Gotham_ A History of New York City to 1898 - Edwin G. Burrows [141]
All told, between 1739 and 1763 legalized plunder poured something like two million pounds into the pockets of two hundred or so investors—an immense accession of wealth at a time when, as Gerard G. Beekman observed, an income of three hundred pounds a year was sufficient to live “Like a Gentleman” in New York. Not all of this was profit, of course. As a rule, the crew of a privateer signed on for 60 percent of the value of prizes taken. An experienced captain received an extra two to three hundred pounds for a voyage of nine or twelve months. There were also multitudes of contractors, suppliers, and lawyers to be paid, not to mention the costs to be absorbed when a ship returned empty-handed, or didn’t return at all. Inevitably, some shareholders in privateers lost everything, while still others barely covered expenses.
As a group, however, they did well enough that the average investor could expect to double or even triple his money in less than a year. Christopher Bancker refitted one of his merchantmen as a privateer in 1744 at a cost of twelve hundred pounds. He then sold shares to seven other merchants and captains, probably at a small profit to himself. Three cruises resulted in the capture of prizes worth £42,400. After the crew received its share, and after all other expenses were paid, each investor realized a profit of eighteen hundred pounds—a return of around 140 percent on the initial investment, perhaps more for shares that had changed hands at a discount.
More than a few found ways to multiply their winnings. They speculated in shares in privateering expeditions, creating a rudimentary futures market. They invested in city real estate, as land appreciated steadily in response to the pressures of population and economic growth, provided a hedge against recession, and could be mortgaged to obtain credit. They also loaned out their funds to friends and business associates at 6 or 7 percent interest, creating a system of private credit that partially compensated for the absence of banks.
INDUSTRY AND EMPIRE
A second source of New York’s prosperity during the 1740s and 1750s was that great transformation of the British economy known as the industrial revolution. Its essential components were many and varied: the application of water and steam power to textile production, a burst of road- and canal-building, a new flowering of banks and insurance companies, improved agricultural output, accelerated demographic expansion, and urbanization. The population of London, largest city in the Western world, climbed from 676,000 to 900,000 between 1750 and 1800.
For British America, these changes spelled enhanced importance both as a market for cheap manufactured goods and as a source of raw materials and foodstuffs. By midcentury roughly half of all British shipping was engaged in trade with the American colonies, and the colonies were buying nine hundred thousand pounds’ worth of British products annually—around 25 percent of all Britain’s exports and 50 percent of all manufactures other than woolens. By the early 1760s that figure had soared to over two million pounds. (Because the Navigation Acts prohibited direct imports from other European countries, 80 percent of the finished wares shipped to New York from British ports were of British origin.)
Colonial exports rose almost as rapidly, from seven hundred thousand pounds at mid-century to some £1.5 million in the early 1760s. For New York and other northern ports, the mainspring of this business remained the British craving for sugar, which in the 1740s and 1750s triggered a new round of expansion in the West Indies. The demand for North American lumber and foodstuffs drove the prices of those commodities