1749—Colonial Hyperinflation and Currency Deflation

The American colonial financial crisis of the late 1740s was the confluence of a number of growing currency problems throughout the British colonies, exacerbated by war and trade issues. Periods of hyperinflation, shortages of specie, the uneven quality of colonial paper currencies, the costs of wars with France, and trade issues with Britain all contributed to the colonial crisis.

Hyperinflation was particularly problematic in the colonies of Massachusetts, Rhode Island, Connecticut, and New Hampshire. During the 1740s, the annual inflation rate was above 19 percent. (By comparison, during the period of high inflation in the United States in the 1970s, it never rose above 13.3 percent.) Inflation increased the price of basic commodities, such as molasses, by 60 percent from 1745 to 1749. Extreme increases in the prices of raw goods created a nightmare for British trade, which counted on a supply of cheap colonial raw materials for their manufactured goods. Parliament was pressured to enact the Currency Act of 1751, which prevented the colonies from printing their own paper money. The resulting lack of money in circulation, along with the high cost of goods, ultimately caused riots in the streets of Boston.

Currency problems had plagued the colonies from the start. Great Britain promoted a barter system for goods from its American colonies because it gave an advantage to British manufacturing and the goods were carried in British ships. Colonial exports of skins, ginseng, and tobacco were paid for in English goods such as clothing, pewter, and glass windows. The colonists preferred to receive specie (gold and silver coins) as payment, but coins were in short supply. Unlike Spain, Britain did not have colonial gold and silver mines as a source of the precious metals needed to make additional specie.

The best source of coins for the colonies was from piracy, as British and colonial pirates and adventurers captured Spanish treasure ships sailing between Spain and its colonies. The most common coin in the British colonies was the Spanish dollar, which could be divided into eight pieces. The activities of such pirates were welcomed by the colonists and were responsible for the wide circulation of the Spanish dollar. More coins in circulation helped improve the terms of trade for colonial merchants and farmers, because a currency-based trade is more efficient than barter.

The king of England had refused to allow the colonies to mint their own coins. During King William’s War (1689–1697), when British colonists first began to pay for their own defense forces, the king had allowed the colonies to pay soldiers in paper money known as “bills of credit.” Slowly, the creation of these bills of credit by fiat outpaced the silver in circulation, which was needed to lend the bills legitimacy. This resulted in inflation throughout the colonial economies from 1710 to 1750. These bills of credit were backed by the colonial governments and had to be accepted for goods; thus, they had the attributes of paper money. Like our paper money today, the bills of credit were not backed by silver or gold. Inflation increased as spending on King George’s War (1744–1748) and on the French and Indian War (1754–1763) put more of this paper money into circulation and created demand for more goods.

The tight trade links between British merchants and the colonies exacerbated colonial inflation. English merchants had begun accepting these bills of credit as payment for the goods they shipped to the colonies. As the value of the bills began depreciating because of inflation in the colonies, British merchants began to charge more for their goods in compensation. A spiral of inflation began.

The currency crisis created local economic turmoil and recession as well as inflation. In the 1740s, the rate of inflation was in the double digits, creating street riots. American traders were at odds with British merchants as their barter system broke down. Another problem arose because the New England colonies could not collect taxes from farmers and merchants who were not making any money. Small farmers found themselves in deep debt to merchants in Boston, who made the currency shortage in the colonies—and thus the recession—worse by shipping much-needed colonial coins to Great Britain in return for goods.

The colony tried another form of bills of credit backed by land, known as the Land Bank. In effect, the Land Bank would create more paper money and allow more money in circulation. The idea was extremely popular with the colonists. The governor and the king did not like the idea of the Land Bank, however, judging it would further increase inflation and allow colonists to escape full payment for goods. The Land Bank idea went forward because it was popular in elections but ultimately failed. The father of Samuel Adams, one of America’s founding fathers, was one of those who went bankrupt when the Land Bank failed.

The combination of the economic downturn and inflation made life miserable in the colonies. Shortages of silver required customers to supply their own old silver if they wished new silver implements made. The shortage of currency prevented landholders from paying taxes, which in turn often resulted in their property being seized. Merchants could not sell their goods because their buyers lacked currency.

In Massachusetts, political pressure mounted for reform as tax revenues dropped, trade tightened for lack of money, and street protests continued. Massachusetts began currency reforms in 1750, which offered a way out of the crisis, but the other colonies refused to join it. Massachusetts worked with Great Britain to retire bills of credit through the payment of specie to the colony. Colonists had four months to turn in the bills, after which they became worthless. No future paper money would be allowed. Shortfalls would be covered by additional taxes. Massachusetts also banned the use of paper money from other colonies. The state could still issue bills backed by specie but retained an exception in case of a major war.The immediate effect was a shortage of currency, which made things worse in the colony for a brief period. But Massachusetts issued a new type of paper currency called a Treasury Note, which was redeemable in specie and earned interest while it was held. Although Massachusetts had not planned for these treasury bills to circulate, they did and became a type of currency. The backing of these bills with specie restored confidence in the colony’s currency. The Massachusetts reform proved highly successful as prices fell and inflation declined. By the 1740s, the Boston Land Bank had circulated these new land-backed notes at an alarming rate, and Parliament used the old Bubble Act of 1720 to restrict the practice. 

Finally, Parliament moved to further restrict paper money in 1751.Britain passed the Currency Act of 1751 to impose the Massachusetts reform on Rhode Island, New Hampshire, and Connecticut. More wealthy colonists and some farmers who owned bills of credit from the Land Bank were bankrupted. New England once again suffered a mild recession. The Currency Act did not apply to the middle and southern colonies, which at the time had a stable currency. Unfortunately New York, Pennsylvania, and Delaware continued to print bills to finance the French and Indian War. Eventually, all the colonies would be covered under the Currency Act of 1764. Virginia remained a special case because of its direct tobacco trade with Great Britain. Virginia’s high currency demands during the French and Indian War allowed it to continue issuing paper bills.

Economists still use the hyperinflation in colonial Massachusetts as a case study for understanding modern-day inflation. It is striking that this colonial inflation was far more problematic than even America’s experience with high inflation in the 1970s. The currency reforms that arose in Massachusetts and that Britain imposed on the colonies helped to return some stability to colonial economies. The failure of individual currencies from each colony would ultimately lead to the use of a common currency, under a common government.

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1733—Molasses Act

Britain had a large stake in molasses from its slave-worked plantations in the West Indies. Sugar cane was grown in large quantities on the islands of Barbados, Jamaica, and Antigua in the Caribbean West Indies. On these plantations, sugar cane was harvested and distilled into thick, syrupy molasses and sugar crystals. The sugar crystals were shipped to Great Britain directly while molasses went to New England for rum making. The non-British West Indies sent molasses to New England as part of what became known as the triangular trade, which Britain did not control. One common triangle involved picking up slaves in Africa, selling those slaves in the West Indies for molasses, shipping molasses to New England, and then taking rum produced in those colonies back to Africa to barter for more slaves. There the triangular trade would begin again. A great deal of this trade was barter, but the West Indies was also a source of currency in Spanish dollars for New England. New England ships also made up a growing part of the triangular fleet.

Rum was a huge industry in colonial America, with local demand requiring four gallons per year for every man, woman, and child. Distillers in Boston alone were making more than a million gallons a year by 1733. Rum was the standard alcoholic beverage throughout the colonies, and was even critical to the fur trade with the Indians. The molasses trade was an integral part of the triangular barter trade system between Africa, the colonies, and the islands of the West Indies. In this respect, the growth of the molasses trade was instrumental in the rise of colonial shipbuilding, fishing, whaling, and the slave trade. Molasses had become the main commodity bartered by traders in the West Indies for New England salted fish—another major colonial industry.

In the early 1600s, rum was made where molasses was made, in the British West Indies. The price of rum remained high because the British held a monopoly on the trade. In response, the Yankee traders of New England developed a major rum industry by purchasing better-quality and cheaper molasses from non-British sources to be distilled in New England. The British West Indies and New England were not well-matched trading partners, however; New England wasn’t interested in buying the more expensive British molasses, and the West Indies did not need the lumber or fish New England produced.

The French West Indies, on the other hand, were prevented from shipping rum or molasses to France because of French laws to protect the country’s brandy industry. This gave the French West Indies an incentive to barter and trade with the New England colonies, and they worked out a deal to exchange their molasses for New England fish. This arrangement ultimately cut the price of rum produced in New England to one third that of rum produced in the British West Indies.

The loss of their New England market for molasses put the British West Indies into an economic depression. At the time, sugar from the West Indies was one of the major imports into England. Plantation owners in the British West Indies pressured the British Parliament to regulate the molasses trade with Britain’s American colonies to help these owners recapture their previous advantage.

In acting to help these plantation owners, Parliament underestimated the importance of the molasses trade to New England and overestimated its ability to regulate colonial trade. The Molasses Act of 1733 imposed a heavy tax on molasses (the major sweetener of the colonies), sugar, and rum imported into Britain’s American colonies from non-British sources. The act affected some 40 distillers in New England as well as all of the North American colonies.

The passage of this Molasses Act caused a panic in New England because trade with the islands of the West Indies was critical to the whole colonial economy. The act’s tax on molasses caused a major reduction in molasses supply and a price increase. The price of rum rose as a result. The amount of currency in circulation declined because of the reduction in trade with the Caribbean islands that were not British, and even local merchants in New England felt the pain from lost business.

Because of the economic threat, New England traders soon found ways to avoid the tax. New Englanders were seasoned world traders on a par with traders in European nations. Early on, smuggling and smuggling routes for molasses and rum developed as a growing network to evade the tax, but the prices continued to increase. Piracy increased with the illegal networks as smugglers worked outside the protection of the British navy. Another technique used to evade the molasses tax was to have ships carrying molasses from the Caribbean rendezvous with another smaller ship to offload the molasses at sea. The routes were changed to avoid government tax collectors at various ports.

Bribery was also was very common because of the heavy tax of six cents a gallon. The tax collector could be bribed a penny a gallon to turn his head to not see the illegal imports, saving the trader five cents a gallon in tax. Even colonial governors did not enforce the Molasses Act to the fullest extent, understanding the importance of this trade for the overall health of the colonial economy. Britain had also underestimated the negative impact of the act on the traders of other colonies such as Rhode Island and South Carolina, who were sometimes part of triangular trade. After a few years, the tax avoidance network became well established.

The Molasses Act was really part of a series of Navigation Acts to limit colonial production. The first of several British acts to discourage colonial manufacture and support British mercantilism was the Hat Act of 1732, which was a reaction to the production of more than 10,000 hats in New England in 1731. The Hat Act limited the number of colonial apprentices and prohibited the exportation of hats. The Molasses and Hat acts were an effort by Britain to destroy the booming manufacturing community in New England. Had the Molasses Act tax been fully implemented, it would have shut down the New England rum industry, destroyed the highly profitable triangular trade of the colonies, and been a major inflationary factor on staple goods for the colonies. The crisis caused by the Molasses Act was the first to demonstrate the interrelationships among mercantile trade systems.The Molasses Act created a major economic crisis for the British colonies of North America. It cut off the New England rum industry’s best source of molasses by a tax on non-British sources. It was not designed to be a revenue act but one aimed at the control of colonial trade. Britain operated under the economic philosophy of mercantilism, which assumed that the primary function of colonies was to supply natural resources for the mother country’s factories.

Ultimately, the Molasses Act backfired on Britain. It impeded instead of promoting its goal of controlling trade from its colonies. Instead, the colonies developed a non-British network to move all colonial trade goods. Increasingly this included flour, grain, horses, and livestock as well as molasses. In the long term, it also produced an economic loss for New England, as competition returned in the form of British rum production. The act forced the British West Indies to produce their own rum with their own molasses, because American markets rejected their higher-priced molasses. British slave traders were also hurt indirectly as the direct trade routes from the American colonies to Africa were strengthened.

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1719—Mississippi Bubble

The Mississippi Bubble was the first European financial bubble to reach the shores of America. This bubble was caused when the central bank of France over inflated French currency by issuing paper money and government-backed bonds to fund a speculative trading company created by John Law, a Scottish economist, to help the French government cover its national debt. High expectations about the potential value of beaver skins and precious metals in France’s New World colonies underlay the scheme, which ultimately led speculators from all social classes to lose vast sums.

The roots of the Mississippi Bubble went back to the financial collapse of the French treasury in 1715. Years of paying for wars with Great Britain in Europe and in America had bankrupted France. Participation in the War of the Spanish Succession (1701–1714) had not only strained the French treasury but had also slowed income from the French colonial fur trade. War debt had left France deprived of gold and silver, the basis of most national currencies at this time, which limited any growth in the French economy. France’s debt had overwhelmed it, forcing it to default on most of its bonds and to cut back its interest payments to its creditors. 

John Law, a Scottish economist and monetary expert, was brought in to help. Beginning in 1716, Law established a bank that ultimately became the French national bank (Banque Royale). Under Law’s guidance, the Banque Royale, in a novel move for this age, issued paper money that was only backed by gold and silver. This ingenious creation of paper money increased monetary liquidity in the French economy and brought brief economic stability. However, France still did not possess enough gold and silver to fully back, or pay for, the paper money the Banque Royale had put into circulation.

Law had seen that Spain’s success in gold mining in South America had helped Spain’s economy by putting more Spanish gold into circulation. Law hoped that the shareholder trading company he created, the Mississippi Company, would find gold or silver in France’s Louisiana colonies and would be able to exploit the French fur trade. Based on the potential of finding this New World gold and silver, Law convinced the Banque Royal to print paper currency well beyond any physical amount of precious metal in the French treasury. They thus created currency by fiat, based on speculation, on the hope that precious metals would be discovered.

Another part of Law’s plan was his scheme to merge the Banque Royale and the Mississippi Company. The French government backed the company’s bonds and promised a high return to investors. High expectations and wild speculation drew in investors from all social classes. Shares in the Mississippi Company rallied from 500 livres per share to 10,000 livres per share in 1718 and to more than 20,000 livres per share in 1719. This created Europe’s first major investment bubble.

Meanwhile, Law expanded the Mississippi Company’s operations by sending colonists and supplies to search for mining opportunities, hoping to duplicate Spain’s success in finding gold and silver. The company expanded settlements in Mississippi and other parts of the Louisiana colony. Furthermore, Law’s company was granted a full monopoly on the French tobacco, fur, and slave trade. Law also took over tax collections on trade in French America with the idea of backing French debt with company bonds and stock.Finding settlers for swampy Louisiana was a tough sell, though, and Law had to advertise all over Europe. He was able to induce many poor Germans to join the venture, and he used French convicts to establish a foothold of settlements around New Orleans and the Mississippi. France’s initial success with the Mississippi Company scheme led Great Britain to copy it with its own South Sea Company, which would create a historic bubble in Britain as well.

The rapid rise of prices in Mississippi Company stock and the uncontrolled printing of paper currency created a huge, inflationary, bubble-driven speculative mania. It is believed that the first use of the term “millionaire” came into being to refer to the Mississippi Company stockholders. In 1720, investors wanted to take their profits in the company in gold, but the French government did not have enough gold to cover the payments, so the Banque Royale imposed a limit on the amount of paper currency that could be converted back into gold.

Slowly, word got out among investors that there was a problem. Law’s next response was to lower the price of Mississippi Company shares and to stop gold payments. Panic hit, and the company’s shares traded down to less than 500 livres, devastating investors and causing the loss of many fortunes. As a result, an economic crash occurred in France in 1720. France’s trade in its American colonies was destroyed. Law came to be viewed as a scam artist and was exiled from France.

John Law died in poverty, unheralded, even though many see him as the world’s first practitioner of the monetarist school of economics. The Mississippi Bubble also had a devastating effect on French-American colonists. Supplies stopped flowing to Louisiana, and many of the company’s colonists died of starvation. Some of the Germans migrated to the English colonies for better land after it became apparent no relief was coming from France. A few colonists built settlements on high ground between the Mississippi River and Lake Pontchartrain and survived by fishing. It took decades, but this small colony developed into a trade center that we now know as New Orleans. In Great Britain, where a similar scheme evolved, Parliament passed the Bubble Act of 1720, which put tight restrictions on paper money in Britain and its colonies to prevent the re occurrence of another Mississippi Bubble.

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1703—Tobacco Depression

The great tobacco depression of the early 1700s was a result of over dependence on tobacco as the main cash crop in the British colonies of Virginia, Maryland, and the Carolinas. The period was probably America’s first depression as trade and commerce declined. Prices of tobacco dropped below the sum of production costs, shipping costs, and taxes. The drop in prices was a result of overproduction in previous years, the British monopoly on trade via the Navigation Acts, and the War of the Spanish Succession.

The large planters, who shipped massive quantities of tobacco, often in hogs-head barrels directly to warehouses and auction houses in Scotland, were able to make a nominal profit during these years. This depression, however, would finally drive small farmers and non-slave labor out of the tobacco business and push large growers to the slave system in an attempt to reduce costs. The widespread loss of planter income filtered down, ruining the businesses of town merchants. One positive result of the tobacco depression was the growth of colonial manufacturing, as planters responded to high import prices by creating their own manufactured goods on-site.

Virginia, Maryland, and the Carolinas had experienced an economic boom from the 1600s to 1703 as Europe acquired a taste for smoking tobacco. After Bacon’s Rebellion (1676), the tobacco industry in these colonies became a controlled monopoly with the king and the colonial governors setting taxes on production and controlling shipping rates, thereby raising costs for growers. In addition, speculators had encouraged overproduction of tobacco in the American colonies to meet an expected increase in demand for tobacco in Europe due to the coming war in Europe. The war that came, known as the War of the Spanish Succession (or Queen Anne’s War in the colonies), was a war between France and the anti-French alliance of England, Austria, Holland, and Prussia.

Tobacco demand did not meet expectations, however, and prices fell. Prices in the fur trade in the colonies also fell because of overproduction. The downturn in these commodities brought shipping on America’s East Coast to a standstill. The War of the Spanish Succession had also disrupted shipping, creating high prices and shortages of manufactured goods. Planters were often forced to ship their commodities below the cost of production because they needed to acquire goods from England in exchange.

In response, the larger planters in the colonies began to manufacture more goods on their plantations. Plantations became tobacco factories, and coopers and black-smiths were trained to make barrels for shipping tobacco. Plantations produced nails as iron became available from colonial furnaces, and bricks were made on-site. Food was grown to support plantation communities of more than 200 people.Plantation owners found that they could only profit with large shipments of low-cost tobacco. One way to reduce the cost of tobacco was to reduce the costs of production, and that meant turning to slave labor. At the beginning of the tobacco depression, there were only 6,000 slaves in Virginia; by 1730 that number reached 28,500 as planters. Larger plantations required as many as 200 slaves to operate. The large plantations could buffer themselves from price fluctuation because they could afford to hold their product off the market when prices were low. They also achieved a degree of independence when they began manufacturing their own hard goods locally.

Although larger plantations were able to adapt with their new factory system and slave labor, smaller planters were devastated. These smaller planters had high debt, and the depression caused numerous bankruptcies. The depression ended the small planter, tenant farmer, and white farm labor systems in the British colonies.The tobacco depression did not lead to more crop diversification but to a diversification into manufacturing. Plantations started to manufacture cloth and shoes. Hard cider was produced in tough times to replace imported rum and wine. Many planters, including Governor William Berkeley, even looked to producing iron and invested in early iron works. They believed freedom from English goods would allow the planters to demand a higher price for their tobacco. Some southern colonies even began to grow rice as a cash crop. The New England colonies, while affected by the shipping decline, still maintained an active trade in salted fish. 

The southern planters also looked to other unexpected means of reducing labor costs. Some Maryland planters experimented with the slavery “task” system in which the slaves worked a daily quota on the plantation but were given their own land to farm to feed their families. Slaves were even allowed to own a musket to hunt food. The task system allowed the planter to reduce the costs of caring for and feeding his slaves. Clearly, the tobacco depression brought not only lower commodity prices but also major changes to the colonial plantation system in America.

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1676—Bacon’s Rebellion

Bacon’s Rebellion was the political result of a confluence of economic problems in the Virginia colony. Many believe it was the first sign of the serious economic distress in the English colonies that would fully surface as a cause of the American Revolutionary War 100 years later. Bacon’s Rebellion, which occurred during America and Virginia’s first recession, is an example of how economic conditions can cause a change in government and political instability. It is probably the first example of what became the great American tradition of “voting your pocketbook.”

In 1676, the English colony of Virginia was experiencing its first major economic downturn after years of growth and prosperity. Tobacco had been the main agricultural product of this rich colony, but in the 1670s, the colony of Mary-land had begun growing tobacco as well. The Carolinas were also increasing their tobacco production. As a result, tobacco prices were declining.

The governor of the Virginia colony, Sir William Berkeley, and his administrators got the money to run the colony from taxing the colony’s planters and participating in the very profitable fur trade with the Indians. With tobacco prices declining, the colony’s tax revenues declined as well. The governor decided to replace the loss of tobacco tax receipts by increasing the tax rates on planters. Virginia at this time was largely made up of wealthy tobacco planters who ran completely self-sufficient plantations. But there was another group of small planters and traders on Virginia’s frontier, including George Washington’s ancestors.

Under the English Navigation Act of 1651, the governor of Virginia had a total monopoly on shipping from the colony. This monopoly benefited the large plantation owners, with their large economies of scale, by providing them with a secure market for their products. At this same time, increased demand for manufactured British goods in the colonies had inflated the prices of manufactured goods. Even the Virginia weather of 1675—a summer drought and a hurricane—had exacerbated economic problems for the colony.

The small Virginia planters were severely hurt by the decrease in tobacco prices, the increase in tobacco taxes, and the higher cost of manufactured goods. Small planters also faced other cost disadvantages because they had to use an agent for shipping and had to pay a tax on the transfer of the tobacco to that shipping agent. The very large planters, such as the Lees and Carters of Virginia, were more insulated from tobacco price swings and the price of imported goods. Several of these large planters also benefited from a share in Governor Berkeley’s lucrative fur trade.

Berkeley had also started a trade in deerskins so he could sell the leather in Europe; this also hurt the small planters and traders on Virginia’s frontier. Deer were abundant on the frontier and offered another source of income for these poor Virginians, but Berkeley also set high taxes on this trade and controlled it through his shipping monopoly. Berkeley also tried to diversify the economy, testing silk-worms on his and other plantations and expanding hemp production, but the Virginia economy remained largely tobacco based.

The governor and larger plantation owners had begun to use black slaves as a means to reduce their production costs. Small planters generally employed poor white laborers and white indentured servants. These workers opposed the growing use of slaves on plantations, seeing them as competitors who were taking their work. White workers had been attracted from England with wages four times the rate in England. Planters paid for the transportation of these workers from England. In return, the workers indentured themselves to the planters until the debt was repaid. These “indentured servants” usually worked four to seven years before gaining their freedom. Once these white indentured servants paid off their debt, they could remain on the plantation earning a good wage or could become small farmers.

All of these factors led to tensions between the governor and the large planters on one side and the small planters, independent farmers, and white workers on the other side. The increasing costs of production, higher taxes, and lower tobacco prices hurt the small farmers. The competition from slaves hurt the white workers’ prospects and their hopes of paying off their indenture debt. The small planters and independent farmers also desired access to more land on the Virginia frontier because tobacco depleted the soil quickly. The large plantations, meanwhile, had access to fresh tobacco land in the Virginia heartland. As frontier farmers cleared new land for new tobacco fields, they provoked conflicts with the Indians who lived near them on the Virginia frontier.

Fights with the Indians over land had been common for decades. The governor, with his interest in the fur trade, was reluctant to fight the Indians who often traded furs with settlers and buyers on the frontier. Berkeley had built forts and sent troops in response to complaints from whites on the frontier, but to pay for these forts and troops, he taxed the frontier planters more, particularly after the decline in the tobacco market.Berkeley governed with a state council of 12 handpicked wealthy planters that made up the upper house. The lower house of burgesses comprised elected planters. The governor convened the council or house at his discretion and determined when elections to the house of burgesses took place. Berkeley had not called for elections for the decade before Bacon’s Rebellion because those in power were favorable to him. Without elections as a pressure-release valve, Virginia’s economic problems led to political rebellion.

Nathaniel Bacon, a large planter, a member of the state council, and the governor’s relative by marriage, organized a revolt. Still, Bacon’s roots were with the small planters. He put together an army of poor whites, slaves, and small planters to challenge Berkeley’s government. They issued a Declaration of the People of Virginia (1676) highlighting the issues of unjust taxes, Berkeley’s monopoly of the fur trade, and lack of protection against the Indians.

Bacon’s army took the capital of Jamestown and the seat of government, holding it for months. Berkeley asked the English king Charles II to send 1,000 troops and used them to defeat the rebels after Bacon died of natural causes during the war. Berkeley refused to pardon any of the rebels—they had burned Jamestown before abandoning it— and made no changes in his policy of high taxes. He was eventually relieved of his governorship by the king because of his harsh treatment of the rebels. Berkeley died before he could justify his actions in person before King Charles.

A similar rebellion (Culpeper’s Rebellion) occurred a year later in North Carolina over tobacco taxes for small tobacco growers. Ultimately, the Virginia economy improved as tobacco and fur prices rebounded, but the problem of high taxes and uneven representation in Virginia’s government remained until the American Revolution. Poor white servants, white laborers, and independent farmers were replaced by black slaves on most plantations. Bacon’s Rebellion remains an example of a local economic crisis caused by global competition, a transformation in the labor market (poor laborers to slaves), market realignments from price declines of an economy’s major crop, and import inflation in the price of manufactured goods.

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