Martin Luther 2 Essay, Research Paper

Economics in Colonial America

During the 1500’s to 1800’s, the strength and stature of a

country depended upon its political power, which can be traced to how

self-sufficient it was. Striving to be self-sufficient was what

nations sought after; dependency was not a characteristic of a

powerful nation. Raw materials were the most required item to

strengthen the central government, and deter interactions, such as

trade with other nations. The first country to introduce mercantilism

in America was Spain. The spanish american colonies were not allowed

to trade directly with Europe. Instead they had to funnel all of the

sugar and tobacco, two common commdities of the new land, through

Spain. When this was done, heavy custom duties were imposed and the

central government gained. Spanish American colonies were forced into

providing precious metals and raw materials to the mother country.

These colonies existed only to enrich spain, even if the economic

policies adversly effected the well-being of the colonies. This grip

caused the central economy of Spain to grow at the expense of the

colonies. During the duration of this period, the 1500’s through the

1700’s, mercantilism had a major effect on the economies in the new

world. English speaking colonies were effected by England’s policies

and acts. These policies and acts were means of controling the economy

of the colonies in America and strengthen the central government of

England. Dutch traders had the commercial vessel market well cornered

in the 1640’s. It was very difficult for English colonies to compete

with the Dutch. With owning 75 percent of Northern Europes’ vessels,

being well-financed and experienced, the Dutch were going to stay in

control of the market unless European Parliament intervined. In 1651

the European parliament enacted the first Navigation Act to undercut

the Dutches domination. England was hoping that this Act would exclude

the Dutch from trade with the English and force its own merchant

marine to grow. This act was the first attempt to enforce

merchantilism by England. The act proclaimed that all trade between

France and English colonies, Europe and English colonies, and the

colonies with themselves must be conducted on an english ship

(Kurland). The British were hoping that this would boost the economy

and expand the mercant marine. The failure of this act was caused by

inadequate machinery to enforce the law. The english colonies publicly

defied the act and kept on trading with the Dutch. The restoration of

Charles II brought about major changes in 1660. All of the acts of the

Commonwealth Parliament, including the Navigation Act of 1651, were

considered illigal under his rule (Kurland). Charles II did not intend

on doing away with the act, but revising it. The Navigation Act of

1660 was a restatement of the 1651 act, but it also established a list

of items including: tobacco, cotton, wool, and indigo, that couldn’t

be shipped outside of the British empire (Barck and Lefler). This Act

made the english colonies frusterated for they could get a higher

price for these items outside of the british empire. The Navigation

Act worked as a disadvantage to the colonies, but helped the central

economy and government of the british by excluding such raw materials

from trade to other countries. The Staple Act of 1663 was an offshoot

of the Navigation Acts. It stated that all European goods bound for

the American colonies must first land at an english port and then be

reshipped to America in English vessels (Kurland). The British would

benefit from this act by imposing custom duties on goods, which cost

would be passed to the american consumer. The english merchants would

profit from handling, insurance, and shipping fees. This Act also

provided for a naval officer in all colonial ports to insure the

upholding of the mercantile law. From the American stand point, the

Staple Act meant higher prices and a blatant attempt of the British to

exploit America for the benefit of the english merchants. There was no

need for the Staple Act to be passed. The Act served no other purpose

other than the enrichment of the British people and strengthening of

the central government. Another example of the British trying to exert

control over America was with the Molasses Act of 1733. This Act

imposed a duty of nine pence per gallon on rum, six pence per gallon

on molasses, and five shillings per hundredweight of sugar imported

from French or Spanish colonies. The was no tax put on british rum,

molasses, or sugar imported from British Colonies. The British, trying

to control the american colonies, were largely ineffective. The act

was vastly ignored by the Americans. The Americans were not going to

obey a law passed by the english, when the english had no way of

enforcing it. The english colonies were pulling away from the

alligence to Britain. The British wanted the colonies to build the

political power of Britain, without getting anything in return. The

British wanted to use up all of the resources and raw materials of

America, without the colonies resisting. After the British recognized

that the Molasses Act was ineffective, they amended it with the Suger

Act (Morison and Commager). Bribing customs officals into taking 1 and

a half pence per gallon not to notice the cargo being unloaded was how

the Molasses Act failed. To do away with this problem, the British cut

the tax by fifty percent and strickly enforced it. Now the colonies

were objecting to the decreased tax. Before, the tax was not collected

or enforced so the Americans were happy. Now that the tax was

collected the Americans were feeling the threat of British rule. The

British government was regarding the colonies as a source of revenue.

The colonies also noticed how the money was being spent and objected

to it. The British talked of how they needed money to support troops

in America. The troops were not there to protect the colonies, but to

enforce British rule. The troops were stationed at ports, not in the

interior where the threat of attack was the greatest. America existed

for the sole purpose of strengthening the central government of

England. Unlike the rest of the Acts passed for the improvement of the

british government, the Stamp Act caused the biggest political storm.

Everyone from small farmers to merchants were effected. The parliament

wanted the colonist to pay for some imperial expenses. To do this,

parliament passed the Stamp Act in 1765. This law made it illigal to

puchase any paper, newspapers, customs documents, various licenses,

college diplomas, and numerous legal forms for recovering debts,

buying land, and making wills without a stamp bought buy the British.

The law enabled the British not only to generate revenues, but censor

all materials going into the public. The British would simply not

stamp any material, such as a newspaper, that were putting any

comments about the British that were bad. The American colonies did

not reciate this law at all. They protested it with a vengance

claiming, “Taxation without representation is slavery.” The

working-class’s approach to this problem is to riot, gather great mobs

and burn things, and beat up the tax collectors. The upper-class’s way

of handling this was to make reforms and go about changing this in a

civilized manner. Everyone in the colonies could agree that the Stamp

Act was a selfish law made by the British to control the media and

aquire revenues at the expense of the colonies. During 1790 to 1795,

mercantilism helped spark the economy of America under Hamiltons

authority. Hamilton wanted all foreign debts, amounting to 11.7

million, to be payed off in full (Kurland). This would establish a

very high credit rating with other nations and help the government

create political power. Other debts the Hamilton required to be payed

off or assumed were the 40 million in Confederation war bonds and 28

million in debts of individual states (kurland). For the good of the

creating a cash economy and strengthing the U.S. credit rating,

Hamilton wanted to induce a Bank of the United States under the

“implied powers” clause. The system of banking he purposed was very

similar to that of Englands. Founded in 1791, the Bank of the United

States had the duties of financing the federal government during war,

regulating credit, and producing sound currency. Hamilton also had the

idea of making the bank privately owned, so it would run proficiently.

This would give the federal government a backbone during times of war

or emergencies and make it much more powerful. Hamilton also called

for American self-sufficiency. The report on Manufactures of 1791,

written by Hamilton, promoted tariffs on imports to protect

manufacturing and create national wealth. America was building its

political power by manipulating its economy. What the British were

once doing to the colonies, the colonies were now doing to themselves.

America was using the idea of mercantilism to run the country and

build political power. In conclusion, the whole purpose for England to

develope and carry out the Acts they passed were to stay in control of

the colony’s economy and better their central government. The British

troops were not there to protect, but to carry out english laws. The

Stamp Act was developed to control the media and legal documents so

the colonies wouldn’t stray away and acquire their own system. The

Navigation Act was to stop the dominating Dutch from taking over the

commercial vessel industry and build up Englands merchant marine. The

Molasses and Sugar Acts were to make America pay for its so called

troops and help British merchants. Britains mercantilistic ideas in

these Acts show their disregard for the new colonies and the

exploitation of their resources. After the War for Independence,

America took some mercantilistic ideas to begin building their

political power and economy.