|Reviewer(s):||Walsh, Lorena S.|
Published by EH.Net (February 2011)
Nuala Zahedieh, The Capital and the Colonies: London and the Atlantic Economy, 1660-1700. Cambridge: Cambridge University Press, 2010. xvii + 329 pp. $95 (hardcover), ISBN: 978-0-521-51423-1.
Reviewed for EH.Net by Lorena S. Walsh, Colonial Williamsburg Foundation (retired).
Several recent investigations of early modern economic growth have emphasized the critical importance of overseas expansion — especially the rise of Atlantic commerce — in encouraging economic development and in inducing institutional changes initiated by new mercantile groups operating outside of royal circles (e.g., Robert C. Brenner, Merchants and Revolution: Commercial Change, Political Conflict, and London?s Overseas Traders, 1550-1653 [Cambridge, 1993]; Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy [Princeton, 2000], and Daron Acemoglu, Simon Johnson, and James Robinson, ?The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth,? American Economic Review, 95 (2005), 546-579).? Some have also stressed the dynamic role of Atlantic port cities, London in particular, in bringing together strategically favorable combinations of financial and commercial expertise; skilled, well-paid workforces; and high levels of demand for food, fuel, manufactured goods, and new tropical products (e.g., Robert C. Allen, The British Industrial Revolution in Global Perspective [Cambridge, 2009]; and Acemoglu, et al, ?Rise of Europe?).
Nuala Zahedieh, a senior lecturer in economic and social history at the University of Edinburgh, provides a masterful account of Londoners? central role in facilitating economic development in the later seventeenth century that integrates literatures on colonial empire, commerce, the consumer revolution, and the Industrial Revolution.? A main focus of research is how merchants ?responded to the opportunities and challenges? offered by Britain?s early overseas expansion ?and set in place a durable mercantile system which underpinned both extensive and intensive growth and made the Industrial Revolution more likely?(p. 3).? She sees the later seventeenth century as a critical period when ?the rules of the game were established and the incentive structure that shaped investment and the accumulation of financial and human capital took lasting form?(p. 7).? Readers will find her discussion of the mercantilist system familiar, but less so her argument (developed from long years of research on colonial, especially West Indies, trade) that the seventeenth-century state ?did not have the resources to enforce commercial legislation which seriously raised private costs,? leading her to take evidence of general compliance with the Navigation Acts by the 1680s as ?a measure of increasing convergence between English and Dutch commercial capabilities and costs rather than as a forced shift towards inefficient providers?(pp. 6-7).?
Scholars? relative neglect of London?s later seventeenth-century commerce is understandable given the scarcity of aggregated commercial statistics, the loss of many London portbooks, and the daunting volume of those that have survived.? The Capital and the Colonies employs a systematic analysis of portbooks for 1686 (a peacetime year for which the records survive in full) and more limited samples of data from the 1660s and c. 1700 to provide a detailed statistical portrait of London?s Atlantic trade.? In addition to data on exports and imports, Zahedieh compiled a biographical database of colonial merchants identified in the 1686 portbooks which she uses to trace their careers and trading networks.? Less systematic research in mercantile papers and court records, promotional tracts, and economic literature supplements the portbook materials.? Extensive period illustrations of metropolitan and colonial cityscapes, public and commercial buildings, mercantile publications, ships, manufactories, and plantations lend visual concreteness to the text.
London was unique among European cities in the size of its population and manufacturing sector, its concentration of national political and legal institutions, and in its possession of three quarters of the nation?s merchant fleet, including most shipping devoted to lucrative West Indian and African commerce.? Atlantic trade not only constituted a growing proportion of overall trade, but, Zahedieh argues, had a qualitative significance beyond its actual volume and value in that it encouraged diversification in manufacturing and provided a high proportion of commodities traded in the new re-export sector, enabling London to challenge Amsterdam as Europe?s main redistribution center.
Colonial commerce was distinctive in its competitiveness, in its high transactions costs, and in its requirements for long credits and a high volume of shipping.? These characteristics all encouraged efficiency gains from take-up of best practices and from innovation. The trade was open, unregulated, and conducted by individuals rather than corporations.? As a result it stimulated modernized mercantile education, new associational activities, strenuous efforts to reduce transactions costs (including improvements in sorting, marketing, processing, and distribution of colonial products), and more effective solutions to risk mitigation and problems of trust and poor information (e.g., partnerships, marine insurance, bills of exchange, published price-currents, and multilateral settlements).?
Zahedieh finds increasing concentration of plantation commerce among large merchants specializing in particular commodities and regions in the 1680s, when falling commodity prices and increased taxes eroded profit margins and drove out small traders.? Colonial merchants seldom invested in overseas property, but made a massive contribution to expansion of empire in the form of short-term credit extended to settlers. The larger operators accumulated enough capital to diversify investment into shipbuilding, slave-trading, joint-stocks, insurance, wharves, industry, landed property, loans, and public credit. This decade was a turning point, as merchant concentration and specialization led to improved productivity, economies of scale, and reduced costs.? Zahedieh portrays the attempts of the later Stuarts to corner the profits of empire by restricting free trade among Englishmen as having limited success.? On the other hand, she sees the effect of the Glorious Revolution, not as leading to an economically optimal political arrangement, but as consolidating the capacity of the transatlantic trading elite to enforce regulation in its own interests and enhance ?the value and scale of rent-seeking enterprises at the expense of competition and efficiency? (p. 127), leading to a period of slower growth in colonial trade and shipping at the end of the century.
Unlike trade with Europe, colonial commerce required an unusually large fixed capital investment in the greater tonnage needed to transport large volumes of bulky goods over long distances.? Zahedieh argues that English- and plantation-built ships were better suited to most colonial commerce than were Dutch prototypes, and that it was long-distance commerce, rather than the protection of the Navigation Acts, that revived the English shipbuilding industry.? By 1700 plantation shipping accounted for 40% of London?s overseas trading capacity. Atlantic trade led as well to increased education among mariners in mathematical, mechanical and managerial skills, and expanded the market for navigational instruments.? It also contributed to London?s prosperity by stimulating the construction of wharfs and warehouses, and increasing the scale of naval refitting, repair, and provisioning trades.? Although technology and unit input costs were fairly stable across the period, increased volumes and growing experience with colonial conditions led to organizational improvements which made more efficient use of inputs. Greater awareness of seasonality and the accompanying need for careful timing, along with standardized containers, greater use of marine insurance, and the development of multilateral voyages all led to fuller use of shipping capacity and to reduced costs.
The volume of colonial imports more than trebled between the 1660s and 1700, when they accounted for a fifth of London?s inward trade and a third of its re-export trade to Europe.? And, as Zahedieh?s discussions of the fish, fur, timber, tobacco, sugar, cotton, and dye-stuffs trades demonstrate, merchants achieved efficiency gains in both production and distribution. Plantation products provided incentives to invest in improving skills, techniques, commercial infrastructure, and organization of industry, intensifying use of resources and strengthening manufacturing capacities.? Colonial imports proved a catalyst in changing domestic consumption patterns.? Innovations in retailing expanded aggregate demand, while availability of alternative beverages to beer, such as tea and coffee, along with increased use of sugar in alcoholic drinks and as a food preservative, reduced pressure on the nation?s grain supply.? Colonial imports also supplied industrial raw materials and provided a surplus of exotic commodities that were re-exported to pay for European goods.? Their prominence in domestic trade induced investment in an improved national transport network that reduced not just the cost of plantation products for British consumers, but also the cost of bringing goods to the metropolis.? Processing of colonial products, reserved by the Navigation Acts for the mother country and aided by access to skilled workers and cheap fuels in the metropolis, promoted diversification of the capital?s manufacturing sector.?
Zahedieh considers London?s export trade with colonies — which, fueled by colonists? voracious appetite for English goods and services, grew faster between 1660 and 1700 than did imports — to be equally influential as imports in driving expansion and change.? Included and valued in Zahedieh?s survey are the trades in servants and slaves and freight earnings, exports not listed in the portbooks.? Due to limited markets, high labor costs and skills shortage — rather than mercantilist regulations — colonists remained dependent on the mother country for most manufactures.? The high profits merchants could earn in this most profitable branch of colonial commerce ?focused entrepreneurial attention on different problems from those facing the high-fashion, high-cost, craft industries catering for the London elites? (p. 276).?? Making goods for distant American and African markets encouraged restructuring of industries around bulk production at low unit cost, while the growing re-export trade encouraged investment in new processing industries.? A surge in colonial demand in the late seventeenth century had a radical impact of the volume and character of the English export trade away from traditional wool fabrics to a wider array of textiles and ready-to-wear clothes, as well as metalwares, miscellaneous manufactures, and foods.
This sophisticated study in Atlantic economic history will interest metropolitan and colonial as well as Atlantic scholars, challenging them to take more account of the feedback effects and linkages for economic growth generated by overseas expansion, and the potential role of competitive long-distance trade in a wide array of ostensibly mundane commodities in helping to precipitate the Industrial Revolution.
Lorena S. Walsh is the author of Motives of Honor, Pleasure and Profit: Plantation Management in the Colonial Chesapeake, 1607-1763 (Chapel Hill: University of North Carolina Press, 2010).
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|Subject(s):||International and Domestic Trade and Relations|
Markets and Institutions
|Time Period(s):||17th Century|