1. An Interlocked Economy What was the economic relationship between the thirteen colonies? What role did mercantilism play in shaping the Old and New World’s relationship? Intra-colonial Trade v. International Trade

2. Mercantilism Mercantilism: Suggests that the government should play an active, protectionist, role in the economy by encouraging exports and discouraging imports, especially through the use of tariffs. Protective Tariff: Applied to imported goods, is intended to artificially inflate prices of imports and “protect” domestic industries from foreign competition. Protectionism: Is the economic policy of promoting favored domestic industries through the use of high tariffs and other regulations to discourage imports. Absolute Economic and Political subordination of the colony to the Mother country. England has guaranteed market for finished goods. England imports raw materials from colony. Colony should always remain dependent for industrial necessities. Regulatory Taxation: “Protective Tariffs” on foreign (non-English) imports, makes foreign goods unpractical.

3. English Policy: Economic Warfare Acts of Trade and Navigation, 1651: Theoretically prevented non- English trade with English colonies. Non-English goods must first pass through England to be taxed and then re-exported at an inflated price. This went for colonial exports as well. For instance, New England rum, would first have to go to London before it could be shipped to Martinique. All trade must move on English ships. ¾ of the sailors must be English or Colonial. Act largely ignored by colonists, England unable to enforce Act: American colonists continued to trade sugar, tobacco, indigo, molasses, dyewoods, cotton, furs, pitch, tar, and masts to foreign buyers, particularly the French, Dutch, and Spanish in the West Indies. 9 out of 10 ships leaving the colonies carried illegal cargo.

4. English Policy: Economic Warfare Staple Act of 1663: Required merchants to carry all tobacco, sugar, and indigo to England. Either selling it to English merchants or pay a “protective tariff” to ship it internationally Duty act of 1673: Required colonial sea captains to post bond that guaranteed they would deliver all enumerated goods to England or else pay a “plantation duty” before sailing. Navigation Act of 1673: Placed export taxes on all enumerated goods shipped in the coastal trade, not enforced until eve of American Revolution. The Wool Act of 1699: Prevented colonial finished from competing with English finished goods. Prohibited colonial exportation of finished woolens and imposed duties on English woolen imports. An attempt to regulate inter- colonial trade. Molasses Act of 1733: made prices for English sugar and molasses cheaper and imposed a heavy tax on the same French products. A legislative attempt to prevent colonist from purchasing higher quality goods at a fair price. Hat Act of 1732: Attempt to regulate colonial manufactures production of fur garments, particularly hats. Iron Act of 1750: Attempt to regulate colonial manufacturers from producing iron products such as kettles, anchors, etc. Acts failed, by the 1750’s, 80% of the colonies exportable goods were going to the West Indies.

5. Colonial: Coastal Trade, 1768-1772 The Coastal trade served 2 basic functions: one was to carry out the distribution of colonial products destined for domestic consumption; and the second was to collect commodities for export to overseas markets from the larger ports like Boston, New York, Philadelphia, and Charleston, and to distribute imports from such commercial centers as these. Primary colonies involved in inter-colonial trade: Massachusetts, Rhode Island, New York, South Carolina, and Pennsylvania (New Jersey and Delaware products collected in New York and Philadelphia). Coastal trade included goods received from the West Indies and redistributed throughout the colonies: Boston, Rum and Molasses. Smuggling: 1765, trade (including smuggling) between New England and Newfoundland was £200,000 sterling, by 1774 that number had reached £400,000 sterling.

6. Colonial: Coastal Trade, 1768-1772 Northern Colonies to New England: Skins, Sheep, Seal, Caribou, Moose, Dried Fish: 53,012 lbs. New England to New England: cattle, lime, Soft Soap, Fish Oil, Shook Hogsheads, and Potash: 461,916 lbs. New England to Middle Colonies: Whale Fins, Pickled Fish, Cocoa, Chocolate, Molasses, Cheese, Cast Iron, and New England Rum: 1,313,273 lbs. Middle Colonies to New England: Coffee, feathers, Oats and Rye, and Bread and Flour: 26,640,304 lbs (Pennsylvania 54%). Upper South to New England and Middle Colonies: Pitch, Tobacco, Slaves, Wheat, Indigo, Cotton, Oak, and Indian Corn: 443,085 lbs. Lower South to New England and Middle Colonies: Turpentine, Snake Root, Rice, and Deer Skins: 77,539 lbs. So What: Some historians argue that the political role the coastal trade played in providing contact and communication between the colonies, fostered not just economic unification, but political unity.

7. Colonial: International Trade, 1768- 1772 New England’s overseas trade was centered on the West Indies. Importing large quantities of West Indian goods and re-exporting a substantial portion of them in the coastal trade. The Middle Colonies exported large quantities of wine, salt, and flour to Southern Europe. The Southern Colonies exported tobacco, rice, wheat, corn, indigo, and naval stores (pitch, tar, turpentine, and lumber). Southern Colonies, by far, were the most heavily involved in the international market of all the colonial regions: £239,000+ sterling. Northern Colonies major international export was dried fish.

8. Free Trade Non-Zero-Sum: An economic situation where all participants stand to gain or suffer together. “A country that has no mines of its own must undoubtedly draw its gold and silver from foreign countries, in the same manner as one that has no vineyards of its own must draw its wines.” Adam Smith Wealth of Nations, 1776. Result: Both benefit from transaction. Trade wine for gold or silver or vice versa. Environment needed: Free competition and enterprise, only regulating force is the “invisible hand.” in other words the market would regulate itself. One of the Revolutions goals: Free Market Economy!