In researching my latest novel, The Lost Diary of Alexander Hamilton, I knew I had to master the art of smuggling. In the 18th century, smuggling was big business. It kept the thirteen colonies afloat, since, without their illicit trade with the West Indies, they would have been eternally indebted to London bankers. Indeed, as Peter Andreas points out in "Smuggler Nation", America was born a smuggler nation.
It is interesting but not ironic that America’s first Treasury Secretary and architect of our nation's financial system came from the West Indies. As a child growing up on St. Croix, Hamilton was at the very center of commerce. In those days, St. Croix was considered an “entrepôt”, an important transshipment center in the colonial trading system. And smuggling was a big part of that system. Sugar may have put the West Indies on the map, but it was smuggling that linked it to the rest of the world. And without it, the American Revolution would not have been possible.
In neutral Danish and Dutch islands like St. Croix, St. Thomas, St. Eustatius, and Curaçao, huge quantities of goods were imported, stored, traded, and often re-exported. These entrepôts played a vital role during the days of wind-powered shipping, and as a chief clerk for Beekman & Cruger, Alexander Hamilton would have been at the heart of this illicit trade.
As Nicholas Cruger’s right hand man, Hamilton was in charge of organizing, managing, and shipping huge quantities of goods and currency. He would have had an intricate knowledge of the exchange rates between the various currencies: English pounds guineas, Danish rigsdalers and skillings, Dutch guilders, Spanish pieces of eight (pesos) and Portuguese Joes. He would have been responsible for keeping the books and managing the finances of the firm. A grasp of bookkeeping and the various journals would have been essential tools of his trade.
18th century rulers did not have an appreciation for free trade. They wanted to ensure a ready market for their goods, and would impose high taxes on outside competitors to keep them out. Laws like the Acts of Trade and Navigation and the Molasses Act were designed to protect the interests of British planters in the West Indies, to keep them safe from competition. These laws made it legally impossible for French, Spanish, Dutch, and Danish sugar, rum, and molasses to find a market in Great Britain or in any British territory, including the thirteen colonies. Instead, these products were smuggled by American vessels into the thirteen colonies, usually with a wink and a nod from the Customs Officials, and often a bribe.
So it is precisely because of Britain's protective mercantile laws that islands like St. Croix flourished. Why all this need for surreptitious shipping?
In the 18th century, almost all manufactured goods (paper, fabrics, household items, tools, glass, tiles, etc.) came from Europe, while meat, fish, grain, and animal hides came from North America, and sugar, rum, and molasses came from the West Indies. The balance of trade always favored Great Britain. Meaning, the value of British goods imported by the thirteen colonies vastly surpassed the value of American goods shipped to Great Britain. This left the thirteen colonies with a huge trade deficit. This also meant that Great Britain reaped a huge surplus in gold compared to the colonies. In other words, the purchasing power of North America was greatly hampered by their forced dealings with Great Britain on an exclusive basis. They longed for British goods, but they could not earn enough specie to pay for them by selling their own products to Great Britain. They needed a third source of revenue. This could only come about by smuggling to foreign ports. This lack of free trade proved to be an intolerable shackle for the Americans. They longed to purchase more European luxury goods, but they needed a ready supply of cash. So how could they accomplish this?
Through smuggling.
It is estimated that the value of British goods exported to North America was worth double the value of American goods exported to Great Britain. This left a huge trade deficit that could only be made up through smuggling. By definition, the American colonists needed a ready supply of gold and silver so they could continue to buy British manufactured goods. This could only be achieved through illicit trade with the French, Spanish, Dutch and Danish West Indies. In other words, the North American colonists were forced to smuggle their own goods to the non-British West Indies out of economic necessity. They needed a ready market for items such as bread, flour, rice, dried and pickled fish, barrel staves and hoops, and cured meat. In turn, the gold the islanders paid the North Americans for these products fueled their trade with England. In one year alone, 1770, New England sent to the islands three times as many staves and hoops for barrels and hogsheads as was sent to England. Philadelphia exported 23,500 tons of bread and flour to the islands, as compared to 264 tons to England. All of this was basically in exchange for sugar, molasses, rum, and cotton.
Benedict Arnold was a New England ship captain who grew wealthy smuggling goods to the West Indies, including St. Croix.
What was Alexander Hamilton's part in all of this? As chief clerk for Beekman & Cruger in Christiansted, he was responsible for keeping the system in motion. He would receive the North American goods, find buyers on St. Croix for them, as well as receive Dutch, Spanish, and French goods (sugar, rum, molasses, cotton, coffee, cacao, etc.) for use by the North Americans. Some of these goods were African slaves, which no doubt fueled his strong anti-slavery stance during the course of his life.
Some of the activities he would have engaged in his day-to-day life would have entailed creating false clearance papers, partial entries, or mislabeled packages. For instance, later in the Revolution, we know that Dutch merchants in St. Eustatius were shipping gunpowder to North America in tea chests and rice barrels by means of false labeling. In other cases, they were shipping the gunpowder in glass bottles labeled "spirits". Many of these shipments may have passed through St. Croix on their way to the American colonies.
How do I know this?
Charles Reade, a resident of St. Croix, wrote to James Pemberton in Philadelphia in 1774 that much of the trade occurring on the island was being conducted by smuggling. A Captain Bryne from Antigua reported that he had learned of a schooner which arrived in St. Croix in 1775 to procure gunpowder for America, and "offering any money" for the purchasing. In addition, there is a letter in which Nicholas Cruger writes that he will be paying a tax on brown sugar, when it is really "clayed sugar", and paying the customs agent a "fee."
So it is precisely because of Britain's protective mercantile laws that islands like St. Croix flourished. Why all this need for surreptitious shipping?
In the 18th century, almost all manufactured goods (paper, fabrics, household items, tools, glass, tiles, etc.) came from Europe, while meat, fish, grain, and animal hides came from North America, and sugar, rum, and molasses came from the West Indies. The balance of trade always favored Great Britain. Meaning, the value of British goods imported by the thirteen colonies vastly surpassed the value of American goods shipped to Great Britain. This left the thirteen colonies with a huge trade deficit. This also meant that Great Britain reaped a huge surplus in gold compared to the colonies. In other words, the purchasing power of North America was greatly hampered by their forced dealings with Great Britain on an exclusive basis. They longed for British goods, but they could not earn enough specie to pay for them by selling their own products to Great Britain. They needed a third source of revenue. This could only come about by smuggling to foreign ports. This lack of free trade proved to be an intolerable shackle for the Americans. They longed to purchase more European luxury goods, but they needed a ready supply of cash. So how could they accomplish this?
Through smuggling.
It is estimated that the value of British goods exported to North America was worth double the value of American goods exported to Great Britain. This left a huge trade deficit that could only be made up through smuggling. By definition, the American colonists needed a ready supply of gold and silver so they could continue to buy British manufactured goods. This could only be achieved through illicit trade with the French, Spanish, Dutch and Danish West Indies. In other words, the North American colonists were forced to smuggle their own goods to the non-British West Indies out of economic necessity. They needed a ready market for items such as bread, flour, rice, dried and pickled fish, barrel staves and hoops, and cured meat. In turn, the gold the islanders paid the North Americans for these products fueled their trade with England. In one year alone, 1770, New England sent to the islands three times as many staves and hoops for barrels and hogsheads as was sent to England. Philadelphia exported 23,500 tons of bread and flour to the islands, as compared to 264 tons to England. All of this was basically in exchange for sugar, molasses, rum, and cotton.
What was Alexander Hamilton's part in all of this? As chief clerk for Beekman & Cruger in Christiansted, he was responsible for keeping the system in motion. He would receive the North American goods, find buyers on St. Croix for them, as well as receive Dutch, Spanish, and French goods (sugar, rum, molasses, cotton, coffee, cacao, etc.) for use by the North Americans. Some of these goods were African slaves, which no doubt fueled his strong anti-slavery stance during the course of his life.
Some of the activities he would have engaged in his day-to-day life would have entailed creating false clearance papers, partial entries, or mislabeled packages. For instance, later in the Revolution, we know that Dutch merchants in St. Eustatius were shipping gunpowder to North America in tea chests and rice barrels by means of false labeling. In other cases, they were shipping the gunpowder in glass bottles labeled "spirits". Many of these shipments may have passed through St. Croix on their way to the American colonies.
How do I know this?
Charles Reade, a resident of St. Croix, wrote to James Pemberton in Philadelphia in 1774 that much of the trade occurring on the island was being conducted by smuggling. A Captain Bryne from Antigua reported that he had learned of a schooner which arrived in St. Croix in 1775 to procure gunpowder for America, and "offering any money" for the purchasing. In addition, there is a letter in which Nicholas Cruger writes that he will be paying a tax on brown sugar, when it is really "clayed sugar", and paying the customs agent a "fee."
To give you an example of the cost of smuggling: In 1763, a shipment of 15,000 hogsheads of molasses was imported into Massachusetts, “all of which, except for less than 500, came from foreign (non-British) ports.” It was estimated that the value of the duty on molasses alone, if collected, would amount to $25,000 per year. Money that would have gone into the King’s treasury.
How did the Danish authorities react to smuggling? In my research, I’ve discovered that the Danish West Indies were a virtual smuggler’s haven. Charles Reade, a resident of St. Croix, wrote to James Pemberton in Philadelphia on March 8th, 1774 that much of the trade occurring on the island was being conducted by “smuggling.” Sir Joseph Yorke, British Ambassador at the Hague, had built up one of the better spy systems in Europe. On August 5th, 1774 he wrote his superior in London: “…Holland is shipping contraband directly to America, or trading with her in the Dutch and Danish islands of the Caribbean.”
Smuggling is a crime entirely created by governments. Broadly speaking, smuggling entailed any trade that circumvented the Acts of Trade and Navigation. In the mid-18th century, there was also a steady flow into the colonies of “foreign” (code for French) sugar and sugar products obtained through Dutch, Danish, and Spanish intermediaries in the West Indies or directly from the French themselves. Of all smuggling activities, the Dutch trade was the most sophisticated and best integrated into the consumer culture of New England and the Middle Colonies. The Dutch trade was, at its core, the shipping of goods from the European mainland to North America without fulfilling the Crown’s requirement that the merchant vessel stop at a port in Great Britain and enter its goods. By shipping directly, a merchant stood to save the cost of off-loading and reloading his goods and to avoid import and export taxes. He was then able to undercut his competition by selling his smuggled goods at a lower price.
In the 18th century, the British government collected a great deal of its income from customs duties - taxes paid on the import of goods such as tea, cloth, wine and spirits. The tax was as high as 30% in some cases, so these items became quite expensive. Smuggled goods were a lot cheaper since no duty was paid. People were ready and willing to buy smuggled goods, and it became big business.
Working in the trading firm of Kortright & Cruger (formerly Beekman & Cruger), exposed Alexander to all types of trade, including the African slave trade, which no doubt fueled his strong anti-slavery stance during the course of his life.
According to the Danish historian, Waldemar Westergaard, smuggling in the Danish West Indies became a “fine art” and was one of the “approved ways to wealth and affluence and even to titles of nobility.” The results of this liberal policy toward smuggling were reflected in the increased trade with the Dutch and the English colonists in North America, who were adept at “wriggling through the meshes of eighteenth century commercial regulations.” The visiting Dutch traders, always willing to sell their wares on credit, were highly successful among the planters in the Danish West Indies. No doubt, Beekman & Cruger were the agents of many of these sales.
Alexander Hamilton always maintained that he received "the most useful part of his education" while working for Beekman & Cruger in Christiansted.
While it is recognized that John Hancock was a smuggler of products like Dutch tea, glass, lead, paper, and French molasses, what’s not commonly recognized is that Alexander Hamilton, as chief clerk for Beekman and Cruger, was right in the thick of things. As Boatner wrote in his Encyclopedia of the American Revolution, “Amid the British, French, and Spanish islands were the Danish island of St. Croix and the Dutch island of St. Eustatius. These two were important supply points and neutral havens for American privateers and smugglers from the start of the Revolution.” Indeed, while working for Beekman & Cruger on St. Croix, Alexander Hamilton did receive the “most useful part of his education”.
You can read about Alexander Hamilton's lost boyhood on St. Croix in my forthcoming novel, "The Lost Diary of Alexander Hamilton" due out in 2020.
***Special thanks to Michael Newton for his help in writing this blog post.
THE LOST DIARY OF ALEXANDER HAMILTON, the story of Hamilton's forgotten boyhood in the Caribbean is now available for pre-order from Amazon. Special introductory price only $2.99. Click here.
How did the Danish authorities react to smuggling? In my research, I’ve discovered that the Danish West Indies were a virtual smuggler’s haven. Charles Reade, a resident of St. Croix, wrote to James Pemberton in Philadelphia on March 8th, 1774 that much of the trade occurring on the island was being conducted by “smuggling.” Sir Joseph Yorke, British Ambassador at the Hague, had built up one of the better spy systems in Europe. On August 5th, 1774 he wrote his superior in London: “…Holland is shipping contraband directly to America, or trading with her in the Dutch and Danish islands of the Caribbean.”
Smuggling is a crime entirely created by governments. Broadly speaking, smuggling entailed any trade that circumvented the Acts of Trade and Navigation. In the mid-18th century, there was also a steady flow into the colonies of “foreign” (code for French) sugar and sugar products obtained through Dutch, Danish, and Spanish intermediaries in the West Indies or directly from the French themselves. Of all smuggling activities, the Dutch trade was the most sophisticated and best integrated into the consumer culture of New England and the Middle Colonies. The Dutch trade was, at its core, the shipping of goods from the European mainland to North America without fulfilling the Crown’s requirement that the merchant vessel stop at a port in Great Britain and enter its goods. By shipping directly, a merchant stood to save the cost of off-loading and reloading his goods and to avoid import and export taxes. He was then able to undercut his competition by selling his smuggled goods at a lower price.
In the 18th century, the British government collected a great deal of its income from customs duties - taxes paid on the import of goods such as tea, cloth, wine and spirits. The tax was as high as 30% in some cases, so these items became quite expensive. Smuggled goods were a lot cheaper since no duty was paid. People were ready and willing to buy smuggled goods, and it became big business.
Working in the trading firm of Kortright & Cruger (formerly Beekman & Cruger), exposed Alexander to all types of trade, including the African slave trade, which no doubt fueled his strong anti-slavery stance during the course of his life.
According to the Danish historian, Waldemar Westergaard, smuggling in the Danish West Indies became a “fine art” and was one of the “approved ways to wealth and affluence and even to titles of nobility.” The results of this liberal policy toward smuggling were reflected in the increased trade with the Dutch and the English colonists in North America, who were adept at “wriggling through the meshes of eighteenth century commercial regulations.” The visiting Dutch traders, always willing to sell their wares on credit, were highly successful among the planters in the Danish West Indies. No doubt, Beekman & Cruger were the agents of many of these sales.
While it is recognized that John Hancock was a smuggler of products like Dutch tea, glass, lead, paper, and French molasses, what’s not commonly recognized is that Alexander Hamilton, as chief clerk for Beekman and Cruger, was right in the thick of things. As Boatner wrote in his Encyclopedia of the American Revolution, “Amid the British, French, and Spanish islands were the Danish island of St. Croix and the Dutch island of St. Eustatius. These two were important supply points and neutral havens for American privateers and smugglers from the start of the Revolution.” Indeed, while working for Beekman & Cruger on St. Croix, Alexander Hamilton did receive the “most useful part of his education”.
You can read about Alexander Hamilton's lost boyhood on St. Croix in my forthcoming novel, "The Lost Diary of Alexander Hamilton" due out in 2020.
***Special thanks to Michael Newton for his help in writing this blog post.
THE LOST DIARY OF ALEXANDER HAMILTON, the story of Hamilton's forgotten boyhood in the Caribbean is now available for pre-order from Amazon. Special introductory price only $2.99. Click here.