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For Ready Money
from the For Ready Money Electronic Field Trip Teacher Guide
After John Rolfe introduced a South American variety of tobacco in 1613 did colonial Virginia have a profitable export. Like other English colonies, Virginia exported raw materials such as tobacco, grains, lumber, animal hides, and iron to be sold in the mother country. The profits were then used to purchase commodities from England. It was a lucrative trade. By the eighteenth century, tobacco was the basis of Virginia's economic system. In 1730 Lieutenant Governor William Gooch convinced the Virginia legislature to pass a law titled: "An Act for Amending the Staple of Tobacco and for preventing Frauds in his Majesty's Custom." This important piece of legislation set up a tobacco inspection system that transformed the local methods of marketing tobacco.
[The primary method for disposing of tobacco crops was] a consignment system that was most commonly employed by large tobacco producers . . . On arrival in England, the tobacco was sold by an English merchant who received a commission for his efforts. The proceeds had to be returned to the planters in the form of merchandise because cash could not be exported from England. A planter who sold by consignment assumed the risks of shipping, the cost of storage in England, and customs fees, but he usually could acquire his goods more cheaply this way than if he purchased from a local Virginia merchant. After costs were paid, the planter usually cleared from £10 to £12 sterling per tobacco hogshead. If the planter's tobacco sold for more than his order for goods amounted to, which usually went along with his shipment of tobaccothe merchant credited his account with the balance.
The tobacco produced by a large plantation the Tobacco Inspection Act of 1730 provided the means to carry on the retail distribution of goods easily and efficiently for the first time. The act provided the incentive needed for traders to establish permanent retail establishments in the colony because planters now did not have to sell their tobacco when the annual fleet arrived but could sell their notes anytime. Now merchants did not need the warehouse facilities and manpower to physically handle tobacco nor did they need to be expert in judging quality. Even though planters now bore the cost of getting their crops to the inspection stations, they too benefited from the act. The notes were easy to negotiate and planters could bargain with several merchants at different locations. For example, a planter living in a distant part of the colony could sell his tobacco notes to a merchant in Williamsburg and the merchant was taking no chances with buying inferior-quality tobacco. Usually merchants never saw the tobacco they purchased and exported after the passage of the Tobacco Inspection Act of 1730. Small planters now had the opportunity to buy goods year-round instead of being forced to buy a year's supply at one time from itinerant merchants. The Tobacco Inspection Act of 1730 made the direct sale of tobacco much safer and cheaper for the merchant and provided small producers with convenient means of selling their crops and buying manufactured goods.
Anyone involved in farming or in business needed to maintain a set of account books to keep track of customer debts and payments. Three basic types of account books were used to record business transactions: waste books, journals, and ledgers. A waste book contained a chronological listing of all daily transactions. At the end of each day, the waste book information was transferred to a journal (also known as a day book). The most important account book was a ledger. It contained customer account information, with one full page per customer. A customer's purchases (debits) were recorded on the left side of the page; payments (credits), on the right. Some business-people kept additional books, such as cashbooks for recording cash transactions, tobacco books for noting tobacco purchases, and inventory books for tracking business inventory.
Bookkeeping was an important skill for every successful farmer or business person. People learned bookkeeping and the fundamentals of running a business in several ways. Parents or other family members often taught their children about the family farm, store, tavern, or trade shop, and "the books." Trades apprenticeships included the basics of bookkeeping and business management. Mercantile apprenticeships also offered excellent business training, including reading, writing, mathematics, bookkeeping, and inventory control. A few privileged young boys first attended school in England to learn the basics of reading, writing, and bookkeeping and then were apprenticed to merchants in Virginia or England.
In October 1771 James Robinson, manager of all Virginia stores operated by the Scottish mercantile firm Cuninghame and Company, advised one of his newly hired store managers:
With regard to books, the same method that you have learned and which you know is used here I recommend to you. Keep your ledgers constantly up, posting each day's dealings at night or next morning if possible. Hereby you will always be ready to settle with your customers in a fair and distinct manner. You must be exceedingly cautious to whom you give credit, and your debtors do not owe more than they are worth. You will soon get thoroughly acquainted with their circumstance, and must then act accordingly. Lay it down as an unvariable rule to settle with every person once in twelve months. When it is necessary and prudent take bond. It often happens when a planter is largely in debt at settlement or when any considerable sum of money is advanced them they will offer a security on their estate which should at all times be accepted even from those in the best credit. T. M. Devine, ed., A Scottish Firm in Virginia17671777, W. Cuninghame and Co. (Edinburgh, Scotland: Scottish History Society, 1984), 50.
Colonial customers were diverse, including white men and women of all social ranks as well as slaves and free blacks. In Virginia 5 to 10 percent of surviving account records were in women's names. Women, free blacks, and slaves also produced goods and services generally not provided by other businesses, such as locally produced fruits and vegetables, dairy products, and eggs. With the master's permission, for example, a slave could earn money by keeping a small garden, raising chickens, fishing, or harvesting oysters in their spare time. These items were usually sold at the local market for ready money. Farming was not the only occupation in Virginia. Many people, particularly in Williamsburg, worked for someone else, receiving either a yearly salary or payment as each project was completed. Like today, eighteenth-century wages varied considerably. A journeyman earned a yearly salary of £25 to £60 per year, depending on his trade and skill level. A merchant employed to manage a store operated by a British mercantile firm could earn £75 to £300 per year in addition to room and board. Peter Pelham was paid £40 per year plus free housing as the jailor. In 1770 the usher at the Grammar School at the College of William and Mary was paid a yearly salary of £75. The royal governor of Virginia received salary and benefits of approximately £4,000 per year. To place this income information in context, an individual earning £15 to £20 per year could survive. A person earning more £100 per year was doing quite well. And someone earning more than £1,000 per year was considered wealthy.
Colonial consumers were part of a large, complex transatlantic economic system. Tobacco and other raw materials were shipped from Virginia to Great Britain. Virginians used the profits from these exports to purchase and import British and European manufactured goods, porcelain from China, molasses from the West Indies, spices from the Middle East, fine wines from Madeira, and slaves from Africa. Most of the commodities were also available for purchase in local American stores and businesses. This economic system remained intact until the nineteenth-century Industrial Revolution reduced America's dependence on foreign manufactured goods.This excerpt is from the For Ready Money Electronic Field Trip Teacher Guide, which can be used as a stand-alone but also compliments the Electronic Field Trip's live broadcast and web activities. To subscribe to our Emmy-award winning Electronic Field Trip series, please visit http://www.history.org/history/teaching/eft/index.cfm or call 1-800-761-8331.