WEBVTT NOTE 17. Virginia Tobacco 1 00:00:00.000 --> 00:00:05.000 Volume 2, Chapter 17, Virginia Tobacco 2 00:00:05.000 --> 00:00:13.000 The tobacco planters of Virginia continued, in the 18th century, to get into periods of economic difficulty, 3 00:00:13.000 --> 00:00:15.000 and the secular trend was ominous. 4 00:00:15.000 --> 00:00:25.000 The price that planters had to pay for slaves rose with the increased demand for slaves on South Carolina rice and indigo plantations. 5 00:00:25.000 --> 00:00:38.000 Thus, the common price of slaves rose from £30 per head in 1741 to £46 in 1750 to £58 in the 1770s. 6 00:00:38.000 --> 00:00:44.000 Soil exhaustion also lowered the productivity of the tobacco plantations. 7 00:00:44.000 --> 00:00:53.000 The tobacco planters continued to try to escape their dwindling fortunes on the market by seeking special privilege. 8 00:00:53.000 --> 00:01:02.040 A favorite device was a compulsory cartel imposed by the state to restrict tobacco production. 9 00:01:02.040 --> 00:01:05.680 Production quotas were then imposed on each plantation. 10 00:01:05.680 --> 00:01:11.400 But these restrictions did not have the desired effect of raising the price of a commodity 11 00:01:11.400 --> 00:01:15.180 that was grown on an international market. 12 00:01:15.180 --> 00:01:21.400 And curtailment in one area provided a lively inducement for other farmers to fill the gap 13 00:01:21.400 --> 00:01:27.320 by Increasing Their Output. Moreover, the cartel schemes worked the greatest hardship 14 00:01:27.320 --> 00:01:34.840 on the small planter. Tobacco was the major monetary medium in Virginia and Maryland, and 15 00:01:34.840 --> 00:01:41.760 the small planter was forced to pay fixed sums in tobacco for governmental fees, taxes 16 00:01:41.760 --> 00:01:47.560 and quit-rents. Hence, forced restriction on the amount of tobacco grown was a great 17 00:01:47.560 --> 00:01:53.960 hardship on the small planter, whose fixed fees loomed larger in proportion to his total 18 00:01:53.960 --> 00:02:00.960 output. Thus, a Virginia-Maryland tobacco cartel scheme in the late 1720s fell through 19 00:02:01.760 --> 00:02:08.320 because the small farmers of Maryland would not comply unless Lord Baltimore reduced the 20 00:02:08.320 --> 00:02:14.440 quantity of tobacco levied for quit rents. When Lord Baltimore refused to agree, the 21 00:02:14.440 --> 00:02:30.440 The Virginia planters also tried to escape their difficulties by exploiting the British merchant creditors, that is, by inducing the government to interfere in the process of collecting contracted debts. 22 00:02:30.440 --> 00:02:37.440 In 1708, Maryland passed a law decreeing that debtors might escape a debt by declaring bankruptcy, 23 00:02:37.440 --> 00:02:45.440 but the Crown disallowed the law on the cogent ground that the planters might easily defraud their creditors. 24 00:02:45.440 --> 00:02:53.440 Virginia, in 1749, allowed planters to pay debts in depreciated Virginia paper currency. 25 00:02:53.440 --> 00:03:00.440 All such laws were also disallowed by the Crown as invasion of the creditor's property. 26 00:03:01.740 --> 00:03:08.220 And in 1732 Parliament specified that the lands and slaves of the planters were liable 27 00:03:08.220 --> 00:03:15.080 for their debts. The tobacco merchants have had a bad historical press. The general assumption 28 00:03:15.080 --> 00:03:21.680 has been that the merchants purchasing tobacco exploited the tobacco planters, doing so both 29 00:03:21.680 --> 00:03:29.360 Both as creditors and as payers of supposedly excessively low prices, but middlemen no more 30 00:03:29.360 --> 00:03:36.560 exploit their customers or suppliers than does any other group on the free market. 31 00:03:36.560 --> 00:03:42.640 All prices, whether selling or purchasing, are set by supply and demand in the ultimate 32 00:03:42.640 --> 00:03:45.440 service of consumers. 33 00:03:45.440 --> 00:03:48.720 Neither is anyone forced to go into debt. 34 00:03:48.720 --> 00:03:55.240 In the market, the creditor supplies a valuable service for which he is paid by the debtor. 35 00:03:55.240 --> 00:04:01.120 There were essentially two methods by which planters sold their tobacco in the 18th century. 36 00:04:01.120 --> 00:04:07.080 The large coastal planters sold to London merchants on consignment, shipping the tobacco 37 00:04:07.080 --> 00:04:10.360 from their wharves for sale abroad. 38 00:04:10.360 --> 00:04:16.780 Serving as agents of the planters, the merchants were obviously in no position to do any exploiting. 39 00:04:16.780 --> 00:04:22.860 The small upland planters, on the other hand, not being in a position to finance or take 40 00:04:22.860 --> 00:04:30.180 risks for the longer period, sold their tobacco outright to Scottish merchants, who established 41 00:04:30.180 --> 00:04:36.740 stores in Virginia to buy the product and then resold it at Glasgow. 42 00:04:36.740 --> 00:04:42.620 The Scottish merchants did try to form agreements to lower the prices they had to pay for tobacco, 43 00:04:42.620 --> 00:04:48.800 But even if they had succeeded, this would not have been exploitation, for they would 44 00:04:48.800 --> 00:04:54.020 then have been forced to be content with smaller amounts of tobacco. 45 00:04:54.020 --> 00:04:59.780 The marginal tobacco farmers, hit by lower prices in relation to their cost, would have 46 00:04:59.780 --> 00:05:02.700 shifted to other lines of work. 47 00:05:02.700 --> 00:05:08.460 But such buyer-cartel agreements could not succeed in the face of free competition and 48 00:05:08.460 --> 00:05:10.180 the force of the market. 49 00:05:10.180 --> 00:05:17.620 Thus, in 1770, an Alexandria merchant complained that there are too many purchasers pushing 50 00:05:17.620 --> 00:05:23.540 one another, and three years later protested that he only bid up the price of tobacco to 51 00:05:23.540 --> 00:05:25.700 meet competition. 52 00:05:25.700 --> 00:05:32.540 I am sorry to observe that a few wrong-headed men have it in their power to affect the price. 53 00:05:32.540 --> 00:05:38.900 And newly established merchants, attracted by any temporary success in pushing down prices, 54 00:05:38.900 --> 00:06:08.900 had to bid up their buying prices in order to attract the business of suppliers. Thus Merchant Factor, James Robinson, reported gloomily in 1769 that the price of tobacco would be extravagantly high because of amounts offered by new merchants in Fredericksburg and Falmouth. Some months later he reported with equal concern that he would have to abandon his refusal to buy tobacco for more than 25 shillings 55 00:06:08.900 --> 00:06:23.900 Because of the competition of new stores, and when merchants at Dumfries, Virginia tried to lower the buying prices in 1770, other merchants quickly increased their competing business in Fokker County. 56 00:06:23.900 --> 00:06:34.900 Furthermore, if the planters felt that the merchants' bids were too low, they could always decide to ship on consignment to London, as they did in 1773. 57 00:06:34.900 --> 00:06:40.900 As Professor James H. Soltau concluded in his admirable article on the subject, 58 00:06:40.900 --> 00:06:51.900 From a business point of view, the tobacco buyer had not only a short run interest in purchasing as much tobacco at as lower price as possible, 59 00:06:51.900 --> 00:06:58.900 but also a long run interest in establishing and maintaining a market for his goods and services. 60 00:06:58.900 --> 00:07:06.220 Shrewd entrepreneurs engaged in a competitive business recognized that profits derived from 61 00:07:06.220 --> 00:07:11.740 efficient use of the capital invested in ships, stores and goods. 62 00:07:11.740 --> 00:07:18.260 Robinson, a merchant factor, summarized the policy of tobacco purchasers in this way, 63 00:07:18.260 --> 00:07:24.420 such is the course of our trade that we must endeavor to buy all the tobacco we can at 64 00:07:24.420 --> 00:07:28.580 the different stores at whatever is the market price. 65 00:07:28.580 --> 00:07:34.580 The Company not being willing to lose any of their interest in this branch to any person, whatever.