Philadelphia Reflections

Monetary Causes of the American Revolutionary War

Milton Friedman The Father of Monetarism

Milton Friedman won the 1976 Nobel Prize in Economics (more accurately, the Bank of Sweden Prize in Memory of Alfred Nobel), for generating controversial ideas made even more annoying to his professional adversaries by his matchless knack for attaching memorable slogans to them. A phrase in question is that "Inflation, always and everywhere, is a monetary phenomenon." Turned around, the converse emerges that the great deflation and depression of the 1930s was caused by a global monetary shortage. Then, to extend the same idea to the American Revolution, it could fairly be argued that inept British contraction of colonial coinage had a lot to do with provoking us to seek independence.

French & Indian War

Following the French and Indian War, the colonies experienced a major commodity depression which seems to have been caused by wartime shortages followed by post-war surpluses (associated with failure to adjust to the resulting financial confusion). In Milton Friedman's theory, it is the task of any government to maintain stable prices by balancing the amount of currency in circulation with the size of the gross national product. In 1770, the British Exchequer would thus have had to expand and contract the amount of currency in circulation pretty rapidly to maintain economic stability in the bumpy Colonial economy. Essentially, they had to ride a bucking broncho three thousand miles away. In the Eighteenth Century, there was no trace of understanding of the issues involved. Adam Smith's Wealth of Nations was only published in the fateful year of 1776, for example. Even if the techniques for maintaining stable prices had been crystal clear, there was a thirty-day lag in communication across the Ocean, and comparable lags between the colonies, where different imports and exports were affected at varying times. So it is a little harsh to blame the British for the chaotic result, except to notice that strongly centralized, the trans-Atlantic government was by nature unsuitable for managing rapidly-changing problems, currency and otherwise. The British government had more than a century of experience that should have made that clear. That's what the colonists said, in effect, and their solution for it was Independence.

George III

If you believe Friedman, a shortage of coinage causes a fall in prices or deflation. To correct that, you need a central banker constantly fine-tuning the currency. But banking in the colonies was too rudimentary to consider such a thing. If you needed a mortgage, you went to a prosperous neighbor and borrowed directly from him. That was fine because prosperous colonists had limited opportunities to invest their money conveniently, except by loaning money to their neighbors. Indeed, local communities were knit together socially by the mutual assistance of successful farmers directly assisting their less fortunate neighbors. However, pioneer farming

Depression-era Farm Family

communities are far too unsophisticated to remain tranquil when problems arise out of abstractions. Suddenly and without apparent explanation, in 1770 there was no money for anybody to use, and the fellow with a mortgage on his farm couldn't make his payments even though he was otherwise entirely successful. His creditor himself than couldn't pay his own bills, and eventually, even the kindliest ones were driven to foreclose the mortgage. It was said to be common for a farm worth $5000 to be sold to satisfy a mortgage of $100. And in this way, many honest and once-prospering farmers were forced to walk past their old home, now owned and occupied by a formerly friendly neighbor. It all seemed bitterly unfair, no one understood what was happening, evil motives were readily suspected, and old religious and personal grievances were heightened. When the British finally imposed a total ban on paper money as well as a prohibition of the export of British coinage outside the United Kingdom, things became almost impossible to manage. Almost no one knew exactly what was going on, but everyone could see it was bad. The colonies rapidly deteriorated toward class warfare, which is what the division between Tories and Rebels was soon to become, with both sides quite rightly asserting they were not responsible, and quite wrongly asserting the other must be.

From a far distance, it can be readily perceived the primitive banking and transportation systems of that time were inadequate to respond to the rapidly changing financial problems of a global empire; and it can be readily surmised that many other non-financial issues of governance were similarly hampered by attempting to centralize control over vast distances. In that sense, the colonists were approximately correct in directing their indignation to the person of King George III, whose mother was constantly nagging him to "be a real King". He had the particular misfortune to be dealing with Englishmen, deeply aware of the hidden political agenda made possible in the 13th Century by the Magna Charta and made explicit in 1307, when Edward I agreed not to collect certain taxes without the consent of the realm. Essentially, Parliament placed taxation in the hands of the people, who consistently withheld consent until the king gave them just a little more liberty. This was the reason irksome micromanagement of the distant colonies was immediately countered with the cry of "No taxation without Representation" since membership in the House of Commons was a traditional and historically effective means to the end. But it was getting late for this solution. Maritime New England now wanted to go further than that in order to dominate Western Atlantic trade. Virginia and the rest of the South wanted to go all the way to Independence in order to exploit the vast empty interior wilderness of Ohio and beyond. But the Quaker colonies in the middle felt quite sympathetic with John Dickinson's advice to remain part of the Empire and make a stand for representation in Parliament. When the Lord Howe's British fleet appeared in lower New York harbor an immediate choice had to be made, and ultimately the Quaker colonies were swayed by Benjamin Franklin's embittered report of his mistreatment in Parliament, and his assessment that he could persuade the French to help us. However reluctant they were to resort to force, the Quaker colonies had to choose, and choose immediately: either flee as Tories to Canada, or stand and fight.

Two Hotheads May Have Destroyed an Empire

King George III

Combatants in a war often personalize the enemy in a single person. In 1776 the American colonists blamed it all on King George III. The British might have picked Sam Adams or Thomas Paine. Things are of course always vastly complicated in the affairs of great nations. Economics and national power are strong forces, like our culture, religion, and the accidents of geography and history. But when matters teeter on the edge of a cliff, insignificant pests can occasionally start an avalanche.

Charles Townshend

Consider first Charles Townshend, the Chancellor of England's exchequer in 1768. Townshend didn't particularly want the job, hoping instead for the Admiralty. None of the political power brokers particularly wanted to give him the job, but ultimately regarded it as the place he could do the least harm. He might have had no less an advisor than Adam Smith, who was the tutor of his son, but Smith's letters to him are so servile that it seems unlikely he would urge free trade to such a headstrong merchantilist employer. It is intriguing to speculate this strange association might have sharpened Smith's opinions in the Wealth of Nations which first appeared in 1776./p>

William Bradford

Townshend had been a problem all his life. His mother was brilliant, and notoriously promiscuous. He and his father exchanged 2000-word letters explaining to each other how the other was completely wrong. Charles was witty, eloquent and charming when he wanted to be, and he married an enormously wealthy woman. After that, his family had no hold on him, and they rarely spoke to each other. The same charm and arrogance can be perversely effective in politics, so other politicians often just had to put up with him. But as politicians do, they roasted him in their letters and private conversations. His political opponent, Edmund Burke, was perhaps a most gentle critic when he observed, "His actions... seem never to have been influenced by his most wonderful abilities." Opponents, of course, welcome deficiencies in their enemies, while exasperated political allies can be the most scathing about team members who injure the party with misbehavior. Adam Smith referred to his employer as someone "who passes for the cleverest fellow in England." Chase Price described him as "utterly unhinged". Horace Walpole: "nothing is luminous compared with Charles Townshend: he drops down dead in a fit, has a resurrection, thunders in the Capitol, confounds the Treasury bench, laughs at his own party, is laid up the next day, and overwhelms the Duchess [of Argyll, his mother-in-law] and the good women that go to nurse him!" The final assessment of his biographer Sir Lewis Namier was "...illustrations of Charles Townshend's character can be picked out anywhere during his adult life. He did not change or mellow; nor did he learn by experience; there was something ageless about him; never young, he remained immature to the end."

What matters for contemporary American readers is Townshend's 14-year grievance against American legislatures which seem to have originated when he discovered the New York Legislature in 1754 up to its old tricks of refusing to provide funds for Royal initiatives it did not like. At the time, he was in his first public office, the Board of Trade and Plantations, and had written some highly arrogant orders to New York, making many high-handed and disdainful public asides to his friends, including his wish to have the Assembly cut out of appropriations except for token approval of them. He was young, so his wiser party colleagues simply deflected him. But by 1767 he was Chancellor of the Exchequer, a brilliant speaker, and no doubt had collected many political chits to be cashed in. The Townshend Taxes were enacted, his underlying personal grievances were well known, the colonial assemblies could see it meant big trouble.

Although almost no one could match Townshend for bizarre behavior, in Philadelphia at Front and Market Streets, there was another difficult personality, named William Bradford. As a printer and newspaper publisher, Bradford must have been a person of some note in a town of thirty thousand, but it is difficult to find a portrayal of him, and notes about his personal life are comparatively skimpy. We do know that he was a member of a family of newspaper printers, including grandfather, uncle, and son, all of whom had experienced official prosecution for defiance of government. His grandfather, also named William Bradford, is said to have had Quaker affiliation, but it is not particularly prominent in accounts of him, while almost no mention of Quaker affiliation is made of the rest of the family. Grandfather William had a notable apprentice named John Peter Zenger, who was prosecuted for libel against the Royal Governor of New York, defended in a famous trial by the Philadelphia Lawyer Andrew Hamilton, who established the principle that the truth is not a libel. We can rather safely presume that the younger William Bradford had grown up in an environment of hostility to authority, aggravated but not necessarily caused by some rather plain persecutions by authority. It may even have been specific hostility to British authority, since in 1754 young Bradford began publication of a specifically anti-British paper, The Weekly Advertiser. It is interesting to note that its principle competitor was a pro-British paper printed by Ben Franklin. Somewhere along the line, Bradford became head of the Sons of Liberty, clearly marking him as strongly anti-British, probably well before the Townshend Acts.

Bradford established the London Coffee House at Front and Market Streets in Philadelphia. That might seem a strange sideline for a printer, until you reflect that the location was right beside the waterfront, especially the Arch Street warf. Newspapers in those days almost never had professional reporters, depending for their content on gossip from visiting ships. A coffee shop near the waterfront would be an excellent place to hear the maritime news of the world, and possibly hear it sooner than competitors. The London Coffee House provided a place for bargaining and trade; the Maritime Exchange got its start there. It may or may not be significant that a main activity of the Exchange was to buy and sell slaves. It is sure that the Navigation Acts and the Townshend taxes on various imports were a central topic of angry discussion in a waterfront Coffee House from 1768 to 1776. Thus it is possible that Bradford was caught up in the excited opinions of his customers, but plenty of evidence of anti-British sentiment exists in his background to suppose he nursed a long-standing prejudice against the British government. Our most authoritative account of the events appeared in the Pennsylvania Packet of January 3, 1774, but the beginnings of the story were better related in the Pennsylvania Mercury of October 1, 1791, shortly after Bradford's death.

"After the Tax on Tea imported into America was reduced to 3d. per pound by the British Parliament, there appeared to be a general disposition in the colonies to pay it. In this critical situation of the Liberties of America, Mr. Bradford stopped two or three citizens of Philadelphia, who happened to be walking by the door of his house on Front-street, and stated to them the danger to which our country was exposed, by receiving, and paying the tax on, the tea. Many difficulties stared the gentlemen, to whom he spoke, in the face...; and it was particularly mentioned that the citizens of Philadelphia were tired out with town and committee meetings, and that it would be impossible to collect a sufficient number of them together, to make an opposition to the tea respectable and formidable. 'Leave that business to me(said Mr. Bradford),--I'll collect a town meeting for you--Prepare some resolves;--and,--they shall be executed.' The next evening he collected a few of such citizens who were heartily opposed to the usurpations of the British Parliament, who drew up some spirited resolutions to reject the dutied tea, and to send back the tea ship. These resolutions were adopted the Saturday following (October 16, 1773), by a large and respectable town meeting at which the late Dr. Thomas Cadwalader (a decided Whig) presided. The same resolutions were immediately afterwards (November 5, 1773) adopted, nearly word for word, by a town meeting in Boston, where a disposition to receive the tea had become general, from an idea that opposition to it would not be seconded or supported by any of the other colonies. The events (December 16, 1773) which followed the adoption of these resolutions in the town of Boston are well known. However great the merit and sufferings of that town were in the beginning of the war, it is a singular fact, and well worthy of record in the history of the events which produced the American Revolution, the First act in that great business originated in Philadelphia, and that the First scene in it originated with Mr. William Bradford."

Written within a few days of the events, the January 3, 1774 Pennsylvania Packet is more detailed. In particular, the grievance is stated to be "...the pernicious project of the East India Company, in sending Tea to America, while it remains subject to a duty, and the Americans at the same time confined by the strongest prohibitory laws to import it only from Great Britain." While it is not easy to find a quotation capsulizing the British response, it would be something to the effect that the Tea Act was in fact a face-saving gesture which reduced the price of tea for the colonists, and was received as such by most of them, until smugglers of Dutch tea now faced the same surplus of unsold tea which had nearly bankrupted the East India Company after the colonies resorted to non-importation. Both arguments contain a certain amount of spin, but side-by-side, they contained sufficient reasonableness to permit peaceful resolution. To go on with the details:

"Upon the first advice of this measure, a general dissatisfaction was expressed, that, at a time when we were struggling with this oppressive act, and an agreement subsisting not to import Tea while subject to the duty, our subjects in England should form a measure so directly tending to enforce the act and again embroil us with our parent state. When it was also considered that the proposed mode of disposing of the Tea tended to a monopoly, ever odious in a free country, a universal disapprobation showed itself throughout the city. A public meeting of the inhabitants was held at the State-House on the [16]th October, at which great numbers attended, and the sense of the city was expressed in [the following] eight resolves:"

which we will divide into three sections for commentary. Resolves 1,2, and 5 can be said to be a protest against the Tea Act. While the language is a little high-flown, such a protest would be considered a normal exercise of free speech:

"1. That the disposal of their own property is the inherent right of freemen;that there can be no property in that which another man can, of right, take from us without our consent: that the claim of Parliament to tax America is, in other words, a claim of right to levy contributions on us at pleasure. "2. That the duty imposed by Parliament upon Tea landed in America is a tax on the Americans, or levying contributions upon them without their consent. "5. That the resolution lately enered into by the East India Company to send out their Tea to America , subject the payment of duties on its being landed here, is an open attempt to inforce this ministerial plan, and a violent attack upon the liberties of America. "

Resolutions 3. and 4. are accusations of a deeper plot. The colonists do not want to be taxed by the British Government directly, but prefer to tax themselves so that final payment to colonial officials must pass through colonial control. Unspoken, of course, is the creation of an ability to thwart implementation of unwelcome directives from London:

"3. That the express purpose for which the tax is levyed on the Americans, namely for the support of government, administration of justice, and defence of his Majesty's dominions in America, has a direct tendency to render Assemblies useless, and to introduce arbitrary government and slavery. "4. That a virtuous and steady opposition to this ministerial plan of governing America is absolutely necessary to preserve even the shadow of liberty, and is a duty which every freeman in America owes to his country, to himself, and to his posterity".

Finally, in the tradition of the writing of resolutions, come the so-called Resolves, the solution to the problem which you wish your audience to agree to. These concrete actions are found in resolutions 6, 7, and 8. The British could be expected to be offended, since the Resolves do not acknowledge the right of Parliament to impose the tax, or humbly petition that they reconsider. Rather, they assume the role of sovereign government themselves, effectively declaring the colonies would punish anyone who obeyed the Law, would coerce those who are charged by Parliament to implement the Law, and would cause those appointed by Parliament to do this work, to resign or else the peace would be disturbed by colonial enforcement of these 'suggestions':

"6. That it is the duty of every American to oppose this attempt. "7. That whoever shall, directly or indirectly, countenance this attempt, or in any wise aid or abet in the unloading,receiving and vending the Tea sent, or to be sent out by the East India Company, while it remains subject to the payment of the duty here, is an enemy to his country. "8. That a Committee be immediately chosen to wait on these gentlemen, who, it is reported , are appointed by the East India Company to receive and sell said Tea, and request them, from a regard to their own character, and the peace and good order of the city and province, immediately to resign their appointment."

The thinly-veiled threats contained in these resolutions against anyone who disagreed were soon made more explicit when the tea ship actually arrived at the mouth of the Delaware around December 23, 1773, by public posters to the Delaware River pilots and Captain Ayers of the incoming Tea ship, signed by THE COMMITTEE FOR TARRING AND FEATHERING. Cards were printed up for the public to distribute around the premises of James and Drinker, telling them to resign as sales agents for the Tea by writing a note, to be delivered to the London Coffee House -- William Bradford's place of business. A few shouts and the waving of a few torches would have been sufficient to indicate that the alternative was arson.

A month elapsed between the proclamation of the Philadelphia resolutions and the actual arrival of Captain Ayers in our harbor. Another tea ship had arrived at Boston in the meantime on December 16,1773. The Boston citizens had dressed themselves as Indians, and dumped the Boston Tea consignment into the harbor, proclaiming the same eight Philadelphia-written resolutions. But in Philadelphia, violence proved unnecessary. James and Drinker resigned their appointments as sales agents, the pilots were ready enough to impede passage, and Captain Ayers on December 27, 1773 meekly sailed his cargo of Tea back where it came from.

Franklin Benefits the Pennsylvania Hospital

Benjamin Franklin

During the number of years I was in business as a stationer, printer, and postmaster, a great many small sums became due for books, advertisements, postage of letters, and other matters, which were not collected when, in 1757, I was sent by the Assembly to England as their agent, and by subsequent appointments continued there till 1775, when on my return, I was immediately engaged in the affairs of Congress and sent to France in 1776, where I remained nine years, not returning till 1785, and the said debts, not being demanded in such a length of time, are become in a manner obsolete, yet are nevertheless justly due. These, as they are stated in my great folio ledger E, I bequeath to the contributors to the Pennsylvania Hospital, hoping that those debtors, and the descendants of such as are deceased, who now, as I find, make some difficulty of satisfying such antiquated demands as just debts, may, however, be induced to pay or give them as charity to that excellent institution. I am sensible that much must inevitably be lost, but I hope something considerable may be recovered. It is possible, too, that some of the parties charged may have existing old, unsettled accounts against me; in which case the managers of the said hospital will allow and deduct the amount, or pay the balance if they find it against me.

REFERENCES

Muddle: The War of 1812

H.G. Callaway

HOWARD Callaway is an old friend and an expert historian of the War of 1812. This is the two hundredth anniversary of that war, so Howard is in demand as a speaker. At a recent meeting of the Right Angle Club, he gave a fascinating recital of his analysis of the reasons for the war, and its subsequent upheavals in American politics. The audience at the Club stayed well beyond the allotted hour to ask questions and finally had to be sent home by the moderator. We will here try to summarize his views fairly.

American impressions of this war come largely from Henry Adams, who wrote a nine-volume history of it, concluding it was a senseless muddle. Henry Adams however, was the grandson of John Quincy Adams, and the great-grandson of John Adams, both of whom were active participants of the event, its causes, or its consequences. He later killed himself, having displayed fugues of depression in his autobiographical Education of Henry Adams. No matter how serene his writing style, you have to be a little careful about the views of such an involved person. New England hated this war almost universally, not a single Federalist congressman or Senator voted for it, and the Federalist political party essentially dissolved as a consequence of it. New England even considered secession. In particular, maritime New England hated the two-year embargo on European trade which Thomas Jefferson had imposed as a measure short of war. Since Jefferson had stripped the Army down to 3000 soldiers and the Navy down to a single ship -- he didn't have many choices. Great Britain at that time had eight hundred ships in its navy. When it came, the war was mainly supported by the more rural South and West of the nation. It was the war of the "republican" political party of Jefferson and Madison, actively demonstrating that Virginia had defeated the Federalists and now would dominate American politics for decades. Regardless of details, the War of 1812 made it clear that New England was not the central essence of America any longer; the rest of the country would not follow its lead.

Henry Adams

His opponents called it "Mr.Madison's War", and the bad management of it certainly damaged the later reputation of the principal author of the Bill of Rights, perhaps the Constitution. It's pretty hard to maintain the image of a Founding Father when you get us into a war that could not be won and was not even conducted well. Whatever Madison's early skill as a political philosopher, his later execution as its chief officer was a shambles. He was indeed a clever politician, never completely revealing his true beliefs, so it is a question how much he was really in favor of the war, and to what degree he could merely see how the wind was blowing. It might be argued, for example, that a supporter of the constitutional intent that Congress would declare wars, the president would only command them, might well have been yielding reluctantly to his party's clear wishes. Howard does not think so.

There was no time to expand on the evidence, but our speaker is convinced that Madison and the whole "Republican" party were anxious to sever the cultural ties to England and turn the nation to looking Westward. Certainly that was Jefferson's view, and certainly, the nation entered a century of turning its back on Europe, England in particular, becoming in one word, isolationist. That's the sort of grand strategy which might offer coherence to the subsequent Wilson and Franklin Roosevelt reversals of attitudes, which contain a major element of anglophilia.

Quite a lot to think about, considering what a bumbling rout the War seemed to be in 1812.

REFERENCES

The Streets of Philadelphia, on Ben Franklin's Birthday

Benjamin Franklin 309th Birthday

They changed the calendar in the Eighteenth Century, so it's always confusing to talk about the birthdays of the Founding Fathers. Benjamin Franklin for example was born on January 6, 1705, but by the time he got around to being famous, he was born on January 17, 1706. Scholars handle this awkwardness by saying he was born on January 17, 1706 [OS, January 6, 1705]. That's not all the problem, however. This year on January 17 he had his 309th birthday, unless you wish to say he had his 310th birthday on January 6. The novelty has long since worn off, and nowadays most birthday celebrants prefer just not to mention the matter. You might think Don Smith would think this is of vital importance, but he cheerfully brushes it off with a chuckle.

BenFranklin Celeabration

Don Smith is the current leader of the Ben Franklin Birthday Celebration, which is held at 9 AM every year, on January 17th [NS], starting at the American Philosophical Society's Franklin Hall on Chestnut Street, once a very substantially-built bank building. The constituent members are affiliated with one of the thirty-odd organizations which Franklin founded, although anyone interested is welcomed. On what usually turns out to be the coldest day of the year, the birthday celebrants gather for hot drinks and cookies, followed by one or two really outstanding lectures about Franklin. Sometimes the lecture's connection to Franklin is a little stretched, but all of them are excellent. At 11 AM, the group marches together to Ben's grave at 5th and Arch for a short ceremony, led by Franklin re-enactors and honest-to-goodness members in the uniform of the National Guard, which Franklin founded. He did so when the Spanish and French ships were bombarding the coast, and as the editor of the town's newspaper, Franklin called for troops to defend us. The Quaker government declined to be violent, so Franklin published an invitation for volunteers to bring their guns and join him. Ten thousand showed up, and Franklin's career in public life was established. He was a hero to everyone -- except Thomas Penn, who saw him as a threat. Much subsequent Colonial history revolves around this episode and its consequences.

After the march, the group settles down for a good lunch, and hears yet another outstanding lecture. This year it was given by Paul R. Levy, the President of a planning organization called the Center City District. Steve's message this year was about how the streets of Center City Philadelphia were constructed for walking, or at most riding horseback. That is, they were narrow. They widened somewhat as they went West and had to accommodate a city of carriages. That was quite good enough through the Gilded Age, when Philadelphia could credibly claim to be the richest city in the world.

Auotmoblie

But then what happened was not the two World Wars, the stock market crash of 1929, or anything resembling that. What happened in Paul Levy's view, was the automobile. Hundreds, then thousands of autos filled the streets, scattering chickens and children, and eventually making the city impassible. Nothing would do but to move to the suburbs, which among other things provided the thrill of driving too fast and too carelessly, and reducing the pedestrians while increasing the business of accident rooms. There was certainly no room for bicycles, which were driven away without a tear being shed, and defying the efforts of city planners to find a safe place for them. Europe, good old Europe where we came from, was more successful in hounding the imposter autos off the bike paths of Amsterdam and Copenhaven. And preserving intercity high speed train service, at great taxpayer expense. Those Europeans really know how to live, in sidewalk cafes, unaffected by bicycles, preserving a much older collection of narrow city streets leading to empty cathedrals, in Germany, France, and Central Europe. That wasn't the American way, at all. We just pulled up sticks and moved to the suburbs, abandoning the dirty old defeated cities to their ethnic neighborhoods.

It's a novel theory, and maybe even a correct one. It could explain a lot, if Philadelphia is seen as a victim of Detroit, strangling on their mutual industrial excesses.