A puritan village tries wage control

Posted by Marc Hodak on April 26, 2010 under Economics, History | Be the First to Comment

Reading about governance in the first villages of New England, I come across lessons that keep getting repeated, down to our time. In 1641 the English Civil War triggered an economic crisis across the ocean.  It threatened to disrupt relationships and supplies from the mother country upon which the colony depended, causing a number of the colonists to either sail back to England or move south where they could create a better subsistence for themselves.

The resulting turmoil caused a sharp drop in the price of land and commodities.  At the same time, with labor getting scarce, workmen were able to ask for much higher wages. Relatively larger landholders found themselves in an economic vise.  So, the town fathers, made up principally of these larger landholders, decided to pass wage regulations, limiting how much workmen could charge for their labor.  Here’s a sample of those rules:

Every cart, with four oxen, and a man, for a day’s work          5s.
All carpenters, bricklayers, thatchers                                           21d./day
All common laborers                                                                    18d./day
All sawyers, for sawing up boards                                                3s./4d. per 100
All sawyers for slit work                                                                  4s./8d. per 100

The grandees who argued in favor of this price list no doubt justified it by arguing (a) it was for the public good, (b) no worker should profit from economic turmoil, (c) no one was worth 10 s. per day, (d) it’s good to spread the pain, and (e) given that these limits would be imposed on relatively poor people living at the edge of civilization between an inhospitable wilderness and a gaping ocean, “where else could they go?”

For you economics majors out there, what was the predictable outcome of these wage controls?

From the journal of colonial governor John Winthrop:

The laborers would either remove to other places where they might have more, or else, being able to live by planting and other employments of their own, they would not be hired at all.