"Capital and Credit with Approved Security": Financial Markets in Montserrat and South Carolina, 1748-1775 David Hancock Departmentof History Harvard University In the lastthree decades, economic, business, and socialhistorians havebeen striving to understandwhether America was economically independentfrom Britain, particularly whether it wasable to revoltby 1776because it wasno longerinextricably tied to the mothercountry, by bonds of indebtedness,for the satisfactionof its agricultural, commercial,andmanufactured needs [McCusker and Menard, 1986]1. Scholarshave described and explained America's condition in a variety of ways, the most intriguingof which are thosethat focuson the developmentof colonies,the emergence of discreteindependent regions within colonies,and the extentto whichthe partsof the colonieswere boundtogether [Rothenberg, 1985; Brooke, 1989; Beeman, 1984]. Capitalaccumulation was critical to thiscolonial evolution, and specificinformation on the sourcesand destinations of colonialcapital helpsus form tentative conclusions about the financial independence of eighteenth-centuryAmerica. For no plantationeconomy is there a detailedhistorical study of the rolethat the flow of capitaland credit playedin itsdevelopment. There is noexamination of thegeographical sourcesand destinationsof capitaland credit,the linkagesbetween capitaland countryside,and the complicated,interwoven, financial relationshipsthat held a colonytogether and to its mothercountry. Particularlywell suitedto suchan analysisare the situationsof two of theseeconomies -- thoseof an older and stagnantMontserrat, and a IThis articlehas been improved with thecomments of JacobPrice, Russell Mcnard, John McCusker,Larry Neal, andthe participantsin the BusinessHistory Conference held in Williamsburg,Virginia, in March 1994. BUSINESS AND ECONOMIC HISTORY, Volume 23, no. 2 Winter 1994. Copyright¸1994 by theBusiness History Conference. ISSN 0849-6825. David Hancock / 62 youngerand dynamicSouth Carolina in the period1748-1775. I am examiningMontserrat and South Carolina as part of a largerproject that studiesthe accumulationand outlay of capitaland the managementof laborin SouthCarolina, Georgia, Jamaica, and Montserrat in the period 1748-1775.In thispaper, I attemptto painta preliminarypicture of the structureof their loanmarkets and the extentto whichfinancing was controlledby the center. The purposeof this essayis to open a discussionof the connectionsamong financing, indebtedness, economic growth, and independenceby providingnew empiricalevidence. This evidence comesin theform of publicly-recordednotes, bonds, and mortgages in the two colonies. While some similarities existed in the conduct and volumeof financing,marked differences occurred in the numberand sizeof loans.Most notable of the differenceswas the degree to which the sourceof the colony'sfinancing was a metropolitancenter: in the Caribbean,financing was closelytied to the Londonmarket; on the mainland,not only was financingnot tied to London,it was in many instancesnot evenfunnelled through the capitalof the colony. These loansshow that there were alternative financing systems in plantation America,and that lending patterns responded broadly to the needsand circumstancesof individual economies and populations. The Montserrat andCarolina loan markets provide suggestive and tantalizing glimpses of varyingdegrees of economicindependence and offer the possibility thatpolitical independence flowed in partfrom financial separation and decentralization. Montserrat and South Carolina First settledin 1632, Montserratis a tiny island,less than 40 square-milesin areasituated at thecrossroads of the eastern Caribbean, southwestof Antigua.Sugar was its principal crop. By thethird quarter of the eighteenthcentury, several hundred extremely fertile and well- wateredplantations of middlingsize were owned or managedby a small numberof landholders(142 Irish, 121 English,and 17 Scottish)and evenly distributedthroughout the island; the island was "wholly cultivated,except what is barren& ... reservedfor pasture[Public Record Office CO 152/25/149-62]. Montserrathad no hinterland Capitaland Credit with ApprovedSecurity / 63 awaitingdevelopment. The productionof sugarwas steady but onthe decline.In the early1770s, its planterswere exporting approximately 2,000 tonsof sugar(96% of whichwent to Britain)and 1,000tons of rum (only 35% of whichwent to Britain)-- roughlytwo-thirds of the productionlevels which prevailed only thirty years before on the island anda smallamount when compared to contemporarylevels attained in the neighboringLeeward Islands. In the secondhalf of the century, Montserrat'swhite population was also on thewane, although its slave forcegrew by severalthousand. At its height,the island'spopulation included1,300 whites, 260 freeblacks, and 10,000 slaves. Occupations werenot varied: contemporary loan records list onlymasons, vintners, surgeons,attorneys, and merchants, apart from planters and government officials.The capital,the port of Plymouth,possessed two mainstreets, roughly150 inhabitants,and nearly 100 houses,shops, and wharves. Tax rolls specificallylist only two occupations-- barbersand blacksmiths-- at workin thetown. The governmentheld its "important deliberationsin two roomsin whicha Devonshirefarmer would scruple to hoardhis apples"[Coleridge, 1826, p. 182]. In short,Montserrat's economyand society were small and stagnating. 2 Relativeto that of Montserrat,the storyof the SouthCarolina economyis one of growth,rather than stagnation. Permanently establishedin 1670, South Carolina by the third quarter of the eighteenthcentury was extensive(roughly 31,000 square-miles)and expansive,possessing a rapidly unrolling frontier and a largepopulation that grew from 23,000 to 64,000 whitesbetween 1748 and 1775 and from37,000 to 86,000blacks. In theseyears, the colony exported more produceper capita than any other colony, and it figuredas the center of the BritishAmerican rice, indigo,and deerskintrades. Much of the demographicand commercial rise has been attributed to thedynamism of its capital,the port of Charleston.The capitalwas a substantial 2Thesize of itspopulation and produce relegated it to minorimportance in the empire, and in the mindsof subsequenthistorians of the Caribbean.Only a dozenworks discuss the island,and thesefocus largely on its seventeenth-centurypopulation, its role in military conflict,and its geography and architecture [Gwynn, 1929; Berleant-Schiiler, 1989; Crouse, 1943;Puisipher, 1986; Goodwin, 1987]. No onediscusses the rolethat the flow of capital andcredit played in the developmentof its economy. David Hancock / 64 communityat theoutbreak of theRevolution: the 4th largestcity on the Americanmainland, home to approximately12,000 inhabitants and over 200 merchantsand 100 craftsmen, as well asthe colony's central courts and governmentaloffices [Price, 1974; Calhoun et al., 1985]. South Carolinawas occupationallydiverse: the list of lendersin its loan recordsnotes 60 differentoccupations that were not directlytied to plantationagriculture; the record of borrowerslists 97 different occupationsnot specifically tied to planting,most but not all livingin the vicinity of Charleston: auctioneers, breeches-makers, cabinetmakers,clockmakers, dancing and fencing masters, goldsmiths, hatters,jewelers, perukemakers, printers, seedsmen, staymakers, and upholsterers,to nameonly a few. Economically,Charleston had a lock on the rice, indigo,and deerskinexport trades of North America and nearlyexclusive control over the region's slave import trade; it wasalso an importantnaval provisioningcenter. Unlike the plantersof Montserratwho, whenthey were not absentee,lived andworked on theirplantations year-round, the planters of SouthCarolina frequently lived in the capitalfor at leasta largeportion of the year,since the neighborhoodsof their plantationswere plaguedwith an unhealthy climateand filled with a largepopulation of blackswhom they feared, andthe capital provided amenities unobtainable in thecounties. Unlike Plymouth,Charleston was very much a city.3 3Whatevertheir interests, the historians of thecolony have tended to focuson the capital. Somediscuss the economy broadly, but necessarily focus on the capital: Verner Crane and RobertMeriwether, for instance,baldly statethe primacyof the city [Crane, 1929; Meriwether,1940]. Othersmake an attemptto examinethe entire economy, but end up focusingon the capital: Gayledetails Charleston's exports, Clowse analyzes colonial industriesgrowing up around the city, and Sirroans discusses the economic bases of colonial politicaldisputes which were resolved in Charleston[Gayle, 1940; Clowse, 1971; Sirroans, 1966]. In doingso, they give the countryside short shdff. More attention to thecountryside is given in Sharrer'sstudy of indigoculture, Ackerman's study of land grants,and Haywood'sstudy of agriculturalbounties [Sharrer, 1971; Ackerman, 1977; Haywood, 1959],but these works are narrowly limited in scope.Even the illuminating and relevant analysisof Leila Sellersis confined,her focuson Charlestonand her exclusiveuse of newspapers,magazines, andmerchants' papers missing the colony-wide context in whichthe importanceof Charlestonwas situated [Sellers, 1934]. Capitaland Credit with ApprovedSecurity / 65 Capital and Credit To understandthe differences in thetwo markets,I havecompiled two exhaustivelists of notes,bonds, and mortgages for theperiod 1748- 1775 -- one for Montserrat,and one for SouthCarolina -- from the Deed booksof Montserrat,the Mortgage