Friday, June 16, 2006

History of New England: the impact of transport costs

Earlier I spoke of the way in which the combination of transport and geography had helped shape New England’s history. Drawing from Blainey’s The Tyranny of Distance, I now want to extend this discussion by focusing on the economics of transport.

New England’s European settlers had to pay two sets of transport costs, shipping costs to get goods to or from the nearest port, then land freight costs to get goods to their final destinations.

Blainey notes that transport by land was twenty times more expensive than by ship. It cost more in 1820 for a Sydney merchant to send a barrel of whale oil (whaling was then a major Australian industry) 100 miles inland than around the world to London.

The reason for this was simple. Bullock drays were the most cost-effective land transport. Limited in load and slow, a bullock team and dray cost roughly as much as a modern truck. So per ton costs were very high as compared to ship.

According to Blainey, this meant that only commodities that were extremely valuable on a per ton basis could afford transport from areas more than 40 miles from deep water.

Early European Australia lacked such commodities. By 1800, twelve years after the initial settlement, Britain had occupied just two small areas, a patch around Sydney together with Norfolk Island.

European points of presence then expanded quite rapidly, but initially they were (to use Blainey’s classic phrase) limpet ports, small port settlements clinging to the edge of the continent established for reasons of strategy and policy independent of the resources of the vast interior.

New England’s first European settlements, Newcastle (1804) and Port Macquarie (1821), reflected this pattern.

Both were located at the mouth of rivers and were established as penal settlements to accommodate the growing number of convicts. Both offered access to immediately available resources close to water. Newcastle provided access to coal, timber and also lime from the shell middens established over the generations by the local aborigines. Port Macquarie had fertile soil (the new settlements were expected to feed themselves) and timber, important in part because cutting had already depleted immediately available timber around Newcastle.

Wool changed this limpet settlement pattern. Wool was a valuable commodity, worth at least ten times as much per ton as wheat, sometimes up to twenty. This meant that it could be grown away from the coast and still shipped profitably to London. Wool also grew better away from the humid coastal strip.

The first sheep had come to Australia with the first fleet – fat tailed sheep from the Cape of Good Hope. Initially sheep were primarily another food source. This began to change in 1797 with the arrival of the first fine wool Spanish merinos, forming the base for a selective breeding program by John Macarthur and the Reverend Samuel Marsden.

The first auction of Australian wool was held at Garraway’s Coffee House in London in 1821. By 1838 sheep had moved into every Australian colony, the annual wool clip was over two million kilos and wool had become Australia’s main export (short history of the early wool industry drawn from

Wool may have been valuable enough to allow international sale and thus support the initial spread of settlement across inland New England, but the squatters and those who serviced or depended upon them, still had a powerful interest in lower freight costs.

For the squatters, the problem lay not so much in the direct freight cost of wool, though that was important,

Wool growing was then very labour intensive. Shepherds looked after the sheep in the absence of fences. Sheep had to be gathered for shearing and then sheared. The wool had to be washed (washed wool gained a higher price in London), dried, bailed .and then transported. All the men involved had to be fed and clothed, with much of this brought in by land freight from the nearest port. These freight costs placed a major cost impost on the industry. To overcome this, the New England squatters needed good roads to the nearest port

The impact of road improvements could be quite dramatic. The initial Great Western Road between Sydney and Bathurst was completed in 1815 and then improved. According to Blainey, the cost of carting a ton of goods between Sydney and Bathurst (a distance of around 200 kilometers) was about £20 pounds a ton in the mid 1820s. Within a few years it almost halved and continued to fall over coming decades. Wool growing profits increased as a consequence.

New England squatters were well aware of these economics. They provided the core underpinning to the fight for improved east-west communications described in an earlier post.

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