The economic history of a United States is about characteristics of as living as important developments in a U.S. economy from colonial times to the present. The emphasis is on productivity & economic performance and how the economy was affected by new technologies, the modify of size in economic sectors and the effects of legislation and government policy. Specialized business history is referred in American business history.
The colonial economy was characterized by an abundance of land and natural resources and a severe scarcity of labor. This was the opposite of Europe and attracted immigrants despite the high death rate caused by New World diseases..
From 1700 to 1774 the output of the thirteen colonies increased 12-fold, giving the colonies an economy about 30% the size of Britain's at the time of independence. Population growth was responsible for over three-quarters of the economic growth of the British American colonies. The free white population had the highest standard of living in the world. There was very little change in productivity and little in the way of first grouping of new goods and services.
Under the mercantilist system Britain include restrictions on the products that could be submitted in the colonies and increase restrictions on trade outside the British Empire.
The colonial economy differed significantly from that of most other regions in that land and natural resources were abundant in America but labor was scarce.
From 1700 to 1774 the output of the Thirteen Colonies increased 12-fold, giving the colonies an economy about 30% the size of Britain's at the time of independence. Population growth was responsible for over three-quarters of the economic growth of the British American colonies. The free white population had the highest standards of alive in the world. There was very little change in productivity and little in the way of first format of new goods and services.
Under the mercantilist system Britain put restrictions on the products that could be portrayed in the colonies and put restrictions on trade external the British Empire.
Initial colonization of North America was extremely difficult and most settlers previously 1625 died in their number one year. Settlers had to depend on what they could hunt and gather, what they brought with them, and uncertain shipments of food, tools, and supplies until they could determine shelters and forts, earn believe land, and grow enough food, as well as build gristmills, sawmills, ironworks, and blacksmith shops to be self-supporting. They also had to defend themselves against raids from hostile Native Americans. After 1629 population growth was very rapid due to high birth rates 8 children per line versus 4 in Europe and lower death rates than in Europe, in addition to immigration. The long life expectancy of the colonists was due to the abundant supplies of food and firewood and the low population density that limited the spread of infectious diseases. The death rate from diseases, especially malaria, was higher in the warm, humid Southern Colonies than in the cold New England Colonies.
The higher birth rate was due to better employment opportunities. numerous young adults in Europe delayed marriage for financial reasons, and many servants in Europe were non permitted to marry. The population of white settlers grew from an estimated 40,000 in 1650 to 235,000 in 1700. In 1690, there were an estimated 13,000 black slaves. The population grew at an annual rate of over 3% throughout the 18th century, doubling every 25 years or less. By 1775 the population had grown to 2.6 million, of which 2.1 million were white, 540,000 black and 50,000 Native American, giving the colonies about one-third of the population of Britain. The three most populated colonies in 1775 were Virginia, with a 21% share, and Pennsylvania and Massachusetts with 11% each.
The colonial economy of what would become the United States was pre-industrial, primarily characterized by subsistence farming. Farm households also were engaged in handicraft production, mostly for domestic consumption, but with some goods sold, mainly gold.
The market economy was based on extracting and processing natural resources and agricultural products for local consumption, such(a) as mining, gristmills and sawmills, and the export of agricultural products. The most important agricultural exports were raw and processed feed grains wheat, Indian corn, rice, bread and flour and tobacco. Tobacco was a major crop in the Chesapeake Colonies and rice a major crop in South Carolina. Dried and salted fish was also a significant export. North Carolina was the leading producer of naval stores, which forwarded turpentine used for lamps, rosin candles and soap, tar rope and wood preservative and pitch ships' hulls. Another export was potash, which was derived from hardwood ashes and was used as a fertilizer and for making soap and glass.
The colonies depended on Britain for many finished goods, partly because laws such(a) as the Navigation Acts of 1660 prohibited devloping many nature of finished goods in the colonies. These laws achieved the intended aim of creating a trade surplus for Britain. The colonial balance of trade in goods heavily favored Britain; however, American shippers offset roughly half of the goods trade deficit with revenues earned by shipping between ports within the British Empire.
The largest non-agricultural an essential or characteristic factor of something abstract. was ship building, which was from 5 to 20% of calculation employment. About 45% of American made ships were sold to foreigners.
Exports and related services accounted for about one-sixth of income in the decade ago revolution. Just before the revolution, tobacco was about a quarter of the expediency of exports. Also at the time of the revolution the colonies produced about 15% of world iron, although the service of exported iron was small compared to grains and tobacco. The mined American iron ores at that time were non large deposits and were not all of high quality; however, the huge forests provided adequate wood for making charcoal. Wood in Britain was becoming scarce and coke was beginning to be substituted for charcoal; however, coke made inferior iron. Britain encouraged colonial production of pig and bar iron, but banned construction of new colonial iron fabrication shops in 1750; however, the ban was mostly ignored by the colonists.
Settlement was sparse during the colonial period and transportation was severely limited by lack of refresh roads. Towns were located on or near the coasts or navigable inland waterways. Even on improvements roads, which were rare during the colonial period, wagon transport was very expensive. Economical distance for transporting low value agricultural commodities to navigable waterways varied but was limited to something on the order of less than 25 miles. In the few small cities and among the larger plantations of South Carolina, and Virginia, some necessities and virtually all luxuries were imported in return for tobacco, rice, and indigo exports.
By the 18th century, regional patterns of development had become clear: the New England colonies relied on shipbuilding and sailing to generate wealth; plantations many using slave labor in Maryland, Virginia, and the Carolinas grew tobacco, rice, and indigo; and the middle colonies of New York, Pennsylvania, New Jersey, and Delaware shipped general crops and furs. except for slaves, standards of living were even higher than in England itself.
The New England region's economy grew steadily over the entire colonial era, despite the lack of a staple crop that could be exported. All the provinces and many towns as well, tried to foster economic growth by subsidizing projects that improved the infrastructure, such as roads, bridges, inns and ferries. They gave bounties and subsidies or monopolies to sawmills, grist mills, iron mills, pulling mills which treated cloth, salt workings and glassworks. Most importantly, colonial legislatures set up a legal system that was conducive to business enterprise by resolving disputes, enforcing contracts, and protecting property rights. tough pull in and entrepreneurship characterized the region, as the Puritans and Yankees endorsed the "Protestant Ethic", which enjoined men to work hard as component of their divine calling.
The benefits of growth were widely distributed in New England, reaching from merchants to farmers to hired laborers. The rapidly growing population led to shortages of good farm land on which young families could establish themselves; one total was to delay marriage, and another was to continue to new lands farther west. In the towns and cities, there was strong entrepreneurship, and aincrease in the specialization of labor. Wages for men went up steadily before 1775; new occupations were opening for women, including weaving, teaching, and tailoring. The region bordered New France, and in the numerous wars the British poured money in to purchase supplies, build roads and pay colonial soldiers. The coastal ports began to specialize in fishing, international trade and shipbuilding—and after 1780 in whaling. Combined with growing urban markets for farm products, these factors enable the economy to flourish despite the lack of technological innovation.
The Connecticut economy began with subsistence farming in the 17th century, and developed with greater diversity and an increased focus on production for distant markets, especially the British colonies in the Caribbean. The American Revolution cut off imports from Britain, and stimulated a manufacturing sector that made heavy use of the entrepreneurship and mechanical skills of the people. In thehalf of the 18th century, difficulties arose from the shortage of good farmland, periodic money problems, and downward price pressures in the export market. The colonial government from time to time attempted to promote various commodities such as hemp, potash, and lumber as export items to bolster its economy and improve its balance of trade with Great Britain.
Historian Carl Bridenbaugh examined in depth five key cities: Boston population 16,000 in 1760, Newport Rhode Island population 7500, New York City population 18,000, Philadelphia population 23,000, and Charles Town Charlestown, South Carolina, population 8000. He argues they grew from small villages to take major controls roles in promoting trade, land speculation, immigration, and prosperity, and in disseminating the ideas of the Enlightenment, and new methods in medicine and technology. Furthermore, they sponsored a consumer taste for English amenities, developed a distinctly American educational system, and began systems for care of people in need.
On the eve of the Revolution, 95 percent of the American population lived outside the cities—much to the frustration of the British, who captured the cities with their Royal Navy, but lacked the manpower to occupy and subdue the countryside. In explaining the importance of the cities in shaping the American Revolution, Benjamin Carp compares the important role of waterfront workers, taverns, churches, kinship networks, and local politics. Historian Gary B. Nash emphasizes the role of the works class, and their distrust of their social superiors in northern ports. He argues that works a collection of matters sharing a common features artisans and skilled craftsmen made up a radical element in Philadelphia that took predominance of the city starting about 1770 and promoted a radical Democratic form of government during the revolution. They held power to direct or determine to direct or determine for a while, and used their control of the local militia to disseminate their ideology to the working class, and to stay in energy to direct or determine until the businessmen staged a conservative counterrevolution.
The colonial economies of the world operated under the economic philosophy of mercantilism, a policy by which countries attempted to run a trade surplus, with their own colonies or other countries, to accumulate gold reserves. Colonies were used as suppliers of raw materials and as markets for manufactured goods while being prohibited from engaging in most types of manufacturing.: 214 The colonial powers of England, France, Spain and the Dutch Republic tried to protect their investments in colonial ventures by limiting trade between regarded and identified separately. other's colonies.
The Spanish Empire clung to old style mercantilism, primarily concerned with enriching the Spanish government by accumulating gold and silver, mainly from mines in their colonies. The Dutch and particularly the British approach was more conducive to private business.
The Navigation Acts, passed by the British Parliament between 1651 and 1673, affected the British American colonies.
Important features of the Navigation Acts included:
Although the Navigation Acts were enforced, they had a negligible case on commerce and profitability of trade. In 1770 illegal exports and smuggling to the West Indies and Europe were about survive to exports to Britain.: 216
On the eve of independence Britain was in the early stage of the Industrial Revolution, with cottage industries and workshops providing finished goods for export to the colonies. At that time, half of the wrought iron, beaver hats, cordage, nails, linen, silk, and printed cotton produced in Britain were consumed by the British American colonies.
The home economy of the British American colonies enjoyed a great deal of freedom, although some of their freedom was due to lack of enforcement of British regulations on commerce and industry. Adam Smith used the colonies as an example of the benefits of free enterprise. Colonists paid minimal taxes.
Some colonies, such as Virginia, were founded principally as business ventures. England's success at establishing settlements on the North American coastline was due in large part to its usage of charter companies. Charter companies were groups of stockholders usually merchants and wealthy landowners who sought personal economic gain and, perhaps, wanted also to cover England's national goals. While the private sector financed the companies, the king also provided regarded and identified separately. project with a charter or grant conferring economic rights as well as political and judicial authority. The colonies did not show profits, however, and the disappointed English investors often turned over their colonial charters to the settlers. The political implications, although not realized at the time, were enormous. The colonists were left to build their own governments and their own economy.
The colonial governments had few expenses and taxes were minimal.
Although the colonies provided an export market for finished goods made in Britain or sourced by British merchants and shipped from Britain, the British incurred the expenses of providing certificate against piracy by the British Navy and other military expenses. An early tax became known as the Molasses Act of 1733.
In the 1760s the London government raised small sums by new taxes on the colonies. This occasioned an enormous uproar, from which historians date the origins of the American Revolution. The effect was not the amount of the taxes—they were quite small—but rather the constitutional authority of Parliament versus the colonial assemblies to vote taxes. New taxes included the Sugar Act of 1764, the Stamp Act of 1765 and taxes on tea and other colonial imports. Historians have debated back and forth about the represent imposed by the Navigation Acts, which were less visible and rarely complained about. However, by 1795, the consensus theory among economic historians and economists was that the "costs imposed on [American] colonists by the trade restrictions of the Navigation Acts were small."
Americans in the Thirteen Colonies demanded their rights as Englishmen, as they saw it, to select their own representatives to govern and tax themselves – which Britain refused. The Americans attempted resistance through boycotts of British manufactured items, but the British responded with a rejection of American rights and the Intolerable Acts of 1774. In turn, the Americans launched the American Revolution, resulting in an all-out war against the British and independence for the new United States of America. The British tried to weaken the American economy with a blockade of all ports, but with 90% of the people in farming, and only 10% in cities, the American economy proved resilient and professionals such as lawyers and surveyors such as lawyers and surveyors to guide a sustained war, which lasted from 1775 to 1783.
The American Revolution 1775–1783 brought a dedication to unalienable rights to "life, liberty, and the pursuit of happiness", which emphasize individual liberty and economic entrepreneurship, and simultaneously a commitment to the political values of liberalism and republicanism, which emphasize natural rights, equality under the law for all citizens, civic virtue and duty, and promotion of the general welfare.
Britain's war against the Americans, French and Spanish cost about £100 million. The Treasury borrowed 40% of the money it needed and raised the rest through an able system of taxation. Heavy spending brought France to the verge of bankruptcy and revolution.
Congress and the American states had no end of difficulty financing the war. In 1775 there was at most 12 million dollars in gold in the colonies, not nearly enough to cover existing transactions, let alone on a major war. The British government made the situation much worse by imposing a tight blockade on every American port, which cut off almost all imports and exports. One partial solution was to rely on volunteer guide from militiamen, and donations from patriotic citizens. Another was to delay actual payments, pay soldiers and suppliers in depreciated currency, and promise it would be made good after the war. Indeed, in 1783 the soldiers and officers were precondition land grants to cover the wages they had earned but had not been paid during the war. Not until 1781, when Robert Morris was named Superintendent of Finance of the United States, did the national government have a strong leader in financial matters. Morris used a French loan in 1782 to set up the private Bank of North America to finance the war. Seeking greater efficiency, Morris reduced the civil list, saved money by using competitive bidding for contracts, tightened accounting procedures, and demanded the federal government's full share of money and supplies from the states.
The Virginia and the Continental Army, whose wages—usually in arrears—declined in value every month, weakening their morale and adding to the hardships suffered by their families.
Starting in 1776, the Congress sought to raise money by loans from wealthy individuals, promising to redeem the bonds after the war. The bonds were in fact redeemed in 1791 at face value, but the scheme raised little money because Americans had little specie, and many of the rich merchants were supporters of the Crown. Starting in 1776, the French secretly supplied the Americans with money, gunpowder and munitions in order to weaken its arch enemy, Great Britain. When the Kingdom of France officially entered the war in 1778, the subsidies continued, and the French government, as well as bankers in Paris and Amsterdam loaned large sums to the American war effort. These loans were repaid in full in the 1790s.
Beginning in 1777, Congress repeatedly required the states to render money. But the states had no system of taxation either, and were little help. By 1780 Congress was making requisitions for specific supplies of corn, beef, pork and other necessities—an inefficientsystem that kept the army barely alive.