The same dangerously powerful man describes the institution of slavery as degrading to labor, as intolerant and inhuman, and says the white laborer among us is not enslaved only because he cannot yet be reduced to bondage. Where he learned his lesson, I am at a loss to imagine; certainly not by observation, for you all know that by interest, if not by higher motive, slave labor bears to capital as kind a relation as can exist between them anywhere; that it removes from us all that controversy between the laborer and the capitalist, which has filled Europe with starving millions and made their poorhouses an onerous charge. You too know, that among us, white men have an equality resulting form a presence of a lower caste, which cannot exist where white men fill the position here occupied by the servile race. The mechanic who comes among us, employing the less intellectual labor of the African, takes the position which only a master-workman occupies where all the mechanics are white, and therefore it is that our mechanics hold their position of absolute equality among us.

That's the section in question, I take it. It's really a great piece of persuasive writing, and I suspect would be even more powerful as oratory, but it definitely has its flaws as a sound argument.

You're correct that most slaves were owned by large plantations owner, although there were a fair number of people with just a single slave or a handful. Davis, the author of this speech, was a large slave owner, so clearly he's going to argue for the positives of slavery, which he does here. His argument boils down to three elements:

1. White workers are effectively enslaved - wage slavery, as you put it - even if they are not legally enslaved (i.e. reduced to bondage).
   1a) This argument also presumes that this veritable slavery of white workers is roughly equal to African slave labor.
2. Slave labor and capital work harmoniously, as compared to wage labor, in which there is constant conflict between labor and capitalists.
3. White people are more equal because, at the end of the day, Africans are below them, so even a white mechanic can be considered the equal of gentlemen planters and congressmen, simply because he is white, regardless of the mechanic's faculties or effort.

Let's take these arguments in turn. The first argument certainly depends on your understanding of slavery and your political/economic persuasion, but suffice it to say that equating wage labor with slavery is generally considered an extreme position. Making the further argument that factory work is akin to unpaid plantation labor is simply ludicrous on its face. While work in factories might not have been pleasant, it surely must have been better than unfree labor on a plantation. If for lack of any other evidence, the sheer numbers of run-away slaves who ran north versus the complete lack of factory workers who fled to life as a slave on a plantation ought to suggest the argument is untenable.

The second argument suggests that slave labor works harmoniously with capital, avoiding the pitfalls of labor unrest that has caused millions to starve and fill European poorhouses. Aside from the question of whether organized labor caused starvation and poorhouses to fill, there is a lot of evidence that slaves did not work harmoniously with their masters. Unfortunately, I cannnot point you to any studies suggesting such, but I'm sure they're out there. Again, run-away numbers would be one piece of evidence, slave revolts would be another. Stoppages and slow downs in work would be a third. I'm sure there are others that other members can fill us in on.

And third, the question of whether white people are more equal because of slavery. Again, that is going to depend on how you define equality. On a certain level, this is accurate, and still is - the often discussed "white privilege". But I don't think that's the sort of argument that Davis is making; rather, he argues that all whites are equal in absolute terms, and I think that's a step too far. After all, we're talking about one of the richest men in Mississippi at the time. On a theoretical level, a mechanic might have been equal to Davis because of African slavery - both would be white and could command blacks. But on a realistic level, no way would they be considered equal. Anymore than you or I would be considered equal to Ted Cruz, Elizabeth Warren, or Warren Buffet, or any other person of similar public stature.