Primary reason for success: permanent colonization and settlement (compared to Latin America  colonizers returned to homeland)If permanent colonization was the goal, the major obstacle was to move people to the coloniesLabor shortage would prove to be a persistent problem  strong incentive to increase labor productivity, and freedom of labor marketUS today = loose labor lawsIndentured servants almost always left 1 indentured servant jobReliance on cash crops (huge emphasis on agriculture)1) No gold or silver2) No natives to trade withFirst Englishmen to take serious ventures: Humphrey Gilbert & Walter RaleighGilbert died after two attemptsRaleigh’s first attempt in Roanoke failedHis second attempt with John White failed as the “lost colony” in 1590  after returning to the colony, no people were there (mystery)1607— Two new colonies:1) Sagadahoc (Maine)2) Jamestown (Virginia)  1st permanent English settlement*Colonies were financial and human disastersMajor reform was property rightsLandholdings changed from common rights to private rightsJamestown property rights changes:1) Early settlers were given “planters shares” (communal)2) Later, settlers were given garden plots of their own (private)3) Management became more local  more local controlCame to New World to own land  led to elite social statusJoint-stock companies: (today’s mutual fund) As more investments did not return, colony became “crown colony”  King would fund investments because not enough money in the coloniesIndenture contract: allowed a person to pay for their passage by selling their labor to someone for a specified future period of timeComparative advantage  fertile new landGrew tobacco that was cheaper to produce and better quality than tobacco grown elsewhereEconomy relied on cash crops that were in great demand in the populous industrializing areas of EuropePermanent settlements  early emphasis on farmingLabor shortage/indentured servantsUnifying rules; no real substance or power to federal governmentBy 1780, all 13 colonies had their own constitutionsDid not give federal government authority to directly levy taxesStates taxed in proportion to the value of their land  some states taxed more, others lessDoes not say that states were forbidden to tax imports and exports across the state border  caused tension between statesDestroy common market between 13 statesWeak federal government had limited ability to negotiatePower to tax left to the states. Consequences:Free riding among statesPrinted money to finance war  inflationEach state could print their own money, along with using foreign currencyTo borrow money on the credit of the United States;To regulate Commerce with foreign Nations; and among several States, and with the Indian tribes;…To coin Money, regulate the Value thereof, and oth foreign Coin, and fix the Standard of Weights and Measures;To provide for the Punishment of counterfeiting the Securities and current Coin of the United States…”Article I, Section 9“…No Capitation, or other direct, Tax shall be laid…”“…No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another…”Article I, Section 10“1) No State shall enter into any Treaty, Alliance, or Confederation; grant letters of Marque and Reprisal; coin money; emit Bills of Credit; make any Thing but gold and silver coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.2) No State shall, without the consent of Congress, lay any Impost or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress…”Bill of Rights Amendment IV“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”Bill of Rights Amendment XState’s powers to set local and state laws such as licensing, regulation of business, taxes, zoning laws, civil conduct, and to use police powers to enforce themConstitutional Amendment XVI“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any consensus or enumeration.”Power of tax delegated to federal government  empowered to pay a portion of past debts, including those belonging to the states  led to a sound capital marketFederal government had the sole right to mint coins and regulate coinageBanned states of this right and banned state legislatures from issuing paper moneyAllowed states to charter private banks who could issue paper moneyStates forbidden to enact tariffs  toll-free movement of goods“Interstate clause”  national common market, reduced potential of local monopolies and increased the gain from regional specialization and trade, permitted the extension of federal authority to many areas of interstate economic activityAuthorized federal government to maintain an army and navy, establish post offices and roads, fix standards of weights and measures, and establish uniform bankruptcy lawsCongress has authority to set laws on patents  creative people would hasten technical changeFederal government had power to negotiate treaties or set tariffsPower lever in negotiations with foreign nations to reduce or eliminate duties on American goods abroadTariffs became the chief source of government revenues throughout the 19th centuryLaid foundation for private property rightsRevolutionary War: began April 19, 1775; lasted more than 6 yearsEffects:Both imports and exports fell dramaticallyImport substitutionGeneral economic effects from independence:1) US ships excluded from direct trade with British West Indies2) Spain withdrew privilege of direct trade with Cuba, Puerto Rico, and Hispaniola3) Increased trade with French West