IN the 1700s, the colonial economy in America was dominated by two types of workers: farmers and merchants.
This is to say it was agrarian, with the merchants’ major task being to market the crops grown by farmers and use the proceeds to make purchases for them. In the mid-18th Century, the factors of production seemed to mandate this for America’s future.
In a world with cheap land, dear capital and scarce labour, subsistence farming in the northern and middle colonies and the same, plus vast plantations, in the southern colonies seemed inevitable.
The high demand for tobacco, and the yet-meagre amount available from Virginia, combined with new legislation, caused prices to rise sharply.
This encouraged a proliferation of small farms in North America and, eventually, the creation of plantations.
The shortage of workers also spurred the slave trade, which, of course, increased the labour supply.
These factors enabled the colonists to ship more and more tobacco: an average of 65 000 pounds per annum in the early 1620s, which rose to more than a million pounds by the end of the 1630s, and 20 million pounds by the late 1670s.
By 1699, exports from Britain’s North American colonies rose to 30,757 million pounds, of which all but 113 000 came from Virginia and Maryland. Britain imported 496 000 pounds from other areas, including Europe, Turkey, Africa and the Caribbean that year.
During the next three-quarters of a century, tobacco imports from other areas declined, spiking upward only in the early 1730s and the mid-1770s. Re-export of tobacco from the colonies to England, and then to other markets, was generally steady during the first half of the century, but rose in the third quarter, peaking at 97 000 pounds in 1773.
By then, more than 80 percent of all exports from North America to England originated in the colonies of Virginia, Maryland, Carolina and Georgia, with tobacco the chief product.
The leaf was shipped in hogsheads, weighing approximately half a tonne. Tobacco lost much of its moisture during shipping and had to be moistened before handling.
For the product to be used in smoking, the first operation was the removal of the stem and rib from the leaves to obtain what was known as ‘strips’.
This was done by women, using short, sharp knives. Next, flavourings, such as sugar, glycerine, gum and starch were added. Because these additives caused the leaf to ferment, the tobacco was covered with cloth to help control the process.
It was a tricky procedure, but upon successful curing, the leaf would be granulated for smoking purposes. When the process failed, the leaf would be pressed into a plug, which might be chewed or ground into snuff.
The returns to all those involved in Britain were, none-the-less, enormous. In addition, the British companies provided banking and related services to the planters, which added to their profits.
In 1765, a French observer claimed: “The revenue from tobacco in Great Britain is esteemed to be about three hundred pounds sterling per annum — and the greater part of the profits of exported tobacco comes to the merchants, which brings nearly as great a sum every year into the Kingdom, the whole weight falling on the planter, who is kept down by the lowness of the original price and the extravagance of the Charges.”
He further observed: “… how advantageous must this article be to Great Britain, for which the rest of Europe . . . pays her ready money, besides 200 large vessels and a proportional number of seamen, which are occupied in this trade. . . .”
While subsistence farming was the occupation of the majority of Americans in the north, those who could do so grew some tobacco as well. Fully half of all the American colonists obtained their cash earnings, directly or indirectly, from tobacco.
Moreover, wages in Maryland were often paid in the form of tobacco, which functioned as a currency.
Asked why the colonists grew tobacco rather than wheat, one official replied that labour occupied with tobacco was worth six times that used in wheat. In 1770, the value of tobacco exported from Britain’s North American colonies alone came to 906 638 pounds sterling, and this did not take into account the leaf smuggled to places other than Britain and the Indies.
In that year, the next most important export in terms of value was bread and flour at 504 553 pounds sterling, followed by rice, which accounted for
340 693 pounds sterling.
Yet all was not well. Even prior to the American Revolution, there were signs of trouble in the tobacco region. Soil depletion resulted in lower yield per acre.
The tobacco growers faced a dilemma: In order to maintain income from the sale of a declining cost crop, they would have to expand their planting, bringing in a larger crop, which would then further depress prices.
Indeed, prices fluctuated sharply. In 1713, the mean price for Maryland tobacco was one pence per pound and fell to 0.71 pence the following year. By 1720, the price was up to 1.19 pence, only to fall again to 0.65 pence by 1731.
A generalised slump followed, then an advance to 1.48 pence in 1752, and a sustained rise to 2.23 pence by 1769. Chronically low prices forced some Virginia planters to seriously contemplate the abandonment of tobacco in favour of wheat. Thereafter, the price declined, slipping to 1.13 pence in 1773.
One of the reasons tobacco growers in the ‘Bright Belt’ supported Revolution was their increasing indebtedness to English merchants. Approximately two out of every three tobacco planters owed money to their English agents.
Thomas Jefferson was one of them, and he wrote that such debts “…had become hereditary from father to son, for many generations, so that the planters were a species of property, annexed to certain merchants in London.”
The American Revolution brought an end to the Navigation Acts, but it did not alter the adverse circumstances many planters still had to face.
By the early 18th Century, some shopkeepers, most of them in coastal cities, had evolved into sedentary merchants. The difference was, in part, a matter of scale.
Shopkeepers purchased a relatively small quantity of selected items, which were sold from their shops to local clientele. Whereas the sedentary merchant might purchase large lots of a widely diversified number of products, which could be warehoused, while some were sold from his establishment to a wider circle of customers than was served by shopkeepers, other parts of the inventory might be resold to other merchants, shopkeepers and peddlers.
But there was more to the business than that; and more to the tasks of the sedentary merchant.
These individuals were always on the lookout for business opportunities, such as taking a share in the insurance of voyages and in the ships, land speculation and the brokering of loans. They acted as agents for customers; arranging purchases, payments and financing for fees that might range from two to five percent.
Dr Michelina Andreucci is a Zimbabwean-Italian researcher, industrial design consultant and is a published author in her field. For comments, e-mail: firstname.lastname@example.org