Engerman S.L., Gallman R.E. The Cambridge Economic History of the United States, Vol. 1: The Colonial Era
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The European Background 127
with a "base-weight" in the preceding period, or modern, looking back
from the present. Another possibility is to compare early-modern Britain
with one of its contemporaries, say France or the Netherlands.
Making a bold stab at a conclusion, we should certainly keep in mind
the level of technical practice in medieval times and in the neighboring
countries. By those standards, Britain performed quite well, despite a
great mix of industrial and agricultural methods and plant size. Better
methods were spreading in a number of industries and certainly in agricul-
ture.
But the great variety of practice means that the best techniques
known were very far from universally adopted.
As to dynamic
technical
efficiency,
England was one of the more creative
societies known by that period. Much of the scientific theory underpin-
ning late eighteenth-century industrialization was actually developed in
France, but it was of signal importance that an artisan class had emerged
in England capable of giving practical embodiment to the ideas. The
continent, France especially, did not do as well in that respect.
Authorities differ with respect to the desirability of an
equal distribution
of
income.
Some feel that the taxes and regulations needed to approach
equality must fatally reduce incentives to produce. But the degree of
inequality was very marked, and it is noteworthy that, by the time of
Independence, Americans had not only become far less unequal but had
achieved higher average incomes, too. While that presumably owed much
to abundant resources, the implication may be that British extremes of
poverty failed to provide an equivalent spur to effort.
Finally, what may be said about the
speed
of
adaptation
to
"exogenous"
shocks?
By reasonable historical standards, it was good. As Adam Smith
noted, neither wars, nor plagues, nor fires had prevented the accumulation
of national wealth. An excellent example of resilience is provided by the
speed of rebuilding after fires, and not merely after the Great Fire of 1666
in London, where restrictions on work by nonresident craftsmen were
readily lifted. Many other towns experienced severe fires that destroyed
much of their housing and capital stock, hundreds of houses at a time
(13,200 were razed in the Great Fire). Local resources and informal mu-
tual assistance among towns, together with the issuing of "Briefs" (licens-
ing the collecting of alms for individuals), almost always facilitated rapid
rebuilding.
England, even more the whole of Britain, was not an equitable society,
not one that mobilized its resources to the full, and not one that allocated
its factors of production optimally. However, compared with most and
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128 E. L.Jones
perhaps all economies of the day, it was relatively flexible. Its factor
markets were becoming freer, technical change was being generated, and
society as a whole was rich and energetic. The colonists of America had the
best start then possible.
OTHER EUROPEAN ECONOMIES
The European migrations to North America and Australasia were not the
biggest in history, but they were among the biggest that failed to blend
significantly with existing cultures. The Native American presence, like
that of the Australian aborigines, tended to fade
away.
There was conflict,
contact, and a little borrowing, but on the whole, the Europeans usurped
the territory and set about populating it with whites engaging in
European-style economic life.
Among the Europeans, the role of the British and especially the English
clearly predominated. The question arises, why did other countries even in
the western half of Europe play a so much lesser role? As it happens, their
role was probably greater than the number of their settlers suggests, at
least regarding the introduction of techniques which were then borrowed
by migrants from Britain. Nevertheless, their participation was rather
small. The colonies that some of them established were taken over by
migrants from the British Isles.
Certain European countries were larger in population than Britain, and
some of them tapped a richer vein of technical change - for instance, the
metallurgy of southern Germany. The fact that most had more rigid social
systems and more arthritic factor markets than England (the United Prov-
inces was the main exception) did not necessarily dissuade them from
major acts of
imperialism:
Spain, after all, secured
a
vast empire in Central
and South America. That the Spanish and other colonies did less well in
the long run than the British colonies in North America is not quite the
point. In any case, British colonies in the Caribbean did not always do
very well. The present question is, why was colonizing by other northern
Europeans in North America so much feebler than that by the British?
The first and obvious answer is that Britain blocked them. There is
something to it. Britain did restrict or usurp the settlements of smaller
peoples like the Swedes, Dutch, and Danes. Yet Britain's ability to defeat
even a small nation like the Dutch was not certain, and her tussle with the
French was neither brief nor one-sided.
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The
European Background
129
For central Europeans, there were alternatives, not merely the eastward
movement of earlier centuries but internal colonization like draining
marshes and Frederick the Great's settling of 300,000 people in 1,200
new agricultural villages. However, that option might be interpreted by
some as a response to the British monopolization of North America.
Other nationals did manage to settle in the British colonies. After
1685,
with the Huguenot dispersion, the diversity of origins increased,
especially in the Middle Colonies; there were also Sephardic Jews and
many Dutchmen, while by the middle of the eighteenth century, one-
third of the inhabitants of Pennsylvania were German. The Dutch and
German languages long survived, and Benjamin Franklin was not the only
one who objected to this and saw in it a threat of Balkanization. On the
whole, non-British public institutions were not introduced. The Germans
and Swedes tended to settle in distinct communities, often inland in the
Middle Colonies. Continental Europeans distrusted the law, since in their
own countries it had tended to defend privilege. They kept away from
state churches and politics. Bunching together was linguistically easiest.
The German language was vital for the intellectual and emotional survival
of Lutheranism, and many of
the
Germans saw themselves as members of
"redeeming communities," among which the Amish survives. Their
self-
sufficient, reclusive behavior was typical of the Palatines, who swarmed in
1709—10 from their Rhenish land, which the French had devastated in
1697.
Religious, linguistic, and cultural isolation from British settlers
promoted little chain migrations of people from certain regions in conti-
nental Europe, reinforcing their particularism in the New World, protect-
ing the retention of their own folkways, and slowing the rate at which
their ideas mingled with those of British origin.
Governments in the interior of Europe had few resources and little
access to the sea. Among the several hundred principalities, some "not the
breadth of
a
shoe," that made up Germany at the end of the Thirty Years'
War, only the Hanseatic cities of Hamburg and Bremen had coastal access
west of the Baltic. The others had no fleets and would have been obliged
to hire shipping from the Dutch or the English, raising the costs of already
expensive ventures. There were some negotiations along these lines, but
most of the protagonists were inept. They were more interested in a quick
killing in the sugar islands of the West Indies. The seaboard countries
offered more competition to Britain, notably France, which had 123 ports
along a mere 600 kilometers of its northwest coast.
The rulers of mainland Europe had more personal preoccupations,
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130 E. L.Jones
which came to center on the building of extravagant
palaces:
Versailles and
its many replicas. France had the task of refilling the state coffers after
Louis XIV's disastrous wars. Her attempts to establish a profitable export
staple in Louisiana or Canada did not succeed. Once a few of them had
found colonial adventures did not pay, European rulers turned back to
domestic measures designed to increase and attract population to their
own states. They often restricted the private emigration of their subjects.
All in all, there was little free capital and less willingness to invest it in
colonial ventures. Economies were semideveloped, with a patchy distribu-
tion of workshop and rural domestic industry, but with so many political
jurisdictions that markets were poorly integrated. Seen in the round,
continental agricultures lagged behind the institutional and husbandry
developments of seventeenth- and eighteenth-century England. In France,
the proportion of land under forage crops was only four percent ca. 1700
and no more than six percent as late as 1789. Matters were a little better in
northwest Germany, but everywhere else they were worse. An absence of
net investment in the land may have been characteristic of wide areas; the
rents extracted from French estates went to enable the nobility "to live
noblement
on the banks of
the
Seine."
Trade was hampered by frequent tolls. Furthermore, during the mid-
seventeenth century, most of Europe was affected by a decrease of popula-
tion and an economic downturn related to the political disruptions of the
so-called "General Crisis." The worst manifestation was the Thirty Years'
War (1618-48), which supposedly cost the German states one-third of
their population. Thereafter, until the nineteenth century, Germany be-
came the "backyard of
Europe"
and missed out on the Atlantic expansion.
Conspicuous consumption, a high-liquidity preference, and preoccupa-
tion with war typified the rulers and nobility of the mainland European
states.
The landowners tended to consume their rents and, for fear of social
obloquy, most invested covertly, where at all, in trade and industry.
Merchants hurried to buy land for its status value.
European elites remained captive to a syndrome of underdevelopment
longer than their peers did in England, while their merchant class seldom
shared in the early gains of overseas expansion. Historically, there is
nothing surprising in this; the rigidities and lack of a growth ethic were
greater still among Asian potentates. England and the United Provinces,
at base London and Amsterdam, were world exceptions. Their growth,
resting on European coastwise trade, plus the outcome of Anglo—Dutch
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The
European Background
131
rivalry, is what has first to be accounted for in any explanation of the role
played by the English in North American settlement.
BACKWASH EFFECTS
By historical standards, England and Europe were changing fast before
and during the period of North American settlement. Most of that change
was internal, but some of it was a feedback effect from the act of coloniza-
tion
itself.
What forms did this backwash take?
Some of them were small beer. America, Baltimore, Georgia, New
England, New York, North Carolina, Pennsylvania, Philadelphia, and
South Carolina are all frequent as the names of fields in England. The
point is that the names are in the category known as "nicknames of
remoteness," and the fields were distant from the farmhouses or away on
some parish boundary. England was long settled and had a large, compli-
cated society. American influences were remote in most respects.
The big biological effects that the discovery of America had on Europe
do not belong here. Maize, the white potato, and perhaps syphilis were
transmitted from farther south. New commodities like tobacco, indigo,
and later cotton, together with still others already known to Europe, such
as furs, fish, and timber, did flow across the north Atlantic. Taken to-
gether, they added to the resource stream that created the Commercial
Revolution. The economic and political effects of that were not negligible.
Crops that could be physically produced in Europe, like tobacco, were
discouraged in line with the international division of labor dreamt up by
the British crown. Ecologically, the settlement of North America was not
like the discovery of a new planet, in the way that the opening of the
tropics or Australasia has been described. The problems that North Amer-
ica raised for European settlement were unusual only in their scale. The
products supplied went to swell and redirect existing branches of the
economy rather than to create new industries.
As Sir John Seeley concluded in the nineteenth century, England's
success in competing with Spain, Portugal, the Netherlands, and France
to control the New World was because she was the least hampered by
involvement in struggles on the European mainland. Disraeli urged that
England had outgrown Europe.
The Commercial Revolution had helped to change the balance of power.
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132 E. L.Jones
It made Britain more maritime and extended the theater of European
conflict. It made Britain richer and increased the commercialism of its
economy, although few from the Thirteen Colonies brought back wealth
and stayed in Britain. It increased the size of
the
market served, although
scarcely to an extent commensurate with the geographical reach. The
consequences include some responsibility for Britain's rise to foremost
power and foremost economy in Europe. Market growth, then, and a
reshaping of geopolitics were the outcomes.
Incorporated in this was an increase in the geographical and scientific
inventory at the disposal of Europeans, a new faith in a Providence
which seemed to offer a new frontier whenever an old one was passed.
Ample contact at the official, commercial, and personal levels guaranteed
that Europeans could begin to grasp the layout of the globe and what it
offered. This sense of a Manifest Destiny for Europe was partly responsi-
ble for the later, relatively casual, penetration and colonization of the
southern hemisphere.
Some North American settlers returned home permanently. The best-
known reverse flow was that which promptly returned from the "errand"
to build the City on a Hill in New England, back to fight the good fight
for Parliament during the Civil wars or to settle again in a purified
Commonwealth.
Finally, beyond the effects on foreign trade and foreign affairs, the
outflow to colonial America has been seen as a source of British liberties.
Many among the colonists were in their day bigots and ideologues like
Puritans, Quakers, cavaliers who left when they lost the war, violent
Scotch-Irish from the borders, and convicts and whores transported at
state expense. Others, not especially poor, were motivated by restless
earthly ambition. The going of all these sorts and conditions left England
potentially a less troubled and more tolerant country.
CONCLUSION
What difference did it all make? Origins - or parallels? - for most fea-
tures of early America can be found in northwestern Europe, Britain, or
England. Even the quintessential "American System" of mass-producing
interchangeable parts had precursors in the French government arsenals,
the Taylors' block-making plant at Wood Mills on the Itchen in Hamp-
shire, and Brunei's machinery in the Royal Naval dockyard at Ports-
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The
European
Background 133
mouth. The details could be spelled out, one by one. We can see in the
rapid rise of import-substituting industries during the 1640s and the War
of Independence that in the latent structure of their economic life, the
colonies were even more like Europe than they were actually permitted to
remain.
The colonies and the early Republic were tightly bound to the British
trading system. They were a vast, distant, experimental annex of Britain,
but not a colony on the moon. Their ability to outdo their origins and
escape the Third-World status of other colonies, like those in nineteenth-
century Latin America, was outstanding. The precise paths by which they
brought British or European ways to the wilderness are matters of record.
This potential arose from the unbalanced, decentralized, and energized
nature of northwestern European and especially British society, from
which vigorous and motley emigration took place.
The North American colonies, then, descended from the fastest-
developing economy of the most developed part of the world. They had
their birth at the right juncture. Although the British government had
strong views on the mix of economic activities proper to its empire, and
did not hesitate to impose its views in the Navigation Acts, the colonies
were less trammeled than any other home country might have made them.
Britain herself
was
struggling free of Absolutism and
dirigisme
(etatisme),
with its confiscations, monopoly grants, and forced loans.
Moreover, many immigrant groups were radical, originating from the
disgruntled sections of society. Although they carried all the obvious
equipment and most of any Englishman's "invisible baggage" with them,
what they were disinclined to carry was as important: they were impatient
with archaic restraints on the individual. The element of choice in what
they kept and what they left behind is too easily discounted in the pres-
ence of so patently a British and European heritage. European (chiefly
English) tastes, technologies, and institutions
—
the discarding of some
restraints, all in a context of
resource
abundance
—
brewed a novel, vaster,
more prosperous, and more equal trans-Atlantic Europe.
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THE SETTLEMENT AND GROWTH
OF THE COLONIES: POPULATION,
LABOR, AND ECONOMIC
DEVELOPMENT
DAVID W. GALENSON
INSTITUTIONS OF SETTLEMENT
In the years following its establishment of a settlement at Jamestown in
1607,
the Virginia Company set out to build an agricultural colony that
would earn profits for investors. Toward this end, beginning in 1609 it
raised both capital and labor through the device of
a
commercial company
organized as a joint-stock venture. Shares in the company could be ac-
quired either through a subscription of capital or through the pledge of
one's labor in America for a period of seven years. The excitement created
in England by earlier explorations in North America, fueled by optimistic
reports sent back by early settlers in Jamestown, enabled the Virginia
Company to raise one of the largest sums ever invested in an English
maritime venture.
An early failure of the settlement at Jamestown, marked by extremely
high rates of mortality and shortages of food and fresh water that resulted
in debilitating illness among many of those who survived, was met by a
response from the company that would not have surprised English employ-
ers of the day. The colony's governor attributed the infamous starving
time to the idleness of Virginia's labor force, and during the following
years the company moved to eliminate this problem with sterner mea-
sures.
From 1611 to 1618 the colony was ruled with iron discipline, with
a detailed plan for all economic operations. All land was to be owned by
the company and farmed collectively. The workers, all men, were to be
treated as bound servants of the company for their specified terms. They
were to be housed in barracks and provided with strict rations. For build-
ing fortifications and growing crops they were to be divided into work
135
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136 David W. Galenson
gangs,
in military fashion, each of which was to be supervised by an
overseer. The company's officers governed the colony under martial law,
and punishments for misdeeds, including execution for serious crimes,
were harsh and summary.
Within less than a decade after this plan was devised, however, sweep-
ing changes
—
so fundamental as to constitute a social revolution
—
had
transformed the economic and social organization of Virginia. By 1620
the company had freed the earlier settlers from their contracts and given
them their own land and houses. The company had also brought women
to Virginia, so the settlers could marry and have families. Martial law had
been abolished. And a General Assembly was convened in 1619, with two
representatives from each of Virginia's eleven settlements; the extraordi-
narily liberal suffrage privilege extended the vote for these representatives
to all the adult males in
the
.colony.
All these changes were the result of the company's recognition that
greater positive inducements were necessary to permit the recruitment and
motivation of
a
labor force sufficient to reverse the economic decline that
had begun during the company's earlier regimen. The company had be-
gun with the intention of contracting to pay the workers little more than
the low wage rate that prevailed in the English labor market, and trans-
porting them to America, where the abundant land would greatly increase
the value of their labor. The substantial difference between the workers'
high productivity in Virginia and their low English wages would reim-
burse the company for the cost of transportation and leave a handsome
surplus that would accrue to the company as profits. Although the work-
ers could have been expected to realize that their own work effort would
have little impact on the return they would receive when the company's
profits were distributed, the company believed the workers would have no
choice but to cooperate because of their total reliance on the company in
the hostile American wilderness. What the company failed to anticipate,
however, was that its protection was not essential to the workers, who
could consequently rebel against their harsh treatment by finding alterna-
tive employments, whether by running away to live with the Indians or
simply by starting their own small settlements. Faced with this effective
competition for the workers' labor, the company had to recognize that it
did not enjoy the monopsony position it had anticipated as the only
employer in the region's labor market and was forced to respond by
offering workers higher wages and better living and working conditions.
So it was that at the very outset of English settlement in North Amer-
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