The Economy of the Eighteenth Century British Atlantic Empire
“Gold and silver are but merchandise, as well as cloth or linen; and that nation that buys the least, and sells the most, must always have the most money.”[1]
Abstract:
Colonial empires played a critical role in the economic and political expansion of Europe in the seventeenth and eighteenth centuries. One particularly successful cluster was Britain’s North American mainland colonies, the first of which was Jamestown, Virginia, founded in 1605. In this paper, I intend to study the effects of trade between these American colonies and their metropolis, Great Britain. Furthermore, this study will benchmark the utility of colonial empires as a whole, both of the metropolis and the inhabitants of the colonial empire itself. A relevant survey of commodities that were traded and their uses within the British Empire will be conducted, as well as the effects of these commodities on the expansion of the British economy. Several relevant research questions will be addressed in this paper, such as:
-Did the trade that the American colonies provided help strengthen or burden the overall economy of Great Britain?
-What commodities were exchanged on both sides of Great Britain’s Atlantic Empire? What made these commodities special, which generated the most revenue, and which were traded with other European nations?
-What connections exist betweenBritain’s colonies and the Industrial Revolution that occurred at the height of its Atlantic empire?
Historiography:
Historians and economists both widely debate the value of colonial empires; especially whether the resources placed upon defending and governing colonies was worth the commerce that resulted from their existence. Furthermore, issues such as the effects of colonialism on Great Britain, its role in Great Britain’s Industrial Revolution, and the effect of colonial commodities on Europe’s economy are all central discussions.
Economic Historians, especially those focusing on the statistical trade data, frequently observe that Britain’s colonies accounted for a tiny portion of the nation’s gross domestic product (GDP). However, Patrick K. O’Brien refutes these claims stating that the value of the colonies did not necessarily lie in their proportion of the GDP, but more so in their effect of turning Great Britain into a hub of shipping and international trade. O’Brien refutes the statistical perspective, stating, “Very few critics of mercantilism and imperialism… developed an alternative blueprint for national development that might have carried Britain to a position within the international order.”[2] Indeed, across the debate, participants agree that the benefits derived secondary to trade to Britain’s colonial empire were numerous. S.D. Smith, analyzing British exports, points out a major benefit of the colonies was a source of employment in shipping and manufactures. Smith observes a rise in unemployment in manufacturing of woolen stockings, a popular product in the American colonies, during the American Revolution. It is from cliometric observations such as this that Smith concludes the American colonies exceeded their value merely as a market of trade.Britain far more effectively utilized its colonial empire, as Stanley L. Engerman compares the British Atlantic Empire to that of France. The French concentrated capital and resources in the West Indies, particularly Saint-Domingue. Britain, on the other hand, hedged their bets across their Atlantic Empire by evenly distributing resources among their mainland and West Indian colonies. By providing a breadbasket in the mainland to their sugar colonies of the West Indies, Engerman believes the creation of a large sugar supplier, “For England – generate[d] an industrial revolution.”[3]Despite the loss of the mainland colonies in the American Revolution, upon the normalization of relations, trade with the new United States, “Exceeded in size and economic importance those remaining colonies of the French.”[4]Britain’s intelligent colonial policy created far more economically valuable assets than that of their closest rival, France.
D.A. Fernie also observes the commercial empire of the Atlantic, noting a similar result in British port cities during the American Revolution. Bristol and Devon, two major ports primarily tied with North American ties, saw their decline with the American Revolutionand the boycott of commerce related to it. Jacob M. Price also argues the importance of the American colonies should not be dismissed, because, “In short, demand arising from the commercial Empire must be viewed as an important part, but only a part, of the aggregate demand experienced by British manufactures.”[5] Price also scrutinizes the importance of the Navigation Acts, a series of laws first passed in 1651 that restricted trade within the English territory, later the British Empire, to only English shippers. By restricting the flow of trade coming inside, while still allowing commodities such as sugar, rice, and coffee to be exported to Continental Europe, Britain enriched itself and this in part led to the arrival of the Industrial Revolution.
The role of the Industrial Revolution in Great Britain is a matter of great debate among Historians of the Atlantic economy. Price argues that expanding demand for goods among colonist led to technological advances in manufacturing. S.D. Smith, analyzing into labor economics, concurs with this, stating that North American demand led to “Technological discoveries and the diffusion of new ideas are also theoretically related to the division of tasks and the structure of network contact amongst producers.”[6] O’Brien substantially looks at America’s impact on the British Industrial Revolution, and ultimately determines that America played at best a small role. O’Brien cites an ample supply of coal and natural resources, strong agricultural output, a skilled workforce, and capability toward technological discovery as all major factors toward Industrial expansion. In fact, in Inseparable ConnectionsO’Brien affirms had it not been for Britain’s ability to grow enough food to adequately sustain its population as well as even export some to neighboring nations, support for colonialism likely would have been far weaker. However, according to O’Brien, profits from Britain’s American Colonies and trade with Continental Europe allowed Britain to grow, “British industry, internal transportation, financial intermediation, distribution and other activities closely associated with industry; as well as the growth of housing and other infra-structure facilities required to support the growth of London and other towns.”[7]The Industrial Revolution in Great Britain subsequently led to industrial growth across Europe and a better standard of living, this saw an entirely new economic sensation; consumerism.
Many economists studying colonial empires conclude that the influx of new goods and better standards of living led to the phenomenon of consumerism. D.A. Farnie notes the ever changing tastes of Britons and Europeans as a whole, first witnessing huge demand of tobacco; and later, sugar, rice, cotton, coffee, and many more commodities. Sugar quickly became such a profitable crop for growers in the West Indies that it, “Became more profitable than any cultivation that is known in either Europe or America.”[8]The production of sugar also saw the rise of another major commodity of the Atlantic economy, slavery. Better living standards from the industrial era led to disposable income for working families, not just Aristocrats. This, along with a flow of new consumer goods meant that shopping for the first time emerged as a pastime of Europeans. Price also observes the effects on industry in Great Britain of colonies in demand of specialized goods they are unable to produce themselves. The growth of specialized craft in Britain led to a position in the Atlantic Economy where raw materials flowed in and normal goods trickled out across the British Empire. Indeed, the Navigation Acts created a unique position for British manufacturers, exporting from their protected markets to Continental Europe and the American colonies. This led to the growth of exports by 122% from 1700 to 1776, astounding giving the static population of Britain.
Though historians can not agree upon whether Britain’s colonial empire was worth the resources invested in it as a portion of the British economy, it is agreed other side effects were invariably valuable to Great Britain. As an outlet for population and market for British manufactures, the colonies carried their weight in indirectly growing employment in Great Britain. Furthermore, the effect of trade with the colonies dynamically changed the economic landscape of Europe toward a consumer driven economy. Scholars agree the British American colonies can not be ignored as a valuable asset for the British economy of the eighteenth century.
Preliminary Arguments:
The thesis of my paper would cover the three research questions I have selected taking into account the historiography and my own research. While the British Atlantic Empire of the eighteenth century accounted for a small portion of the GDP of Great Britain, it carried numerous other economic benefits. Among these, a market for Great Britain to readily export manufactures, a source of valuable consumer commodities that Britain’s new industrial society accessed with rising incomes, and an outlet to the growing population of Great Britain. Furthermore, the colonies led in part to the rise of the Industrial Revolution in Great Britain, serving both as a market and a source of raw materials; as well as the rise of Great Britain as a naval empire, becoming the center of shipping by the Navigation Acts created to guard the economy of the Atlantic and the growth of the Royal Navy to protect its assets abroad. While not tangibly economically valuable, the positive externalities that arose as a result of the Atlantic colonies turned Great Britain into a premier military and economic state in Europe. Great Britain became the world’s first superpower while its rivals struggled for supremacy in Continental Europe.
Methodology:
In order to survey my unit of analysis, I research trade data, the observations of other historians and economists, and study the colonization efforts of the British Empire. Studying the growth of trade and statistically analyzing whether growth of trade and the British economy was linear or exponential will help determine whether colonial expansion gave Great Britain an edge in growth in comparison to Continental European powers. Furthermore, I also believe that analyzing the value of the colonies as a measure of the GDP of Great Britain is not a fair method of analysis, because agricultural and raw materials are less monetarily prevalent than manufactured goods. Therefore I would discount the GDP as benchmark for the value of colonies. To gather trade data, research at customs offices for trade records as well historical achieves for primary documents of classical economists and politicians on the view of colonial empires in the eighteenth century. Several scholarly articles and books on Atlantic trade as well as the British Empire will need to be read and harvested for factual information as well as interpretations of the effects of Atlantic trade. Altogether, a combination of statistical analysis as well as relevant primary documents will be needed to give an accurate picture of the advantages and disadvantages of Great Britain’s Atlantic empire.
Annotated Bibliography:
1. Engerman, Stanley L. France, Britain and the economic growth of colonial North America, in The Early Modern Atlantic Economy, ed. John J. McCusker and Kenneth Morgan, 227-249. Cambridge: CambridgeUniversity Press, 2000.
Engerman analyzes the factors behind economic growth in the French and British North American colonies, both in the West Indies and American mainland. His central argument is that while climate and natural resources play an important role in patterns of settlement, culture and political attention were more paramount in determining the success of Atlantic colonies. Engerman goes to lengths to show that France’s concentration of economic development on the West Indies, especially Saint-Domingue, led their Atlantic colonial economy to collapse with the loss of this valuable asset. In contrast, the British evenly dispersed their resources, using the American mainland as a breadbasket to feed their sugar industry in the West Indies. As a result, the growth of the mainland colony led to the creation of a large market that, “For England – generate[d] an industrial revolution” (P. 228). Indeed, Britain’s American assets remained valuable in terms of trade after relations were normalized with the newly created United States, which, “Exceeded in size and economic importance those remaining colonies of the French” (P. 228). Engerman also attributes the increased emphasis on the value of colonies in the Caribbean due to the overlap of resources produced in the northern mainland colonies with those produced in Europe, which is why development was encouraged by France on the sugar islands and not New France. French colonial growth was stunted by restrictions placed on the emigration of Protestants, as opposed to the British, who tolerated emigration of religious dissidents as well as ensured land was not consumed by large estates. Great Britain’s intelligent colonial policies all played a role in creating what would become an independent, albeit still economically valuable, asset for Great Britain.
2. Farnie, D.A. “The Commercial Empire of the Atlantic, 1607-1783,”The Economic History Review 15, no. 2 (1962): 205-218.
Farnie studies the causes and motivations leading to the explosive growth of the England’s Atlantic holdings in the seventeenth and eighteenth centuries. His thesis, that in the search for silver and gold bullion in the New World, Europeans found fertile soil which combined with labor and capital created new sources of production and trade. The plantation system was a major part of the agricultural success of the New World, and these plantations relied on the metropolis for manufactures and investment. Tobacco played a huge part in the growth of the American middle colonies, particularly Virginia, which attracted masses of indentured servants, and later turned to slave labor. Though the popularity of tobacco, as well as the price, settled by 1789, its value in developing the American colonies can not be dismissed. Sugar was also an important agricultural cash crop, especially for the West Indies, so much so that it, “Became more profitable than any cultivation that is known in either Europe or America” (P. 210). The sugar trade was a huge boom to the West Indies, and investors were quick to fund planters, quickly making members of the English aristocracy incredibly wealthy. The production of sugar also led to the growth of another important part of Atlantic commerce, the slave trade. While not as profitable as other trades, slavery allowed the West Indies to dedicate itself entirely to sugar production and to rely on the white farmers of mainland America for foodstuffs. The British were the primary merchants of the slave trade, providing slaves for the French, Spanish, and Portuguese colonies as well as their own. The effects of new these new staples played a huge role in changing the culture of Europe; the influx of new consumer goods and disposable incomes, meant for the first time shopping emerged as an active pastime of Europeans. The immigration to America as result of economic growth also led to the American Revolution, and the effect of the severing of trade can be seen on the port cities of England. The Revolution brought about the decline of Bristol and Devon, two cities connected invariably with the American colonies. The other result of the Revolution was the shift of British colonial aims from the Atlantic to the Pacific. However, Britons would always look back upon their settling of the Atlantic as an important, as the United States continued to serve as a major trade partner well after its insurrection had ended.
3. Hakluyt, Richard. “Discourse of Western Planting,” in From Revolution to Reconstruction, by Gary Wiersema. University of Groningen, Department of Humanities Computing, 1994-2005, (revised December, 5, 2006), (accessed December 5, 2006).
Hakluyt, in his discourse, argues for the advantages of establishing a colony on the shores of Virginia. Among his reasoning, aside from appeals to the Queen Elizabeth that she is, “More lawfull and righte then the Spaniardes” to rule the lands of America, he states a number of economic reasons. These include that an American colony would be a source of valuable commodities, and serve as well as a, “Manifolde imploymente of nombers of idle men.” Hakluyt, taking cues from the colonization of Ireland by the English, adequately captures many of the results of the future colonization of mainland America as well as the West Indies, long before they happen. This document also demonstrates the colonial intentions of Europeans, the English in particular, long before imperialism began. It is also a great example of the perceived benefits of colonialism, especially those economic in nature.
4. “Navigation Act of 1696,” The Navigation Act of 1696 1, no. 1, (1997): 1-9.
The Acts of Navigation and Trade, a series of English laws first issued by Parliament in 1651, and subsequently modified in four later acts between 1662 and 1773, were paramount on the economy of the British Atlantic. Originally created to target Dutch shipping, the Navigation Acts banned all trade with third parties outside of the realm of the British monarchy. This far outweighed the role they played in the mercantilist empire of the English, turning England, as the metropolis, into the center of trade in its Atlantic empire. The Navigation Acts would also cause huge growth in English shipping, as a result of denying the Dutch the role as ‘middleman’ in Atlantic and European shipping. Subsequent of the employment for sailors by the Acts, created a flow of able seamen, some of which would join the British Royal Navy, bringing it to be the premier fleet of the world, be it on any ocean. Despite all the Navigation Acts did to grow British shipping and manufacturing, they were often usurped by Dutch and French smugglers bringing French sugar and other goods into the mainland American colonies. The punishment for breaking the Navigation Acts, “Under the penalty of the forfeiture of the said goods, or the full value thereof, as also of the ship, with all her guns, tackle, apparel, ammunition, and furniture”, was harsh, but following the policy of Salutary Neglect, these penalties were seldom enforced. Subsequent revisions of the Act would require the process of re-exporting, that is, shipping from the colonial port to a port in the land of England and from there to its final destination outside of the British Empire. The revision of 1696 required that merchant ships are, “To be navigated by the master and three-fourths of the mariners English.” These restrictions were created to close loopholes that were used to evade the rules of the navigation act by foreign shippers or smugglers.