Credit Nation

Property Laws and Institutions in Early America

Claire Priest

• Editorial: Princeton University Press
• Año: 2021
• ISBN:
  9780691185651
• Categoría: History
• Categoría: Early American History

How American colonists laid the foundations of American capitalism with an economy built on credit Even before the United States became a country, laws prioritizing access to credit set colonial America apart from the rest of the world. Credit Nation examines how the drive to expand credit shaped property laws and legal institutions in the colonial and founding eras of the republic.In this major new history of early America, Claire Priest describes how the British Parliament departed from the customary ways that English law protected land and inheritance, enacting laws for the colonies that privileged creditors by defining land and slaves as commodities available to satisfy debts. Colonial governments, in turn, created local legal institutions that enabled people to further leverage their assets to obtain credit. Priest shows how loans backed with slaves as property fueled slavery from the colonial era through the Civil War, and that increased access to credit was key to the explosive growth of capitalism in nineteenth-century America. Credit Nation presents a new vision of American economic history, one where credit markets and liquidity were prioritized from the outset, where property rights and slaves became commodities for creditors' claims, and where legal institutions played a critical role in the Stamp Act crisis and other political episodes of the founding period.

PART I

Foundations of Property and Credit

1

Colonial Land Distribution and the Structure of British Colonial Commerce

When Thomas Paine remarked that “[i]n America, almost every farmer lives on his own lands,” and when nineteenth-century legal scholars described land ownership as the linchpin of the republican society of the United States, the question arises: what was the source of the relatively greater and more equal land ownership among free Whites in relation to other societies in the eighteenth and nineteenth centuries? This chapter uses a broad brush to describe land distribution in the British American colonies. British policy in the Americas was notable for its goal of putting land into cultivation and for offering small parcels of land to immigrants to achieve the goal. The chapter starts by describing the structure of British colonial government. It goes on to describe the role of the colonies in the broader conception of Great Britain’s commerce, and the legal regulation of colonial trade and credit relationships.

Property as Prerogative

American colonial history involves an interplay between the dictates of top-down colonial rule and the on-the-ground, local operation of colonial institutions. By what source did the colonial officials get their power? The British Crown formed the colonies in America by means of charters that conveyed land and that granted lawmaking authority. Some colonies began as incorporated trading companies funded by investors, such as the early Virginia Company, the Plymouth Company of 1609, and the Massachusetts Bay Company of 1629.¹ Other colonies were proprietorships, which were grants from the Crown to an individual or a group of individuals, such as the charters to William Penn and Lord Baltimore, creating Pennsylvania and Maryland.² A third type of colony, the royal or provincial colonies, were directly ruled by the Crown.³

In each case, a governor or proprietor appointed by the King served as the top executive official.⁴ An appointed council (an advisory board or cabinet) typically consisting of twelve “councilors” or “assistants” as well as other lower-level officials, advised and assisted the colonial governors and their lieutenant governors.⁵ Assemblies, constituted by elected representatives, quickly assumed the role of enacting laws in association with the governors’ offices. In each of the colonies, the originating documents (charters, proprietorships) granted colonial governments lawmaking powers as long as the laws were not “repugnant” to the laws of England.⁶ The question whether colonial laws were “repugnant” at times worked its way from the colonial legislatures by appeal to the English Privy Council, which had judicial authority to review colonial laws.⁷

The British also exercised oversight of colonial lawmaking through the Board of Trade (officially, the Lords Commissioners of Trade and Plantations), an English governmental body formed to supervise colonial matters. The Board of Trade typically had the power to disallow colonial laws that were in conflict with English trade policies, to nominate governors and other appointed officials, and to advise Parliament on laws to enact for the colonies. Often the Board of Trade would issue its instructions, or guidance, to the colonial governors, who would then appeal to the colonial assembly to enact a law consistent with the Board of Trade’s request. The Board of Trade might require that a colony’s laws include suspending clauses: clauses that suspended the operation of an act until it received approval and confirmation in England, often by the Board of Trade.

Yet, ultimately the Board of Trade’s powers were merely advisory and its instructions were routinely ignored. As the historian Edmund S. Morgan describes, “The Board of Trade told the Secretary (of State) what to do; he told the royal governors; the governors told the colonists; and the colonists did what they pleased.”⁸ The assemblies controlled appropriations, including for the governors’ salaries. Colonial governors were often in a bind: they were pressured to comply with instructions coming from Britain, but knew the assemblies had the power of appropriations and could hold back their pay. This dialog between the colonial assemblies and crown-appointed government officials was a persistent feature of colonial governance.

LAND DISTRIBUTION IN BRITISH AMERICA: AN EMPHASIS ON CULTIVATION

Under the constitution of the English monarchy, land policy was a central prerogative of the King and his deputies, the colonial governors. Policies relating to land distribution were therefore determined at the highest levels of government, by Parliament and the Board of Trade, and implemented by the proprietors’ and governors’ offices of the various colonies. From the perspective of authorities in London, the colonies’ role was to generate revenue for the Crown. Toward that end, British colonial land distribution policies encouraged immigration and settlement in North America by people who would actually inhabit the land and work the soil.⁹ Rather than granting land in vast parcels to a small group of elites, which was more typical in Spanish American colonies, in British America, the policy was to grant land directly to cultivators in small quantities.

Labor, and therefore immigration, was desperately needed to achieve the crown goal of land cultivation. In several colonies (Virginia, New York, Maryland, Pennsylvania, Delaware, New Jersey, the Carolinas, and Georgia), the British initially encouraged immigration by granting a “headright,” a free fifty-acre parcel of land per laborer. Robert Beverley’s 1705 account of Virginia defined a headright as “the Title any one hath by the Royal Charter, to fifty Acres of land, in Consideration of his Personal Transportation into that Country, to settle and remain there.”¹⁰ A Virginia law of 1705 clarified that “all and every person, male or female” coming to the colony “has a right to fifty acres of land.”¹¹ The policy encouraged individuals to import laborers, such as slaves, indentured servants, wives, or children, because a petitioner would obtain fifty additional acres for each laborer the petitioner could prove would work the land. The servants had a right to their fifty acres “after he or she becomes free, or time of servitude is expired.” According to the contemporary understanding, this policy promoted slavery because slaves, unlike servants paying off their transport, would have no future claims to land of their own from their employer. The most one person could obtain was 4,000 acres per patent.¹² By the time Beverley’s book was published, however, land was so inexpensive that it was typically purchased outside of the headright system from the crown authorities directly or from larger landowners.¹³

Many colonial titles were founded in conveyances from Native Americans. To give one of many examples, according to the historian Edmund S. Morgan, Roger Williams, founder of Rhode Island, “warned the settlers that they could not really acquire land in Massachusetts by a grant from an English king: ‘they could have no title … except they compounded with the natives.’ ”¹⁴ There is much more work to be done by historians on how land was taken and purchased from Native Americans and distributed to immigrants. It is beyond the scope of this book to address land acquisition from Native Americans, which is worthy of its own book. The legal historian Stuart Banner has documented the pervasiveness of colonial purchases of land from Native Americans. Banner revealed that although seventeenth-century legal theories of discovery and conquest “assumed … that a patent from the Crown was all that was necessary for an English settler to claim property in North America,” experience ran counter to these conceptions. Banner emphasizes that “[p]urchasing land from the Indians became common almost from the beginning of English settlement,” and describes the extent of the practice in Massachusetts, Virginia, Carolina, Pennsylvania, New York, and other colonies.¹⁵ The historian Colin G. Calloway has similarly described land sales as elements of the extensive body of treaties executed between Native American tribes and government officials.¹⁶ Both Banner and Calloway describe in detail the questionable features of the purchases, ranging from the fact that the Native Americans and colonists often had differing conceptions of the substance of the transactions, to inadequate pricing, to questionable authority in the party selling the land, in addition to more blatant fraudulent acts on the part of the settlers. Nonetheless, the colonists were eager to prove that they had good title and would therefore customarily trace the root of title to a formal purchase from Native Americans.

After the acquisition of land, often with both the force of a royal grant and an explicit purchase from Native Americans, the question became how to distribute it. With regard to official British policy, the basic principle underlying the headright system and similar government programs was to allocate land according to the landowner’s ability to improve it. Indeed, headrights and many other colonial land titles were made contingent upon cultivation. According to Beverley, Virginia’s headright policy gave landowners three years “to clear, plant, and tend an Acre of Ground with Corn, or to build an House, and keep a stock of Cattle, for one whole year together upon the Land; after which ’tis presum’d they will continue the Settlement.” Land that was not cultivated in the three-year time frame, according to Beverley, “is said to be Lapsed, and any Man is at liberty to obtain a new Patent of it in his own Name” by petitioning the General Court.¹⁷

The policy of granting land to petitioners in small parcels according to their ability to cultivate was a pillar of British colonial regulation that was surprisingly consistent throughout the colonial era. For example, as late as the 1760s, the English Board of Trade lamented that some of the colonies were “granting excessive quantities of land to particular persons who have never cultivated or settled it and have thereby prevented others more industrious from improving the same.” The colonies were to “take especial care that in all grants … the quantity be in proportion to their ability to cultivate.” The instruction stated that no more than one hundred acres be given to a master or mistress of a family for himself or herself, and fifty acres for every white or black man, woman, or child of which such person’s family shall consist.” However, those that could prove they were in a “condition and intention to cultivate” could obtain a greater amount of acreage.¹⁸ Requiring cultivation limited the size of the parcels granted to individuals and spread titles widely across the population.

In contrast to the headright system, high-level officials were recruited into colonial administration with the promise of amassing large landed estates. Land was the principal asset that could be doled out to incentivize crown officials to immigrate to the colonies. It was universally accepted, for example, that colonial administrators such as the governor and his appointed council would receive large grants of land and be in a position to work through local channels to augment their land holdings.¹⁹ There was often little or haphazard oversight regarding how that land would be used or subdivided in the future. Throughout the colonial era, a segment of the elites connected to government was able to amass large land parcels.

These higher-level officials, proprietors, royal governors, and council members also received patronage-related benefits from controlling land distribution, managing records of property titles, and appointing judges and controlling courts and other institutions. When dealing with the representative assemblies, as the historian Marshall Harris has noted, they “maintained with few exceptions exclusive executive prerogatives, appointed judicial officers, and convened or dismissed the assemblies at will.”²⁰ A 1754 pamphlet supporting the governors’ land-granting prerogative in Virginia, expressed the power clearly:

[T]he King has an absolute property in all the Lands in this Colony, not already granted out; … He may dispose of them upon what Terms he pleases; that the Governor, as his Substitute, may, with his Majesty’s leave, make what Reservations he shall judge convenient; the Governor may take any fee with his Majesty’s leave.²¹

George Clarke, who administered grants of property in New York as a member of the council, wrote to England in 1731 to alert others that petitions were arriving “thick for lands if they should all be granted what will there be for the new Governour to Grant; this I thought fit to hint to you in confidence, it being in your power singly to prevent their going too far.”²² Similarly, the appointment of lower executive o...