Colonial Economy and Mercantilism

• There are both comparisons and contrasts between Britain's colonies, reflecting different economic activities, governance structures, and social systems.

• There are also comparisons and contrasts between Britain and Spain, highlighting their distinct approaches to colonialism and economic exploitation.

Central Points on British Mercantilism

• Economic relations between Britain and its New World colonies greatly benefited Britain through the provision of raw materials, markets, and other resources, which in turn aided in British industrialization.

• Britain became the first European nation to industrialize due to various factors, including its access to resources and markets provided by its New World colonies.

• Despite mercantilist regulations that restricted the colonies economically, Britain's New World colonies were still able to prosper economically due to factors such as resource abundance, trade diversification, and colonial agency.

• From a mercantilist perspective, Britain deemed some New World colonies more valuable than others based on their economic contributions, strategic importance, and other factors. For example, colonies producing valuable raw materials like tobacco or sugar might have been regarded as more valuable than those with less lucrative economies.

Adam Smith's Critique of Mercantilism

• Adam Smith critiqued mercantilism in "The Wealth of Nations," even coining the term, challenging its principles and advocating for free trade and market liberalization.

Mercantilism: Central Ideas

• Fixed Amount of Wealth: Mercantilism operates on the belief that there is a fixed amount of wealth in the world, leading nations to compete for a larger share of this finite resource.

• Zero-Sum Game: Economic interactions are viewed as a zero-sum game, where one party's gain is necessarily another's loss, fostering competition and conflict among nations.

• Not an Expanding Pie: Mercantilism rejects the idea of an "expanding pie" or similar metaphors, emphasizing the importance of gaining at the expense of others.

• Precious Metals: Accumulation of precious metals (gold and silver) is a key goal in mercantilism, as they were considered the most tangible form of wealth and power.

• Favorable Balance of Trade: Maintaining a favorable balance of trade, where exports exceed imports, is crucial in mercantilism, reflecting a "fear" of goods coming in and a desire to accumulate wealth through trade surpluses.

• Role of Colonies: Colonies play a significant role in mercantilist thought by providing raw materials and serving as markets for the mother country, allowing the latter to maintain a favorable balance of trade and accumulate wealth.

British Colonies: Population and Economy

• Population Growth: Ben Franklin estimated that the colonial population would double every generation, a high estimate but reasonably accurate, indicating a rapidly growing economy and labor force.

• Economic Growth: The colonial economy's growth was based on increasing population and exploiting more resources, such as land, timber, and minerals, driving economic expansion.

• Technological Development: Technological advancements became central only after independence, as colonies initially relied on traditional methods and resource exploitation for economic growth.

Mercantilist Policies: Navigation Acts

• Navigation Acts: These were specific laws governing imports to and exports from the colonies, aiming to regulate colonial trade and ensure its benefits accrued to Britain.

• Enumerated Goods: Certain colonial products could only be shipped to Britain, such as tobacco, sugar, and cotton, giving British merchants a monopoly over these valuable commodities.

• Shipping Requirements: British ships and British crews were mandated for trade, promoting British shipping and maritime industries while excluding foreign competition.

Navigation Acts and Triangular Trade

• Triangular Trade Routes: These routes connected Europe, the Americas, and Africa, forming a complex network of exchange involving goods, slaves, and resources.

• Flow of Goods: Raw materials flowed from the Americas to Europe, slaves from Africa to the Americas, and manufactured goods from Europe to the American colonies, illustrating the interconnectedness of these regions in the Atlantic economy.

Atlantic Trade in the Eighteenth Century

• The map illustrates the economic focus of the colonies in the 18th century shifted east towards the Atlantic world rather than west towards the interior of North America, reflecting the increasing importance of maritime trade and colonial connections with Europe.

• Long distances involved in the Atlantic trade and the uncertainties of ocean travel made it difficult for Britain to govern the colonies and regulate colonial commerce, contributing to colonial autonomy and challenges to British authority.

Sugar, Rum, and Slaves

• Trade Flow: Sugar was shipped to New England, rum (and other goods) to Africa, and slaves to the Americas, forming a distinct trade cycle that fueled the plantation economy and the transatlantic slave trade.

Economic Significance of American Colonies for Britain

• Re-exports: Britain re-exported colonial goods like tobacco, enhancing its trading position and generating additional revenue through customs duties.

• Shipping Monopoly: Britain maintained a monopoly on shipping, controlling the transportation of goods between the colonies and Europe and benefiting British merchants and shipowners.

• Finished Goods: Britain turned colonial raw materials into finished goods, adding value to these commodities and selling them back to the colonies at a profit, stimulating British manufacturing industries.

• Colonial Purchases: The colonies purchased British finished goods at a high rate, fueled by expanded colonial credit, creating a captive market for British products and ensuring economic dependence.

• Export Share: Britain's New World colonies purchased around 40% of its total exports, underscoring the significance of the colonial market for British trade and economic prosperity.

Comparative Value of Colonies to Britain

• Varying Value: Some colonies were more valuable than others to Britain, depending on their economic activities, resource endowments, and contributions to British trade and revenue.

• Competing Regions: There were competing and complementary regions like New England (subject to the Hat Act and Woolens Act), the Middle Colonies, the Chesapeake, the Lower South, and the British Caribbean, each playing distinct roles in the British colonial system and Atlantic economy.

Colonial Exports by Region

• Regional Variations: Colonial exports varied by region:

  • New England

  • Middle Colonies

  • Chesapeake

  • Lower South

• Export Destinations: Exports were directed towards Great Britain, Southern Europe, and the West Indies, reflecting the diverse trading networks and economic interactions of the colonies.

• New England Exports:

  • Fish accounted for $24\%$, Livestock $36\%$, wood products $10\%$, whale oil $13\%$, other $17\%$. Of these $66\%$ went to Great Britain, $17\%$ to Southern Europe, and $16\%$ to the West Indies.

• Middle Colonies Exports:

  • Grain products accounted for $77\%$, Meat and foods accounted for $16\%$, other $7\%$. Of these $47\%$ went to Great Britain, $39\%$ to Southern Europe, and $14\%$ to the West Indies.

• Chesapeake Exports:

  • Tobacco accounted for $74\%$, Grain products accounted for $10\%$, other $16\%$. Of these $81\%$ went to Great Britain, $10\%$ to Southern Europe, and $9\%$ to the West Indies.

• Lower South Exports:

  • Rice accounted for $56\%$, Indigo accounted for $23\%$, other $21\%$. Of these $71\%$ went to Great Britain, $19\%$ to Southern Europe, and $10\%$ to the West Indies.

Comparison: Impact of Mercantilism on Britain and Spain

• Spanish Benefits: Spain also benefited from mercantilist relations with its New World colonies; silver was the main product of benefit, enriching the Spanish Crown and funding its imperial ambitions.

• Divergence: Unlike Britain, mercantilism did not lead to Spanish industrialization due to factors such as different economic structures, policies, and historical contexts.

Comparison: Impact of Mercantilism on British America and Mexico

• Progress Despite Regulations: Like the British colonies, Mexico progressed despite Spain’s economic regulations, developing its own industries and economic activities.

• Degree of Industrialization: Mexico industrialized to a greater degree than Britain’s New World colonies due to factors such as a larger internal market, different social structures, and historical development.

Regulators of Spanish International Trade

• Council of Indies

• Casa de la Contratacion: Board of trade in Seville.

• Merchant Guilds: Established in Seville in 1543 and in Mexico in 1594, starting a century before the British.

• Established Ports: Trade was restricted to Spain and its colonies at established ports to facilitate regulation and control.

Threats to Spanish Colonial Trade

• Privateers: Threats included figures like Francis Drake and the Buccaneers, who targeted Spanish ships and ports, disrupting colonial trade and causing economic losses.

• Dutch Interception: The Dutch successfully intercepted a Spanish ship laden with silver, highlighting the vulnerability of Spanish colonial trade to foreign interference.

Spanish Development of the Fleet System

• Safety in Numbers: Large fleets traveled together for safety, protecting ships from pirate attacks and other threats during long voyages across the Atlantic.

• Frequency: Typically, there were two fleets per year, one heading to Veracruz (Mexico) and the other to Cartagena (Colombia), facilitating trade between Spain and its American colonies.

• Determined Ports

• Fleets

• Manila Galleon: Transported silver, which was worth more in Asia than in Europe, allowing Spain to profit from the exchange of silver for valuable commodities from the East.

Manila Galleon

• Development: Developed in 1570, connecting Manila and Acapulco, facilitating trade between Asia and the Americas across the Pacific Ocean.

• Trade Goods: Silks, spices, and porcelain from the East were almost entirely paid for with silver, driving the demand for silver and fueling the trade.

• Silver Value Discrepancy: Spain had trouble stopping the leakage of silver because the silver-to-gold value ratio was 8:1 in the East but 12:1 in Europe, creating opportunities for arbitrage and smuggling.

• Decline: The fleet system became less effective and less frequent in the 17th century, partly due to reduced silver production and increased competition from other European powers.

Spanish Fleet System and Manila Galleon

• Trade Routes: These systems facilitated trade between Spain, its American colonies, and Asia, creating a global network of exchange and cultural interaction.

Benefits of Spanish Mercantilism for Spain

• Mexico as Sub-Empire: Mexico financed Spanish rule in the Caribbean, providing resources and revenue to support Spanish administration and defense in the region.

• Mercury Monopoly: Spain had a monopoly on selling mercury to Mexico, essential for silver mining, giving Spain control over a key input in the silver production process.

• Royal Fifth: Spain received the "Royal fifth," $20\%$, of silver profits, generating substantial revenue for the Spanish Crown and funding its imperial endeavors.

Silver

• Silver production in pesos from 1503-1600

Mercantilism Does Not Lead to Spanish Industrialization

• Attempts to Emulate Britain: Attempts were made to emulate the British industrial system by regulating colonial production to make Mexico an exporter of raw materials and an importer of finished goods, but these efforts were largely unsuccessful due to various factors.

• Raw Material Production: Efforts were made to promote the production of raw materials, especially cotton, for Spanish textiles, aiming to reduce dependence on foreign suppliers and stimulate domestic manufacturing.

• Middleman Role: However, Spain mostly became a middleman, buying goods from European powers and selling them to their colonies, failing to develop a strong industrial base of its own.

Mexico's Industrialization: Obrajes

• Local Production: Due to Mexico’s interior population distribution and poor internal trade routes, it was cheaper to make local textiles, fostering the development of domestic manufacturing industries.

• Textile Tradition: Textiles had been created in the pre-Columbian era, laying the foundation for skilled labor and local expertise in textile production.

• Obrajes: These were colonial textile workshops, producing textiles for local consumption and contributing to Mexico's industrial development.

• Location: A large number were located in Puebla, a major center for textile production and economic activity in colonial Mexico.

• Working Conditions: Obrajes were known for their exploitative working conditions, often involving forced labor, low wages, and harsh treatment of workers.

Obrajes (Workshops), Colonial Mexico

• Illustrations of Indigenous Mexicans working in obrajes, providing insights into the labor practices and social conditions of colonial Mexico.

Obraje: Floor loom

• Visual representation of a floor loom used within an Obraje, illustrating the technology and tools employed in textile production during the colonial era.

Another Form of Industrialization: Colonial Mints

• Silver Processing: Not all silver was exported as raw material; some was processed into coins in Mexican mints, supporting the development of financial institutions and economic infrastructure in colonial Mexico.

New Spain Silver-Producing Frontier

• Mining Regions: Silver mining occurred in regions such as Zacatecas, Guanajuato, and San Luis Potosí, driving economic growth, attracting settlers, and shaping the social and political landscape of colonial Mexico.

Various Documents

• Documents discussed included excerpts/images from "Reading the American Past" and included:

  • The story of Elizabeth Ashbridge becoming an indentured servant in New York

  • Benjamin Franklins “Poor Richards Advice”

  • A fraudulent land purchase from Lenape chiefs Tishcohan and Lapowinsa

  • A sermon criticizing New Light Baptists and Presbyterians in South Carolina

  • Advertisements for runaway slaves in South Carolina and Virginia

Comparative Questions

• Comparing choices made by historical figures and their guiding values.

• The role and forms of religion.

• Significance of individualism, freedoms, and constraints.

• Relations among different racial groups.

• Influence of commerce on the colonies.