Review Essay
An Independent Means:
The American Revolution and the Rise of a National
Economy
Jonathan M. Chu
From Dependency to Independence: Economic Revolution in Colonial New England. By Margaret Ellen Newell (Ithaca, Cornell University Press, 1998) 329 pp. $45.00
In Irons: Britain's Naval Supremacy and the American Revolutionary Economy. By Richard Buel, Jr. (New Haven, Yale University Press, 1998) 397 pp. $35.00
Approaching the economic history of early America requires sound conceptualization, coherent and consistent methodology, tightly argued prose, and a thick skin. Central to any examination of early American economic life is how it deals with the country's transformation into a capitalist society. If resolving this question alone were not enough, Newell and Buel also do battle with the problem of assessing the viability of the American economy on the eve of independence. On these issues, scholars wage fierce historiographical wars, and Buel and Newell seem, at face value, to contradict one another. Newell argues that on the eve of the Revolution, the economy of colonial New England was sufficiently strong to place it on a collision course with that of Britain; Buel contends that the activities of the British navy during the War single handedly demonstrated the new nation's economic weakness and dependence.
These contradictions, however, originate more in the authors' different approaches than in any substantive disagreement. Newell examines long-term debates in Massachusetts about economic policy, finding that Puritanism led to a culture promoting specific [End Page 63] incentives for material profit. Puritanism's regulatory impulses produced a moral framework that gave rise to dramatic commercial change. Commercial change coupled with economic depression led to the development of a promotional state, which led to debate about the course of provincial New England's economy. Those debates, as they evolved over paper money and the Land Bank in the mid-eighteenth century, redirected attention to the merits of local development and ultimately brought American and British interests into conflict. As the imperial crisis deepened, short-term political tactics confirmed a general pattern of thinking about the political economy of British North America that led to independence. Domestic manufactures and currency manipulation, intended to correct the chronic imbalance of payments, led to boycotts to demonstrate opposition to British imperial policy. At bottom, what happened was the adaptation of Puritan culture to a pattern of consumption and economic development that seemed less susceptible to luxurious lifestyles and moral corruption, and the transformation of "a short-term tactic into a blue print for economic diversification" (297).
In positing the emergence of a political economy that promoted manufactures and diversification, Newell's work is consistent with that of Martin and Innes, who found in the unique cultural life of seventeenth-century New England incentives for economic and commercial development. Whereas Martin argues for an entrepreneurial spirit deriving from the secular conditions for settlement, Innes, in a restatement of Weber's Protestant Ethic and the Spirit of Capitalism, discovered incentives for capitalist behavior intrinsic to Puritanism itself. 1
Much of this controversy about when capitalism reared its head in early America rests upon one's use of terms. By pivoting her argument around the debates surrounding paper money and the Land Bank, Newell takes the side of those who see capitalism as the rise of self-interested acquisitive individualism. Because she sees the resolution of the debates about political economy in terms [End Page 64] of policies that attempted to sustain the value of money exchanges--in the form of paper currency backed by land or sterling --Newell depicts a pre-Revolutionary world in which entrepreneurial activity is reduced to calculations of risk and reward or profit and loss. Like Martin and Innes, Newell does not preclude the necessity of communal regulation; indeed, the very existence of the debate reflected the need to subordinate individual acquisitive tendencies to the larger communal good, and, as Innes points out, had the effect of creating a civic ecology that kept destructive activities in check and increased long-term profitability. 2
In her concession to the communal good, Newell twists the argument of those who prefer to postpone the arrival of capitalism to another day. According to Newell, the imperial crisis led to an alignment of economic self-interest, development, and communal regulation. Domestic manufactures and boycott of British goods were the two sides of the coin of economic diversity and independence. Domestic manufactures channeled patterns of behavior into more socially acceptable forms. Boycotting imports and curbing excessive consumption permitted the adaptation of traditional virtues into instruments of moral reform while raising opposition to British imperial policies.
Others have seen the repudiation of imported goods and cash exchanges in another light--the assertion of a precapitalist or moral economy. For these scholars, communities resisted rather than embraced a capitalist mentalité well into the early nineteenth century. Far from promoting acquisitive individualism, agrarian communities acted to restrain the excesses of would-be capitalists with just prices and exchanges that valued social relationships over market ones. In this context, yeoman farmers on the periphery of market and cash economies resisted their blandishments to self-interest, preferring instead their communally defined moral economies. 3 [End Page 65]
This controversy reached a peak with the publication of Rothenberg's "The Market and Massachusetts Farmers, 1750-1855," and two critical comments on it, one by Weiss and the other by Bernstein and Wilentz. 4 Although she resisted characterizing her findings as a transition to capitalism, Rothenberg noted a narrowing of regional prices that indicated a pervasive market economy prior to the American Revolution. Rothenberg's "dear enemies," as she referred to them, disagreed, arguing that her figures did not preclude the existence of moral, rather than market, economies.
Buel presumes the existence of markets in commodities, including money; he links the culture of grain production, British naval activity, and the American balance of trade to the problem of creating a national economy. The war "shattered the assumptions that Americans made about the economic and manpower advantage they would enjoy in a showdown with Great Britain" (5). British naval strength, Buel argues, placed the American economy "in irons," a sailing term indicating a loss of progress and control. Until the Revolution, the colonial economy depended upon the export of high-volume, low-profit staples. War altered this economic culture: It affected the local availability of goods; it redirected trade; and it raised prices.
Wheat and flour illustrated the impact of these changes and the fragility of the American economy during the Revolution. Because wheat was capable of longer storage than corn and rye, the military preferred it, increasing demand for its cultivation and encouraging the development of larger, more centralized flour mills. Furthermore, to evade the British blockade, American shipping had to utilize new ship designs: smaller, swifter vessels with [End Page 66] low capacity in place of slower ones with more cargo space. 5 This change limited shipping capacity, raised transportation costs, and put upward pressure on prices at a time when Americans needed cash to pay for imports. Higher costs impaired wheat's ability to earn the specie, or its equivalent, that was needed to support Congress' increasingly large emissions of paper currency and debt instruments.
The construction of regional mills and the demand for high-value imports concentrated the distribution of goods in commercial centers that were vulnerable to royal occupation or blockade. The ability of the British navy to interrupt, or disturb, the flow of commerce severely undermined confidence in a stable national money supply, thus handicapping economic activity. Distance from markets, military disruptions, and uncertain supplies of specie contributed to fluctuations in prices and in the discounts of French and British bills of exchange, bringing into question the profitability of participation in the American economy. Absent a reliable and profitable source of commerce, Americans remained a colonial economy dependent upon the infusions of specie from loans or from the cash payments of the British and French armed forces for the means of exchange. Even with infusions of specie and the efforts of Robert Morris to produce a stable banking system, Americans were unable to convert the potential of their economic wealth into self-generating activity.
These two books seem to differ about the viability of the American economy on the eve of the Revolution. For Newell, economic ideas generated from debates that lasted three-quarters of a century were as much a cause of American independence as a consequence. Rival independent economic interests came to be separated by the Atlantic. Buel, however, in keeping with his other work on Connecticut, describes a dependent, colonial economy further depressed by the impact of war. 6 Marginal successes created only the terms for subsequent regression. Philadelphia, the financial and commercial center of the new nation, was susceptible to British naval power and the disruption of economic activity. [End Page 67]
Yet, the separation between the two authors lies more in degree than substance. Both authors clearly recognize that independence acted as an economic short circuit, rearranging legal and commercial relationships. Separation from the mother country compelled the reconsideration of economic relationships that scholars like Henretta and Kulikoff have interpreted to be symptomatic of new capitalist environments. 7 Recognizing the profound difficulties generated by wartime circumstances, Newell locates areas of vibrant activity. Her concern, however, is not to discern a quantitative reality--the Revolutionary version of indices of rising economic activity or takeoff--but to illuminate a frame of mind. The Revolution, she argues, "was not so much an intellectual breakthrough as a refinement and extension of earlier ideas about material prosperity, diversification, manufactures, government oversight and commercial access (316)." Buel concurs, especially in his discussion of the war's impact on the grain markets of New England and the Middle Atlantic states. His extraordinary reconstruction of Levi Hollingsworth's flour ledger illuminates the complex decisions that had to be made in the crucible of war (179-180, 257-260).
Whether the Revolution accelerated or retarded the growth of a viable economy misses a far more significant point: The Revolution had a transcendent impact upon the economies and societies of the entire Atlantic community. American independence not only compelled the rearrangement of the empire's structure; it also affected the economies of Britain, France, and the Netherlands. Because of the war, the Netherlands withdrew capital from England and reinvested it in France. The British, freed from the costs of empire and compelled to reorganize their debt structure, learned to redirect capital investment internally. The French tried to reorganize their public finances, and even with the infusions of Dutch capital, they failed and were sucked into their own revolution.
America's commercial relationships with England remained largely unscathed by independence. The Netherlands, France, and Britain all rushed to exploit the post-War American market. Only the British succeeded, but not even that story is one of unmitigated [End Page 68] triumph. 8 America needed to adapt its economy to altered circumstances, to deal with its exclusion from customary ports by Navigation Acts that had hitherto shielded colonial commerce, to work out the protocols of interstate commerce, to establish new systems regulating its means of exchange, and to pay its debts. Ultimately, England's ability to restore its hegemony over the American marketplace would lead to dissension between Alexander Hamilton and Thomas Jefferson about the political economy of the new nation. Some scholars have discussed these problems as signs of dependence vs. independence, but the central point is the interdependent nature of the Atlantic commercial economy and monetary system. 9
Like Newell, Buel writes in opposition to those who see the post-Revolutionary period as the moment at which capitalism reared its head in America. From this perspective, Buel's merchants and farmers lie outside the experience of most early nineteenth-century rural, small-producer households. 10 Buel challenges even those who see the Revolution as introducing integrated markets and the consolidation of small farm families and rural artisans into larger-scale enterprises dominated by monied interests. Rather than destroying traditional economic relationships and accelerating the creation of relationships essentially capitalist in nature, for Buel, the war simply impeled accommodations to new circumstances but did not interrupt the continuing dependent nature of the economy. 11 Dependency on Buel's terms, [End Page 69] however, does not preclude the existence of complex markets or decision making aimed at seizing economic advantage.
What unifies Buel and Newell is their focus upon the centrality of the commodity value of money and its repercussions on events. Both authors make a number of telling assumptions that relate to the issue of capitalism's emergence in the Revolutionary period. When Newell recounts the debates about the Land Bank and paper currency a generation before the war, she assumes the existence of a culture that weds a difficult, complicated assessment of risk and an acquisitive self-interest to economic behavior. Debates about paper currency or the need for domestic production reflect a presumption of the utilitarian nature of commercial and manufacturing activities. They also demonstrate an understanding of markets and an attempt to control their values through the manipulation of the means of exchange. When Buel describes Morris' use of foreign loans, the market in French bills of exchange, and the transfer of specie to create confidence in continental notes, he presumes a similar long-standing culture in which individuals negotiated the value of money and its substitutes as they exercised their acquisitive instincts. The cast of characters in From Dependency and In Irons understand the commodity values of money; they weigh risk and reward through the auctioning of discounts on notes; they bet on inflation; and, as they win and lose, they try to restructure the game to improve their chances of economic and commercial success. 12
In their assumption of a complex culture of acquisition and financial risk, Buel and Newell will not satisfy those who believe that the transition to capitalism happened much later. These books unabashedly focus upon urban, commercial centers where mammon was more likely to be important. Yet, these books are formidable because their arguments presuppose a context fundamentally at odds with notions of subsistence or moral economies. The narratives of Newell and Buel stem from wide-ranging and deep documentation, and their conclusions reflect judicious and [End Page 70] careful evaluation of the evidence. Newell and Buel make a strong case that on the eve of the Revolution, Americans understood how to succeed in business. Whether this position reflects a capitalist mentalité depends upon one's definition of terms. A greedy and self-interested manipulation of economic advantage, it may be argued, has always been with us, and "capitalism," as Merrill notes, "is not just an economic system based on market exchange, private property, wage labor, and sophisticated financial instruments." 13 At this point, all Newell and Buel need are thick skins.
Jonathan M. Chu is Associate Professor of History, University of Massachusetts, Boston. He is the author of Neighbors, Friends, or Madmen: The Puritan Adjustment to Quakerism in Seventeenth-Century Massachusetts (Westport, 1985); "Debt and Taxes: Public Finance and Private Economic Behavior in Post-Revolutionary Massachusetts," in Conrad Edick Wright and Katheryn P. Viens (eds.), Entrepreneurs: The Boston Business Community, 1700-1850 (Boston, 1997).
Notes
1. Early in his career, Innes' position was similar to Martin's. See Stephen Innes, Labor in a New Land: Economy and Society in Seventeenth-Century Springfield (Princeton, 1983). John Fredrick Martin, Profits in the Wilderness Entrepreneurship and the Founding of New England Towns in the Seventeenth Century (Williamsburg, 1991); Innes, Creating the Commonwealth: The Economic Culture of Puritan New England (New York, 1995); Max Weber (trans. Talcott Parsons), The Protestant Ethic and the Spirit of Capitalism (New York, 1958; orig. pub. 1904-1905).
2. Innes, Creating the Commonwealth, 192-307.
3. Michael Merrill, "Cash is Sometimes Good to Eat: Self-Sufficiency and Exchange in the Rural Economy of the United States," Radical History Review, IV (1977), 56-61; and James A. Henretta, The Origins of American Capitalism: Collected Essays (Boston, 1991), 59, make this point explicitly. John Brooke, The Heart of the Commonwealth: Society and Political Culture in Worcester County Massachusetts, 1713-1861 (Cambridge, 1989), 64-65, treads a middle ground, stressing two complex cultures: one moral, communitarian and Harringtonian, and the other, individual and Lockean. David P. Szatmary, Shays' Rebellion: The Making of an Agrarian Insurrection (Amherst, 1980), 9-11, argues that the existence of two rival socioeconomic cultures led to the open conflict of rural, subsistence farmers and urban, eastern capital. See also, Van Beck Hall, Politics without Parties: Massachusetts, 1780-1791 (Pittsburgh, 1972).
4. Winifred Rothenberg, "The Market and Massachusetts Farmers, 1750-1855," Journal of Economic History, XL (1981), 537-566; Rona Weiss, "The Market and Massachusetts Farmers, 1750-1855: Comment," ibid., XLIII (1983), 478-481; Michael Bernstein and Sean Wilentz, "Marketing, Commerce and Capitalism in Rural Massachusetts," ibid., XLIV (1984), 171-173. Rothenberg has since produced a more systematic defense of market-oriented behavior in From Market-Places to Market Economy: The Transformation of Rural Massachusetts, 1750-1850 (Chicago, 1992). Summaries of the debates are to be found in Alan Kulikoff, The Agrarian Origins of American Capitalism (Charlottesville, 1992), 13-33; Merrill, "Putting 'Capitalism' in Its Place," The William and Mary Quarterly, LII (1995), 315-326.
5. Benjamin Woods Labaree also makes this point in his discussion of the impact of privateering on Newburyport's post-Revolutionary social and economic development in Patriots and Partisans: The Merchants of Newburyport, 1764-1815 (New York, 1975).
6. Buel, Dear Liberty: Connecticut's Mobilization for the Revolutionary War (Middletown, 1980).
7. Ibid., 188-256; Henretta, Transition to Capitalism (Boston, 1991), 256-261; Alan Kulikoff, Agrarian Origins of Capitalism (Charlottesville, 1992), 105-106.
8. James C. Riley, "Dutch Investment in France," Journal of Economic History, XXXIII (1973), 732-736; Peter Mathias and Patrick O'Brien, "Taxation in Britain and France, 1715-1810: A Comparison of the Social and Economic Incidence of Taxes Collected for the Central Governments," Journal of European Economic History, V (1976), 605-607, 611-612; Thomas M. Doerflinger, A Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Philadelphia (New York, 1986).
9. John E. Crowley, The Privileges of Independence: Neomercantilism and the American Revolution (Baltimore, 1993), 67-87. James F. Shepherd, "British America and the Atlantic Economy," in Ronald Hoffman et al. (eds.), The Economy of Early America: The Revolutionary Period, 1763-1790 (Charlottesville, 1988), 23-24, maintains that the absence of overall statistics and regional variations accounts for the differences of opinion. See also, Gordon C. Bjork, Stagnation and Growth in the American Economy, 1784-1792 (New York, 1985), and John R. Nelson, Jr., Political Economy and Policymaking in the New Nation, 1789-1812 (Baltimore, 1987).
10. Christopher Clark, The Roots of Rural Capitalism: Western Massachusetts, 1780-1860 (Ithaca, 1990); Jonathan Prude, "Capitalism, Industrialization and the Factory in Post-Revolutionary America," Journal of the History of the Early American Republic, XVI (1996), 237-255.
11. For dissenting views, see Henretta, Transition to Capitalism, 294; Kulikoff, Agrarian Origins of Capitalism, 105-106; Joyce Appleby, Capitalism and the New Social Order: The Republican Vision of the 1790's (New York, 1984); Gordon S. Wood, The Radicalism of the American Revolution: How A Revolution Transformed a Monarchical Society into a Democratic One unlike Any That Had Ever Existed (New York, 1992), esp. 317-347.
12. In Newell, see 165-170 and in Buel, 197-211. For quantitative evidence that confirms their assumptions regarding the commodity value of money, see Leslie V. Brock, "The Colonial Currency, Prices, and Exchange Rates," Essays in History, XXXIV (1992), 4, 21-22.
13. Merrill, "Putting 'Capitalism' in Its Place," 322.
