Settlement and Economic Development: The Colonies to 1763 (Overview)

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In 1585, Richard Hakluyt the elder assured English readers of his pamphlet, Inducements to the Liking of the Voyage Intended towards Virginia, that North America held the economic potential to form the basis of a great English commercial empire. English colonization would open lucrative new American markets for "the Woollen clothes of England" and "sundry [of] our commodities upon the tract of that firme land." The "situation of the climate" and the "excellent soile" would in turn make North America an excellent source of "Oade [a blue dye], Oile, Wines, Hops, Salt," all of which English people could expect to obtain "better cheape than we now receive them." Hakluyt anticipated that the abundance of North American hides, whales, seals, and fish would all give England an edge in a market for these goods which was traditionally dominated by Russian merchants. The "excellent and fertile soile" on both sides of North America's "greate and deep" natural waterways promised "all things that the life of man doth require," and whatever settlers wanted to plant they could expect to harvest in abundance sufficient to "trafficke in."

Over the next 178 years, enterprising merchants and traders and hard-working Native Americans and settlers slowly made into reality Hakluyt's vision of North America as an integral part of a British North Atlantic commercial system. The first to feel the effects of this transformation were the Native Americans, who met English vessels at the shore with valuable furs which they readily exchanged for prized English goods such iron tools, glass beads, and woven cloth. Most early English settlements depended heavily on such trade to repay investors who had financed their voyages, and some economies such as New York's continued to rely significantly on the "Indian trade" through much of the colonial period. The fur trade also exerted a profound impact on Native American economic life as imported European goods began displacing traditional tools, weapons, utensils, apparel, and ornamentation. The historian James Axtell has termed this process "the first consumer revolution" in which Native Americans' appetite for European goods spurred the growth of a Native market for European products that extended rapidly into the interior of North America. Trade with Europeans altered nearly everything about Native life, disrupting and redirecting traditional trading patterns, producing a strain on the natural environment through over-hunting and over-trapping, and changing the way that American Indians clothed themselves, cooked their food, cultivated their soil, and hunted their game. Iron tools replaced implements of bone and stone, woolen garments replaced buckskin, muskets replaced arrows and spears. By 1700 many eastern woodland Indians had become permanently dependent on European commerce, and their participation in colonial commerce contributed greatly to North American economic growth.

Settlers of Jamestown, the first successful English settlement in North America, shared with the adventurers of the earlier, ill-fated Roanoake settlement of 1585 the hope of tapping into precious sources of New World mineral wealth. The founding settlers expected to exploit Virginia's game, fishing, and agriculture, and establishing a lucrative trade with the neighboring Powhattan empire. Nearly all these hopes were dashed as the Chesapeake colony teetered on the brink of failure for more than a decade. They found no gold or gems, manufacturing enterprises such as a glassworks failed, their Old World work habits ill-prepared them for the demanding task of tilling and planting virgin soil, they were continually racked by disease, and their repeated provocation resulted in perpetual strife with their Indian neighbors.

Tobacco, which the settler John Rolfe began cultivating in 1610, eventually became the staple crop that saved the colony. Europeans loved the crop in spite of the denunciations of smoking by prominent figures, including King James I himself. Jamestown planters were soon cultivating the "stinking weed" wherever they could find suitable land. Tobacco plantations began springing up along Chesapeake estuaries, creating a growing demand for labor and land as successful planters increased their holdings to put even more tobacco into cultivation. Settlers who founded the colony of Maryland in 1634 quickly began following the example of their Virginia neighbors. For much of the seventeenth century, Chesapeake planters relied mainly on the labor of indentured servants from England, occasionally supplementing that labor force with captive Indians or Africans whose status varied from person to person. English indentured servants bound themselves to work for a period of four to seven years, after which they were released. Many Africans brought to North America before 1660 shared that status, but a growing number came as slaves for life. Disease and malnutrition made life miserable for both European and African servants. When the supply of European servants began dwindling after 1660, planters turned increasingly to African slaves. By 1700, the economies of Virginia and Maryland had come to depend on the labor of lifetime slaves of African descent who cultivated the main export crop.

A very different economy emerged in the colonies of New England as families migrated to Plymouth, Massachusetts Bay, New Haven, Connecticut, Rhode Island, and New Hampshire to escape pressure to conform to the state-sanctioned ceremonies of the Church of England. The colder northern climate prevented the cultivation of staple crops common in England, but the land was suitable for traditional English farming methods. Significant equality in the size of family property was insured in many parts of New England by an orderly process of land distribution. The New England governments granted large tracts to incorporated towns, which would in turn grant parcels to heads of households on the basis of present and future need. Commerce boomed during Massachusetts Bay's first decade of settlement as earlier settlers prospered by producing goods for sale to the thousands of new arrivals who took passage each year. Yet when the flow of migration ceased after the outbreak of the English Civil War in 1642, the nascent market economy dried up.

Massachusetts officials sought to compensate by developing overseas markets, successfully establishing a trading partnership with British colonies in the West Indies that continued throughout the colonial period. Yet the bulk of the New England economy rested on family farms. Their production was oriented toward achieving, not the exorbitant profits sought by great tobacco and sugar planters, but a "competence" in which members and heirs of each household could expect to enjoy an adequate diet, clothing, housing, and the modest comfort and enjoyment of family and community life.

Other seventeenth-century Anglo-American economies varied somewhat from these two early models. The Hudson River settlements, founded by the Dutch in 1613 and captured by the English in 1664, early centered on the fur trade but also developed a significant agricultural base. The New York agricultural economy was distinguished by the great Hudson River estates on which a few large landholding families such as the Livingstons achieved great wealth from the large numbers of tenant farmers who farmed their lands. The economies of Pennsylvania and the Jerseys rested on family farming by English, German, Scottish, and Scotch-Irish settlers. South Carolina, like Virginia, became a slave society which produced agricultural goodsin this case rice and indigo dyefor a lucrative European market. Many colonies, like North Carolina, also provided England with important sources of goods such as naval storeswhite pine masts for ships, turpentine, pine tar, and hemp for rope.

By 1650 the commercial output of England's colonies had grown large enough to begin enriching many English planters as well as the Dutch merchants who transported tobacco and sugar from the English West Indian and Chesapeake markets to European ports. With the Restoration of Charles II to the throne of England in 1660, Parliament and royal officials began an energetic effort to shape a more consistent policy of colonial commerce that would favor English merchants and shippers while cutting the Dutch out of Anglo-American trade. The Navigation Act of 1660 restricted colonial trade to ships constructed in either England or English America which carried a crew at least 75 per cent English or Anglo-American. In addition, the act listed certain "enumerated goods" tobacco, sugar, cotton, indigo, dyewoods, and gingerthat could be transported only to England or another colonial port. Over the next forty years Parliament refined its commercial policy by passing further Navigation Acts and developing the colonial administrative body that eventually became the Board of Trade. The system, never perfect, suffered from periodic abuse and neglect and was regularly circumvented by smugglers. Nevertheless, by the time the Act of Union united Scotland and England under one Parliament in 1707, a workable administrative framework for Anglo-American trade was in place, fostering the growth of a dynamic eighteenth-century empire of goods that benefited both Britain and her North American colonies.

Most historians agree that the colonial economy grew slowly but steadily during the first half of the eighteenth century, stimulating a corresponding rise in the volume of imported British goods. After 1740, however, the volume of cheap British imports to the colonies began an exponential rise in what some historians have termed an Anglo-American "commercial revolution." English manufacturers using traditional methods of production found ways to make more goods available at cheaper prices than ever before, and English merchants found ways to get these goods to prospective buyers through innovative marketing techniques such as paid newspaper advertisements and attractive shop displays. As the volume of imports rose and the prices dropped more colonists purchased more goods each year. In 1700, for example, only the wealthiest colonists could afford to drink tea regularly, and their homes alone were graced with elegant tea sets. Yet by 1760 tea, like the sugar that sweetened it, had become a "decency" enjoyed by the "middling sort" of colonist as well as the wealthy. The building of market roads and the clearing of river channels carried imported English goods a little further inland every year, and colonists found ways to acquire or reallocate the extra income needed to purchase a growing array of items. They could dress in a widening variety of European fabrics adorned with a growing selection of European lace and buttons, and complete their outfits with fashionable silk stockings, gloves, and wigs. They could pane their windows with imported glass, decorate their parlors with fashionable imported candlesticks, and set their tables with inexpensive ceramic tableware.

This growing participation in a transatlantic market of goods exerted a variety of pressures on eighteenth-century American life. The colonial appetite for imports produced a chronic trade imbalance between the colonies and England, resulting in a perpetual drain of hard currency from the colonies. Colonists responded in a variety of ways such as borrowing from European merchants against the value of future export crops and authorizing the issue of paper currency to expand the money supply. American Indians' increasing dependence on European goods began producing a backlash after 1740 as native prophets such as Neolin called upon Indians to purge themselves of European textiles, tools, and rum to reassert their native identity and regain their spiritual vitality. In contrast, the growing consumption of British goods contributed to a growing commonality of tastes, experiences, and identity among Anglo-American colonists who came to think of themselves increasingly as British Americans. Indeed, colonial protest and Revolution are almost inconceivable without this process. The Stamp Act and Townshend Duties that sparked the protest might not have been passed if the volume of colonial trade were not so great by the 1760s, and the protest might never have been so widespread or popular had not so many Anglo-Americans felt the sting of taxes on the British goods they wished to purchase.


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Mancall, Peter C. and Thomas Weiss. "Was Economic Growth Likely in Colonial British North America?" Journal of Economic History, 59, March 1999.

McCusker, John J. and Russell R. Menard. The Economy of British America 1607-1789. Chapel Hill and London: University of North Carolina Press, 1991.

Richard Hakluyt's Inducements to the Liking of the Voyage Intended towards Virginia, 1585">

the "excellent and fertile soile" on both sides of north america's "greate and deep" natural waterways promised "all things that the life of man doth require," and whatever settlers wanted to plant they could expect to harvest in abundance sufficient to "trafficke in."

adapted from richard hakluyt's inducements to the liking of the voyage intended towards virginia, 1585

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Settlement and Economic Development: The Colonies to 1763 (Overview)

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