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Economic History of the United States: Precolonial and Colonial Periodsfree

Economic History of the United States: Precolonial and Colonial Periodsfree

  • Peter C. MancallPeter C. MancallDepartment of History, University of Southern California


The economy of territory that became the United States evolved dramatically from ca. 1000 ce to 1776. Before Europeans arrived, the spread of maize agriculture shifted economic practices in Indigenous communities. The arrival of Europeans, starting with the Spanish in the West Indies in 1492, brought wide-ranging change, including the spread of Old World infectious disease and the arrival of land- and resource-hungry migrants. Europeans, eager to extract material wealth, came to rely on the trade in enslaved Africans to produce profitable crops such as tobacco, rice, and sugar, and they maintained connections with Indigenous communities to sustain the fur trade. The declining number of Indigenous peoples, combined with growing numbers of those of European or African origin, altered the demographic profile of North America, particularly in the territory east of the Mississippi River. Over time, Europeans’ consumer choices expanded, though the wealth gap between white colonists grew, as did the economic gap between free colonists, on the one hand, and unfree Black and Native peoples on the other.


  • Economic History
  • Environmental, Agricultural, and Natural Resources Economics

Before 1600, the territory that later became the United States was populated by hundreds of Indigenous nations as well as some Europeans who had migrated to North America after the exploratory ventures of Christopher Columbus at the end of the 15th century. Over the course of the 16th century, wherever Natives met newcomers, they invented new economic relationships, often based on trade. By the time the English established what became their first permanent colony at Jamestown, Virginia, in 1607, the peoples of North America had created and sustained a variety of economies. Those systems evolved during the colonial period with the development of more robust commercial networks linking the four continents on the edges of the Atlantic. Labor regimes within North America evolved too, with productivity in many areas the result of work by enslaved peoples, especially Africans. Many, if not most, of the goods produced for export (as opposed to local consumption) in the colonial era came at the expense of enslaved peoples working on sugar plantations across the West Indies, rice plantations in lowland Carolina, and tobacco plantations near Chesapeake Bay. The sale of these crops produced stark differentials in wealth within particular colonies and from one colony to the next. Jamaica, which did not join the rebellious thirteen British mainland colonies in 1776, was the wealthiest British colony in 18th-century North America, its planter class enjoying riches while its enslaved peoples endured degrading conditions that undermined their families and threatened their lives.


By ca. 1000 ce, Indigenous peoples across the Americas had developed their own economies. Though there is no evidence of trade connecting Native Americans with peoples across either the Pacific Ocean or the Atlantic, archaeological evidence suggests that goods moved through North America along aboriginal trade routes. Unlike the commercial systems created by Europeans, this Native commerce likely consisted of a series of short-distance exchanges. Thus, wampum, a bead made from a shell native to Narragansett Bay and Long Island Sound, spread across much of the interior to peoples who had no direct access to the Atlantic coast (Miller & Hammell, 1986; Salisbury, 1982). In exchange, those who proffered wampum received goods to which they otherwise had no access, such as the hides of certain animals or stones used for decoration or as tools. Historians and anthropologists once debated whether Native Americans had the same economic impulses as Europeans—were all of them, as the question emerged in the 20th century, homo economicus who behaved as rational consumers? Countless studies have revealed that very different economic motivations and behavior drove human activity (Cronon, 1983; Martin, 1978). But the desire for rare or prestige goods existed among Europeans and Indigenous in early North America (Potter, 1993; Richter, 2011).

Scholars differ in their estimates of the pre-1492 population of North America, suggesting that the Indigenous population was between 1.2 million and 2.6 million (Ubelaker, 1992). Most of these peoples inhabited small communities, though 21st-century archaeological evidence of a site known as Etzanoa, near Arkansas City, Kansas, might have had as many as 20,000 residents between ca. 1400 and ca. 1700 (Blakeslee, 2018) (see Appendix, Table 1). In other places, human populations tended to be smaller, but permanent communities did exist. In the Southwest, for example, Puebloan peoples created durable settlements by building adobe houses atop mesas and developing irrigation systems to maximize their water supply (Salisbury, 1996).

Cahokia, the largest city in pre-contact North America (near modern-day East Saint Louis, Illinois), once had a population estimated by archaeologists at perhaps ten thousand at its core and another 20,000 to 30,000 people living nearby and with close connections to it. Monk’s Mound, the largest surviving structure at Cahokia (which got its name when a group of Trappist monks took up residence there in the 18th century), took hundreds of thousands of hours of labor to construct, and the supplies for building it came from many miles away. Archaeologists have speculated, based on the distribution of grave goods, that there was a strict social and political hierarchy in the region and that its largest buildings could have been constructed by enslaved peoples. Those grave goods and other finds at Cahokia, and the presence of Cahokia-style ceramics in communities hundreds of miles away, suggest that the city was the hub of an extensive trade network, which moved goods from the northern plains or even the Atlantic coast into the continent’s interior. The presence in these graves of executed women, many of them likely young, also suggests that gender played a role in determining one’s fate (Pauketat, 2009).

The archaeological record suggests that Cahokia thrived for perhaps 200 to 300 years. But by the 13th century the Mississippian residents of the city had dispersed. While scholars debate the reason for the community’s disappearance, Cahokia was likely the victim of climate change, including a series of devastating droughts in the middle decades of the 12th century combined with a mega-storm in ca. 1150. Together, these climatic events made it more difficult to sustain a large population, and the residents of Cahokia emigrated, though they took aspects of their economy and culture with them. Like the great cities of Mesoamerica (such as Tenochtitlán, Chichén Itza, or Palenque), Cahokia had thrived because those in control of the city organized enormous expenditures of labor to sustain it and to build the large mounds that could be seen from far away in the near table-flat lowlands of the region. But its longest and most important legacy was providing a model for what must have seemed at the time as the long-term benefits of maize cultivation (Baulthus et al., 2020; White et al., 2019).

The émigrés from Cahokia spread agricultural knowledge when they left. Though scholars debate whether the development of sedentary communities was good for human health, with some economists and archaeologists maintaining that residents of mobile communities that relied more on hunting and fishing than planting were healthier, maize agriculture provided sustenance for larger communities. The flourishing Indigenous nations in the modern Southeast serve as a testimony to the impact of maize and the importance of learning both its benefits and limitations. Individuals who relied too much on maize suffered from nutritional deficiencies, which remain inscribed on their bones and teeth. But combined with other plants, notably squash and beans to form the so-called three sisters, maize cultivation allowed for community growth with less physical harm. Since maize could be stored after a harvest, those who farmed it could rely on a food source even in times of dearth. Maize cultivation became a fixture in Indigenous economies across eastern North America, just as it had earlier in much of the Southwest—though maize likely arrived there not from Cahokia but instead from other migrants who brought it north from its origins in central Mexico (Verano & Ubelaker, 1992).

Many of the Native peoples of eastern North America, the primary territory later colonized by English migrants, lived in semipermanent communities. From spring to autumn, Indigenous tended to cluster together in areas suitable for maize agriculture. After the harvest, settlements broke into smaller groups, usually defined by kin relationships, and dispersed for the winter. This strategy made sense to Natives, who maximized their production of food and decreased their labor demands by adopting a transhumant lifestyle. In areas where maize agriculture was unreliable because of the shortness of the growing season (north of the Saco-Kennebec watershed in the East, for example), Indigenous tended to concentrate their efforts on hunting, fishing, and gathering wild plants (Cronon, 1983). In the West, Native peoples also responded to environmental conditions in ways that made sense. Thus, in the Southwest most Indigenous tended to inhabit the same towns year-round, whereas across the plains many peoples migrated to follow bison herds, which provided much of their sustenance. Wherever they lived, Native Americans’ economic activities modified the environment, though the changes that Indigenous peoples wrought paled in comparison to the later colonial reshaping of the landscape. Just as important, Indigenous economies were dynamic: the introduction of European livestock transformed Native lives and communities, evident in the emergent equestrian cultures in the Southwest and the tending of sheep and cows across much of the East (Barr, 2017; Hämäläinen, 2003, 2010).

European Expansion

When Europeans arrived in North America in the 16th century, they believed that they had found a continent overflowing with marketable commodities. Columbus had informed his supporters that the West Indies lay waiting to be exploited. Spanish conquistadors who conquered Montezuma’s Aztec empire based in Tenochtitlán sent great hauls of gold and silver across the Atlantic, as did the followers of Francisco Pizarro who conquered the Incan peoples of the Andes. Those conquerors murdered the Incan emperor Atahualpa even after his people had paid a vast ransom in gold, silver, and jewels. The Spaniards who arrived in the Western Hemisphere did more than bring Europeans’ attention to a “New World.” They also established an economic precedent: whatever existed in the Western Hemisphere could either be traded for or taken, especially since the Indigenous of the Americas were, to the newcomers, uncivilized. Developments in the West Indies after 1492 demonstrated that Europeans, eager to get rich, were willing to enslave and relocate Native peoples. These practices had a devastating impact, especially for the Tainos, whose population shrank even before the first report of an epidemic. Slavery and dislocation, not microbes, brought their demise (Elliott, 1970; Livi-Bacci, 2003; Reséndez, 2016).

The European conquest and colonization of the Western Hemisphere hinged on the widespread acceptance—by Europeans—of the notion of “discovery.” As they understood it, any European who traveled to an area previously unknown to Europeans could claim that area even if it was inhabited. The practice began with Columbus. In the published report of the first of the four exploratory voyages he would make, he acknowledged that he found islands with large populations but he still claimed them in the name of the Christian god and his monarchs. Soon after news of Columbus’s first landing crossed the Atlantic, the Spanish and Portuguese went into negotiations, based on earlier Portuguese claims of islands in the mid-Atlantic, to determine who could lay claim to the lands that Columbus had seen. In 1493, Pope Alexander VI, who presided over a still-undivided Christendom, issued a decree known as the “Inter Caetera” or Bull of Donation, granting both of the Iberian nations the authority to lay claim to lands not previously “in the actual possession of any Christian king or prince.” The next year, the Spanish and Portuguese signed the Treaty of Tordesillas, which created an imaginary line in the Atlantic Ocean about halfway between the islands Columbus had visited and the Cape Verde islands, which the Portuguese had previously claimed and colonized. Drawn on European maps, without any consultation from Indigenous Americans, the agreement solidified the notion of the doctrine of discovery. From that point forward, the entire Western Hemisphere was open to any European claimant as long as another Christian nation had not arrived sooner. While the Iberians and, later, the English, French, and Dutch would often try to compensate Indigenous Americans for their territory, the newcomers had no doubt that their legal claim was superior to that of the Natives. Eventually, the immigrants would create other justifications for taking Native lands, defending their seizure as a prize secured in war or because they used the land as the Christian god intended and therefore had a superior claim to Indigenous residents (Greer, 2018; Mancall, 2017).

Laying claim to land was the first step in the European conquest and colonization of the Americas. The next also sprang from Columbus’s journey of 1492. Starting in 1493, printers began to spread news about the Western Hemisphere using the still relatively novel invention of movable type, which had transformed the circulation of information within Europe ever since the German inventor Johannes Gutenberg invented it in the late 1430s. The first printing of Columbus’s letter announcing the discovery appeared in Barcelona in 1493. By the end of the century, it had been translated and printed across Europe. By the early 16th century, an ever-larger number of publishers realized that there was an enormous market for books describing the Western Hemisphere. These books told the story of European travelers, typically extolling the riches to be harvested in the Americas as well as the importance of spreading Christianity among Indigenous peoples. The circulation of information encouraged other Europeans to sail across the Atlantic. In the process, they brought back American plants never seen before in Europe, including tomatoes, potatoes, maize, and tobacco. They also inadvertently carried Old World pathogens to the Americas, which caused devastating epidemics. The historian Alfred Crosby coined the term “the Columbian Exchange” to explain the movement of people, plants, animals, and germs across the Atlantic. Ongoing access to American goods provided new economic opportunities for Europeans. The spread of infectious diseases devastated Native communities, shrinking them and making their homelands all the more tempting to Europeans seeking economic gain. So did the arrival of European livestock, notably cows, horses, sheep, and pigs, though in the early 17th century colonists’ inability or unwillingness to fence their lands meant that their animals often destroyed Indigenous fields, producing tensions that contributed to warfare (V. Anderson, 1994, 2004; Crosby, 1986; Elliott, 1970; Jones, 2003).

Wherever they went, Europeans hoped to extract mineral wealth. The conquistadors who expanded the boundaries of New Spain northward into modern-day New Mexico, Arizona, and California believed that they would find Cíbola, a mythic city of gold and jewels. Though they failed in that pursuit, many of the explorers continued to believe that great riches would come to the Europeans who managed to find minerals. In modern northern Mexico, Spanish explorers and would-be mine owners discovered large deposits of silver in Zacatecas and Parral and quickly set out to find the labor necessary to extract it. The amount of silver here never reached what the Spanish and their enslaved and mita workers extracted from Potosí in Bolivia, but there was more than enough for those who had economic and political authority to either obtain enslaved Africans or, more commonly, hire local Indigenous. When the number of those willing to do the backbreaking work diminished, mine owners turned toward enslaved Indigenous, including Apaches captured farther north (Bakewell, 1984; Hendricks & Mandell, 2000, 2004; Lane, 2019; Velasco Murillo, 2016; Weber, 1992).

By contrast, the Europeans who arrived along the Atlantic coast during the 16th century often had more mundane hopes. To be sure, the French and the English each wanted to find mineral wealth, but they failed. The English explorer Martin Frobisher, who sailed west of Greenland and into modern-day Frobisher Bay, thought he had found gold on his three expeditions in the 1570s; but when he returned home, the ore he had transported turned out to be worthless. Still, Frobisher and others had another economic goal in mind: they hoped to find a water route, marked on the most up-to-date maps at the time, that connected the Atlantic to the Pacific through modern-day Canada. Finding this “Northwest Passage,” they knew, would provide a quick water route to the rich markets of East Asia, previously approachable only via a very long and expensive journey around Africa and India. But while climate change has proved that 16th-century cartographers were right to argue for the existence of the passage, centuries of cold weather made early modern navigation of this region impossible (Mancall, 2013). Still, despite repeated European exploratory ventures into frigid northern waters, the French and the English who traveled to North America during the 16th century nonetheless managed to find sources of wealth. The most successful among them were probably cod fishermen, many of whom embarked from the English port of Bristol and sailed across the North Atlantic to the plentiful cod populations around the Grand Banks (off modern-day Newfoundland) and Georges Banks (off modern-day New England). Those waters had been fished centuries earlier by Norse sailors who had pioneered routes that took them from Scandinavia to Iceland, from there to Greenland, and eventually to the modern Maritime Provinces of Canada. But by the time of Columbus, the Norse had abandoned their northern Atlantic colonial plans, which meant that the great schools of cod and other fish were undiminished when Basque, English, and other European crews arrived (Crosby, 1986; Quinn, 1975, 1990).

Some of those fishermen landed on the shores of North America and began to trade with local peoples. Though there is no precise documentation for the origins of what became the fur trade, there is no doubt that Europeans were trading manufactured goods for the hides of beaver, otter, and other furbearers during the first half of the 16th century. Over time, the fur trade became an enormous economic pursuit. Native Americans who wanted European goods—such as certain types of clothing, tools, and materials for personal adornment—killed thousands of animals and hauled them to coastal entrepôts. The system thrived in part because Europeans, long reliant on European fur-bearing animals, including beaver, faced shortages at home. Unfortunately for Indigenous peoples, the spread of the fur trade also meant sustained exposure to Old World diseases such as smallpox, which devastated Native Americans who had no prior exposure to such pathogens. They succumbed in horrific numbers to the accidentally imported scourges (Axtell, 1992, 1998; Jones, 2003; Krech, 1981; Martin, 1978).

Sixteenth-century European reports about North America often emphasized the potential fertility of the Western Hemisphere. Travelers told tales, some perhaps too fantastic to be believed, about the great beasts that inhabited American forests and the vast schools of fish that swam in American rivers. More commonly, visitors recognized the abundant crops that Native Americans were able to produce. The English who arrived at Roanoke, an island off the coast of modern-day North Carolina, in the 1580s, provided uncommon details about a pre-1607 colonial effort. The immigrants hoped to create a permanent colony in North America, but they failed to do so. Their disappearance in the late 1580s sent a message that colonization was not always an easy business. Still, among the travelers were Thomas Harriot, a young mathematician and ethnographer, and John White, a skilled painter. Harriot’s first report on the region appeared in London without any pictures in 1588, and again the next year in a large compendium of travel accounts edited by the younger Richard Hakluyt, an assiduous promoter of the English colonization of North America. In 1590, a Flemish engraver working in Frankfurt-am-Main published an illustrated edition of Harriot’s report, along with pictures drawn from White’s watercolors. This edition of this book, A Briefe and True Report of the Newfound Land of Virginia, was published simultaneously in four languages—English (the language of Harriot, White, and Hakluyt), German (the vernacular in Frankfurt), Latin (the language of scholars), and French (likely to appeal to persecuted Protestants seeking a new homeland away from war-torn Europe). The book provided the English (and other Europeans) with a keen sense of the economic bounty to be had in North America. In the hands of avid promoters of colonization, Harriot’s text and White’s pictures circulated along with other information about American resources (Mancall, 2007). Taken together, the promotional material solidified certain ideas in the minds of potential colonists. First, the reports suggested, the soil in America could sustain agriculture. Second, there were large populations of useful animals and fish that could be harvested. Third, the Native peoples could be converted to Christianity and thus “civilization,” which meant that they also would adopt the logic of the market and become avid trading partners. Fourth, land could be acquired from the Indigenous, presumably through treaties and purchases. For Europeans who inhabited a continent in which the rural population had long since grown too large to be sustained in the countryside, the vast resources of North America beckoned (Mancall, 2017).

By the end of the 16th century, the French had established themselves in the Saint Lawrence Valley, though they were never able to attract many colonists to their North American holdings. The Spanish had created settlements in New Mexico and Florida, though neither proved to have a substantial economic effect on the Spanish empire. By contrast, the English had yet to succeed at all in territory that would become the United States. However, they had information about American resources, and in the early 17th century they used that knowledge to launch what became the most successful colonization efforts in North America.

Economic Change in English/British North America

In 1600, there were few Europeans in territory that became the United States. That situation changed dramatically over the course of the 17th and 18th centuries. By 1775, when the Revolutionary War began, there were approximately two million people inhabiting territory controlled by the English in eastern North America; the Spanish had expanded their holdings in the Southwest and Florida; French migrants (whose numbers had grown to perhaps 60,000) remained in their old territory as well as the Mississippi Valley; and the number of Indigenous peoples had decreased to perhaps one-tenth of what it had been in 1492, though most of the continent remained Indian Country. A man or a woman traveling along the East Coast in 1775 would have encountered the descendants of migrants from the Netherlands, Sweden, Finland, the German-speaking regions of central Europe, Africa, Ireland, and Scotland, all of them inhabiting territory in the British Empire. According to many scholars, the economy that this diverse population created was among the most productive in Western history (Bailyn, 1986, 2012; Jones, 1980).

The growth of the immigrant English population began in 1607, a product of diverse economic forces. Around the start of the century, English investors began to pool their resources in joint-stock companies. This enabled shareholders to spread risk and encourage innovation. Like the rise of maritime insurance earlier in parts of Europe, the English joint-stock company opened up new possibilities for expansion. Groups of investors formed the Muscovy Company and the Levant Company. Later, similar sentiments fueled the rise of the East India Company, which became a crucial institution in the rising global power of the English (Scott, 1911).

After trying to establish colonies in Newfoundland, Guiana, and Roanoke in the 16th century, and on the coast of Maine in the early 17th century, the English managed to create a permanent North American community when they founded Jamestown, Virginia. The agent behind the operation was the newly launched Virginia Company, which provided financing for ships traveling to North America and helped recruit young men and women to work there. The commercial origins of the company could be seen in the sex ratio of the colonists. In some years, men outnumbered women by almost six to one, a ratio that made family formation difficult. Though many of the first colonists succumbed to local diseases—about 50% of them died of typhoid fever, dysentery, or possibly malnutrition within four years of their arrival—organizers of the settlement managed to convince enough young English men and women to migrate there for the village to survive. The economic base of the colony remained precarious until the mid-1610s, when colonists, desperate to find a profitable export, began to experiment with tobacco production. At the time, many Europeans believed that tobacco was a wonder drug that could cure a wide range of human diseases, though not all believed that developing a tobacco business was a good idea. James VI of Scotland, who became King James I of England after the death of Elizabeth I in 1603, wrote a pamphlet decrying the negative effects of tobacco—not for the physical damage it caused to human bodies but instead the moral corruption that ensued when too many people became addicted to it. Still, despite some voices of protest, the crop succeeded, and planters in Virginia, and later Maryland, prospered as a result (Mancall, 2004). An Indigenous uprising in 1622, quickly labeled a “massacre” by the English, led to the dismantling of the Virginia Company in 1624, but the surviving migrants remained in what became a royal colony (Musselwhite et al., 2019).

Tobacco cultivation was demanding work in the 17th and 18th centuries. Because so many English migrants died soon after their arrival in North America, the tobacco economy survived only because of sustained migration, which brought large numbers of English to the Chesapeake. The vast majority of immigrant men (approximately 85%) and women (almost 100%) arrived as indentured servants. During the early decades of settlement many found economic opportunity after the end of their service. Still, even with the boom in the tobacco trade, many of the migrants never survived their initial indenture. By mid-century those who did complete their service discovered that much of the best land in the tidewater was no longer available. Their disappointment contributed to a decline in the number of English who went to the Chesapeake (Tate & Ammerman, 1979; Walsh, 2010).

Analyses of the “American” economy often focus on territory that became the United States. That approach might make sense for the national period, but it distorts the economy of colonial North America. Pennsylvania farmers who grew wheat to supply plantations in the West Indies had economic opportunities because of the extraordinary growth of enslaved Africans in English (or British) colonies. For much of the 17th century, Barbados was a far more powerful economic engine than Virginia or Massachusetts. The English conquest of Jamaica in 1655 set the conditions for an even more economically dynamic model. Economic growth in British colonies hinged on obtaining laborers. Through the first half of the 17th century, thousands of English men and women migrated across the Atlantic, many of them as indentured servants (Canny, 1994; Games, 1999). English policymakers and economic theorists had hoped that they could establish colonies without relying on slavery, even in the Caribbean. A group of wealthy Puritans, for example, believed that they would be able to turn Providence Island, a virtually uninhabited locale off the Nicaraguan coast when they arrived in 1630, into a profitable center of cotton production. But the English could not sustain their venture there even though they bolstered their numbers with enslaved Pequot taken captive in southern New England in 1637. In 1641, the English lost their hold on the island (Kupperman, 1993).

But losing Providence did not quell the desire that the English had to make profits in the West Indies or in other parts of the Atlantic. In 1609 the English had laid a claim to the reef-enclosed archipelago they called the Summer Islands, now known as Bermuda. By 1616, they had imported enslaved Africans to help develop the land. In 1619, a group of approximately 20 Angolans arrived in Virginia. Their legal status was not yet defined, but they were enslaved, the first Africans forced to work in territory that became the United States (Musselwhite et al., 2019). In 1627, the English decided to colonize Barbados, another unpopulated island. (There had been an earlier Indigenous population, but it had disappeared by the time the English arrived.) Like the English who went to Providence Island, they did not at first recognize that the greatest profits would come from sugar production. But by the 1640s, a rising group of planters, many of them younger sons of English gentry who would not inherit property at home and saw making money abroad as their best chance of social advancement, recognized the profits to be made from sugar. Some of the planters hoped to recruit English or Irish indentured servants to clear the fields, plant and tend the crop, and then transform raw cane into molasses. But while they understood what was necessary to create a profitable plantation, having learned lessons from Dutch colonization along parts of the Brazilian coast, they discovered they could not rely on poor young men from Britain or Ireland. Instead, they made the decision to purchase enslaved Africans (Burnard, 2015; Burnard & Garrigus, 2016; Wood, 1974).

The English Barbadian planters did not invent the slave trade, nor were they the first Europeans to profit from it in the Americas. From the early 16th century until 1650, the Spanish had imported 250,000 to 300,000 enslaved Africans. Most of them worked in Mexico and Peru. From 1625 to 1650, the Portuguese imported approximately 50,000 enslaved Africans to work in Brazil. During those years, the English purchased 20,700 of the enslaved to work in the West Indies. Barbados soon became the most profitable colony. Its wealthiest residents were English who commanded large numbers of enslaved Africans to produce sugar. They hosted elaborate feasts at their homes, impressing visitors with the astonishing foods and alcohol they made available to guests. At the same time, the overseers of their plantations imposed harsh work regimes. They did so after planters had made the most gruesome and heartless calculation: it would be less expensive to work another human to death and then purchase a replacement than to provide better housing, nutrition, and basic medical care that might enable the enslaved to live longer. With that calculation in mind, plantation owners purchased an increasing number of enslaved Africans (Eltis, 2000; Eltis & Richardson, 2010).

Sugar was so profitable to the planters that they cleared as much land as possible to produce it. They were so eager to expand sugar plantations on Barbados that planters denuded a one-time rich environment. Monoculture, common in parts of Britain, became dominant there, but with two costs. First, ecological change transformed the landscape. Planters, servants, and enslaved workers cleared forests to make houses and fences and to provide fuel for sugar mills. They were so successful that a second cost became evident: Barbadian planters needed to import food and wood. The initial rationale that had driven planters from England—to find a place to become rich—now led them to create an economy dependent on others for basic sustenance. In Jamaica, the need to import food took a disproportionate toll on free colonists, exacerbating the economic differences among the non-enslaved population. Ecological change was so great in Barbados and on other sugar islands that it eventually fed new sensibilities favoring conservation (Burnard, 2001; Burnard et al., 2019; Grove, 1995; Schwartz, 2004).

Yet despite the eventual move toward reliance on an enslaved workforce, for much of the 17th century free workers, the majority of them indentured servants, outnumbered those who had no choice. In all, approximately 116,000 migrants traveled from England to the Chesapeake during the 17th century, the vast majority sailing across the Atlantic before 1660. After mid-century, with disappointment spreading among those who had finished their terms, the earlier optimism faded along with the on-the-ground opportunity. By the 1660s, the number of migrants declined too (Canny, 1994). Many who might have traveled across the Atlantic instead chose to remain in England, where the return of plague and the 1666 Great Fire of London provided new employment opportunities. Still others decided to migrate to other colonies where the possibilities for obtaining land and work seemed greater. For their part, tobacco planters who looked for labor for their holdings increased the number of enslaved Africans they purchased. Although the Chesapeake magnates did not invent the slave trade, which by the mid-17th century had existed in the Atlantic basin for generations, their decision to import slaves to work on tobacco farms reoriented the economy and culture of the southern mainland English colonies. Once established, slavery remained a dominant component of the regional economy until the U.S. Civil War. By one estimate, there were about 28,000 enslaved in mainland British North America by 1700. The number exceeded 150,000 by 1740 and was over 450,000 in 1770. Those numbers reflected but one segment of the transatlantic slave trade. From 1501 to its eventual abolition in 1867, enslavers shipped 12.5 million Africans into bondage. The transit across the Atlantic was only the first arduous journey for the enslaved, many of whom were sold at auction time and again within North America (Berlin, 1998; Eltis, 2000; Galenson, 1981; Newman, 2013; O’Malley, 2014; Thornton, 1998; Walsh, 2010).

The move toward expanding the enslaved population within territory that became the United States sprang from the logic and models worked out in the West Indies during the middle decades of the 17th century. The timing was crucial. The decline in available indentured servants from Britain in the 1660s did not diminish American planters’ belief that they needed to produce for export. Instead, even though there were price fluctuations for major commodities, the demand for labor remained high. This was the economic climate when English planters began to colonize lowland Carolina, which proved to be an ideal environment for rice cultivation. Many of the first planters there came from Barbados, making Carolina a “colony of a colony” in the words of the historian Peter Wood. From its inception, Carolina’s demography reflected the demand for bound labor. It was the first mainland colony to have a Black majority, and by the middle of the 18th century, when about one-half of Virginia’s population was of African descent (including a minority who were free), approximately two-thirds of Carolina’s population consisted of enslaved Africans or their descendants who had been born into enslavement based on the English idea that the status of an infant followed that of their mother. If a woman was an enslaved African, her children would be the property of the planter who claimed the mother’s body and service—even if the child was conceived by a white planter raping an enslaved African woman (Berlin, 1998; Wood, 1974).

Bound labor existed in other parts of the English mainland colonies too, though in New England it was more the exception than the rule. After the initial Pilgrim colonization of Plymouth, which began in 1620, large numbers of Puritans traveled to New England during the so-called Great Migration, from 1630 to 1642. During that period, approximately 21,000 English men, women, and children moved to Massachusetts. Although they never created a substantial export-oriented economy—their most important trade goods were furs purchased from local Native Americans—the colonists inhabited healthy environments. As a result, their populations swelled; family size in many New England communities was, on average, eight to 10 individuals (V. Anderson, 2010; Demos, 1970; Greven, 1970). Still, demographic success did not promise wealth. Instead, the great fecundity of the colonists led to overpopulation and land shortages, and by the third generation of settlement (approximately the final third of the 17th century), many grown children chose to migrate from their home communities to found new satellite villages. Such internal migration made sense from an economic perspective, but it did not always please Puritan clerics, who had envisioned the creation of communities in which families would be able to remain close together. But even without substantial demand for new sources of labor, English families purchased enslaved Indigenous or Africans, though in numbers far less than in tobacco- and rice-growing regions (Newell, 2015; Warren, 2016).

The relatively small number of enslaved Africans (or Natives) in New England should not be taken to mean that the Puritans and others who traveled there lacked a desire to become wealthy. Historians have long debated the motivations for the Puritans’ migration, which was concentrated during a 12-year period beginning in 1630 and came to an end with the English Civil War. While it is no doubt true that the desire to find a place to practice their faith without persecution contributed to the decision of many to leave home, economic problems, especially in the woolen industry, created problems independent of their religious beliefs. The combination of financial precariousness for some and intolerance for many proved a powerful incentive. But once in North America, after an initial period of economic dislocation—predictable, perhaps, when a group of primarily urban residents migrate to a place that they considered a “wilderness”—many colonists in New England set about to improve their economic standing. At times, the pursuit of economic gain by individuals threatened the sensibilities of others; in one celebrated instance a Boston merchant named Robert Keayne wrote a 50,000-word will justifying his economic practices in the face of accusations that he sought individual profit rather than the betterment of the community (Bailyn, 1964). When immigrants dispersed and created new towns west of the initial core around Boston, many among them sought to make a profit, including the Williams family, the founders of Springfield, Massachusetts, which they quickly turned into a trading post that operated, as the historian Stephen Innes put it, like a “company town” (Bailyn, 1955; Innes, 1983; J. Martin, 1991). Across New England, colonists learned how to integrate wampum into their negotiations, first relying on Indigenous-produced strings and then introducing European-made glass beads into the business. In the process, wampum evolved from a prestige good to a form of currency—a “wampum revolution” as the historian Neal Salisbury wrote (Salisbury, 1982).

The Colonial Economy

By the late 17th century, the English had expanded their settlements along the Atlantic coast. Victory over the Dutch in the 1660s allowed the English to take control of the colony of New Netherland, which they renamed New York. In 1681, King Charles II granted an enormous tract of land to William Penn, who created the colony of Pennsylvania. The English also created colonies in North and South Carolina, in East and West Jersey (later combined into New Jersey), and across New England (New Hampshire, Connecticut, and Rhode Island). Plymouth, initially independent, was absorbed by Massachusetts in 1691. The creation of the colony of Georgia in 1732 represented the final territorial expansion of the English during the colonial period.

Scholars who have examined the economy of the mainland colonies of British America have often focused on the staple crops produced in particular regions. Such an approach demonstrates the intense regional differences that existed. In low-lying areas in the southern colonies, notably South Carolina and Georgia, planters imported thousands of slaves to produce rice, a crop that they then exported to English ports, where merchants typically arranged to ship it again, to the Iberian Peninsula, where rice was always in great demand. Over time, southern colonists added indigo to their exports, as well as deerskins, which they obtained from Choctaws, Cherokees, Chickasaws, and Creeks (Muscolges) who survived the demographic catastrophe wrought by the arrival of Old World diseases. Tobacco dominated exports from Virginia and Maryland, though by the late-colonial period planters also had begun to export wheat. New York, Pennsylvania, and New Jersey became the center of cereal exports. Unlike the South, most of the agricultural exports produced in the middle colonies came from farms worked by free laborers, either the owners themselves, their children, or hired help (including, at times, the work of indentured servants, many of whom came from the Rhineland). Colonial farmers in the middle colonies shipped much of their produce to the English outposts in the West Indies, a trade that planters in the islands needed in order to concentrate their land and enslaved laborers on the production of sugar. In terms of exports, New England lagged behind the other regions, though the merchants of Boston, Newport, and Salem took a direct hand in organizing the shipments of goods across the Atlantic basin, taking advantage of towns developing along its coastline and supporting fishing ventures. By the second half of the 18th century, English traders had established commercial connections stretching from the Ohio Valley to the Atlantic (Bailyn, 1986; Davis & Engerman, 1999; Dunn, 1972; Heyrman, 1984; Hinderaker, 1997; Innes, 1988; McCusker & Menard, 1991; Perkins, 1988; Peterson, 2019).

Throughout the colonial period, the economy of North America remained rural. As late as 1790, the time of the first census of the United States, over 90% of the population inhabited farms or small rural communities. Yet even with the urban share of the population relatively slight, the cities that did exist became crucial for organizing economic activity. Merchants who clustered in Boston, Philadelphia, and New York City, along with others in the coastal ports of New England and Charleston, South Carolina, played a dominant role in determining the imports that other colonists would find in their local stores. They also created the financial infrastructure to support commerce across English America (Doerflinger, 1986; Henretta, 1978; Perkins, 1994; Peterson, 2019).

Free colonists, even in rural areas, benefited from the increase in long-distance commerce across the Atlantic basin. Though economic opportunities for this population contracted at times, stability was common (though with some exceptions, such as Bacon’s Rebellion in Virginia in 1676) and most individuals remained connected to markets that brought consumer wares across the interior regions of British colonies. The earliest colonial houses tended to be small and of simple architectural design. By the early decades of the 18th century, wealthier colonists, especially urban merchants and rural plantation owners, expanded their properties. Economic stratification, present even from the start, became more pronounced over time among the free population. Relatively few lived as well as the wealthiest planters of Barbados or Jamaica. But along the lower reaches of rivers feeding into the Chesapeake, and in Boston, Newport, and Philadelphia, the rich inhabited better housing, and they filled their rooms with imported finery. Much of what they purchased had been produced from American materials, including fine mahogany furniture made from West Indian and Central American forests. Wealthy women could purchase elaborate dresses made from imported silk, serve their guests from fine china on tables with English silverware and Chinese porcelains, and have their portraits painted by artists trained in England or on the continent. Some Americans, conscious about their image, projected an image of rustic simplicity, evident in the popularity in the late 18th century of images of Benjamin Franklin wearing a raccoon skin cap. But the richest among them might own a beautiful silver pot created by Paul Revere or a stunning painting by John Singleton Copley. To be sure, the wealthiest people in Britain lived more extravagantly. There was no American equivalent of Blenheim Palace, for example. But Mount Vernon and Monticello, each funded by profits of enslaved laborers, were hardly the rude log cabin of American myth (J. Anderson, 2012; Anishlansin, 2016; Bushman, 1998, 2011; Carr et al., 1991; Clemens, 1980; Coclanis, 1990, 2005; Isaac, 1982; Kamensky, 2016; Peterson, 2001; Shammas, 1990, 2012).

Viewed from a distance of over 200 years, the economy of the English colonies appears a great success, at least for the free population. The English never suffered the kind of defeat that the Spanish experienced in New Mexico during the Pueblo Revolt of 1680, an Indigenous uprising that forced Spanish colonists back into Mexico, at least for a time (Weber, 1992). The English colonies also had a reputation for being an excellent place to find work, a “best poor man's country,” a term promoters used for Pennsylvania in the 18th century, an idea that helped that colony become a magnet for migrants during the early-modern period (Lemon, 1972). Hence Europeans flocked to the Anglo-American colonies and avoided New France; even poverty-struck French men and women refused to go to their nation’s American settlements, leaving them mostly in the hands of soldiers and missionaries. Though English expansion had a catastrophic impact on the Native peoples of eastern North America, Natives remained as trading partners and often neighbors of European colonists. By the mid-18th century, if not earlier, Indigenous had experienced a commercial revolution: many had become eager consumers of European goods such as manufactured clothing, guns and powder, metal tools, and alcohol, a commerce that began in earnest after 1650 and had unfortunate consequences for many Indigenous groups (Calloway, 1997; Hinderaker, 1997; Mancall, 1991, 1995; C. Martin, 1975; Richter, 1992; Silver, 1990; Usner, 1987; Wickman, 2018). To the north, the Hudson Bay Company, which began its operations in 1671 despite the mutiny that had led to Henry Hudson’s own death in 1611 near the shores of the bay that now bears his name, had operations that stretched far into the Canadian west and generated large profits for its investors (Carlos & Lewis, 2010).


In recent times some scholars have questioned the nature of the economic success experienced by the English and have shown the benefit of analyzing American economic history in a wide geographical context (Usner, 2014; Van Ruymbeke, 2013). There is no doubt that the prosperity colonists enjoyed often came from exploiting the labor of Native peoples as well as enslaved African and African-American men, women, and children, and from the purchase and appropriation of lands earlier tended by Indigenous communities (Berlin, 1998; Burnard, 2004, 2020; Coclanis, 1991; Guasco, 2016; Greer, 2018; Mancall & Weiss, 1999; Steckel & Rose, 2002; Vickers, 1983). Close examination of the lives of urban denizens also suggests that many working people never enjoyed the prosperity they had hoped to find in North America (Smith, 1990). In addition, the pursuit of economic gain often created long-term environmental damage, at times to the point of reducing or eliminating specific pursuits, such as the beaver trade in New England (Cronon, 1983; Pluymers, 2016; Silver, 1990). The lack of large sets of statistics makes it difficult to provide measures for entities such as output per capita. Still, whatever the rate of economic growth, the history of the colonial era reveals that success came often to those who migrated from Europe and their descendants while, as many historians have argued, the material basis of that wealth sprang from the labors and lands of others.

Further Reading

Those interested in learning more about the early American economy might want to start with John J. McCusker and Russell R. Menard, The Economy of British North America, 1607–1789 (revised ed., Omohundro Institute of Early American History and Culture and University of North Carolina Press, 1991), which provides the best overview of economic activity for the period, and Stephen Innes, ed., Work and Labor in Early America (Omohundro Institute of Early American History and Culture and University of North Carolina Press, 1988), a series of economic history essays covering a wide territory.

For Native economic activity, the best starting point is William Cronon, Changes in the Land: Indians, Colonists, and the Ecology of New England (Hill and Wang, 1983), a searing reminder of the fact that it is impossible to understand economic activity without considering both the physical world and cultural differences of those who often lived near each other.

Regional differences mattered throughout the period, especially between the primarily free population of New England and other areas where enslaved laborers were crucial to economic performance. For superb regional analyses See Bernard Bailyn, The New England Merchants in the Seventeenth Century (Cambridge, MA, 1955); Trevor Burnard and John Garrigus, The Plantation Machine: Atlantic Capitalism in French Saint-Domingue and British Jamaica (University of Pennsylvania Press, 2016); Ann M. Carlos and Frank D. Lewis, Commerce by a Frozen Sea: Native Americans and the European Fur Trade (University of Pennsylvania Press, 2010); Thomas Doerflinger, A Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Philadelphia (Omohundro Institute of Early American History and Culture and University of North Carolina Press, 1986); and Simon P. Newman, A New World of Labor: The Development of Plantation Slavery in the British Atlantic (University of Pennsylvania Press, 2013).

For the late colonial period see the meticulous work of Alice Hanson Jones in Wealth of a Nation to Be: The American Colonies on the Eve of the Revolution (Columbia University Press, 1980).

For consumer behavior see Carole Shammas, The Pre-Industrial Consumer in Britain and America (Oxford University Press, 1990).

For works relating to enslaved peoples see especially Ira Berlin, Many Thousands Gone: The First Two Centuries of Slavery in North America (Harvard Univesity Press, 1998); David Eltis, The Rise of African Slavery in the Americas (Cambridge University Press, 2000); Gregory E. O’Malley, Final Passages: The Intercolonial Slave Trade of British America, 1619–1807 (Omohundro Institute of Early American History and Culture and University of North Carolina Press, 2014); and John Thornton, Africa and Africans in the Making of the Atlantic World, 1400–1800, 2nd ed. (Cambridge University Press, 1998).


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  • White, A. J., Stevens, L. R., Cao, A., Bogdanovich, T., Lorenzi, V., Munoz, S. E., & Schroeder, S. (2019). Fecal stanols show simultaneous flooding and seasonal precipitation change correlate with Cahokia’s population decline. Proceedings of the National Academy of Sciences of the United States of America, 116(12), 5461–5466.
  • Wickman, T. M. (2018). Snowshoe country: An environmental and cultural history of winter in the early American Northeast. Cambridge University Press.
  • Wood, P. W. (1974). Black majority: Negroes in colonial South Carolina from 1670 through the Stono Rebellion. W.W. Norton.


Table 1. The Population of North America, 1500–1800 (in Thousands)






















* Includes territory from the Arctic to the southern border of the United States.

** British colonies in the Western Hemisphere only, including the West Indies; both categories include migrants and American-born peoples of European or African ancestry.

Source: For Native peoples: Ubelaker (1992, Table 3, p. 173); for European and African peoples: McCusker and Menard (1991, Table 3.1, p. 54).