Economy in Colonial New England
The Triangle Trade
By the end of the seventeenth century, New England colonists had tapped into a sprawling Atlantic trade network that connected them to the English homeland as well as the West African slave coast, the Caribbean's plantation islands, and the Iberian Peninsula. Colonists relied upon British and European imports for glass, linens, hardware, machinery, navigational instruments, paint, and other household items. In contrast to the southern colonies, which could produce tobacco, rice, and indigo in exchange for imports, New England's colonies could not offer much to England beyond fish, furs, and naval stores. Nevertheless the New Englanders built a thriving mercantile network and a lucrative shipbuilding system; after all, they needed fishing boats, and the regional economy quickly became dependent upon the sort of trade that only ships could produce at the time. New Englanders began to profit mightily from trade with England, rather than simply supplying the mother country with cheap staples, as mercantilist doctrine demanded. In response, between 1698 and 1717 the English government imposed an unfavorable trade balance on New England and New York by raising duties against major colonial exports like fish (to protect English fisheries) and meat (to protect English agriculture). This meant that the colonies were forced to purchase more from England than they were able to sell back.
The colonists dealt with this unfavorable situation by using their own ships to sell to other markets not subject to English taxation—the Azores, southern Europe, Madeira and Newfoundland. But the New Englanders' most important trade, by far, occurred in the West Indies, where Americans sold bread, corn, flour, fish, beef, pork, horses, and bacon to the islands' planters, in part so that the planters could feed their slaves. In return the Caribbean planters gave the New Englanders molasses, sugar, rum, indigo, and dyewoods. The molasses trade was particularly crucial to the New England economy; it created a lucrative market for manufactured items from the region, since those Caribbean colonies owned by non-English powers were only allowed to sell the English molasses in return for the items they wanted to purchase.
New England traders could also receive specie from this trade with foreign Caribbean colonies. Currency inflation became a major issue in colonial politics during this period, as specie was always in short supply and farmers and other colonial debtors demanded more paper money to raise prices and therefore bring them more profit from selling their crops. Creditors, on the other hand, wanted to limit the amount of paper money in circulation, thereby increasing the value of their capital.