Engerman S.L., Gallman R.E. The Cambridge Economic History of the United States, Vol. 1: The Colonial Era
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Per capita
regional product
$660
$935
$1,238
Aggregate
regional
product
(millions)
$8.4
$185.3
$1,387.9
Economic
and Social Development of the South 257
Table 6.2.
Estimated income
in
the southern
colonies,
1650-
1774 (1990
dollars)
Year
1650
1720
1774
Note: The calculation begins with the midpoint of Alice
Hanson
Jones's
estimate of per capita GNP in 1774.
Wealth of a Nation to Be: The
American Colonies on
the Eve
of
the Revolution
(New York, 1980), 63. Figures for 1650
and 1720 were then derived assuming an annual growth
rate of 0.5 percent. Aggregate GNP was derived by
multiplying the per capita figure by the population
estimate in Table
6.1.
Figures were converted to 1990
dollars by the price index
in
John J. McCusker, "How
Much Is That in Real Money? A Historical Price Index
for Use as a Deflator of Money Values in the Economy of
the United States," American Antiquarian Society,
Proceedings,
101 (Oct. 1991), 323-32. Compare John J.
McCusker and Russell R. Menard,
The Economy
of British
America,
1607-1789 (Chapel Hill, NC: 1985), 57.
income, exports averaged more than £3 sterling per head, triple that for
the northern colonies.
While exports were critical, production for home consumption and for
local exchange accounted for the bulk of the output in the southern
economy, even in the plantation districts. Given per capita incomes in the
neighborhood of £10 sterling, export earnings made up some 15 to 20
percent of the total. For example, on the Cole estate, a small plantation in
southern Maryland, exports accounted for just over one-third of total
revenues during the 1660s, production for home use a bit less than one-
half,
and local exchanges just under one-fifth. In the late eighteenth
century, when dependency ratios were higher and local markets larger, the
export sector must have contributed even a smaller share of the whole.
European American women, it is important to note, although restricted
by the conventions of
a
patriarchal society to only limited participation in
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258
Russell
R. Menard
the export sector, played a central role in production for home use and in
managing local exchange, especially at the neighborhood
level.
Such activi-
ties are poorly documented and are only now finding their historians, but
we should not let their obscurity conceal their contribution to colonial
living standards.
The benefits of southern economic growth were not evenly distributed.
For one thing, there were substantial regional differences. The extent of
those differences is illustrated in Table 6.3, which summarizes data from
probate inventories taken in 1774 for three places: Anne Arundel County,
Maryland, along the tobacco coast; Orange County, North Carolina, in the
backcountry; and the Charlestown district of South Carolina, at the heart
of the lowcountry. The lowcountry was by far the richest of the three
regions: probated decedents in the Charlestown area were worth nearly
four times their counterparts along the Chesapeake and nearly ten times
those in Orange County. The data reveal other notable differences in the
structure of wealth between the three regions. The most striking is the
importance of
slavery,
which clearly was more central to the economies of
the tidewater plantation districts than to the backcountry. Real estate
accounted for a smaller share of wealth in the backcountry than in the
other two regions, reflecting differences in the availability of land as well
as the limited improvements in a region still in the farm-building state.
Differences in product mix are also evident: livestock was relatively more
important in the backcountry than along the coast, crops less so, a func-
tion of distance from markets and of participation in the great export
trades of the Atlantic economy. While the differences are striking, there
are some important similarities. Residents of Orange County invested the
same share of their assets in consumer goods as did their coastal counter-
parts,
and as their financial assets and liabilities show, they were equally
engaged in the world of credit and debt. Living standards in the
backcountry may have been crude, but settlers did not abandon their
aspirations for the good life or turn their backs to the market when they
moved to the interior.
There were striking differences in wealth by region in the South by the
end of the colonial era, but it is unclear whether inequality among free
whites increased during the eighteenth century. While abundant resources
and scarce labor kept inequality among free colonists low by comparison to
Europe, many historians now argue that the poor were on the rise and that
a growing share of regional income was captured by a few big merchants
and great planters. That position finds support in studies of long-settled
Cambridge Histories Online © Cambridge University Press, 2008
Table 6.3.
Property
owned by
probate-type wealthholders
in selected
counties,
1774
(in pounds sterling)
Total worth
Servants and slaves
Estates (%) with servants or slaves
Servants and slaves*
Nonhuman wealth'
Real estate*
Livestock*
Crops'
Consumers' goods'
Financial assets*
Financial liabilities'
Net worth'
N inventories
Anne Arundel Co.,
MD
711.7
169.2
66.7%
7.1
540.8
352.1 (65.1%)
43.4 (8.0%)
25.7 (4.8%)
42.9 (7.9%)
53.3 (9.9%)
51.3(9.5%)
660.4
27
Orange Co.,
NC
274.6
89.6 (32.6%)
37.5%
2.2
193.9
60.7 (31.3%)
52.3 (27.0%)
1.9(1.0%)
16.7
(.8.6%)
38.2 (19.7%)
47.1(24.2%)
227.5
32
Charlestown
District,
SC
2690.3
1325.0(49.3%)
83.3%
27.9
1359.6
734.9(54.1%)
65.2 (4.8%)
68.9(5.1%)
99.1 (3.7%)
352.6(26.3%)
352.6(25.9%)
2337.7
84
'Per estate.
Source: Alice Hanson Jones, Wealth of a Nation to
Be:
The
American Colonies on
the
Eve
of the
Revolution
(New York, 1976),
379;
Jones,
American Colonial
Wealth:
Documents and Methods
(New York, 1977), II,
1239-94,1443-71;
III, 1473-1619.
Cambridge Histories Online © Cambridge University Press, 2008
260 Russell R. Menard
communities in the tidewater where overcrowding led to higher rents,
lower wages, and rising inequality. On the other hand, limited opportuni-
ties on the coast encouraged migration to the interior, where prospects
were better and wealth more evenly distributed. Whether movement to
areas of low inequality fully offset coastal trends is uncertain, but it is clear
that inequality remained low by comparison to England or to later periods
in southern history and that the benefits of growth were widely shared
among free colonists.'
The issue has a different look if we consider slaves and slavery. The
African American population of the South grew rapidly over the period
(Figure 6. i) from roughly 900 blacks (3 percent of the total) in 1730 to
over 400,000 (41 percent) in 1770. Slaves played a critical role in the
southern economy and made a major contribution to the living standards
of the free population. Their presence tempers romantic notions of a
region marked by equality, opportunity, and a widely shared prosperity.
This is not to say that slaves were without income or even that those
incomes failed to rise over the colonial period. Slaves had to be fed,
housed, and clothed, and there is evidence that their material conditions
improved over time. The best evidence of such improvement is demo-
graphic. Beginning in the 1720s in the Chesapeake region and in the
17 50s in the lowcountry, the African American population grew rapidly
through reproduction, a rare achievement among New World slave soci-
eties.
But they paid a frightful price for those modest gains.
The economy of the South grew impressively in the 125 years following
1650,
and it distributed the benefits of growth widely among those of
European ancestry. Given the sharp differences in the South, the dynamics
of growth are best approached through analysis of the several subregions.
Before narrowing the focus, however, it is useful to think about the South
more broadly, to incorporate a Native American perspective. Although
Adam Smith's notion of an "advance ... to wealth and greatness" aptly
summarizes southern economic history from a European point of view,
colonization brought disaster to native peoples. We do not know how
many people lived in the South on the eve of Europe's invasion, nor is it
likely that we ever will. In 1670, however, by which time the evidence
will support an informed guess, there were roughly 250,000 to 300,000
Indians in the region. While this already represented a substantial reduc-
tion since the beginning of
the
century, their numbers fell further, reach-
> Peter H. Linden and Jeffery G. Williamson, "Three Centuries of American Inequality," in
Research
in
Economic
History I (1976), 69-123.
Cambridge Histories Online © Cambridge University Press, 2008
Economic
and Social Development of the South 261
ing 100,000 in 1700 and 50,000 in 1750. By now, of course, this is a
familiar pattern, well-known from all parts of Americas. What is less-
often recognized is the impact of that decline on the population as a
whole. As Figure 6.1 shows, the total population of the South actually fell
until 1700 and it was only in the 1720s that it surpassed its level of 1670,
and doubtless much later when it regained the size attained on the eve of
the invasion. "Advances to wealth and greatness," it would seem, depend
on the beholder's breadth of vision.
TOBACCO AND THE RISE OF THE
CHESAPEAKE ECONOMY
"Tobacco is the only solid Staple Commodity" of the Chesapeake colonies,
George Alsop reported in 1666, a crop "generally made by all the Inhabit-
ants.
..." "Tobacco as our Staple is our All," Governor Benedict Leonard
Calvert added in 1729, "and indeed leaves no room for anything else."
6
Both men exaggerated - not everyone grew tobacco, and there were other
products
—
but they did not exaggerate by much. Tobacco was "king" in
the region, as dominant as sugar in the islands, rice in the lowcountry, and
cotton in the antebellum South. It was not king from the start, however,
and Virginia floundered before planters discovered that they could build
prosperity on smoke. As late as 1616 - nearly a decade following the
arrival at Jamestown, after an investment of more than £50,000 sterling
and the migration of over 1,700 settlers - there were only 351 Europeans
in the colony, many of them hungry, most of them disgruntled and
disappointed. In that year, John Rolfe shipped off the first crop of Virginia
leaf to London. The Chesapeake boom was on.
An overview of price and production trends in the Chesapeake tobacco
industry suggests three stages - two lengthy eras of expansion that sur-
rounded a shorter period of little or no growth. During the first growth
phase, lasting into the 1680s, tobacco output rose at a rapid but decelerat-
ing pace while prices fell. Output grew more rapidly than prices dropped,
however, and the farm value of the crop climbed, from £20,000 sterling at
mid-century to more than £100,000 by the 1680s. During the second
6
George Alsop, "A Character of the Province of Maryland" (1666), in Clayton Colrrtan Hall, ed.,
Narratives of Early Maryland, 1633-1684 (New York, 1910), 363; Benedict Leonard Calvert to the
Lord Proprietary, October 26, 1729, in W. H. Browne ct al., eds.,
Archives
of Maryland (Baltimore,
1883-),
XXV, 602.
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262
Russell
R. Menard
expansion, which began about 1720 and lasted until the Revolution,
output and prices rose in tandem, pushing the value of the crop to more
than £750,000 by the 1770s. These two periods of expansion sandwiched
a generation of stagnation, stretching from the 1680s to the 1710s, when
both prices and production showed little change over the long run. Cut-
ting across all three periods was a recurring pattern of boom and bust in
which prices and output rose and fell in the short term and earnings from
the staple fluctuated dramatically.
The seventeenth-century expansion of
the
tobacco industry has puzzled
historians because it was accompanied by sharply falling prices. Falling
prices, it is often argued, reflected: a restrictive mercantilist policy that
kept the Dutch out of the trade and channeled tobacco through England
no matter where its final market; parasitic governments, which laid high
taxes on the leaf and thus restricted its market; and overproduction by
hard-pressed planters struggling to make ends meet. And low prices
brought hard times, leading some scholars to characterize the second half
of the seventeenth century as a period of prolonged depression around the
Bay. While not entirely wrong, that argument misses the main point.
Prices fell because planters and merchants improved productivity and
lowered costs. Lower costs meant lower prices, and lower prices meant
more people could afford the Chesapeake
leaf.
More customers meant
larger markets, and larger markets fueled the expansion of the tobacco
industry. It was not until the 1680s, when the long-term decline in prices
stopped in the face of rising production costs (a function of higher prices
for land and labor), that the industry stagnated. Planters then weathered
thirty years of "hard times."
One reason for the confusion among historians is that planters often
complained of depressed tobacco prices, and they blamed their difficulties
on mercantilist policies, taxes, and overproduction. Such complaints were
not constant but rather followed a recurring pattern rooted in the instabil-
ity of the Atlantic economy. The long-term movements of price and
production were not smooth but occurred in a series of
sharp,
short swings
as the tobacco industry moved quickly from buoyant prosperity to deep
depression in a largely self-contained price and production cycle. Short-
term increases in European demand led to a
flurry
of activity along the Bay
as planters bought new workers and put new land into cultivation to raise
output and capture the profits that higher prices promised. The response
was usually too robust, however, and markets were quickly glutted. Prices
fell,
and planters reduced investments in new workers and new land.
Lower prices made Chesapeake leaf
more
competitive with tobacco grown
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Economic
and Social Development of the South 263
elsewhere and permitted the penetration of new markets. Demand rose,
boom followed bust, and the cycle repeated
itself.
While planters muttered about "mysterys in Trade ... as great as
those in Religion" that alternately swelled and shrank their incomes, they
acted vigorously to control the economy, especially during the down-
turns.
7
Their efforts were both public and private. Depression encouraged
legislation to raise tobacco prices by limiting production and controlling
quality, to diversify the economy by promoting towns and local manufac-
tures,
to develop new markets, and to promote other exports. Individu-
ally, planters tried to lower costs and increase productivity in tobacco and
to create more self-sufficient and diverse operations so they would be
better able to ride out the hard times. Eventually those efforts, especially
the private efforts, erected a hedge, but the hedge proved low, and it grew
slowly. The problem persisted in large part because boom regularly fol-
lowed bust, and when tobacco prices improved, planters again concen-
trated on the staple.
The productivity gains that fueled the expansion of the tobacco industry
in the seventeenth century had several sources. There were, for one thing,
major savings in distribution costs as the industry was transformed from a
high-risk venture "accompanied both by Sea and land with . . . many
hazards" into "a certaine and orderly kind of
trade.
"
8
In particular, freight
charges on shipping the crop to London fell from 3d per pound in the mid-
16205 to less than a penny by the 1680s, largely because of better packag-
ing, while the commission that English merchants charged for selling
tobacco on consignment tumbled from 10 percent to 2.5 percent. Also,
prices for English manufactured goods fell as trade risks declined and
higher settlement densities permitted some scale economies in marketing,
while food became cheaper as planters built working farms. Most impor-
tant, the amount of tobacco produced per worker more than doubled
across the seventeenth century, from about 700 pounds in the 1620s to
more than 1800 by the 1680s.
The development of what has been called "the Chesapeake system of
husbandry" played the key role in improving agricultural productivity
around the Bay.
9
The system blended European and Native American
farming techniques with new methods worked out locally through experi-
mentation. As planters "learned by doing," they created a long-fallow
7
William Byrd to Mr. C. Smith, August 23, 1735, Virginia Magazine of
History
and Biography DC
(1901-2),
118.
8
S. Kingsbury, ed., Tbt
Records
of
the
Virginia
Company
of
London
(Washington: 1906—3)), IV, 264.
» The phrase is from Lois Green Carr, Russell R. Menard, and Lorena S. Walsh,
Robert Cole's
World:
Agriculture and
Society
in Early Maryland (Chapel Hill: 1991).
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264
Russell
R. Menard
agriculture with a twenty-year field rotation system using simple tools
(hoes and axes were sufficient) to grow tobacco and corn, and they raised
cattle and hogs that were allowed to range freely in the still sparsely
populated colonies. Contemporaries
were
sharply critical, even contemptu-
ous,
of the system
—
an "exceeding Ill-Husbandry" Robert Beverley called
it
—
but they underestimated its suitability to local circumstances.
10
The
Chesapeake system of husbandry yielded export income to purchase manu-
factured goods and servants while producing food for the family. It both
saved labor, the scarce resource in the seventeenth century, and preserved
the long-term fertility of the soil. Critics also failed to appreciate the
creativity of the achievement. As planters worked out the details of the
system - discovered, for example, the optimum distance between hills for
setting plants, the best methods for curing the
leaf,
how to bring new land
into cultivation without plowing or pulling stumps, how to manage work
schedules to maximize output, and how to raise livestock without fencing
it in
—
they greatly improved both the productivity of their agriculture
and their standard of living. The precise particulars of the process of
development are now lost, but their obscurity should not undermine
appreciation of their significance.
The Chesapeake system of husbandry also helped to shape the structure
of society along the tobacco coast in the seventeenth century. One needed
only a few simple tools, a few head of
cattle,
and about fifty acres of land
to set up as an independent planter, all within reach of newly freed
servants or free immigrants of modest means, especially while a rapidly
expanding tobacco industry generated easy credit. Further, the system
offered few returns to scale, and it placed substantial barriers in the way of
large plantations. Given the land requirements of tobacco and corn, most
planters could manage only four or five workers efficiently. Going beyond
that required the establishment of a separate operation, called a "quarter,"
which was hard to do incrementally but instead required a plunge - the
purchase of
several
workers who had to be provided with tools, livestock,
food, and clothing while the new plantation was put into working order.
As a result, small owner-operated farms worked by a family with the help
of a few servants and hired hands dominated the economy, while small
planters played a major role in government, often dominating the local
level. The seventeenth century was "the age of the yeoman planter" in the
Chesapeake region.
10
Robert Beverley, The History and
Present
State of Virginia (Chapel Hill: 1947 [orig. publ. 1705]),
291.
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Economic
and Social Development of the South 265
This open, relatively undifferentiated society of small planters was trans-
formed in the decades surrounding 1700. For one thing, the long expan-
sion of the tobacco industry slowly ground to a halt in the 1680s, and
output stagnated at just under 30 million pounds before beginning an-
other sustained rise around 1720. The inability of planters to achieve
further cost reductions was chiefly responsible for the slowdown and even-
tual stagnation. The major efficiencies in the Chesapeake system of hus-
bandry had been achieved by the 1680s, and planters faced increasing
prices for land and labor. Merchants did reduce transport and marketing
costs after 1680, but the savings had to be passed on to the planter to
offset rising production costs. The tobacco industry could no longer ex-
pand by lowering consumer prices. Further expansion would require in-
creased demand, unlikely while the Atlantic economy was disrupted by
war and Europe's population was in decline. As a result, the Chesapeake
region suffered three decades of hard times, interrupted only by a brief
boom around 1700, and a sharp contraction in opportunities for poor
families to climb the agricultural ladder.
The turn of the century also witnessed major changes in demography.
The growth of slavery was the most striking change. Indentured servants,
who often shared a common social origin with the planters they served and
who hoped to become masters in their own right once they completed
their indenture, dominated the unfree work force before 1680. As the
century progressed, planters faced difficulties in recruiting enough ser-
vants.
A declining population, depression, and slowly rising real wages in
England joined with constricting opportunities in the Chesapeake and
growing American demand for workers to produce a shortage of inden-
tured labor on the tobacco coast and a change in the composition of the
work force as planters purchased slaves to replace servants. In 1680,
servants outnumbered slaves along the Bay by about three to one, and
blacks were only 7 percent of the region's population. By 1720, slaves
greatly outnumbered servants, and blacks were nearly 20 percent of the
population, while in some areas their proportion approached one-third.
Changes in the composition of the white population reflected the grad-
ual rise of a native-born majority in the colonies. The Chesapeake demo-
graphic regime of the seventeenth century was harsh and peculiar. Immi-
grants were predominantly male, with sex ratios ranging from over 600
men per 100 women in the 1630s to about 250 by the 1670s, and they
encountered a destructive disease environment that kept more than half of
both men and women from reaching age 40, nearly three-quarters from
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266 Russell R. Menard
age 50. The few women who did immigrate, furthermore, married late, in
their middle twenties on average, as most had to finish indenture terms
before they could find a husband, set up a household, and begin having
children. As a result, deaths exceeded births until near the end of the
seventeenth century, and the region long retained the male surplus and
low dependency ratios characteristic of frontier populations. Those immi-
grants did have some children, however, and they gradually transformed
the demographic regime. The native-born lived longer than their immi-
grant forebears, the sex ratio among them was balanced, and they married
much earlier. By the early eighteenth century, native-born adults were a
majority in the region, rapid growth through reproduction had begun,
and the age structure and sex ratio acquired a more settled character.
The decades around 1700 also witnessed the first, tentative steps to-
ward a gradual diversification of the Chesapeake Planters in coastal North
Carolina, the lower James River basin in Virginia, and on the lower
eastern shore, where soils yielded only low-grade
leaf.
They abandoned
tobacco almost entirely during periods of low prices after 1680. They
concentrated instead on naval stores, wood products, grains, livestock,
and subsistence farming, and they looked more to markets in the Carib-
bean than in England. Although planters made some tobacco when prices
were especially high, the region did not again become a major participant
in the tobacco trade. The pace of diversification increased in the eigh-
teenth century, especially after 1750, when rising food prices persuaded
planters in northern Maryland to abandon tobacco for wheat and planters
elsewhere to supplement their income from the traditional staple with
grains. Table 6.4, which describes exports from Maryland, Virginia, and
North Carolina on the eve of independence, understates the extent of
diversification because it does not include the growing coastal trade to
other regions in British North America nor the substantial overland busi-
ness with Philadelphia. Nevertheless, it suggests the extent and limits of
change. Tobacco remained the dominant export, accounting for about
two-thirds of the total value; Great Britain was still the dominant trading
partner, taking more than three-quarters of all exports. However, those
shares had dropped considerably, from perhaps 95 percent of the total in
1700,
in large part due to the rise of the grain trade to the sugar islands
and southern Europe.
The Chesapeake tobacco industry entered a period of renewed expansion
around 1720. At first, growth brought only slight encouragement. To-
bacco prices rose slowly (if at all) over the long term, and there were severe
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