Part 2 (2/2)
The gradual destruction of the fertility of the soil in the Tidewater country and the expansion of the tobacco industry into the back country made direct consignment less feasible. This, and the various other causes of dissatisfaction with the consignment system, led to the system of outright purchase in the colony. This new procedure was carried on largely by the outport merchants, especially the Scottish, who were doing quite a bit of illicit trading before the Union of 1707.
Since the Tidewater business was controlled largely by the London merchants, the new Scottish traders penetrated the interior and established local trading posts or stores at convenient locations, many of which became the nuclei of towns. After the Union their share of the trade increased very rapidly, and at the beginning of hostilities in 1775 the Scots were purchasing almost one-half of all the tobacco brought to Great Britain. On the eve of the Revolution only about one-fourth of the Virginia tobacco was being s.h.i.+pped on consignment.
The factorage system appears to have been introduced in Virginia around 1625, and was actually a part of the consignment system. A factor was one who resided in the colony and served as a representative and the repository of the English merchant. With the establishment of a repository in the colony, trade became more regular, debtors less delinquent, and the problem of securing transportation for exports or imports was mitigated. Some of the factors were Englishmen sent over by the English firms, others were colonial merchants or planters who performed for the foreign firms on a commission basis. As the tobacco industry expanded beyond the limits of the navigable waters, it became the custom of the planters located near such streams to act as factors for their neighbors in the interior. By 1775 the factorage system had developed to the extent that one planter found four firms at Colchester, eleven at Dumfries, and twenty at Alexandria which would buy wheat, tobacco, and flour in exchange for British goods and northern manufactures.
The rise of a cla.s.s of factors in Virginia, aided by the Scottish merchants, made it possible for the planters to break away from the London commercial agents. The Revolution cut the connection between England and the Virginia planters, but the factorage system was not destroyed. The merchants and businessmen in the former colonies simply replaced the English factors. Soon after the cessation of hostilities, England had reestablished her commercial predominance owing to the superior facilities and experience of British merchants in granting long term credits, and perhaps the preference of Americans for British goods. The British were again willing to extend to the planters the accustomed long term credits, but they were careful to grant it only to merchants of high standing.
Lax inspecting caused the buyers to lose faith in the inspectors'
reputation and guarantee. As early as 1759 tobacco was being sold by displaying samples. It was quite natural then for the buyers to begin visiting the warehouses as the tobacco was being inspected, to enable them to purchase the better hogsheads directly from the original owner.
But it seems that even as late as 1800 such practices were only occasional. While lax inspections caused a few buyers to visit the warehouses, the presence of these buyers led many of the planters to bring their tobacco to the warehouses most frequented by the buyers. As these buyers paid higher prices for the better tobacco, the ultimate result was the development of market towns and the disappearance of the tobacco note. Within a decade after the turn of the nineteenth century Richmond, Manchester, Petersburg, and Lynchburg had become major market towns.
PRODUCTION, TREND OF PRICES, AND EXPORTS
When tobacco was first planted in Jamestown, Spanish tobacco was selling for eighteen s.h.i.+llings per pound. Virginia tobacco was inferior in quality, but it was a.s.sessed in England at ten s.h.i.+llings per pound.
On the basis of these high prices the Virginia Company of London agreed to allow the Virginia planters three s.h.i.+llings per pound, in trade at the magazine in Jamestown, for the best grades.
Even though it seemed that the London Company was getting the lions share, these prices proved to be very profitable for the colonists and the infant tobacco industry increased very rapidly. During the period 1615-1622 tobacco exports increased from 2,300 to 60,000 pounds, and by 1630 the volume had risen to 1,500,000. Meanwhile prices had fallen as rapidly as production and exports had increased. In 1625 tobacco was selling for about two s.h.i.+llings per pound, but in 1630 merchants were reported to be buying it for less than one penny per pound.
It was quite obvious that the fall in prices was due to overproduction.
The English first attempted to alleviate the condition in 1619 through monopolistic control. Negotiations were conducted with the Virginia Company of London, Henry Somerscales, and Ditchfield in 1625. All were opposed by the colony, except that of the London Company, because the colonists thought that the various proposals would benefit the King and a small group of court favorites at the expense of the planters.
The next move was made by the colony. In an attempt to restrict the production of tobacco, Governor Wyatt ordered that production be limited to 1,000 plants per person in each family in 1621. These same instructions provided that only nine leaves were to be harvested from each plant. Similar laws were enacted in 1622 and again in 1629, but these laws were probably not strictly enforced as prices failed to improve. Undaunted by failure in its first attempt to cope with the situation, the General a.s.sembly made several attempts at price fixing.
In 1632 tobacco prices in the colony were fixed at six pence per pound in exchange for English goods; in 1633 it was increased to nine pence.
The 1639 crop was so large that the legislature ordered all of the bad and half of the good tobacco destroyed; merchants were required to accept fifty pounds of tobacco per 100 of indebtedness. English goods were to be exchanged for tobacco at a minimum rate of three pence per pound. The minimum rate of the 1640 crop was fixed at twelve pence.
Such legislation failed to meet with the approval of the home government and in 1641 tobacco averaged about two pence per pound.
Following the depression of 1639 tobacco prices failed to rise above three pence, and probably never averaged more than two pence per pound for the next sixty years. To prevent the complete ruination of the tobacco planters, the General a.s.sembly established fixed rates for tobacco in the payment of certain fees. In 1645 these fees were payable in tobacco rated at one and one-half pence per pound; ten years later the rate had increased only a half pence. The war with Holland, restrictions on the Dutch trade, and the plague in England brought forth another serious depression in the colonies in the 1660's. In 1665 the tobacco fleet did not go to the colonies on account of the plague in London. Tobacco prices dropped to one pence per pound.
[Ill.u.s.tration: METHODS OF TRANSPORTING TOBACCO TO MARKET
a, Upon canoes. b, By upland boats. c, By wagons. d, Rolling the hogshead.]
[Ill.u.s.tration: PLANTATION TOBACCO HOUSES AND PUBLIC WAREHOUSES
a, The common tobacco house. b, Tobacco hanging on a scaffold. c, The operation of prizing. d, Inside of a tobacco house, showing the tobacco hanging to cure. e, An outside view of a public warehouse. f, showing the process of inspection.]
This new depression stirred the Virginia legislature. In 1662 the a.s.sembly prohibited the planting of tobacco after the last of June, provided that Maryland would do the same. Maryland rejected the idea.
This would have eliminated a great deal of inferior tobacco, for much of the tobacco planted in July seldom fully matures before it must be harvested to save it from the frost. The planters in both colonies continued to produce excessive crops and the depression became more acute. Led by Virginia, the North Carolina and Maryland legislatures prohibited the cultivation of tobacco in 1666. Lord Baltimore again refused to permit a cessation in Maryland, consequently Virginia and North Carolina repealed their legislation. Instead of cessation the Virginia crop was so large in 1666 that 100 vessels were not enough to export the crop. The possibility of another enormous crop in 1667 was eliminated by a severe storm that destroyed two-thirds of the crop.
However, the glutted market resulting from the large crop grown in 1666 caused prices to fall to a half pence per pound.
In the 1670's prices climbed to one and one-half pence, but a tremendous crop in 1680 glutted the market again. The crop was said to have been so large that it would have supplied the demand for the next two years, even if none were produced in 1681. The General a.s.sembly once again came to the aid of the planter by rating tobacco in payment of debts at one and one-fifth pence in 1682, and two pence in payment of quit-rents in 1683. Once again Virginia renewed attempts to bring about a cessation of production, but the English government refused to permit such action claiming that it would stimulate foreign production and thereby reduce the revenue to the Crown. In April, 1682 the General a.s.sembly convened but was prorogued by Lieutenant Governor Sir Henry Chicheley a week later, when it was apparent that the members were determined to discuss nothing but the cessation of tobacco. A week later a series of plant cuttings broke out in Gloucester County followed by others in New Kent and Middles.e.x counties. Approximately 10,000 hogsheads of tobacco were destroyed before these riots were put down by the militia. Probably as a result of this destructive act, prices rose to two and a half pence in 1685, but a b.u.mper crop of over 18,000,000 pounds in 1688, the largest ever produced to that date, caused prices to drop to one penny per pound in 1690.
Throughout most of the seventeenth century the tobacco planters were plagued with the problem of overproduction and low prices. To add to their woes the entire eighteenth century was one of periodic wars either in Europe or in America, or both. King William's War ended in 1697 and the following year tobacco prices soared to twenty s.h.i.+llings per hundred pounds and prices remained good for the next few years. The outbreak of Queen Anne's War and another 18,000,000 pound crop ushered in another depression. Several thousand hogsheads of tobacco s.h.i.+pped on consignment in 1704 brought no return at all, and the next year many of the planters sold their tobacco for one-fourth of a penny per pound.
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