Economic State OF THE United States At The End Of The Revolutionary War
The colonial victory in the Revolutionary War left the American economy with a mixed bag of benefits and disadvantages . Previous restrictions on trade and industry ended. As a result, an American merchant marine and manufacturing industry developed, especially in munitions and consumer products. The removal of restrictions on Western expansion caused European-American migration across the Appalachians. Although this made life difficult for the unfortunate Native Americans whose lands were further invaded, it provided economic opportunities for the European-Americans and immigrants who entered the country after the war.
Many traces of Britain, her loyalists, and her economic system were eradicated. Large estates belonging to loyalist families were broken up into smaller plots. Primogeniture, the ancient British practice of passing on a family's entire estate to the eldest son, was ended. Both these policies provided increased opportunities for small, independent farmers. In addition, British mercantilism was critically examined in light of the new economic system of capitalism, championed by Scotsman Adam Smith.
Not all the results of the war made a positive impact on the economy of the United States. American merchants were excluded from the British West Indies, and lost their favored position with Britain as a trade partner. In addition, as wartime demand declined, agricultural prices fell and cities faced high unemployment rates. American merchants maintained trade with Mediterranean countries, and opened trade with China in the 1780s. Mediterranean trade, however, was hampered by pirate attacks; and American ships no longer had the protection of the British Navy. Chinese trade, initially lucrative, became less so in the early nineteenth century: prices in the United States fell; the Chinese market became saturated with American goods; and supplies of furs and sandalwood, the primary commodities being traded, ran low.
The greatest adverse economic legacy of the war, however, was currency and debt. Continental currency had an enormous inflation rate and had depreciated dramatically. To make matters worse, the national government owed approximately $12 million in foreign debt and $44 million in domestic debt; and state governments owed approximately $25 million, mostly in war debts. The primary concerns of post-war economic planners were reducing the inflation rate and raising the value of the currency; and repaying and financing government war debts.