The Growth of the American Economy: An Introduction to the Economic History of the United States

By Robert G. Albion; Harold F. Williamson | Go to book overview

CHAPTER 2
The Early Settlements: A European Investment of Capital and Labor

THE ECONOMIC HISTORY of America has its beginning in an investment of European capital and labor. The Colonial settlements were inspired by a wide variety of motives, but in a very large degree the accomplishment of the purposes of settlement, whatever their nature, depended upon the solution of a basic economic problem--to enlist the capital necessary for underwriting the venture and to recruit a labor supply possessed of the requisite endurance and skill. This necessity, in turn, called for some plan of settlement assuring an adequate return on the investment made. The adventurer, as the European promoter who risked chiefly a capital investment was commonly described, demanded a reasonable assurance that merchantable commodities could be produced in sufficient quantity to provide a profitable return of the capital sum invested. The Colonist who adventured his life and labor in the settlement naturally insisted upon a share in the produce of his efforts that would permit him either to return to the old country after a few years with his fortune made, or to remain in America in the enjoyment of an economic and social position superior to any he could command at home. It follows that the infant economy of an American community was measured chiefly by its capacity to meet the demands and potentialities of a European market. For only through the establishment of credit in an Old World market could the adventurer be assured of the return of his capital, the homeward-bound fortune hunter of the means for a fuller enjoyment of Old World life, and the permanent settler in America of an ability to purchase essential supplies in Europe. On the primitive frontiers of the New World, it must be understood, there was no hope of an advanced standard of living save through imports from abroad.

Such basic considerations, rooted in the very conditions of original settlement, were through many generations to shape the developing economy of America. Upon successive frontiers new communities were established, each representing an investment of capital and labor drawn from older communities, and each in its turn tied to a dependence upon established markets. The point of departure for most of the settlements here dealt with was London; but with the passage of time, such cities as Boston, New York, or Philadelphia were to assume a role in the westward advance of settlement not unlike that originally held by Britain's

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