I continually harp that the period we examine is a transition period–a rather long and indefinite-multi-faceted one–that arguably started with the English enclosure movement, the Protestant Reformation, English Civil War and Restoration. Pennsylvania was founded during the last years of the Restoration, as a proprietary colony of the Penn family in repayment of debts owed to them by the King of England. Arguably mercantilism was the last hurrah (and a weak one it was, coming at a time when feudal kingdoms evolved into republics, democracy, and charismatic modernizing empires.
English mercantilism started in the Elizabeth I’s last decades, and the Barbados was its greatest success of that period. The Stuarts presided over an extremely personalistic kingdom, divine right was what they aspired to be (in imitation of the other guy, Louis XIV—although the time line is all wrong). Colonial policy was what they said it was. The English Civil War and the Cromwell Protectorate followed until the Stuarts were restored in 1660. Upon their return, the First Navigation Law (approved 1650) which had been pushed to the side by Cromwell’s military adventures, was repassed in 1661.
This second version of the Navigation Law (1660) was in fact the first real commencement of English official mercantilism. The 1661 Law required formally the use of English-owned ships for all trade with England and her colonies, and created “enumerated commodities” (included sugar, tobacco, dyes, later molasses) had to be sent directly to a English port before resell to a third party—and at which time dues or (custom) taxes would be assessed. In 1673 a systems of custom agents was created to provide enforcement and accountability. This effectively created a colonial trading system that was closed, with non-English shippers not allowed, and key commodities of international trade sent to and through English ports.
A point that is frequently lost is that trade within the British Empire was well established by 1661. Colonial trade with the West Indies (Massachusetts) started in late 1640’s, and Connecticut in mid-1650, and Virginia’s Royal Governor William Berkeley had a series of trade battles with London concerning coastal trade with New York City Dutch, periodically through his administration. This meant that trade of sugar and molasses, enumerated (i.e. regulated commodities) preexisted the Navigation Laws, and trade relationships had been established previous to the enforcement of the Navigation Laws. In addition the disruption of the Civil War and Cromwell period awarded Holland a great opportunity to establish its own direct contracts and trade with the colonies—breaking any monopoly of England over its colonies.
The earliest [colonial] government [trade] measures taken by the colonies were in the pre-1650 era, when few, if any imperial regulations were in force. The colonists’ most intensive period of [non-conforming] activity in this regard, from the late 1630’s and the mid 1640’s was conditioned by the breakdown in English government during the Civil War. This was accompanied in the colonies by a severe depression, from which only they could and did deliver themselves—or so they thought. Thus the colonists, accustomed to managing on their own, largely ignored, the [Navigation] Act of 1651, and they paid scant attention to it when it reappeared in 1660. By then Massachusetts, Virginia, Barbados, and the other colonies could point to both mercantilist theory and to several decades of practice, which they believed entitled them to considerable autonomy in their economic affairs[99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 48.
Massachusetts, for reasons to be discussed in the next chapter, simply never bought into the spirit of the Navigation Acts and hence quickly ran afoul of them. In 1652, Massachusetts started its own coinage (opening up a mint), and in no time they challenged the East India Company who pushed back with complaints to London: “Their charters do not strictly tie them to the enforcement of the Navigation Acts, and so they assume at times a liberty of trading contrary to the Acts. Thereby many American commodities, especially the tobacco and sugar of the southern and West Indies possessions are surreptitiously transported by New England shipping directly to Europe without first landing in England any paying dues” [99] Joseph Dorfman, “The Economic Mind in American Civilization 1606-1685” (Vol. 1), (Viking Press, 1946) p. 53. A full-throated brew-ha-ha blew up in 1689 in which merchant conformity to Navigation Laws played a role. New England colonial charters were revoked and royal governors brought Massachusetts into formal conformity with the Navigation Laws.
The Navigation Laws, a sort of economic constitution, were in their fragile first decades in the 1661-93 years; they were a work in process through 1693. Said and done, the mercantile system was mostly an honor system until 1693 and from that point a more extensive system of reporting, keeping of lists and inventories at ach port, and custom officials at each port. “The repeated passage of [the Navigation Laws] suggests it took some time to convert the colonists from practices already thirty years old in 1660. The colonists behaved better in the 1680’s … By the end of the War of the Spanish Succession in 1713, colonial trade conformed in almost every particular to the navigation system; it continued to do so until the American Revolution WITH A FEW EXCEPTIONS [capitalization mine]. Especially blatant were the smuggling into North America after 1733 of sugar, molasses and rum from the Non-English Caribbean and the trade with the enemy during War of Austrian Succession [1740-1748] and the Seven Years War [French and Indian War-1754-1763]. In these cases, the returns simply outweighed the risks [[99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 49.
It is well we keep in mind McCusker & Menard’s opening observation on mercantilism as a formal “system” of colonial administration: mercantilism “implied a more formal, consistent body of theory and law than in fact existed. We would do well to remember that mercantilism was little more than a shared perception among those who controlled northern and western Europe from the sixteenth to the eighteenth century that foreign trade could be made to serve the interests of government—and vice versa” [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 35 Hidden in that quote was that England was not alone in its pursuit of mercantilism. Whatever mercantilism was or was not, it saturated the international, colonial, and economic policies of those countries which then were on the road to becoming today’s European developed nations.
To close our discussion on the mercantile system (but not the Navigation Laws} we ought to alert the reader that while mercantilism exerted several serious problems for the American colonies (probably the lack of hard currency the most damaging), mercantile closed system economics did provide compensating advantages. First, commercial and logistical sectors enjoyed a de facto monopoly on coastal trade to other colonies—coastal trade was always a multiple of trade with the Mother Country.
McCusker & Menard estimate that British North America‘s annual rate of growth over the one hundred twenty years of the colonial period was 3.2% [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 53. “Both productivity and the standard of living in the colonies got better during the colonial era, which argues quite forcefully for real per capita growth in the economy” [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 55. The GNP of Colonial America, they estimate grew about 3.5% annually over 120 years after 1650—by “contrast with Great Britain … less than .5 percent per year during the same period [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 57. Whatever this may say about overall colonial economic growth, it does also offer evidence that economic growth was sufficient to create opportunities for social-economic classes to evolve—and for the likely emergence of wealth and status inequality. We shall deal with both shortly in this module.
Secondly, working within the mechanics and dynamics of the closed system yielded excellent profits to participants. Many a merchant became exceptionally wealthy, and baring the vagaries of risk (weather, for example) middling players could generate a fine business to pass on to their children. Thirdly there is no indication that mercantilism restrained economic growth in the colonies, nor did it produce sufficient profits to constitute exploitation by Mother England of her colonies—England did not trade sufficient volumes with the colonies to exert a serious impact on her overall economy. And luxury goods like furs, tobacco, and even sugar/molasses could be dispensed with in times of war or political controversy. Colonial merchants and shippers were able to navigate mercantilism sufficiently well to be able to offset imported goods with their exports—saved frequently through non-cash credit and accounting bookkeeping transactions.
Their skill lay in their ability to produce a range of commodities for which there was consistent demand in the rest of the world. Their skill lay in their ability to exploit a variety of commercial opportunities left open to them within the British mercantile system [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 52
Mercantilism was so central, however, to the self-sufficiency export-import strategies of the colonies, that its effects and dynamics were not infrequently perceived by American commercial-logistical elites as more important, more impactful than it actually was. Less evident was the success of the self-sufficiency strategy itself, which for all its dependence on export was able (in general) to spin off, diversified sectors, industries and businesses that fortified its domestic economic base, and actually was the cutting edge of each colony’s economic growth.
Overseas commerce [export] did not merely make colonial life comfortable; it made it possible. Without foreign trade the colonists would have been unable to earn sufficient credits in their balance of payments to buy imported goods. Many of the immigrants would not have come in the first place, and only a few of those who did come would have stayed … Moreover the vast majority of settlers came [to America] to improve their economic well-being, at levels considerably above mere subsistence … they sought far more than simple survival in ‘wilderness’. The promise of a prosperous America is what attracted settlers, and that prosperity rested in good measure on their ability to buy what they needed [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 71
Said and done, mercantilism may have pre-determined parameters for a diversified colonial economic base, but it did not prevent the development of colonial domestic economic bases. It may be the issue that likely produced the Revolution was a growing body of commercial-logistical elite that, having created an economic base of sufficient capacity to meet its own needs, saw opportunities that could be tapped only by trade with non-British markets. It may be no accident that one year after the 1783 Treaty of Paris (that ended the Revolutionary War), the newly commissioned 360 ton New York ship, Empress of China, arrived in China with a cargo of ginseng, and a return voyage of 800 chests of tea and 20,000 pairs of nankeen trousers. The owner of that ship, Robert Morris, a Founding Father, the Philadelphia banker, Pennsylvania senator, founder of America’s first national bank (1781), and treasurer of the Articles of Confederation.
British Institutions and Colonial Policy-Making –Accordingly it was left to Penn and his descendants and appointees to live up to the expectations of a mercantilist London Board of Trade, Parliament, and Glorious Revolution Monarch. After the Glorious Revolution (1689), and England’s victory in the Queen Anne’s war (1702-14), ENGLAND (my capitalization) carved for itself the beginnings of a colonial empire, in the West Indies, India and North America. From 1650 (Civil War and Cromwell) through 1709, England forged the United Kingdom. Lurking in further in the background is Louis XIV who died in 1715. Accordingly, the Glorious Revolution produced for our purposes an entirely new policy system—with decidedly aggressive beliefs in the central mercantilist mission of colonial possessions. It was this last policy system that over several decades was able to assert an English mercantilism over its colonial possessions. Say this in another way, certainly previous to 1661 there was little in the way of an enforced and systematic application of mercantilism over colonial America.
England, during these transition years during the development of mercantilism and the Navigation Laws, developed a severe case of partisan politics (Whig and Tory), polarization, and despite the existence of elections, the franchise was grossly limited, and so-called democratic elections produced what can be best described as an oligarchy (aristocracy and upper middle class-gentry)) which shared power with the Throne which was not without its power to mightily affect decisions. Talk about separation of powers and checks and balances—this transition period had them all without a formal constitution.
It only added to the dysfunctionality of 18th century (pre-1750) colonial administration that this collection of elites hardly deserved the label “elites” if competence and consistency, not to ignore basic honesty were included in its definition. Corruption went beyond the simple blurring of private and public. What may be most obvious in a reading of history, however, is simple myopic vision, sheer incompetency, a curious British stubbornness and inflexibility that converted what could have been short-term disputes into long-term frustrations that led to Revolution. Oh yes, BTW, the American colonial elite was its own basket of stubbornness and greed, wrapped in proto-capitalism libertarianism.
The larger point of this is the British themselves were in process of forming their own brand new policy system, built on the baggage and happenstance of its previous one. The first British Prime Minister was Robert Walpole whose term commenced in 1721. Before 1721 England did not have a prime minister as such–but in this early period the first five Navigation Acts were approved. In short the basic approach to colony management was set by actors trained in and reacting to, a previous policy system, a policy system which was overthrown by a new one.
The “bible” on this period (for better and worse) is Herbert L. Osgood’s Vol III, the American Colonies in the Seventeenth Century (Chapter 1) [99] (the MacMillan Company, 1907). Osgood sums it up “… conditions were giving rise i the seventeenth and eighteenth centuries to a novel political structure”. The supreme legislature never satisfactorily defined, the relation between the home government and the colonies … It simply legislated for the colonies on certain subjects … and refrained from legislating on a much greater variety of other subjects. There was no judicial tribunal in the British system, except possibly the House of Lords” [99] pp. 10-11. But the provinces were mostly governed by charters issued by the King–most of which were previous to the Glorious Restoration (1689).
The organs of the British government which were called into play in the administration of imperial control over the colonies were … the parliament, the courts of law, and the various executive offices and boards which surrounded the king, and constituted what was officially known as the crown (p12.) The organs of government through which executive control over the colonies were exercised were, besides the sovereign himself, the secretaries of state, the privy council, the lord high treasurer … the lord high admiral [admiralty] [and even as representatives of the Church of England] the archbishop of Canterbury or bishop of London [there was no separation of church and state]. [In the period after 1650, the privy council was the organ primarily responsible for the ‘dealings between the King and the proprietors of the colonies” [p. 16]]
The effect of this fragmentation and flux between the colonies and the Mother Country, and within the “Crown” were succinctly collapsed by Osgood:
Englishmen who, while they remained in the realm, were immediately subject to the control of the executive in all its branches and to all acts of parliament, by removal across the sea escaped from those relations and instead became subject to colonial proprietors, with their legislatures and officials. Behind and above all these were the sovereign rights of the crown and parliament, but the relation in which the colonist now stood to these bodies was no longer immediate, but mediate.
Between the two the proprietors and their officials, or the general court [the provincial legislatures] with the elected officials of the corporate colonies had been interposed. This in the realm of administrative organization was the result which followed from the settlement of the colonies on a remote continent under the impulse of private initiative. An essentially feudal relation had been created, with a large measure of practical immunity.
But from the first, the need of conserving imperial rights was felt; and, as the dominions [empire] grew and the rivalry of other competing motives developed, the strength of this feeling [control] increased. Considerations of national wealth and power as emphasized by the mercantilist theories of the time, enforced the need [for control]. It became apparent first, and chiefly, in the sphere of war and international trade. Out of these general conditions arose the imperialist views of the later seventeenth century, the chief exponents of which were merchants, lawyers, and crown officials. They insisted upon guarding the interests of England in her colonies, and upon subjecting them as a whole to a consistent and far-reaching policy.
This is a mouthful–but as a summary it is excellent to understanding the colonial-mercantile underlying dynamics and structures of decision/policy-making during the colonial period. The flaw in this colonial system, its inherent weakness, however, is contained in Osgood’s next sentence: “But, under the system of chartered colonies, the administrative machinery for accomplishing this was lacking. Without a corps of royal officials resident in the colonies, it would be useless to overcome their particularism, or to establish systematic control over them. The elected officials of the corporate colonies and the appointees of the proprietorship were almost equally useless for such a purpose” [pp. 21-2]
To compound matters, money and profit (i.e. opportunities for corruption) entered into British colonial decision-making, as did the merchant electoral constituency that demanded colonial policy should set up and protect a semi-formal English monopoly over American traders and merchants. And so, the various versions of the Navigation Acts which followed from the original one in 1650, were intended to protect British commercial-finance-shipping interests.
The Board of Trade passed regulations requiring English ships to be used in colonial trade, that American ships must ship first to England (and pay English customs)–from which English merchants would then and take possession to ship and sell wherever they may. The electoral power of these constituencies is sometimes subsumed as part of the mercantilist system, as well it was, but in the toss and tumble English partisanship of the period, it had its own dimension.
It was this exploitation that mobilized the American commercial elite encouraged within them the adoption of practices, behaviors and attitudes [varying in degree and focus among each colony] that protected their interests, those aligned properly with the self-sufficiency strategy nexus (including favorable balance of trade)–and those that served the interests of private profit–smuggling–as the hidden source of much colonial discretionary private and public investment capital.
Gordon Wood aptly describes that while all this was going on in Merrie England, the colonies were left without a Bank of England’s largesse (there were no commercial American banks at all), no stock exchange, no large trading companies, no great centers of capital, and no readily available circulating currency. Compared to this, London alone in 1774 had fifty-two private banks, a raft of massive trading companies well installed within the halls of Whitehall. In his view the colonies economies were dominated by their need to export.
This emphasis on overseas trade confirmed the traditional mercantilist assumption which held that each colony could increase its aggregate wealth only by selling more beyond its borders than it bought. The economic goal of a colony was to have more exports than imports … But since the colonists tended to import far more than they exported, they always had an acute shortage of gold and silver specie … [which limited] the colonists’ ability to make [economic transactions] with one another…. The colonists believed that their internal trade—say between Lancaster and Philadelphia—had no real value unless goods were further shipped outside the colony.” [99] Gordon S. Wood, the Radicalism of the American Revolution (Vintage Books, 1991), p.65
The nest topic area consists of two related but separate modules. For those interested in following the fate of William Penn’s economic base-building plans–and most particularly the entity charged with their implementation during the last two decades of the seventeenth century, see Society of Free Traders.
Those otherwise interested can proceed to the larger module which in detail explores the implementation in Pennsylvania of the Export-Import Strategy within the Self-Sufficiency Nexus. Pennsylvania’s Self-Sufficiency Strategy 1682 to 1720:
A following Module will detail the formation of agglomerations and clusters congruent with the Diversification of the Economy Strategy
Ron W. Coan 