1. Military requirements and fiscal transition in North America during the Seven Years’ War

After 1758, Parliament and military officers like General Jeffrey Amherst developed a new fiscal method for incentivizing colonial compliance with centralized decisions. This method maximized short-term military efficiency by harnessing colonial merchant debt to serve the war effort. Under the post-1758 system, English public contractors selected well-networked colonial merchants and promised them direct payments in hard bullion specie shipped from England at a future time in exchange for issuing credit to those providing goods and services.Footnote ¹⁰ Previous colonial wars did not rely on direct shipments of bullion from England to merchant war financiers. Instead, wartime expenses before 1758 relied on a series of local intermediaries that then assigned provisioning and financial roles to local colonial merchants. For example, generals and statesmen like Edward Braddock, William Shirley, and John Campbell, 4th Earl of Loudoun had limited purses of hard money during the early stages of the French and Indian War. They relied instead on currency and resources requisitioned from town and provincial assembles. These wartime leaders also relied on local merchant networks to provide liquidity using personal book credit which they could also circulate throughout the colonies in the form of paper notes.Footnote ¹¹ Colonial assemblies and local merchants often balked at these demands. Amherst lamented this recalcitrance and sought to eliminate these unreliable middlemen in the process of military finance and requisition.

The 1758 contracting system implemented under Amherst incentivized select merchants to take on larger amounts of debt on their firms’ private accounts. Merchants had long used debt as a tool in commerce and specifically in war finance.Footnote ¹² However, the extent of merchants’ willingness to use their debt to fund war expenditures stopped at the point at which the provincial fiscal system could adequately reimburse them. The shift which occurred in 1758 under Amherst’s command followed Prime Minister William Pitt’s decision to leverage Britain’s public debt to inject larger amounts of credit into North America’s military-fiscal system. In 1758, Parliament appointed London merchants with strong colonial connections like John Colebrooke, Arnold Nesbitt, and Barlowe Trecothick to dispense commissions for colonial merchants to participate in this new credit system.Footnote ¹³ Colonial merchants issued paper notes backed by their own credit. These merchants tapped into their social and commercial networks to expand the credit on which they could draw. They dispatched agents in major port towns like Boston and New York to solicit subscribers willing to contribute funds. Wealthy colonists contributed short-term monetary payments in return for repayment of the principal with interest once later reimbursements arrived from England to cover all liabilities on the merchants’ accounts.Footnote ¹⁴ The result was a streamlined relationship between metropolitan policymakers and colonial credit markets. This circulating merchant credit provided liquidity for quick financing of military needs on an unprecedented scale.

To pay the extraordinary costs of Britain’s military expenses in North America, the metropolitan state indebted itself to colonial merchants and those merchants in turn indebted themselves to other colonists. This relationship centralized administration within imperial state authority by removing checks on wartime debt finance at the provincial level that depended on local merchants, towns, and provincial assemblies. However, this credit system nonetheless remained dependent on dispersed local financial knowledge and a complex, bottom-up, colonial credit system. This system financed Britain’s military victories in the final years of the war, but such successes came at the cost of unintended financial instability when the state found that it could not pay what it had promised.

The proliferation of bills of credit in the eighteenth-century colonial economy aided in the process of extending merchant debt during this surge in imperial war expenditures in the period 1758–1762.Footnote ¹⁵ War finance through the new contract system maximized the funds that the military raised. It also minimized the time it took to make payments because merchants in colonial port towns quickly allocated resources to the major sites of conflict in Canada, the maritime Northeast, and the Ohio River Valley.Footnote ¹⁶ As enterprising traders sought immediate profits in the market boom for wartime provisioning and finance instruments, this speculative activity drew scarce resources and labor away from regular colonial economic activities. When British repayments fell short, the unpaid debts of the war proved larger than the productive capacity of the region, generating a credit crisis that staggered the postwar economy.

Historians have described the economic downturn that arose from the transition from war to peace after 1760. Fred Anderson has shown that colonial merchants struggled with large inventories after British military spending tapered off at the end of the war. He has shown how the reduction of colonists’ spending occurred because of the postwar downturn. Several large “troubled firms,” he has observed, absorbed a significant portion of credit during the war, and consequently caused substantial crises when they fell.Footnote ¹⁷ These instances that Anderson noted were not, however, isolated incidents, but rather a direct consequence of the restructuring of colonial credit relationships. Britain’s structural changes in wartime financing after 1758—not the everyday contingency of participating in transatlantic trade—caused these effects.

Because of the absence of complete surviving accounts, it is impossible to conduct a full quantitative analysis of this restructuring. Nonetheless, the post-1758 restructuring and its effects can be gauged by examining the records kept by a few key merchants involved in war financing, including Charles Ward Apthorp in New York. Apthorp served as a major financier and promised, and sporadically delivered, bullion reimbursements to cover obligations to his creditors who contributed money, goods, and services to the war effort. The diaries, accounts, letter books, and court transcripts of merchants like Apthorp indicate large outstanding obligations unfulfilled by the British state by the mid-1760s. Because Britain failed to fully reimburse colonial financiers, these debts passed to the merchants’ creditors and those creditors’ creditors across colonial society. These contracted merchants like Apthorp held obligations exceeding their net worth, and these liabilities caused the credit collapse responsible for the recession historians have documented at the end of the French and Indian War. The chain of bankruptcies in colonial port towns which began as the war ended suggests the connections between these specific war financiers and the economic downturn that plunged the colonial Northeast into financial crisis. A chain of defaults from metropole to individual British American subjects followed the structure of credit relationships that British policies and large merchants created to finance the Seven Years’ War. While true that complicated patchworks of credits and debits long existed across colonial society, very large debts sufficient to cause financial panics could be held only by large firms. Failure to fulfill bullion obligations to contracted financiers rippled downward through creditors after a bankruptcy.

Colonial merchants developed extensive transatlantic networks and specialized knowledge through years of commercial activityFootnote ¹⁸, but none held complete knowledge of the decentralized system they had constructed over the course of multiple generations. Restructuring financial relationships around a central state mandate caused major ruptures in the scale and scope of merchant activity. Several notable merchant families, once capable and esteemed, found themselves verging on bankruptcy when they failed to account for all debt accumulated by agents of their firms. Many of these same merchant houses, like the Apthorps of Boston and New York, had successfully served as war financiers and provisioners during the War of Austrian Succession and avoided the large unpaid obligations and litigation that the firm would face after 1762.Footnote ¹⁹

2. War finance, accountability, and the challenge to traditional colonial relationships

The war finance system introduced in 1758 fundamentally changed the structure of public financial relationships in North America by altering who firms, paymasters, and policymakers were accountable to. Military officials preferred to interact with a small number of firms, and they extended contracts to those firms most willing to take on debt to maximize the spending capacity of British generals and paymasters. This led to a regional monopolization of the Northeastern war finance market. Among the most notable of these leading merchant financiers was Charles Ward Apthorp, who presided over an extensive transatlantic financial network.Footnote ²⁰

Apthorp’s agents, including William Bayard in New York and Nathaniel Wheelwright in Boston, found their debts overextended by the end of the war. Merchant bankruptcies produced economic catastrophes in port towns where social stability relied on the mutual obligations of credit. This credit extended foremost from prominent merchants whose obligations radiated through local commercial communities and involved artisans and urban laborers who they paid with promissory notes and book credit. Experienced merchants like Boston’s John Rowe expressed great concern about the bankruptcies and a shift toward austerity in British fiscal policy that accompanied the end of the war.

Merchants turned against each other to avoid bankruptcy, destabilizing the prewar amicability of towns like Boston. These commercial grievances became points of political protest, as traders joined together with other critics of Britain’s post-ministry to voice their opposition to hard money taxes, fees on litigation and paper bills mandated under the Stamp Act, provisions under the Currency Act that prevented the printing of colonial currency, and other administrative reforms. The British patriotic enthusiasm that had reached its fruition in the latter years of the Seven Years’ War shifted suddenly to discontent and skepticism of Parliament and royal officials in America. On-the-ground witnesses to the postwar depression, like John Rowe, knew that the social turmoil in Boston after 1762 arose from the failure of the empire to maintain its political and financial credibility. Public finance between 1758 and 1762 had won the war, but in doing so, it had aggravated popular resentment against the empire.

Historians of the British imperial state, most notably John Brewer, have pointed to the long eighteenth century as a period of strengthening and consolidation of state power through the development of fiscal linkages. To Brewer, imperial institutions like the Treasury Board restructured the English fiscal system into a unified whole accountable to central authority. Brewer attributes this centralization to a uniform administration of money under one political system with an “absence of institutionalized regionalism” in which parliamentary government promoted a universal tacit consent to taxation. Furthermore, Brewer argues that the English fiscal system did not face the same burdens associated with prolonged conflict nor debt in contrast to continental Europe. These conditions, in Brewer’s formulation, produced a fiscal-military state that “dwarfed any civilian enterprise” as an institution.Footnote ²¹ Brewer’s depiction of Britain after 1688 describes an increasingly effective state that developed many bureaucratic characteristics of modern fiscal systems. He argues that the empire successfully used fiscal centralization to fund military expenses.Footnote ²² Brewer’s conceptualization applies to the British Isles but, in America, British officials relied on colonial merchants and provincial governments for colonial war finance.Footnote ²³

Writing on the evolution of the British fiscal system in the eighteenth century, P. G. M. Dickson emphasized the significance of public securities that allowed the state to fund itself through debt. To Dickson, this evolution of the imperial state’s capacity to take on public debt through more sophisticated financial tools arose largely because of its inability to generate sufficient revenue through taxation. In Dickson’s conception, debt freed the state from the fiscal constraints of spending according to the amount of tax revenue and, consequently, debt financing expanded the financial resources on which Britain drew to expand and defend the empire.Footnote ²⁴

Brewer’s calculations and descriptions of the English fiscal state structure represent it as a professional, effective, and universal system that linked British sovereign territory into a homogenous unit. This model of public finance focuses primarily on the relation of public debt to taxation as public securities like tallies and bonds issued by state representatives in proportion to tax revenue. Other historians have noted payments made to private individuals, or short-term debt that did not require securities with fixed maturities.Footnote ²⁵ However, these operating definitions of public debt ignore the use of private debt for public purposes that occurred outside the view of the state. Thus, Brewer’s interpretation focuses on taxing and spending as it related to metropolitan Britain but does not consider the public–private partnerships that made war financing possible in North America. After 1763, court records show that merchants in colonies did not know of the extent of the public obligations within their own networks. It is therefore unreasonable to conclude that the policymakers who these merchants reported to would have a better idea of the extent of these obligations. Much of the credit circulating to fund the North American theater of the Seven Years’ War circulated outside the rigorous scrutiny of the British imperial state.

In the case of North American war finance, cooperative, regionalized, public–private deficit finance proved dominant. Contracting policies that co-opted private finance for public spending facilitated imperial expansion and hegemony. Therefore, colonial private debt must factor into any characterization of the British fiscal system. Merchants at the forefront of North American war finance between 1758 and 1768 expressed that revenue did not meet the costs of conflict.Footnote ²⁶ They argued correctly that as peripheral debtors they assumed disproportionate costs.

The pattern of war finance after 1758 occurred in two phases. The first phase from 1758 to 1762 followed a shift of contracting methods which caused colonial merchant firms to take on substantial private debts to serve as contractors for the British military. During this phase, colonists felt generally positive about the state of the colonial economy, bolstered in part by patriotic fervor following British military successes and the positive effects of increased spending throughout the militarized economy. However, a few merchants, though optimistic about the outcomes of the war at that time, nonetheless expressed concerns about their fellow merchants’ liabilities. These concerns foreshadowed a transition to the second phase after 1762, during which the end of the war suddenly eliminated demand for military services which had consumed so much colonial resources and labor over the previous 4 years. Merchants had received only partial payment for all outstanding obligations by the time of the 1763 peace.

In the second phase, metropolitan policy placed further strain on colonial debtors by placing new taxes on the colonies that, while relatively small in nominal terms, pulled limited stable money from colonial hands. With limited access to hard currency, and disruptions to traditional prewar commercial markets, merchants had limited capacity to remit on the substantial debts developed in the first phase. From the perspective of the postwar colonial debtor, the fiscal state’s capacity to provide revenues for its expenses had definitively failed. The promises of state-focused monetary regimes promoted a more extensive use of credit-backed currencies backed by public mandate over the less dynamic, but more stable, bullion alternatives. Such promises promoted speculative financial leverage and hindered the repayment of debts in the postwar financial crisis.Footnote ²⁷ A strong, stable, trustworthy, eighteenth-century fiscal state with sufficient ability to fund expenditures did not extend to the colonies, nor did membership within this fiscal structure provide a net benefit to colonial participants.

3. Money, credit, and the extent of British imperial influence

Many historians of the colonial economy in the mid-eighteenth century describe the Seven Years’ War as a period of British state expenditure that transferred capital and wealth to the North American colonies through transatlantic supply chains. In this interpretation, colonists benefited from British governance. This interpretation of transatlantic flows of payment and capital emphasizes the relatively small size of the annual deficit in the colonies’ current account, which colonists could theoretically fund with shipments of available specie.Footnote ²⁸ According to this interpretation, an argument for chronic currency shortages in the colonies caused by imperial trade deficits, which necessitated the shipment of money to the metropole, makes little sense. This is partially because of the prevalence of available Iberian currencies on colonial accounts. However, this interpretation ignores the high demand for strong currency in the colonial economy. Colonists needed to fund domestic debts that outsized the availability of currencies other than inflationary colonial paper emissions, making any exportation of money very onerous. The relevant consideration is therefore not the absolute nominal size of the transatlantic deficit relative to specie, but instead the competition between colonial and imperial debtors for a limited quantity of that specie.Footnote ²⁹

Colonists needed money to fund debt. Because colonists relied on stable credit relations for common transactions, the effective burden of postwar fiscal reforms proved both tangible and substantial. Colonists, especially those engaged in port town commerce expressed this exact concern between 1762 and 1768. Their critiques of British fiscal policy joined a political argument against unconstitutional taxes, but it was rooted in a harsh material reality. Strong ideological stances against British taxation policies emerged only after the fact and reflected the economic interests of Northeastern colonists who suffered because of the financial crisis.Footnote ³⁰

Tracking transatlantic flows of goods and payments is an incomplete model of colonial relations with the imperial core during the war in the Northeast. This interpretation fails to account for the importance of the financial burdens and unrealized gains of colonists incurred prior to 1763. The strengths of empire relied on a “soft power” approach of co-opting local economies by using public credit to incentivize influential individuals to act according to central goals. However, imperial states lacked the “hard power” to deliver on their promises to these individuals in the form of concrete remittances or credible physical threat. After 1762, the fundamental divergence between colonial and imperial interests, which had fractured during the war, ultimately proved obvious to colonists who did not receive the benefits of imperial membership that they expected.

Midway through the Seven Years’ War, a reorganization of North American merchant activity occurred in response to a new imperial fiscal policy. Following 4 years of unsuccessful, and even disastrous, military performances against the French and their Native American allies in the period 1754–1758, William Pitt’s ministry—in power from 1756—sought to reform the fiscal state to better serve military ends in Europe as well as America. Parliament, the Royal Treasury, and the Board of Trade sought colonial merchants as allies. Their new fiscal policies depended on merchants and their financial influence to direct colonial resources, labor, and capital toward the war effort.Footnote ³¹

The policy shift of the Pitt administration initially enjoyed popular support in the American colonies. Almost every colony assembly immediately voted to raise more troops in response to the Pitt ministry’s promises that London would pay the costs of the war. Aggressive engagement against French positions drew on this dramatic expansion of financial resources made possible by these policies, turning dismal war news into reports of victories and a resurgent optimism about Britain’s prospects in the conflict. Pitt recognized that, given the sizeable influence of colonial participation in provisioning and providing troops, especially in Canada,Footnote ³² incentivizing colonists to support imperial military goals would determine the outcome for the American theatre of the war.

Colonists needed no external motivation to fight the French and their Native allies. They had long attempted to wrest control of territory from French colonists in contested regions. However, as previously noted, fiscal constraints tempered colonists’ aggressive goals. The constraints of local financial and resource demands competed with their drive toward territorial expansion. The policies of the Pitt administration eliminated the constraints of provincial budgets, giving the colonists an opportunity to contribute to a massive British effort to end French colonization in North America.

Merchants had long made use of bills of credit which, during the Seven Years’ War, worked much like modern war bonds, and colonists could transfer them between parties, turning these debt instruments into a medium of exchange that facilitated transactions. In aggregate, these bills stimulated commerce in the short term by effectively increasing the amount of available currency in the colonies as the bills changed hands from person to person.Footnote ³³ The post-1758 method of war finance differed from past practices in previous wars in the extent to which it streamlined and centralized control of funds between military officers, paymasters, and colonial merchants. Through merchant credit, they bypassed the need to directly tax colonists and, therefore, to confer with meddlesome provincial governments to secure funds that could back paper issues.

Prior to 1758, military officers would go to colonial legislatures, like the Massachusetts General Court, or to colonial governors, to request a tax, or levy, to pay to an appointed merchant for the purpose of provisioning supplies and paying wages to those who enlisted. From the perspective of the military officers and paymasters, however, this system limited their ability to wage war because it provided a limit on their requisitions. Elected representatives sometimes refused to grant additional funds if the towns which they represented judged the burden too high, which they often did. This older requisition system survived, in part, until the end of the Seven Years’ War alongside the new credit-based system that dominated increasingly after 1758. However, antagonism between provincial assemblies and military officers, especially between the Massachusetts General Court and General Jefferey Amherst, meant that those leading the British forces in North America would favor the new system.Footnote ³⁴ The elimination of provincial checks on spending, once merchants replaced direct requisitions with privately financed debt instruments, yielded staggering new spending on the war, which helped the British achieve a series of military victories against the French, beginning with the successful siege of Quebec in 1759.

4. Opportunity and risk in Northeastern merchant communities after 1759

Colonial merchant John Rowe expressed concern even as Britain experienced wartime successes. In September 1759, as British defense spending increased dramatically in proportion to public revenues, Rowe worried about how he might mitigate potential losses in high-risk war markets.Footnote ³⁵ He suffered the loss of a ship in which he had a stake. This loss was compounded by troubling financial news in the larger merchant community, and Rowe noted the first signs of insolvency among his counterparts. Rowe’s concerns about lost ships and other extreme costs of wartime commerce, along with the sizeable debts of his wealthy neighbors, all emerged in the context of shifts of scale and scope in the mercantile networks of the colonial Northeast in response to wartime demands. The demand for goods and services of militias and regulars fighting the French in Canada and the Ohio River Valley created new opportunities for merchants. However, opportunity did not extend equally to every merchant. They vied for the favor of imperial contractors and paymasters to grant them a share of this defense spending. This was a zero-sum competition for share of a market in which policymakers excluded all but those most responsive to the goals of the war.

Rowe planned to provide a shipment of fish to the suppliers at the recently captured fort at Louisburg on Cape Breton Island.Footnote ³⁶ To do so, he needed information on potential inroads into the contractor networks supplying the fort. He wrote to his brother at Louisburg requesting that he communicate to the paymasters and officers there that he would be willing and able to fulfill any demands for supplies.Footnote ³⁷ The rush to participate in the British war financing system, as it emerged between 1758 and 1762, emboldened speculators and encouraged dominant merchants to seek monopolistic positions over wartime commerce. New York City merchants connected to the De Lancey political faction took advantage of speculative opportunities by expanding their firms’ market share of the lucrative war markets via aggressive extensions of debt to maximize the amount of bills they could pay directly into the war effort. This was a continuation of New York City merchants’ attempts to supplant competitors in Albany and Boston that had been dominant financial intermediaries when colonial general William Shirley had been in command in the earlier stages of the war.

New York merchants extended private credit to provide immediate stimulus to commerce in support of the war effort.Footnote ³⁸ Debt and liquidity became political tools by which competing merchant networks could gain the upper hand in contests for the right to provision the King’s forces. London contractors awarded these firms with large commissions and paid them, partially, in installments with direct shipments of hard currency remittances from the Royal Treasury.Footnote ³⁹ The colonial subcontractors used these remittances to pay off debts to those from whom they requested bills of credit. These merchants also paid their own commissions and the interest on whatever bills of credit they issued themselves for military payments.

In the spring of 1760, John Rowe wrote to his brother Jacob. John expressed concern about his brother’s failure to inform him of outstanding debts held by a Mr. Sherburne and Josiah Rhodes against his firm. He expressed sympathy on his brother’s lack of communication, writing “I suppose you forgot it,” along with plans to find means to cover the obligation along with the two other bearers on the outstanding bill, Captain Cushion and Captain Forbes.Footnote ⁴⁰ Just prior to this event, a fire broke in Boston that almost destroyed a significant amount of his stock. The potential ramifications of such destruction to property could prove catastrophic for any one merchant in an economy increasingly dominated by risky debt. With slightly less luck, the more complete destruction of his stock along with large debts could force a merchant like Rowe, and everyone who depended on his financial stability, into ruin. Loss of substantial physical assets to accidents, a real risk in the colonial economy, could prevent their ability to fund the debt they had incurred. British merchants created sophisticated methods of insuring transatlantic cargos, such as accumulating relief funds through marine societies or by negotiating with other merchants for insurance in coffee houses and exchanges. However, smaller coastal ventures dominant in the New England economy, as well as property damage, often fell solely on individual venturer.Footnote ⁴¹ High risk paired with the challenge of securing remittances from contractors created conditions for large bankruptcies. In short time, this was precisely the position in which some notable debtholders in Boston and New York found themselves.

The new public credit system undergirding war finance incentivized leveraged speculation. Wealthy colonists gave bills of credit to subcontractors in return for repayment, plus interest, guaranteed by Britain.Footnote ⁴² Those who issued bills to the subcontracted firms owed debts to employees, or a grocer, or cobbler, who themselves owed debts to a lawyer, or cooper, or farmer.Footnote ⁴³ The result of these chains of obligation produced webs of credit relations that came to depend on merchants’ ability to repay their obligations to creditors with remittances from the British government. In the short term, this stimulated the war effort and encouraged colonial production as bills backed by mercantile debt flooded the colonial economy.Footnote ⁴⁴ In places like Boston and New York, wherein wartime commercial activity and exchange occurred at the greatest pace, the effects of this new credit currency could find its way into anyone’s hands, especially as local artisans and laborers shifted their work in support of wartime demand and took payments from local merchants in return.

In 1760, New England and the Middle Colonies had a combined population of around 877,500, each of whom had some credit relations with others, especially given the rarity of sterling and the long-term unreliability of colonial paper alternatives.Footnote ⁴⁵ In rural communities, where coinage proved especially rare, all liquidity and exchange depended on the proliferation of credit relationships—denominated in private account books-even though their methods were less formal than the dual-entry accounts of coastal merchants and other professionals.Footnote ⁴⁶ However, even the most remote towns had financial connections with creditors in commercial centers like Boston. The colonial credit structure was a complex web of debits and credits that embraced virtually the whole colonial population.

By comparing merchant activity during the war with the structure of the colonial economy as a whole, we can appreciate the scale of the relationship between total private credit and war spending in colonial North America. In times of peace, merchants, artisans, and laborers in towns like Boston made frequent, often daily exchanges, either with book credit or with alienable credit instruments. They also made remissions in goods or services, or less frequently in Iberian hard currencies like Spanish milled dollars and Portuguese joannes. Merchants marketed commodity surpluses produced by farmers, fishermen, and artisans who packaged and processed these raw goods for distribution. They stood at the top of a credit hierarchy that financed the movement of commodities to the marketplace. For example, Boston merchants like John Hancock and Hugh Kennedy had credits and debits held against the Boston cooper and Son of Liberty Joshua Pico as well as the lawyer, and later political leader, John Adams. They also held debts and credits against farmers in the Massachusetts hinterland.Footnote ⁴⁷ The failure of a merchant to remit on one debt might cause a failure to remit on many. This position at the top of hierarchies gave merchants the ability to draw on the private credit of the whole economy but also made the ramifications much worse if they found themselves overextended. Merchants’ revenues had to be sufficient to cover large liabilities. If they were not, one bankruptcy triggered another, with the potential to cascade into a colony-wide social and financial crisis.

Colonial merchant–financiers during the Seven Years’ War drew on webs of colonial creditors. To someone like Amherst, it made little sense to contract multiple firms, one of which pursued the most aggressive extension of debt and others that operated more conservatively. By eliminating the more financially conservative firms and dealing only with the one most willing to hold debt against creditors who offered bills, a general or paymaster could maximize revenue quickly. This preference had the effect of creating de facto monopolies by 1762, like the Boston- and New York-based Charles Ward Apthorp & Co. and the New York merchant John Watts. This New York mercantile interest group presided over a hierarchy of borrowers stretching from Louisburg to Pennsylvania soon after 1758.Footnote ⁴⁸ This new top-down structure emerged largely because these powerful New York merchant houses would be the first to receive any bullion shipments from the government in London, which made all agents under them dependent on the credit of these few contracted firms. Merchants found themselves pulled into the military markets in which the new credit bills circulated because the military’s demand for goods and soldiers siphoned resources and labor from other markets. Increasingly, merchants in Boston and New York negotiated with paymasters and generals at the British command center at Halifax. John Rowe shifted the activity of his Boston firm toward commerce directed toward Halifax and Quebec in the 1760s, when the availability of bills of credit and liberal fiscal policy of the Pitt administration had reached their zenith.Footnote ⁴⁹

By 1760, merchants expressed increased concerns about their peers’ debts. This proved especially true in Boston, as evident in commercial correspondence. In May 1760, John Rowe wrote to his brother-in-law Francis Robbins arranging the division of shares from returns for supplying the Commissary General in Quebec. He added he had heard that multiple colonists, including one George Conde, had failed to remit payments for his debts to Robbins. Rowe discussed means by which he would contact potential executors and beneficiaries of the scattered debtors to secure a remittance for Robbins. After May 1760, this theme of securing remittances from debtors would recur regularly in Rowe’s correspondence as people failed to pay and creditors sought advice and mediation from him.Footnote ⁵⁰

In earlier wars, and during peacetime commerce, spending in anticipation of revenue did not depend on faith in single large bullion shipments from England. Instead, it relied on proven channels of coastal and transatlantic commerce or local acquisitions of resources and taxes most often extracted at the level of town assemblies.Footnote ⁵¹ This decentralized system kept insulated the economy against individual failures. However, after 1758, when creditors depended on single large state remittances totaling hundreds of thousands of pounds sterling from the British state, the scale of these dependence on external repayment threatened to pull the whole economy into crisis if those payments stopped. Shortages of British bullion payments hit major commercial centers like New York City and Boston first.Footnote ⁵² John Rowe’s writings show a marked increase in the rate and size of bankruptcies after 1760, indicating that the end of the war initiated a credit crisis that went beyond the regular financial swings of the eighteenth-century economy. Debtors sometimes sought temporary refuge at Halifax to avoid their creditors in Boston. This practice of evasion relied on Nova Scotia’s 1750 Debtors’ Act, which prevented residents from being sued for debts contracted elsewhere before their arrival.Footnote ⁵³ In 1760, Rowe contacted correspondents in Halifax to locate a “Mr. Upcolis.” Rowe represented several concerned merchants who wished Upcolis to return to Boston to settle his accounts.Footnote ⁵⁴ The ability of merchants to collect overdue payments broke down over a distance and between different colonial governments. Inefficient local courts and political corruption in Halifax further prevented recouping investments.Footnote ⁵⁵

5. Merchant debt, litigation, and demilitarization after 1760

The military supply to Canada subsided following definitive victories against the French between 1760 and 1763. In 1760, just as the war had shifted clearly in favor of the British, the Duke of Newcastle submitted the largest budget of the conflict of approximately fourteen million pounds, half of which required borrowing. However, soon after this spending pinnacle, Parliament reduced the size of Parliamentary grants to the military government in Canada, a process that would reduce Nova Scotia’s provincial budget to a tenth of its wartime levels within 3 years.Footnote ⁵⁶ Access to public revenue began to fade. During this period, Rowe’s correspondence shows increased frequency and alarm over defaults among colonial merchants. In the summer of 1760, Rowe heard of the Quebec paymasters protesting the bills of Captain Arthur Brown, which caused Rowe some confusion. He wondered: “How he could be so Imprudent to draw bills & have no Effects” to cover the obligations. The extent of debts yet unpaid in the colonial economy, especially relative to remittable assets, had not yet become apparent to Rowe. The communication of information concerning debt occurred only as quickly as interested parties could compile all the information in their accounts and then write to each other on a case-by-case basis. In the fall of 1760, for example, John Rowe had no figures on the debts that his brother Jacob held for their firm’s business in Halifax. John awaited the surrender of Canada, at which point he expected a full memorandum on his brother’s debts held for the activities of Rowe’s firm there over the previous years. By the end of 1760, much valuable information that might have alerted a merchant to any impending credit crisis remained largely uncommunicated.

Signs of friction started to appear among Boston merchants in 1760. Thomas Hancock refused to accept bills of credit that John Rowe had received from his brother, likely because Hancock doubted the solvency of their issuer. John instructed Jacob Rowe to seek payment from the person from who he had received the bill since he could not find a market for it in Boston.Footnote ⁵⁷ In January 1761, John Rowe experienced the first clear indicator of an impending credit collapse when a bankrupt merchant named Joseph Green, whom Rowe and colleague Samuel Wentworth had paid for use of his ship Squirrell, fled Boston after having appointed Rowe and Wentworth assignees to “Receive & Dispose of his Effects for the Sole Benefit of his Creditors.”Footnote ⁵⁸ Rowe, along with Wentworth, faced a legal obligation to mediate between an absent debtor and local creditors unable to recoup the full value of their loans. Given that Rowe himself held substantial debts against Green, this position put substantial financial pressure on him. In March, he wrote to his brother that “Joseph Green is gone off & Considerable in Debt to me.”Footnote ⁵⁹

By December 1761, unpaid debts within the merchant communities of Boston and New York triggered litigation. Merchants typically mediated disputes with debtors outside of the courts, and the rise of debt suits after 1761 suggests the severity of the emerging credit crisis. To seek repayment from one debtor, Rowe turned to prominent Boston lawyer (and political radical) James Otis, who began collecting unpaid notes of hand from Rowe as evidence to be used in a pending lawsuit. To those belonging to Rowe, Otis added notes entrusted to Rowe enumerating additional unpaid debt by this debtor from correspondents in New York.Footnote ⁶⁰ Later that month, Rowe communicated to Otis some concern about a second outstanding debt owed by the merchant Perez Tillson.Footnote ⁶¹ By the spring of 1762, following a spate of defaults among fellow merchants, Rowe’s opinion on wartime credit markets had soured. He wrote to his brother Jacob in March: “As you purpose to go into Business with what you have Acquir’d, Let me give you this Advice, give as Little Credit as Possible.”Footnote ⁶²

Britain sent some bullion reimbursements to colonial assemblies and a small number of merchant contractors like Charles Ward Apthorp, but not enough to reimburse all creditors. Between 1758 and 1760, Apthorp’s firm received seven shipments of bullion to remit on the bills of credit he issued to at least 43 subscribers including the public account of the Province of New York. The seven shipments arrived in Men of War under the commission of the Royal Navy including the Winchester and Lizard. The bullion shipments were in mixed forms of bullion money including Spanish milled dollars, British silver guineas, and Portuguese gold by tale. Apthorp valued the sum of the shipment to be at least £568,225 sterling. This was a significant sum of funds under the firm’s management, representing approximately 2.78 percent of all British defense expenditures in 1758 and 1759 including payments to Continental Europe, the West Indies, Asia, and coastal Africa.Footnote ⁶³ Such direct shipments of sizeable bullion funds were unprecedented in the colonial period, indicating substantial power to allocate funds in the hands of a single private firm.

By 1760, Apthorp appears to have repaid obligations on the paper issued on behalf of himself and his agents Nathaniel Wheelwright and William Bayard in Boston and New York respectively, but regular repayments stopped thereafter. Unpaid debts of over £200,000 sterling remained on the books of the Apthorp firm and its agents, a figure that shows how much additional bullion from Britain Apthorp would need to retire these debts.Footnote ⁶⁴ After 1760, bullion shipments to Apthorp trailed off. But payments for provisions to multiple provincial merchants, ship captains, and paymasters continued thereafter on the credit of the Apthorp firm, increasing its obligations. Apthorp and his agents did not have the funds to fulfill the obligations of their bills as they did in the first 2 years of the contract.Footnote ⁶⁵ In the final 3 years of the war, the Apthorps continued business under the false assumption they would receive additional bullion shipments to balance their ledgers.

Remaining bills circulating as currency lost value when their issuers had nothing substantive to give when the holders of the bills sought their redemption in hard currency. Because the holders of these bills eagerly put them to use as a circulating currency, these shaky financial instruments now affected the thousands of individuals throughout the Northeast who held them. The debtor problem that Rowe had already observed beginning around 1760 started to spiral out of control in colonial port towns between 1763 and 1768 as creditors sued debtors, and debtors sued each other in disputes over responsibility for bad notes.Footnote ⁶⁶

A new credit currency system emerged under the centralizing authority of generals, paymasters, and Parliament. These authorities made this effort at centralization under the argument of military necessity. Although this currency system, and the military procurement system it arose from, relied on financial activity channeled through merchant houses, it was nonetheless more centralized than public finance methods organized through provincial government. The centralization of finance in this case meant not simply one governing unit exercising full control in the “command economy” sense, but rather a unification of otherwise competing interests into a single interest group dependent on direct remittances backed by metropolitan state credit. Such centralization allowed for the postwar collapse because many port town merchants sought to integrate themselves into this interest group because of the perceived benefits of a close financial relationship with the metropole. As evident in the postwar writings of John Rowe and others, the postwar contraction of credit would prove disastrous for those living within towns like Boston and would explain the emergence of radical new political movements that emerged among the commercial communities there. Pinched between the desire to maintain commercial stability between colonists, merchants, and England on one hand and the growing strain on Boston’s economy under the new imperial policy on the other, John Rowe would seek communal resolution in vain before realizing the futility of applying old communal measures to this new imperial problem.

At the end of the Seven Years’ War in 1763, Parliament, facing the reality of paying for unfunded national wartime expenditures, underwent an about-face in imperial economic policy which included revoking mercantile contracts and halting Parliamentary grants. The era of easy credit promoted by the policies of the Pitt administration ended as George Grenville became the Prime Minister and Chancellor of the exchequer. The metropole’s fiscal culture shifted away from the policies they had pursued during the war and instead sought to recoup expenditures and secure existing territory by exercising greater control of taxation and commerce within the empire.Footnote ⁶⁷ Following a recommendation from the London merchant Moses Frank, Parliament terminated the contract with the firm of George Colbrooke and Arnold Nesbitt which had given them the right to finance and provision British combatants through their connections including Charles Ward Apthorp in North America.Footnote ⁶⁸ In the austere political climate that swept metropolitan of English politics after 1763, merchants began to make accusations of corruption against metropolitan contractors responsible for taking out debts against the Treasury to pay North American merchants.Footnote ⁶⁹

6. Postwar British imperial policies, remittances, and the growing instability of American credit relations

After 1763, merchants considered the limited availability of bullion money, paired with policy directing its flow from the colonies, as the cause of their peers’ financial failures. The Currency Acts of 1751 and 1764 both limited access to currency that might allow debtors to make remittances within the colonies or to pay taxes. The Currency Act of 1764 along with the Stamp Act of 1765 explicitly mandated the payment for public obligations in hard currency rather than in any new issuance of paper money. This stipulation aggravated the remittance problem among merchants in the postwar credit crunch. Demand among the merchants for remittable funds meant that the price of these bullion currencies was high even before new administrative reforms further restricted and siphoned the limited supply. Colonial creditors, like the administrators looking to pay down the postwar public debt, preferred bullion money to cheaper inflationary private credit instruments and colonial paper issues which did not hold their value. Consequently, metropolitan public debt competed with colonial private debt for the same limited supply of money. This naturally produced antagonisms between the two interest groups and contributed to political opposition to the 1764 Currency Act by merchants and the webs of colonial creditors dependent on their complete and timely remittances.

Even if the common colonist did not know the precise origin of the economic decline, they would experience the results. Colonists started to intuit that their material interests no longer aligned with the metropole. Many merchants in port towns like Boston explicitly indicated the animosities that monetary shortages caused. It is at this point that much of the new rhetoric of resistance would begin to take hold in colonial port towns’ revolutionary circles. In 1765 and 1766, events like the Stamp Act Crisis emerged in the immediate wake of this credit turbulence. Mobs in Boston targeted administrators like Francis Bernard, Thomas Hutchinson, and Andrew Oliver who London tasked with enforcing the taxes and who had remained unwavering advocates of hard money policies since the 1740s. The shift to austere fiscal policies stripped debtors of remittable funds by both taxing available specie and preventing provincial governments from printing paper money that would benefit colonial debtors. Only months after major merchant bankruptcies, anti-Stamp Act mobs attacked and vandalized Hutchinson’s house and hung his brother-in-law, the stamp master Andrew Oliver in effigy. Hutchinson’s and Oliver’s promotion of fiscal austerity, revenue collection, and enforcement of the autonomy of admiralty courts to enforce debt litigation, all prevented an easy recovery from the postwar slump. Colonists saw Hutchinson, Oliver, and Francis Bernard as promoters of a minority interest in financial and commercial disputes.Footnote ⁷⁰

Given that the Currency Act of 1764 limited payment to increasingly scarce bullion-backed money rather than provincial paper or private credit, representatives of postwar imperial taxation formed an interest group in direct opposition to those suffering most from the failure of bankrupt merchants to acquire remittable funds.Footnote ⁷¹ Even if the fiscal burden proved relatively small in nominal terms, the pressing need to remit on debts meant that, to colonists in the postwar period, the real price of hard money was very high. Consequently, port town colonists rejected any new taxation policy, and saw the public representatives of fiscal and commercial restraint as enemies to provincial interests. During this period, the focus of urban mobs and pamphleteers on the vested interest of administrative elites with the ear of the king and Parliament makes sense given that direct connections to London appeared to reward a small minority of internet worked administrators and merchants like Thomas Hutchinson and Charles Ward Apthorp to the detriment of a debtor majority.

In the postwar period, some colonial merchants like Charles Ward Apthorp lobbied London merchant-statesmen and began to use civil litigation to shield their assets against creditors.Footnote ⁷² Additionally, they could use civil litigation to advance even further within the ranks of the colonial mercantile world by purchasing the devalued assets of bankrupt debtors. The English merchant Moses Frank’s father worked as a merchant in New York, and his son’s petitions to Parliament served only to strengthen the influence of merchants like Apthorp whose interest lied most in concentrating financial power in the elite networks of that city. Consequently, Apthorp, John Watts, and other New York merchants who had worked to monopolize war finance over the previous decade, benefited greatly when Colbrooke’s and Nesbitt’s contract transferred to Samuel Fluyder and Adam Drummond, who retained Moses Frank as an agent. Frank then selected John Watts as his agent in New York, thus finalizing the streamlined relationship between London and the New York mercantile network of Watts, Apthorp, and their allies.Footnote ⁷³ The ultimate losers of these events proved to be the excluded merchants in Boston and elsewhere who lacked such connections.

As part of the effort to reign in the fiscal excesses of the previous 4 years, Parliament approved administrative reforms between 1763 and 1774. English creditors also tightened their lending which gave struggling colonial debtors few options to return to solvency through new commercial ventures.Footnote ⁷⁴ Further reducing opportunities, the Sugar Act of 1764 placed increased costs on trade to West Indian markets. While the act did reduce duties paid on British sugar, it also promoted enforcement of strict commercial regulations that limited colonial access to foreign traders in the West Indies.Footnote ⁷⁵ This limited potential revenue into the mainland colonies, especially into New England where merchants depended on such trade for funds to repay their outstanding balances to artisans, laborers, agents, and other merchants for goods, services, and loans already rendered. Reforms targeting the West Indian rum trade also limited access to the Iberian bullion coinage that had traditionally served as remittable funds in the Boston economy.Footnote ⁷⁶

The failure to pay obligations produced three provincial factions. The first included unpaid artisans, urban laborers, and those merchants and other elite creditors who had lent their services or bills of credit to war financiers. The second faction included the minor financiers who owed money they could not pay to the first group like William Bayard, John Hancock, and Nathaniel Wheelwright. While clear animosities and tensions emerged between these factions, they both held common resentment against the third faction of high financiers like Apthorp, the Delanceys, and the New York Watts family, as well as the entrenched political elite like Francis Barnard and Thomas Hutchinson. Royal appointees in the colonies refused to waver from the hard money policies that had controlled for the runaway inflation of colonial paper currency relative to sterling until reforms in 1751.Footnote ⁷⁷ The period from 1763 to 1768 included an articulation of the interests of these factions through disputes over bankruptcies and urban financial collapse. Such conflict caused disaffected colonists to admit the futility of provincial dispute resolution. They chose instead to turn in united opposition against London and those they perceived as the privileged financial and political representatives in the colonies.

By the fall of 1764, John Rowe had found himself embroiled in multiple contentious arbitrations between Massachusetts merchants. Disputes between insolvent merchants often necessitated the participation of third parties with both expertise and the ability to maintain a degree of detached neutrality. On October 23, for example, Rowe spent the evening with three other merchants arbitrating the debts that Clement Jackson owed to underwriters. On November 2, after dining with John Hancock, Governor Francis Bernard, and three others, Rowe joined merchants Nicholas Boylston and Thomas Gray to spend the evening “at an Arbitration between Mr. Arnold Wells and young Mr. Austin of Charlestown.”Footnote ⁷⁸ The following evening, Rowe went to Boston’s coffee house to again, along with Thomas Gray and Mitabiah Bourne, to arbitrate a dispute between merchants John Russell and John Avery.

December 1764 brought continued efforts among Boston’s merchant community at internal dispute resolution as well as concerted attempts at legal action to prevent the outflow of valuable silver sterling through the new imperial taxes and customs system. On December 3, Rowe met with a committee of eleven other merchants, where they voted that one of them, Thomas Ivers, bring an action at court against the Customs Collector for demanding the duty of five shillings sterling per hundred on sugar cleared from his office. Significantly, a jury trial early the following month found in favor of Ivers. Rowe wrote that locals “generally thought it a good verdict.”Footnote ⁷⁹ This jury verdict indicates that Boston’s general population opposed the taxes on merchants’ revenue. The remittance problem was a public issue no longer isolated to a small number of merchants.

For Rowe and other merchants of the colonial northeast, the worst of the postwar financial fallout and conflict had yet to come. On December 27, 1764, Rowe dined with almost forty wealthy Bostonians at a celebration of the Brethren of St. John’s Lodge, unaware to them all that one of their number, the wartime provisioner Nathaniel Wheelright, was teetering on the edge of the most severe bankruptcy in Boston’s history to date. Merchants like Rowe and the members of the lodge had existed in close-knit social networks where interdependent communication and arbitration often solved disputes. However, the scale and irreconcilability of obligations threatened to rupture traditional unity by 1765. Wheelwright’s bankruptcy would send an entire network of northeastern creditors into panic. On December 30, 1764, the most predominant colonial architect of the wartime market for notes of credit, Charles Ward Apthorp, arrived in Boston after an almost decade long residence in Amherst’s financial stronghold at New York.Footnote ⁸⁰ Apthorp, originally a native of Boston when working for his father, moved to New York where family alliances with the Delancey political faction and the wealthy McEvers family of merchants allowed him close contact with Amherst and other metropolitan connections.Footnote ⁸¹ Apthorps wartime experience contrasted with the Boston merchants without these direct contacts. Apthorp was in the early stages of a dispute with his New York agent, and brother-in-law, William Bayard, concerning outstanding balances of £249,204 sterling, more than double the net worth of any merchant in continental North America and surpassing the outstanding debts on Wheelwright’s accounts by about £79,000.Footnote ⁸² However, Apthorp’s public reputation was unstained by accusations of insolvency at that time. Consequently, he stood in a good position to target the market for devalued assets of bankrupt Massachusetts merchants in the following months.

In January 1765, Boston lawyer Robert Treat Paine received letters from lawyers Robert Auchmuty and Henry Laughton instructing him to execute an action in court against Thomas Cobb of Attleborough as a trustee to Nathaniel Wheelright. Wheelright had outstanding debts throughout the colonies, and such litigation indicates the social extent of the merchant defaults. Auchmuty and Laughton wrote frantically to Paine: “it will be serving a number of orphans who are greatly concern’d [sic]. Have but a moments [sic] time can only add that the Town is in the utmost confusion. This note is but little more than half the Debt.”Footnote ⁸³ Through appeals such as this, colonial communities sought to pressure payment from indebted merchants. Auchmuty and Laughton’s concern for the finances of the community of Attleborough indicate that payments to noteholders were necessary for the general welfare of a wider community beyond simply port town commercial communities. Large defaults and bankruptcies had widespread social implications.

Merchants like Wheelright had only the recourse of selling off their remaining assets to those who remained wealthy enough to purchase them. This likely meant selling at low prices given their urgency. For bankrupt merchants, liquidating assets remained the only option to give them any chance at avoiding complete social ostracization, or possibly imprisonment. The selloffs of merchant debtors, especially in and near Boston, benefitted those merchants like Charles Ward Apthorp, who retained their wealth through appeals to influential officials in New York and London. On January 15, Rowe recorded: “The Trade has been much alarmed this day. Mr. Wheelwright stopt [sic] payment & kept in his room. A great number of people will suffer by him.”Footnote ⁸⁴ On January 19, Rowe would learn of the bankruptcies of John Scollay, John Dennie, and Peter Bourne, noting that he was “like to be a large sufferer by Scollay.”Footnote ⁸⁵ That Sunday, January 20, Rowe and Boston descended into dread as they scrambled to find solutions to the defaults. That same day, John Rowe recorded that the bankruptcies of Wheelwright and Scollay had the town “greatly distressed,” and that he had been called upon by the Sherriff to help address the situation. Rowe described his mindset saying: “Did not go to church, my mind too much disturbed.”Footnote ⁸⁶ The following day, the General Court met to address the repeated bankruptcies and to address the town’s consternation with an Act for the Relief of Insolvent Debtors, which Rowe wrote “would be very seasonable at this time.”Footnote ⁸⁷ Bankruptcy cases continued to appear regularly before the General Court into March. Rowe continued to participate in arbitrations, including the case of Captain John Phillips on March 19, but the resolutions to bankruptcies had clearly shifted from the merchant community into the purview of courts.Footnote ⁸⁸

The number and scale of the bankruptcies had overwhelmed the traditional tendencies toward interpersonal resolution among merchants. In a last attempt to find remittable revenue, Nathaniel Wheelright appointed Thomas Cobb as his legal trustee who sought to fund Wheelright’s obligations by first selling off mortgages, which Wheelright held on several properties, to Apthorp, who was Wheelright’s brother-in-law. This sale proved insufficient to raise enough funds. Some of Wheelright’s allies’ petition to the Massachusetts General Court to grant him a 6-month reprieve, which they rejected. Creditors including Haughton and Auchmuty continued to bring suits against Wheelright. Wheelright fled Boston in the spring of 1765.Footnote ⁸⁹ On March 25, Rowe met with the other Wheelwright creditors, including Charles Ward Apthorp, to discuss whatever limited options remained after Wheelwright had fled the colony.Footnote ⁹⁰ A few months later, on June 9, 1765, Rowe met with Scollay’s creditors at the Boston coffee house, where they decided that Rowe, William Phillips, and John Erving would serve as trustees to divide Scollay’s assets.Footnote ⁹¹

Thomas Cobb, Wheelright’s trustee, also held outstanding debts in Boston, especially to the Merchant Thomas Fitch. Cobb followed the same practice as he had when he served as trustee to Wheelright and began selling assets including a 100-acre property in Taunton, Massachusetts and a 200-acre property in Attleborough, both sold to Samuel Fitch. Cobb included both properties in a mortgage financed by Apthorp. Cobb, Apthorp, and Samuel Fitch signed the mortgage deed on March 30, 1765.Footnote ⁹² Wheelright’s and Cobb’s cases represent how the rush to sell assets to avoid defaults favored a class of protected merchants, like Apthorp, who could continue to fund purchases on credit through this period of contraction. Unlike Wheelright and Cobb, Apthorp, rather than selling to pay debtors, entered a second speculative period of buying land and capital including thirty-six of the seventy land allotments which the town of Lancaster, Massachusetts issued between 1765 and 1770.Footnote ⁹³ These purchases further augmented Apthorp’s political sway in Massachusetts as he could dominate the town’s proprietor meeting as an absentee landowner through agents in the town who operated on his behalf. Apthorp’s appointment as the Crown’s representative in New York in 1763 further solidified his postwar political influence.Footnote ⁹⁴ Meanwhile, most other colonists, including Apthorp’s merchant peers, continued to struggle.

On July 9, 1766, the Boston Gazette reported that Nathaniel Wheelwright had died in Guadeloupe.Footnote ⁹⁵ The following day, July 10, 1 year after a mob had ransacked his house and destroyed most of his property, Thomas Hutchinson, then serving as Chief Justice in Boston, issued a warrant against the Taunton merchant Ratcliffe Hellon for debts owed across Massachusetts. These debts included substantial sums to Taunton residents Robert Treat Paine, John Adam, and George Williams. On July 30th, Apthorp’s Boston agent William Molineux informed him that he had obtained a bill of sale for a ship from Hellon. Apthorp purchased the vessel on credit with a price dependent on a valuation upon its arrival in New York. Hellon died that same month and his creditors Paine, Adam, and Williams served as trustees of his estate.Footnote ⁹⁶

In May 1766, Rowe spent significant time continuing to resolve and discuss the General Court’s recent bankruptcy act with Robert Treat Paine and Robert Achmuty, and would spend the following weeks settling accounts with several merchants after what Rowe referred to as “many debates.” In the coming days, official word would arrive of the repeal of the Stamp Act which Rowe described as “Glorious News.”Footnote ⁹⁷ At the end of the month, Boston elected James Otis speaker of the House, but Governor Bernard vetoed the election along with five others. The House of Representatives chose Samuel Adams as clerk by a one vote margin. Rowe described him as having “a great zeal for Liberty.” The new, more radical political environment emerged from the turbulence of default and disaster that had upset the old order of earlier decades. On November 25, 2 days before Thanksgiving and John Rowe’s fifty-second birthday, he spent the afternoon with the bankruptcy committee of the General Court along with James Otis, Samuel Adams, John Hancock, and others. Of the meeting, he wrote: “Am in hopes wee [sic] shall get Redress in our Trade.” In the following months, Rowe would continue to meet with creditors as well as attend multiple trials litigating debts in Boston.

In February 1767, the Massachusetts House of Representatives met to devise a land bank scheme to create a new currency emission, in partial defiance of imperial policy, which would allow for the creation of some supply of currency that might be used to repay debts. This directly conflicted with the stipulations of Parliament on paper currency issues via the Currency Act which colonists increasingly found untenable. Colonists appealed to Parliament for relaxed interpretations of legal tender laws, but this resulted in no adjustment to the mandate against colony paper currency for paying Parliamentary taxes. Governor Bernard and Lieutenant-Governor Hutchinson, backed by the Board of Trade, guarded against any attempts by the colonial legislature to produce an alternative currency. They did this to protect real returns to creditors who might be hurt from having the value of their credit reduced by inflation.Footnote ⁹⁸ At this point, however, many creditors considered repayment welcome in any form.

Given the lack of hard currency and the extraordinary debts of local bankrupts, fiscal conservativism would have had little immediate appeal even to creditors like Rowe. They had few options other than colonial paper. With the outflux of specie money, given that the stipulations of the 1751 Currency Act still restricted the use of colonial paper for paying public debts, the practical choices for remittable currencies by 1764 included paper emissions, like a chartered land bank, worthless private notes backed by the credit of merchants fighting bankruptcy, or nothing. The old hard money position that Bernard, Hutchinson, and the Board of Trade advocated for could not find political support in this environment.Footnote ⁹⁹ The rapid shift from easy credit to austerity at the end of the Seven Years’ War had made traditional forms of fiscal conservativism politically unviable, eroding the support that Bernard and Hutchinson might earlier have had in the merchant class. Rather, creditors turned entirely from both monetary policy and arbitration toward litigation to salvage whatever they could in more confrontational, winner-take-all, forums.

Charles Ward Apthorp engaged in a prolonged dispute with his New York agent and brother-in-law William Bayard over the £249,204 of obligations to holders of promissory notes used to finance war expenditures on credit during the war. The Apthorp–Bayard case illustrates how, in addition to the fracturing of mercantile connections, personal relationships disintegrated through the postwar defaults as well. During the war, Apthorp and Bayard merged families through marriage to form a merchant kin network operating under Apthorp’s firm, an alliance that would give both men net a worth, not yet counting their obligations, between £50,000 and £100,000 sterling by the end of the war. Only four merchants in New York had a net worth in this range: Apthorp, Bayard, John Cruger, and Apthorp’s close colleague John Watts.Footnote ¹⁰⁰

Social fissures produced by default continued to cause turmoil in Massachusetts society. After a brief period of optimism following the repeal of the Stamp Act, Boston merchants realized that no functional currencies remained in the colonies to remit on debts. Parliament continued to enforce duties that further pulled remittable hard money revenues away from the debtors who needed it. In December 1767, Rowe lamented the “Duties on Glass, Painter’s Colour’s & c. An Imposition on America in my Opinion as Dangerous as the Stamp Act.”Footnote ¹⁰¹ These new duties, known as the Townshend Acts, provoked new protests against Parliamentary taxation powers over the colonies.Footnote ¹⁰² On March 1, 1768, Rowe and a committee of merchants met in Boston to discuss this problem and, specifically, how the abundance of debt and scarcity of good currency, endangered the political stability of the colony and empire. Rowe wrote:

Rowe expressed a concern prevalent among the Boston mercantile community, that British imperial policy produced observably harmful effects on colonial commerce and monetary stability. Rowe observed the expansionary war and credit markets of the 1758–1762 period, mirroring the general optimism. However, after 1762, and especially by 1767, he recognized a systematic remittance problem emerging from the transition from wartime and peacetime markets. To Rowe, the prevalence of colonial debt, paired with the costs of public revenue on colonists, threatened the health of the fiscal substructure at the base of the British imperial state. He wrote:

The demands of the state had disturbed a stable traditional relationship between provincial and imperial finance. Debt-financing through private credit during the Seven Years’ War, rather than solidifying imperial holds on the economy, created the conditions for the final collapse of imperial credit. This collapse severed many of the fiscal and political linkages that unified the North American colonies with the British metropolitan state.

7. Conclusion

Colonial British American political development emerged from a general willingness to accept the benefits of state expansion paired with an inability to make centralized imperial states credible to a dispersed population. Fiscal linkages were necessary for state capacity. Projection of military force occurred effectively only in cases where peripheral financiers could use their regional networks to provide services to military units. While imperial policy proved effective at incentivizing merchant–financiers to shift their efforts toward the Seven Years’ War, it could not maintain such incentives indefinitely. Postwar transition prompted austere fiscal policies that increased taxes on colonists and reversed the flow of hard money toward imperial administrators and away from indebted merchants desperately seeking means to repay expenditures made during the war. Such a sudden reversal of the fiscal relationship with the British state produced an imperial crisis as colonists reevaluated the credibility of the metropole and its provincial administrators.

The postwar crisis of British imperial credibility described in this article complicates the conceptual division between a weak and a strong state. The case of the mid-eighteenth-century colonial war financiers indicates that state administrators could use their offices to accomplish collective ends. Specifically, they could create conditions under which American subjects were willing to contribute in mass to institutionalized violence against French imperial competitors. However, such capacity often proved transitory and, in the long term, even illusory. Unified action against the North American French required creating an incentive structure that convinced colonists to contribute to imperial goals. However, this incentive structure could not exist indefinitely regardless of the intentions or efforts of imperial administrators. Consequently, the question of the strength of the British transatlantic fiscal state differs based on whether one analyzes it over the short term or long term. Long term, in this case, means the length of time necessary for subjects to weigh their benefits of participation in the affairs of the imperial state. Imperial administrators acted to expand the metropolitan state apparatus, or at least expressed intentions to do so, and colonists often perceived such actions positively for a time. However, subsequent communication, learning, and new demands of the state on its subjects revealed that short-term intentions contrasted markedly with long-term realities.

The Seven Years’ War produced an accelerated articulation of the fiscal relationship between Britain and its North American colonies. Military requirements spurred a fiscal transition after 1758 as wartime exigencies motivated military officers, merchants, and politicians to streamline relationships between provincial firms and armies. Imperial rivalries created the impetus for consolidation of war finance services in the hands of a few firms and their agents. From the perspective of the metropole and military administrators like Jeffery Amherst, provincial intermediaries were necessary to provide the credit and liquidity necessary for quick military action. Expectation of benefits from those providing such services yielded a market boom fueled by the expectation of interjections of metropolitan specie. When such payments did not meet expectations, wartime unity gave way to postwar fragmentation. Transatlantic society reverted to a resting state of de facto colonial autonomy and combativeness with imperial demands.

The shock of the failure of the British state created social fissures and radicalization as merchants and other port town residents gradually recognized a crisis of accountability for the transfer of funds. Demands for remittances exacerbated tense relationships between provincial and metropolitan communities as colonists and tax administrators laid claim to the same scarce money to fulfill their respective obligations. Money and credit served as a symbolic representation of obligation between the empire and its subjects during the controversial administrative reforms of the 1760s. The economic instability documented in the writings of John Rowe indicates how financial crisis forced the issue of the long-term sustainability of Boston’s transatlantic relationship with, and reliance on, England. Demilitarization after 1760 provoked imperial crisis and, ultimately, political transition during the early stages of the American Revolution. The failure of the British imperial state to meet the perceived obligations of subjects would have weighed on the minds of many of this founding generation. Continued imperial ambitions in the early national period would necessitate addressing this issue either by strengthening the capacities of the national state or readdressing the fundamental assumptions of what states and citizens owed to each other.