The Economy of British America

by

Cathy D. Matson

• LAST REVIEWED: 24 July 2012
• LAST MODIFIED: 24 July 2012
• DOI: 10.1093/obo/9780199730414-0161

Introduction

From its earliest settlement in the early 1600s by small groups of British individuals to the conclusion of the American Revolution, when some five million people were poised to sprawl across a continent, British America had a dual economy. On the one hand, it was a colonial economy that depended on its ability to export commodities to the home country of England, the other colonies of the Western Hemisphere, and the eager buyers from foreign empires. Exporting, in turn, fostered deepening networks of credit, ability to import necessary and desirable goods from other sources, and systems of payment throughout the Atlantic world. On the other hand, British Americans developed a thriving internal economy in which they cleared land, grew much of their own food, provided their own housing and most of their tools, and expanded interdependent markets between regions and among myriad local places within the colonies. Although officials at the hub of the British Empire in London established navigation laws to regulate the markets of British American colonial commerce and to restrict British American manufacturing, the economies of farms, plantations, and towns grew steadily. Collectively known as the Acts of Trade, the laws embodied policies founded on the goal of bringing colonies securely under the economic wing of England, but also of curtailing the potential for British Americans to develop parallel economies. By the early 1700s some sectors of the British American economy were growing by leaps and bounds, aided by the Acts of Trade somewhat, but increasingly prospering outside the acts. During the next decades, British American per capita incomes would steadily rise, and the accumulation of household goods by middling people as well as the maturity of their markets for colonial and imported goods would provide visible evidence of colonial economic growth. Nevertheless, a paradox of economic development persisted for British Americans. Throughout the colonial era they lived in distinctive regions marked by the agricultural and commercial systems that evolved in each of them over the colonial era, and marked as well by the dominant labor systems and economic cultures that suited these different regional economies. Yet, they were also actively engaged in Atlantic, occasionally global, connections that brought goods and people together in mutually dependent relationships that stretched far beyond the settled areas of British America.

General Overviews

The studies included here trace important themes in the development of the British American economy from earliest colonial settlement to the end of the 18th century. Each offers a particular argument about the causes and consequences of economic development. One of the earliest contributions to understanding the economic policies and empirical unfolding of the British Empire in the North American colonies was Charles McClean Andrews’s four-volume study produced during the 1930s (Andrews 1934–1938). In more-recent decades, analyses of the North American economy have more directly employed econometric analyses and sophisticated methodological approaches. McCusker and Menard 1985 provided the first important overview of the British American economy, based on a survey of existing economic history, and it remains a standard starting point for reviewing the trends in economic development across the entire spectrum of colonial development. Shepherd and Walton 2010 (originally published in 1972) offers another important overview of the North American colonial economy from the middle of the 17th century to the American Revolution, with emphasis on the later years. It uses quantitative analysis to prove that productivity was increasing not so much because of technological change but, rather, because of improvements in market organization and reduced risks of business enterprise within markets. Perkins 1988 is another important overview of the North American economy, constructed from the standpoint of particular social groups. Daunton and Halpern 1999 provides a valuable collection of essays on Native American economies in North America. Henretta 1973 and Nash 1979 (cited under Colonial North American Urban Economies) set a wide variety of economic information in cultural and ideological contexts, insisting that scholars view economic behavior in terms of cultural values. Lamoreaux 2003 reconsiders many of the long-standing debates in economic history and locates ways to support and utilize aspects of many interpretations.

• Andrews, Charles M. The Colonial Period of American History. 4 vols. New Haven, CT: Yale University Press, 1934–1938.

  A basic starting point for understanding the political economy of mercantilism in rich detail. See especially Vol. 4, England’s Commercial and Colonial Policy.

• Daunton, Martin, and Rick Halpern, eds. Empire and Others: British Encounters with Indigenous Peoples, 1600–1850. Philadelphia: University of Pennsylvania Press, 1999.

  Numerous articles in this collection have valuable analyses of Native American economies, as well as surveys of methodologies, and there is a good (though now-dated) bibliography.

• Henretta, James. The Evolution of American Society, 1700–1815: An Interdisciplinary Analysis. Lexington, MA: D. C. Heath & Company, 1973.

  Approaches the economy of British America from the standpoint that cultural beliefs and institutional structures were vital in shaping developmental possibilities. A brief but important contribution that depends on a wide range of secondary literature across scholarly disciplines.

• Kulikoff, Allan. From British Peasants to Colonial American Farmers. Chapel Hill: University of North Carolina Press, 2000.

  Traverses the entire range of North American landholding, labor arrangements, and family or household economic strategies, summarizing a wealth of research on land, government regulation of rural enterprise, “mixed farming,” local exchange, neighborhood borrowing, and “mixed enterprise.” See also Kulikoff, “The Transition to Capitalism in Rural America,” William and Mary Quarterly 3d ser., 46.1 (1989): 120–144.

• Lamoreaux, Naomi R. “Rethinking the Transition to Capitalism in the Early American Northeast.” Journal of American History 90.2 (September 2003): 437–461.

  DOI: 10.2307/3659440

  A recent reappraisal of the long-standing debate about whether the British American economy was driven by entrepreneurial and self-interested calculations to prosper in markets, or by safety-first family and community moral economies. See also entries for Lemon 1972, Kulikoff 2000, and Henretta 1978 (cited under The Mid-Atlantic), as well as Michael Merrill’s article “Cash is Good to Eat: Self-Sufficiency and Exchange in the Rural Economy of the United States,” Radical History Review 1977.13 (Winter 1977): 42–71.

• McCusker, John J., and Russell R. Menard. The Economy of British America, 1607–1789. Needs and Opportunities for Study Series. Chapel Hill: University of North Carolina Press, 1985.

  The authors include an important introduction taking up the strengths and weaknesses of the “staples thesis,” and conclude that it continues to be a powerful tool for understanding colonial economies. Although dated, the breadth of coverage of the most-significant topics in British America’s economic history makes this volume indispensable initial reading.

• Perkins, Edwin. The Economy of Colonial America. 2d ed. New York: Columbia University Press, 1988.

  A broad survey of the era—population and economic expansion, the six main occupational groups (family farmers, indentured servants, slaves, artisans, great planters, and merchants), women in the economy, domestic and imperial taxes, the colonial monetary system, and living standards for the typical family. First edition in 1980.

• Shepherd, James, and Gary Walton. Shipping, Maritime Trade, and the Economic Development of Colonial North America. Cambridge, UK: Cambridge University Press, 2010.

  Presents a theoretical framework for examining the general aspects of long-term economic development in the colonies. Offers analyses of shipping costs and profits from shipping services and discusses shipping and overseas trade in detail, including costs of shipping and distribution, sources of productivity change, commodity trade with overseas markets, and more. Several statistical appendices supporting the authors’ argument follow the text.