the restoration of the islands to France. If the colonists, therefore, returned to their old practice of disregarding the Acts of Trade, the French Plantations would again reap the advantages of adequate supplies of provisions and a good market for sugar and molasses. If the mother country used her experience during the war to suppress illicit trading, she would be countering the natural development of the colonies and provoking opposition. Now that the French menace in Canada had been removed, opposition might well take a new form. In justice to the colonial system as it worked before 1763 it ought to be judged without reference to subsequent events. But it is difficult to do so. The older writers were inclined to seize upon the details of the commercial policy as a deep-rooted cause of and ample justification for the ultimate revolt of the continental colonies. A reaction against this view has almost gone to the extreme of denying that commercial regulations caused any friction. The truth is that there are no means of establishing any simple generalisation. It has been contended that the attitude of the mother country towards the colonies was dictated by the political exigencies of the moment and was not based on any intelligible economic principles. On the contrary, it has been argued that a clear conception of a well-knit system guided successive governments in attempting to realise the ideal of a self-contained empire. The first view makes it possible to approve or disapprove of isolated cases of interference with the normal economic development of the colonies, or even to applaud a certain amount of "salutary neglect." The latter admits that there was a system against which an indictment might be drawn. But the discussion as to whether there was or was not a system is hardly a fruitful one. A survey of the period as a whole points to the conclusion that the opportunities opened up by colonisation suggested to an age obsessed by mercantilist ideas that the movement could be employed to promote national prosperity, particularly by eliminating adverse balances of trade. In practice, however, the material proved to be intractable. Schemes miscarried and compromises had to be effected. "Sometimes indeed there is a mighty enquiry into trade", complained Joshua Gee, "and persons are called upon to give their thoughts, but commonly those enquiries die."2 The advocates of a thorough-going application of principles were apt to overlook the difficulty of reconciling opposing interests, and they were too often unmindful of Matthew Decker's warning that "in endeavouring to force nature the expense is certain but the success is doubtful". There are no means of assessing at all precisely the balance of advantage and disadvantage of such measures as were adopted. The principle of enumeration was undoubtedly designed to bring profit Beer, G. L., Commercial Policy of England towards the American Colonies, p. 89. 2 Gee (ed. of 1767), p. 115. 3 Decker, Matthew, Essay on the Causes of the Decline of Foreign Trade (1749), p. vi. EFFECTS OF COMMERCIAL REGULATIONS 593 to the mother country. This applied especially to the two important staples, tobacco and sugar. The results in these two cases were quite different, though this could not have been foreseen. The supply of tobacco so greatly increased that the price fell and a larger proportion was re-exported. Whether the price would have been higher had the planters been free to export to any market is problematical. The countries of southern Europe would almost certainly have continued to exclude it in favour of other sources of supply, and there is much force in the contention that for northern Europe Great Britain was the natural entrepôt for the trade.1 The sugar planters had a monopoly of the British market, and there is good evidence that they exploited it to their own advantage. When they secured the right of direct export to Europe in 1731, they were not able to make much use of it. The enumeration of copper, beavers and furs in 1722 was of slight importance. Permission was given to export rice to southern Europe when it was shown that its strict enumeration damaged the interests of Carolina. The policy of paying bounties on the production of certain commodities in the colonies was of course a benefit to particular colonial interests. It was mostly unsuccessful with respect to hemp and timber, but large sums were paid out for tar and pitch throughout the colonial period. The Carolinas profited from this expenditure, for they possessed great pine forests; so, although the mother country did not succeed in the original intention of inducing the northern colonies to produce naval stores, she did stimulate a development in the south which was a benefit to the shipbuilding industry in the north. The payment of a bounty on indigo in 1748 promoted the cultivation of it to such an extent that the older trade with India suffered an eclipse.2 The Carolinas, and to a lesser extent Jamaica and Barbados, benefited from this expenditure. As to the northern colonies the Navigation Acts operated as a bounty on shipbuilding in so far as they restricted the carrying-trade to British ships. The Thames shipbuilders found that the New England colonies with their great supplies of cheap timber could undersell them in the home market. American-built ships were sent either direct to Great Britain for sale or with cargoes to the West Indies, where they unloaded and took freights consigned to British merchants. This sale of ships was a considerable means of making remittances to the mother country. The restrictions on the manufacture of woollens, on the export of hats and on the development of the iron industry were objectionable in principle and to some degree appear to have been oppressive in practice. Contemporaries were satisfied that the colonial system attained its purpose of promoting the prosperity of the mother country. Statistics 1 Ashley, Sir Wm., "The Commercial Legislation of England and the American Colonies, 1660-1760" in Surveys Historic and Economic, pp. 317-18. 2 Econ. Journal, XXII, 237. CHBE I 38 showed that the total volume of British imports and exports had greatly increased and that colonial trade accounted for more than a proportionate share of this increase. Whether this was due to fostering legislation may be doubted. It is known that the Acts of Trade were extensively evaded. When they were observed it does not follow that they turned trade in a direction it would not have taken in the absence of positive enactment. The fact that provision of capital by private investors and the granting of credit facilities may have exercised a greater influence than State regulation was not generally appreciated. The capital available for investment was growing rapidly in Great Britain in the eighteenth century, and in so far as it found its way overseas it went to develop the trade of British settlements in the East and West. Adam Smith was of opinion that mercantilist principles diverted an undue amount of capital to such enterprises, but he probably under-estimated the difficulties of finding outlets elsewhere. Once it was invested it naturally assumed a controlling position, as is amply illustrated by the increasing influence exercised by financial interests in the political life of Great Britain during the period. The colonies had always suffered from chronic lack of credit. In time of war bills of credit were issued as a simple means of raising supplies, it being provided that they should be redeemed by colonial taxation within a specified period. This device proved so useful that a demand arose for issues in peace time; for such "banks of money" seemed an excellent way of stimulating trade. The suggestion was that the colonial governments should issue paper, not to meet the exigencies of government, but to loan it out to private persons for a term of years on mortgage security. There was a danger that such paper would be over-issued and would therefore depreciate in value. Merchants who were usually creditors were naturally apprehensive of the consequences, and their representations kept the members of the Board of Trade firm in their opposition to the issue of bills of credit except during war and under strict provision for redemption. A disastrous experiment with paper money in the New England colonies led Parliament to pass an Act in 17511 which forbade issues in future unless sanctioned by the Crown. Paper money was not necessarily confined to Government issues. Projects for founding land banks were actively discussed in Massachusetts, Connecticut and New Hampshire, but the application of the Joint Stock Companies Act of 17202 to the colonies made it impossible to float a banking company without a special charter. The upshot was that the colonists largely depended on British merchants for financial accommodation in the form of long credits. Although individual merchants may have denounced the "pernicious practice", it served the purpose, 14 Geo. II, cap. 37: 1 24 Geo. II, cap. 53. 2 3 "The Letter-book of a Quaker Merchant, 1756–8”, in E.H.R. Jan. 1916, p. 142. THE RÔLE OF CREDIT 595 particularly in the southern colonies, of giving the creditors the economic advantage in business transactions. The planters, it was said, were "a species of property annexed to certain mercantile houses in London". They sent cargoes to Great Britain not because it was illegal to send them elsewhere, but because they could best reduce the burden of their debts by doing so. Although they might grumble now and again about the inconveniences occasioned by the Acts of Trade, they were more generally aware of Great Britain as a great creditor nation than as a domineering mother country. The years immediately following the conclusion of the Seven Years' War were to put the colonial system to the test. The mercantilists, it has been shown, believed that the commercial restrictions caused the profits of colonial trade to flow to Great Britain. Few of Adam Smith's contemporaries would have accepted his contention that the whole system was a great illusion under the influence of which capital was forced into a distant trade where it earned a smaller return than it otherwise would have done. They were more impressed by concrete instances than by abstract analysis. There was the growth of the chief western ports. A single house in Bristol was said to buy 3000 pieces of stuff for export every spring.1 In 1764, 188 vessels arrived in Liverpool from and 141 departed to the colonies.2 For several years prior to 1770 the annual import of tobacco to the Clyde was between 35,000 and 45,000 hogsheads, the greater part of which was re-exported to the continent of Europe. It was assumed, indeed, that the Acts of Trade promoted the general prosperity of the country to such an extent that the Government necessarily gained from its greater taxable capacity. For the direct contribution to the Exchequer was inconsiderable. What was received was due to the fact that the mechanism of customs duties was employed as a simple and obvious way of enforcing the commercial restrictions. No one would have argued for a moment that the yield of these duties was in any degree an indication of the value of the colonies to the mother country. In general, as Burke put it, England pursued trade and forgot revenue; the fiscal was practically always sacrificed to the commercial point of view. 3 Difficulties were bound to arise if the question was asked whether the total advantages derived from the operation of the Acts of Trade were sufficient to cover the charges to which Great Britain was put for the defence of the colonies. With a national debt the service of which absorbed half the annual yield of the staple taxes, with the powerful landed interest demanding a lightening of the burden they were bearing, and with the financial commitments involved in the organisation of the newly acquired territory, the Chancellor of the 1 Latimer, J., Annals of Bristol in the Eighteenth Century, p. 414. 2 Smithers, Henry, Liverpool, its Commerce, Statistics and Institutions, p. 112. Exchequer had to face this issue. It is significant that the Board of Trade was invited to report, among other things, on "what mode, least burthensome and most palatable to the colonists can they contribute towards the support of the additional expense which must attend their civil and military establishments". The Board, which was the repository of mercantilist precedents, had no observations to offer on this subject. The subsequent attempts to raise revenue by enforcing the Laws of Trade and by imposing new taxes were inspired by motives which were political rather than commercial, imperial rather than mercantile. Incidentally much light was thrown on the nature of the colonial trade and particularly on those aspects of it which were obnoxious to the mother country. It would appear that the chief articles imported directly from the continent of Europe, or concealed when a British port was touched, were linens from Hamburg, tea and gunpowder from Holland and wines and fruits from Spain. The offenders were usually the merchants of Massachusetts, Rhode Island, Pennsylvania and New York, for such smuggling could be successfully carried on only by those whose ostensible business was the import of other goods. More stringent enforcement of the Laws of Trade would probably have prevented some of these breaches of the code; but it is unlikely that it would have entirely suppressed such practices. The declared intention of the mother country to enforce the principle of the Molasses Act was generally recognised as a much more serious issue. It seemed to preclude the possibility of relieving the acute trade depression which had followed the conclusion of the war. In Boston as early as November 1763 the merchants were considering joint action in favour of a petition that the duties on foreign molasses and sugar should be removed or reduced. New York merchants decided to support this appeal towards the end of January 1764, and they also persuaded those of Pennsylvania to take action. Rhode Island was even more closely concerned. A remonstrance was drawn up at a meeting convened at South Kingston on 24 January and forwarded to the Board of Trade. The colony, it was pointed out, had a population of 40,000, of which nearly a third lived in the two towns of Newport and Providence and depended on commercial activities. Having no staple commodity for export they had to get the means of paying for the manufactures they imported from Great Britain by a three-cornered trade. There was a market for their timber, provisions and horses in the West Indies, and consequently that trade was the necessary foundation of their commerce. Appealing to the testimony of the Custom House books at Newport they asserted that in the year 1763, 184 vessels had cleared for Europe, 1 Basye, A. H., The Lords Commissioners of Trade and Plantations, pp. 128-31. 2 Records of the Colony of Rhode Island and Providence Plantations in New England, vi, 378-83, and Callender, G. S., Selections from the Economic History of the United States, 1765-1860, pp. 56-63. |