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Economics in Colonial America
During the 1500's to 1800's, the strength and stature of a country depended upon its political power, which can be traced to how self-sufficient it was. Striving to be self-sufficient was what nations sought after; dependency was not a characteristic of a powerful nation. Raw materials were the most required item to strengthen the central government, and deter interactions, such as trade with other nations. The first country to introduce mercantilism in America was Spain. The spanish american colonies were not allowed to trade directly with Europe. Instead they had to funnel all of the sugar and tobacco, two common commdities of the new land, through Spain. When this was done, heavy custom duties were imposed and the central government gained. Spanish American colonies were forced into providing precious metals and raw materials to the mother country. These colonies existed only to enrich spain, even if the economic policies adversly effected the well-being of the colonies. This grip caused the central economy of Spain to grow at the expense of the colonies. During the duration of this period, the 1500's through the 1700's, mercantilism had a major effect on the economies in the new world. English speaking colonies were effected by England's policies and acts. These policies and acts were means of controling the economy of the colonies in America and strengthen the central government of England. Dutch traders had the commercial vessel market well cornered in the 1640's. It was very difficult for English colonies to compete with the Dutch. With owning 75 percent of Northern Europes' vessels, being well-financed and experienced, the Dutch were going to stay in control of the market unless European Parliament intervined. In 1651 the European parliament enacted the first Navigation Act to undercut the Dutches domination. England was hoping that this Act would exclude the Dutch from trade with the English and force its own merchant marine to grow. This act was the first attempt to enforce merchantilism by England. The act proclaimed that all trade between France and English colonies, Europe and English colonies, and the colonies with themselves must be conducted on an english ship (Kurland). The British were hoping that this would boost the economy and expand the mercant marine. The failure of this act was caused by inadequate machinery to enforce the law. The english colonies publicly defied the act and kept on trading with the Dutch. The restoration of Charles II brought about major changes in 1660. All of the acts of the Commonwealth Parliament, including the Navigation Act of 1651, were considered illigal under his rule (Kurland). Charles II did not intend on doing away with the act, but revising it. The Navigation Act of 1660 was a restatement of the 1651 act, but it also established a list of items including: tobacco, cotton, wool, and indigo, that couldn't be shipped outside of the British empire (Barck and Lefler). This Act made the english colonies frusterated for they could get a higher price for these items outside of the british empire. The Navigation Act worked as a disadvantage to the colonies, but helped the central economy and government of the british by excluding such raw materials from trade to other countries. The Staple Act of 1663 was an offshoot of the Navigation Acts. It stated that all European goods bound for the American colonies must first land at an english port and then be reshipped to America in English vessels (Kurland). The British would benefit from this act by imposing custom duties on goods, which cost would be passed to the american consumer. The english merchants would profit from handling, insurance, and shipping fees. This Act also provided for a naval officer in all colonial ports to insure the upholding of the mercantile law. From the American stand point, the Staple Act meant higher prices and a blatant attempt of the British to exploit America for the benefit of the english merchants. There was no need for the Staple Act to be passed. The Act served no other purpose other than the enrichment of the British people and strengthening of the central government. Another example of the British trying to exert control over America was with the Molasses Act of 1733. This Act imposed a duty of nine pence per gallon on rum, six pence per gallon on molasses, and five shillings per hundredweight of sugar imported from French or Spanish colonies. The was no tax put on british rum, molasses, or sugar imported from British Colonies. The British, trying to control the american colonies, were largely ineffective. The act was vastly ignored by the Americans. The Americans were not going to obey a law passed by the english, when the english had no way of enforcing it. The english colonies were pulling away from the alligence to Britain. The British wanted the colonies to build the political power of Britain, without getting anything in return. The British wanted to use up all of the resources and raw materials of America, without the colonies resisting. After the British recognized that the Molasses Act was ineffective, they amended it with the Suger Act (Morison and Commager). Bribing customs officals into taking 1 and a half pence per gallon not to notice the cargo being unloaded was how the Molasses Act failed. To do away with this problem, the British cut the tax by fifty percent and strickly enforced it. Now the colonies were objecting to the decreased tax. Before, the tax was not collected or enforced so the Americans were happy. Now that the tax was collected the Americans were feeling the threat of British rule. The British government was regarding the colonies as a source of revenue. The colonies also noticed how the money was being spent and objected to it. The British talked of how they needed money to support troops in America. The troops were not there to protect the colonies, but to enforce British rule. The troops were stationed at ports, not in the interior where the threat of attack was the greatest. America existed for the sole purpose of strengthening the central government of England. Unlike the rest of the Acts passed for the improvement of the british government, the Stamp Act caused the biggest political storm. Everyone from small farmers to merchants were effected. The parliament wanted the colonist to pay for some imperial expenses. To do this, parliament passed the Stamp Act in 1765. This law made it illigal to puchase any paper, newspapers, customs documents, various licenses, college diplomas, and numerous legal forms for recovering debts, buying land, and making wills without a stamp bought buy the British. The law enabled the British not only to generate revenues, but censor all materials going into the public. The British would simply not stamp any material, such as a newspaper, that were putting any comments about the British that were bad. The American colonies did not reciate this law at all. They protested it with a vengance claiming, "Taxation without representation is slavery." The working-class's approach to this problem is to riot, gather great mobs and burn things, and beat up the tax collectors. The upper-class's way of handling this was to make reforms and go about changing this in a civilized manner. Everyone in the colonies could agree that the Stamp Act was a selfish law made by the British to control the media and aquire revenues at the expense of the colonies. During 1790 to 1795, mercantilism helped spark the economy of America under Hamiltons authority. Hamilton wanted all foreign debts, amounting to 11.7 million, to be payed off in full (Kurland). This would establish a very high credit rating with other nations and help the government create political power. Other debts the Hamilton required to be payed off or assumed were the 40 million in Confederation war bonds and 28 million in debts of individual states (kurland). For the good of the creating a cash economy and strengthing the U.S. credit rating, Hamilton wanted to induce a Bank of the United States under the "implied powers" clause. The system of banking he purposed was very similar to that of Englands. Founded in 1791, the Bank of the United States had the duties of financing the federal government during war, regulating credit, and producing sound currency. Hamilton also had the idea of making the bank privately owned, so it would run proficiently. This would give the federal government a backbone during times of war or emergencies and make it much more powerful. Hamilton also called for American self-sufficiency. The report on Manufactures of 1791, written by Hamilton, promoted tariffs on imports to protect manufacturing and create national wealth. America was building its political power by manipulating its economy. What the British were once doing to the colonies, the colonies were now doing to themselves. America was using the idea of mercantilism to run the country and build political power. In conclusion, the whole purpose for England to develope and carry out the Acts they passed were to stay in control of the colony's economy and better their central government. The British troops were not there to protect, but to carry out english laws. The Stamp Act was developed to control the media and legal documents so the colonies wouldn't stray away and acquire their own system. The Navigation Act was to stop the dominating Dutch from taking over the commercial vessel industry and build up Englands merchant marine. The Molasses and Sugar Acts were to make America pay for its so called troops and help British merchants. Britains mercantilistic ideas in these Acts show their disregard for the new colonies and the exploitation of their resources. After the War for Independence, America took some mercantilistic ideas to begin building their political power and economy.


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