In today's lecture I'm going to be talking about immigration and so as an
additional source or a source that I'm
going to be drawing from somewhat as an article by Carr
on the immigration and the standard of living in
the 17th century Chesapeake Bay area.
We'll be getting it up
and through at least that material today.
Does anybody have any questions about what we did
in the previous class on Arctic
Exploration. You might want to take a look for this paper on the web. Of course, it's
in the library, but you can at least grab the abstract that's available on the web to
sort of look over your notes to see if you've got some of the right or some of the general
Now, which basically we looked at the discovery, the European discoveries of the new world,
and we also looked at the discoveries in the Arctic where we were able to compare fairly
very clearly public exploration and private exploration
in a more or less isolated history.
The important exploration
as I indicated was of a mercantilist character
where you had
basically private people
backed up
by the government or the king
and you had public money subsidized, maybe ships, military personnel, the power of the
king to declare land for the king, to give away land and to reap all the benefits from
that so you had that very powerful private incentives but the power of government combined
of government combined in mercantilist endeavors.
And basically going about the idea of following the mercantilist philosophy of going out and getting the gold.
Once they found out that there were other lands out there that had all this gold,
and they didn't have very good weapons, it was a big opportunity to go out and pillage and plunder and take possession.
Most notably by the Spanish and the Portuguese. They got the lion's share of the gold from the New World. They got the silver, they got tremendous land holdings consisting of the better parts of the western United States, Mexico, Central America and all of South America.
But they had very difficult times actually colonizing these places.
People really didn't want to go to the New World, except for the people who were going to be able to get the land themselves and get the gold themselves.
The average person really didn't want to go, and so the Spanish and the Portuguese were very ineffective at actually colonizing these places,
of bringing their civilization over and replicating it and expanding the population and actually
taking control and using the land that they had taken.
And Spain was very particular about it.
They only allowed Catholics to immigrate to their territories.
And if you wanted to go to the New World, you actually had to leave from one particular
in Spain.
They were very unsuccessful
at actually colonizing these places effectively.
One question you might
think about
is
what happened to all the gold?
I mean, they had huge ships
to go from the old world to the new world, fill them up with gold and silver
and then sail them back to Spain
and you've probably seen
uh...
stories about
modern-day explorers
of the ocean
who have found some of these Spanish galleons
and the tons of silver
and gold
that they've raised up from these
Spanish wrecks
off the coast of Florida, for example.
So they were just ship after ship after ship
filled with gold and silver.
So what did that do?
What did that do for the Spanish
and to a lesser extent the Portuguese?
It made them wealthy, or at least they thought so. It made some people very wealthy. It made the king. A lot of this gold comes home taken possession by the king, queen of Spain and Portugal.
And they were able to use it to buy luxury goods, to build huge monuments, houses, cathedrals, but it's going to cause inflation.
That's right. They've got gold, but they don't have anything else. I mean gold, but they still have the same farmland
They still have the same number of sheep and cattle in Spain. They still have the same number of trees. They still have the same number of workers.
All they've got is more money. And they didn't want the money exported to other countries. So they actually passed laws that said,
Okay, the king can spend it, right? But y'all can't take it out of the country. The king
can spend it out of the country, but we don't want anybody else exporting this gold and
silver. So there's a huge inflation in Spain and Portugal, and as the money does start
What were they using as money at the time?
You're trading in terms of gold and silver. Now the average person of this time period in Europe didn't really do a lot of exchanging with money.
You basically were growing your own food, getting your own fuel to heat your house, making your own clothes.
And there wasn't a lot of money left over for things like luxury goods, books, cooking utensils, things of that nature.
So that the average person was usually in a barter economy.
So that you would bring your crops in and exchange them with merchants at city fairs
for things like cooking utensils, but the money of the time was gold and silver, and the little guys, the average exchange economy would be using silver coins and units of silver, and the bigger exchanges, international trade would take place using gold coins and gold bars.
The minting process goes back a couple thousand years before that.
The minting of gold and silver coins becomes more and more dominant,
Just because minting coins tells us that the silver and gold is of a more or less uniform character and is of an approximate weight.
So the minting process says, you know, if you came to my mint and I put my stamp on it, that says that I've assayed it, or essayed it,
I've essayed it, which means I've looked at the purity of the metal, and I've weighed it, and I'm saying that this is one Mark Thornton coin.
And then everybody starts to find out that I'm a very honest person, and everybody starts accepting and trading my coins on an equal basis instead of having to weigh them and essay them all the time.
So I developed this great reputation, and then what do I do next?
Start cheating.
No, I wouldn't do that.
So gold and silver coins are the medium of exchange from antiquity, several thousand
years before this, until fairly recently.
Whatever Money is a fairly recent development, and we're going to be talking a lot about that.
Rothbard will have much to say about that.
So we have this great inflation, two developments that come from this, one, and they're kind of indirect developments.
The price inflation in Europe is a direct development of the money. The two indirect but very important secondary phenomenon is one, we discover the quantity theory of money.
Okay, not surprisingly people puzzled over the fact that, let's say, a horse was equal to a half an ounce of gold.
And it pretty much had been equal to a half an ounce of gold for as far as everybody could remember.
And then all of a sudden, within one generation, a horse might cost an ounce or an ounce and a half or two ounces of gold, and everything else was jumping up in price too.
Not just a little bit, but by a factor of 100 or 200 percent.
So, not surprisingly, people would puzzle over this. It's kind of like the price of gasoline in the U.S. going from like $1.59 a gallon to $3.09 a gallon in one year, except it happened to everything.
So the thinkers of the time eventually came up with the quantity theory of money, which basically tells us that if the quantity of money in society increases, prices are also going to increase.
Another related effect was that Spain goes into economic decline. Spain had been a leading economic power in Europe. It was the leading military power in Europe.
But this period of discovery, colonization, and bringing the gold back basically set the stage for the economic and military decline of Spain.
Of course, Britain replaces Spain, and Britain was the country that didn't really have any
local domestic gold and silver production.
So money, if you just look at that little bit of evidence, suggests that money really
isn't wealth. It's still just our plain old ordinary medium of exchange.
So all the gold standards are less like a great depression in the economy?
had a stagnating effect in their economy and also there was a drive towards the production of luxury goods in Spain and because of the mercantilist policies and that they had sort of gone away from free trade and that sort of thing, what ended up happening was the money was funneled into areas in the economy like luxury good production and away from staple production.
Food, Clothing, and Shelter and so they were pushing their economy in the direction and of course the more you push an economy in a particular direction the less overall production you're going to get because you're putting resources there and the cost of producing additional luxury goods becomes greater and greater and greater and what are you losing? You're losing
large quantities of staple production. So they had a very unbalanced economy and a weakening of their overall economy as a result. I wouldn't describe it as a crash and depression type of a phenomenon. That's a very good point though.
Okay, now more to our point is what about the French and British who controlled the colonies that we now know as the United States and Canada?
Well, they didn't have much luck colonizing either. They set up what's called a joint stock company approach, kind of a mercantilist approach,
where the government's in the project providing land, land grants, to the companies
and it's the company's job to find some way to get people over to the new world and start using this colony.
It doesn't do the king any good if there's nobody over there working it.
The Virginia Company is begun in 1606, and the Virginia Company actually consists of the London Company plus the Plymouth Company,
which I don't think has anything really to do with the automobile. I'm not sure, but I don't think so.
Okay, it was the London Company and was established in 1607 to establish a settlement in Jamestown, Virginia.
Now they really didn't have very good information about the colonies and the new world.
And so the London Company set forth some rather optimistic goals for the people who were to
found Jamestown.
The London Company was to establish a Northwest Passage, in other words they were supposed
was to find that route around Northern Canada over to Asia, which, as we saw in the last
class, ultimately it took 92 expeditions and a couple of hundred years more, or 250
years more, to actually find that Northwest Passage. So, that first goal was a little
The company was also supposed to find gold and silver and send it back to the company in London.
They were also supposed to feed for themselves, fend for themselves, and send back all excess production back to London.
So these are rather optimistic goals.
Of the 105 people who made the initial voyage, 67 died in the first year.
From lack of proper nutrition, hard work, disease, just about everything you would do
do to try to kill yourself. They were trying to do, basically. Set up everything from scratch,
which meant a lot of hard work, not a lot of access to food, because that takes a couple
of years to get going, disease, the elements, the unknown, new sets of everything from diseases
to animals to trees to everything was brand new, basically. The next year, 400 more people
More people were sent from London to Jamestown, but things didn't improve at all.
This is referred to as the starving time.
They actually had more mouths to feed, but not a whole lot more crops to feed them.
Of the 505 people who made that initial two voyages, within a year's time, after they
had all arrived, there were only 60 people left, so the death rate was very high.
Of the 505 people who made the two initial voyages, after they all had arrived, a year
after that point, only 60 people survived. So you have 400 some odd people dying, lack
of food and so on. Yes. So that would have been, the London Company starts in 1607, they
They arrived in 1608, so it would be about 1611.
Now the people who were over there were indentured servants.
An indentured servant is somebody who signs a contract, and in general the contract specifies
The company will pay for your voyage, they will supply you with food on the way over, and they will provide supplies like tools, some food, and some clothing to get you started.
And then you have to work for that company for a period of several years, four, five, six, seven years depending upon the contract.
And then you're working for the company. And then after that period of time, you're free to go. You've paid off your debt.
So that's what an indentured servant or an indenture contract is generally all about.
Now, the colonists were considered by the company as being lazy. They blamed initially that all of these mistakes, all of this death, was because the colonists wouldn't work. They wouldn't work enough to provide their own food and that's why they died.
But a more economic explanation for their failure, besides just all of the risks and uncertainties, was the fact that basically the colonists were working under a system not of private initiative, of incentives and property,
But they were working under a system that is almost better characterized as socialism.
Okay, where everybody would work according to their ability and receive goods according to their needs.
And so they were all working for the common good.
But under those conditions, you needed a very motivated workforce to do that hard work, to produce those goods.
But other than the possibility of dying, there really was no good motivation.
In 1612, as a matter of desperation really, the colonists were given their own property to raise crops on.
So instead of everybody working the same large farm and contributing their labor to it,
In 1612, they decided, well, what we're going to do is instead of everybody working this large farm, what we're going to do is we're going to divide it up into individual plots, and everybody works their own plot, you get to keep what you produce, and you pay the company a fixed fee.
And the fixed fee was something like two barrels of grain, something like that. So no matter what you produced on your individual plot, each plot owner had to give the company a fixed fee, which would pay off your debt to the company.
Now that solution did stabilize things, but of the first 6,000 people who came over, 4,000 of them died.
So the company's approach, this joint stock company approach, this sort of mercantilist approach to colonization really was a failure and what ended up happening was the system was created or moved in the direction of a private property system and the company was ultimately dissolved and instead of being a company it became a colony.
of Individual Land Holders. And things stabilized and things started to grow somewhat, but the important thing here is that life in the colonies was very, very difficult. Even after they made these improvements in the indenture contracts, the company structure, so on, life was stable.
It's still very, very difficult and emigrating from the old world to the new world was not a choice that was really relished by many people.
You can imagine, I mean, if you were in Europe at the time, things were not so great, especially for the lower classes.
But are you really going to think about, well, yeah, maybe I'll just leave all of this and
go over there where there's no structure to society and you've basically got to start
from scratch and you've got to work extremely hard and you've got all these new diseases
The choice of going to the New World was not one that people took lightly. It wasn't like, oh yeah, let's go have a fun over there in America.
In England at the time, beginning of the 17th century, life expectancy was about 20%.
Life expectancy was about 28 years old. So if you were living back in the 17th century, you'd already be two-thirds the way through your average life expectancy.
In America, in a sample from Virginia and Maryland, life expectancy was only 21 years of age.
And given the fact that most people were coming over and not being born there,
The death rate was very, very high. In terms of food and what we refer to as raw wages, how much food can you consume in a particular area, in America things were better than in Europe.
After the initial phases of these initial settlements, and once the agricultural community was developed and you had planted and you had cleared land, and you were grazing crops, food production was actually quite high, so that people actually had more calories to consume in the new world than in the old world.
So in that factor, the food factor, Americans were better off, at least in terms of quantity.
Not necessarily in terms of quantity. In England, the average consumer would be consuming things like beer and bread.
Your diet, the bulk of it was beer and bread, although not necessarily in that order, and you would also have other supplemental things like dairy products, meat, vegetables and things like that, but most of your calories came from grain of one form or another.
In the New World, they relied a lot on corn for their caloric production. They could produce lots of corn per person. A farmer could easily produce more than enough for himself and have excess production.
There was also lots of game, wild game that could be captured, and so the number of calories that people consumed in the United States was substantially above that of Europe.
But the quality left something to be desired. The Europeans didn't like generally eating corn, corn mush, corn meal, corn bread, things of that nature.
And they hadn't really developed, because they didn't have a lot of grains, there was no beer, which led to a lot of discontent amongst the indentured servants.
As a matter of fact, one Virginian who was commenting or writing about the high death rate in Virginia, he said, quote,
quote, More do die here of the disease of the minds than of the body by having this
country over-promised unto them in England and by not knowing thou shall have to drink
water here.
So they were very upset about this beer problem and they overcame that problem, well you probably
We all know how they overcame that problem.
Celebrated myth of American history, I think it's a myth, whiskey comes along a lot later,
the rum trade comes along later, they, Johnny Appleseed planted apples all over the place
And they made apple cider, and then they made hard apple cider, and they drank a lot of
apple cider that had been fermented into hard cider or apple jack.
You worked harder and longer in the New World.
There were no draft animals or very few draft animals, so you had to go cut your own trees
down and plow your own fields and all that kind of stuff.
You didn't have any draft animals to do the plowing for you.
The upside of the New World is that if you lived long enough, you paid off your indenture
and you could pretty easily get your own land.
First of all, you'd start off by renting somebody else's land and you would take the excess
Excess production from that land to buy your own land, and land was cheap.
And then you'd start farming your own land.
And you'd take the excess production from that, and what would you do with it?
You'd buy more land, and then?
Well, you couldn't afford slaves, but they would get their own indentures.
and they would buy the contracts of their own indentured servants.
Slavery comes along a couple decades after the first settlements.
So the trade-off here was that the New World was hard work, low quality food, not a lot of amenities, that sort of thing.
But, eventually, if you lived long enough and worked hard enough, you could end up owning your own land and becoming fairly well off.
So it's a life and death struggle, and the payoff is independence in land.
The other colony in Plymouth, the Plymouth Company started in 1607. And this is the Pilgrims, the Puritans, the English Protestants. They come over in the Mayflower in 1620, landing in Massachusetts.
Half of them die in the first year.
Another ship comes over in 1621 called the Fortune, but like with the Jamestown settlement,
the additional hands, the additional people that it brought over really just intensified
The Lack of Food and the Famine that they were experiencing.
And they also made the mistake of organizing their venture on a socialist basis, where
everyone works for the company themselves, plus the investors back in the New World or
the Old World.
Everything that is produced is put into a common storehouse and then is divided according
to your needs.
And so the governor of the company is going to take all the production of the lands into
the common storehouse and then dole things out to families and individuals based on their
individual needs.
And then at the end of the period, at the end of the indenture period, things will get
divided up between the remaining colonists and the investors back in London.
So that families were supplied based on their size and composition, but work was done essentially
on the, work on the crops at least was done essentially by the men and the single men
were working as much as the married men and this of course did not sit too well with the
of the Single Men because they were essentially working for the support of other people's families.
This is kind of odd because the reason the Puritans came over to the New World is they wanted to protect their children from the influences of society.
The whole sort of goal of this religious group was to protect the children, but actually, when they got over there, the incentive problem was based on the fact that the children were drawing rations essentially, and the work was provided equally, but the benefits were not.
So the initial harvest feasts of these Puritans, or the Pilgrims, what we now call Thanksgiving,
was not really so much a big festival celebrating plentiful, bountiful production.
They weren't producing enough food to meet their needs, and people were dying because of malnutrition.
So those initial harvest festivals were not so much a thanksgiving as they were a last big meal for condemned men, because most of them ended up dying.
Like in Jamestown, the governor of this colony, Governor Bradford, after a couple of these disastrous years, and as a matter of desperation, also turned the Plymouth colony into a private property system, where they took the jointly held croplands from the company and divided them up into individual property lots.
Lots. That was in 1623, so the third year that they were over there. And things turned
around fairly quickly so that by 1627 the columnists were able to actually buy out the
investors in the company and turn it into their own settlement. So instead of a company
with investors, indenture, being indentured in the new world, they were able to actually produce enough to buy out the investors to have their own private property lots and become a settlement rather than a company or a colony.
There were of course other companies and other proprietary colonies, Pennsylvania, Maryland,
parts of the Carolinas were all settled by proprietor colony systems whereby the king
gave some particular person the right to settle the area and the person paid the king the
and the right for that land and then that person would bring over the colonists and sell private property lots to those colonists.
But still the question remains, why come to America? I mean, unless you're just pretty
well misinformed, there's a problem with going over there. I mean, things are pretty good
in Europe and things are really, really tough in the New World.
So who would migrate to the New World?
Why did so few people go to the New World?
And why did they continue to indenture themselves to the New World even after slavery became
the dominant mode of importing labor.
If you were an economist, what would you suspect is going on here when you've got things are
nice in Europe and things are difficult in the new world?
Why would you expect people to make that choice anyways?
Well, they're stupid, they're foolish, they're defrauded, you know, those kind of reasons.
There's great potential.
That is true.
Religious reasons is an important one.
And it becomes an important reason, for sure.
Well, the key here is whenever I ask you what should an economist think,
one of the things you always go to is opportunity cost, right?
Opportunity cost, it's really simple, it's really easy, it's right in the first couple pages of the principal's book.
So whenever you get into a jam like that, just think, okay, what's the opportunity cost?
So while things are good in general in Europe, there are going to be some people who have
a very low opportunity cost.
They don't have any opportunities in Europe.
Charlie Grubb looked at some of the contracts, these indentured contracts, that were initiated
between 1682 and 1686. There were about 3,000 indentured contracts per year, which isn't
very much. Found that most of them were unmarried males between 15 and 25 years of age. 37 percent of the males reported on the contract that they were fatherless.
If their fathers had died or they were orphaned or whatever, 90%, at least 90% of, did not
report a residence or an occupation.
All of the very young males, 11, 12, 13 years of age, reported that their fathers were deceased, or they were orphans.
Grub concluded that fatherlessness was probably under-reported.
In other words, it said on the contracts in 37% of the cases that they were fatherless, but
his investigation reveals that in a lot of cases it simply wasn't reported
whether or not they had a living father. Only 6% of these indentures had consent from their father.
So miners, they usually try to have a signed consent form for miners to sign these contracts, and only 6% of them were signed by their father, who would have been the natural person to sign that contract, rather than a mother or an uncle or something like that.
and so he concluded that at least fifty percent of these males were probably fatherless. They obviously couldn't pay for the voyage, so they accepted indentured contracts. Without a father in Europe, your economic possibilities were not good. The family income obviously would have been very low.
Very little. Your employment contacts to get a job would be greatly diminished. You probably
wouldn't have any land to work or to inherit. And without a father, the possibility of getting
an apprenticeship was almost nil. In order to get an apprenticeship, your father usually
We had to be an upstanding citizen who was already in a profession and had the money
to pay for the apprenticeship and apprenticeship basically means you're a 13 year old boy,
you're going to go work for, I don't know, a clothing maker or a mechanic or somebody
or maybe longer. You've got to work for free, right? I'm not paying you to come to this
class. As a matter of fact, you are paying for me. So one of the major explanations for
a lot of these people coming over was that they were fatherlessness, that they didn't
have opportunities, that they didn't have a way for economic enrichment in Europe and
So they took their chances and signed the indentured contract and went to the new world.