No More Learning

81338 (L. C. Tran-
scripts), pp. 164-165.
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? 34
THE COLONIAL MERCHANTS: 1763-1776
had the reputation of being the best in the world. Al-
though an "enumerated" article, it monopolized the
Dutch, German and Portuguese markets and had gained
a foothold in Spain. Near the middle of the eighteenth
century, another plant was introduced, which quickly
gave promise of pushing rice for pre-eminence. This
was indigo, the production of which was greatly stimu-
lated by parliamentary bounties. Though its exportation
was confined to the mother country, many of the indigo
planters, it was said, were able to double their capital
every three or four years.
North Carolina, by virtue of her midway geographical
position, displayed some characteristics of both adjoining
provinces, growing tobacco in her northerly parts and
indigo and rice in the southern counties. 1 Her chief
articles of export, however, were the products and by-
products of her forested areas--tar, pitch, turpentine
and many varieties of lumber. In 1767, there were on
the Cape Fear River and its tributaries fifty saw-mills,
cutting annually a total of seven and one-half million
feet of boards.
The most striking feature of the southern economy
was the fact that native capital, in its larger aspects, was
invested almost exclusively in plantation production.
Out of these large landed estates there grew up a great
social and political system, with its aristocracy of birth
and leadership and its vital distinction between slave
labor and gentlemanly leisure. Towns in the plantation
provinces were neither large nor numerous. Charleston,
possessing a population of almost eleven thousand in
1770, was the chief port of the South and the fourth city
in British America. Each province had some place of
1 American Husbandry, vol. i, pp. 331-351; report of Gov. Tryon, N.
C. Col. Recz. , vol. vii, pp. 429-430.
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? THE OLD ORDER CHANGETH
35
which it could be said that " trade is more collected here
than in any other place . . . "; 1 thus, Baltimore in
Maryland, Norfolk in Virginia, Wilmington in North
Carolina and Savannah in Georgia.
Native Americans did not ordinarily become merchants,
and commerce was handled in British bottoms in one of
two ways, each of which was uneconomical for the
planter. 2 The wealthy planter employed the London or
Bristol or Glasgow merchant as a sort of commission
merchant, to dispose of his tobacco or rice and to lay
out the probable proceeds in goods of one kind or an-
other, to be delivered at the planter's wharf in the fol-
lowing season. This system resulted in careless and
wasteful management on the part of the merchant in
England, high commissions and freight rates, and
chronic overbuying on the part of the colonist.
For ordinary trading purposes, the British merchant
maintained an agent or "factor" in the colonies, who
kept up a stock of merchandise the year round, worked
up business, and acted as financial agent and confidential
adviser of his employer. The factors were almost alto-
gether "foreigners," as the local vernacular termed
them--that is, natives of Scotland. They had the repu-
tation of being shrewd, hard business men, veritable
Shylocks; and from the point of view of their patrons
they undoubtedly were, for they demanded, from as
wasteful a race of gentlemen-farmers as ever lived,
punctual payment for goods sold or money loaned. 8
1 4 Am. Arch. , vol. i, pp. 371-372.
1 Bassett, J. S. , "The Relation between the Virginia Planter and the
London Merchant," Am. Hist. Assn. Reps. (1901), vol. i, pp. 551-575;
Schapcr, W. A. , "Sectionalism in S. C," ibid. (1900), vol. i, pp. 287-
288, 297; Sioussat, St. G. L. , "Virginia and the English Commercial
System," ibid. (1905), vol. i, pp. 71-97.
8 For an able defense of the Scotch merchants, vide "A Scotchman"
in Pinkney's Va. Gas. , Mch. 23, 1775.
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? 36 THE COLONIAL MERCHANTS: 1763-1776
Here again, there were large profits for the British
dealers and shipowners, and lavish buying on the part of
the colonist.
The British capitalist advanced money and gave gen-
erous credit to the planter, but this merely served to
complicate matters; the planter continually operated on
borrowed capital and found his next crop mortgaged
before 1t was planted. For more than a quarter of a
century7 Colonel iJyrd of Virginia, struggled to repay
indebtedness contracted with a London firm for the sake
of enlarging his plantations. In 1736, he was "selling
off land and negroes to stay the stomach" of his hungry
creditors; and he asserted that they allowed him twenty-
five per cent less for tobacco than they gave to other
people, knowing that they had him for a customer until
the debt was discharged. "
The result of this financial system, in its various ram-
ifications, was the economic bondage 61 tr1e planting
class to the British merchants. "The planter, Thomas
Jefferson, declared iMai 111 Vllglllia "these debts had be-
come hereditary from father to son, for many genera-
tions, so that the planters were a species of property,
annexed to certain mercantile houses in London. "'
Whgp-th,*>> statute of 17^2 was enacted by Parliament to
protect the debts of British creditors in the, rmnn1es1 the
Virginia Assembly drew UP a memorial t thy "jyhplp aim
and interjt" "f which, says Professor Sioussat, was "ex-
pressive of a revolt against the domineering and 'graft-
ing-' rule nf th^ combination of merchant^ crecf1tors,~ in
its various manifestations. From time to time, the
1 Bassett, J. S. , Writings of Colonel William Syrd (New York, 1901),
pp. li, Ixxjciv.
1 Jefferson, Writings (Ford, P. L. , ed,), vol. iv, p. 153. Vide also "A
Planter" in D1xon & Hunter's Va. Gas. , Apr. 13, 1774-
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? THE OLD ORDER CHANGETH 37
colonists tried to improve their situation by passing lax
bankruptcy laws and other legislation prejudicial to non-
resident creditors; but their efforts were usually blocked
by the royal veto. 1 Toward the close of the colonial era,
their condition was becoming well-nigh insupportable.
The situation was especially acute in Virginia. 2 In
1748, the Virginia Assembly provided that, in actions
for the recovery of sterling debts, the amount adjudged
could be settled in currency at twenty-five per cent ad-
vance, notwithstanding the fact that exchange fluctuated
and was at times as high as forty per cent. Seven years
later, the Assembly was induced to modify the law to
the extent that the Virginia courts should be empowered
to fix the rate of exchange. This law was hardly more
satisfactory to the British merchants than the earlier one;
and their dissatisfaction was sharpened by the fact that,
about this time, Virginia began to issue legal-tender
paper money. This money depreciated steadily; and, as
a large portion of the debts of the British merchants was
in paper, the action of Virginia had the effect of partial
repudiation.
But the resourcefulness of Virginia was not yet ex-
hausted. In 1758, a law was passed, permitting persons,
who owed tobacco for debts, contracts, fees or salaries,
to discharge their obligations during the following year
in money at the rate of twopence a pound. This "Two-
Penny Act" was passed because of a sharp rise in the
price of tobacco: and it aroused the bitter opposition,
1 The plantation provinces displayed much greater activity along these
lines than the commercial provinces. This legislation is conveniently
summarized in Dr. Russell's Review of American Colonial Legislation,
pp. 125-136.
1Beer, G. L. , British Colonial Policy, 1754-1763 (New York, 1907). ,
pp. 179-188.
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? 38 THE COLONIAL MERCHANTS: 1763-1776
not only of British creditors, but also of the Virginia
clergy. In 1759, the merchants of London interested in
Virginia trade presented a memorial against the act,
showing that large quantities of tobacco were owing to
them in Virginia, and that under this law the debts could
be commuted in money at the rate of twopence per
pound notwithstanding that at the time the market price
of tobacco was considerably higher. The act thus had
the effect of annulling contracts that had turned out un-
favorably to the planters; and in August, 1759, an order
in council disallowed it, as well as others of a similar
nature enacted prior to 1758.
The local clergy were in a similar dilemma, since an
earlier law had established their salary at a fixed quantity
of tobacco. They believed that they should reap the
benefit of any advance in the price inasmuch as they had
always suffered by its decline. One of the suits, brought
by the "parsons" to recover the full market price of the
tobacco, gave opportunity for the first grandiose decla-
ration of the rights of the colonists in the matter. The
question of justice had already been decided in favor of
the "parson "-plaintiff, when young Patrick Henry was
called in by the vestry to exhort the jury to scale down
the amount of the verdict which should be assessed.
Arguing vigorously for the natural right of the com-
munity to govern for itself in the matter, he persuaded
the jury to award nominal damages of one penny. 1
The peculiar economic situation in the plantation
provinces shaped the developments of the decade 1764-
1774 in fundamental contrast with those of the commer-
cial provinces. Whereas, in the latter, financial power
1 Henry, W. W. , Patrick Henry (New York, 1891), vol. i. pp. 30-46;
M. -u1ry, A. , Memoirs of a Huguenot Family (New York, 1872), pp.
418-423.
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? THE OLD ORDER CHANGETH
39
and political power were vested in the hands of the same
class in the early years of the decade, in the plantation
provinces financial control and political leadership be-
longed to two classes, dissimilar in nativity, social man-
ners and political sympathy. The important result was
that when the new policy of Parliament adopted in 1764
threatened to inflict serious injury on the merchants of
the North, the planters of the South felt an instinctive
affinity for their oppressed brethren and were moved to
join them in their demands for remedial legislation and
a larger measure of colonial autonomy. Oliver Wolcott
went so far in later years as to say with reference to
the chief plantation province :^" It is a firmly established
opinion of men well versed in the history of our revolu-
tion, that the whiggism of Virginia was chiefly owing to
the debts of
Thus far it has not been necessary to distinguish be-
tween legal commerce and illicit commerce, for the reason
that the mother country failed to draw sharply the dis-
tinction until the closing years of the colonial era. a The
Influence on the Affairs of the United States Proved and
Explained (Boston, 1804), quoted by Beard, C. A. , Economic Origins
of Jeffersonian Democracy (New York, 1915), pp. 297-298. It will be
recalled that the question of payment of the pre-RevoIutionary private
debts to British merchants occupied the attention of the British and
American governments in the treaties of 1783 and 1794 and in the con-
vention of 1802. The claims presented against the commercial prov-
inces amounted to ? 218,000; those against the plantation provinces,
^3,869,000. The former figure consisted, in large part, of claims on
behalf of American loyalists for compensation, while this was not true
in the latter case. Ibid.
* This summary of smuggling is based largely upon the following
materials: Postlethwayt, M. , Great Britain's Commercial Interest Ex-
plained and Improved (London, 1759), vol. i, pp. 485-498; "An Essay
on the Trade of the Northern Colonies," Prov. Gas. , Jan. 14, 21, 1764;
report of commissioners of the customs, Brit. Mas. Addl. Mss. , no.
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?
40
THE COLONIAL MERCHANTS: 1763-1776
business of smuggling was made easy and attractive by
several favoring circumstances--the extensive and irreg-
ular coastline, the distance of the colonies from England,
the inefficient system of administration, and, it must be
said, the practice of custom-house officials "of shutting
their eyes or at least of opening them no further than
their own private interest required. "1 Smuggling was
almost exclusively a practice of merchants of the com-
mercial provinces. "The Saints of New England," wrote
Colonel Byrd of Virginia acridly, ". . . have a great
dexterity at palliating a perjury so well as to leave no
81330 (L. C. Transcripts), ff. 85-86; Hutchinson, History of Mass. Bay,
vol. iii, pp. 160-163; and other sources noted from time to time. The
conclusions presented do not differ materially from those given in:
Andrews, C. M. , "Colonial Commerce," Am. Hist. Rev. , vol. xx, pp.
61-62; Ashley, W. J. , "American Smuggling, 1660-1760," Surveys His-
toric and Economic, pp. 336-360; Beer, G. L. , British Colonial Policy,
1754-1765, pp. 235-246, and Commercial Policy of England, pp. 130-143;
McClellan, W. S. , Smuggling in the American Colonies (New York,
1912), chap, iii; Root, W. T. , Relations of Pennsylvania with the Brit-
ish Government (New York, 1912), pp. 61-76. As to the quantity of
illicit trade, every student will agree with Professor Andrews that "it
is doubtful if satisfactory conclusions can ever be reached . . . owing
both to the lack of evidence and to its unsatisfactory character. "
1 " Essay on Trade of Northern Colonies," Prov. Gas. , Jan. 14, 21,
1764. Surveyor General Temple accused Governor Bernard of sharing
in such illegal gain. Quincy, S. L. , Mass. Reports, 1761-1772, pp. 423-
424. Hutchinson wrote on Sept. 17, 1763: "The real cause of the
illicit trade in this province has been the indulgence of the officers of
the customs, and we are told that . . . without bribery and corruption
they must starve. " Ibid. , p. 430. On Feb. 8, 1764, Governor Franklin
of New Jersey reported to the Board of Trade that the custom-house
officers entered "into a Composition with the Merchants and took a
Dollar a Hogshead, or some such small matter, in Lieu of the Duties
imposed by Act of Parliament," and he had no knowledge that they
ever remitted the "Composition Money" to England. 1 N. J. Arch. ,
vol. ix, pp. 403-404. It should be noted that by law the collectors had a
discretionary power to accept partial payment of duties as full payment
(13 and 14 Charles II, c. 11).
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? THE OLD ORDER CHANGETH 41
taste of it in the mouth, nor can any people like them
slip through a penal statute. "'
For the most part, colonial smuggling took two
forms. * First, there was a direct traffic, back and forth
across the Atlantic, between the British provinces and
foreign countries. The outgoing commerce was likely
to infringe the regulation which confined certain colonial
exports to Great Britain alone; and the incoming trade
unavoidably violated the requirement that practically all
products of Europe and Asia should reach the colonies
via England. The illicit traffic in colonial exports was
apparently very small. Of much larger proportions was
the clandestine importation of foreign commodities and
manufactures, although its relation to the total volume
of legitimate trade was not important. Colonial mer-
chants carrying legal cargoes to Holland, Hamburg and
France sometimes returned with drygoods, tea, wines
and gunpowder, which they had not troubled to enter at
a British port. 3 Or these wares found a more circuitous
entrance into the colonies by way of the foreign islands
in the West Indies. Or New England merchants, hav-
ing disposed of their fish in Portugal, Spain or Italy and
having, in accordance with the law, loaded all the salt
they wished, completed their cargoes with fruit, oil and
1 Letter of July 12, 1736, Am. Hist. Rev. , vol. i, p. 88.
1 One form of smuggling disappeared after the seventeenth- century
and is not discussed here. This was the direct exportation of colonial
tobacco to Scotland. The illegal character of this traffic was removed
when the acts of trade were extended to Scotland in 1708. Morriss,
Colonial Trade of Maryland, pp. 116-120.
1 E. g. , vide reports of Lt. Gov. Colden of New York, Golden, Letter
Books, 1760-1775 (N. Y. Hist. Soc. Colls. , vols. ix and x), vol. i, pp.
257-259, 375-376; letter of William Bollan, Feb. 26, 1742, Col. Soc. Mass.
Pubs. , vol. vi, pp. 299-304. The letter of an Amsterdam commission
house to a Rhode Island merchant, dated Jan. 31, 1764, is interesting
first-hand evidence on this point. R. I. Commerce, vol. i, pp. 105-106.
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? 42 THE COLONIAL MERCHANTS: 1763-1776
wine, and made straightway for America. Governor
Bernard of Massachusetts spoke of "an Indulgence time
out of mind allowed in a trifling but necessary article,
. . . the permitting Lisbon Lemons & wine in small
quantities to pass as Ships Stores";1 and, acting upon
the same understanding, Peyton Randolph, attorney
general of Virginia, drew upon himself the withering
wrath of Governor Dinwiddie, for dismissing a case in-
volving this breach-- " inconsistant with Justice, the
Sense and Spirit of the Laws that were produc'd on the
Tryal," as Dinwiddie declared. 2
By far the greatest mass of contraband trade consisted
in the importation of undutied molasses, sugar and rum
from the foreign West Indies, particularly molasses.
The heavy restrictions of 1733 had been imposed regard-
less of the protests of colonial merchants, the avowed
purpose of Parliament being to give to the British
planters in the West Indies a monopoly of marketing
their molasses in the commercial provinces. The act
had been passed at the behest of the "West India in-
terest" in Parliament;8 and to colonial merchants, it
appeared a sinister piece of exploitation intended to en-
able "a few pamper'd Creolians" to " roll in their gilded
1 He added: "I have always understood that this was well known in
England,--allowed, as being no object of trade, or if it was, no way
injurious to that of Great Britain. " Quincy, op. eit. , pp. 430-431. Vide
also article in Bos. Eve. Post, Jan. 2, 1764. S. Toovey, clerk to the
customs collector at Salem, described, in convincing detail, how the
customs entries were manipulated for this purpose, in a deposition of
Sept. 27, 1764. Bos. Gas. , June 12, 1769.
1 Official Records of Robert Dinwiddie (Richmond, 1884), voL ii, pp.
679-681. Gov. Fauquier of Virginia reported on Nov. 20, 1764, that
ships returning from Lisbon generally brought a small quantity of
fruit and sometimes wine. Brit. Papers ("Sparks Mss. "), vol. ii, p. 43.
1 About forty members were usually so classified. Bos. Eve. Post,
Nov. 21, 1763; Bos. Post-Boy, Aug. 4, 1766.
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? THE OLD ORDER CHANGETH 43
equipages thro' the streets" of London, at the expense
of two million American subjects. '
If any serious attempt had been made to enforce the
statute, the prosperity of the commercial provinces
would have been laid prostrate. It was the West India
trade, more than anything else, which had enabled them
to utilize their fisheries, forests and fertile soil, to build
up their towns and cities, to supply cargoes for their
merchant marine, and to liquidate their indebtedness to
British merchants and manufacturers. The entire mo-
lasses output of the British islands did not equal two-
thirds of the quantity imported into Rhode Island alone,
and was estimated to amount to only about one-eighth
of the quantity consumed annually by all the provinces. '
Moreover, the prices of the British planters were twenty-
five to forty per cent higher than those asked at the
foreign islands; although the foreign planters would
accept business only for cash. * That smuggling with
the foreign islands was extensive and important, the
evidence is plentiful and uncontradicted. It is to be
found in such a variety of sources as letters of colonial
1 Bos. Eve. Post, July 8, 1765, quoting an article by " Anti-Smuggler"
in the London Public Ledger. Vide also ibid. , Jan. 2, 1764. For the
best explanation of the motives of Parliament in passing this law, vide
Andrews, C. M. , "Anglo-French Commercial Rivalry," Am. Hist. Rev. ,
vol. xx, pp. 761-780.
1 Of the 14,000 hogsheads of molasses imported into Rhode Island
. each year, 11,500 hogsheads came from the foreign West Indies, pay-
1ng no duty. Representation of R. I. Assembly, in R. I. Col. Recs.