The individualistic Rhode Islanders angrily turned Governor Stephen Hopkins out of office for embroiling Rhode Island in a "foreign" war between England and France.

Rhode Island blithely disregarded the embargo against trade with the enemy, and redoubled its commerce with France. Rhode Island's ships also functioned as one of the major sources of supply for French Canada during the war. In the fall of 1757, William Pitt was told that the Rhode Islanders "are a lawless set of smugglers, who continually supply the enemy with what provisions they want…"

The Crown ordered royal governors to embargo exports of food and to break up the extensive traffic with the West Indies, but shippers again resorted to flags of truce and trade through neutral ports in the West Indies. Monte Cristi, in Spanish Hispaniola, proved to be a particularly popular intermediary port.

The flags-of-truce device particularly irritated the British, and the lucrative sale of this privilege—with the prisoners' names left blank—was indulged in by Governors William Denny of Pennsylvania and Francis Bernard of New Jersey. French prisoners, for token exchanges under the flags, were rare, and therefore at a premium, and merchants in Philadelphia and New York paid high prices for these prisoners to Newport privateers. The peak of this trade came in 1759, for in the following year, with the end of the war with New France, the Royal Navy was able to turn its attention to this trade and virtually suppress it.

However, in the words of Professor Bridenbaugh, "Privateering and trade with the enemy might have their ups and downs … but then as now, government contracts seemed to entail little risk and to pay off handsomely."1  Particularly feeding at the trough of government war contracts were specially privileged merchants of New York and Pennsylvania. Two firms of London merchants were especially influential in handing out British war contracts to their favorite American correspondents.

Thus, the highly influential London firm of John Thomlinson and John Hanbury (who was deeply involved in the Ohio Company) received a huge war contract; the firm designated Charles Apthorp and Company its Boston representative, and Colonel William Bayard its representative in New York.

In addition, the powerful London merchant Moses Franks arranged for his relatives and friends—David Franks of Philadelphia, and Jacob Franks, John Watts, and the powerful Oliver DeLancey of New York—to be made government agents, New York, furthermore, was made the concentration point for the British forces and the general storehouse of arms and ammunition, thus permitting "many merchants to amass fortunes as subcontractors if they enjoyed the proper family connections." By 1761, however, all the great ports in America were suffering badly from the severe dislocation of trade wrought by the war.