1.6 Colonial Economy, Mercantilism & Transatlantic Trade

By the 18th century, the British American colonies were fully integrated into a dynamic transatlantic economy. Imperial economic policy, commerce, and profound religious and intellectual movements transformed colonial society, fostering a distinct American identity.

Mercantilism & The Navigation Acts

During the 17th and 18th centuries, European powers governed their empires according to the economic doctrine of Mercantilism. Mercantilism held that the total amount of global wealth (measured in gold and silver bullion) was finite. To maximize national power, a mother country had to achieve a favorable balance of trade by exporting more goods than it imported.

In this economic framework, colonies existed solely to benefit the mother country by:

1. Supplying cheap raw materials (tobacco, sugar, indigo, timber, furs).
2. Serving as exclusive captive markets for manufactured goods produced in the mother country.

To enforce mercantilist control, the British Parliament enacted the Navigation Acts (1651–1696):

• Shipping Restrictions: All colonial trade had to be transported on English or colonial-built ships manned by crews that were at least 75% English or colonial.
• Enumerated Commodities: High-value colonial products—such as tobacco, sugar, indigo, cotton, and naval stores—could only be exported directly to England or other English colonies.
• Import Duties & Routing: Foreign manufactured goods bound for the American colonies had to first land in England, where they were unloaded, inspected, and taxed before reshipment.

Imperial Consolidation: The Dominion of New England (1686–1689)

To crush widespread colonial smuggling and enforce trade compliance, King James II revoked northern colonial charters and created the Dominion of New England in 1686, consolidating Massachusetts, Plymouth, Connecticut, Rhode Island, New York, and New Jersey under autocratic Governor Sir Edmund Andros. Andros suspended colonial assemblies, revoked land titles, levied unapproved taxes, and strictly enforced the Navigation Acts. The Dominion collapsed in 1689 following England's Glorious Revolution, which deposed James II and restored charter governments.

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The Era of Salutary Neglect

Following the Glorious Revolution, Britain entered a prolonged period of unofficial imperial policy known as Salutary Neglect (roughly 1689 to 1763). Championed by British Prime Minister Sir Robert Walpole, this policy held that if royal authorities refrained from strictly enforcing parliamentary trade regulations, the colonies would flourish economically and buy more British manufactured goods.

During decades of Salutary Neglect:

• Imperial customs officers frequently accepted bribes or overlooked colonial smuggling with the French and Dutch West Indies.
• Colonial legislative assemblies solidified their power, asserting sole control over taxation and executive salaries (known as the "power of the purse").
• American colonists developed habits of economic self-reliance, local self-governance, and autonomous trade that made subsequent British taxation efforts after 1763 deeply explosive.

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Transatlantic Triangular Trade & The Middle Passage

Colonial trade operated within a complex, multi-directional network known as the Triangular Trade, linking Europe, West Africa, and the Americas.

The Three Legs of Transatlantic Commerce

1. Europe to Africa: British manufactured goods—knives, textiles, firearms, metalware, and rum—were shipped to West African coastal trading ports and exchanged for captive human beings.
2. Africa to the Americas (The Middle Passage): Enslaved Africans were forcibly transported across the Atlantic Ocean under horrific, overcrowded conditions. Human beings were crammed into ship holds with negligible ventilation, sanitation, or medical care. Mortality rates during the Middle Passage averaged 15% to 20% due to dysentery, smallpox, suicide, and physical abuse. Survivors were auctioned to plantation owners in the West Indies, South America, and British North America.
3. Americas to Europe: Raw materials produced by enslaved labor—sugar, molasses, tobacco, rice, indigo, and timber—were shipped back to Great Britain to feed industrializing markets.

Enslaved labor formed the economic bedrock of the Southern plantation system and generated enormous wealth for Northern merchants in Boston, Newport, and Philadelphia who built slave ships, insured voyages, and exported foodstuffs to Caribbean sugar islands.

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The First Great Awakening (1730s–1740s)

During the 1730s and 1740s, a massive spiritual revival swept through the American colonies. Known as the First Great Awakening, this transatlantic evangelical movement arose in reaction to declining church fervor and the rationalist, dispassionate tone of Enlightenment theology.

Key Figures & Preaching Style

• Jonathan Edwards: A brilliant Massachusetts Congregationalist minister who preached intense, emotionally vivid Calvinist sermons. Edwards emphasized absolute divine sovereignty and human helplessness, famously delivering his sermon Sinners in the Hands of an Angry God (1741), which depicted sinners dangling over the pits of hell like spiders over a flame.
• George Whitefield: An English itinerant evangelist who toured the colonies from New England to Georgia. Whitefield was a spellbinding orator who preached in open fields to crowds exceeding 20,000 people. He sparked passionate, personal conversion experiences ("new birth") through theatrical delivery.

Historical Impact

• Old Lights vs. New Lights: The movement fractured Protestant denominations. Traditional ministers ("Old Lights") condemned emotional revivalism as fanatical disorder. Evangelical revivals ("New Lights") defended personal religious emotion and individual conversion experiences.
• Institutional Growth: New Lights established colleges to train evangelical ministers, including Princeton (Presbyterian), Brown (Baptist), Rutgers (Dutch Reformed), and Dartmouth (Congregationalist).
• Democratic Legacy: The Great Awakening was the first shared mass movement across all thirteen colonies. By teaching that any individual could experience salvation without relying on elite established clergy, the movement fostered anti-authoritarian attitudes and democratic ideals that challenged traditional hierarchies.

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The American Enlightenment & Benjamin Franklin

Simultaneously, the 18th century experienced the American Enlightenment—an intellectual movement emphasizing reason, scientific inquiry, individual liberty, and human progress. Enlightened thinkers applied natural laws to political philosophy, drawing heavily from English philosopher John Locke (Two Treatises of Government). Locke argued that governments are formed via a social contract to protect citizens' natural rights to life, liberty, and property; if a government fails to protect these rights, citizens retain the right to alter or abolish it.

Benjamin Franklin stood as the preeminent symbol of the American Enlightenment. A self-educated polymath, printer, author (Poor Richard's Almanack), and inventor (lightning rod, bifocals, Franklin stove), Franklin conducted groundbreaking electrical experiments. He promoted civic pragmatism, founding the American Philosophical Society, subscription libraries, and voluntary fire departments—embodying the Enlightenment belief that human reason and practical knowledge could continuously improve human society.