Engerman S.L., Gallman R.E. The Cambridge Economic History of the United States, Vol. 1: The Colonial Era
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Settlement and Growth of the
Colonies
187
export to the great European markets. In part, the poor demographic
performance of these regions was caused by the geography of disease, as
malaria and other dangerous illnesses spread more readily in warmer cli-
mates. But the demographic problems of these regions were in part a
consequence of their economic opportunities, as the availability of lucra-
tive export crops resulted in harsh labor regimes in which profits could be
increased by forcing laborers to work at levels of effort and under adverse
conditions that damaged their health and reduced their longevity.
Malthus contended "that there is not a truer criterion of the happiness
and innocence of a people than the rapidity of their
increase.
"*«
And he
had no doubt that the extraordinarily rapid growth of the population of
the English North American colonies was due to extraordinarily favorable
economic circumstances, as the availability of vast amounts of fertile land
was combined with political institutions favorable to the improvement
and cultivation of that land.
15
Although quantitative studies of the eco-
nomic and social progress of the colonial population cannot provide direct
measures of their happiness, these studies can tell us how migrants to the
colonies fared materially, and therefore provide indirect evidence on how
the settlement of English America was perceived by contemporaries.
The best systematic evidence on the economic and social progress of the
immigrants comes from several studies that have traced the careers of
sizable groups of indentured servants who migrated to Maryland during
the seventeenth century. How migrants fare at their destination is of
course an important question in the study of
any
migration. In the case of
indentured servants in early America the question seems particularly inter-
esting in view of the great sacrifices they made in order to migrate, giving
up much of their freedom of choice over living and working conditions for
substantial periods, as well as considerably increasing their risk of prema-
ture death both on the ocean voyage and upon arrival in the New World.
The question of whether the servants' gains from migrating could have
justified these high costs was hotly debated by contemporaries, as well as
by many historians in more recent times.
Servants who arrived in Maryland early in the seventeenth century and
who escaped the substantial risk of premature death in the early Chesa-
peake generally prospered: 90 percent of those who arrived in Maryland
during the colony's first decade of settlement and who remained in the
'« Malthus, Essay on Population, 106.
•' Malthus, Essay on Population, 105. This analysis appean to have been drawn from Smith, Wealth of
Nations, 338—9.
Cambridge Histories Online © Cambridge University Press, 2008
188 David W. Galenson
colony for at least ten years after completing their terms of servitude
became landowners, typically on a scale that afforded them a comfortable
living. Some accumulated considerable wealth, and a few gained estates
that placed them among the wealthiest planters in the
colony.
Nearly all of
these early former servants who remained in Maryland for a decade or more
after gaining their freedom held political office or sat on a jury - not
major positions in most cases, but nonetheless substantially above what
these men could have expected had they remained in England. Several of
these early servants became members of the elite group that ruled early
Maryland, even joining the colony's governing Council. The accomplish-
ments of many of these freedmen were very impressive from an English
perspective; most could not have expected to do nearly as well had they
not emigrated, for England was
a
place that offered little chance of signifi-
cant economic or social mobility for those born below the gentry.
Opportunities for immigrants to Maryland deteriorated over time, how-
ever. Parallel analysis of the careers of a group of servants who arrived in
the colony during the 1660s shows less impressive accomplishments.
More than half of those who remained in Maryland for at least a decade as
freedmen failed to become landowners, and none of these former servants
acquired great wealth. A smaller proportion than of the earlier group
participated in government, and of these none rose above minor public
office. The opportunity for former servants to become prosperous planters
in Maryland was therefore much less late in the seventeenth century than
it had been earlier. Freedmen increasingly faced a choice between remain-
ing in the colony as hired workers or moving elsewhere, most often to
Pennsylvania, in search of their own land.
Several general conclusions might be drawn from these studies of the
success of migrants. One is the simple recognition that the time and
destination chosen by an immigrant were crucial determinants of his
experience. This point, which emerges strongly from the history of
seventeenth-century Maryland, becomes even clearer when differences
among colonial regions are considered: whereas the availability of good
farmland gave Pennsylvania a favorable reputation among immigrants for
a century, the high cost of land and undesirable conditions for hired
workers caused indentured servants and free immigrants of modest means
very early to avoid traveling to the West Indies, and later the Lower
South. But as these decisions by immigrants indicate, information about
the desirability of the different colonial regions spread widely among
Englishmen who were considering moving to America. It was indeed the
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Settlement
and
Growth
of the
Colonies
189
choices made by white immigrants to avoid the harsh living and working
conditions of the sugar islands and the rice colonies that made slavery the
economic solution of planters in these regions, for Africans could be forced
to work in places where Europeans chose not to.
A
second generalization from
the studies
of Maryland
is
that although the
degree of economic opportunity available to immigrants declined over time
in the Chesapeake, even in the
final
decades
of the seventeenth century there
was no shortage of employment. Although the rapid expansion of the
tobacco
economy,
which earlier had made the sparsely settled Chesapeake an
excellent place for poor settlers, had given way to slower growth in a more
densely settled region where the choicest land had become occupied, freed-
men could still find abundant work at good wages. This point again seems
subject to wider application: although the extent of opportunity for immi-
grants varied over time and across
places,
colonial English America appears
throughout its history to have remained a genuine land of opportunity
where European migrants might considerably improve their condition if
they were willing to risk premature death in the trans-Atlantic crossing and
the unfamiliar disease environment of the New World. That the colonies
continued to attract large numbers of Europeans, skilled as well as un-
skilled, throughout the seventeenth and eighteenth centuries is testimony
to the fact that many Europeans knew this to be true.
ECONOMIC DEVELOPMENT
Our knowledge of the growth of the aggregate colonial economy is poor.
Existing data sources have not been adequate to provide the basis for
reliable estimates of the total product or income of the colonies, so it is not
possible to summarize the colonies' economic growth by presenting time-
series evidence on aggregate colonial output or per capita income. The
best summary evidence on overall colonial economic performance has been
drawn from probate records, as considerable effort has recently been de-
voted to developing estimates of the per capita wealth of the living from
the inventories of the estates of decedents made by colonial probate courts.
Although these wealth estimates cannot be converted convincingly into
estimates of per capita income because of a lack of evidence on savings
rates,
the evidence on wealth is of value in its own right for the insights it
yields into colonial economic performance both over time and in cross-
sectional comparisons among regions.
Cambridge Histories Online © Cambridge University Press, 2008
190 David
W.
Galenson
The most extensive use of the probate inventories for the estimation of
wealth was made by a study that estimated the wealth of all the English
mainland regions in the single year of 1774. Estimates for earlier years are
scarce, and no comparable study of a large number of colonies has been
done for any other time. Some indications of change over time can be
gained from narrower studies, however. One study recently found that
total wealth per wealthholder in six Maryland tidewater counties in 1700
was £203, and estimated that per capita wealth in these counties at the
same date at £34.7.?* In 1774, total wealth per wealthholder in the
southern mainland colonies was £395, while per capita southern wealth
was £54.7. After adjusting for price-level changes, the estimate of south-
ern real total wealth per wealthholder for 1774 is 49.8 percent higher than
that for Maryland in 1700, while estimated real total wealth per capita in
1774 is 22.6 percent above the estimate for 1700.
17
Comparison of these
figures over time can be no more than suggestive, because the geographic
coverage of the estimates is very different, and the direction of
any
result-
ing bias in comparing the estimates is unknown. The changes in level are
substantial, however, as the implied annual average of growth of wealth
per wealthholder is 0.55 percent between 1700 and 1774, while the
annual average increase of per capita wealth is 0.28 percent. Moreover, it
is likely that these growth rates continued a process that had begun earlier
in the colonial period, for wealth levels were probably considerably higher
in 1700 than in the mid-seventeenth century. The more rapid increase of
wealth per wealthholder than of per capita wealth between 1700 and 1774
is consistent with the increase during the eighteenth century of
the
impor-
tance of slaves in the southern colonies, because slaves increased the total
population without adding to the numbers of wealthholders. Although
obviously imprecise, the indication of growth given by these comparisons
is clearly consistent with the consensus among most economic and social
historians who have studied the colonies, that significant increases oc-
curred during the colonial era in both productivity and the standard of
living.
Although comparable estimates of per capita wealth for the seventeenth
century are lacking, some studies of the value of probated estates provide
suggestive evidence. One of these found that the mean value of estates in
16
All values in this section are given in £ sterling.
" Price-level changes are taken from Henry Phelps Brown and Sheila V. Hopkins, A
Perspective
of
Wages
and
Prices
(London: 1981), 30. Because the wealth estimates are quoted in English currency,
the appropriate price-level adjustments are those of England. .
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Settlement and Growth of the
Colonies
191
Jamaica rose steadily during the last quarter of the seventeenth century,
with the average value in 1700 more than twice that of 1675. A study of
four counties on Maryland's lower western shore found that the mean value
of estates rose by 40 percent between the 1660s and the beginning of the
eighteenth century. Although these increases are impressive, they are not
necessarily the result of economic growth, for to some unknown extent
—
most likely a large extent in Jamaica - they may represent the effects of a
growing concentration of wealth as the number of bound laborers in-
creased. Yet it is likely that in some degree they were caused by genuine
gains in productivity. Early in the colonial period, English settlers in
those regions that differed most from their homeland with respect to
climate and other agricultural endowments began to grow staple crops
that were generally new to them, on a scale that was also unfamiliar. The
potential profits to be made by growing sugar, tobacco, and other crops
more efficiently were great, and might be expected to have led colonists to
work at improving their methods of production. This does seem to have
occurred, as for example in the early Chesapeake planters both learned how
to handle more tobacco plants per worker and developed better strains of
the plant. The results were impressive, as one study found that tobacco
output per worker in Maryland and Virginia more than doubled between
1620 and 1630, and doubled again between 1650 and the end of the
seventeenth century, with the net effect that the amount of the crop
harvested per worker rose from 400 pounds in the early decades of tobacco
cultivation to 1,900 pounds per worker by 1700. This achievement of
early productivity gains was by no means inevitable, however, and it is not
likely to have occurred equally throughout all the colonial regions. In
some regions, particularly those where agricultural conditions differed less
from those of England, there may have been less scope for productivity
increases due to improvements in agricultural methods. A study of two
rural Massachusetts counties, for example, found no increase in mean
wealth per estate between 1680 and 1720. Earlier in this essay, it was seen
that the greatest departures from the originally intended forms of govern-
ment and the greatest modifications in transplanted institutions tended to
occur in those regions where economic conditions differed most from those
of England. Although detailed investigations remain to establish the eco-
nomic effects of these adaptations, it may be that the more radical changes
coincided with, and perhaps served as the basis for, the greatest gains in
productive economic efficiency.
The major study of colonial wealth done to date has estimated that
Cambridge Histories Online © Cambridge University Press, 2008
192 David W. Galenson
nonhuman per capita wealth in the mainland colonies in 1774 was £37.4.
Although comparisons with other countries are again difficult, it is possi-
ble to give some indication of where this placed the colonies relative to
England. Per capita wealth in England rose from approximately £110 in
1760 to £192 in 1800.
l8
Per capita wealth therefore appears to have been
substantially lower in America than in England, with the colonial level in
1774 probably significantly less than one-third that of England. Although
little research has been done to evaluate this sizable difference, the author
who produced the colonial estimates cited here suggested that the large
size of this gap in wealth might have been due in part to differences in
social structure and institutions between the mother country and the
colonies, and that the difference in the level of income might consequently
have been smaller than that in wealth:
We are left with the possibility that British wealth per capita, which includes the
wealth of the barons, lords . . . and of other great landed estates, was consider-
ably higher than that of the colonists, including the slave population. Income
may have been higher in relation to wealth in the colonies because of the much
lower value of land here, the importance of "free" income (gathered from the
countryside), the lesser elegance of
the
finer private buildings, the
as
yet relatively
fewer "carriages and coaches," the relatively small amounts of fixed industrial
capital.
•»
Support for the proposition that colonial income levels might have
compared more favorably with that of England than was the case for
wealth is provided by several intriguing pieces of indirect evidence about
one important component of the material standard of living, nutrition. A
recent study of muster rolls for soldiers who fought in the American
Revolution produced the striking result that American-born colonial sol-
diers of the late 1770s were on average more than three inches taller than
their English counterparts who served in the Royal Marines at the same
time.
Since the genetic potential for height in these populations would not
have differed, the most likely cause of this remarkable American advan-
tage in height is superior nutrition. This conclusion becomes somewhat
less surprising in view of another recent study that examined the diet of
colonists in the Chesapeake region, and found that after the very earliest
years of settlement it is likely that nearly all migrants from England to the
18
These figures for national wealth per head are from Charles Feinstein, "Capital Formation in Great
Britain," in Peter Mathias and M. M. Postan, eds., Cambridge
Economic
History of Europe, Vol. VII
(Cambridge: 1978), Table 24, 83; the figures were converted from constant 1851-60 prices to
current prices using the price index given in
ibid.,
Table 5, col. 1, 38.
•'» Alice Hanson Jones, Wealth of a Nation to Be (New York: 1980), 69.
Cambridge Histories Online © Cambridge University Press, 2008
Settlement
and Growth of the
Colonies
193
Chesapeake improved their diets in the process. Although settlers in the
Chesapeake had to adapt to a diet different from the one they knew in
England, with an American diet based primarily on Indian corn instead of
wheat and other grains, most colonists in the Chesapeake received a more
nourishing diet than all but the most affluent Englishmen. These studies
of nutrition together suggest that the real standard of living of typical
colonists might have been higher relative to those of English workers than
has generally been believed in the past, and higher than might be inferred
from the comparison of American and English wealth levels.
Another indication of high colonial standards of living is afforded by
evidence on levels of education. Literacy rates among free adult males in
the colonies were high by contemporary English standards. In the mid-
seventeenth century, about two-thirds of
New
England's adult males were
literate, compared to only one-third of adult males in England. Although
literacy rates were higher in New England than elsewhere in the colonies,
literacy rates for free males in seventeenth-century Virginia were near one-
half,
still above English levels, and literacy rates in Pennsylvania were
probably higher than in Virginia. Literacy rates in a number of colonial
areas appear to have fallen in the late seventeenth century, perhaps as a
result of the increasing geographic dispersion of the population; as new
lands on the frontier were settled, more families had no access to existing
schools, and many new towns initially lacked the wealth to build and
operate schools. Strong evidence of improving education appears in the
eighteenth century, however, as literacy rates rose throughout the main-
land colonies. By the close of the colonial period regional differences still
existed, but they were considerably smaller; adult male literacy in New
England was near 90 percent, and free adult males in Pennsylvania and
Virginia had literacy rates near 70 percent. As in the seventeenth century,
overall literacy rates for free adult males in the colonies in the late eigh-
teenth century were therefore higher than those of England, where adult
male literacy was about 65 percent. Evidence on the extent of literacy
therefore suggests that by contemporary standards English America was
not only initially settled by a well-educated population, but that after an
early decline due to the costs of geographic expansion, the colonial popula-
tion saw considerable improvements in education during the eighteenth
century which kept its levels of literacy above those of England.
While comparisons of colonial living standards with those of England
are plagued by severe problems of measurement, comparisons of wealth
among the colonial regions in 1774 can be made with greater precision.
Cambridge Histories Online © Cambridge University Press, 2008
194 David W. Galenson
These reveal a number of interesting contrasts in the levels as well as the
nature of the economic development that had occurred in different places
over the course of the colonial period. The first column of Table 4.9
compares total wealth per capita for the mainland regions and Jamaica.
The level rises from north to south, with New England's wealth at two-
thirds that of the South, the Middle Colonies' at three-fourths the south-
ern level, and Jamaica's 50 percent greater than that of the South. This
ranking was familiar to contemporaries, whose understanding of the princi-
pal economic basis of these geographic differences was succinctly expressed
by Adam Smith: "The profits of a sugar-plantation in any of our West
Indian colonies are generally much greater than those of any other cultiva-
tion that is known either in Europe or America: And the profits of a
tobacco plantation, though inferior to those of sugar, are superior to those
of corn."
20
Although at first glance it might appear natural to consider the wealth
measure used in the first column of Table 4.9, obtained by dividing a
region's total wealth by its total population, in the case of colonial Amer-
ica it is extremely difficult to interpret this measure. For the legal exis-
tence of transferable property rights in humans in colonial America, in the
form of slavery and servitude, means that bound laborers are here included
both in the numerator of
this
expression, as part of physical wealth, and in
its denominator, as part of the total population.
The second column of Table 4.9 eliminates this problem by removing
the value of human capital from total wealth. This treatment is compara-
ble to that typically used for measuring per capita wealth in today's
economies, in which property rights in humans cannot be sold. This
measure can be interpreted as giving one indication of the productive
capacity of an economy relative to its population, by estimating the ratio
of nonhuman physical capital to total population. The ordering of the
regions changes in this measurement, as the Middle Colonies lead the
other mainland regions, and New England and the South are both at the
same level below it. Jamaica remains above all the mainland regions. Yet
what is most striking about the results obtained with this measure is
perhaps not the change in ranking, but the very small differences among
the regions: the Middle Colonies' nonhuman wealth per capita is only 10
percent greater than that of the other mainland regions, and Jamaica's is
less than 10 percent above that of the Middle Colonies.
™
Adam Smith, Wealth of Nations, 366.
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Table 4.9. The wealth of the
colonies
in 1774
Region
New England
Middle Colonies
Southern Mainland
Jamaica
(1) Total wealth per
capita (£)
36.6
41.9
54.7
84.1
(2) Nonhuman
wealth per capita (£)
36.4
40.2
36.4
43.0
(3) Total wealth per
free capita (£)
38.2
45.8
92.7
1200.0
(4) Nonhuman
wealth per free
capita (£)
38.0
44.1
61.6
754.3
Note: Nonhuman wealth includes land (real estate) and nonhuman portable physical wealth (livestock; producers'
durables, crops, consumers' durables, etc.). Total wealth is the sum of nonhuman wealth and the value of
indentured servants and slaves.
Sources: Mainland
Colonies:
Jones,
Wealth
of a
Nation to
Be,
58,
96.
Jamaica:
McCusker and Menard,
The Economy of
British
America,
61;
McCusker, "The Rum Trade and the Balance of
Payments
of the Thirteen Continental
Colonies, 1650-1775" (unpublished dissertation, University of Pittsburgh, 1970), 692; Stanley L. Engerman,
"Notes on the Patterns of
Economic
Growth in the British North American Colonies in the Seventeenth,
Eighteenth, and Nineteenth Centuries," in Paul Bairoch and Maurice Levy-Leboyer, eds.,
Disparities
in
Economic
Development Since
the Industrial
Revolution
(London: 1981), 50.
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196 David W. Galenson
Comparing columns
1
and 2 of
Table
4.9 serves to emphasize both the
central importance of bound labor in the southern mainland colonies and
the West Indies and the marginality of bound labor in New England and
the Middle Colonies. The difference between the entries for a given region
in the two columns is the value of transferable human wealth in a region
divided by total population, and this ranges from a mere £0.2 in New
England and £1.7 in the Middle Colonies to the much larger amount of
£18.3 in the southern mainland and the still greater value of £41.1 in
Jamaica.
Although informative, the measure presented in the second column of
Table 4.9 fails to capture important aspects of the striking differences in
wealthholding that existed among colonial regions. Since human capital
could be bought and sold under colonial law, servants and slaves repre-
sented valuable physical assets to their owners; at the same time, most
bound laborers were not potential wealthholders. The measure given in
the third column of Table 4.9 recognizes these facts by including the value
of bound laborers in physical wealth while excluding bound laborers from
the population measured in the denominator. The resulting measure gives
an indication of the ratio of the value of total transferable physical wealth
to the size of the free population. The effect of the change in the measure is
dramatic. The initial ranking obtained for total wealth per capita, rising
from north to south, reappears, but what is most striking is again the
relative magnitudes. New England and the Middle Colonies both had less
than half the total wealth per free capita of
the
South. Even more remark-
ably, Jamaica had more than twelve times the average wealth per free
resident of the southern mainland colonies, or equivalently more than
twenty-five times the mean level of the Middle Colonies or New England.
This third measure corresponds most closely to the perceptions of con-
temporaries who compared the wealth of the colonial regions, for what
impressed them was the enormous wealth represented by the great planta-
tions of the southern mainland colonies and the West Indies, in contrast to
the more modest agricultural economies of New England and the Middle
Colonies, which were based on the family farm. Contemporaries were also
aware of the great wealth gap between the West Indies and the southern
mainland, as witnessed for example by Adam Smith's observation that
"our tobacco colonies send us home no such wealthy planters as we see
frequently arrive from our sugar islands."
21
" Smith, Wealth of Nations, 158.
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