Economic Growth

Introduction of Thesis:

It is widely agreed upon that there was a rapid and substantial growth of population, prosperity, and productivity in the British American colonies leading up to the American Revolution. (4/5 sources) Scholars have debated over numerous theories on how it happened and what was responsible, but few have actually questioned how it was determined that the colonies were growing in wealth along with productivity and to what degree. Many of these scholars base some of their theories on estimates calculated by Alice Hanson Jones, who used probate records as her sources in order to determine the change in assets. With a closer look at what methods were used to produce the estimates and  exactly how the economic growth was measured, it will be shown that the wealth and economic growth of the colonies was grossly underestimated and that, in fact, it was England’s economy that was the major source of economic growth. By looking at the economic growth of the colonies as separate from that of England, one can show the quantitative theories proposed by many economic historians to be deceiving.

Clarifying some important Terms used

             It is important to introduce and clarify the economic terms that will be used in the theory posited here, because many of these terms have been used by previous economic historians and can, of course, be interpreted and used differently. The most important terms used here that can be easilly misinterpreted are wealth, economic growth, asset, and market value. Wealth is defined by Alice Hanson Jones in her book, Wealth of a Nation to be, as anything that has market value.[1] The problem with the preceding definition is that almost anything can have market value if at least one entity makes some form of a transaction with another entity, transferring an item as an asset and thereby ascribing to it a market value. From this point on, an asset will be defined as any tangible or intangible entity that can be owned, controlled or traded. (EconomicsPrinciples, 272) Wealth will be delineated as any asset in abundance; anything that can be given or taken that is considered to have market value. In the case of a deceased man, his entire collection of assets, even his body can be considered in abundance because none of the above are an absolute necessity for him to keep. The market value is an amount determined by one or more previous transactions of the asset, while the fair market value is an amount determined by probable future transactions of the asset. Finally, economic growth can mean a number of things due to the many different ways in which it can be measured, but for the purpose of the argument put forth here, it will be known as the expansion of the economy, where the expansion is measured in any rise of wealth of a specified entity or entities. The reason for focusing economic growth on the measurement of the rise of wealth is because economics is a mathematically based subject where ratios are derived to account for its state. In order to know if an entity is accumulating more assets or growing in wealth, it is necessary to use mathematical calculations as a form of measurement to gauge the change, hence the focus on tangible measurement.

Describes the importance of Documentation to Economics.

In order to measure the economic growth, wealth, or even the market value of an asset, evidence is needed from the time period in question. As a matter of course, the best way to find evidence relating to British America during the colonial period is examining documents from the period that still exist today. Documents relating to economic activity in the colonies during the 17th century are extremely scarce and their numbers did not increase much until the 1690s when England began to keep a systematic record of commercial statistics.[2] The little evidence that remains suggests that not all of the transactions that took place during the period were accounted for. This not only makes it difficult to determine the market value of an asset, but it also acts as an irregularity in the measurement of the economy. Some of these unrecorded transactions have been confirmed in other sources, but only enough information is available to acknowledge their existence rather than to create detailed accounts that could be used for economic interpretation. These types of transactions are referred to as "invisibles" and they cause incomplete measures of balance in accounting.[3]  For example, when gold was exchanged for the service of shipping cargo and the transaction went unrecorded,  it would appear to an auditor that the person who paid for the shipping in gold declined in wealth for no apparent reason. Without a report of the transaction, it is nearly impossible to ascertain the reason for a rise or decline in wealth, or to track an exchange of specie for goods or services. Thus, the invisibles not only have a detrimental effect on the measurement of economic growth, but also on uncovering the reasons for economic growth.

Assets & Liabilities - Debits and Credits

When a trade occurs between two people, as in the example above, there are two recorded transactions that take place, one for each of the assets being transferred. Each transaction requires that a debit and a credit be recorded in order to keep all of the accounts balanced, thus a trade between two people of two assets needs four notes to be considered properly documented. In the example, the two assets being transferred are the gold as payment and the service of transporting cargo overseas. When the transporter received the gold, it is marked as a debit in his account because he had gained in wealth, but the transportation of the cargo is marked as a credit since it is considered a loss. However, on the account of the person paying for the service, the loss of the gold is marked as a credit and the shipping is marked as a debit. The recording of a financial transaction with this method helps in determining how wealth is transferred, lost, and gained by a person or entity. It is known as double-entry bookkeeping and has been in use since 15th century Venetian merchants exploited it for greater profitability. Double-entry bookkeeping is one of the fundamentals of modern day accounting and is necessary for tracing the distribution of wealth in any economy. Every trade that was not properly recorded in this fashion in British America raises the difficulty in assessing the nature of the economy.

Attempting to recover what’s missing through Math

As pointed out above, improper documentation can lead to many problems for economic historians because an accurate account is necessary for an analysis of the economy. A complete absence of documentation, as is the case with the invisibles, is even more problematic. Alice Hanson Jones acknowledges the inaccuracy that is caused by the invisibles, but in her assessment of the wealth of the New England colonies in 1770, she claims to have adjusted her figures to account for their absence.[4] Regardless of how advanced the mathematical formulas for calculating the amount of adjustment needed are, they are estimates that are impossible to confirm and cannot be accepted in any way as factual. There are plenty of mathematical formulas used to generate the additional statistics needed to determine aspects of the economy in the colonies and they can often lead to slight errors in accuracy. It is common knowledge that statistics cannot be 100% accurate due to its nature, but that is addressed by disclosing a margin of error, which is an indicator of how far off the data is within a 99.5% confidence interval. That means that if there is a margin of error of 5%, then the estimate can be under or overstated by 5% and 995 times out of 1000, it would be correct. In the case of Jones’s invisibles adjustment, the margin of error is far greater due to the limited amount of data that she had to base it off of. Even if adjustments were unnecessary and the raw data was correct, there still can remain the necessity to modify it further due to the source. For instance, probate records are accounts and inventories of a colonists valuables after his death, which means that the information gathered from probate records cannot be applied to the economy at the time of the death. Rather, compensation is required to fit the information in with the period in which it applied. In the case of probate records, the wealth that is listed is applied to the economy retroactively in order to attain a more accurate account.

Input Variables explained and the Historian’s Bias

There are more factors than just the natural imperfections in statistical calculations that affect the accuracy of economic estimates, and one of the most important is the input of the historian himself or herself. All of the formulas used in economics require some sort of input in numerical form, the origin of which sometimes requires someone to judge what possible adjustments and discrepancies need to be taken into account when constructing the numbers. Jones does just this when deciding what can be considered an asset and what should be included in the measure of wealth. One example of a debatable asset is the labor that can be produced by indentured servants or slaves. Jones produces two figures in her estimates for wealth; one including slaves and bound workers and one that does not.  [5] For the purposes of this theory, slaves will be excluded from the calculations done with regard to the New England colonies which are explored further when the theory is applied to that economy. The advantage of examining both sets of data is being able to see the importance of servitude and slavery in economic growth.  However, because determining the value of slaves and time remaining as indentured servants is tricky, there are larger margins for error and greater discrepancies that can occur.[6] The decision as to whether or not to include servants as part of the assessment of wealth in the New England colonies is irrelevant based on the fact that the value of a servant is in the eye of the beholder. So even though Jones constructed two estimates, the estimate that includes servants is built upon numbers determined by Jones. Although Jones based her numbers off of legitimate data like the fetching prices of slaves in auctions, it can not be considered accurate because knowing the value of a slave would require knowing how much work that slave would do until his death as well as the death date or in some rare cases, the time the slave was freed. All of the above begs the question of how accurate Jones's estimates really are, while also raising doubt as to the reliability of the theories that use her data as a source.

Economic Growth measured through Income per Capita

            In the 1950s, there was a rise of interest in the British-American colonial economy which touted the economy's successful expansion to support Capitalism over Communism.[7] This led to an increase in the amount of data and theories on the subject, especially among the young intellectual elite, and many of these scholars referred to per capita income. Almost all economic historians agree that per capita income is one of the best known ways to measure the growth of an economy. Since per capita income estimates require knowing the growth in wealth of a person or region, Jones’s wealth estimates are the preeminent sources available to determine the colonists revenues, which makes it understandable that so many historians and economists have cited her. Jones’s work is excellent and extremely useful but, as it has been pointed out, it is a series of educated guesses rather than hard facts. The challenges that are proposed with regard to Jones’ estimates are merely to show that they should be taken with a grain of salt. Although, even with a low accuracy in results and a high amount of discrepancies, the fact remains that the economy of British America expanded at a rapid pace, which is obvious from more than just Jones’s wealth estimates. Jones’s results support many of the theories posed by other historians on the subject, but the doubt in accuracy that has been cast is intended to support a new way of looking at the economy of colonial America which would demean some of the widely accepted theories currently available while also giving a little more credence to Jones’s work.

Describing current Theories on why the Economy grew

The current theories on economic growth in colonial America state a number of different reasons justifying why the economy grew. The most widely-accepted theory today is the Staple theory which proposes that the staple commodities produced by the colonies were the primary reason that their economy grew. (EOBA, 18-23) The demand for the colony’s staple--the principal raw material or commodity from a region--led to an export-driven economy that needed to expand in order to keep pace. This required a constant increase in the factors that affect production like population and productivity causing the wealth and standard of living in the colonies to continually rise along with it. (Kulikoff, 280) A problem with this theory is that it does not successfully apply to the northern colonies. The economy of almost all the northern colonies, including New England, New York, and Pennsylvania, was not based on trade of a staple, but rather on trade in general. The northern colonies exported very little to England, especially when compared to the middle and southern colonies or even to the imbalanced amount that they imported from England. (GoAE1860, 83) Their economy mainly depended on the building of ships and, later, on providing the shipping services themselves, but in no way was export-driven like that of the south. (GoAE1860, 104)

The alternative approach is a demographic model known as the Malthusian-Frontier theory which was posited by Daniel Scott Smith. It combines Malthusian principles with Frederick Jackson Turner’s frontier thesis. Thomas Malthus speculated that due to the ample means available to British America, the population growth rate was exponential until the point where checks came into play that would nullify its development. Turner’s frontier thesis puts forward that the expansion of the frontier continually drained the urban population by providing better opportunities in agricultural production away from the towns. Thus, Smith’s Malthusian-Frontier theory states that an abundance of means to economically grow allowed colonists to take advantage and secure large amounts of wealth. (EOBA, 18; EOCA, 39) The vast amount of land, resources, access to labor, and the lack of structural change enabled the colonial economy to grow with ease as if it were only natural. A problem with this theory is that if it were absolutely the case, then the Native American population and prosperity should have been far higher than it was at the time of European settlement. The absence of mercantilism and technological advancement hindered the economic growth of the Native American’s. Work on this  Smith’s theory concentrates on reasons within the colonial economy that led to economic growth rather than the trade with England. Among these are population growth, increases in local commerce, and development of an agricultural base. (EoCA, 39)

The 5 C’s Theory on Economic Growth of British America

While the above theories are commendable, neither of them are conclusive enough to believe that one is right and the other is wrong. There is always more than one reason, one cause, or even one fact that relates to an historical event. Accepting a simple theory without trying to expand upon and refine it usually means that the theory is applied too generally and avoids complications through details. The above theories are good examples of such; they both contain some amount of validity which on the surface seems convincing, but with further exploration into the subject, fallacies are noticed that diminish their credibility. It is posited here that it is necessary to combine and develop all of the above theories for a more accurate and fitting explanation of economic growth in the British American colonies. One that not only can be applied to the individual colonies, but to the whole of colonial British America as well. The following theory does just that, detailing the five factors and causes of economic growth while also proposing a new outlook that would redefine how economic growth is understood. It consists of Country, Citizenship, Commerce, Capital, and Control, which is why it can be referred to as the “Five C’s Theory to Economic Growth in British America”.

Country

The Five C’s theory begins with Country which refers to land, not only the soil of an area, but the usable surroundings as well. Land has been the most valuable asset throughout all of human history. It is an absolute necessity for sustaining life and is even more valuable for the resources it yields. Land ties in to economic growth in multiple ways. As Malthus pointed out, a population will increase exponentially until it is checked by some limitation like food supply, disease, war, or in the case with many regions in the colonial era, land. An abundance of earth avoids overpopulation in concentrated areas lowering disease and the death rate, thereby increasing the able-bodied labor force available for production. The Frontier thesis shows that the opportunities that extra land provided spread the colonial population by attracting colonists from the coast, but it fails to show that the procurable land also attracted a number of immigrants from overseas which also added to the able-bodied labor force. The richness of land provided a near limitless amount of resources to sustain not only a thriving local populace, but a demanding foreign market as well. The colonists rarely, if ever, had limits on population growth due to a scarcity in resources after the 16th century and their surplus went straight into the market providing them with beneficial income. A substantial surplus of a resource usually meant that the resource was considered a staple commodity and was in high demand by England thus tying land to the Staple thesis. Although England coveted the staple commodities imported from its colonies, the land was actually more valuable because it enabled the production or extraction of the commodities. Since there was so much land and so few people to populate it at first, England underestimated the potential value of the land itself and literally gave it away to anyone willing to work it. It only valued the materials that could be gained through the land rather than the land which continually generated evermore materials. So when England provided ownership of the land to the colonists, it also provided them with the necessary capital to generate income through the production and sale of raw materials. Thus, the colonists valued the land more than the resources it produced because most of the resources they traded could be regenerated and their major expense was their own labor. This is why when tobacco production doubled in efficiency in 17?? (Cite this, in an article you read), the colonists still continued to expand beyond the frontier in search of more land. They knew that more land meant greater profit. The ability to generate income through the use of ample and available land was a focal reason for economic growth in British America.

Citizenship

Citizenship is used in the sense of a member of a community rather than as a citizen that belongs to a nation, and as such, refers to the population of British America. This not only includes the colonists, but also the indians, slaves, servants, and other foreign colonists, all of whom were involved in the economy in some way. A person is the pinnacle of ownership which is why it is the basis of measuring an economy. The more people there are in a community, the more people there are to work, sell things to, buy things from, reproduce, and in general, generate economic activity. An increase in population is always good for an economy insofar as it does not extend beyond the means necessary to sustain itself. This was the case in England and much of Europe in the 16th and 17th century when overcrowding and starvation were rampant problems, but it did not apply to the colonies because of the excess of viable land. British America, as an expanding territory, was able to sustain a population of nearly any size granted that there were enough able-bodied members to participate. This allowed the rate of population increase to remain high throughout the 17th and 18th century leading to the development of one of the major factors in production. A larger population in any of the British American colonies meant that there were more people to work the land--harvesting tobacco, cutting timber, fishing, mining iron--and trade their produce for profit. According to Edwin J. Perkins’ research in The Economy of Colonial America, “the population growth was responsible for over 75 percent of the increase in aggregate economic output during the eighteenth century.” The increasing number of people in the colonies were for the most part generating income and accumulating wealth through their activities causing the economy of British America to grow at a rapid pace. 

Commerce

Commerce is an important factor in that a market is necessary for economic growth of any region. A market not only encourages economic activity, but it also enables communities to grow through efficiency and specialization. It may be easier or more profitable to grow only tobacco while buying wheat and dairy from someone else specializing in that produce. This is why even the local commerce, no matter how small, attributed to the economic growth of British America. Commerce is vital to the economic growth of a region and even more so in regards to business conducted with entities outside of the region. When trades are conducted turning a profit for the colonists, whether it be with an Indian, Englishman, foreigner, or even a company, it is essentially a transfer of wealth from one entity to British America. As the staple thesis stated, trade between England and its colonies over staple commodities led to an export-driven economy in British America. Although it was pointed out that this does not explain all of British America’s economic growth, especially in the northern colonies, it is important to every one of the colonies’ economies. The commerce between England and its colonies was setup so that the colonies sold their raw materials to the mother country which were used to produce manufactured goods for the colonies to then buy. It may seem like an unfair deal for the colonists, but it provided a constant and secure market to trade in meaning as long as they sold more in raw materials to England than they bought in manufactured goods, they would be gaining wealth by draining it from England. With the addition of the native indian commerce and trade with other countries, the colonists were able to overcome the restrictions enforced by England and generate a substantial profit as to increase their wealth.

Capital

Capital will be defined as “assets available for use in the production of further assets.” In this sense, many things can be considered capital so long as it generated wealth for the colonists. Capital is as necessary to an economy as is the former three C’s, Country, Citizenship, and Commerce. It begins as the initial assets necessary to produce raw materials for England, so of course it comes from England. The land that was given to the colonists is considered capital as well as the credits extended by numerous English companies and merchantmen, and so is the part of the English population that migrated to the colonies since they could provide labor . It may have all appeared as an investment to the English, but it was capital in the eyes of many colonists; capital that was used to procure more wealth for the colonies rather than the mother country. The immense capital that England provided to the colonies was the sole reason for their initial survival and a consequential reason for their economic growth. England pumped resources into its colonies with no gain for decades before they became self-sustainable. England was transferring assets to the colonies in hopes of attaining a high profit off of them that would make the investment worth the risk, but on the advent of revolution, all of the English investment, even the extended credits and the colonies themselves constituted one huge recorded loss in the English economy.

Control

Control consists of two elements; ownership and freedom. Ownership is control over an asset by an entity, but it is also the continuation of control. Not only is it necessary to possess an asset for it to be considered part of an economy, but it is also necessary to maintain the possession or else it would become a loss as was with England and its colonies that successfully revolted. Freedom is the lack of regulation over an economy. The colonists were able to conduct what business was most profitable to themselves meaning that with the English’s inability to enforce commerce laws, the colonists were free to choose the highest buyer or lowest seller of an asset other than from the English market. The laissez-faire policy that was indirectly applied to the colonies by England, up until the revision of the navigation acts in the 18th century, was a cause for economic growth in British America. Even the extreme restrictions of the navigation acts which were intended to transfer wealth from the colonies to England in order to counterbalance the empire’s vast expenditures, were not enough to confine the economic growth of British America whose total income was lessened by a mere 1 to 2%. For the most part, the navigation acts actually aided in British America’s economic growth by eliminating competition with the French, Spanish, and Dutch. The led to the the American Revolution where England lost possession of valuable assets to the colonists including all the capital that was invested. More important than the navigation acts ability to concentrate assets in England, was the power it represented. England attempted to subdue the colonies by boasting its influence and increasing regulation in trade along with enforcement, but the endeavor to maintain control over the colonies ended in failure. Control is a cause of British America’s economic growth as much as it is a central reason for the advent of the American Revolution. extend this

Country, Citizenship, Commerce, Capital, and Control all attributed to the economic growth of British America where some were larger factors for particular areas than others. The 5 C’s theory is flexible enough to be applied to any of the regions of colonial America while also being able to explain the economic growth of British America as a whole. It fills in the gaps and corrects the inconsistencies caused by previous theories on the subject. Where the staple thesis fell short in explaining economic growth of the northern colonies, the 5 C’s theory succeeds by emphasizing the factors that were the most influential to economic growth of that particular region. In the case of New England, the most

New England, for example, had an economy not primarily based on a staple, but on services and manufactured goods. Although New England had a solid fur trade and exported some fish, it did not export nearly as much as it imported over the 17th and 18th century. In 1699, New England was exporting only 26,660 pounds to the mother country while importing 127,279 pounds, an amount five times greater than its exports. By 1750, New England was importing in one year an amount seven times greater than the value of its exports. The trade deficit is evidence that the staples New England sold to the mother country were definitely not enough to cover the expenditure in imported goods. The lack of revenue generated through the staple market and the minimal exports of the New England colony show that it was not an export-driven economy. Instead New England’s primary income came from the shipping industry by cutting timber to use for repairing and building ships. The ample forest provided a lasting amount of trees to cut down and the high quality skillset of the shipbuilders enabled them to produce numerous ships for commerce and profit. They even became a major trading port and provided shipping services increasing their income through Commerce, Capital, and Control. The Malthusian Frontier is the epitome of the only thing that is self-evident. The one time that it does not seem to work is when the economy does not want to get better. But when the population is not going to work for what it gets, then that is when the purpose of the better is to find the worse in t

England’s economy and British America’s economy. the largest cause was England itself

Economies.... the smaller the region/community, the more accurate or better.

Compare your theory with the New England colonies. Back it up with it as proof. Then breifly describe why it is flexible enough to fit to any of the colonies economies. 

Conclusion: Summarize theory that is posited. The colonies are an extension of England, as such the economies are too intertwined to be dealt with separately, especially for a time period of limited economic documentation.

England's economy and how it connected to the colonies.

                             - Navigation acts

                             - Imports and exports to and from England. Defecits.

                                             - Current, Capital, Buillion, ^Gold?^

                             - Capital, Security, and Support. The worst and best investment in England’s history. Worst after the revolution. Best after World War II.

                             - Credits and deficits

My Theory explained

- (Country)LAND! It is important for multiple points of this paper as well as the Lagniappe at the end. Land is one of the things that leads to control and the creation of governments. It is the most important asset on the planet and always will be, or at least until the unlikely future event of floating platforms that can be considered land. Note that this has been attempted to some degree in Japan when they built the City or Airport on a floating platform on the ocean. Every president of the U.S. was a land speculator at one time or another up until Obama. This is also part of many of the theories

- (Capital)Capital. Extremely important because it is central to your ??? thesis that the colonial economy grew only in so much as capital was transferred to them.

- (Commerce)Market. Must have someone to buy your  product?? stuff?? might as well make it the best??? This includes the economy that is not related to England which consists of trade with Indians, Africans, other countries/colonies, as well as amongst themselves (local economy). 

- (Citizenship)Population. Mus have people to work, to sell to, to buy from, and to possess things. The more the merrier, at least until overpopulation which is becoming more of a reality each day that passes in the modern world. Connection = Luckily the excess of land avoided this problem which is a reason for the population growth.

- (Control)Freedom. The ability to do what you want so that your transactions can be the most profitable to you that they can be! Love this idea! Run with it! Used in another theory that you read about. Look it up.

- ??? Make sure you read the other theories and are not forgetting a major factor.

ECONOMIC RENT = http://en.wikipedia.org/wiki/Economic_rent

From Mercantilism to Capitalism according to accounting

This is one reason why gold became so popularized; since it had a wide appeal and became acceptable by more and more people as a true asset, it transformed into a standard medium of exchange, probably making it the first global specie or currency.

             While the colonies were exporting mostly renewable resources and raw materials, they were importing a large amount of manufactured goods, sometimes with a higher and longer lasting value. They were also investing in and developing their land at the expense of their mother country. English merchant capitalists supplied the entirety of principle needed to create the economy of British America while at the same time taking on responsibility for its maintenance and growth with investment, credits, and security.

[1] Wealth of a Nation to be, 15

[2] Economy of British America, 73

[3] Economy of British America, 75

[4] Wealth Estimates for New England, 102

[5] Wealth of a Nation to be, 23

[6] Wealth of a Nation to be, 113

[7] Origins of American Capitalism, 154

==============================================================================

         It is important to define economic growth rude????

         What is considered wealth in the 17th and 18th centuries in British America?

                     - Land, Ability to produce, expenses/debts

         Separating the economies of British America and England

         Capitalist standpoint

         Transfer of assets

         - Probates are missing, or were not recorded. This is mathematically compensated.

             - Tobacco as an asset causes problems in the calculations.

             - Credits were calculated that most likely went unpaid to England.

             - Corruption was not considered in the calculations.

             - High population growth lowered the CPI.

             - England’s economy is not accounted for even though the colonies were its extension.

Origins of Amer. Cap.

- Boston as an example. Property Taxed. Agricultural to Maritime.

- Land value increased in 18th century due to population, productivity and demand 173

- Extensive growth of frontier, intensive development of settled areas 175

- Many historians in 1960’s were arguing for Capitalism using CA as proof. 154

- Growth of 1% per annum by George Rogers Taylor 155

- Tobacco production doubled mid 17th century increasing profit margins

Economy of Colonial Amer.

- Population increased consistently by 3% 1660-1775, due to imigration, then all birth 1

- Population also due to large family size, high rate of early marriage, low mortality 4

- Rapid rise in population while high material stand. of living persisted and improved 12

- 18th century - England had per capita income growth with ⅙ pop growth of colonies 12

- Inconveniences of British trade,internal regulations ignored, effected output 4-6% 14

- Europe: Too little land. America: More than enough. Able to be expanded. 12

- Navigation Acts rules enacted in first half of 17th century. Did not hinder economy. 20

- Trade regulations benefited northern shipping interests, minimizing competition. 20

- British Navy provided security no cost. Reimbursed colonists for military ops. 21

- Northern colonies trade with England in 17th cent: Furs, fish, masts then whale oil 22

- Northern colonies better for buying prods rather than prov. raw mats. 24

- British exports: Textiles and metal hardware

- Colonies produced 2% of world iron by 1700. 25

- Colonial market accounted over half of British exports of certain products. 26

- Colonial demand grew fast enough to support British and domestic 26

- Invisible “earnings”, unrecorded economic activity, paid for imports 28

- Large debts owed to British mercantile firms. 36

- Items bought from Britain: luxury, cloth, furniture, clocks, jewelry, silverware 37

- Debts related to revolutionary behavior 38

- 1772, British credit crisis, British recalled American debts 38

- Staple thesis = growth b/c of staple euro demand, reason to invest 39

- demographic model = internal factors: pop growth, dvlpmnt of agric. local commerce 39

- Malthusian principles = more than enough means

- Daniel Scott Smith: Malthusian & Turner’s frontier, less urban oprtnty. more rural 39

- Unproof staple: foreign markets didn’t affect everyone the same, staples trade varied 40

- Navigation laws didn’t affect colonies economic growth 41

- Linking both economies and considering them as one 42

- Paper currency, coins: British limited them, colonies depended on Spanish silver 163

- Paper currency. Issued due to lack of specie by local gov’t. 168

- Bills were loans to gov’t b/c they printed more for military and gov’t expenses 171

- Property taxes and head taxes 172

- Minimal taxation, 50% of England’s tax, 187

- British investment and aid outweighed the effects of the navigation laws 196

Growth of the Amer. Economy to 1860

- British invested, help setup basic utilities to support the colony, sawmills, ironworks 36

- Adam Smith excerpt, Nature and Causes of Wealth of Nations, 57

- Rapid growth because of plenty and cheap land 58

- Document that describes colonies, what they provide, 69

- Talked about producing hemp 69

- Document stating amount and prices of imports and exports to and from England 77

- Document stating the amounts imported exported in pounds from 1697-1775 80

- Document Describes economy of New England: RI, MA, NH 104

- Document of population stats by colony 112

- Document by Adam Smith describing causes for population increase 114

- Smith: Lots of land, too little labor, high wages, prosperity, wealth

- Labor System: Indentured servants and slaves 115

- Land: Document legal Headright system, private ownership w/ forfeit EULA 119

- Population: Document Ben Franklin saying its b/c of natural increase 120

- Capital: Provided by England, Advancing goods for credits. Document of deal 122

- Standard of Living: Document talking about SOL in 1775 140

Wealth of a Nation to be

- Defines Wealth, Capital, Income, and Property 15

- Wealth: anything that has market value

- Capital: Physical stock used to promote production, or savings/investment

- Property: Legal right or claim to a particular asset.

- Document on values of items in 1774 16

- Human Capital: slaves and servants are assets, wealth 23

- Slave and Servant Values 113

- Wealth Tables. Document. 129

- Wealth totaled 88 million sterling, 37.4 per capita excluding slaves and servants 294

- 57% of population under 21

- Colonial Economic Growth prior to 1774. 305

- Per capita nonhuman wealth increased from 1650-1774

- Reverse engineers 1650 figures

Economy of British America

- Northern colonies developed, South grew/expanded 17

- Malthusian/frontier: population growth, aggregate output, no structural change 18

- Staple thesis: Staple drove everything, export expansion = economic growth 18-20

- Staple: Size, structure of export-led economy shaped by dominant staple 23

- Staples doesn’t explain Northern colonies economic growth, not export-led ME

- Specialization leads to gains in productivity and income 26

- Staples critics: 27

- Directs attention away from domestic, more data on foreign trade

- Consequences of plantation crops could be explained through slavery

- Ignores the role of Native Americans

- Mercantilism: shared perception among Western powerful people 1600-1800. 35

- foreign trade could be made to serve interest of gov’t and vice versa

- Balance-of-payments accounting: Debits must = Credits. Three categories - 37

- Current account: value of Goods & Services in 1 year

- Capital account: investments, ownership

- Buillion account: movement of gold and silver

- Trade grew substantially from 1700-1775 39

- Document: English imports. Colonies helped England’s economy. 40-41

- Britain promoted the colonies b/c it was in her interest, mercantilism 45

- Navigation Acts and effects explained 47

- Economic Growth 1607-1775 b/c

- export demand

- expanding commercial empire,

- protected and promoted by strong imperial system

- endowed with plenty abundant resources

- Ways to measure economic growth: per capita income 52

- Britain’s economy grew real annual avg compound rate .3% per capita 1690-1785 55

- Colonial prices moved in conformity with English prices 64

- Document of expansion and contraction of both economies 63

- England began systematic collection of commercial stats in 1690s 73

- “Invisibles” not included in current account make incomplete measure of balance 75

- Invisibles were like earning credits for shipping, visibles were like ships

- Colonies started shipping lots rice & wheat to Europe after 1750s 79

- Trade passed from English vessels only, slowly to colonial merchants 79

- Large deficits for colonists in trade with England 82

- Northern colonies made up large deficits by shipping, selling ships 82

Jones, Alice Hanson. Wealth of a Nation to be: The American Colonies on the eve of revolution (New York: Columbia University Press, 1980)

- Local circulating medium was bills of prov. gov't backed by taxing power = 8

Egnal, Marc. New World Economies: The Growth of the Thirteen Colonies and Early Canada (New York: Oxford University Press, 1998), iii,

- Rate of economic growth in the Thirteen Colonies reflected rate in England

Marshall, Peter and Glyn Williams, eds. The British Atlantic Empire before the American Revolution. London: Cass, 1980.

Nettels, Curtis Putnam. The Money Supply of the American Colonies before 1720. Madison, WI: University of Wisconsin, 1934.

Newell, Margaret Ellen. From Dependency to Independence: Economic Revolution in Colonial New England. Ithaca, NY: Cornell University Press, 1998.

North, Douglass and Robert Paul Thomas. The Growth of the American Economy to 1860. New York: Harper and Row, 1968

McCusker, John and Russell Menard. The Economy of British America 1607-1789. London: University of North Carolina Press, 1985.

Perkins, Edwin J. The Economy of Colonial America. New York: Columbia University Press, 1988.

James F. Shepherd and Gary M. Walton, Shipping, Maritime Trade, and the Economic Development of Colonial North America (London, 1972)

Allan Kulikoff, "The Economic Growth of the Eighteenth Century Chesapeake Colonies," The Journal of Economic History, Vol. 39 No. 1 (Mar. 1979), 275-88

   - Staple Thesis - economic growth encouraged by rising demand

   - Questioning the Bias of the data to calculate growth

   - Growth in population saturated the economy, more births=less workers and more dependents.

Terry L. Anderson, "Wealth Estimates for the New England Colonies, 1650-1709" Explorations in Economic History, 12 (Apr. 1975), 151-76

Gloria L. Main, "The Correction of Biases in Colonial American Probate Records," Historical Methods Newsletter, 8 (Mar., 1974), 10-28

   - Probates do not form a representative sample

   - Probates are of older wealthier males

   -

Peter C. Mancall and Thomas Weiss, "Was Economic Growth Likely in Colonial British North America?" The Journal of Economic History, Vol. 59, No. 1 (Mar. 1999), 17-40

   - Discusses growth per capita between .3 and .6 percent per year

   - Believes that colonists not afford saving and investment for economic growth

   - Suggests Native Americans raise economic growth through transfer of wealth

   - Comes up with his own estimates of economic growth

Marc Egnal, "The Economic Development of the Thirteen Continental Colonies, 1720 to 1775." William and Mary Quarterly, 3d Ser., 32 (1975) 191-222

   - Growth because of population increase along with expansion of output and rise per capita

   - Wars effected economic growth - 193

   - Population caused by large birth rate and small bits of immigration to New England

   - Economic growth not fully because of staple crops

John R. Hanson II "The Economic Development of the Thirteen Colonies, 1720 to 1775: A Critique." William and Mary Quarterly 3rd Ser. 37 (1980). 165-72

   - Engal's theory is flawed.

George R. Taylor, "American Economic Growth Before 1840: An Exploratory Essay." Journal 24, no. 4 (1964): 427-44

John McCusker and Russell Menard. The Economy of British America, 1607-1789. Chapel Hill: University of North Carolina Press, 1985.

Terry L. Anderson "Economic Growth in Colonial New England: Statistical Renaissance." The Journal of Economic History, Vol. 39, No. 1, (Mar., 1979) 243-57

   - Summarizes the findings of others on economic growth

   - Looks at population and probates

   - Uses Hampshire County, Massachusetts in 18th century to generate stats

   - Tobacco colonies in Chesapeake productivity growth rate of 1%+=  for a century 246

Terry L. Anderson "Economic Growth in Seventeenth-Century Chesapeake Colonies," Explorations in Economic History, 15 (Oct. 1978).

Alice Hanson Jones, "Estimating Wealth of the Living from a Probate Sample" Journal of Interdisciplinary History, Vol. 13, No. 2 (Autumn, 1982) 273-300

   - Goes over the methods for estimating wealth in the 1774 estimate of the thirteen colonies

"They [Probates] usually do not show debts owed by the estate" 278

Gloria L. Main, "Probate Records as a Source for Early American History" The William and Mary Quarterly, Third Series, Vol. 32, No. 1 (Jan., 1975) 89-99

Alice Hanson Jones “Wealth Estimates for the New England Colonies about 1770” The Journal of Economic History, Vol. 32, No. 1 (March, 1972) 98-127

Gloria L. Main and Jackson T. Main (1988). Economic Growth and the Standard of Living in Southern New England, 1640–1774. The Journal of Economic History, 48 , pp 27-46 doi:10.1017/S0022050700004137

Underregistration and Bias in Probate Records: An Analysis of Data from Eighteenth-Century Hingham, Massachusetts

Daniel Scott Smith

The William and Mary Quarterly , Third Series, Vol. 32, No. 1 (Jan., 1975), pp. 100-110

Published by: Omohundro Institute of Early American History and Culture

Article Stable URL: http://www.jstor.org/stable/1922596

- discusses the faults in using probate records. Wealth estimates are not accurate enough due to factors like small sample size, inaccurate adjustments, and sample bias.

- Uses Hingham, Massachusetts which has a large sample size to compare estimates.

From Malthusian Frontier to Demographic Steady State: The Concordian Birth Rate, 1635-1993

Brian J. L. Berry

Population and Development Review , Vol. 22, No. 2 (Jun., 1996), pp. 207-229

Published by: Population Council

Article Stable URL: http://www.jstor.org/stable/2137433

- Explains Malthusian Frontier model

^ a b Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 272. ISBN 0-13-063085-3.