Colonial Economy
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Basic Information

The Monopoly by Royal Decree system was applied in the Colonial Era, and it shaped (warped, even) the economy of the colonies. Most colonies were established by Charter Companies as private business ventures. Effectively, entire colonies started as Company Towns.

Let's say a colony would produce a bunch of cotton. You (as a typical colonist) might want to spin that into cloth then make your own clothing. If you're good at it, you might want to make some clothes for your neighbors, and eventually open up a shop selling your wares. However, a legal monopoly decree was in effect saying you couldn't - only this fellow down the street, who happened to be the Governor's cousin, was allowed to make and sell clothing locally. The punishment for violating such monopolies tended to be severe and harsh.

So, the only thing you could do is send the Cotton to Europe, via the King's agent - the Colonial Governor. That agent would ship the cotton to Europe, where it would be made into clothing, then be shipped back and sold. So, you may want to shop local, but in the colonies often your only choice was to buy imported goods. Goods from which the Governor, the King, a Shipping Company, and Manufacturers back in Europe all took a cut. Such an export-only economy ends up with a lot of inflation, and a good bit of instability.

Despite these monopolies, the Charter system failed to turn the quick profits that had been expected at the start of the era. As a result, many of the companies sold their charters to the settlements, resulting in differing amounts of freedom and financial solvency in different colonies. Given that context, the Boston Tea Party and similar protests aren't surprising. (Though, admittedly, it had a lot to do with taxation as well.) Over time, as more of the monopolies were broken up, the colonies became more and more independent. On the other side of the coin, the powers of Europe felt they'd already given up quite a bit in the colonies, and weren't ready to say goodbye to taxes as well. This lead to a series of revolutions - of which the American Revolution was but one.

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Game and Story Use

  • This common and unavoidable aspect of daily life in the Colonial Era was also a common cause for Protest, Piracy, and Revolution.
  • Note that the system of monopolies was, to a degree, continuous with the medieval Guild system, which also put significant brakes on free enterprise - the Colonial system merely choked the number of franchises provided in the colonies.
  • Also, the concept of colonies supplying the mother country with raw materials and demand for manufacturing goods, whilst the economy back home produced goods to meet colonial demands was a key part of the economics of colonialism and the loss of this integrated system was part of the significant economic disruption that followed WW2 and the final collapse of the remaining European empires.
  • An interesting backdrop / bit of flavor for adventurers who Wander the Earth in the right time periods - differing colonies, even if adjacent, might have wildly divergent economics, prices, and financial laws. Temporary shortages (as well as monopolies) can lead to big price spikes. Shipping and trading aren't nearly as much fun as adventuring, but there may be opportunities for PCs to make money with a ship or caravan (and the adventure can come from pirates or ambushes).
  • This can very easily be recycled in space.
  • Properly managed, this sort of system could have been instrumental in preventing the colonies growing the sort of industrial base they needed to become independant … managed for maximum short term profit, it instead served only to promote the cause of independance.
  • Like any kind of state meddling in the economy, this gives a great deal of scope for enterprising individuals to engage in a certain amount of unlicensed free trade.
    • John Hancock, a leading figure in the American Revolution, got much of his fortune from his family's smuggling business
    • Many Spanish colonial settlements - bound by extremely restrictive conditions on their trade - were reasonably "vulnnerable" to being "forced to trade at gunpoint" by foreign privateers.
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