Mercantilism and the American Colonies

Though Parliament prohibited Americans from manufacturing textiles (Woolen Act, 1699), hats (Hat Act, 1732), and iron products such as plows, axes, and skillets (Iron Act, 1750), it could not prevent the colonies from maturing economically. American merchants soon controlled over 75 percent of the transatlantic trade in manufactures and 95 percent of the commerce between the mainland and the British West Indies (see Map 3.4).

Moreover, by the 1720s, the British sugar islands could not absorb all the flour, fish, and meat produced by mainland settlers. So, ignoring Britain’s intense rivalry with France, colonial merchants sold their produce to the French sugar islands. When American rum distillers began to buy cheap molasses from the French islands, the West Indian sugar lobby in London persuaded Parliament to pass the Molasses Act of 1733. The act placed a high tariff on French molasses, so high that it would no longer be profitable for American merchants to import it. Colonists protested that the Molasses Act would cripple the distilling industry; cut farm exports; and, by slashing colonial income, reduce the mainland’s purchases of British goods. When Parliament ignored these arguments, American merchants smuggled in French molasses by bribing customs officials.

The lack of currency in the colonies prompted another conflict with British officials. To pay for British manufactures, American merchants used the bills of exchange and the gold and silver coins earned in the West Indian trade. These payments drained the colonial economy of money, making it difficult for Americans to borrow funds or to buy and sell goods among themselves. To remedy the problem, ten colonial assemblies established public land banks, which lent paper money to farmers who pledged their land as collateral for the loans. Farmers used the currency to buy tools or livestock or to pay creditors, thereby stimulating trade. However, some assemblies, particularly the legislature in Rhode Island, issued huge quantities of paper money (which consequently decreased in value) and required merchants to accept it as legal tender. English merchants and other creditors rightly complained about being forced to accept devalued money. So in 1751, Parliament passed the Currency Act, which barred the New England colonies from establishing new land banks and prohibited the use of publicly issued paper money to pay private debts.

These conflicts over trade and paper money angered a new generation of English political leaders. In 1749, Charles Townshend of the Board of Trade charged that the American assemblies had assumed many of the “ancient and established prerogatives wisely preserved in the Crown,” and he vowed to replace salutary neglect with more rigorous imperial control.

The wheel of empire had come full circle. In the 1650s, England had set out to create a centrally managed Atlantic empire and, over the course of a century, achieved the military and economic aspects of that goal. Mercantilist legislation, maritime warfare, commercial expansion, and the forced labor of a million African slaves brought prosperity to Britain. However, internal unrest (the Glorious Revolution) and a policy of salutary neglect had weakened Britain’s political authority over its American colonies. Recognizing the threat self-government posed to the empire, British officials in the late 1740s vowed to reassert their power in America — an initiative with disastrous results.