Actually, the penal system was originally set up as a retraining camp to aid the industrial revolution. It was supposed to train people to perform jobs the powers that be thought were important. So you're right in a way, but the labor was really training for further labor after release.

It was only once we started locking up niggers after the end of slavery that the purpose changed. It's more a permanent penalty box now, because they can't be trained to behave.