18th century Economics:-
Introduction:-
India of the 18th century failed to make progress economically, socially, or culturally at a pace, which would have saved the country from collapse. There is a complete dearth of authentic figures which can help in drawing a picture of the socio-economic life of India in the eighteenth century. The British records, which also relate to the whole of the peninsula, are available only after the census which took place only in 1880 for the first time. The record left by the Court historians of the native rulers was more overshadowed, by pessimism.
Copper Panic of 1789:-
The Copper Panic of 1789 was a monetary crisis of the early United States that was caused by debasement and loss of confidence in copper coins that occurred under the presidency of George Washington.
After the American Revolution, many states began minting their own coins largely in copper. At first the coins were widely accepted and their usage was rarely impeded, whereas several attempts by the British Empire to introduce new coins to the Americas were met with resistance. For several years there were high levels of confidence in these coins and knowledge that they were a high quality copper.
As more counterfeiters began production and caused minters to have to debase their coins to remain in business, the value of copper began to fall. Several laws were passed during this time period, including the prohibiting of debased coins from being considered legal tender. The State of New York prohibited the circulation of copper coins entirely. The State of New Jersey in 1787 declared it would no longer accept any legal tender of other states for any debts. This furthered the decline in copper prices, forcing many minters to shut down, leaving only counterfeiters who produced extremely low quality coins.
By 1789 the market was completely flooded with debased coppers that were officially illegal and thus caused the citizens to lose all confidence in them. The Federal government attempted to value them at 48 coppers to the shilling, but merchants refused to cooperate and the coins became almost entirely worthless. At the height of the debasement, there was a 430% inflation rate for copper and commerce ceased, forcing several businesses and manufacturers to close down.
The situation was alleviated when the Bank of Philadelphia began issuing paper bank notes to replace the copper coins. State governments sought to cooperate with the plan and thus established the small fiat currency as an active medium of trade. With stability returning to the economy the value of copper also rose again, until it was almost back to normal values in most areas. Commerce began to flourish again as the monetary system had confidence restored. This event was largely a factor for the federal government establishing a stronger federal currency standard and initiating more federal taxes to empower a central authority.
The Currency Act(1764):-
The colonies suffered a constant shortage of currency with which to conduct trade. There were no gold or silver mines and currency could only be obtained through trade as regulated by Great Britain. Many of the colonies felt no alternative to printing their own paper money in the form of Bills of Credit. But because there were no common regulations and in fact no standard value on which to base the notes, confusion ensued. The notes were issued by land banks, or loan offices, which based the value of mortgaged land. Some notes paid interest, others did not, some could be used only for purchase and not to repay debt. Some were issued only for public debts and could not be used in private transactions. There was no standard value common to all of the colonies. British merchant-creditors were very uncomfortable with this system, not only because of the obvious complexity, but because of the rapid depreciation of the notes due to regular fluctuations in the colonial economy. On September 1, 1764, Parliament passed the Currency Act, effectively assuming control of the colonial currency system. The act prohibited the issue of any new bills and the reissue of existing currency. Parliament favored a “hard currency” system based on the pound sterling, but was not inclined to regulate the colonial bills. Rather, they simply abolished them. The colonies protested vehemently against this. They suffered a trade deficit with Great Britain to begin with and argued that the shortage of hard capital would further exacerbate the situation. Another provision of the Currency Act established what amounted to a “superior” Vice-admiralty court, at the call of Navel [sic] commanders who wished to assure that persons suspected of smuggling or other violations of the customs laws would receive a hearing favorable to the British, and not the colonial, interests.
Economy of the kingdom of Mysore:-
The Kingdom of Mysore(1399 – 1947 CE) was a kingdom in southern India founded in 1399 by Yaduraya in the region of the modern city of Mysore, in the Karnataka state. The Wodeyar dynasty ruled the Southern Karnataka region until Indian independence in 1947, when the kingdom was merged with the Union of India.
The peak of Mysore’s economic power was under Hyder Ali and Tipu Sultan in the post-Mughal era of the mid-late 18th century. They embarked on an ambitious program of economic development, aiming to increase the wealth and revenue of Mysore.[1] Under their reign, Mysore overtook Bengal Subah as India’s dominant economic power, with highly productive agriculture and textile manufacturing.
Under Tipu Sultan, Mysore had India’s highest real wages and living standards in the late 18th century, and was comparable to Britain, which in turn had the highest living standards in Europe. Mysore’s average per-capita income was an estimated five times higher than subsistence level.
Gaudot Affair:-
Gaudot Affair began in 1747, when the King of Prussia, Frederick II, introduced the lease of the tax revenues in Neuchâtel, his principality, to the auction of the rent and tithing, instead of the state administration. In 1766 the opposition to the new system, which conferred considerable advantages to the prince, was published: no one was willing to buy the high-priced tenancies. Frederick II finally proposed the sale of all tithes to the highest bidders, which caused a storm of indignation among the Neuchâtes; they saw in it a disregard for the principle of sovereignty which had been guaranteed to them in 1707, and demanded the restoration of the old system.
In May 1767 Frederick II decided to call the Bernese as arbitrators. Both parties stubbornly defended their position. The representative of the General Prosecutor of the Principality, Claude Gaudot (1713-68), was particularly relentless in his condemnation of Neuchâtel. At the beginning of 1768 the Grand Council of Bern accused Neuchâtel of violating the prince’s rights. The rage of the citizens of Neuchâtel was so great that Frederick authorized a Bernese military force to intervene. Although Lucerne, Solothurn, Freiburg, and the ambassador of France attempted to moderate, Bern recruited and gathered 9,000 men to the east of the principality to frightened the citizens of Neuchâtel and Valangins.
Frederick II appointed Gaudot as the representative of the Bernese lieutenant colonel to Neuchâtel. When he returned to the city, he was lynched by the population on 25 April 1768, without the authorities taking the slightest step to protect him. One month later, 600 soldiers from the four allied estates occupied Neuchâtel. The affair ended in August with the complete subjugation of the city.
Robert Scipio von Lentulus was subsequently appointed governor of the city.
Mississippi Company:-
What is the Mississippi Company?
The Mississippi Company is a company that experienced rapid growth and decline in 18th century France. It is commonly used as a cautionary tale when discussing speculative bubbles.
Breaking down of Mississippi Company:-
The Mississippi Company is often used as an anecdote when discussing speculative bubbles and the impact their bursting can have on an economy. The company is an example of how speculation can cause rapid growth and then rapid decline across an economy.
France had been struggling with unstable currency and a volatile treasury status for some time when a Scottish adventurer named John Law introduced a plan to help settle the nation’s debts. Law had acquired a company that was developing a strong foothold in the United States called the Mississippi Company. Law proposed to his friend, the Duke d’Orleans, that selling off shares of the company could help pay off some of the debts that France had incurred during the reign of King Louis XIV.
The Mississippi Company had been working on developing the U.S. French territories in the Mississippi River valley and was doing extremely well. The company quickly grew to hold a monopoly on both French tobacco and African slave trades in the region. Just two years after Law acquired it, the company had monopolized the entirety of French colonial trading, thanks in part to support from France.
Speculation of continued growth spread and the public’s interest in purchasing shares of The Mississippi Company increased. Law theorized that he could sell the shares at a high price and use the profit to pay off most of France’s national debt. He intended to sell these shares in exchange for billets d’etat, the nation’s public securities, as these had also experienced a rapid rise in value. These activities lead to a period of economic growth throughout Europe. France responded to the positive speculation by increasing production of their paper money.
Inevitably, inflation caught up with France and both the currency and the billets d’etat began to decline in value. The economic boom resulted in a stock market crash around the globe. While Law was not the sole entity responsible for this sudden economic downturn, he was largely blamed for the rapid rise and fall of the market. In 1720, Law left behind both France and the once profitable Mississippi Company. France absorbed both the company and its large debts in his absence and was left with no choice but to raise the nation’s taxes to compensate for the losses incurred.
Revenue Act of 1766:-
The Revenue Act 1766 was an Act passed by the Parliament of Great Britain in response to objections raised to the Sugar Act 1764. The Revenue Act was passed in conjunction with the Free Port Act 1767.
The Act was repealed by the Statute Law Revision Act 1867.
Spinning bee:-
“As for me, I will seek wool and flax, and work willingly with my hands; and indeed there is occasion for all our industry and economy.”
—Abigail Adams, in a 1774 letter to her husband, John Adams
Did you know that the humble spinning wheel was once a symbol of patriotic fervor in America? Colonial women in the years before the Revolution created their own homespun cloth as a way to disrupt the British monopoly on the textile market. In fact, spinning played such an important role in the conflict that the Daughters of the American Revolution chose a spinning wheel as a symbol for their organization.
It all started with Britain’s attempt to protect one of their biggest industries, textiles. Colonists imported most of their textiles from Britain, and wool production in the colonies was discouraged since Britain saw America as a supplier of raw materials for England’s factories. England could then sell the manufactured goods to the colonies at a handsome profit.
But early Americans had other ideas. By the end of the 1600s, America was exporting wool, which outraged England and led to the Wool Act of 1699, prohibiting the colonies from exporting wool, wool yarn, and wool cloth.
The passage of the Wool Act lit the fires of resentment in the colonies and many people resisted by making cloth from flax and hemp—and producing their own essential clothing instead of buying British imports.
The homespun clothing movement really gained steam when the Daughters of Liberty turned to their spinning wheels. This group of patriotic women organized mass spinning “bees’’ in town squares, churches, and private homes. Once the war started, they gathered to spin and sew uniforms for the Continental Army.
During Sheep-to-Shawl at Philipsburg Manor, interpreters demonstrate 18th-century spinning and weaving techniques similar to those used by the Daughters of Liberty. Although the owners of Philipsburg Manor sided with England during the Revolution and bought their textiles from Britain, it’s certain there were patriotic spinners among the manor’s many tenant farm households!
Stamp Act:-
Andrew Oliver could have been excused if he didn’t feel very welcome in his hometown of Boston. After awaking on August 14, 1765, the wealthy 59-year-old merchant and provincial official learned that his effigy was hanging from a century-old elm tree in front of Deacon Elliot’s house. After dusk, angry Bostonians paraded Oliver’s likeness through the streets and destroyed the brick building he had recently built along the waterfront. In case Oliver still hadn’t received the hint, the mob beheaded his effigy in front of his finely appointed home before throwing stones through his windows, demolishing his carriage house and imbibing the contents of his wine cellar.
Oliver had become the public’s enemy after news arrived from England weeks earlier that he would be responsible for the local implementation of a reviled law imposed by the British government—the Stamp Act. Approved by Parliament on March 22, 1765, the measure imposed a tax on all printed materials for commercial and legal use—including wills and deeds, newspapers, pamphlets and even playing cards—as a means to pay for the deep debt Great Britain had incurred protecting the American colonies from French and Native American forces during the Seven Years’ War, which ended in 1763. The Stamp Act also denied offenders a trial by jury because colonists had a habitual tendency to find their smuggling peers not guilty.
The Stamp Act was the first direct tax on internal commerce, rather than a duty on external trade goods, imposed on the American colonies, and it had colonists who believed that only their own representative assemblies could levy direct taxes in an uproar. When news of the Stamp Act arrived in May, newly elected Patrick Henry railed against the law in the Virginia House of Burgesses and led the adoption of the radical Virginia Resolves, which denied the right of an unrepresentative Parliament to tax the colonies. In Boston, opposition moved from fiery rhetoric to inflamed violence, fanned by a secret organization known as the Loyall Nine. The clandestine group of artisans and shopkeepers printed pamphlets and signs protesting the tax and incited the mob that ransacked Oliver’s house.
The Stamp Act commissioned colonial distributors to collect a tax in exchange for handing out the stamps to be affixed to documents, and Oliver, without his knowledge, had been appointed the distributor for Massachusetts. The day after his property had been destroyed, Oliver resigned a position he never asked for and one he never held, since the Stamp Act wasn’t due to take effect until November 1.
The resignation, however, didn’t douse the violent protests in Boston. On August 26, another mob attacked the home of Oliver’s brother-in-law—Lieutenant Governor Thomas Hutchinson. The rioters stripped the mansion, one of the finest in Boston, of its doors, furniture, paintings, silverware and even the slate from its roof.
Similar riots broke out in seaports from Portsmouth, New Hampshire, to Savannah, Georgia, and forced the resignations of crown-appointed officials. Mobs turned away ships arriving from Great Britain with stamp papers. The Loyall Nine expanded and became known as the Sons of Liberty, which formed local committees of correspondence to keep abreast of protests throughout the colonies. In October, delegates from nine colonies traveled to New York to attend the Stamp Act Congress, which drafted a “Declaration of Rights and Grievances” that affirmed that only colonial assemblies had the constitutional authority to tax the colonists. Merchants in seaports such as Boston, New York and Philadelphia united to boycott British imports, which prodded British merchants to lobby for the Stamp Act’s repeal.
The intimidation campaigns and boycotts worked. When November 1 arrived, the mass resignations of the stamp distributors impeded the administration of the tax. In many parts of the colonies, printers proceeded with business as usual. When it proved impossible to implement the Stamp Act, Parliament repealed it almost a year to the day after it had approved it. However, it also passed the Declaratory Act to reaffirm its authority to pass any legislation impacting the colonies.
When news of the Stamp Act’s repeal reached Boston in May, the Sons of Liberty returned to the elm tree from which they had dangled Oliver’s likeness, this time to hang celebratory lanterns, not effigies, from its mighty boughs. Every year on August 14, the Sons of Liberty gathered under the shade of the elm, which they christened the “Liberty Tree,” to commemorate the 1765 protest.
The issue of taxation without representation continued to fray the relations between the American colonies and the mother country over the next decade until war broke out in 1775. During that summer, British soldiers and Loyalists under siege in Boston took axes to the Liberty Tree and chopped it into firewood. Although the tree was missing when the patriots returned to Boston after the British evacuation, they still gathered around its stump on August 14, 1776, to commemorate the protest from 11 years earlier that was one of the first rebellious steps on the path to revolution.
The Sons of Liberty also never forgot Andrew Oliver, whose reputation improved little among Boston’s patriots after becoming lieutenant governor in 1770. When Oliver passed away four years later, a Sons of Liberty delegation was at his graveside to give three cheers as his coffin was lowered into the ground.
Sugar Act:-
Sugar Act, also called Plantation Act or Revenue Act, (1764), in U.S. colonial history, British legislation aimed at ending the smuggling trade in sugar and molasses from the French and Dutch West Indies and at providing increased revenues to fund enlarged British Empire responsibilities following the French and Indian War. Actually a reinvigoration of the largely ineffective Molasses Act of 1733, the Sugar Act provided for strong customs enforcement of the duties on refined sugar and molasses imported into the colonies from non-British Caribbean sources.
Protests had been received from America against the enforcement of the Molasses Act, together with a plea that the duty be set at one penny per gallon. Although warnings were issued that the traffic could bear no more than that, the government of Prime Minister George Grenville refused to listen and placed a three-penny duty upon foreign molasses in the act (the preamble of which bluntly declared that its purpose was to raise money for military expenses). The act thus granted a virtual monopoly of the American market to British West Indies sugarcane planters. Early colonial protests at these duties were ended when the tax was lowered two years later.
The protected price of British sugar actually benefited New England distillers, though they did not appreciate it. More objectionable to the colonists were the stricter bonding regulations for shipmasters, whose cargoes were subject to seizure and confiscation by British customs commissioners and who were placed under the authority of the Vice-Admiralty Court in distant Nova Scotia if they violated the trade rules or failed to pay duties.
As a result of sugar Act, the earlier clandestine trade in foreign sugar and, thus, much colonial maritime commerce were severely hampered.
Taxes the 18th century way:-
Today income tax is a ‘direct’ tax paid by almost every working adult in the UK. There are also ‘indirect’ taxes on a wide range of commodities and consumables.
The Land Tax:-
In the 18th century, however, the structure of taxation was quite different. Direct tax was only paid by the owners of land or property according to the size of their landholdings.
This tax – the ‘Land Tax’ – was paid by the more prosperous sections of society, from the wealthiest duke to the owners of business premises such as tradesmen, shopkeepers and innkeepers. The rate of tax was set by Parliament each year in a ‘Land Tax Act’ and was usually between two and four shillings in the pound, based on the value of each individual’s land or property.
An unusual feature of the tax was that it was administered not by government officials, but by unpaid local ‘commissioners’, gentry who were nominated by Parliament and whose names were included in the annual Land Tax Acts. Those who collected the tax were usually local men of modest means, such as farmers or tradesmen.
Indirect tax:-
The commonest indirect taxes paid by most people in the 18th century were excise duties. These were levied by Parliament on basic commodities – household essentials such as salt, candles, leather, beer, soap, and starch.
Duties on ‘luxury’ items, such as wine, silks, gold and silver thread, silver plate, horses, coaches and hats were aimed at wealthier consumers. Parliament raised or lowered duties, as well as adding new items or dropping others, depending on the needs of the time. In practice, however, consumers were largely unaware of these impositions as it was the traders who actually paid.
There were also ‘Assessed Taxes’, of which the best known is the Window Duty. This was first levied by Parliament in 1696 in support of William III’s war with France. House owners paid two shillings on properties with up to ten windows, and four shillings for between 10 and 20 windows. From 1778 the rate was made a variable one depending on the value of the property.
Reference:-
https://worddisk.com/wiki/Customs,_etc._Act_1766/
https://www.investopedia.com/terms/m/mississippicompany.asp#:~:text=The%20Mississippi%20Company%20is%20a,tale%20when%20discussing%20speculative%20bubbles.
https://www.britannica.com/event/Sugar-Act#:~:text=Sugar%20Act%2C%20also%20called%20Plantation,following%20the%20French%20and%20Indian
https://www.ushistory.org/declaration/related/currencyact.html
