Smuggler Nation (4 page)

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The Golden Age of Illicit Trade

AMERICA WAS BORN A
smuggler nation, and indeed smuggling helped give birth to the nation. How exactly did this happen? To pinpoint the time of conception, we must go back some three hundred years, to the early colonial era. The tale of the rise of colonial smuggling unfolds within the context of highly restrictive British trade rules, in which maritime smugglers can be viewed as leading the push for more open trade. In this sense, colonial smugglers were truly pioneers of free trade, defying and circumventing restrictive trade barriers whenever and wherever they could. Britain’s official trade rules were designed to keep its distant colonial outposts subordinate, weak, and dependent. The realities in the American colonies, particularly in port cities such as Boston, New York, and Philadelphia, dictated otherwise. Colonial merchants in many ways enjoyed the best of both worlds, reaping the benefits of imperial restrictions while evading imperial restrictions with relative ease. As we’ll see, this peculiar arrangement persisted until the early 1760s through a mix of British neglect, tolerance, and corruption.

Formal Rules, Informal Realities

On paper, the British imperial trading system was tightly controlled. Its mercantilist policies were codified in the Acts of Navigation and Trade,
a series of ambitious statutes put in place in the second half of the seventeenth century. For certain commodities, such as tobacco and sugar, the British colonies in North America were allowed to trade only directly with each other and with England, and vessels engaged in trade with any English territory had to be English and mostly manned by English crews. Trade was also subject to import and export duties, sometimes prohibitively. Competing European powers had similarly restrictive trade rules, creating a rigidly mercantilist commercial world.

Informal practice was another matter entirely. Mercantilism leaked like a sieve.
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Indeed, trade that defied mercantilist rules was integral to the very functioning of the Atlantic trading system: “What made all this possible—what helped bind the widespread and intensely competitive Atlantic commercial world together—was the mass of illegal trade that bypassed the formal, nationalistic constraints,” explains historian Bernard Bailyn.
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Smuggling-related corruption was so institutionalized in some places that manuals were even printed up listing the standardized bribes.
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Beyond bribing, smugglers used many tricks of the trade to disguise the origins and contents of their illicit cargoes, ranging from counterfeit clearance papers to mislabeled containers and doctored ship manifests.
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Merchants in British North America were at the forefront of this bustling Atlantic smuggling economy, developing an illicit trading network linking colonial ports to the West Indies and continental Europe. The type and extent of smuggling in the colonies, however, was far from uniform. For instance, smuggling was less pervasive in Virginia than in Massachusetts. There were fewer incentives to smuggle in the South, given that England provided a ready export market on favorable terms for leading Southern products, most notably tobacco (the strain used for export was introduced to Virginia by John Rolfe, who had smuggled in strictly controlled Spanish seeds from the Caribbean in the early seventeenth century). The Northern colonies, in contrast, produced little of value to English consumers and therefore sought out alternate markets through illicit channels. The Southern colonies did nevertheless engage in intracolonial smuggling—evading duties, for example, on tobacco exports to Northern colonies—as well as contraband trade with the West Indies. Northern merchants also served as smuggling intermediaries for the Southern colonies.
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We’ll never know the exact amount of illicit trade in the American colonies—or anywhere else, for that matter, past or present. For obvious reasons, few records were kept—frustrating quantitative economic historians and making nonsense of official trade data.
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But what is clear is that both the opportunities and the incentives to smuggle were enormous. Ambitious British trade restrictions clashed with the limits of actual enforcement, a long and minimally monitored coastline, and fierce local resistance. Not only was there little social stigma attached to smuggling in the colonies, but in port cities, where trade was the primary generator of wealth, smuggling enjoyed considerable community support. This made it extremely difficult for British authorities to rely on provincial courts to uphold seizures and convict smugglers. Indeed, the legal system could even be creatively used to retaliate against overly diligent customs agents.

Even though we lack precise measures of smuggling, we do have clues. These include uneven balance in cargo between incoming and outgoing ships, private correspondence, and travel accounts.
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The magnitude of the illicit trade in molasses is revealed by the discrepancy between official imports and the amount of molasses actually needed to keep colonial distilleries running. For instance, a mere 384 hogsheads of molasses per year officially arrived in Boston in 1754–55, but 40,000 hogsheads per year were required to run the region’s sixty-three distilleries.
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It was largely this illicit molasses trade, Bailyn suggests, that made possible a positive balance of payments for the New England colonies.
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Colonial merchants predictably balked when Britain suddenly stopped turning a blind eye to such smuggling in the 1760s. In a revealing line, John Adams would later write, “I know not why we should blush to confess that molasses was an essential ingredient in American independence.”
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The Early Years

British trade laws were subverted in the American colonies from the very start. But for the most part, evasion by colonial traders in the seventeenth to mid-eighteenth centuries was met with imperial accommodation more than enforcement. The reasons were both strategic and practical. Great Britain was first and foremost preoccupied with
geopolitical rivalries and therefore wished to ensure the loyalty of its colonial subjects—even if this came at the cost of overlooking a certain amount of illicit commerce. Moreover, sporadic and short-lived British attempts to improve colonial customs administration had produced dismal results, generating more resentment than revenue. Colonial merchants developed an impressive repertoire of evasive maneuvers to conceal the origins, nationality, routes, and content of their illicit cargoes. This included frequent use of fraudulent paperwork to make the cargo appear legal and authorized.
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And much to the frustration of the British authorities, when seizures did happen local merchants were often able to use sympathetic provincial courts to reclaim their confiscated goods and have their cases dismissed.
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For instance, Edward Randolph, the appointed head of customs in New England, brought thirty-six seizures to trial from 1680 to the end of 1682—and all but two of these were acquitted. Alternatively, merchants sometimes simply took matters into their own hands and stole the illicit goods back while impounded.
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It should be little surprise that Britain had such difficulties with smuggling in its remote colonies, given the magnitude of illicit trade in its own backyard: English smugglers (known locally as “free traders”) engaged in large-scale tea smuggling and other contraband commerce across the English Channel, often in open defiance of the authorities and with considerable popular support in coastal communities. In the American colonies, by comparison, British trade rules were both more restrictive and more difficult to enforce.
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The first six decades of the eighteenth century can be described as the golden age of illicit trade in the American colonies. Britain’s “salutary neglect” and pragmatic tolerance trumped enforcement and revenue collection. In 1710, there were only thirty-seven customs officers in the colonies; the number had increased to only fifty by 1760.
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During this same time period the estimated colonial population increased from 331,700 to 1,593,600. The imperial customs administrative apparatus in the colonies was fragmented and in disarray; enforcement was typically lethargic.
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The British authorities had neither the will nor the capacity to put a serious dent in the smuggling business. At the same time, restrictive trade rules remained on the books, new restrictions were added (most notably the Molasses Act), and a formal pretense of
customs administration was maintained. All sides kept up appearances. Colonial traders continued to use circuitous routes to smuggle goods, disguise their cargo, and dole out bribes rather than publicly challenge the king’s right to collect duties and enforce the trade laws. Customs officials, for their part, went through the ritualistic motions of inspecting ships and collecting modest amounts of duties (while routinely lining their pockets with payments to look the other way).

Institutionalized corruption had a pacifying effect; informal financial accommodation meant that violence between smugglers and customs inspectors was rare. For the most part, bribing trumped bullying, producing a win-win situation for the smuggler and the customs agent—even if not for imperial coffers. Corruption was in fact competitive: colonial ports competed with each other to attract shipping business, and those ports that offered the most laxity in inspections and most bribable customs houses enjoyed a competitive advantage.
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Customs administration was in such a sorry state of neglect that the royal collector in some places was not even present and instead rented out his post to a deputy. Such was the case in Rhode Island, where in 1742 the judge of the Vice-Admiralty court noted that the collector for the colony “for many years last past has not resided there but farms out the same.” The judge also later reported that the port “at present is filled by a Deputy Collr who must be presumed to Rent ye Office from his Principle.” Consequently, Rhode Island was “virtually a free port.”
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Although historians disagree about the extent of eighteenth-century smuggling in the American colonies, it is clear that the passage of the Molasses Act in 1733 was a de facto invitation to smuggle, stimulating the development of a smuggling superhighway between the West Indies and the American colonies. The new law, aimed at protecting English planters in the British West Indies, imposed prohibitive duties on non-English sugar products. Yet it was so poorly enforced and so widely violated that it was treated as virtually a “dead letter” from the start. The restrictive law was first announced as a temporary five-year measure, but it was renewed again and again for three decades. “If any serious attempt had been made to enforce the statute,” suggests historian Arthur Schlesinger, “the prosperity of the commercial provinces [New England] would have been laid prostrate. It was the West India
trade, more than anything else, which had enabled them to utilize their fisheries, forests and fertile soil, to build up their towns and cities, to supply cargoes for their merchant marine, and to liquidate their indebtedness to British merchants and manufacturers.”
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In exchange for molasses and other sugar products, colonial merchants supplied the non-British West Indies with timber, horses, grain, bread, meat, and fish—especially low-grade dried cod and mackerel, used to feed plantation slaves. They not only shipped these smuggled goods to the West Indies but also sold smuggled ships, contributing to New England’s rapidly growing shipbuilding industry.
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Smuggling in violation of the Molasses Act was not merely the domain of small-time traders. Some of the most well-known New England merchant elites, such as the Hancock family in Boston, became enmeshed in the West Indies trade.
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Thomas Hancock (uncle of the famous John), wrote to his captain Simon Gross in December 1743 to take advantage of both licit and illicit trade opportunities in the Caribbean: “You have liberty to go to any of the English Islands, & if you think it Safe, to any of the French Islands … I’d have you unload at Nantasket [Boston’s outer harbor] if no man of War there.” The letter concludes: “… [A] load of Molasses will be the best Cargo you can bring here; write me all Opportunitys.”
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Smuggling was so institutionalized in the Boston merchant community that merchants were able to buy insurance policies to cover them in the event of seizure.
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