Imagine being taken to a virgin field, a very large one, in the middle of nowhere, and being instructed by your boss that you must build a human settlement, a town, on it. What’s more you are explicitly tasked with building a strong economic base for that town–otherwise, you are warned that town will die on the vine (talk about a really bad metaphor, except it is an idiom).
“Where do I get the stuff I need to do that“, you push back; “I can build buildings and make a street plan, but how the hell do I start an economy in an undeveloped wilderness, an ocean away from anybody else“. “That’s your job“, he counters, “but I’ll give you one hint: you either make your own stuff, or you get it from somewhere else”.
Stop reading! Think a wee bit. Let your mind wander. How do you actually do this? Pause for thought please!
Congratulations! You have now become a 1681 Pennsylvania economic developer in a primeval New World starting from scratch.
There may be other options than your boss gave you, but she forces you on basic reality: either you develop self-sufficiency by innovating, create your own infrastructure, and develop your colony’s own form of entrepreneurship so to produce life-sustaining products/services OR, you import what you need from somebody, the Indians perhaps (that’s what the Jamestown Virginians and Pilgrims did), or the outside world.
Without any doubt, however, you must feed yourself, protect yourself , and since winter is coming, build a roof over your head and find a source of heat. That has to be done without the benefit of import because you need these things immediately, not when “your ship comes in”. The North Atlantic is very rough in winter and winds are not blowing in the right directions. So you need tools, shovels, wheels for wagons, rope, sails, and a farmer’s market (among lots of other things). These all require skills–I can’t do any of these today–that’s what the internet is for. So you begin to fabricate your own domestic economic base using the resources, skills and people on hand.
But the inevitable reality is that export-import is a primary economic development strategy if you want to do something more than survive and get through the winter. Over time you can build infrastructure, attract population/skills, develop domestic markets, and it will be obvious that you ought to develop new clusters-agglomerations of sectors/occupations/jobs.
To diversify from a wilderness base, you really need tools and people with the skills to use them. Sooner or later, the stuff Penn brought with him would be exhausted, and then rubber had better hit the road. Not much rubber hit the road in Jamestown, that’s why so many died in those first years. Plymouth was a bit better, but not by much. The Indians brought the food for Thanksgiving. For the Virginians, and the Pilgrims a thirteen years later, moving to the New World had to have been a frightening choice, for which they knew they were not prepared. Self-sufficiency in that world was, for them, much like a colony on Mars would be–an exercise in survival against forces and conditions that generated such fear and trepidation that one wonders what they thought as they took their first steps in the hostile new world. Fortunately for us one of them, Governor William Bradford of the Plymouth colony, wrote in his diary what he believed his 102 Mayflower settlers feared as they landed at Plymouth Rock:
Besides what could they see but a hideous and desolate wilderness, full of wild beasts and wild men–as what multitudes there may be of them they knew not. Neither could they, as it were, go to the top of Pisgah [bible reference, probably Mount Nebo from which the Israelites probably first saw Canaan] to view from this wilderness a more goodly country to feed their hopes for which way soever they turned their eyes (save upward to the heavens) they could have little solace or content in respect of any outward objects. For summer being done, all things stand upon them with a weatherbeaten face, and the whole country full of woods and thickets, represented a wild and savage hue [99] William Bradford, American Tradition in Literature, Vol 1, pp. 47-8. See also, the Wall Street Journal Editorial “the Desolate Wilderness” November 24,2021, p. A14
By the next spring or fall, their number had been reduced to fifty-two. On that day, these survivors ate from food provided by ninety Wampanoag warriors. After a three day feast, the Pilgrims crossed the river from starvation and began to build their self-sufficiency. The uses that self-sufficiency were put shame on us today (Squanto the negotiator of the peace and the feast) was dead a year later, some believe murdered. More shame followed after that.
If only not to dwell on that shame, which will be related in the next chapter, I return to our original purpose: the compelling initial ED strategy thrust upon each colony in the American New World during the seventeenth century: to simply survive in the hostile and desolate wilderness. That fundamental economic development strategy, self-sufficiency, had to be met and resolved in some manner. How?
If you want to borrow from someone nearby, than you have got to trade, and finance that trade. Eventually the Indians wanted weapons, and that didn’t seem like a good idea. There were limitations to exclusive trading with your neighbors. So you figure out, I’ve got to import from long distances–but you still have to trade and finance that trade, and you also have to get there (transportation–ships for coastal trade or cross-Atlantic since there are no roads or bridges yet built. Plus oceans need to be crossed. You need tools, and some irritating craftsman that knows how to use them to make planks, masts, and sails, rope/cloth) or wagons, wheels and horses for land transport. Where is Door Dash when you really need them–and Amazon?
You also realize that the flip side of your workforce is a consumer who needs a roof over their head, food to eat, physical safety, and some source of energy to heat and cook, and manufacture stuff like tools and cutting trees into planks-masts for houses and ships. A plow and shovel, saw and hammer, harness and shoes for the cow, oops I mean horse, would be nice, and rims for the wagon wheels. That’s a lot of people, so you need to attract a steady stream of newcomers to fill all the vacancies in your workforce–but that also means more consumers.
That is how rudimentary economic development starts in the founding of a colony in British North America. A little imagination and putting oneself in the shoes of the original settlers can help us overcome the inevitable imposition of hindsight and to instill an appreciation for the level of technology at the time—and the “newness” of this thing called a modern economy.
To better understand the “start from scratch” economic development, I have employed an economic development strategy, the self-sufficiency nexus, as the principal approach applied by each of the thirteen colonies to “found” their first local economic base. Shortly, in this module we will link self-sufficiency nexus to paradigms of historical economics, but for the moment, let’s focus on how it was used by the first economic developers and decision-makers of a colony in the founding of its economic base. Hopefully, it will assist the reader in deciphering the wandering paragraphs and topics that follow.
The self-sufficiency strategy nexus is imposed on the colony founders on the first day they arrive. Their creativity or the impact of their political culture approach, the variety or lack of local resources, and the advantages and limitations of their geography allow them to fabricate some leeway in what has to be done, when, and how. As implementers of the strategy nexus, they can “bend the twig” that will shape the mature economic base “tree”.
Self-Sufficiency Nexus, Local Choices and Direction of the Economic Base–For these reasons (and others) I call attention to the ED priorities, strategies and initiatives that are inevitably instilled in the economic development thinking of the colony founders because of the self-sufficiency nexus. Local decision-makers, of course, have latitude (based on time period, geography/season, and natural resources available and accessible in their colony) in their choices as they apply the strategy. But each choice has to confront realities that are timeless in founding a community in the wilderness. The founders are not able to start off with a blank slate, trying what they wish, when they wish. They do not have our hindsight, and so will inevitably make wrong choices—always because they are stupid and evil.
I call it the self-sufficiency strategy. It’s not a permanent ED strategy, but it hangs around as the primary ED provincial and port city strategy for for several decades—it takes time to pour the foundation for a community. Self-sufficiency does not occur over night, and the strategy is going to be around for decades. If you are successful, you can move on to other strategies. But in the first decades of a colony you are on your own, making do with what you have, and importing the rest.
The self-sufficiency strategy nexus is composed of a number of individual ED strategies. To accomplish a task or goal, several strategies must be employed more or less simultaneously, and in conjunction with each other. Things can happen by “happenstance” but economic development topics/programs/tools converge upon each other, and blur. So the nexus includes: people-attraction, financing-debt, entrepreneurship, infrastructure, skills development, lots of creativity, innovation (making do, experimenting), and the get up and go to make it all sustaining that usually requires an organization(s) of some type (EDO), government agency, or a business. There will be certain agglomerations-clusters that you must deal with almost immediately.
I mention here only in passing that the self-sufficiency nexus rest upon achieving two conflicting goals (local autonomy and interdependence with the external economic bases). Think of it as combining “buy American” with export globally, a sort of tension-filled balance of maximum exports with minimum imports. At some point the stress on one, say export, will require imports to provide local goods, commodities and services even foodstuffs. No province would ever reduce its own self-sufficiency and autonomy to that level you might argue—that is beyond a decision-makers choice parameter.
Except history suggests it was not.
Barbados, the richest colony in the British empire of the period made precisely that choice. Virginia, and South Carolina followed to a lesser extent in that direction as well. New England, believe it or not, having possibly read a history of ancient Phoenicia, choose a “middleman” traders economic base (they didn’t have anything that anybody else wanted to import except fish which had a certain shelf life), and Pennsylvania devised a balanced approached to implementing the two goals. The point of this paragraph is that while self-sufficiency nexus is imposed on each colony at its founding, it does not necessarily produce provinces that are clones of each other. The choice of an initial provincial economic base is a critical factor in why each state today is different.
A colony builds on, coexists with, its mother county’s institutions and law. That limits the leeway on how to approach the nexus, as the colony must operate congruent to the business practices, currency, and its inhabitants do not possess the luxury of ignoring their heritage or language. This means the colony must pay its bills so to speak. In the wilderness, you have only what you brought on ship with you—and in 1682 it takes six weeks to two (even three) months to travel the Atlantic.
At the heart of the self-sufficiency nexus is the need to import “stuff’, and to pay for it you must “export” stuff. In this world you must pay in advance, because credit is very hard to find. If you can’t pay, you exchange goods or barter. These are forms of ED financing—so be prepared to be flexible in your thinking.(Urban planning and urban economic development have not split–they did so around the turn of the twentieth century–and so the distinctions/activities between the two are mostly handled by the same person or organization in this period). Export and Import are “international” economic transactions—the external world, and the diverse economic bases and countries that infest that international world leave their mark-parameters on local economic decision-making. In the 17th and 18th centuries the developed European world followed an economic approach we today call mercantilism. We shall discuss mercantilism in greater detail later in this module.
The separation of public from private is not well developed in colonial America—or in England or continental Europe—so be prepared for blatant conflicts of interest. Because you might be appalled doesn’t mean the colonists were. There are some rules, customs and accepted parameters, but to the contemporary observer they are usually deemed insignificant. Privatism does not have the ideological meaning then that it has today; most colonists wanted and expected the private side to be dominant in the 17th century. In this period one can make an ED policy and expect to benefit from it personally, and materially. Penn certainly did.
Internal Domestic Dynamics of Self-Sufficiency— Because self-sufficiency required export-import, each colony had to develop its own, or manage access to, a port city. At the time of Philadelphia’s founding (Boston, New York City, Newport, Charlestown, and Baltimore). Pennsylvania also inherited New Castle and the rise of Philadelphia generated a lot of internal passion within Penn’s colony. Penn planned on Philadelphia, but he didn’t plan on New Castle—so he had to move Philadelphia’s location and that did not fit well with his land plan for the export city.
Each North American port city focused heavily on the same clusters (because of the self-sufficiency nexus)–and will develop others given the geographical and political context of that colony. What will emerge, however, is that port specific features, for example the productivity of the hinterland, the intrusion of the provincial policy system, and the vagaries of war will affect the cluster/agglomeration. So while we can discern a shared inter-colonial pattern in agglomeration-cluster development, the variations among colonies will be noticeable and deserving of comment.
I further suggest self-sufficiency creates a “natural” priority of agglomeration-cluster development that necessarily follows from the inevitability that both export-import and fostering self-sufficiency must be pursued simultaneously. Accordingly key Philadelphia startup clusters will be home-building nexus (daily life, food production/logistics, residence accessories, health, safety, and utilities), ship-building, and finance-logistics. The state of Indian affairs affected each of these considerably. It is a major factor in distinguishing Massachusetts economic base-building from Pennsylvania’s; we will not even comment on Virginia’s so affected was its base-building.
Each component of the nexus, will at its particular pace, spin off specialized products (the industry’s sectors). Inevitably, the companies and businesses involved in each nexus will reflect these spinoffs, and competition and supply chains will evolve. The use of the cluster concept will capture some of those dynamics).
The finance cluster for example, will informally, then formally develop capital, fabricate a currency (including barter or exchange) for transactions, issue debt, fabricate insurance, and develop a logistics system with appropriate infrastructure. It will also finance ships and wagons and farmer mortgages and business startups. There are no banks in America until much, much later. As the Industry matures, relationships with other industries (companies) will be incorporated into the larger nexus–transitioning into a cluster. All this understandably takes time; time measured in decades not years.
Since the self-sufficiency nexus inherently contains industries/agglomerations-clusters that further two conflicting goals (export-import versus self-sufficiency), the tendency is to reduce imports and maximize exports–which reduces imports over time. The balance of payment between the two tolerates no sustained deficiency and so in a wilderness colony export must commence from the first day of residency. Expanding exports, however, develops excess capital to support further growth—and profit. Exports are the way one finances infrastructure, and the infrastructure required of those sectors that export is a first priority. Exports finance imports. If you don’t export something you must hard cash, and that doesn’t grow on oaks, pines and maples—unless they are cut and processed and shipped to someone who wants wood.
It may not seem evident but the clusters that focus on self-sufficiency will generate the need to expand the population (which in itself enlarges a market area) and generates economic growth. One has to grow into self-sufficiency and a stagnant population means it is hard to generate income for business investment. If such growth is minimal than these industries will need to expand less, and more priority and emphasis will be diverted to industries associated with economic growth in exports. Virginia followed that path; Pennsylvania did not.
One might also expect there will be variations between urban and hinterland, as each sub-economic base adjusts to flux and change.
As an economic base achieves reasonable self-sufficiency, a new economic base will slowly emerge. Population growth creates a need for further augmentation of domestic self-sufficiency industries. This too takes time. Philadelphia-Pennsylvania seem to have achieved a functioning self-sufficiency during the second or early third decade of the 18th century (1720 or so), but the impact of sustained immigration-migration that increased greatly between 1715 become fully felt until about 1730, and even 1740. Philadelphia’s and Pennsylvania’s economic base is in flux throughout this period, and that creates tensions, inequality, dislocations and at points political insecurity. When the economic base growls, the policy systems listens.
Self-Sufficiency as Seen by Economic Historians–Economic and “development” historians had to create a special place to explain American colonial economic development. As McCusker & Menard remind us “the colonies grew up with the world economy before the industrial age; they were sparsely populated and had an abundance of natural resources; at the same time they lacked governments sufficiently powerful to control the economy” [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789 (Omohundro Institute of Early American History and Culture, University of North Carolina Press, 1991), p. 17. In my words, colonial America is not modern as the contemporary world understands it.
In so thinking, development economics assumes things and concepts that are only found in embryo in colonial America—classes for instance and full blown industrialization and finance, plus some reasonable level of urbanization. These are not found in seventeenth century colonial America. To some degree I have used the self-sufficiency nexus as a navigation tool to place our discussion in some context and organization. Still America was a developing nation in 1607
Current development economics, on the other hand, is firmly lodged in how a developing country can “catch up” with a developed world. As the reader will see, I view colonial America as an offshoot of England that was forced, by dint of distance from the home country and its wilderness reality, to imitate her in the best fashion she could. We didn’t do an especially good job of imitation, however. You can’t avoid what we transplanted, modeled and outright copied from England and Great Britain—it is the foundation of our institutions—but while we use the same names, their historical and cultural experience proved vastly different from England’s. Hence, we hacked out our own path to development, and became a developed nation almost on pace with the best of them, England, France and most certainly Germany.
So how does one explain the initial building of colonial America’s economic base? McCusker & Menard posit two traditions “that have their origins in efforts to write the history of North America and that are concerned with growth in a context of abundant resources and scarce labor and capital”. Of the two, I suggest the “staples” approach is most appropriate to our task. The staples or “export-led, or ‘vent for surplus’ growth model … [which argues for the] fundamental importance to the export of primary, resource intensive products. It argues that the export sector [populated by our so-called commercial elite] played a leading role in the economy of British America and maintains that the specific character of these exports shaped the process of colonial development” [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 18.
The central assertion of the staples thesis is that expansion of a staple export determines the rate of economic growth in ‘new countries’ or ‘regions of recent settlement’. A small (at first virtually nonexistent) domestic market, abundant resources, and shortages of labor and capital, give the colony a strong comparative advantage in the production of resource-intensive commodities or staples for export. In such a region, the process of economic growth is twofold: expansion of the export sector and diversification around the economic base. The first part of the process is largely a function of increased external demand, although improved productivity also played a role as planters and merchants learned to make and market colonial staples more efficiently” [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789,pp. 20-1.
My self-sufficiency nexus is my construction that allows us to tie into an economic historian approach and match it to the rise of capitalist industrial America in the Articles of Confederation and the 1789 Early Republic. The nexus also is sufficiently flexible to accommodate our focus on the formation and rise of state and local American economic development.
This is the logic of the Pennsylvania self-sufficiency nexus, a theory on the flow of ED strategies and the building of an economic base from scratch in the American wilderness. However, before we can move on to compare this conceptual logic with how Philadelphia and Pennsylvania actually built their self-sufficient economic base, one more set of dynamics must be discussed: the intrusion of the external competitive hierarchies, the world external to Pennsylvania. We must add “their realities” into the Logic of Self-Sufficiency. The next topic module is:
British Colonial Policy: Mercantilism
Ron W. Coan 