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The Causes of the Revolution of 1776

Mises Daily: Wednesday, April 25, 2012 by

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It was said at the time, I believe, that the actual causes of the colonial revolution of 1776 would never be known. The causes assigned by our schoolbooks may be dismissed as trivial; the various partisan and propagandist views of that struggle and its origins may be put down as incompetent. Great evidential value may be attached to the long line of adverse commercial legislation laid down by the British State from 1651 onward, especially to that portion of it which was enacted after the merchant-State established itself firmly in England in consequence of the events of 1688. This legislation included the Navigation Acts, the Trade Acts, acts regulating the colonial currency, the act of 1752 regulating the process of levy and distress, and the procedures leading up to the establishment of the Board of Trade in 1696.[1] These directly affected the industrial and commercial interests in the colonies, though just how seriously is perhaps an open question — enough at any rate, beyond doubt, to provoke deep resentment.

Over and above these, however, if the reader will put himself back into the ruling passion of the time, he will at once appreciate the import of two matters which have for some reason escaped the attention of historians. The first of these is the attempt of the British State to limit the exercise of the political means in respect of rental values.[2] In 1763 it forbade the colonists to take up lands lying westward of the source of any river flowing through the Atlantic seaboard. The deadline thus established ran so as to cut off from preemption about half of Pennsylvania and half of Virginia and everything to the west thereof. This was serious. With the mania for speculation running as high as it did, with the consciousness of opportunity, real or fancied, having become so acute and so general, this ruling affected everybody. One can get some idea of its effect by imagining the state of mind of our people at large if stock gambling had suddenly been outlawed at the beginning of the last great boom in Wall Street a few years ago.

For by this time the colonists had begun to be faintly aware of the illimitable resources of the country lying westward; they had learned just enough about them to fire their imagination and their avarice to a white heat. The seaboard had been pretty well taken up, the freeholding farmer had been pushed back farther and farther, population was coming in steadily, the maritime towns were growing. Under these conditions, "western lands" had become a center of attraction. Rental- values depended on population, the population was bound to expand, and the one general direction in which it could expand was westward, where lay an immense and incalculably rich domain waiting for preemption. What could be more natural than that the colonists should itch to get their hands on this territory, and exploit it for themselves alone, and on their own terms, without risk of arbitrary interference by the British State? — and this of necessity meant political independence. It takes no great stress of imagination to see that anyone in those circumstances would have felt that way, and that colonial resentment against the arbitrary limitation which the edict of 1763 put upon the political means must therefore have been great.

The actual state of land speculation during the colonial period will give a fair idea of the probabilities in the case. Most of it was done on the company system; a number of adventurers would unite, secure a grant of land, survey it, and then sell it off as speedily as they could. Their aim was a quick turnover; they did not, as a rule, contemplate holding the land, much less settling it — in short, their ventures were a pure gamble in rental values.[3] Among these prerevolutionary enterprises was the Ohio company, formed in 1748 with a grant of half a million acres; the Loyal Company, which like the Ohio Company was composed of Virginians; the Transylvania, the Vandalia, Scioto, Indiana, Wabash, Illinois, Susquehanna, and others whose holdings were smaller.[4]

It is interesting to observe the names of persons concerned in these undertakings; one cannot escape the significance of this connection in view of their attitude toward the revolution, and their subsequent career as statesmen and patriots. For example, aside from his individual ventures, General Washington was a member of the Ohio Company, and a prime mover in organizing the Mississippi Company. He also conceived the scheme of the Potomac Company, which was designed to raise the rental value of western holdings by affording an outlet for their produce by canal and portage to the Potomac River, and thence to the seaboard. This enterprise determined the establishment of the national capital in its present most ineligible situation, for the proposed terminus of the canal was at that point. Washington picked up some lots in the city that bears his name, but in common with other early speculators, he did not make much money out of them; they were appraised at about $20,000 when he died.

Patrick Henry was an inveterate and voracious engrosser of land lying beyond the deadline set by the British State; later he was heavily involved in the affairs of one of the notorious Yazoo companies, operating in Georgia. He seems to have been most unscrupulous. His company's holdings in Georgia, amounting to more than 10 million acres, were to be paid for in Georgia scrip, which was much depreciated. Henry bought up all these certificates that he could get his hands on, at ten cents on the dollar, and made a great profit on them by their rise in value when Hamilton put through his measure for having the central government assume the debts they represented. Undoubtedly it was this trait of unrestrained avarice which earned him the dislike of Mr. Jefferson, who said, rather contemptuously, that he was "insatiable in money."[5]

Benjamin Franklin's thrifty mind turned cordially to the project of the Vandalia Company, and he acted successfully as promoter for it in England in 1766. Timothy Pickering, who was secretary of state under Washington and John Adams, went on record in 1796 that "all I am now worth was gained by speculations in land." Silas Deane, emissary of the Continental Congress in France, was interested in the Illinois and Wabash Companies, as was Robert Morris, who managed the revolution's finances; as was also James Wilson, who became a justice of the Supreme Court and a mighty man in postrevolutionary land grabbing. Wolcott of Connecticut, and Stiles, president of Yale College, held stock in the Susquehanna Company; so did Peletiah Webster, Ethan Allen, and Jonathan Trumbull, the "Brother Jonathan," whose name was long a sobriquet for the typical American, and is still sometimes so used. James Duane, the first mayor of New York City, carried on some quite considerable speculative undertakings; and however indisposed one may feel toward entertaining the fact, so did the "Father of the Revolution" himself — Samuel Adams.

A mere commonsense view of the situation would indicate that the British State's interference with a free exercise of the political means was at least as great an incitement to revolution as its interference, through the Navigation Acts, and the Trade Acts, with a free exercise of the economic means. In the nature of things it would be a greater incitement, both because it affected a more numerous class of persons, and because speculation in land-values represented much easier money. Allied with this is the second matter which seems to me deserving of notice, and which has never been properly reckoned with, as far as I know, in studies of the period.

It would seem the most natural thing in the world for the colonists to perceive that independence would not only give freer access to this one mode of the political means, but that it would also open access to other modes which the colonial status made unavailable. The merchant-State existed in the royal provinces complete in structure, but not in function; it did not give access to all the modes of economic exploitation. The advantages of a State which should be wholly autonomous in this respect must have been clear to the colonists, and must have moved them strongly toward the project of establishing one.

Again it is purely a commonsense view of the circumstances that leads to this conclusion. The merchant-State in England had emerged triumphant from conflict, and the colonists had plenty of chance to see what it could do in the way of distributing the various means of economic exploitation, and its method of doing it. For instance, certain English concerns were in the carrying trade between England and America, for which other English concerns built ships. Americans could compete in both these lines of business. If they did so, the carrying charges would be regulated by the terms of this competition; if not, they would be regulated by monopoly, or, in our historic phrase, they could be set as high as the traffic would bear. English carriers and shipbuilders made common cause, approached the State and asked it to intervene, which it did by forbidding the colonists to ship goods on any but English-built and English-operated ships. Since freight charges are a factor in prices, the effect of this intervention was to enable British ship owners to pocket the difference between monopoly-rates and competitive rates; to enable them, that is, to exploit the consumer by employing the political means.[6] Similar interventions were made at the instance of cutlers, nail makers, hatters, steel makers, etc.

These interventions took the form of simple prohibition. Another mode of intervention appeared in the customs duties laid by the British State on foreign sugar and molasses.[7] We all now know pretty well, probably, that the primary reason for a tariff is that it enables the exploitation of the domestic consumer by a process indistinguishable from sheer robbery.[8] All the reasons regularly assigned are debatable; this one is not, hence propagandists and lobbyists never mention it. The colonists were well aware of this reason, and the best evidence that they were aware of it is that long before the Union was established, the merchant-enterprisers and industrialists were ready and waiting to set upon the new-formed administration with an organized demand for a tariff.

It is clear that while in the nature of things the British State's interventions upon the economic means would stir up great resentment among the interests directly concerned, they would have another effect fully as significant, if not more so, in causing those interests to look favorably on the idea of political independence. They could hardly have helped seeing the positive as well as the negative advantages that would accrue from setting up a State of their own, which they might bend to their own purposes. It takes no great amount of imagination to reconstruct the vision that appeared before them of a merchant state clothed with the full powers of intervention and discrimination, a State which should first and last "help business," and which should be administered by persons of actual interest like to their own. It is hardly presumable that the colonists generally were not intelligent enough to see this vision, or that they were not resolute enough to risk the chance of realizing it when the time could be made ripe; as it was, the time was ripened almost before it was ready.[9] We can discern a distinct line of common purpose uniting the interests of the actual or potential speculator in rental values — uniting the Hancocks, Gores, Otises, with the Henrys, Lees Wolcotts, Trumbulls and leading directly toward the goal of political independence.

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The main conclusion, however, toward which these observations tend, is that one general frame of mind existed among the colonists with reference to the nature and primary function of the State. This frame of mind was not peculiar to them; they shared it with the beneficiaries of the merchant state in England, and with those of the feudal State as far back as the State's history can be traced. Voltaire, surveying the debris of the feudal State, said that in essence the State is "a device for taking money out of one set of pockets and putting it into another." The beneficiaries of the feudal State had precisely this view, and they bequeathed it unchanged and unmodified to the actual and potential beneficiaries of the merchant state. The colonists regarded the State primarily as an instrument whereby one might help oneself and hurt others; that is to say, first and foremost they regarded it as the organization of the political means. No other view of the State was ever held in colonial America. Romance and poetry were brought to bear on the subject in the customary way; glamorous myths about it were propagated with the customary intent; but when all came to all, nowhere in colonial America were actual practical relations with the State ever determined by any other view than this.[10]

Notes

[1] For a most admirable discussion of these measures and their consequences, cf. Beard, op. cit., vol. I, pp. 191–220.

[2] In principle, this had been done before; for example, some of the early royal land-grants reserved mineral-rights and timber-rights to the Crown. The Dutch State reserved the rights to furs and pelts. Actually, however, these restrictions did not amount to much, and were not felt as a general grievance, for these resources had been but little explored.

[3] There were a few exceptions, but not many; notably in the case of the Wadsworth properties in Western New York, which were held as an investment and leased out on a rental-basis. In one, at lease, of General Washington's operations, it appears that he also had this method in view. In 1773 he published an advertisement in a Baltimore newspaper, stating that he had secured a grant of about twenty thousand acres on the Ohio and Kanawha rivers, which he proposed to open to settlers on a rental-basis.

[4] Sakolski, op. cit., ch. I.

[5] It is an odd fact that among the most eminent names of the period, almost the only ones unconnected with land-grabbing or land-jobbing, are those of the two great antagonists, Thomas Jefferson and Alexander Hamilton. Mr. Jefferson had a gentleman's distaste for profiting by any form of the political means; he never even went so far as to patent one of his many useful inventions. Hamilton seems to have cared nothing for money. His measures made many rich, but he never sought anything from them for himself. In general, he appears to have had few scruples, yet amidst the riot of greed and rascality which he did most to promote, he walked worthily. Even his professional fees as a lawyer were absurdly small, and he remained quite poor all his life.

[6] Raw colonial exports were processed in England, and re-exported to the colonies at prices enhanced in this way, thus making the political means effective on the colonists both coming and going.

[7] Beard, op. cit., vol. I., p. 195, cites the observation current in England at the time, that seventy-three members of the Parliament that imposed this tariff were interested in West Indian sugar-plantations.

[8] It must be observed, however, that free trade is impractical so long as land is kept out of free competition with industry in the labor-market. Discussions of the rival policies of free trade and protection invariably leave this limitation out of account, and are therefore nugatory. Holland and England, commonly spoken of as free-trade countries, were never really such; they had only so much freedom of trade as was consistent with their special economic requirements. American free-traders of the last century, such as Sumner and Godkin, were not really free-traders; they were never able — or willing — to entertain the crucial question why, if free trade is a good thing, the conditions of labor were no better in free-trade England than, for instance, in protectionist Germany, but were in fact worse. The answer is, of course, that England had no unpreempted land to absorb displaced labor, or to stand in continuous competition with industry for labor.

[9] The immense amount of labor involved in getting the revolution going, and keeping it going, is not as yet exactly a commonplace of American history, but it has begun to be pretty well understood, and the various myths about it have been exploded by the researches of disinterested historians.

[10] The influence of this view upon the rise of nationalism and the maintenance of the national spirit in the modern world, now that the merchant-State has so generally superseded the feudal State, may be perceived at once. I do not think it has ever been thoroughly discussed, or that the sentiment of patriotism has ever been thoroughly examined for traces of this view, though one might suppose that such a work would be extremely useful.