Evolution of a Federalist: William Loughton Smith of Charleston (1758-1812)

By George C. Rogers | Go to book overview
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II
BENJAMIN SMITH, MERCHANT

T HE SYSTEM OF COLONIAL TRADE in its purest and simplest form, especially in the staple-producing colonies, was controlled by three figures: the British merchant, the colonial factor (or commission merchant), and the planter. The British merchant who possessed capital would purchase manufactured goods at home and send them to the colony, preferably in his own ship. In the colonial port the factor received these goods and disposed of them to planters on a commission basis. The planter would pay for these goods with the produce of his soil -- sugar in the West Indies, tobacco in Virginia, and rice or indigo in Carolina. The factor took these crops and freighted the returning vessel with them, for which he charged the merchant a commission somewhat less than for the disposal of his goods. The merchant in Britain ultimately sold the crops and replenished his capital. If the planter produced more than he bought, he might have large sums at his command in Britain. If, on the other hand, he bought more than he sold, he would be in debt to the merchant. These debts would be collected for the merchant by his agent, the factor.

The history of the factor is different in each of the three staple- producing areas. In the West Indies he largely disappeared. Planters who had survived into the eighteenth century were big enough to become absentee landlords, to live in England, and to deal directly with merchants. The disappearance of the factor and the absenteeism of the planter help to explain the loyalty of the West Indies during the Revolution. Sugar nabobs bought seats in Parliament and were in this way represented directly, not virtually, as some Englishmen believed the continental colonies to be.

In Virginia, tobacco planters never became absentee landlords, although some were big enough to assume the functions of the factor and to save the commissions for themselves. Factors were therefore present until the eve of the Revolution, always pressing the planters for the payment of debts.

In South Carolina, factors in many instances soon ceased to be factors for others and became merchants in their own right. There was a general tendency in the colonies for this to happen, but the likelihood was greater in the important colonial ports where many

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