Economics in Colonial America


During the 1500's to 1800's, the strength and stature of a 
country depended upon its political power, which can be traced to how 
self-sufficient it was. Striving to be self-sufficient was what 
nations sought after; dependency was not a characteristic of a 
powerful nation. Raw materials were the most required item to 
strengthen the central government, and deter interactions, such as 
trade with other nations. The first country to introduce mercantilism 
in America was Spain. The spanish american colonies were not allowed 
to trade directly with Europe. Instead they had to funnel all of the 
sugar and tobacco, two common commdities of the new land, through 
Spain. When this was done, heavy custom duties were imposed and the 
central government gained. Spanish American colonies were forced into 
providing precious metals and raw materials to the mother country. 
These colonies existed only to enrich spain, even if the economic 
policies adversly effected the well-being of the colonies. This grip 
caused the central economy of Spain to grow at the expense of the 
colonies. During the duration of this period, the 1500's through the 
1700's, mercantilism had a major effect on the economies in the new 
world. English speaking colonies were effected by England's policies 
and acts. These policies and acts were means of controling the economy 
of the colonies in America and strengthen the central government of 
England. Dutch traders had the commercial vessel market well cornered 
in the 1640's. It was very difficult for English colonies to compete 
with the Dutch. With owning 75 percent of Northern Europes' vessels, 
being well-financed and experienced, the Dutch were going to stay in 
control of the market unless European Parliament intervined. In 1651 
the European parliament enacted the first Navigation Act to undercut 
the Dutches domination. England was hoping that this Act would exclude 
the Dutch from trade with the English and force its own merchant 
marine to grow. This act was the first attempt to enforce 
merchantilism by England. The act proclaimed that all trade between 
France and English colonies, Europe and English colonies, and the 
colonies with themselves must be conducted on an english ship 
(Kurland). The British were hoping that this would boost the economy 
and expand the mercant marine. The failure of this act was caused by 
inadequate machinery to enforce the law. The english colonies publicly 
defied the act and kept on trading with the Dutch. The restoration of 
Charles II brought about major changes in 1660. All of the acts of the 
Commonwealth Parliament, including the Navigation Act of 1651, were 
considered illigal under his rule (Kurland). Charles II did not intend 
on doing away with the act, but revising it. The Navigation Act of 
1660 was a restatement of the 1651 act, but it also established a list 
of items including: tobacco, cotton, wool, and indigo, that couldn't 
be shipped outside of the British empire (Barck and Lefler). This Act 
made the english colonies frusterated for they could get a higher 
price for these items outside of the british empire. The Navigation 
Act worked as a disadvantage to the colonies, but helped the central 
economy and government of the british by excluding such raw materials 
from trade to other countries. The Staple Act of 1663 was an offshoot 
of the Navigation Acts. It stated that all European goods bound for 
the American colonies must first land at an english port and then be 
reshipped to America in English vessels (Kurland). The British would 
benefit from this act by imposing custom duties on goods, which cost 
would be passed to the american consumer. The english merchants would 
profit from handling, insurance, and shipping fees. This Act also 
provided for a naval officer in all colonial ports to insure the 
upholding of the mercantile law. From the American stand point, the 
Staple Act meant higher prices and a blatant attempt of the British to 
exploit America for the benefit of the english merchants. There was no 
need for the Staple Act to be passed. The Act served no other purpose 
other than the enrichment of the British people and strengthening of 
the central government. Another example of the British trying to exert 
control over America was with the Molasses Act of 1733. This Act 
imposed a duty of nine pence per gallon on rum, six pence per gallon 
on molasses, and five shillings per hundredweight of sugar imported 
from French or Spanish colonies. The was no tax put on british rum, 
molasses, or sugar imported from British Colonies. The British, trying 
to control the american colonies, were largely ineffective. The act 
was vastly ignored by the Americans. The Americans were not going to 
obey a law passed by the english, when the english had no way of 
enforcing it. The english colonies were pulling away from the 
alligence to Britain. The British wanted the colonies to build the 
political power of Britain, without getting anything in return. The 
British wanted to use up all of the resources and raw materials of 
America, without the colonies resisting. After the British recognized 
that the Molasses Act was ineffective, they amended it with the Suger 
Act (Morison and Commager). Bribing customs officals into taking 1 and 
a half pence per gallon not to notice the cargo being unloaded was how 
the Molasses Act failed. To do away with this problem, the British cut 
the tax by fifty percent and strickly enforced it. Now the colonies 
were objecting to the decreased tax. Before, the tax was not collected 
or enforced so the Americans were happy. Now that the tax was 
collected the Americans were feeling the threat of British rule. The 
British government was regarding the colonies as a source of revenue. 
The colonies also noticed how the money was being spent and objected 
to it. The British talked of how they needed money to support troops 
in America. The troops were not there to protect the colonies, but to 
enforce British rule. The troops were stationed at ports, not in the 
interior where the threat of attack was the greatest. America existed 
for the sole purpose of strengthening the central government of 
England. Unlike the rest of the Acts passed for the improvement of the 
british government, the Stamp Act caused the biggest political storm. 
Everyone from small farmers to merchants were effected. The parliament 
wanted the colonist to pay for some imperial expenses. To do this, 
parliament passed the Stamp Act in 1765. This law made it illigal to 
puchase any paper, newspapers, customs documents, various licenses, 
college diplomas, and numerous legal forms for recovering debts, 
buying land, and making wills without a stamp bought buy the British. 
The law enabled the British not only to generate revenues, but censor 
all materials going into the public. The British would simply not 
stamp any material, such as a newspaper, that were putting any 
comments about the British that were bad. The American colonies did 
not reciate this law at all. They protested it with a vengance 
claiming, "Taxation without representation is slavery." The 
working-class's approach to this problem is to riot, gather great mobs 
and burn things, and beat up the tax collectors. The upper-class's way 
of handling this was to make reforms and go about changing this in a 
civilized manner. Everyone in the colonies could agree that the Stamp 
Act was a selfish law made by the British to control the media and 
aquire revenues at the expense of the colonies. During 1790 to 1795, 
mercantilism helped spark the economy of America under Hamiltons 
authority. Hamilton wanted all foreign debts, amounting to 11.7 
million, to be payed off in full (Kurland). This would establish a 
very high credit rating with other nations and help the government 
create political power. Other debts the Hamilton required to be payed 
off or assumed were the 40 million in Confederation war bonds and 28 
million in debts of individual states (kurland). For the good of the 
creating a cash economy and strengthing the U.S. credit rating, 
Hamilton wanted to induce a Bank of the United States under the 
"implied powers" clause. The system of banking he purposed was very 
similar to that of Englands. Founded in 1791, the Bank of the United 
States had the duties of financing the federal government during war, 
regulating credit, and producing sound currency. Hamilton also had the 
idea of making the bank privately owned, so it would run proficiently. 
This would give the federal government a backbone during times of war 
or emergencies and make it much more powerful. Hamilton also called 
for American self-sufficiency. The report on Manufactures of 1791, 
written by Hamilton, promoted tariffs on imports to protect 
manufacturing and create national wealth. America was building its 
political power by manipulating its economy. What the British were 
once doing to the colonies, the colonies were now doing to themselves. 
America was using the idea of mercantilism to run the country and 
build political power. In conclusion, the whole purpose for England to 
develope and carry out the Acts they passed were to stay in control of 
the colony's economy and better their central government. The British 
troops were not there to protect, but to carry out english laws. The 
Stamp Act was developed to control the media and legal documents so 
the colonies wouldn't stray away and acquire their own system. The 
Navigation Act was to stop the dominating Dutch from taking over the 
commercial vessel industry and build up Englands merchant marine. The 
Molasses and Sugar Acts were to make America pay for its so called 
troops and help British merchants. Britains mercantilistic ideas in 
these Acts show their disregard for the new colonies and the 
exploitation of their resources. After the War for Independence, 
America took some mercantilistic ideas to begin building their 
political power and economy.


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