Economy of Cities

Human settlements in North America prior to the 17th century hardly could be said to have had or to have been embedded in economies. Aboriginals formed relatively permanent settlements to provide for their social and physical needs, while relations of reciprocity and redistribution enabled food and implements to be exchanged. But, exchange for gain—a defining element of market economies—was absent. Only well after the continent had been colonized did market economies appear and shape the size and form of settlements, eventually becoming a major force in the development and diversification of cities. Lost was the organic coherence of aboriginal settlements in which the “economic” was indistinguishable from the “social.”

When the English and Dutch colonized North America in the early 1600s, they entered a New World already populated by settlements that ranged from a few hundred to several thousand inhabitants. Spread across the continent were a variety of tribes whose relationship to the land changed with climate and the availability of edible plants, fish, and animals. Along the northwest Pacific Coast, Chinookan tribes established villages organized around fishing. In the Eastern woodlands, hunting, gathering, and farming—corn, beans, squash—anchored Mohawk settlements, while in Alaska the survival of large and permanent Eskimo villages depended on whaling and the hunting of sea mammals. Throughout the Great Plains, settlements were rare. The Sioux and Comanche were mostly nomadic and survived on hunting bison. Trade occurred among aboriginals, but it consisted mainly of bartering.

In stark contrast, the first English and Dutch colonies in the New World were economic enterprises explicitly designed for the exporting of furs, forest products such as potash, and rice, indigo, and tobacco. These were joint-stock companies whose sole purpose was to provide commodities for the home market. Absent this export function, they were subsistence “economies” with little potential for growth. Such settlements included the Jamestown colony established by the Virginia Company (chartered in 1606); New Amsterdam, founded by the Dutch West India Company; and the Providence Islands Company, which operated in the Carolinas.

Until the early 18th century, all colonies, whether joint-stock companies or not, relied for their needs mainly on family farms, trade with aboriginal tribes, and hunting, gathering, and fishing. A number of places had strong export activities—Newport (whaling) and Norfolk (tobacco), for example—but the small size of these towns, restrictions on manufacturing by the colonial authorities, and the lack of capital kept external trade one-sided: profits accrued to foreign investors. The sole purpose of these settlements was to serve external markets.

Throughout most of the 18th century, the economy grew at a rapid pace. Population increased five-fold to 2.5 million people, mainly through immigration and, coupled with a westward movement that created new settlements extending to the Allegheny Mountains, strengthened internal trade. Foreign commerce involving Southern farmers also expanded. Trade, in turn, bolstered the growth of commercial [Page 232]towns. The port cities of Charleston, Boston, Philadelphia, New York, and Baltimore were increasingly prosperous. A number of them (for example, Boston) engaged in shipbuilding, and this spawned the manufacturing of ropes, sails, and related products. The economy, at least as measured by what people did to subsist, remained agricultural, however. Moreover, it was a rudimentary economy lacking in the banks and credit systems that would enable large-scale and profitable trade and thus rapid growth. Yet, the spread of settlement westward was opening new markets and creating towns that were not so easily controlled by colonial authorities. Consequently, these places were more likely to develop manufacturing and to trade with each other.

...