Overview

Between 1500 and 1789, the American economy evolved from subsistence-level colonial outposts to a complex system shaped by mercantilism, agriculture, slavery, and transatlantic trade. Regional economic differences laid the foundation for later sectional divides and contributed to the colonies' eventual drive for independence.

Key Themes and Events

• Mercantilism and Navigation Acts: European powers pursued mercantilist policies that sought to accumulate wealth through a favorable balance of trade. The British Navigation Acts (1651 onward) restricted colonial trade and required goods to be shipped through England, benefiting the mother country at colonial expense.
• Triangular Trade and Slavery: A transatlantic economic system developed involving Europe, Africa, and the Americas. Slaves were transported to the colonies, raw materials were exported to Europe, and manufactured goods circulated back. This fueled plantation economies, especially in the South.
• Regional Economies: New England focused on shipping, fishing, and small-scale farming. The Middle Colonies grew grains and engaged in commerce. The Southern Colonies depended heavily on labor-intensive cash crops like tobacco, rice, and indigo.
• Indentured Servitude and Labor Systems: Before slavery became dominant, many European immigrants came as indentured servants. Over time, the demand for permanent labor helped institutionalize slavery in the South.
• Colonial Currency and Trade Barriers: Colonies often lacked hard currency and relied on barter, foreign coins, or commodity money. Trade restrictions and British economic control caused growing resentment among colonists.
• Economic Roots of Revolution: Taxes and trade limitations imposed after the French and Indian War (e.g., Sugar Act, Tea Act) created economic grievances that helped spark the American Revolution.

Quick Tip

Know the structure and consequences of triangular trade. Be familiar with how regional economies developed differently, and how British economic policies contributed to revolutionary sentiment in the colonies.