Thursday, August 14, 2014

EC HISTORY | Origins of 1776 (Updated Dec.14, 2015)

The American colonies on the eve of the American Revolution. Land speculation
by Virginians was a crucial motivator. Source: Maps ETC.
Aug. 14, 2014–I just received the July 2014 issue of The American Journal of Economics and Sociology (73:3)edited by Cliff Cobb.

The entire issue is a forum for an update of what is called the "Curtis Thesis" – the idea that  key reasons for the American Revolution were economic.

Two new British rules broke with the established economic order:

1. They created  trade monopolies and 2. They changed the way lands obtained from the French would be sold.

The Curtis Thesis is  an extension of Charles Beard's Economic Interpretation of the Constitution of the United States, published in 1913.

My reaction to the new issue is: Bravo, Curtis! Bravo Cobb!

It should not detract from our admiration of George Washington that he was a land speculator along with other Fathers of Our Country like Thomas Jefferson, Patrick Henry and Benjamin Franklin. After all, Washington's profession had been land surveying, before he joined the military during the French and Indian War.

The Founding Fathers engaged in brave and thoughtful initiatives - they succeeded in uniting the 13 colonies and in forming a new country with a durable constitution. It should not shock us to find that they had significant self-interest in the independence from the British Crown of the newly united American colonies.

The Curtis thesis is propounded by Thomas D. Curtis, a retired professor of economics with an interest in economic history and the history of economic thought. He received his Ph.D. in economics from Indiana University and has taught there and at the University of South Florida and elsewhere. He and his wife live in Temple Terrace, near Tampa, Fla. The thesis elaborated in the new issue of the Journal is challenging. The main points are:
  • The taxation issue associated with Boston Tea Party was not the central issue for many of the principal actors of the American Revolution. 
  • The more important issue for the traders was the monopolization of the tea trade in the hands of the East India Company.
  • For the Virginians who were a major force at the center of the unification of the 13 colonies, the key issue was the Quebec Act, which transferred settlement rights to the Crown, which sought to add them to Quebec
The elimination in 1763 of French claims west of the
colonies opened up huge areas for speculation.
I have noted elsewhere that William Pitt the Elder, alumnus of Trinity College, Oxford, made possible the American Revolution by defeating the French in North America (starting with the attack on Fort Duquesne), and that Lord North, another Trinity, Oxford alumnus, made the Revolution inevitable through his tax and land policies.

The feud between John Wilkes and John Stuart (Earl of Bute), both of them alumni of the University of Leiden, also played a part.

More generally, Oxford alumni (especially south of New York) and Cambridge alumni (especially in New England) had an abiding influence on the emergence of the American colonies.

Curtis shows exactly how Lord North created the perfect storm for the colonies and united them against George III. The British Crown and Parliament, which in 1773 represented England, Wales, Ireland and since 1707 Scotland, introduced policies that were anathema to the colonies.

Taxes were not the most important issue. Yes, the colonies were expected to pay for the war on their behalf. But, Curtis says, "the colonists successfully overturned [the tax] measures [so that] taxation was a superficial problem." He goes on, in the abstract of his thesis:
But in 1773 ... [Britain] imposed a commercial monopoly on tea sales, and in 1774, when it cut off settlement in western lands, the colonists saw no choice but to rebel and create their own nation.
In other words, the British Government saw an easy way to obtain revenues from the colonies without imposing direct taxes on them. They would monopolize trade and collect taxes from the monopoly, and they would put up western land sales claimed as Virginian for auction instead of allowing the colonies to collect revenue from the sales. However, the newly imposed indirect methods of raising revenue were more abhorrent to the leaders of the colonies than the ones they replaced. And the French and Indian War had trained colonial military leaders such as General Washington, who made resistance to London a real possibility.