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A Quantitative Approach to the Study of the Effects of British Imperial Policy upon Colonial Welfare: Some Preliminary Findings*

Published online by Cambridge University Press:  03 February 2011

Robert Paul Thomas
Robert Paul Thomas
Affiliation:
University of Washington
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Extract

Historians have long debated whether the American colonies on balance benefited or were hindered by British imperial regulation. George Bancroft thought the regulations worked a definite hardship on the colonies. George L. Beer believed these regulations nicely balanced and that the colonies shared in the general advantages. Lawrence Harper, in a now classic article, actually attempted to calculate the cost and found that British policies “placed a heavy burden upon the colonies.” Oliver Dickerson wrote that “no case can be made … that such laws were economically oppressive,” while Curtis P. Nettels, writing at the same time to the same point, stated: “British policy as it affected the colonies after 1763 was restrictive, injurious, negative.” It is quite evident that a difference of opinion exists among reputable colonial historians over this important historical issue.

Type
Articles
Information
The Journal of Economic History , Volume 25 , Issue 4 , December 1965 , pp. 615 - 638
Copyright
Copyright © The Economic History Association 1965

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References

1 “Mercantilism and the American Revolution,” Canadian Historical Review, XXIII (Mar. 1942), 3Google Scholar.

2 The Navigation Act and the American Revolution (Philadelphia: University of Pennsylvania Press, 1951), p. 55Google Scholar.

3 “British Mercantilism and the Economic Development of the Thirteen Colonies,” Journal ofEconomicHistory, XII, No. 2 (Spring 1952), 114Google Scholar.

4 The effects of British regulations not considered in this paper will be taken into account in the larger study now in process.

5 The statistics on colonial exports have been adjusted in a manner suggested by James Shepherd and used by him in preparing his balance of payments for the colonial period. Imports, due to a lack of prices, were adjusted by the Schumpeter-Gilboy price index.

6 Quoted in Fogel, Robert W., Railroads and American Economic Growth (Baltimore: Johns Hopkins Press, 1964), p. 17Google Scholar.

7 Journal ofEconomicHistory, XII (1952), 114Google Scholar.

8 In 1790, nearly 80 per cent of the residents of the United States traced their origin, or that of their ancestors, to the British Isles.

9 Knollenberg, Bernhard, Origin of the American Revolution: 1759–1766 (New York: Collier Books, 1961), p. 18Google Scholar.

10 Savelle, Max, “The American Balance of Power an-d European Diplomacy, 1713–78,” in Morris, Richard B., ed., The Era of the American Revolution (New York: Columbia University Press, 1939), p. 162Google Scholar.

11 Knollenberg p. 19.

12 This was certainly the case after the American Revolution.

13 “American Economic Growth Before 1850: An Exploratory Essay,” Journal ofEconomicHistory, XXIV, No. 4 (Dec. 1964), 435Google Scholar.

14 Mitchell, B. R., Abstract of British Historical Statistics (Cambridge [Engl.]: University Press, 1962), p. 312Google Scholar.

15 The values of imports are the official values f.o.b. Great Britain. For that reason, they are probably approximately 10 to 20 per cent too low. Import figures for 1768 were used because detailed breakdowns for 1770 were unavailable when this paper was written.

16 Sir William Ashley thought the regulations of English mercantilism were pious formulas nullified in the actual world of commerce by fraud and evasion when they existed contrary to national commercial habits. Studies by Lawrence Harper have indicated that the burden of the Navigation Acts was in fact felt in transatlantic commerce.

17 The Molasses Act of 1733 was a law enacted in the interest of the British West Indies. This law taxed foreign molasses sufficiently to make the molasses of the British West Indies competitive. The law was, however, widely evaded.

18 Export commodities shipped to the West Indies were reputed by one source to be worth £ 275,000 when they left the American colonies and £ 500,000 when they arrived in the West Indies. The freight factor is thus over 30 per cent. The return trip saw excess cargo capacity and therefore lower rates. The freight factor on the return trip was but 5 per cent. Bell, Herbert C., “West Indian Trade before the Revolution,” American Historical Review, XXII, No. 2 (Jan. 1917), 273–74Google Scholar.

19 Canadian Historical Review, XXIII (1942), 3.

20 Dickerson, p. 33.

21 Since most tobacco was exported, exports for all practical purposes equal output or production.

22 For Philadelphia prices, Bezanson, Anne et al. , Prices and Inflation during the American Revolution: Pennsylvania, 1770–1790 (Philadelphia: University of Pennsylvania Press, 1965)Google Scholar. For a European port, Amsterdam prices have been used as found in Posthumus, N. W., Inquiry into the History of Prices in Holland (Leiden: E. J. Brill, 1946)Google Scholar. For tobacco quantities, see Historical Statistics of the United States, Colonial Times to 1957 (Washington: U. S. Government Printing Office, 1960), series 230–37, p. 766Google Scholar.

23 Albert Fishlow, discussion of a paper by Biork, Gordon, “The Weaning of the American Economy: Independence, Market Changes, and Economic Development,” Journal ofEconomicHistory, XXIV, No. 4 (Dec. 1964), 565Google Scholar.

24 This amounts to assuming an elasticity of supply of one. This is probably optimistic, since the average exports of tobacco between 1790 and 1793 were 28 per cent greater than the average for the period 1763–72 and 41 per cent greater than for 1770. This suggests on a crude base an elasticity of supply between 8 and 9. Bjork also found that tobacco prices after the Revolution rose sharply.

25 The indirect burden suffered because of the loss of exports is calculated as the unit burden times the increased output that would have been exported, divided by two.

26 For rice, the prices are to be found in Cole, Arthur H., Wholesale Commodity Prices in the United States, 1700–1861, Statistical Supplement (Cambridge: Harvard University Press, 1938)Google Scholar. The rice estimate was made on the basis of but one observation in the colonial period (1760). The author considers the rice estimate optimistic.

27 The average preference was figured from statistics presented in tables 2 and 3, found in Lawrence Harper, “The Burden of the Navigation Acts on the Thirteen Colonies” in Morris, ed., Era of the American Revolution.

28 Recorded bounty payments for the decade 1763–72 averaged:

29 The gain to the colonists from the bounty payments was figured in the following manner. The gain is in two parts. First, the unit bounty times the quantity that would have been produced without the bounty gives us the clear gain. In order to find that portion of naval stores that would have been produced without the bounty, we assumed a supply elasticity of one, reckoned the percentage of the price of naval stores that the bounty represented, and thus easily estimated that portion of the supply of naval stores for which the bounty was responsible. The other part would have been produced anyway; on this portion the full amount of the bounty was clear again. On the part stimulated by the bounty, only one half was gain to the colonists.

30 This figure is taken from reports by the London Custom House, retained in Treasury 38, Vol. 363, Public Record Office, London, as originally stated in Dickerson, p. 28, and is accurate. Lawrence Harper “Navigation Acts” (cited in n.27) uses a figure of £ 23,086. While the Dickerson figure may possibly exclude some payments, the Harper figure is calculated on the basis that all indigo received the bounty, which was not the case. Lewis Grey quotes a British official to the effect that about seven eighths of the indigo exported from South Carolina received the bounty, but much less deserved so, being poor in quality. On this basis the payments could have reached as high as £ 20,000 a year. Grey, Lewis C., A History of Southern Agriculture (Washington: Carnegie Institution, 1933), p. 292Google Scholar.

31 Figured on the basis of an annual bounty of about £ 20,000. Then around £ 10,000 would have been the value of the bounty to the producers of indigo.

32 Beer, George Louis, British Colonial Policy, 1754–1765 (New York: Macmillan, 1907), p. 224Google Scholar.

33 “Navigation Acts,” p. 36.

34 P. 70.

35 Colonial prices are to be found in Bezanson and Amsterdam prices in Posthumus.

36 Bjork, , Journal ofEconomicHistory, XXIV, (1964), 554Google Scholar, found that goods of foreign manufacture (his Index A) fell dramatically in price after the Revolution, while goods in which Britain had a comparative advantage fell little if at all in price (his Index B).

37 This loss was calculated by taking the percentage unit burden on the price of such imports times their total value.

38 The consumer surplus lost to the colonists because of higher import prices could be easily calculated in the Hotelling-Harberger manner.

39 Canadian Historical Review, XXIII (1942), 4.

40 p. 32.

41 See James Shepherd, “Colonial Balance of Payments,” p. 691, for a discussion of how this estimate was obtained.

42 Colonial vessels probably would have carried relatively less of the trade with the West Indies, assuming that (as happened after the Revolution) they were excluded from the British West Indies. However, they would also presumably have carried relatively more of the transatlantic trade.

43 Roots of American Economic Growth (New York: Harper and Row, 1916), p. 74Google Scholar.

44 Knollenberg, p. 34.

45 Britain, Great, House of Commons Journals, King George III, Vol. XXXII (1768–1770), sessions no. 1768, 1803Google Scholar.

46 Historical Statistics, p. 737.

47 Gillingham, Harold E., Marine Insurance Rates in Philadelphia, 1721–1800 (Philadelphia: Patterson & White, 1933), pp. 18, 64Google Scholar.

48 Ibid.

49 Goldsbourgh, Charles, The United States Naval Chronicle (Washington, 1824), pp. 109–10Google Scholar.

50 U.S. Congress, American State Papers, Finance, III, 14th Cong., 1st sess., 63, 69.

51 Canadian Historical Review, XXIII(1942) 2.

52 p. xiv.

53 Harper estimated that the burden on tobacco, rice, European goods imported, and the benefits of bounties together added up to a burden of between $2,560,000 and $7,038,000. Harper's estimate of the loss on tobacco and rice really measured the area (P1A.B.P3) in Graph 1 rather than (P.A.E.P), which is the correct area. However his lower estimate is rather close to ours.

54 Journal ofEconomicHistory, XXIV (1964), 566Google Scholar.

55 Ibid., p. 429.