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Publisher Description

Tobacco played a prominent role in the development of the American colonies. The "stinking weed" dominated the economy of the Chesapeake Bay colonies and became the first colonial-produced commodity subjected to mercantilist restrictions. Although today tobacco is condemned and its consumption discouraged for its negative health consequences, it is after all an agricultural product, and the nature of tobacco production is similar to most other crops. The British mercantilist laws protected British merchants from foreign competitors by requiting all tobacco to be shipped to England, and the colonies sometimes imposed their own crop control measures to secure higher prices. Present-day agricultural programs throughout the developed world also protect domestic farmers from foreign competition and impose crop controls to reduce farm surpluses. There is much that can be learned from the study of mercantilism and the colonial crop controls to help us to appreciate some of the problems of present-day agricultural market regulation. The sheer economic waste resulting from mercantilist trade barriers (including higher prices to consumers, dislocations of capital, and colonial warfare) has been well known since the time of Adam Smith. More recently, economists Robert Ekelund and Robert Tollison (1981) have analyzed British mercantilism as a rent-seeking society. (1) Protectionist favors were supplied by both the king and the Parliament and demanded by the domestic British merchants. There was brisk competition among the monopoly seekers and also competition between the two monopoly suppliers. A sort of perverse bidding for special, protectionist favors took place, and because resources had to be expended both to acquire and maintain these favors, most of the wealth transferred from the public to the monopolists was probably dissipated as well.

Politics & Current Affairs
January 1
Cato Institute

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