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The Restoration and the Navigation Acts

Mises Daily: Tuesday, October 23, 2012 by

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[This article is excerpted from Conceived in Liberty, volume 1, chapter 37, "The Restoration Crisis in New England." An MP3 audio file of this article, narrated by Floy Lilley, is available for download.]

One of the most far-reaching actions of the first years of the Restoration was a series of Navigation Acts, by which England imposed mercantilist restrictions on its empire. Attempting to eliminate the more efficient Dutch shipping from the American trade for the benefit of the London merchants, the Puritan Parliament in 1650–51 had prohibited foreign vessels from trading with America; goods to and from the colonies could only be carried on English or colonial ships, or on ships of the home country of growth or manufacture.

Fish imports and exports from England were limited to English ships alone. As part of the Restoration compromise, Charles II continued to gratify the London merchants and passed a series of Navigation Acts in 1660–63. Part of the commissioners' instructions, indeed, was to see to the enforcement of these acts.

The new Navigation Acts drastically restricted and monopolized American colonial trade, to the detriment of the colonies.

The Navigation Act of 1660–61

  1. restricted all colonial trade to "English" ships (English and American), that is, ships built, owned, and manned by Englishmen;
  2. excluded all foreign merchants from American trade; and
  3. required that certain enumerated colonial articles be exported only to England and English colonies.

We have already seen the havoc caused in the Southern colonies by tobacco being made one of the enumerated goods. Among the others were sugar, cotton wool, and various dyes. The second important Navigation Act was the Staple Act of 1663, which provided that all goods exported from Europe to America must first land in England. Only a few colonial imports were exempt from this prohibition: salt, servants, various provisions from Scotland, and wine from Madeira and the Azores.

The Staple Act meant that English ships and merchants would monopolize exports to America, while English manufacturers selling to America would be privileged by extra taxes being levied at English ports on foreign exports to the colonies. The enumerated-articles provision ensured that these staples would be exported only by English merchants and in English ships. The English seizure of New Netherland was partly designed to complement the Navigation Act by crushing the Dutch freight trade with the New World.

The immediate impact of these acts on New England merchants and the New England economy was not great. New England imports were largely manufactured goods from England anyway, and thus were not greatly affected. And the restrictions — such as the enumerated articles and the prohibition of direct imports of wines from the Canary Islands — were simply ignored. The Massachusetts merchants blithely continued to ship enumerated articles direct to European ports — for example, tobacco to Holland — and to import goods direct from Europe. The New England merchants were happily able to save the South from immediate devastation at the hands of the Navigation Acts by first importing Southern tobacco to Boston and then exporting it direct to foreign countries.

In this way, the South, for a time, was enabled to avoid the drastic burden of the Navigation Acts. The distracted English government did not attempt to enforce any of these restrictions until the Anglo-Dutch wars were over in the mid-1670s. The position of the merchants was backed fully by the Massachusetts General Court, which declared that it simply was not subject to "the laws of England any more than we live in England." On this issue the Boston merchants and the Puritan theocracy were allied: the former to prevent British restrictions on their trade, the latter to keep England from interfering with the Puritan regime in Massachusetts.

Indeed, the Massachusetts merchants, able to avoid the restrictions of the Navigation Acts, were also able to take advantage of the provisions driving out their efficient Dutch competitors. The London merchants, having used governmental power to crush Dutch competitors, suddenly found to their dismay the Massachusetts merchants outcompeting them in marketing colonial products in Europe, in shipping, and in supplying the colonies with imported manufactures — including European products competing with English goods. The king's revenue was of course diminished by direct trade with Europe, because the taxes levied at English ports were avoided.

The most flourishing trade in New England during the Dutch wars of the 1660s and 1670s was the essentially uneconomic supplying of war contracts to provision the English attempts at conquest. Massachusetts' major provisions were naval stores, especially masts, channeled through Portsmouth, New Hampshire. This became the biggest business seen in New England up to that time. Once again, London merchants were the key entrepreneurs in this trade, using their influence to obtain government war contracts.

The most favored Massachusetts merchants were those with connections to the London contractors. The leading New England mast supplier was Peter Lidget, but the Massachusetts mast industry was able to flourish largely because it was highly competitive and not centrally organized.

In 1670, for example, Richard Wharton was able to obtain for his company a ten-year monopoly of the supply of naval stores (including masts) in Massachusetts and Plymouth, but the endeavor quickly failed because the grant of privilege was impossible to enforce.

Once again the market process was able to dissolve even a monopoly created by government privilege.