Tuesday, August 28, 2012


Hopewell Furnace
Courtesy of the New Jersey Pine Barrens

 Mercantilism was the reigning economic theory in England (and other major countries of Europe) between the 16th and 18th Centuries.  It rested on the propositions that the measure of a nation’s wealth was the amount of gold and silver in the coffers of government and commerce, and that having more wealth was better than having less wealth.  It held that imports were bad because they sent money out of the country and reduced the nation’s wealth.  Exports were good because they brought money into the country and increased the wealth.
An adjunct to Mercantilism was that the purpose of colonies was to provide raw materials for the mother country.  This placed colonial Americans into a conflicting situation.  In the 1680s, King William III declared that the colonials were full Englishmen with all the rights of citizens who were born in and still lived in England.  Presumably this included entering into commerce and manufacturing.  As colonials, though, it was never intended that Americans would compete with commerce and manufacturing in the mother country.  The inability to resolve this conflict as much led to revolution and separation between the mother country and her American colonies as any other cause.  The English relegated Americans to second class status, no matter how much wealth an individual might have.  The Americans got pushy about being Englishmen with full rights, while not paying the full amount of taxes that people in England paid.
‘Whereas the importation of bar iron from his Majesty's colonies in America, into the port of London, and the importation of pig-iron from the said colonies into any port of Great Britain, and the manufacture of such bar and pig-iron in Great Britain, will be a great advantage not only to the said colonies, but also to this kingdom...and by means thereof large sums of money, now annually paid for iron to foreigners, will be saved this kingdom, and a greater quantity of the woolen, and other manufactures of Great Britain, will be exported to America in exchange for such iron so imported; be it therefore enacted...the several and respective subsidies, customs, impositions, rates, and duties, now payable on pig-iron, made in and imported from his Majesty's colonies in America, into any port of Great Britain, shall cease...be it further enacted...no mill or other engine of slitting or rolling of iron, or any plating-forge to work with a tilt hammer, or any furnace for making steel, shall be erected, or after such erection, continued, in any of his Majesty's colonies in America; and if any person or persons shall erect...shall for every such mill, engine, forge, or furnace, forfeit the sum of two hundred pounds...” 
George II, 12 April 1750

Summary—no duties on pig iron exported from the colonies to Great Britain; no duties on bar iron, if sent to London; forges in the colonies might continue to operate because they were necessary to making iron, but no new ones could be built; engines and mills for manufacturing products made from iron could not be built or operated.
The purpose of the law was to protect English steel manufacturers in Leeds, Manchester, and Sheffield.  In 1749, they paid £40,000 for iron imported from Sweden (at about £12/ton).  That meant money left the country.  If the colonials could produce as much iron as Sweden (nearly so) and it was of good quality (it was), then it would be a double win for English mercantilism.  Money would not leave the country to pay for imported iron and the colonials would buy products manufactured in England, not some other country.
Virginia and Maryland began sending pig iron to England and Scotland in the 1720s.  Other colonies soon followed suit.  (Production of bar iron seems to have been limited.) The new law helped the exporters, but made colonial expansion nearly impossible.  When a group of colonials packed up and moved to the frontier, they were forbidden to build forges with which to make metal tools for development of their settlement.  They were supposed to take their tools with them.  Hammers, knives, saws, and all metal things have weight.  Horses can only pull so much weight, so what was going to be left behind?  Clothes?  Food?  Kitchen utensils?  Muskets and ammunition?  How and from where were pioneers supposed to get nails?
Americans complained to Parliament that the law was unfair.  It prevented them from making full use of raw materials on land they owned, which Englishmen in the mother country were not prevented from doing.  The law would make impossible development of western lands the colonials had legally bought.  It treated Americans as if they were not Englishmen with full rights and privileges.  However, the complaints were ineffective.  Parliament did not repeal the law.
Americans were already smuggling, an English tradition, and cheating on taxes, another English tradition.  Now, in order to expand to the west and make room for the many people who continued to migrate to the colonies, they became lawbreakers.  In April 1775, when the Revolutionary War began, there were more forges in the American colonies than in all of Great Britain.  There hadn’t been as many in 1750.


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