English Commercial Revolution Begins
The Tobacco Economy during the 1620-1630’s Shift from Gentry London City Trading Company Merchants to Young “New Men”
The Massacre brought an end to any serious effort to diversify Virginia’s economic base. Not only were the consider reforms started by the Greate Charter reform (which encouraged silk culture, wine-making, cultivation of olives, almonds, ginger, citrus fruits, indigo and cotton, and imported artisans to manufacture iron from iron works and make glass as well. The reform even contemplated the making of glass bead to trade with the Indians for fur. With the company near bankrupt, the artisans and the orchards literally dead and/or burned, the King unwilling to invest his own funds, there was no resources to rebuild what had been destroyed. So if you wanted to eat in Virginia, you’d better grow it yourself or preferably grow tobacco and sell it.
So there was some diversification in garden or “truck” products—corn especially because one could take it from the Indians if necessary. But tobacco was the default—until it morphed to become a way of life. Tobacco was ideal in many ways for export. Relatively light as commodities go, it was priced highly—at least to the late 1620’s, tobacco could be exported to England and sold at reasonable cost relative to the value of the product. Monopoly in England meant sale was safe and easy, and while Spanish product did compete even at a higher cost, Virginia tobacco , “the poor man’s luxury” always had a market.[99] Clement Eaton, a History of the Old South: the Emergence of a Reluctant Nation (3rd Ed) (Mcmillan Publishing, 1975), pp. 16-17.
One huge change which followed in the years after the Massacre was the unwillingness of absentee Company investors to continue their plantation projects into the “new” post Company period. During the Company period, a good deal of plantation expansion was driven by absentee investors residing in England, who financed and sent over induced servants to develop plantation projects. The Massacre literally put an end to a good number of these plantations-hundreds. The Berkeley Hundred sent over about ninety servants between 1619-20, and invested 2,000 pounds. Two-thirds died before the Massacre, and eleven during the Massacre. By the summer of 1622 only nineteen remained alive—all eventually left and by 1632 only their cattle were left to graze undisturbed on the land. The Southampton Hundred and Martins Hundred shared the same fate. As Craven remarked:
Residents of England, and especially merchants engaged in the Virginia tobacco trade, acquired and even developed plantations in the colony through the years that followed [the Massacre]. But such absentee owners became the exception rather than the rule. From 1624 the real Virginia adventurer was the planter in Virginia. [99] Craven, the Southern Colonies in the Seventeenth Century, pp. 161-2
Cultivated by clearing land in the Indian fashion (cutting a band of bark from the tree and letting the tree weaken by disease and natural factors, then burning it as it stood there), without plows because of the stumps and still-partially existent roots, hoes were used. The production increasd so vigorously that by the end of the decade, the crop simply exceeded market demand and the price fell from five pounds to a low of 2 pence by 1630. At the end of the decade we had a tobacco depression in Virginia. As early as 1629, the “assembly” approved gubernatorial requests to impose restrictions on the number of plants to be planted annually, and those restrictions were increased again in the following year. It is not clear how well these were carried out, and Maryland tobacco undercut Virginia tobacco in any case, so there were no miracles through legislative regulation.
In such an economy, cash and new venture capital were the behind the scene’s drivers. Access to finance and the headright are the key advantages former Virginia Company associates in the post-company fall era enjoyed. It is not apparent what remuneration officials of the Virginia Company received for their work during the Company period. Clearly, Dale’s Gift was part of it—or all of it other than any investments they had in the Company. Certainly after the fall of the Company in 1624 Virginia officials did not receive remuneration. The officials were at first paid after 1618, from the returns of a “public estate”—a grant of land to the government, the proceeds of which were used to reimburse, if not pay the company’s administrative officials. That system set up a grand plantation, complete with indentured servants, whose tobacco production/sales were used for officials expenses.
With the demise of the company, this public estate theoretically reverted to the king, but there is no evidence that it did and instead seems to have been carved up in the following years by the council of state officials, governor and such who were able to avail themselves of the land grants made. This was an insiders game, and I have no doubt it was a major factor in providing the headstart and first advantage of forming a larger, more viable and sustainable plantation, a benefit of which was, of course, their seat on the council itself. [99] Wesley Frank Craven, the Southern Colonies in the Seventeenth Century, 1607-1689 (Louisiana State University Press, 1970), pp. 155-8.
Still, the headright was available to the small freeholder who survived the Massacre, or to those who somehow paid their way over and arrived in the new home as a freeholder, footloose and fancy-free. Bringing family over, wife and kids to work the fields, one could set up a small, and very rough, subsistence homestead—and this is what happened. If small homestead freeholders greatly outnumbered the piratical well-born Wild Bunch that accumulated land and plantations en masse, both were crushed in number by the the indentured servant population.
The Virginia of this period was a colony of small landowners and not of large plantations and wealthy planters. The largest of the early grants of the Company to its subscribers were … either not taken up at all, or else were divided among small farmers [tobacco], men of slender means, and probably often of still more slender skill in agriculture, who through numerically large, were socially and politically of relatively little importance. They formed, however, the backbone of the community, constituting in the total the largest group of tobacco raisers, and economically speaking were the basis of the colony’s wealth.
In origin they were either freemen, who had come over at their own expense and entered at once into the social and civil life of the colony as planters, and holders of public office, or else they were indentured servants, who had bound themselves to serve four or five years before they were free to enter a career of their own ….Many doubtless dropped into the class of the ne’er do wells or died in bondage. Others became hired laborers … others rented small properties, while others … still a smaller number obtained one way or another a small acreage whereupon to produce, with aid of wife and children, a crop of tobacco. Though socially inferiror and with little desire or opportunity for political preferment, they were important because of the crops they raised and the right to vote which they possessd. [99] Osgood, Vol. I, p. 209
Numerically in these mid-1620 years (through most of the seventeenth century), the great bulk were indentured servants brought from England on ships by ship captains. ”The Inclosure Movement had produced a number of unemployed agricultural laborers, and the Elizabethan poor laws prevented free migration from one parish to another by making each parish responsible responsible for its own poor… The only method by which [these poor] could transfer their labor from a cheap market in England to a dear market in America was the indenture system” [99] Clement Eaton, a History of the Old South: the Emergence of a Reluctant Nation (3rd Ed) (Mcmillan Publishing, 1975), pp. 23.
At this point Andrews estimated that about 75% of Virginia’s resident population (including blacks) were indentured or apprenticed.[99] Andrews, Vol 1, pp. 208-9 Perhaps, he believed, half would eventually become freeholders at the end of their contract, and more than likely would set up a mixed product tobacco and foodstuffs/corn to live off of. The rest would be fodder for Marx’s lumpenproletariat, sharecroppers, mobile laborers, or if lucky a rented homestead of their own. In an economy without a currency, labor did not pay well, but there was a perpetual shortage of labor—you didn’t starve.
So the population grew—the battle for self-sufficiency had finally been won. As long as one could sell one’s tobacco crop at the relatively high prices of that period, one could buy/import what one did not grow, and import what you needed to conduct your life and homestead. One usually purchased indentured servants by tobacco as well, and one imported goods from England also. But tobacco was a cruel master of the soil from which it grew. Within five years or so, virgin soil would be exhausted of its nutrients, and productivity fell dramatically. In the constant quest to find already cleared land, Indians lost their fields, and town center/hamlets succumbed to nearby plantations. Now the reader can better understand the dynamics underlying the shredded community.
Profits were of course high during the five years, but unless new fields were cleared at the same time, when the fertility clock rang out its warning, one had to move on. It is easy to see this was more easily coped with by large planters who had the resources to do both at the same time. Small and subsistence planters and sharecroppers were literally left holding the bag. It took little time for a mobile underclass of subsistence planters, laborers and sharecroppers to follow their larger planters into the hinterland, abandoning their initial fields. Over the following decades, these fields turned to scrub brush and first stage forests—underpopulated– and refuges for isolated subsistence, hardscrabble, agricultural underclass.
If this could be considered as America’s first instance of “deindustrialization” contemporary readers would understand better the forces at work; but in the first seventy five years of Virginia agriculture was the economic base—hence we have our first instance of ‘de-agriculturalization”. My spell-check does not like this word—I suspect the reader doesn’t as well. Nevertheless, we are seeing the seeds of what will become a regional underdevelopment since “By the time of the Revolution, much of Tidewater Virginia and Maryland had been left in a state of desolation” [99] Clement Eaton, a History of the Old South: the Emergence of a Reluctant Nation (3rd Ed) (Mcmillan Publishing, 1975), pp. 22.
Larger planters, however, acquired new tracts of land in the western hinterland using the headright system in volume, but also through marriages, succession from death of their family elders; they could purchase adjacent fields and leave the older fields out of production until they regained their nutrients. Larger planters became government officials and as government officials they were entitled to grants of land from provincial-owned land. Like a snowball rolling uphill, a seriously unequal social and economic order quickly took root.
The accumulation of large estates in the South was facilitated by the headright system. This practice led to great frauds. Some unscrupulous planters magnified the number of servants they had imported or the number of acres patented by adding zeros to the [recording] documents. A collusion between land-grabbing squires and colonial officials often made possible the accumulation of broad estates.
Also aspiring planters consolidated their holdings by marrying widows possessed of goodly acres. The breakup or sub-division of these semi-feudal holdings was prevented to some extent by the laws of primogeniture and entail … [in which] the lands of an estate were inherited in tact by the oldest son, if the father died without a will … many planters [however] chose to divide their plantations by a will.
The aristocratic law of entail permitted the descent of estates [and property on it, i.e. slaves and indentured servants] … to be inherited by the family from generation to generation. [Finally], quitrents were often evaded. [99] Clement Eaton, a History of the Old South: the Emergence of a Reluctant Nation (3rd Ed) (Macmillan Publishing, 1975), pp. 21-2.
There was one more, now forgotten problem, with relying on tobacco as a currency; it fluctuated as its export market price varied. We have already commented on the collapse of tobacco pricing in the late 1620’s due to overproduction relative to market demand. But variation in pricing was characteristic of good times as well. Consider the plight of Anglican ministers who were paid in tobacco annually (16,000 pounds per year).
Tobacco would become a “legal medium of exchange” in Virginia, Maryland and North Carolina. There was little hard English currency (coins, gold-silver) in North America, and in a very few years, bartering took the form of an exchange/promise of tobacco as collateral or payment, and from there the legislature approved its use in economic transactions, including payment of taxes or fees. The Legislature paid its debt obligations, in this case to Anglican ministers, in the form of local tobacco production from the parish which the minister served.
Virginia planters grew to varieties of tobacco: a sweet-smelling (scented) which was in high demand and paid an attractive price, and Oronoco, much more commonly produced, less in demand relative to its rival and garnered a lesser price. Ministers who served in parishes that produced sweet-smelling tobacco made off like a bandit, relative to the average minister in an Oronoco-producing parish. [99] Clement Eaton. A History of the Old South (3rd Ed), 1975), p. 17. Needless to say, the quality of Virginia tobacco in the larger marketplace would also play a major role in pricing—and that set the stage for a later discussion on market regulation to establish quality of tobacco shipped—an inspection process and export regulations enforced through a single port of exit.
The first inspection law was approved by the General Assembly in 1619-one of the very first acts of the novel Greate Charter reform. Also mandated were its export from specified towns in which an inspector and warehouses could be found. While on the books, inspection was not comprehensive because in this period plantation owners contracted with the own set of English buyers, and were able to ship directly from their plantation piers. With the Navigation Laws formally thirty years in the future, and with the Crown unable to supply sufficient number of English ships for transport to England, much of the annual tobacco production in this period traveled on Dutch ships. This was not all to the benefit of the plantation owner as the costs of transportation and finance were higher than would have been had competition existed.
It is during this transition period that Virginia tobacco exporters began gravitating to the “commission system”, and away from the company (magazine)—and then the provincial—so called monopoly enforced, at least conceptually, with inspection through its two legal export port cities. rather than for each plantation owner to export directly by their own ad hoc export to England (or wherever, as there was always smuggling to non English/West Indies ports). This was complicated and inflexible, relied heavily on the plantation owner and his relatives or contacts, and the product was always sold upon arrival—regardless of the price prevailing.
It also meant dodging the legal export system, which meant not using the more protected (from pirates and privateers) annual “tobacco fleet” sailing to England in the early winter. Usually, the English purchaser would send his own ships over to pick up the tobacco at your pier, where immediate payment for the tobacco would be made—and usually a laundry list of purchases for goods in England would be handed over to the sea captain, who would deliver the items on his next trip over. From the plantation owner’s view, he got immediate payment at a known price, and was not responsible for the logistics. His export package conveniently included his import need and their logistics.
The Commission system worked through relationships with English merchants (located in England) that were waiting on the English pier to take consignment of the tobacco, and would then dispose of it on terms of the plantation owner, pay custom duties, or place it in English storage if the price at that time was not to the owner’s liking. All for a flat fee of about 2½%. The merchant could also handle import needs and arrange their shipment to Virginia. That meant shipping to England at their own risk; the delayed communication process also carried its own risks.
However, if overproduction of tobacco depressed tobacco prices—which was a major factor by the late 1620’s, tobacco could be stored, which, if done properly, could increase the quality of the product. Merchants actively recruited plantation owners in Virginia by sending their “factors” to make the deal in Virginia. Located in the small port areas, these factors were easily reachable by the plantation owner. This closeness meant the two parties could get to know each other, and become comfortable and, if this implied trust so be it. With the principals knowing each other, promissory notes were enforceable, and that meant the plantation owner was no longer dependent upon “cash” exchanges and able to “borrow” a portion of his exchange.
The Tobacco Depression–After 1628 the price of tobacco collapsed sold literally for “pence on the the pound”, an English equivalent of pennies on the dollar. Legally the Virginia provincial legislature-governor held a monopoly in the sale and regulation of tobacco, so it is natural the Virginia tobacco elite, mostly former Company officials or those associated with them. was both desperate and frightened—and in 1629, the first year of Harvey’s governorship, while he still was in England, Virginia adopted several major tobacco-related initiatives and legislation of interest our history. In 1629, with no official General Assembly meetings held after the fall of the Company in 1625, a more or less official meeting of the General Assembly met to deal with the tobacco crisis and other matters.
Legislation was approved to restrict each planter to cultivation of no more than 3,000 plants—and in the next year it approved further legislation reducing plantings to 2,000 plants. There is no evidence, I found that suggested crop control was followed by the individual planters, and since no means existed to comprehensively enforce it, we are at a loss to determine whatever effectiveness it may have had. The restrictions continued on the books for a considerable period of time, and were responsible for an early tension between Virginia tobacco planters and early Maryland planters.[99] Clement Eaton, A History of the Old South (3rd Ed) (Macmillan Publishing Co, 1975), p. 17.
Of equal importance was a repurposing of the tobacco inspection process which had been authorized in the Greate Charter Assembly of 1619. At that point and through the decade, low quality tobacco was burned at the inspection site, or used for the payment of taxes. This was intended to raise the quality, and hence the price of tobacco to its purchasers. The law had been amended in the “starving year of 1623” to empower “selected” officials to condemn such low quality tobacco, and in 1630 the law was further amended to close the tax payment loophole. By the 1630’s there were five export ports (Cheskiaak, Denbegh, Sherley Hundred Island, Southampton River in Elizabeth City, and Jamestown). Two more inspections sites were added during the decade. In 1639, 213 inspectors were authorized. Knowing as the reader does that arguably most Virginia tobacco bypassed this legal process, it is unsure of how this translated into the average grower. What is amazing, in 1641, an about face was made as the Legislature voided all these inspection laws, retaining only the right of the district commander to employ three inspectors. Factors often purchased low quality tobacco and sold in in northern Europe, where Viking taste buds were not offended. Why, tobacco production had spread so deeply into the interior—even over the Fall line—that inspection was no longer practicable [99] https://encyclopediavirginia.org/entries/tobacco-in-colonial-virginia/. Tobacco had won!.
What is likely to have come with the collapse of tobacco prices is both an expansion in tobacco plantations (make up in volume of production what is lost in the price), and some effort at diversification from the monoculture. Craven captures both in his observation of this period: “As is well-known the main trust of the Virginia traders after 1622 was toward the upper Chesapeake, with William Claiborne in the lead, and by mid-century toward the south and southwest with Abraham Wood and William Byrd as leaders” [99] Wesley Frank Craven, White, Red and Black, p. 66. We see evidence of increased trading activity among several of the elite establishment, expressed in initiatives by Samuel Mathews and George Menefie. In this period land patent around the Potomac and into the north above it are being filed. Virginia is beginning to settle areas in northern Virginia and the Washington DC and Maryland’s southern eastern shore. Enter the Maryland Colony and First Lord of Baltimore, George Calvert
It was estimated the commission system comprised about 30% of Virginia’s tobacco export, by the early 1630’s. [99] https://encyclopediavirginia.org/entries/tobacco-in-colonial-virginia/. The commission system did not really take off until the tobacco depression of 1680’s, however. Nevertheless, over the following generations an individual Virginia plantation owner was able to bypass the “legal” provincial export systems which replaced the former Company monopoly through its cape merchant and company store magazine. A private export system responsive to the individual plantation owner, a sort of black market that was larger than the official one, established roots, in the coastal Tidewater and eastern shore geographies below the Fall line
Sadly, on the other hand, almost any of these systems handicapped the small tobacco freeman-homestead planter. With small volumes the factors were not interested, and these small producers could not handle either the commission system, logistic costs and risks, the lack of any credit meant storage was out of the question, as small tobacco producers usually needed to sell all their crop at once, and thus had to buy seed in the spring. Their “import bucket list” might or might not work out as well as it would for the larger plantation owner. Obviously, the logic of the Virginia tobacco export system created—and sustained–a more or less permanent underclass, and subsistence agricultural groupings that cling to tobacco—and the large plantation that grows and exports it. These are the “makings” of a very unequal economy, and policy system. Producing tobacco became a trap for the small homestead, and over time it led to the plantation owner becoming an intermediary for the cluster of small producing units in his vicinity.
If the reader is looking for when this tobacco monoculture took root in Virginia—this module’s time period is when those roots took root.
That said, we shall return to that theme in several later modules in this chapter and the next especially. But there is one caveat the reader should take note of immediately, and keep in the back of her mind for the remainder of this module: the land and authority to grant it to others was, after the Company charter’s termination, the Kings. Land was the power base of Virginia’s governing elite, and the aspiration of its struggling subsistence classes. Absent a currency, what land produces, tobacco especially, served as its currency and collateral. Taxes were paid in tobacco, and so was ammunition and fort-building. The support of the Anglican Church, salaries for its ministers, a responsibility of provincial government, was paid annually in tobacco. The sale of tobacco produced provincial and personal financial liquidity, and so the land question was an almost existential issue for a Virginia resident.
In 1625 any Company-granted, or implied in an indenture incentive, and even potentially any land sold through the Company, was subject to repeal by the King, and/or penalty or tax. In effect the title for any owned Virginia land was not “clear”, and would not be until the King made his intentions known. Land, the basis of Virginia wealth, status, and even political power, also hung on a slender thread—as did the continuance of a Virginia Greate Charter legislature. Until the king formally, and somewhat unequivocally articulated his support these two issues were under legal question—and no doubt lay in the back of most Virginia landowners. It is no small wonder that in their minds, the two became conflated. Later on we will argue that the Maryland issue was fundamental to the Harvey affair—but included in the Maryland issue was certainly a determination of land ownership.
The need to confirm the decisions of the governor and the legislature in matters of land and taxes was foremost in Virginia minds, and annual messages to the King and Privy Council. That is why the replacement of Governor Yeardley (he died) with a new royal governor put nerves on edge no matter who the gentleman was—and the man chosen, a contender and rival of many in the young gazelle game that Virginia politics had become, was so disruptive to whatever cohesion existed among the spiteful, entitled, avaricious, and vicious grouping that dominated its core. Charles I had chosen one of these men as his governor—talk about a match in a gunpowder factory!
Ron W. Coan 