Trade Of Colonial America

Mercantilism, coupled with agricultural production, made trade an important part of colonial economic development. Colonists participated in the market economy when they sold excess crops and, increasingly in the eighteenth century, when they consumed British and global commodities. Mercantilism allowed American wealth and products to flow to England, and it made the colonies a profitable market. Thus colonists, Native Americans, and Africans throughout British North America contributed to this development.

The expansion of trade depended on the rise of a merchant class that exported colonial products and imported manufactured goods. The largest merchants engaged in overseas trade; while some specialized in specific commodities, most dealt with a variety of goods. Next in size were regional merchants who purchased products from large merchants and then sold or traded the products in the hinterland.

There, local merchants bought local products and sold various goods. All these merchants depended upon credit, and bookkeeping advances, along with increasing amounts of capital, allowed merchants to negotiate numerous long-term exchanges. Especially in the seventeenth century, however, there were traditional economic and social constraints that regulated them.

An example was the New England just price,  which limited profits by setting a fair value. The just price was especially important during famines when, if food prices remained at market value, the poor would starve. Thus, the just price placed the common good ahead of individual profits.

During the eighteenth century, these domestic restraints broke down. Internationally, the triangle trade created three lines of commodity movement: from Europe to West Africa, from West Africa to the Americas, and from the Americas to Europe. Within this triangle, goods, including firearms, alcohol, and textiles, flowed to West Africa to be exchanged for slaves who, after they were transported to the Americas, became a permanent unfree labor force.

American products, including crops, naval stores, furs, and raw materials, then traveled to Europe, where the process began again. The triangle trade explains the general flow of goods in the Atlantic, but it creates a simplistic understanding of a complex and interconnected trading network. The goods being carried to West Africa came from not only Europe and the Americas but also the Far East, and it was not just European-based merchants who became involved in the slave trade.

The flow of goods within the colonial economy also occurred on multiple levels. The first for most settlers involved their local economic network. As most colonists engaged in agriculture, they purchased goods that they could not produce at home.

Often, this involved bartering with their neighbors or creating a reciprocal relationship, but it usually involved selling a surplus crop. A Pennsylvania farmer who sold his surplus corn contributed to Philadelphia's development when a Philadelphia merchant purchased this corn to sell to urban consumers. The same corn might be placed in a ship and sent to the Southern colonies or the West Indies to feed slaves.

The development of, and connections between, these economic networks created profit through surplus production, thereby providing access to a growing variety of consumable goods. As colonial trade developed, so did the carrying trade, sometimes referred to as merchant capital. This involved the movement of goods from the producer to market by someone other than the producer.

The success of the Navigation Acts in displacing the Dutch from this trade allowed the colonists to become more involved. An early example of the carrying trade occurred between Virginia and New England. Virginian tobacco production created a profitable commodity, but the planters' focus on land and labor made them reliant upon New Englanders' sailing vessels and crews to carry their goods to the European market.

The profit in the carrying trade came from the difference between the purchase and selling price, minus transportation and other costs. While the carrying trade provided an effective way for producers to sell their commodities, they lost a percentage of their profit to middlemen. By the eighteenth century, a complex carrying trade operated within the Atlantic world.

As the carrying trade integrated regions, an important local and regional exchange system also occurred between settlers and Native Americans. For the Europeans, this commerce, especially in the fur trade, was particularly lucrative. A profitable market for furs, especially beaver pelts, existed in Europe, and there also were local and regional markets for clothing created from animal skins and furs.

In some cases, European fur traders, such as the French coureurs de bois, trapped the furs themselves. Although the fur trade was profitable for the colonists, it had a negative impact on the Native Americans who engaged in it. As native peoples focused on trapping, they quickly depleted resources within their tribal lands, and their search for new furs caused inter-tribal conflict.

Many historians also believe that the fur trade was primarily responsible for creating Native American dependency upon European goods. Another important trade item for the colonies was rum. New England merchants carried foodstuffs and other goods into the West Indies and, in return, received sugar, molasses, or rum.

The popularity and value of West Indian rum caused New England merchants to distill their own. While of a lesser quality than West Indian rum, New England rum quickly became popular because of its low cost. Rum provided New England merchants with a durable and valuable commodity in demand throughout the Atlantic.

Rum's profitability, coupled with its declining production in the British West Indies and rising production in the French West Indies, caused Parliament in 1733 to pass the Molasses Act, which placed a tax of 6 pence per gallon on all imported molasses. The Americans frequently avoided the tax by smuggling in cheaper illegal molasses. By the 1760s, New England imported 6 million gallons of molasses per year, which they distilled into 5 million gallons of rum.

Thus, the production of rum, like numerous other areas of trade, allowed both the colonies and England to profit. Yet another area of commerce, with direct connections to the triangle trade, was the slave trade. As slavery grew in importance to colonial development, so did the demand for more slaves.

In 1672, Parliament created the monopolistic Royal African Company to carry slaves to the Americas. The company supplied about 5,000 slaves to Britain's colonies in the Western Hemisphere, but its monopoly powers were resented by other merchants; they were able to get its monopoly status overturned in 1698. Parliament then opened the slave trade to the so-called ten percenters, who were required to pay a 10 percent duty, thus allowing England to become the dominant slave carrier.

The success of the ten percenters and free trade ensured a continuous supply of slave laborers and a growing West African market for colonial goods. Most colonies relied upon English slavers; in fact, Rhode Island was the only colony extensively involved in the slave trade. While Britain's mercantile system proved beneficial to the motherland, the colonists often found it overly restrictive or unprofitable.

As a result, smuggling became an important and hard-to-curtail practice. Parliament had designed the 1733 Molasses Act to raise revenue through the colonial production of rum, but that legislation brought in little revenue since legal molasses, because of the tariff, cost more then illegal smuggled molasses. The continued and growing production of rum, coupled with the lack of revenue created by the Molasses Act, clearly demonstrated colonial involvement in clandestine trade.

In addition, the colonists developed other ways to manipulate the system. The colonial customs structure was limited; customs agents could not cover every port and inspect every ship, and many officials were corruptible. In a number of instances, however, smuggling proved more beneficial than harmful to the larger imperial economy, as it allowed the colonies to obtain currency they could use to pay their debts to England.

Another problem with the mercantile system involved its success in causing specie, gold and silver coins, to flow from the colonies to England. This meant that the colonies encountered a dearth in a common medium of exchange. To counteract this problem, the colonists utilized bills of exchange.

Bills of exchange began as a system of credit when producers, such as farmers, took their product to a local merchant for sale. The merchant might not possess enough gold or silver to pay the farmer, and the farmer might not be ready to utilize all of his credit. To solve this problem, the merchant provided the farmer with a bill of exchange with a specified amount to be paid by the merchant at a later date.

These bills were soon being exchanged as a form of currency, becoming a limited but usable form of paper money, and setting the basis for the individual colonies to print their own currency. The development of paper money solved one internal problem, but the same issues of debt existed between the colonies and England. The majority of colonial exports were agricultural products and raw materials, and most imports were finished goods produced in or re-exported through England.

This created debt on the colonists' side, since export profits were generally less than import costs. While many factors alleviated this problem, the development of the colonial economy, especially as a market for English goods, depended upon the willingness of British merchants to extend credit to colonial merchants and consumers. During the eighteenth century, credit, coupled with the growing colonial population, allowed the colonial market to grow.

Large British merchants extended credit to large American merchants, who then extended credit to regional merchants, who extended it to local merchants, who extended it to consumers. During the so-called American crisis (1763 1776), as tensions between colonists and Britain grew over the issue of imperial economic control, this credit/debt situation became an important element in colonial resistance to Britain's changing imperial policies and increasing taxation. Trade in the Colonies *** Trade in the Colonies *** Colonial Massachusetts ***

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