How the American Revolution Turned North American Foreign Trade on Its Head
After peace came in 1783, the new republic faced a two-fold economic adjustment: to peacetime from the artificial production and trade patterns during the war, and to a far different trading picture than had existed before the war. The largest change between the two eras of peace was the shift in trading patterns resulting from independence. Most importantly, while Americans were freed from the shackles of British mercantilism and could trade freely with the rest of the world, the United States was now a foreign country that could no longer freely enjoy a market within the British Empire.
While the bulk of America’s trade remained with the British Empire, the pressure of New World opportunities and tightened British restrictions greatly changed the structure of American trade. American exports to Great Britain fell almost in half during the 1780s, the bulk of the drop being in rice and especially in tobacco. Before the war, tobacco was compelled to go to Britain and was re-exported from there by British merchants. Now American tobacco found other markets abroad, especially in France, where tobacco formed 70 percent of the imports from the United States. Part of this shift was impelled by a heavy English tax on foreign tobacco and rice, which lowered the British demand for American staples. Tobacco grew and prospered immediately after the Revolutionary War, particularly in the new frontier areas: Kentucky, Tennessee, and up-country South Carolina and Georgia. Virginia and other southern tobacco-growing states were initially buoyed by the high price of the crop, but by 1785 the great postwar tobacco boom was over and tobacco prices began a sharp fall.
The American naval stores—largely pitch and tar—and indigo industries had been artificially stimulated in the colonial period by British bounties; now, shorn of these subsidies, the indigo and the naval stores industries—concentrated particularly in North Carolina—declined, and their shipments were made to the northern states rather than to Great Britain. The decline of indigo, however, was offset by the rapid growth of a new southern crop: cotton, particularly in backcountry Georgia and South Carolina. Also expanding in the South was the production of grain, previously confined largely to the middle provinces. Corn, wheat, and flour production expanded greatly in the South, and Alexandria became a leading center for the export of grain.
With American-built ships now excluded from British ports, the New England shipbuilding indu
Article from Mises Wire