The OTHER Reason for the American Revolution → Washingtons Blog
The OTHER Reason for the American Revolution - Washingtons Blog

Thursday, June 4, 2009

The OTHER Reason for the American Revolution

Everyone knows that the American colonists revolted largely because of taxation without representation and related forms of oppression by the British. See this and this.

But - according to Benjamin Franklin and others in the thick of the action - a little-known factor was actually the main reason for the revolution.

To give some background on the issue, when Benjamin Franklin went to London in 1764, this is what he observed:

When he arrived, he was surprised to find rampant unemployment and poverty among the British working classes… Franklin was then asked how the American colonies managed to collect enough money to support their poor houses. He reportedly replied:

“We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.”

In 1764, the Bank of England used its influence on Parliament to get a Currency Act passed that made it illegal for any of the colonies to print their own money. The colonists were forced to pay all future taxes to Britain in silver or gold. Anyone lacking in those precious metals had to borrow them at interest from the banks.

Only a year later, Franklin said, the streets of the colonies were filled with unemployed beggars, just as they were in England. The money supply had suddenly been reduced by half, leaving insufficient funds to pay for the goods and services these workers could have provided. He maintained that it was "the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War." This, he said, was the real reason for the Revolution: "the colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction."

(for more on the Currency Act, see this.)

Alexander Hamilton echoed similar sentiments:

Alexander Hamilton, the nation's first treasury secretary, said that paper money had composed three-fourths of the total money supply before the American Revolution. When the colonists could not issue their own currency, the money supply had suddenly shrunk, leaving widespread unemployment, hunger and poverty in its wake. Unlike the Great Depression of the 1930s, people in the 1770s were keenly aware of who was responsible for their distress.

As historian Alexander Del Mar wrote in 1895:

[T]he creation and circulation of bills of credit by revolutionary assemblies...coming as they did upon the heels of the strenuous efforts made by the Crown to suppress paper money in America [were] acts of defiance so contemptuous and insulting to the Crown that forgiveness was thereafter impossible . . . [T]here was but one course for the crown to pursue and that was to suppress and punish these acts of rebellion...Thus the Bills of Credit of this era, which ignorance and prejudice have attempted to belittle into the mere instruments of a reckless financial policy were really the standards of the Revolution. they were more than this: they were the Revolution itself!
And British historian John Twells said the same thing:

The British Parliament took away from America its representative money, forbade any further issue of bills of credit, these bills ceasing to be legal tender, and ordered that all taxes should be paid in coins ... Ruin took place in these once flourishing Colonies . . . discontent became desperation, and reached a point . . . when human nature rises up and asserts itself.
In fact, the Americans ignored the British ban on American currency, and:
"Succeeded in financing a war against a major power, with virtually no 'hard' currency of their own, without taxing the people."

Indeed, the first act of the New Continental Congress was to issue its own paper scrip, popularly called the Continental.

Franklin and Thomas Paine later praised the local currency as a "corner stone" of the Revolution. And Franklin consistently wrote that the American ability to create its own credit led to prosperity, as it allowed the creation of ample credit, with low interest rates to borrowers, and no interest to pay to private or foreign bankers .

Is this just ancient history?


The ability for America and the 50 states to create its own credit has largely been lost to private bankers. The lion's share of new credit creation is done by private banks, so - instead of being able to itself create money without owing interest - the government owes unfathomable trillions in interest to private banks.

America may have won the Revolutionary War, but it has since lost one of the main things it fought for: the freedom to create its own credit instead of having to beg for credit from private banks at a usurious cost.

As economic writer and attorney Ellen Brown has tried to teach to Obama, Schwarzenegger, and anyone else who will listen, the way out of the economic crisis is to stop paying interest to private banks for the creation of credit, and to return to the system of government-issued credit used by the Founding Fathers to create prosperity for the people and to gain independence from their oppressors.

And see this.

Postscript: The Smithsonian gives an interesting description of the origin of America's monetary program:

Unlike the Spanish colonists to the south, the English settlers of our original thirteen colonies found no gold or silver among the riches of their new land. Neither did they receive great supplies of gold and silver coins from Britain - money was supposed to move the other way, to the mother country, in exchange for goods. The monetary system in the colonies was "notable because it was based on thin air," says Smithsonian numismatics curator Richard Doty in his book America’s Money, America’s Story. To make up for the lack of currency, the colonists would "replicate and create, try, reject, and redesign every monetary form ever invented anywhere else."
Necessity is often the "mother of invention". Whether or not the monetary system was created out of trial and error and scarcity-based necessity, it was a very productive system.

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  1. Great post. I love Ellen Brown's writing.

  2. This comment has been removed by the author.

  3. "As economic writer and attorney Ellen Brown has tried to teach to Obama, Schwarzenegger, and anyone else who will listen..."

    Unfortunately, such people are not listening. How could they? They were put into office to serve the bankers! We won't see any relief comming from our leaders. Local currencies, or state banks, like North Dakota, are more likely to work.

  4. From

    Not only were there Abolitionists in Bible days,
    But there were many more for abolition I can praise.
    The Kings and Popes of middle ages were the ones to say,
    That interest was evil but since then they've lost their way.
    Some presidents who of this Populist idea knew,
    John Adams, Thomas Jefferson, and Andrew Jackson too.
    Some brilliant scientific men were also of accord,
    With Franklin. There was Thomas Edison and Henry Ford.
    The Native North American Civilizations great,
    Did "wampum" promissory IOU beads advocate.
    All issued IOU beads for their horses, hides and seed.
    Each mark on bead meant value personally guaranteed.
    The Whites said they should put away their private currrency,
    So braves lined up with Whites at unemployment agency.
    Forced to use white's currency, they had to play the game,
    And in the larger game of nations, they came out so lame.
    Our forebear's generations called it work-bee on a date,
    Where men could pay their taxes with some service to the state.
    They built the roads that carve the land, the bridges over blue,
    To those who said they needed gold, they proved it wasn't true.
    Now look at how it works today, let's get it understood,
    Replacing wooden tallies now is paper pressed of wood.
    Two notes used in America can clearly show the way,
    Both legal tender now down south. They can be spent today:
    "United States Note" issued by the nation's Treasury,
    And "Federal Reserve Note" which is banker's currency.
    Their fronts are very similar except the name they state,
    Their backs are very different, it means another plate.
    The Treasury provided notes for federal expense,
    And taxed them back to balance books with numbers that made sense.
    In 1913, other plates were given to the banks,
    Creation of the money. They gave politicians thanks.
    The Government had given banks permission to create,
    A batch of brand new money to be lent at interest rate.
    The Government then borrowed from them and at their request,
    The Congress passed the Income Tax to pay them interest.
    One Congressman objected, Louis T. McFadden, loud,
    "The greatest crime in history," he said with head unbowed.
    Ten dollars out, eleven back, it often takes a while,
    But after years, the end result's a melancholy style.
    The money from the Treasury, its use did almost cease,
    To pay the interest to banks, the taxes did increase.
    And when we ask "The Treasury, why is it never used?"
    In answer, we get silence and an attitude bemused.
    So to this day the bulk of the American supply,
    Is borrowed from the banks at rates that make debts multiply.
    All Governments do service debt by taxing you and me,
    Instead of letting Treasury create it interest free.
    I see no reason for a tax to pay them interest,
    When use of plates by Treasury would lower taxes best.
    The money from the Treasury was used down south before.
    The "Greenbacks" used by Lincoln paid to win the Civil War.
    The "Continentals" did their job until King George did state:
    "There'll be no use of your own plates, for gold you'll have to wait."
    Though we've been told that their revolt was over tax for tea,
    Ben Franklin said "The war's because they took our currency."

  5. to all concerned i believe that we can all create a conglomerate internationally where we can fund each other as in a club to help buy homes for families and other essentials and use our skills to stabilise society for our and our childrens future benefit. we can also look at ensuring a working model which can never be manipulated as in a constitution barring elements of the usury causing class to join us in our endeavour. unless we start action based on mutual trust between all faiths except those who promote usury we will be only a talking shop for years to come. and yes i am a muslim who is not an enemy to anyone but humanity centred!

  6. Hey, I knew that.

  7. It seems the automakers have been mocking us here in America.

    The "Lincoln Continental," anyone?

    People knew we were being robbed and enslaved us through a criminal central banking system.

  8. Yes, time for local, public, transparent banks and lenders. We must self-regulate because the govt. has proven itself a sham, a protector of an oligarchy. And this is to be expected, I suppose, in that we must make our credit systems ourselves. DIY. We must make our own Bank of North Dakota ourselves, in our own states, cities. Brown (Web of Debt) even mentions universities joining together to create lending gurantors (banks) in some radio interview somewhere. (How ironic, can you imagine Yale or Harvard creating their own public lending institutions? perhaps creating the Ivy League lender or some such? I know, the oligarchs themselves come from these places so they'd never allow it, but how pathetic that Yale or Princeton suffers financially at the hands of a few punks. Idiotic- when the universities could be making much much more money if they became the lender themselves.) Ditto for the states.

    The following are well worth the effort:

  9. The Ivy League institutions exist to serve the needs of the Oligarchs. Forget restructuring, you think the powers that be have any interest in democratic ideals? You think this is a democracy?

  10. Unfortunately, Ellen Brown is wrong about the solution (and many of the problems). Legal tender laws need to be repealed so that other currencies could compete with a national currency so people would have an alternative in the case of overprinting. The Fed's interest is payed back in large part to the treasury. I know it's private, but it wouldn't make a difference if this power was back in the Federal governments hand (and only the governments hand). Ms. Brown is notorious for misquoting founding fathers to make them appear as if they supported a an unbacked currency printed by the federal government. Most in fact supported a currency backed by metal, and this is all that is allowed in our constitution. Printing money is not a pathway to prosperity; there is no free lunch (or maglev train). An economy can only absorb so much inflation in this manner (not to mention the mis-allocations of capital resulting from false price signals innevitably created). Credit should be extended on realistic (natural, market-- not artificial government created) terms. If the creation of the commodity money was left to free market as it should be, there would not be any shortage to speak of. The best we can hope for is stable prices (with moderate overall deflation resulting from increasing productivity from continuous investment). A government's monopoly on money will only continue the debasement of currency and the destruction of real wealth and prosperity.

    Also, the Bank of North Dakota doesn't print money, and it's all fractional reserve. It doesn't have the powers of a central bank. Why is this pointed to as a real life model of a solution?


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