Intro
With hindsight we know Penn’s urban and economic development plans never took root. Before he ever arrived in America, his planners and founding officials had to abandon the preferred Delaware River site, and move upstream. The street plan Penn had outlines, the glory of architect textbooks today, was transferred to a site where topography only partly supported it. His “greene” hinterland approach fared better, but Philadelphia from day one had a waterfront district that stretched for miles—into two planned suburbs. Moreover the east bank of the Delaware, New Jersey, was already settled and not especially happy with his Philadelphia project. To complicate matter the land sales made in England to his First Purchasers was not easily accommodated to the new site. This produced an important group of unhappy campers.
His economic development plan came to naught with the collapse of his Free Society of Traders. His colony inherited a previous colony in its southwest leaving behind settlements and dispirited Pennsylvanians who wanted as little to do with Pennsylvania as possible, but who had a head start in establishing contacts and trading relationships with outsiders. Threatened by any rise of Philadelphia, they attempted (unsuccessfully in the main) to capture what they could of any export/trading opportunities. The unanticipated unwillingness of pre-existing southern Delaware residents to Philadelphia as the principal export site wreaked havoc with Penn’s legislative majority, and the provincial legislature never, ever, was on board with his self-sufficiency plant—leaving actual decision-making to an amorphous community of diverse Philadelphia merchants.
Finally, whatever any validity is planning efforts has, Penn (and almost everybody else) failed to anticipate the lure that tolerance and willingness to accommodate ethnic and religious diversity meant the dilution of his Quaker support/political culture, inviting contrasting cultures and aspirations to enter into his poorly-designed policy system. These discordant factors would also affect the direction of economic development as well. Literally from almost day one Philadelphia-Pennsylvania economic base building was in the hands of whatever constituted the local commercial community—over which he had little, if any, practical influence. His Holy Experiment was, in reality, somewhat unholy, and they were unreceptive to Penn’s personal rule as governor, and no doubt agitated by Penn’s personality and his poor sensitivity to politics and governance.
Completely insensitive to all these setbacks, the self-sufficiency nexus imposed itself on the new colony without remorse of a honeymoon period. New arrivals wanted to eat that winter, and sleep in a home not a tent. That Penn seemed as much concerned with building his own manor in the hinterland, did not go well when they discovered the land was not what they expected, and the surveying—the first step in building the home—was a bureaucratic nightmare.
The essence of that strategy nexus meant that in the short-term Philadelphia-Pennsylvania had to import the bulk of needed recourses, quickly bring over new settlers with skills (which in fact happened), and to pay for those imports, someone needed to find something to export—and then come up with payment in advance to secure the goods. The Society for Free Traders was going to handle that—but its start was so rocky its poorly executed initiatives were beaten out by the pre-existing pre-colony businessmen who already had established trading relationships and advance capital to pay for the goods. From that point on any merchant with access to capital, preexisting relationships with foreign traders, and the willingness to assume the risk simply developed his own plans and took his chances.
To lessen the chokehold the initial strategy imposed on future economic growth and Pennsylvania’s hope for sufficient autonomy to implement its Holy Experiment and to generate prosperity for its businesses and residents, a diversified economic base had to be constructed to manufacture increasing variety of resources in the city and its hinterland (a sort of Build Pennsylvania program). That meant town-building (Philadelphia’s as the city with an export port), and people attraction of population, that ensured the key needed skills and a sufficient and growing market/consumption.
If Penn lost control over the vital urban export-import strategy, he was more fortunate with his hinterland agricultural strategy. Penn realized back in England that the bulk of the people attracted to Pennsylvania were not going to live in its urban center, but settle in its hinterland–making their living and sustenance from either homestead or plantation agriculture. That was never challenged in Pennsylvania’s colonial history. Hinterland land sales was what Penn believed would pay for his expenses (and hopefully infrastructure). His financial plan was based mostly on land sales to these newcomers and that fared reasonably well in his first tenure in Pennsylvania. From our self-sufficiency perspective, the development of homesteads and plantation to produce agricultural products to use to pay for export did go well. Since the first step in the hinterland expansion was land purchase from the Native Americans, Penn’s humane Indian policy served him well, and he was able to produce a secure land title for his new immigrant purchasers.
But as Teaford relates, Penn followed up over the next decades with a relatively consistent approach to hinterland agricultural development, that included town-building (somewhat), and extended provincial democracy by extending the electoral franchise to agricultural property owners who paid their quitrents and who met residency requirements. Despite the resistance of the provincial legislature to his governance, Penn remained faithful and constant in his willingness to find a way to make the colony economically successful.
Penn granted the [unsuccessful] Philadelphia charter in 1691, in order to achieve ‘the more immediate and entire Government of the said Town and the better Regulation of Trade therein’, and in 1701 he established the corporation of Chester [as a borough] ‘ for the better encouragement of settlers and regulations of trade’. Similarly, in 1720, George I, [on the behest of Pennsylvania’s Governor William Keith], incorporated the borough of Bristol Pennsylvania with an intent ‘to promote trade, industry, rule, and good order’. [99] Jon C. Teaford, the Municipal Revolution in America, p. 17.
Post Penn Economic Base Building
Word of mouth had filled ship after ship with new, mostly Quaker immigrants, and over the first five years or so, population growth was sufficient to bring in needed skills, and importantly to set up homesteaders in the agricultural hinterland. Pennsylvania did not need to “market itself” to the outside world. Pennsylvania benefited from those seeking opportunity in North America’s “best poor man’s country”. William Penn had personally marketed continental Europe before he ever left London; his religious and ethnic open-door policy system was more than sufficient to sustain a sufficient workforce from abroad–in fact with little effort Philadelphia emerged as the go-to location in the thirteen colonies. Word of mouth, in the form of letters home from the first settlers usually kept the momentum going. Events in Europe were the drivers in Pennsylvania’s population supply; they created the demand for immigration to Philadelphia.
Penn’s liberal immigration policy encouraged rapid development of the region and along with natural increase drove Pennsylvania’s population from about 18,000 in 1700 (from about 500 in 1685) to about 220,000 in 1765. The urbanized Philadelphia region grew from about 2,200 in 1700 to 19,000 in 1760, and then to about 30,000 as the Revolution erupted in 1775 [99] Gary B. Nash, First City: Philadelphia and the Forging of Historical Memory (University of Pennsylvania Press, 2006), p. 45.
the Export-Import Strategy
On the other hand, it also brought in a new batch of commercial entrepreneurs who not only resisted the already beleaguered Society, but whose relationships and experiences exceeded many of the first commercial entrepreneurs. In short, despite the failure of his urban base-building and political plans, economically Philadelphia and Pennsylvania got off to a great start in its very first years.
Only three years after settlement, [Pennsylvania’s] capital city had cut deep inroads into New York’s control of the Middle Atlantic fur trade and tobacco markets. By 1700 Philadelphia was second in size to only Boston in the English colonies. … from the outset Pennsylvania possessed a large number of highly skilled craftsmen who formed the nucleus of a thriving urban community, and gave impetus to the infant economy … the immediate arrival of an experienced body of merchants, men long established in other seaports … men with sound credit and reputation, men whose close mercantile contacts throughout the world of English commerce gave the economy a headstart. Gary B. Nash, Quakers and Politics: Pennsylvania 1681-1726 (Northeastern University Press, 1968), p. 57
The trade of Philadelphia throve upon a business acumen that, by the time of the Revolution, made the name Quaker a byword for hard work and good sense. All benefited from an imperial system that kept potential competitors outside the empire, or otherwise preoccupied within it. Well before 1770, Philadelphia and New York had replaced Boston as the colonial mercantile capital, and the general level of income and wealth in the Middle Colonies had advanced beyond the level of New Englanders [99] John J. McCusker & Russell R. Menard, the Economy of British America, 1607-1789, p. 189.
In essence, unplanned and ill-coordinated, a commercial community was developing in Philadelphia, around its waterfront, and largely beyond both Penn’s and the Legislature’s influence. That commercial community was the nucleus of several proto-classes that would gradually evolve over the decades before the Revolution. The earliest commercial merchants—especially the Quaker ones—would evolve into a colonial aristocracy.
The successful risk taking Quakers could do well in these early years, with first advantage and preferred standing with Penn they acquired scale, experience and established relationships that secured them a firm standing in the struggles to implement the self-sufficiency strategies. As we shall see their early dominance in the export-function would provide them capital and trading advantages in the “diversifying” element of that strategy as well.
For the moment, however, we are most concerned with understanding the internal dynamics of that early commercial community, how they first “did” business, and how they carved their own individual-family niches in the larger commercial community: We are also interested in how they coped with the imperial mercantile system in which they necessarily completed. Where, what and when did they trade, and how did that “feed” into the food-producing hinterland self-sufficiency nexus is also an important theme of this section as well.
Finally, from its founding, Philadelphia enjoyed watching a rather constant parade of foreign-owned ships arriving at her port. Releasing their precious cargoes of people and resources essential to her self-sufficiency, the centrality of shipping was visibly evident to potential entrepreneurs. Philadelphia entrepreneurs (Shippen and Anthony Morris, for example) more often than not concentrated upon opportunities at hand, and they dabbled in a hodge-podge of ventures ranging from trade, land speculation, housing-inns, tavern owners and brewer, and manufacturing and mining.
They also were attracted to servicing the ships that entered their port–providing ship repairs, goods storage and warehousing, even wharfs to dock on and transfer goods to and from the shore (Samuel Carpenter). In the first decades it was rare that an early business entrepreneur would engage in just one venture in a single sector. Diversification, as in a stock portfolio, was essential to managing the risk, of which there was no shortage. Entrepreneurs moved into opportunities that required building entirely new sectors, beyond agriculture quickly.
Arguably among the first sectors which diversification opportunities manifested itself was in the marine sector: fishing and shipbuilding. Accordingly, the reader is alerted that “sector diversification” as an element of the self-sufficiency nexus appeared quite early in Pennsylvania. We shall for the moment defer discussion of the “diversification strategy” (which we rename to agglomeration-cluster building) to later in this section [SEE Agglomeration & Cluster Building]
First we shall tackle the internal dynamics of the early commercial community:
If [early] Philadelphia commercial competition was intense, it was also controlled. Family and religious connections were primary … in the growth of an aristocracy. Since a single proprietorship or a [family] partnership was the conventional form of business organization [which required] an initial investment of 1,000 [pounds, a considerable sum] … commerce was by no means open to all [high barrier to entry required initial access to capital from other sources] [99] Joseph E. Illick, Colonial Pennsylvania: a History (Charles Scribner’s Sons, 1976), pp 106-7.
[Thus] Many of Pennsylvania’s early merchants came from other colonies where they had already been engaged in trade. Out of the West Indies came the names of Carpenter, Richardson, Norris, Dickinson, while from Boston arrived Shippen, from New York Morrey and Frampton, from Maryland Fishbourne, Preston and Hill, while New Jersey supplied Morris [No relation to the future Robert Morris]. Still in boom times [these] ambitious outsiders edged into commercial ventures, causing established [Quaker] merchants to seek ways of limiting competitors. One method of control was to restrict training in the field to young men who were close relatives or personal acquaintances. … Apprentices paid to live with their tutors.
Out of the rough and tumble of its first decades, the Philadelphia commercial elite created a community of winners, and their network of business allies, suppliers, and a rough cluster-based network, almost all of which involved some form of trade (and hence finance) to sustain and grow their operations. Newcomers were constant, and failure not merely a threat but a constant reality. They had to work together in tough times and these relationships were maintained in boom times. As early as the 1690’s, a group of them organized a association which met on the top of the waterfront banking, in back of Carpenter’s Long Wharf from which a huge crane lifted the goods from the ship to the wharf, and then up the cliff. Stairways up that bank led to the Globe Inn and Carpenter’s Coffee House.
That last establishment quickly became the headquarters–the Exchange–of the day, where ship captains, merchants, craftsmen and farmers gathered to trade news and commodities … Carpenter’s Coffee House suspended the sale of alcohol altogether in 1703… The [Municipal Corporation of Philadelphia’s] City Council [its lower house] adopted the place as the seat of local government [99] Domenic Vitiello and George E. Thomas, The Philadelphia Stock Exchange and the City it Made (University of Pennsylvania Press, 2010), pp. 3-4.
Until William Bradford’s London Coffee House opened in 1754, the Carpenter’s Coffee House, (and several others) over the following decades, incrementally, built commercial trading capacity, gathering experience and contacts, and pursuing opportunities created by events and war. Philadelphia merchants would venture deeply in colonial coastal trade, linking the American port cities, and developing trading relationships with the West Indies in particular. The lack of insurance for these ventures meant for many either bust–or the successful venture whose proceeds yielded the foundation for growth. As the noted historian of Philadelphia’s commercial elite noted constantly in his comments, failure was an option, and even early success could eventually lead to failure [99] Thomas M. Doerflinger, A Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Philadelphia (University of North Carolina Press, 1986).
The other port cities, Boston especially had been early pioneers in that trade route, and Philadelphia followed in their wake. These extended trade relationships placed more stress on the evolution of Philadelphia commercial practices and the development of trading system. One might suspect the Coffee House was the first step toward creation of America’s first stock exchange. More on that later.
During his first years on his own, the budding trader often served as a “factor”, making his living from commissions on the sale of another’s merchandise. Capital was a necessity … the successful merchant had to have a network of relatives, friends, and agents at other ports; otherwise he would have to consign his cargo to a ship’s captain. … Quakers, who were constantly in touch with one another … and had a strong sense of being ‘a peculiar people’ maintained contact regarding commercial affairs and traded whenever possible with one another. This nexus was reinforced by [continental] family connections [99] Joseph E. Illick, Colonial Pennsylvania: a History (Charles Scribner’s Sons, 1976), pp 106-7.
Secondly, as they practiced their occupation and made their fortunes, they necessarily had to confront the fragmented, personalistic, often bitter politics of the political civil war between Proprietor and Legislature. As one might expect problems would appear, need for some kind of public assistance would manifest itself, and as time went on no doubt an expectation they should, if they so choose, be able to participate in the political life of their community. In particular, the needs of the waterfront, export-import infrastructure, and the linkage with the hinterland food-producers and import consumers required them to turn to “somebody” for immediate solutions. Because most of the commercial community were part-time, generally full-time residents of Philadelphia, the governance of that city demands special attention.
I see a rough similarity between today’s aspiring startup entrepreneurs and the techniques and practices they employ, and those that were used by their startup precursors three hundred years before. It was these opportunistic migrants who the newly-formed Corporation of the City of Philadelphia alienated with the first decade pursuit of traditional guild-like regulations on “outsiders” to the membership of that Corporation. The Corporation was never able to overcome that bad start with these entrepreneurs, and the ones that were successful became elites outside of the Corporation’s restricted membership.
The Corporation, however, as we described in these early years had a rather rough go navigating their way through the civil war between Proprietary and Legislature/Quaker Party, and a goodly number of these outsiders wound up on the outside of the Proprietary forces. The Legislature, heavily engaged in macro political initiatives, a voting majority based on hinterland delegates, and their version of limited government were not deeply committed to Philadelphia’s agenda.
Thus when the Philadelphia merchant class needed something to be done, they had to do it themselves. Generally, they found support from the anti-Proprietary coalition, Lloyd, his Quaker Party and the Legislature. Accordingly, the reader is alerted that economic base-building inherently included what amounted to a “feedback”, an input into the Pennsylvania-Philadelphia policy systems. As we talk about economic base building we must constantly remind ourselves that economic base building intrudes upon its adjacent sub-systems. That such inputs tapped into or ran afoul of prevailing political culture(s) should also be noted.
Trading Partners and Patterns
Before 1700, perceived Philadelphia commercial opportunities attracted a diverse group of venturesome commercial entrepreneurs that included Quakers from other colonies, opportunists from other colonies including the Barbados, and immigrant entrepreneurs from England, and even continental Europe. Many had previous experience and background in international trade, some had contacts and relationships, and several had financial backing to take advantage of specific projects-ventures.
In this period, England did not have a pressing need for Pennsylvania wheat—the province’s chief agricultural export—and so the somewhat surprising opportunity of trading that wheat with the Barbados which had determined not to produce its own foodstuffs (sugar exporting was so profitable, scarce Barbados land could not justify its substitution for wheat or other foods. In fact, the West Indies proved a reliable and profitable market for a variety of artisan and commodity products from Pennsylvania. This legal West Indies trade, long pioneered by New England and New York—even Virginia tobacco—was an opportunity to which Philadelphia merchants availed themselves.
Also of some note was trade with other colonies, what came to be called “coastal trade”. Each colony had its own needs-deficiencies and home products and a network of small coastal ports transferred cargoes from England, West Indies and the major ports of North America, and in this manner a web of trading relationships developed. What we refer to as coastal trade includes several dynamics which in and of themselves are worth discussion and which are important, in this case, to our economic development story.
What we shall discover is that in each province, the port city was the export hub and the major coastal trade player (Boston, however, had several Massachusetts competitors) and that what we are seeing is a major outlet for each province’s hinterland export trade—hence a vital element of the self-sufficiency strategy. The role of coastal trade in ameliorating the Mother County provincial balance of payment dilemma was a significant factor in compensating for the “abuses” of England’s Mother Country exploitation of its colonies.
… in the ports north of Maryland, native rather than British merchants conducted commerce. These [northern] ports were outlets for products which British capital had little interest. Not only was the hinterland of the northern colonies less productive than that of the South [Pennsylvania excepted] but many of the region’s most important products, especially, wheat, cattle, and fish were unwanted in England. Natives [provincial commercial elites] plied the banks of Newfoundland, the coastal settlements, the West Indies, Africa, and southern Europe to find commodities that would enable them to obtain specie [hard cash], bills of exchange on London, and other means of paying for the imports of English manufactures. English [owned] vessels, however, dominated transatlantic commerce …[so] the main interest of American shipping was the coasting and West Indies trade where the smaller size of colonial vessels and their relative closeness to their home ports gave them advantages in operating costs [99] Stuart Bruchey, the Roots of American Economic Growth, 1607-1861 (Harper Torch, 1968), p. 49.
In the below case study of Maryland-Pennsylvania War, which we will shortly provide, I alert the reader to “how” foreign trade meant trading with an adjacent American colony-province, how such trade operated within British mercantile system and its regulations, and how intra-colonial economic and political relationships dovetailed, both positively and negatively to the advantage/disadvantage of each province and the their economic base. To those who wonder why contemporary states are different, and why states have so difficult a time in staying out of fights with each other, and instinctively compete with each other, this section will provide evidence that such behavior is built into the structure of American federalism; good fences create good neighbors and no colony or province had such a fence. From the very, very beginning intra colonial economics yielded as much dispute as agreement and intra state competition is most felt from one’s closet neighbor, not one’s regional rival.
What will be particularly interesting in the Pennsylvania-Maryland case study below is the role Philadelphia played in the development of Baltimore. What we shall also see is a clash of provincial commercial elites. Finally, we shall see evidence that in both provinces, the provincial legislature played the decisive role in ED policy-making, but in Maryland’s instance, a change from Proprietary to Royal Governor provincial policy system offers a new dimension into intra-colonial competition and policy-making. We shall also see how changes in one province created friction in another. This inevitable friction and complexity is an underlying topic in our discussion on intra-provincial coastal trade
That Pennsylvania enjoyed relationships with its neighboring provinces, for example West New Jersey, New York, Virginia and the New England states means that the two little words “coastal trade” imply a rather robust economic development agenda—one that only seldom is included in traditional, political histories. That relationships create rivalries and a legacy of past bad experiences (as well as good—but these are usually forgotten), one might understand the difficulties that arose under the future Articles of Confederation and the 1787 Constitutional Convention.
Whatever their inclination a “natural” functional trade existed of exporting hinterland agricultural products and importing necessary and quality goods needed by domestic residents. Fairly bountiful in these early years, the Pennsylvania hinterland yielded wheat, and some flour, port, beef and lumber. Coastal trade was “financed” in several ways, but Pennsylvania produce could be exchanged with other colonial merchants for hard specie or bills of exchange—both of which were extremely helpful in transferring to British creditors to relieve the balance of payments dilemma. From this intercolonial trade developed a little known but quite interesting relationship between Pennsylvania and its none-to-happy neighbor Maryland.
Trading with these early trading partners meant opportunities in grain, flour, bread, pork, beef, and (wood) shingles, which went primarily to West Indies, Barbados and Kingston, and in return they brought home sugar, molasses, rum; trade with European ships which traveled to Philadelphia more often were furs bartered from Indian tribes in the hinterland, and in return from London and American port cities returned manufactured goods to Philadelphia. Since immigration trade did not “take off” until after the 1720’s (war was a factor), it was almost self-evident that Philadelphia’s export-import strategy meant Pennsylvania’s production of export agricultural products (furs, also) from its hinterland. Still, over the next half-century, Philadelphia and Pennsylvania became known as the “breadbasket of the Atlantic”.
Hidden-in-plain sight in what appears to be an unfolding natural opportunity to trade its hinterland agricultural products, converting them into exports to finance and foster a budding commercial economic base and trading elite, is a major reason why Pennsylvania/Philadelphia departed from the pattern of export trade pioneered by Virginia and Maryland whose commercial export functions were largely assumed by British factors, often resident in Virginia. England produced her own grain and wheat largely sufficient to her needs. Pennsylvania wheat offered no special attraction to English markets, expensive as it was. So it did not seek to control Pennsylvania’ export of agricultural grains–forcing poor Pennsylvania to develop her own markets of export. As asserted by John Steele Gordon that since
“the middle colonies, like New England, could not rely on a cash crop [tobacco, rice, indigo] that was in demand in the mother country, they did not develop economically as typical colonies of that time did. The planters in colonies such as Virginia depended on so-called factors in England to market their tobacco for them, and to function as bankers and purchase agents, shipping back to Virginia goods that were not obtainable there. Pennsylvania and New York, like New England developed their own merchant class, every bit as sophisticated as that in the mother country and with contacts spread just as widely over the globe [99] John Steele Gordon, An Empire of Wealth: the Epic History of American Economic Power (Harper Collins, 2004), p. 40.
And so from this seemingly natural development of the economy flowed a Mason-Dixon line, and north-south bipolar economic bases that spun off two styles of politics and policy systems that gave rise to a regionalism that led to American federalism, and a checks and balances saturated Constitution.
That meant merchants had to involve themselves in developing hinterland infrastructure and supplying the needs of the hinterland agricultural base. Makeshift roads, inns and taverns, mills, even dredging rivers and Indian trading posts. It also attracted merchants into building/owning ships, and manufacturing opportunities connected to shipping (rope and barrel-making, cloth for sails, warehouses, coopers (metal-benders) and the like. A waterfront district formed, with very serious implications on the physical and quality of life in Philadelphia.
With its young maritime industry in formation, sailors and grocers who sold consumer goods to the residents entered into their orbit as well. A waterfront worker-laborer community incrementally developed and required housing, as well as slaughter houses for animal processing. Slave trade was a constant, as Pennsylvania, Quaker notwithstanding, was no exception to ports in the Atlantic community. All these opportunities required capital, but they also expanded greatly the activities discussed in the “coffee house exchanges”. These waterfront-based “finance and logistical institutions” bore the brunt of deal-making. Merchants took shares in each other’s ships; bought and sold each other’s inventory, lent capital to transport and sell goods abroad, and finance venture into the hinterland. Private transactions all, based on handshakes, character, past experience, and simple necessity.
Shared risk made these coffee houses the precursors of the municipal Boards of Trade so prominent a century later. Political discussion, international politics, newspapers interspersed with business negotiation. One can see a glimpse of this in Ebenezer Scrooge’s various business activities (and funeral). Coffee houses filled the bill until the great opportunity afforded by a major war, the French and Indian War in 1754, simply overwhelmed the coffee house [99] See Stuart Bruchey, the Roots of American Economic Growth, 1607-1861 (Harper Torch, 1968), p. 49-54.We shall return to that shortly below. But in the meantime:
A metropolitan economy grew up around the activities of the farmers and merchants. Wagoners and flatboat operators carried foodstuffs into the city, and returned with iron tools, textiles, shoes, and other manufactured goods to be sold at hinterland stores and trading posts. On the outskirts of the city, millers and butchers processed grain, lumber and livestock from the country side. In [hinterland] town [and cities], shopkeepers grocers, tailors, and smiths, provided city dwellers with their everyday necessities, while the keepers of taverns, inns and boardinghouses accommodated visitors and recent arrivals. Along the riverfront [Delaware] ship builders, riggers, sail makers and coopers outfitted vessels, and made barrels for shipping dry goods, and the port was crowded with stevedores, carters, and laborers carrying goods between ships and warehouses.
These merchants and their ships integrated Philadelphia into the world economy, building especially strong connections to the West Indies, Europe and other parts of North America [[99] Domenic Vitiello and George E. Thomas, The Philadelphia Stock Exchange and the City it Made (University of Pennsylvania Press, 2010), p. 5.
That enhanced risk forced the Philadelphia merchants to spend more time at their coffee houses, and further encouraged their forming business conglomerates, which over time led to merchant winners which in its turn produced merchant aristocracies, and a solid, but volatile, middling merchant community, and the early emergence of an artisan class. The settlement of the hinterland, while not explosive in the two decades that followed, concentrate in the three counties, filling them up with homesteads and a few towns, and the southern three counties deepened their reliance on tobacco and the Tidewater plantation economy. With the exception of the latter, of course, Pennsylvania in this period would be mostly contained within the present-day Philadelphia metro area.
The end of the war in 1714 produced a serious recession, dampened investment capital and consumer demand, if creating some slightly higher rates of immigration. In this period the Proprietary Party had a brief period of influence and legislative power–with James Logan, the Penn Family secretary, in his “glory days”. At that time the pivot of William Penn away from land sales to Indian fur trade (a hinterland-focused strategy), made Logan the wealthiest aristocrat in the Pennsylvania neighborhood–and gave rise to William Allen and the Norris and Pemberton families rise. An embryonic aristocracy was developing. [An extensive module series will discuss the pivot to a settlement strategy, with its associated complexity on Indian relations, and hinterland development into the interior]
Quaker merchants, prone to retirement in hinterland plantation estates, and fractured between Legislature and Proprietary, undergoing generational change, were being diluted by the constant arrival of non-Quaker migrants and immigrants–a diversity which was also reflected in the configuration of the merchant community, no longer dominated economics as they had in the days of yore. “The growth of commerce and population brought about a cultural transformation from a Quaker community to a religiously and philosophically heterogeneous one … With the emergence of a diversity of competing religious dominations and sects, the cultural atmosphere, at least among the town’s bludgeoning upper class, moved away not only from Quakerism, but also from traditional Christianity toward the secularism of the Enlightenment” [99] Edwin B. Bronner, Village into Town: 1701-1746 , Philadelphia: a 300-Year History (W. W. Norton & Company, 1982), p. 43. This will discussed in later modules, as will its effect on Pennsylvania policy-making. During this period, the electoral franchise was expanded by increased landowning of its residents, and hinterland homestead settlement. The Municipal Corporation of Philadelphia stagnated and began its descent into meaninglessness as a municipal government. Yes, the reader knows that led to privatism on steroids.
The Pennsylvania-Maryland War
Maryland and Pennsylvania quarreled from Pennsylvania’s 1681’s founding. Both were Proprietaries, Lord Calvert and our friend William Penn. They both received their “patents” land charters directly from the King (George Calvert, James I’s Secretary of State got his first charter entitling him as Baron of Baltimore in 1625; his charter for Maryland immediately after his death in 1632 was granted by Charles I).
Both were previous to the English Civil War. Penn got his from Charles II a half-century later. Much had changed including the passage of the first two Navigation Laws. Neither agreed about the boundaries and Calvert’s successor directly entered into very early Pennsylvania politics with a personal campaign and playing off the opposition from the southern three counties, the former Dutch-Swede colony. Calvert, while Penn was in Pennsylvania, doubled down on his opposition to Penn’s new colony in London, and that was a major, but not the only, reason Penn returned to London in 1684 to fight back. Calvert shortly lost the battle, and his Proprietary after the Glorious Revolution installed new monarchs who recalled his charter in 1689. From that point on Maryland was governed by a Crown-appointed royal governor. Penn somehow retained his Proprietary.
Putting aside the boundary issue—which was by no means uncommon among the thirteen colonies—Maryland and Pennsylvania got along reasonably and until 1681 the southern three counties—Dutch-Swede in 1631 until surrendered to England in 1664—trade relations developed among the residents, and tobacco plantations became a major part of its economic base. As Penn’s economic base building took effect, Penn’s diversified economic base, centered in his new port city of Pennsylvania compensated for the lack of such products in Maryland. Close by and water accessible, Pennsylvania non-agricultural production found a willing and easily accessible trading partner in Maryland:
Maryland with essential a one-crop economy-welcomed the flour, bread, meet, beer, and Pennsylvania merchants lusted for the hard specie/bills of exchange that Maryland tobacco exports generated, and which could be “bartered”, i.e. transferred to pay for Pennsylvania exports. … “Theoretically it was a mutually profitable relationship” [99] Gary B. Nash, “Maryland’s Economic War with Pennsylvania (Maryland Historical Magazine, Vol. 60, No. 5 (September 1965), pp. 232-3. To alert the reader, this section on the Maryland-Pennsylvania’s trade war is based on my interpretation/precis of Nash’s article on the topic.
Maryland, like Barbados and Virginia could concentrate on the lucrative tobacco trade with England, and transfer some of the balance of payment excess to Pennsylvania to pay for her necessaries and food imports. Mercantilist trade restrictions indeed had their negative features, but one can see how our coastal trading mitigated their dysfunctions and allowed a complementary trade among the northern and southern colonies to develop and evolve.
It took little time, the first reference to it was 1697, was that Pennsylvania merchants took advantage of Maryland’s annual tobacco fleet to England (harvest tobacco was shipped in a convoy for protection to England in the fall). In England, the ships of the fleet were filled with Pennsylvania imports, and instead of returning empty were made profitable (p. 233). Upon arrival in the small fledgling port of Baltimore, they were sent on up the Delaware to Pennsylvania duty free. Sounds great so far, but in 1694 the relationship became “complicated”.
In 1694 Pennsylvania merchants officially complained that some Maryland tobacco was being sent to Philadelphia for export, escaping the export tax. This was smuggling and a mortal sin against the Navigation Law. The merchant fear was that the British would crack down on it, and fine the Pennsylvania ship for smuggling. So the Pennsylvania legislature duly responded by levying a stiff fine on shippers who did not pay the required tax.
Well, it turns out that the initial complaints originated from Pennsylvania’s tobacco exporters based in the three southern counties who had to pay the tax and whose tobacco was then more expensive than that “smuggled”. It also seems that Philadelphia merchants were able to use the tax to bargain harder with Maryland merchants to obtain more hard specie (instead of bartering tobacco) to pay for their transactions. Instead of bartering, the war time transactions of this period were made even more expensive to Maryland exporters because Pennsylvania merchants demanded more hard specie than previously. It took little time for all this to be placed in the lap of the Maryland legislature. We have a trade war on our hands.
The timing of all this was terrible. Why? Simultaneous with this, Maryland acquired a new royal governor, Francis Nicholson, and he arrived in Annapolis with a chip on his shoulder regarding Quakers and Pennsylvania. A former soldier, he had just served as Virginia’s Acting Governor, and he had just witnessed the first of what will by a chronic negative reaction of Pennsylvania Quakers to the need to provide soldiers and pay for the war which was then ongoing. In his mind this was one shade light of actual traitorism. He was further upset because the Pennsylvania legislature was actively participating in “laundering” pirate booty and using it to refit and restock pirate “transactions” on the Spanish Main. This was a real problem in Virginia—Blackbeard had just be caught and killed by a Virginia royal governor.
So instead of negotiating this out, Nicholson seized upon a September, 1694 request from the Virginia House of Burgesses that Maryland should pass a tax, similar to one just approved by the Burgesses upon rum, beer and molasses imported by Pennsylvania merchants from Maryland merchants [instead of importing it directly from the Barbados and paying a tax]. Nicholson, however, realized that the Pennsylvania merchants were indifferent to the Virginia legislation as they simply passed on the tax to the consumer.
So, ever creative, Nicholson learning about the return voyage of the Maryland Annual tobacco fleet, applied the tax (10%) to Pennsylvania imports. He then ordered the imports held in storage until the tax was paid. The Maryland provincial lower House approved this tax in October 1695—and then later extended the tax for three years. Philadelphia merchants appealed the Maryland legislative action directly to the Board of Trade—and sent a copy, bcc if you prefer, to our friendly Proprietor, William Penn.
While the details of a trade war are complex and terribly boring, they provide tremendous insight into how mercantilist trade operated during this period. They also reveal how complex the economics of export-import self-sufficiency strategy was—and also how central that strategy was in the making of provincial policy. In this case, everybody saw an angle and got involved. With the entry of Governor Nicholson the matter of trade took second place to Nicholson’s desire to bring the Province of Pennsylvania into conformity with English colonial policy and English nationalism.
Nicholson reported all this directly to the London Board of Trade—describing Pennsylvania as “a center for illegal trade, trafficking freely with the [Dutch] West Indies, sending tobacco to Newfoundland, and exchanging tobacco for European goods with Scottish traders [factors], all in flagrant violation of the Navigation Laws. He further added on the complaint that Pennsylvania was housing escaped Maryland residents (seamen deserters—probably blacks), and using unfair pressure to affect economic transactions to acquire Maryland hard currency. Apparently trade wars can escalate, and acquire new issues as they roll downhill—whoever would have thought that could happen? It never does today—trade wars never become political and serve as proxies for larger regional issues.
Nicholson followed up and sent sixty soldiers in a boat—I guess that makes them Marines—into Pennsylvania waters, and seized a ship captain and several deserters. Penn’s appointed Governor thought this an invasion of Pennsylvania and that Nicholson was in process of annexing Pennsylvania to Maryland—one might think this is beginning to get out of hand? The Pennsylvania Lieutenant Governor also accused Nicholson of plotting against him by inciting Philadelphia Anglicans. This kind of stuff in only supposed to happen in contemporary politics?
As might be expected, Penn followed up with a strong letter and complaint to the Board of Trade. In a weird twist of timing, Penn was actually in good standing in London at this particular point in time {he hardly ever was]. He was a close friend of the Secretary (sort of CEO) of the Board of Trade, and he made it known to him that Pennsylvania was going to escalate the trade war still further—he threatened to stop Pennsylvania merchants from using the return voyage of the tobacco fleet for their imports—crushing the economics of the annual tobacco trade. The matter dragged into 1697 (three years if you are counting); in that year Penn presented the matter directly to Parliament’s House of Lords Committee on Trade and Plantations. Now we have Parliament involved.
Penn got a favorable ruling on the matter from Parliament, but from there the order to Maryland to stop got stuck in the Board of Trade—which was required to refer its decision to the Privy Council for approval. By the time Whitehall (the Board of Trade) approved it and sent it on it was 1699 (five years counting—and the Maryland tax legislation had expired on its own terms, the matter was legally moot. Also, importantly, Nicholson had been transferred back to Virginia as royal Governor. War had ended; peace had begun and trade could now open up once again and wartime economics that promoted some of the 1694 fury had subsided. The economic trade war between Maryland and Pennsylvania was seemingly over.
But it wasn’t.
Now the reader is no doubt jumping up and down. Enough! I get the point! Too many moving parts, I’m bogged in useless and meaningless detail!
But if this was a case study in the American Congresses of immigration and Dreamer Legislation, it wouldn’t be.
In any case in 1702 War broke out yet again and the tobacco international market collapsed. Freight and insurance rates skyrocketed, price of tobacco plunged, and the tobacco plantations of North American were in their Great Depression. Tobacco markets were glutted and tobacco exports to Great Britain could not even pay for the exports costs alone, so low had prices fallen. In memory of their past trade war, Maryland traders defaulted on their Pennsylvania bills of exchange—bringing up the subject of bankruptcy to affected Pennsylvania lenders.
The Maryland Legislature then approved legislation. “in an attempt to achieve provincial self-sufficiency …prohibited altogether the importation bread, beer, flour, wheat, other grains, malt, tobacco, and horses” [they didn’t have kitchen sinks back then] (p. 241). The legislation was approved in 1704 and sent to London for its approval. They then approved additional legislation that included banning importation of hard liquor [a really big deal in bartering]. One caveat to this second phase of the trade war is that trade between the two parties largely continued except in those products and commodities that were included in the legislation—which it must be admitted were essential products for each province. Trade was diverted by mutual consent of the provincial merchants to other products.
The reaction from Pennsylvania was the colonial period’s version of instantaneous. James Logan wrote to Penn in 1704: “The duty on liquor ‘would prove a great discouragement’ … for Philadelphia merchants had much favored the circuitous trade which carried Pennsylvania grain to Barbados, and then Barbados rum to Maryland for bills of exchange’. Isaac Norton, one of Philadelphia’s wealthiest merchants, bitterly opposed the Maryland laws’. Nash recounts that in 1704 [that] the times of war Maryland’s economic troubles were also Pennsylvania’s.
“Lacking products of her own that were marketable [able to be financed through bills of exchange], Pennsylvania had come to rely on bills of exchange purchased in other colonies [our coastal trade] as a means of balancing accounts with English suppliers [imports].Most of these bills, as Norris noted, came from Maryland …’We cannot coin [mint our own] bills [of exchange]’, wrote Logan” .[99] Gary B. Nash, “Maryland’s Economic War with Pennsylvania (Maryland Historical Magazine, Vol. 60, No. 5 (September 1965), pp. 242-3
Essentially, Pennsylvania’s self-sufficiency strategy had become interwoven with that of Maryland, and the effect was the two provinces were fiscally interdependent upon each other. The reality they were in a mutual trade war, at a time of actual war, only further intensified the usual effects of war—and Philadelphia and Pennsylvania’s growth was significantly impacted until 1714 when the war and the trade war ended.
Guess what? Almost the exact sequence of events from 1694 repeated itself. Maryland reauthorized the laws in 1707 (five years if you are counting). The matter dragged on through 1713—ten years of open war. It was resolved only when the war ended (does that seem familiar) in 1714. By that time Maryland had an extreme food shortage, and Maryland on the edge of depression and starvation, gave in and suspended its legislation and allowed Pennsylvania imports back in. Interestingly, in 1715, Maryland once again repassed its law banning trade with Pennsylvania on essential products because the latter were in the words of Maryland’s royal governor “dreyning [draining] our ready coyne [coin or specie] [99] Gary B. Nash, “Maryland’s Economic War with Pennsylvania (Maryland Historical Magazine, Vol. 60, No. 5 (September 1965), pp. 244.
The two phases of the trade war had consumed a generation- 1694-1713.
The experience, it might be mentioned, forced Maryland to reconsider its decision to fully rely on tobacco exports to finance its imports, and to begin serious efforts to copy Pennsylvania in diversifying its economy. The Maryland self-sufficiency nexus, obviously had followed a very different path than Pennsylvania. How had Maryland further diversified her economic base? She moved from tobacco production to wheat.
I suspect the reader was expecting something else.
Thoughts & Observations on Case Study
It is clear one of, if not the key players in our provincial self-sufficiency strategy nexus is the “merchant”. The individual merchant was the decision-making hub, the centerpiece of action in a colonial economic base pursuing a life-sustaining self-sufficiency strategy of a young colony. He was the browser in the access of internet strategy—without which you ain’t going anywhere. It probably won’t be a surprise to know the merchant will be a pivotal element in the colonial Drift to Independence and Revolution” and a likely instigator in the writing of our 1789 Constitution. Like him or not, one cannot ignore his role in colonial policy-making, and he is the central player in our history of colonial economic development.
The Merchant? — The starting problem in the colonial era is that in its pre-capitalist context, the colonial merchant does not fit later classification and definitions, and, hence befell into a rather disputed literature in regards to whether there was a merchant class, a class that fit the usual contemporary definitions of a social-economic class. One reads about “merchant princes”, a merchant aristocracy, and “wealthy traders” that existed by the time of the Revolution. One wonders who they were, how they accumulated their wealth, and forget their low social status relative to their English compatriots. In a world of primogeniture, colonial entrepreneurship was the fate of second and third sons. Sitting across from an individual at a tavern could be a merchant, an immigrant, who rose from rags to riches in a decade. Or one of the city’s richest merchants who went bankrupt when his ship sank. Consider the atmosphere at the merchant’s tavern when they heard war had been declared? It couldn’t have been much different than a stockbroker firm on Oct 1929.
The reader will discover a single individual, call him a merchant or something else, will form an organization nexus that will overlap finance, production, transportation, retail-wholesale, infrastructure, and advocacy-innovation functions-sectors. He was like a computer chip in his processing of information; his internal management was dominated by family considerations, personal loyalties, and character due diligence inherent in his treatment of trading partners and associates. We call that entrepreneurship today. Entrepreneurial pretensions were expressed in clothing, houses, and household accessories. We might not be surprised to learn that by the 1730’s a cottage industry of “gurus holding classes relevant to business and skills” at the local tavern had evolved. Alas, all that fine detail is now lost or deemed funny and irrelevant. Self-improvement with the goal of transforming oneself to a merchant or artisan was the aspiration of many.
What also eludes description is the women, many widows, who were merchants, or who were the chief operating officer of an artisan’s retail operations. Lost also in an uncomfortable profession were the thousands of women and children who worked at home—and the blacks who provided technical guidance to innovator of mass produced indigo dye that rocked the economic base of South Carolina—a woman by the way. George Washington was her pall-bearer at her funeral, because her son was a Vice-Presidential candidate.
His business organization is more a conglomerate than a firm that operates in a single industry or sector. By the nature of the communications of the time, the organization will be incredibly decentralized, and the organizations (businesses) will be small by anyone’s standards; yet one is unsure if one should saddle them with the moniker of “small business”. What ought to stand out is the lack of financial liquidity that is characteristic of the entire economic base; cash is king and it was hard to get ahold of it. Credit and barter (exchange of goods/services) were the real currency of early colonial economic bases.
No banks, and such lending as existed was personalized beyond belief. When he retired from his generalship in 1784, Washington, reputed to be among the richest in the thirteen colonies had to sell land to finance his Mount Vernon crop production. Robert Morris, the only man who could have been richer than Washington, the Treasurer of the American Revolution and his closest friend could not—and went to debtor’s prison. Washington, then President, would have supper with him in the prison.
Personal wealth was illiquid, paper money by today’s lingo. Property rich, Cash Poor, Bankruptcy and debtor’s prison a real and constant fear. All the risk encountered in what was a normal transaction of the period is simply discounted, the emotion, obsessive concentration, and sleepless nights not even a thought for today’s reader of colonial history. In today’s history books he is more likely to be a scoundrel, an oppressor, exploiter than the sine qua non of prosperity and colonial quality of life. Inequality of status and wealth naturally flowed from his actions and his personal attitudes and beliefs.
Frankly, it is not important to this history of colonial economic development whether there was a merchant class, or whether it was a rather fragmented community composed of a number of related occupations, businesses and activities/skills that lacked cohesion or a distinctive class identity. In the same vein I do not argue these individuals are economic developers—rather that their activities and businesses were the fuel that created private colonial economic development in their aggregate. They were the instruments in the achievement or failure of the provincial economic development strategy, and they will clearly be actors in the making of economic development policy.
From this litany of trite observations, one might discern the chief characteristic of the Philadelphia merchant community: its diversity. Drawn from all parts of the European developed world, divided among Quakers, Anglicans, Huguenots, Jews, and even Scots Irish Presbyterians and German Reform Dutch or Lutheran, each with a life story and family background distinctive to his business associates. By no means could one think of this as an inbred aristocracy, a derivative of England’s landed aristocracy, or even as a budding colonial aristocracy in the making.
The merchant community, therefore, was not a tight commercial elite of merchant princes, but a large occupational group embracing both wealthy traders and many petty capitalists who lived no more sumptuously than a successful cooper or grocer [i.e. artisans]. The combination of ethnic diversity, rapid growth, considerable turnover of personnel, and an unequal distribution of wealth prevented the merchant community from obtaining a high degree of social cohesion. It was amorphous, divided, unorganized [99] Thomas M. Doerflinger, a Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Pennsylvania (Institute of Early American History and Culture, University of North Carolina Press, 1986), p. 15; See also, Frederick B. Tolles, Meeting House and Counting House: the Quaker Merchants of Colonial Philadelphia, 1682-1763 (University of North Carolina Press, 1948).
Yet by the time of the Revolution something had jelled sufficiently that historians see some of this and assert such a grouping will play a major role in American history, and logically in the development of American state and local economic development. Perhaps a partial answer as to how this evolved is to realize that generational cohorts had followed the original entrepreneur and in an economy dominated by family-owned businesses, such wealth could be inherited. It was time that created this aristocracy, if aristocracy it really was. Doerflinger posits how and who this aristocracy might have been:
One can identify three distinct groups [within the merchant community or commercial elite], with somewhat overlapping memberships. First, there was the city’s Merchant Community, a large and diverse occupational group consisting of all Philadelphia wholesalers. A second, much smaller occupational group … consisted of independently wealthy gentlemen, the true aristocrats of Philadelphia society, who lived off their rents and loans and devoted their livers to public service and genteel amusements … they combined with most of the city’s wealthy citizens, including the top 15 percent of the merchant community to form Philadelphia’s social elite or upper class. This elite was divided into Quaker and non-Quaker wings, but each segment was united by a complex web of genealogical and organizational ties [which historians] typically refer to as the ‘merchant aristocracy’ [although 50% of its members were not merchants]. The great bulk of Philadelphia’s wholesalers [the third grouping] were part of the city’s large middle stratum [characterized by] an ambitious person possessing modest capital, proper contacts, or commercial talent … upwardly mobile strivers—intense entrepreneurs who were tough, grasping, and willing to take large risks [99] Thomas M. Doerflinger, a Vigorous Spirit of Enterprise, p. 16.
What Doerflinger is aptly describing, when combined with segments of the artisan community, is “the private sector” of a large port city in a pre-industrial era. More precisely, these are important elements of what will eventually form into modern classes when capitalism fully matures much later in the 19th century. By then aristocracy will translate into oligopoly and monopolists, and we will talk of the structure and concentration of capitalism. It is my belief we do ourselves little good in transferring the emotions of the reader, and the power of the latter onto the shoulders of the former.
Rather what we deal with in this book is a snapshot of a new order emerging. It has not by any means achieved self-consciousness/identity as a class, and its chief characteristic is its diversity, or, say it another way, fragmentation. Elements from this grouping will go different ways as the Drift to Independence and Revolution transpires—and many will move to London or Canada. Others will fight with Washington and supply/finance his army. Others will sign the Constitution, and form the Federalist Party. Many will leave the Federalist Party and become Democrat-Republicans—still others will simply withdraw from politics.
Having said all this, there is one not-so-small qualification. This is, among other things, a history of economic development policy-making. While one can feel more comfortable with this distinction as a sociologist, any of these groupings and the elements of any one wing or faction, can play disproportionate roles in the making of policy. In a Quaker dominated policy system, Quaker merchants or the so-called Quaker aristocracy, occupy a powerful insider position, in say, the dominant Quaker Party, or the Municipal Corporation of Philadelphia. Many of these early wealthy merchants who foster families of great status, and they will enjoy “first advantage” over those who come later in our history. The effects of generational change, also, are massive and transformative, as the Great Awakening will demonstrate. There will arise new elites, immigrant elites, and industrial elites and they too will play huge and often disruptive political roles.
Viewed from hindsight, the original founders passed during the 1720’s and 30’s and a more cohesive grouping emerged in the aftermath of the French and Indian War in the middle 1760s. If so, it would seem successful economic bases can generate business aristocracies and promote concentration of industry—even in colonial, pre-capitalist times. At the same time, it is completely evident this grouping fractured into ideological and political factions—and a serious number, Loyalists we call them today, left the country at the end of the Revolution. It is equally true that after the Revolution new generations of commercial, and now industrial elites would develop and evolve—and they too would fragment and play different roles and possess conflicting beliefs. Some will be Mainstream Economic Developers, and others will found and establish American Community Development.
It was the commercial-finance-logistical entrepreneurs who had to work around importing and exporting on British ships, to export to England first and from there to be sold at less profit to English-resident companies who would then resell it in other markets for a higher price. The litany of other complaints, including its draining of hard currency/specie so necessary to finance domestic investment, the balance of trade bias that enhanced American dependence on expensive British imports tor necessities and finished goods, and the simple lack of a local currency that Americans could conduct their own domestic economic transactions were felt first in commercial elite’s export activities, and then shaped, not always to the best, domestic allocations of capital and investment for future profit.
They were the group who most directly felt, and had to pay for, British trading regulations, and who were held accountable for any perceived abuse. This, of course, does not assert they were the only ones to feel the burdens of mercantilist policy and regulation, the general American consumer, paid higher prices. But at least they had some choice in that purchase, and they were free to support business endeavors to develop the product or commodities in the local economy, creating local jobs and achieving a greater level of domestic self-sufficiency.
—the inevitable tension that followed from a strategy of self-sufficiency only aggravated the frustration—and imperiled their creativity and entrepreneurship. From the start the commercial-logistics-financial entrepreneurs figured out dodges, bypass strategies, and creative ways to finance their exports/imports; from creative inventory and shipping logs, accounting techniques that bypassed export quotas for export with off the book local transactions, to more adventuresome laundering pirate hard currency and repairing/stocking pirate ships for their future endeavors, to actual trade in West Indies and smuggling goods forbidden.
Quaker entrepreneurs and Anglican on-the-make emigrants had access to capital to start off First Purchasers artisan and sector-company business enterprises. Self-sustaining in those very early days meant not only acquiring necessary goods/materials and bringing in immigrants, but also required that shippers and merchants acquire hard money capacity to pay the bills. In those early days, pirates did some of that–and Philadelphia tapped pirates for their hard currency pieces of eight–and successful trading ventures involving pirates were profitable to Philadelphia merchants.
Trading Routes
Trade with the West Indies was supplemented by an incredibly profitable Portuguese wine trade that made Pennsylvania the breadbasket of southern Europe–and which yielded profitable spin offs with trade to Pennsylvania’s provincial neighbors. This breakout trade route was made possible by a loophole in British Navigation laws that Pennsylvania ship-owners could take advantage of. Trade with the Motherland also benefited, although hard currency remained a serious issue [A module series will deal with hard currency, paper money and the institutionalization of fiscal, lending and debt, and a colonial version of Keynesian expansionary deficits].
The real gold mine was trade with the Mediterranean, Portugal and the Madeira Islands. Portugal’s foreign trade had been monopolized by British firms in 1703, and Philadelphia merchants and the English trading firms with whom they worked, saw it to mutual advantage to utilize Philadelphia ships for trade. Because of a loophole in English trade regulations, Portuguese wine could be transported and sold in the colonies without having to stop in an English port. Pennsylvania sent wood for casks, lots of wheat, and Nova Scotian fish sent to Philadelphia by export by New England fisheries. Aside from drinking (it was not viewed as good quality), Madeira was used in quantity for pickling/preserving. A curious trade to be sure, it swelled to serious volumes.
To add to the profit, the Philadelphia-built ship was often jointly owned by the foreign and Philadelphia firms, with the American component sold to the foreign firm on arrival at port, thus becoming part of the transaction. Philadelphia was flooded with Portuguese Madeira, and that was disposed of through an extensive intercolonial trade and shipments to the West Indies. From this peculiar and complicated start, the Portugal trade waxed and waned in response to the difficulty of southern Europe to trade with northern Europe during war–or in famine [99] See Henry D. Berg, Merchants and Mercantile Life in colonial Philadelphia, 1748-1763“, University of Iowa, Iowa Research Online, 1940.
That unleashed serious immigration into Pennsylvania by Germans, Scots Irish, and chunks of all kinds of ethnic and religious groups (Huguenot, Jews). Black slavery, under some challenge from Quakers, did not subside. [a module series on immigrant settlement will develop this topic more fully]. This is the period in which the Philadelphia shipping cluster “took off”. Philadelphia benefited from changes in shipping technology, as sloops and schooners gave way to larger, more profitable brigs that could better cross oceans.
Ships constructed in Pennsylvania increased dramatically [despite many Philadelphia ships being sold abroad as part of the deal in trade with Mediterranean and West Indies] with sizable increases in employment, market share, and profitability. Twice as many ships were built in 1726 Philadelphia, as in any year before 1723 [99] Edwin B. Bronner, Village into Town: 1701-1746, Philadelphia: a 300-Year History (W. W. Norton & Company, 1982), p. 9, with Massachusetts growth coming under some pressure, Philadelphia and Pennsylvania began its rise to become the North American most populous city and largest port of immigration.
Ron W. Coan 