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
197
The clarity of contemporaries' perceptions of the differences in the
wealth of the major colonial regions was due not only to the striking
regional differences in the scale and organization of agriculture, but also in
part to the highly visible nature of the economic activity that was key to
the accumulation of wealth in these colonial settlements, specifically the
export of agricultural products. The prosperity of a colonial region de-
pended heavily on its ability to produce agricultural commodities that
were demanded in the much larger European markets. Table 4.10 shows
the difference among the regions in this respect in two different periods,
centered around 1700 and 1770. The ranking of the regions in the value of
exports per capita are similar in the two periods, with the southern main-
land colonies substantially higher than both New England and the Middle
Colonies, and the West Indies substantially higher than all the mainland
regions. The ordering of the regions in per capita exports in 1770 is also
similar to the ranking of the regions for total wealth per capita shown in
Table 4.9. And as in the case of wealth, the relative magnitudes across
regions change sharply when the value of exports is divided not by the
total population, but by the free population. In both periods, while the
values for the two northern mainland regions remain almost unchanged,
the values for the southern mainland colonies increase significantly, and
those for the West Indies increase enormously. And because of the increas-
ing quantitative importance of blacks in the southern mainland colonies
and the West Indies over time, the value of exports per free capita rises
more in these areas relative to simple exports per capita at the end of the
colonial period than in the middle. This difference reflects the very impor-
tant fact that the continuing growth of slavery in the Chesapeake, the
Carolinas, and above all the West Indies served to increase the commercial
power of many of the free residents of these regions over time. With
differences in per capita exports as large as those shown in Table 4.10, as
well as in the per capita wealth of the white populations, it is little wonder
that contemporaries were so clearly aware of the economic hierarchy that
existed among the mature colonial regions.
Not surprisingly, the very different levels of export activity among the
regions were associated with very different patterns of trade by destination.
Table 4.11 presents the percentage distributions of the value of each re-
gion's average annual overseas exports during 1768—72 by place of destina-
tion. Although these data do not include evidence on the trade among the
North American regions, they do provide interesting insights into the
contrasting patterns that had developed by the end of the colonial period.
Cambridge Histories Online © Cambridge University Press, 2008
Table 4.10.
Average
annual
value
of
commodity exports
by
region,
1697—1705 and 1768-1722 (£
sterling)
1697-1705
1768-1772
Region
New England
Middle Colonies
Upper South
Lower South
West Indies
Total value of
exports
31,392
15,065
217,062
11,870
608,279
Value of exports
per capita
0.34
0.28
2.21
0.72
4.11
Value of exports
per free capita
0.35
0.30
2.55
0.87
18.43
Total value of
exports
439,101
526,545
1,046,883
551,949
3,910,600
Value of exports
per capita
0.76
0.95
1.61
1.60
8.16
Value of exports
per free capita
0.78
1.01
2.63
2.91
86.9
Note: Data for 1697-1705 include only exports to Great Britain; data for 1768-72 include exports to all overseas destinations.
Sources: Sir Charles Whitworth, State of the
Trade
of Great Britain in Its
Imports
and
Exports,
Progressively from the Year 1697 (London:
1776),
1-9; McCusker and Menard,
The Economy
of
British
America,
103-8, 130-6, 154-60,
172^1,
199-203.
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Table
4.11.
Percentage distributions
of the
value
of
average
annual
regional exports by
destination,
1768-
7772
Exporting region
New England
Middle Colonies
Upper South
Lower South
West Indies
Great Britain
and Ireland
18
23
82
72
87
Southern
Europe
15
35
9
10
0
West Indies
63
42
9
18
0
Africa
4
0
0
0
0
North
America
—
—
—
—
13
Total
100
100
100
100
100
Note: For North American mainland colonies, exports to other mainland colonies were not
measured, and are consequently not included in this tabulation.
Source: McCusker and Menard,
The Economy
of
British
America,
108, 130,160,175,199.
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200 David W. Galenson
New England's major overseas trading partner from very early in the
colonial period was the West Indies, which received nearly two-thirds of
all New England's exports. The economy of early Massachusetts enjoyed
substantial continuing flows of immigrants throughout the 1630s, and
during this time many of the earliest settlers prospered by selling cattle
and other agricultural products to more recent arrivals. When political
prospects for Puritans in England improved in the early 1640s, however,
the rate of immigration to New England dropped sharply. Deprived of the
infusions of capital provided by new settlers, Massachusetts' economy
became depressed, and land and cattle prices fell abruptly. The colony's
government searched in vain for a new source of
prosperity,
passing laws
aimed at promoting such activities as the fur trade, iron manufacturing,
and cloth production, but no successful solution was found until New
England merchants became aware of
the
increasing need for food that had
arisen in the West Indies in the wake of that region's sugar revolution.
Boston merchants began to trade with the West Indies in the mid-1640s.
In 1647
a
correspondent from the islands wrote to John Winthrop in
Massachusetts that "Men are so intent upon planting sugar that they had
rather buy foode at very deare rates than produce it by labour, so infinite is
the profit of sugar workes after once accomplished."
22
New England began
to send a variety of foods to the West Indies, with fish, meats, and grain
the most important, and this trade continued throughout the remainder of
the colonial period. Some parts of the region, including the Narragansett
Country in southern Rhode Island, prospered by specializing in raising
cattle for export to the Caribbean islands. The Middle Colonies later
joined New England's farmers and merchants in benefiting from the West
Indies' monoculture in sugar. The Middle Colonies' major export, grain,
went in approximately equal amounts to the West Indies and southern
Europe. The Middle Colonies also sent meat and other food to the West
Indies on a smaller scale.
The trade of the Upper South from a very early date was dominated by
tobacco, which made up more than 70 percent of the region's total exports
even in 1770, and all of which was sent to Britain. The region's much
smaller volume of exports to the West Indies and southern Europe con-
sisted almost entirely of
grain.
Rice made up more than half of
all
exports
from the Lower South; two-thirds of this was sent to Britain, with the
" Quoted in Harold Innis, The Cod
Fisheries
(Toronto: 1954), 78.
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Settlement
and Growth of the
Colonies
201
remainder divided equally between the West Indies and southern Europe.
The region's other important export, indigo, was all sent to Britain.
Sugar accounted for 80 percent of the West Indies' total exports in
1770,
and virtually all was sent to Britain. The region's other important
export, rum, was divided among Britain and the mainland regions from
which the sugar islands imported the bulk of their food.
Taken together, Tables 4.10 and 4.11 serve to emphasize not only the
general importance of trade in generating colonial wealth, but also the
particular importance of trade with Great Britain. It was those colonial
regions that found staples that could be sent to Britain that were able to
prosper most through the production of exports. Those regions that could
not export to Britain on a large scale had to resort to exporting within the
colonies, or elsewhere in Europe, on a much smaller scale. The clear
division of the regions by degree of success in exporting to Britain, with
New England and the Middle Colonies the least favored, the southern
mainland regions considerably more successful, and the West Indies by far
the leader, furthermore suggests that in these preindustrial economies the
key to successful trade was overwhelmingly geographic, as those regions
whose climates and natural endowments differed most from those of the
mother country had the strongest basis for trade with the metropolis.
Contemporaries clearly recognized this, as evidenced by the argument of
the English mercantilist,
Sir
Josiah Child, in the late seventeenth century
that "New-England is the most prejudicial Plantation to the Kingdom of
England," precisely because of the similarity of its natural endowments to
those of England: "All our American Plantations, except that of New
England, produce Commodities of different Natures from those of this
Kingdom. . . . Whereas New-England produces generally the same we
have here, viz. Corn and Cattle." New England's products provided the
basis for little trade with England, while the region's export of those
foodstuffs to the West Indies reduced England's own trade with the sugar
islands. In consequence, Child concluded that "Old England suffers dimi-
nution by the growth of
those
Colonies settled in New-England," while in
this regard "that Plantation differs from those more Southerly, with re-
spect to the gain or loss of this Kingdom."
2
' Child's argument, based on
the straightforward use of the value of
a
colony's trade with England as a
measure of the colony's benefit to the mother country, underlines the fact
»» Sir Josiah Child, A New
Discourse
of
Trade
(London: 1698), 166, 204-6.
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202 David W. Galenson
that the prosperity of English American colonies depended in large part on
their ability to produce goods that could profitably be sent to England.
The differences noted above in wealth levels may have translated into
significant regional differences in the material standard of
living.
Among
native-born colonial recruits for both the French and Indian War and the
Revolution, men born in the South were significantly taller than their
counterparts from the North. During the 1770s, even after allowing for
such characteristics as occupation and urban or rural residence, being born
in Virginia rather than New England added an average 0.6 inches to a
soldier's height, while being born in the Carolinas added an average of 0.8
inches relative to New England; men born in New York were also taller
than those from New England. As in the earlier comparison of
the
heights
of colonial soldiers with the English, the most likely source of these
regional differences in mean height is variation in levels of nutrition,
which in turn may point to differences in real incomes across regions that
follow the rankings of the regions by wealth.
The dominance of agriculture in the American economy even at the
close of the colonial era is clearly demonstrated in Table 4.12. Land
accounted for 68.4 percent of all nonhuman wealth in the mainland
colonies in 1774, while livestock made up another 11.5 percent, and
inventories of crops an additional 3.5 percent. Thus agriculture accounted
for more than four-fifths of
all
nonhuman wealth. Nonfarm capital goods
accounted for only 0.5 percent of nonhuman wealth in the colonies over-
all,
and nonfarm business inventories only 1.9 percent. Some regional
variation does appear in the importance of nonfarm enterprise, as New
England and the Middle Colonies, which were more oriented toward
mercantile activity than the South, had combined nonfarm equipment and
inventories worth 3.8 percent and 4.5 percent of wealth, respectively,
compared to only 0.8 percent in the South, but in no region did agricul-
tural capital make up less than three-quarters of nonhuman wealth.
There were also considerable regional differences in the distribution of
wealth. Although systematic estimates of wealth distribution in the West
Indies are not available, the enormous value of the land, capital, and
bound labor of the great plantations must certainly have made wealth in-
equality much greater in the sugar islands than on the mainland. Compari-
sons of the mainland regions are shown in Table 4.13, which presents
evidence on the distribution of wealth among free adults. New England
and the South had somewhat greater concentration of wealthholding than
the Middle Colonies, measured by the share of total wealth held by the
Cambridge Histories Online © Cambridge University Press, 2008
Table
4.12.
Category
Composition
of
nonhuman
wealth,
1774
Thirteen Colonies
£per
capita
%
New
England
£per
capita
%
Middle Colonies
£per
capita
%
South
£per
capita
%
Total
Land
Producers'
capital:
Livestock
Nonfarm
business
equipment
Crops
Nonfarm
business
inventory
Other
Consumers'
goods
37.4
25.6
4.3
0.2
1.3
0.7
1.6
3.7
100.0
68.4
11.5
0.5
3.5
1.9
4.3
9.9
36.4
26.1
2.8
0.4
0.2
1.0
1.7
4.4
100.0
71.1
7.7
1.1
0.5
2.7
4.7
12.1
40.2
25.9
4.8
0.3
2.1
1.5
1.7
4.0
100.0
64.4
11.9
0.7
5.2
3.7
4.2
10.0
36.4
25.1
4.8
0.1
1.5
0.2
1.5
3.1
100.0
69.0
13.2
0.3
4.1
0.5
4.1
8.5
Source:
Jones,
Wealth
of a
Nation to
Be,
Table
4.2, 96.
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204 David W. Galensm
Table 4.13.
Distribution
of
total wealth by
region,
1774
Percentage of
total wealth
held
by richest
1 percent
2 percent
10 percent
20 percent
50 percent
Gini coefficient
Mean (£)
Median (£)
Thirteen
Colonies
12.9
19.6
50.7
67.9
933
0.66
252.0
108.7
New
England
11.6
18.8
46.8
65.9
92.4
0.64
161.2
74.4
Middle
Colonies
12.0
16.0
35.1
52.7
88.8
0.54
189.2
152.5
South
10.4
16.9
46.9
69.6
94.2
0.67
394.7
144.5
Note: The population included in this tabulation is those eligible
to hold wealth; for definition of this group,
see
Jones,
Wealth
of a
Nation to
Be,
33—7.
For the definition of the Gini coefficient, see
ibid.,
164-5.
Source: Jones,
Wealth
of a
Nation to
Be,
Table 6.2, 164-5.
richest io, 20, or 50 percent of wealthholders, or by the Gini coefficient.
New England and the South also had values of mean wealth per free adult
more than twice as high as their respective medians, compared with a
mean less than 25 percent greater than the median in the Middle Colo-
nies.
Yet the South was rich with considerable inequality: the region's
mean total wealth per free adult was more than twice as high as those of
the other two regions. In sharp contrast, New England was relatively
poor, as it had both the lowest mean and the lowest median wealth per free
adult among the regions. That wealth inequality should be great in the
South is perhaps not surprising, because the region had many large planta-
tions that dwarfed the much more numerous small farms. The consider-
able concentration of wealth in New England may have been a result of the
contrast between the region's large and relatively poor agricultural sector
and its small but prosperous mercantile sector. The lesser degree of in-
equality in the Middle Colonies, together with mean wealth somewhat
higher than New England but well below the South, may have been a
result of the prosperity of the Middle Colonies' agriculture relative to that
of New England, but without the considerable variation in agricultural
scale made possible by the large plantations that appeared in the South.
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Settlement
and
Growth
of the
Colonies
205
Notwithstanding these regional differences within the colonies in
wealth inequality, it is likely that overall economic inequality was consid-
erably less in the mainland colonies than in England at the time. Visiting
contemporaries almost unanimously described colonial America, particu-
larly the northern mainland regions, as a remarkably egalitarian society,
and regularly commented on both the greater incidence of property owner-
ship and the more limited extent of extreme poverty in the colonies than
in Europe. When a visitor to Pennsylvania in 1775 remarked that "it was
the best country in the world for people of small fortunes, or in other
words, the best poor man's country," he was echoing the words of many
earlier immigrants who had contrasted their new homeland with the old in
letters to relatives and friends who remained behind.
24
Although careful
quantitative comparisons have yet to be carried out, contemporaries' per-
ceptions were probably correct, and modern historians generally believe
that wealthholding was considerably less concentrated in colonial America
than in England.
Another important question on which little systematic research has
been done concerns possible trends in the extent of economic inequality
that occurred during the course of the colonial period. No studies of
overall wealth inequality throughout the colonies are available for dates
prior to 1774. Yet a number of investigations have measured changes in
the distribution of wealth over time within particular communities. On
the basis of studies that found rising wealth concentration in specific
communities, including several large cities and prosperous rural counties
settled early in the colonial period, a number of
scholars
have argued that
wealth inequality probably rose throughout the mainland colonies during
much of the colonial period. Recently, however, this hypothesis of rising
overall colonial inequality has been challenged by an analysis that argues
that this generalization from the local studies is flawed by a fallacy of
composition. The new analysis recognizes that inequality was rising in
cities and in older agrarian regions along the Atlantic coast. Equally
significant for overall inequality, however, was the fact that new frontier
communities were being settled at very rapid rates during most of the
colonial period. The settlers in these new communities were drawn by the
economic opportunities offered by the frontier. Per capita wealth grew
** Quoted in Jackson Turner Main,
The Social Structure
of
Revolutionary America
(Princeton, NJ: 1965),
222.
For an earlier example of this description, see Susan E. Klepp and Billy G. Smith, eds., The
Itifortutiatt: The
Voyage
and
Adventures
of William
Moraley,
an Indentured Servant (University Park, PA:
1992),
88-9.
Cambridge Histories Online © Cambridge University Press, 2008
206 David W. Galenson
more rapidly in the new frontier communities than in the older coastal
settlements, and because the settlers in the newer communities were
initially poorer on average than the residents of older cities and towns, the
effect of this rapid growth in wealth on the frontier was to reduce overall
colonial inequality. The geographic redistribution of the colonial popula-
tion away from the Atlantic seacoast therefore served to reduce economic
inequality by offering younger, poorer, and more ambitious migrants from
older communities the opportunity to achieve greater economic success by
developing the frontier. Quantitatively, the impact of this redistribution
of population may have been large enough to counterbalance the rising
economic inequality that has been observed within some older communi-
ties,
and the net effect may have been to produce relatively little change in
overall wealth inequality in the mainland colonies throughout most of the
colonial period.
The economic development of the colonies of English America was
surely rapid by preindustrial standards, and as in the case of population
growth this was clearly recognized by contemporaries. Adam Smith began
his general analysis of the economic growth of colonial regions with the
proposition that "the colony of a civilized nation which takes possession of
a waste country, or of one so thinly inhabited, that the natives easily give
place to the settlers, advances more rapidly to wealth and greatness than
any other human society."
2
' And Smith left no doubt as to the principal
evidence on which he based this generalization, stating that "there are no
colonies of which the progress has been more rapid than that of the
English in North America."
26
From a series of small settlements fighting
for their survival in the early seventeenth century, the English colonies
both in the West Indies and on the North American mainland reached
levels of economic development that afforded not only great riches for the
economic elite, but widespread levels of more modest but nonetheless
significant economic prosperity for many European settlers and their de-
scendants. Yet it is clear that the differences in the process of develop-
ment, and in the nature of the economies and societies that emerged, were
enormous among the regions that have been treated here. At one end of
a
spectrum lay New England, which had the least wealth, the least foreign
trade, and the least bound labor among all the regions. At the opposite
end lay the West Indies, where the greatest volume of trade produced the
greatest physical wealth, and the greatest amount of the harshest form of
"» Smith, Wealth of Nations, 531-2.
a6
Smith, Wealth 0/Nations, 538.
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