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Bernard Bailyn


Harvard Univ. Press, Cambridge, 1955, 246 pgs., index, end notes, sources, illustrations


This is a terrific book - no economic theories, just the facts about economic activity, who, when, where, why and results. We learn many things. The governments of the various colonies were created either before the colonists left England or immediately upon arrival. The organization of the economic activities was an immediate priority government activity. Governments expect to and were expected to manage much economic activity; promote, prevent, subsidize, encourage, discourage private and group activities in the name of the colony as well as deal with the demands of trade with external individuals and groups such as merchants in different parts of England and gradually also with increased economic relationships with foreign powers.. Actually the purpose was always strongly influenced by the desires of special inerest groups, farmers, fisherman, and especially various types of merchants. The colonial government and merchants also had to deal with the original financial backers, merchants in England, whose motives were different.


Immediately, not only government executives and legislatures were created, but also courts. Lawyers were soon employed in civil cases over economic controversies, such as bankruptcies.


Although the colonists had many different personal motives for their personal risk in venturing into the unknown, the colonies themselves, were generally organized as commercial enterprises and the financiers in England expected profits. The colonists and the colony thus started out on the basis of credit (debt) and some of the English financiers invested their own money but others borrowed on credit themselves. De. Bailyn discusses the role of currency money and credit money of which the latter was a critical component. When individual merchants began to conduct trade with overseas places (Caribbean, Spain, Africa,) they used letters of credit frequently drawn on English banks or merchant houses. To reduce financial risk most such merchant enterprises were organized around family members sent to foreign locations as factors. There was a constant shortage of coin money in New England. Some colonies experimented with paper money, which rapidly depreciated.


The English merchants extended this initial credit plus added more in the hopes of making profits from the exchange of the goods they provided for producdts from the colonies. These were expected to be mostly fish and furs. But these soon were depleated or the trade was captured by the Dutch aor Sweds.. Thus there was a continual deficit in the balance of trade between the colonies and England. And the shortage of coin within the colony inhibited local economic activity. The colonial governments sought to create local production, especially of goods being imported from England. This resulted in many efforts to produce iron and establish local clothing industry. By the last decades of the century British wars with Holland resulted in innovative colonists creating a new profitable industry in shipping hondreds of tall timber masts for the British fleets. They also found that some agricultural products and horses were needed in the Caribbean colonies.


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