it was said to be a scientific, measurable and modern form of disciplinary re-education, in line with bureaucratic oversight. One apprentice, James Williams, in an account of his life published in 1837, recalled he was punished much more after 1834 than before. Indeed, it is likely that slave-owners sweated their labour under apprenticeship, in order to squeeze out the last ounces of unpaid labour before full emancipation finally came in 1838.

While the British state, even after emancipation, still failed to see black people as persons, the enslaved themselves inhabited a complex society of their own creation. Enslaved people called the experience of slavery “barbarity time”. And during the barbarity, they developed their own internal banking and legal systems. They created extensive trading relations between towns and villages, and across plantation enclaves. They had their own spiritual practices, such as Obeah, an Afro-centric repertoire of divination and social communion cultivated alongside the religion bestowed by the Christian missionaries. Slaves had their own rich musical forms and traditions of storytelling. They were engineers, chemists and medics on the plantation fields they inhabited. Many of their innovations contributed to making life under slavery livable, such as the architectural design of the tapia house in Trinidad. Even if the official white gaze could not see the 800,000 persons that lived in the plantation colonies, those persons still persisted.

Benjamin Disraeli, the great Tory prime minister of the late 19th century, once described the “forlorn Antilles”, or Caribbean, as millstones around the neck of Britain. Here in Disraeli’s remark, is the British habit of externalising the problem of slavery as playing out in some distant place, rather than within Britain’s own heart of darkness. Today, evading the question of British slave legacies takes the form of celebratory national narratives about British abolition, and in the nervous reflex of switching the topic to “modern slavery” whenever the history of British slavery is raised for discussion. Slavery becomes comfortable for the British nation if it can be situated “out there”, among the dark-skinned peoples of the earth, in countries far away.

It is hardly surprising, then, that the British establishment has been so resistant to hearing calls for reparations for slavery. In 1997, manacled human remains were found on a beach in Devon. It was soon determined that the bones were those of enslaved blacks who had probably been kept in the hold of The London, a vessel shipwrecked in 1796. The enslaved people, who were probably from the Caribbean, were supposed to be sold on the British slave market. Labour MP Bernie Grant, a reparations advocate and one of the first black members of parliament, took the occasion to make a pilgrimage to Devon, and to renew the call for reparations.

Grant’s programme began with the demand for an apology from the British state for the legacies of British slavery. “I am going to write to the Queen,” Grant had said in a speech in Birmingham in 1993. “I know she is a very reasonable woman.” He died in 2000 without ever receiving that very reasonable apology.

In 2013, a powerful renewed call for reparations arose among representatives of Caribbean nations, stimulated by the publication of the book Britain’s Black Debt. The following year, its author, Hilary Beckles, vice-chancellor of the University of the West Indies, and chair of the Caribbean Reparations Commission, gave an address to a group of British MPs and peers in the UK parliament’s British-Caribbean all-party group. His voice booming across Committee Room 14, Beckles argued that Britain has a “case to answer in respect of reparatory justice”.

British prime minister David Cameron on a visit to Kingston, Jamaica. Photograph: Stefan Rousseau/PA

He anchored his demand for reparations in the need for the British state to admit its role in forcefully extracting wealth from the Caribbean, impeding industrialisation and causing chronic poverty. The Caribbean, by the late 20th century, became one of the largest centres of predatory lending, orchestrated by the IMF and World Bank, as well as by European and American banks. Even today, the economies of Jamaica, Barbados and Antigua find themselves dangling precariously between life and debt, suspended by their historically enforced dependence on foreign finance.

The legacies of slavery and racism are no less present in Britain, where black workers are more than twice as likely than white workers to work in temporary or insecure forms of employment. While 3% of Britain’s general population is black, black people comprise 12% of the incarcerated. And people of colour are still hugely underrepresented in positions of power in Britain – in politics, academia and the judiciary, in particular.

Six months after Beckles’ speech, the Treasury finally finished repaying the debt on its Abolition of Slavery Act loan. And a further six months after that, in July 2015, then-prime minister David Cameron travelled to Jamaica on an official visit. There, on behalf of the British nation, he took a big leap backwards. It is time to “move on from this painful legacy and continue to build for the future,” he stated glibly.

But how can you move on from something that has not yet stopped happening? Neither the history of British slavery, nor the process of emancipation that re-enacted slavery, nor the bones of the enslaved that wash up on British shores, nor the debt for slave-owner compensation that continued for so long to cycle through British national accounts, seem ever to be able to bring the nation’s representatives to acknowledge its crimes against humanity and to provide restitution.

The scholar Christina Sharpe has written about the “residence time” of black bodies thrown into the dark sea during the “middle passage”. This is the span of time, measured in thousands of years, that it takes for the atoms of jettisoned slaves’ bodies to pass out of the oceanic system. The Atlantic is one kind of vault of slavery’s aftermath. But so too is the ocean of British national debt, through which the ghosts of the enslaved circulated for centuries, waiting for their moment of due reckoning; waiting for an apology from the British state, and for its commitment to redress what British slavery sought to obliterate: the personhood of black folk who emerged out of this empire, like me and my ancestors.

• This article was amended on 29 March 2018. An earlier version stated incorrectly that the Wills Memorial Building in Bristol was named after slave-owners. It was named after a merchant whose family’s business profited from the slave trade.

• Follow the Long Read on Twitter at @gdnlongread, or sign up to the long read weekly email here.