America Gains Economic Freedom

The Grand Strategy of Britain to control the industry and markets of the American colonies was the primary reason for the American War of Independence. America’s founding fathers recognized the “consumption of foreign luxuries, [and] manufactured stuffs, as one of the chief causes of [the colonies’] economic distress.”[1]

In the harbor of New York there are now 60 ships of which 55 are British. The produce of South Carolina was shipped in 170 ships of which 150 were British…. Surely there is not any American who regards the interest of his country but must see the immediate necessity of an efficient federal government; without it the Northern states will soon be depopulated and dwindle into poverty, while the Southern ones will become silk worms to toil and labour for Europe…. In the present state of disunion the profits of trade are snatched from us; our commerce languishes; and poverty threatens to overspread a country which might outrival the world in riches.[2]

The famous Boston Tea Party, touted as one cause of the revolution, was only a particularly theatrical protest over a rather minor example of this systematic injustice.

Not even a horseshoe nail was to be produced in America, and under no circumstances were manufactured products to be exported to countries within Britain’s trade empire. The colonialists

could import only goods produced in England or goods sent to the colonies by way of England. They were not allowed to export wool, yarn, and woolen cloth from one colony to another, “or to any place whatsoever,” nor could they export hats and iron products. They could not erect slitting or rolling mills or forges and furnaces. After 1763, they were forbidden to settle west of the Appalachian Mountains. By the Currency Act of 1764, they were deprived of the right to use legal tender paper money and to establish colonial mints and land banks.[3]

After American independence England’s Lord Brougham proposed destroying America’s infant industries by selling manufactured goods to them below cost.

He thought it ‘well worthwhile to incur a loss upon the first exportation [of English manufactures], in order, by the glut, TO STIFLE IN THE CRADLE THOSE RISING MANUFACTURES IN THE UNITED STATES.’

This experience, and Spain and France blocking America’s expansion, caused Americans to lay the foundation for their own Grand Strategy, copying Britain’s neo-mercantilist trade policy. Gaining full freedom required military might and led to establishing the Naval War College and a powerful navy.[4]

U.S. statesman Henry Clay quotes a British leader:

[N]ations knew, as well as [we did], what we meant by ‘free trade’ was nothing more nor less than, by means of the great advantage we enjoyed, to get a monopoly of all their markets for our manufactures, and to prevent them, one and all, from ever becoming manufacturing nations.”[5]

Lord Brougham’s economic warfare plan was thwarted when, 36 years after gaining their political freedom and theoretical rights in the Revolutionary War and while Britain was busy battling Napoleon on the Continent, Americans fought the War of 1812 to remove Britain’s iron grip from America’s commerce.

America was now both politically and economically free. By winning that War America gained its full independence. Until then, the American economy—and thus the fundamental rights of Americans—were dependent upon the whims of British neo-mercantilists backed by British naval power.

America, Canada, New Zealand, and Australia were the only former colonies to eventually gain both their political and economic freedoms.[6] There is more to independence than the political freedom first gained by the American Revolution: the right to vote, free speech, and choice of religion.

For example, the states could trade between themselves, but they could not trade freely with the rest of the world due to the British navy’s denial of that basic right, this maintained colonial dependence upon British industry and shipping.

A humiliating treaty, Peace of Versailles, 1783, had been forced on the colonies permitting “only the smallest American vessels to call at the island ports and prohibited all American vessels from carrying molasses, sugar, coffee, cocoa, and cotton to any port in the world outside the continental United States” and Britain’s navy was there to ensure compliance.[7]

But when Britain was fighting Napoleon on the Continent, the War of 1812 broke those trade barriers and gave the United States economic freedom.

With its great natural wealth, rapid industrialization, and rich gold and silver discoveries, America was able to break free from Britain’s monopolization of finance capital.

Friedrich List Wrote His Classic Observing America’s Industrialization

Friedrich List, the German diplomat, writer, and promoter of a German state with no internal tariffs, observed “the wonderful favourable effects of Napoleon’s Continental System, and the destructive effects [on the continent] of its abolition” when France was defeated at Waterloo.[8]

Thirteen years after the American-British war of 1812, Friedrich List arrived in America, became an American citizen, and studied America’s protectionist break for economic freedom.

America’s Grand Strategy, designed by America’s founders and promoted through List’s German language newspaper Outlines of Political Economy, provided the foundation for his 1841 protectionist classic, The National System of Political Economy.[9]

America took the philosophical lead in protection of industry and markets and, from 1816 to 1945, was one of the most protected nations. Virtually every nation which has ever successfully industrialized did so under the protection principals laid down by Friedrich List.

List analyzed how the British had industrialized; their strategy of technological monopolization and control of trade; noticed the collapse of European industry when sales of English products penetrated Europe after Napoleon’s defeat; how America had ignored British free trade propaganda (perception management), protected its industry and markets, and became wealthy; and how Britain’s promotion of free trade was a subterfuge to maintain control of markets.

List then designed a philosophy under which his beloved native Germany, or any other nation, could industrialize, protect their tender industries and markets, and become wealthy.

America’s founding fathers, especially Alexander Hamilton, had made the same analysis. The prosperity Americans enjoyed once they had gained both their political and economic freedom exposes the Grand Strategy of the original promoters of Adam Smith to keep America’s, and the world’s, wealth going to British vaults.

America’s treasured independence is little more than breaking the chains of financial dependence. Financial independence depends on gaining control of industrial technology, access to raw material and fuel to process into more industrial tools and useful products, as well as access to markets to sell enough products to pay for necessary imports. Gaining their economic freedom to manufacture and trade is what most colonial nations were unable to do.

Adam Smith’s philosophy, although quite just between equally developed nations and quite valuable as an analysis of trade between nations of equal power, is the industrial world’s self-protective philosophy forced upon the rest of the world under the guise of it being for their own good.

From Plunder by Raids to Plunder by Trade

Controlling technology in the outlying countryside so as to maintain access to resources and the wealth-producing-process originated in the city-states of Europe in the Middle Ages. They were learning to “plunder by trade:”

Up to and during the course of the fifteenth century the towns were the sole centers of commerce and industry to such an extent that none of it was allowed to escape into the open country. . . .The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years. . . .The severity of these measures increased with the growth of ‘democratic government.’. . .All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms and fulling-vats were broken or carried away. The problem of the towns collectively was to control their own markets, that is, be able to reduce the cost of items purchased from the countryside and to minimize the role of stranger merchants. Two techniques were used. On the one hand, towns sought to obtain not only legal rights to tax market operations but also the right to regulate the trading operation (who should trade, when it should take place, what should be traded). Furthermore, they sought to restrict the possibilities of their countryside engaging in trade other than via their town. Over time, these various mechanisms shifted their terms of trade in favor of the townsmen, in favor thus of the urban commercial classes against both the landowning and peasant classes (Karl Polanyi, Henri Pirenne, Eli F. Heckscher, Immanuel Wallerstein).

Those simple looms and fulling vats were primitive industrial capital. With this primitive technology, the cities could produce cheaper and better cloth and trade these commodities to the countryside for wool and food.

But when the serfs came to town and looked at the simple looms and fulling vats, it did not take them long to build their own tools and produce their own cloth.

The loss of the city’s markets for both raw material and manufactured products due to the comparative advantage of the countryside meant impoverishment and possibly even starvation for those in the city who formerly produced that cloth. The same loss of monopoly through increased technological knowledge of the countryside and its natural comparative advantage held true for other products and other cities.

The wealth-producing process had to be protected. The comparative advantages of the outlying villages were eliminated by force to maintain dependency upon the city and lay claim to both the natural wealth of the countryside and the wealth produced by technology.

When one city took over the countryside markets of another city, the dispossessed would again face starvation. Thus the wars between the City-states of the Middle Ages were wars over control of trade.

City-states evolved into countries that that also went to war over control of trade. And powerful countries evolved into empires which controlled resources and trade far beyond their borders.

Americans gaining their freedom was essentially gaining the freedom to trade. The colonialists

could import only goods produced in England or goods sent to the colonies by way of England. They were not allowed to export wool, yarn, and woolen cloth from one colony to another, “or to any place whatsoever,” nor could they export hats and iron products. They could not erect slitting or rolling mills or forges and furnaces. After 1763, they were forbidden to settle west of the Appalachian Mountains. By the Currency Act of 1764, they were deprived of the right to use legal tender paper money and to establish colonial mints and land banks. (Philip S. Foner).

England’s Lord Brougham proposed destroying America’s infant industries by selling manufactured goods to them below cost. “He thought it ‘well worthwhile to incur a loss upon the first exportation [of English manufactures], in order, by the glut, TO STIFLE IN THE CRADLE THOSE RISING MANUFACTURES IN THE UNITED STATES.’ ”

One hundred and fifty years after gaining its freedom, America took over from Britain the job of imposing Adam Smith Free trade upon the world.

This was a scam from the beginning. So long as weak nations could be made to believe it, they handed their wealth to the imperial-centers-of-capital of their own free will.

Not a nation in the world ever developed under Adam Smith unequal free trade. Virtually every successful nation developed under the philosophy of Friedrich List’s 1841 classic, The National System of Political Economy.

To stop fast expanding socialism, America provided the money, technology, and markets to Western Europe, Japan, Taiwan, and South Korea. That is Friedrich List protection, not Adam Smith free trade.

Later, the Asian Tigers and China moved in under the umbrella of that protection, all the while mouthing the words of Adam Smith free trade. These nations were taking advantage of America’s paranoia and turning the scam back upon them.

After the collapse of the Soviet Union, America and Europe no longer needed protection against fast expanding socialism and withdrew their protection. The result, the 1997 currency collapses and economic crisis in the newer developing Asian countries.

The money fleeing those periphery countries for the safety of the imperial centers actually strengthened the American and European economies as periphery nations, including Japan, remained in crisis.

The once collapsing prices on the periphery of empire (they have recently been recovering) increased the wealth in the imperial center as per the formula high pay divided by the low pay squared. When equally-productive labor on the periphery is paid 10% that of the wealthy world, in world trade they retain one unit of wealth while the well-paid nations retain 100 units of wealth ($10 divided by $1=$10; $10 X $10=$100).

The powerful military of imperial nations today are for the same purpose as those raiding parties of the city-states centuries ago, control of technology, control of resources, and thus control of the wealth-producing-process.

As the poor nations now understand how their wealth is plundered through unequal trades, world trade is changing fast. The current world financial collapse is compounded by the world demanding their full and equal trade rights.

Inform your friends, form your discussion groups. People are good. Prove to philosophers and negotiators in the wealthy world the reality of plunder by trade and many will recognize they have been misinformed and support you.

Our next page addresses the Historical Struggle for Dominance in World Trade

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[1] Charles A. Beard, An Economic Interpretation of the Constitution (New York: Macmillan Publishing Co., 1941), p. 46. See also Michael Barratt Brown, Fair Trade (London: Zed Books, 1993), p. 20.

[2] Beard, Economic Interpretation, pp. 46-47, 171, 173.

[3] Philip S. Foner, From Colonial Times to the Founding of the American Federation of Labor (New York: International Publishers, 1982), p. 32. See William Appleman Williams, Contours of American History (New York: W.W. Norton & Company, 1988), pp. 105-17; Smith, Wealth of Nations, pp. 548-49, Book IV, chapters VII, VIII; James Fallows, “How the World Works,” Atlantic Monthly. December 1993, p. 42 ; Frederic F. Clairmont, Rise and Fall of Economic Liberalism (Goa India: Other India Press, 1996), p. 100.

[4] Williams, Contours of American History, pp. 192-97, 339-40; Aptheker, Colonial Era, pp. 23-24; List, National System, especially pp. 59-65, 71-89, 92, 342, 421-22; chapter XI; Dean Acheson, Present at the Creation (New York: W.W. Norton & Company, 1987), p. 7; Richard Barnet, The Rockets’ Red Glare: War, Politics and American Presidency (New York: Simon and Schuster, 1983), pp. 40, 60, 68. [4] 34.

[5] Williams, Contours of American History, p. 221.

[6] The following books will lead you to primary sources on nations, especially America, successfully developing protecting their industries and markets. Though some—because they were needed as allies—developed under others’ protection, there are no nations which successfully developed without protection for their industries and markets. Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977); Clarence Walworth Alvord, The Mississippi Valley in British Politics: A Study of Trade, Land Speculation, and Experiments in Imperialism Culminating in the American Revolution ( New York: Russell & Russell, 1959); Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: University of Chicago Press, 1993); Correli Barnett, The Collapse of British Power (New York: Morrow, 1971); Oscar Theodore Barck, Jr. and Hugh Talmage Lefler, Colonial America, 2nd ed. (New York: Macmillan, 1968); Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday, Doran & Co., 1933); John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission (Washington DC: U.S. International Trade Commission, 1976); Alfred E. Eckes, Jr., Opening America’s Markets: U.S. Foreign Trade Policy Since 1776 (Chapel Hill: University of North Carolina Press, 1995); James Thomas Flexner, George Washington: The Forge of Experience (Boston: Little Brown and Co., 1965); William J. Gill, Trade Wars Against America: A History of United States Trade and Monetary Policy (New York: Praeger, 1990); John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt (New York: Walker and Co., 1997); Irwin, Against the Tide; Emory R. Johnson, History of Domestic and Foreign Commerce of the United States (Washington DC: Carnegie Institute of Washington, 1915); Richard M. Ketchum, ed., The American Heritage Book of the Revolution (New York: American Heritage Publishing, 1971); Michael Kraus, The United States to 1865 (Ann Arbor: University of Michigan Press, 1959); John A. Logan, The Great Conspiracy: Its Origin and History, 1732-1775 (New York: A.R Hart & Co., 1886); William MacDonald, ed., Documentary Source Book of American History, 1606-1926, 3rd ed. (New York: MacMillan, 1926); John C. Miller, Origins of the American Revolution (Boston: Little Brown and Co., 1943); Samuel Eliot Morison and Henry Steele Commanger, Growth of the American Republic, 5th ed. (New York: W.W. Norton, 1959); Sir Lewis Namier and John Brooke, Charles Townsend (New York: St. Martin’s Press, 1964; Gus Stelzer, The Nightmare of Camelot: An Expose of the Free Trade Trojan Horse (Seattle, Wash.: PB publishing, 1994); Peter D.J. Thomas, The Townshend Duties Crisis: The Second Phase of the American Revolution, 1776-1773 (Oxford: Clarendon Press, 1987); Arthur Hendrick Vandenberg, The Greatest American (New York: G.P. Putman’s and Sons, 1921).

[7] Barnet, Rockets’ Red Glare, p. 40.

[8] List, National System, pp. xxv-xxvi.

[9] Ibid., in Memoirs. See also Irwin, Against the Tide, pp. 125-27, chapter 14 and Eckes, Opening America’s Markets, chapter 1.

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