American Elephants

A Rebellion With Lots of Spirit, No Money. by The Elephant's Child

“The country that declared its independence on July 4, 1776, had many advantages in the military struggle with Britain that was already under way. Finances,  however, was not one of them.

The United States was fighting on its home ground and could react quickly. Britain had to fight from a distance of three thousand miles and with a communications time lag of at least three months, often four. The American military commanders and politicians were intimately familiar with that ground; their British counterparts were often profoundly ignorant. Most of all, the United States had only to avoid losing the war until the British government and people tired sufficiently of the struggle and its mounting costs. Britain had to defeat and pacify a vast country awash in rebellion.

But Britain had virtually unlimited financial resources; the Americans had hardly any. Because of those resources it could deploy the largest and best navy in the world (although it had been allowed to decay considerably since the end of the Seven Years’ War). The British army was second to none in training and equipment, and could be easily augmented with hired foreign troops. The Americans had to scratch together what forces they could using state militias and privateers as much as if not more than the Continental Army and Navy.

The rest had to come from borrowing, some from wealthy Americans committed to the cause, but mostly from France and Holland, who were both, of course, far more interested in humbling Britain than in helping the Americans. Along with money, they also supplied about 60 percent of the gunpowder used by American forces. During the course of the war, American privateers seized some two thousand British vessels, worth, together with their cargoes some 18 million pounds.” *

So to overcome the limits of borrowing, the Americans turned to the printing press, with the usual result — inflation. From early 1779 to early 1781 prices rose nearly tenfold. Robert Morris, a Philadelphia merchant, took charge in 1781 and was able to raise financing to move the Continental Army from New York State to Yorktown, Virgina.

The French fleet blocked the entrance to Chesapeake Bay, cutting off relief to the British army. If the British wanted to continue the war they would have to raise, equip and transport a new army.  There was no political will to do so. The British were “war weary” in the common phrase of journalists. The British began negotiating a peace treaty that resulted in formal recognition of American independence in 1783. The Americans won the war by not losing.

* John Steele Gordon: An Empire of Wealth

%d bloggers like this: