Marc Liebman's Blog, page 39

Financing the American Revolution

When the war broke out at Lexington and Concord on April 19th, 1775, the colonists had no means of funding the fight that would take seven long years. There was no government to raise money for salaries, food, ammunition and all the other items needed to wage war. What the colonists had on the battlefield came out of individual wallets, literally.

Even after the Second Continental Congress passed the Articles of Confederation and the situation was desperate. The Continental Army and Navy was starved for funds.

In 1781, Robert Morris, a wealthy Philadelphia merchant who emigrated from Liverpool as a teenager, accepted the appointment by the Congress as the Superintendent of Finance. His job – raise money from the colonial governments and private citizens and ensure that it was spent wisely. Morris founded the Bank of North America as the country’s central bank and to raise money, sold 1,000 shares at $400 each in what can be considered our nations first public offering.

The individual colonies, despite pressure from Morris, were not paying their share of the cost of the war so Morris had no choice but to turn to a network of wealthy colonists. One of whom was Hyam Salomon who was born in East Prussia and immigrated to New York in 1765 and became a wealthy securities broker. In 1775, Salomon was arrested by the British as a spy and pardoned in 1776 so he could act as an interpreter for their German mercenaries. Because he continued to help American prisoners escape and encouraged German soldiers to desert, he was arrested again in 1778.

Salomon escaped, went to Philadelphia where helped Robert Morris raise money. Salomon brought in over $18 million in 2019 dollars that doesn’t sound like much, but during the American Revolution, it was a princely sum and kept Washington’s army in the field. Near the end of the war, the Continental Army, Washington was about to trap Cornwallis at Yorktown, but his army was out of money. The general sent a letter to the Congress asking them to find Salomon who quickly came up with the money he needed. Salomon did as asked and the British were defeated.

The hard economic times following the American Revolution were not kind to those, including Haym Salomon, who loaned money to the Continental Congress. Even though it had promised to pay all its debts, the Congress couldn’t raise struggled money from the individual states and the debts went unpaid. For example, a year after the Treaty of Paris was signed in 1784, Salomon was penniless and in debtor’s prison where he died from tuberculosis in 1785.

Morris took the lessons learned from the American Revolution and turned the Bank of North America into the First Bank of the United States. Later, along with Alexander Hamilton, Morris created the basis for the financial system we know today which is the strongest in the world.

Death of the Articles of Confederation

Our nation’s first attempt at a constitution had the seeds of its own destruction built into the document. It created, as one historian put it, more of a “league of friendship” than a government that could run a growing country. The story leading to the Constitutional Convention of 1787 was about money, power and the lack of both!

When the Treaty of Versailles was signed in 1783, the country was broke, the dollar was worthless and the Congress was powerless to do anything about it. The Articles of Confederation gave the Congress the power to assess taxes, but not the means to collect them. Therefore, it could not execute its assigned tasks, i.e. foreign policy, promote general welfare, regulate interstate commerce or provide for the common defense.

Countries and the citizens who loaned the Continental Congress money to fund the war wanted their money as did the soldiers and sailors who were not paid. Overseas suppliers refused to offer credit to businessmen in the new United States. At the time, we were mostly an agrarian economy and meant many farmers couldn’t borrow money against the revenue from their future crops.

In 1787, Revolutionary War veteran Daniel Shays led a rebellion against the State of Massachusetts’ tax collectors who began seizing farms used as collateral for unpaid loans. Shay’s 4,000 followers seized the U.S. owned Springfield Armory and demanded changes. The central government was powerless because the army and navy were dissolved shortly after the war ended.

Massachusetts Governor James Bowdoin hired former Continental Army General Benjamin Lincoln to create an army and end the rebellion. Funded by merchants who were owed money by Shay’s farmers, Lincoln succeeded in his mission with minimal bloodshed.

Shay’s Rebellion was just one problem. Another facing the Congress was resolving the dispute between Maryland and Virginia over their Potomac River boundary. Much of what both claimed would become the state of West Virginia in 1863. Despite clauses in the Articles of Confederation, Rhode Island claimed the right to tax any goods passing through its boundaries.

The repercussions of Shay’s Rebellion, border disputes, imposing illegal taxes, a penniless central government resonated throughout the thirteen states. These problems caused George Washington to call for constitutional reform.

On May 14th, 1787, the Constitutional Convention convened in Philadelphia with only Rhode Island not participating. The convention took only four months to write the document we know as our Constitution. It became law of the land when New Hampshire became the ninth state to ratify it on June 8th, 1788. Rhode Island was the last of the original thirteen states to ratify it on May 29th, 1790.

Besides being one of the events that led to the Constitutional Convention, Shay’s rebellion let to Vermont statehood. In 1787, Vermont was an “unrecognized republic” and had actually declared independence from New York on July 4th, 1777. Vermont offered Shay’s rebels shelter after their rebellion and its residents demanded independence. Led by New Yorker Alexander Hamilton, Vermont was allowed to separate from New York and on March 4th, 1791, became our 14th state.

The Articles of Confederation – A Valiant First Constitution

Once we were at war with Great Britain, the most powerful country in the world at the time, our founding fathers realized they needed a governing document that outlined what the Continental Congress could and couldn’t do. On June 12th, 1776, the day after the Second Continental Congress created a committee to draft the Declaration of Independence, it assigned thirteen men to draft a constitution. It took the group roughly eighteen months until November 15th, 1777 before they had a document they knew would be ratified by the colonial legislatures.

Virginia ratified the Articles of Confederation a month later on December 16th, 1777.  On February 2nd, 1781, Maryland was the last colony to ratify. On that day, the United States of America was born.  The articles are the first official document that uses the words United States of America.

It is an interesting document to read.  For example, Article 2 authorizes the Congress to provide for the common defense, security of the states’ liberties and general welfare. Article 6 starts by forbidding any citizen of the United States to accept a title or receive a present from any other country nor can the United States grant any title of nobility.

According to Article 7, selection of colonels and below is given to the state and generals would be appointed by the Congress. Article 8 says expenditures of by the United States of America will be paid by funds raised by the states based on the apportioned property value. Article 9 requires the states to fund and equip their own militia upon the request of the central government. It also establishes a position to lead the country for a term of three years.

Article 11 allows Canada to become one of the states if it agrees to the Articles of Confederation. To be admitted to the United States, other colonies need the approval of nine states.

The creators of the Articles of Confederation gave the responsibility for the common defense, declaring war, establishing a post office, creating a currency, providing rules to allow extradition of criminals, and regulating commerce to the central government.  It reads like a constitution.

In another post, I’ll cover why it took just four years to realize that the Articles of Confederation needed replacing. On May 25th, 1787 the Constitutional Convention was convened and by September 17th, 1787, thirty-nine of the original fifty-five delegates signed the document we know as the constitution. It still had to be ratified by at least nine states that took until June 21st, 1788 and the document became the law of the land on March 4th, 1789.

Many of the clauses in the Articles of Confederation appear in the Constitution that governs us today. They were rewritten to make them clearer and give more control to the central government. The Constitution of the United States is a remarkable document that has stood the test of time. It has only been modified thirty-seven times, the first ten of which came almost immediately in the form of the Bill of Rights which was a condition required by several states, notably Massachusetts, before they would ratify the document.

Behold, a good document has been given unto you. Forsake it not!

 

Socialism 101

Roughly thirty-five years ago, my daughter asked for an explanation of how socialism works. So, for better or worse, here’s how I explained it to a member of the National Honor Society.

My answer started with a little history. The concept we know as socialism began to emerge during the French Revolution that began in 1789 because living and working conditions are what we would call today, horrific. There were huge in economic and cultural inequalities in French society.

The words liberté (liberty), fraternité (fraternity and brotherhood) and égalité (equality) were on the lips of those who overthrew the French king. French philosophers of the day envisioned a socioeconomic system in which every citizen would be treated equality, i.e. made the same amount of money, be taxed the same, enjoy the same privileges, same social status, etc., etc., etc.

Based on that background here’s the analogy I used. Envision a group of students in which there is a mix of grade point averages from really bad – D’s and F’s) to straight A’s.

And, imagine you are working your butt off (which she was) to get straight A’s to get into the college of your dreams. To do it, meant taking (at parental insistence) advanced placement and honors math, science, English and history courses. To do this, she was studying several hours a day, worked a part time job and was an officer on the drill team. This was her world as a high school junior.

For the sake of discussion purposes, I suggested that her A’s gave her a Grade Point Average (GPA) of 100. It wasn’t but it makes the math easy.

Now, I said, the high school principal decides to make all the students’ GPAs equal with a GPA of 75 that he arbitrarily sets. His plan takes twenty-five points from your GPA and gives it to other students so that theirs will come up to the average of 75.

You’re not the only one affected. All students whose GPA is above 75 are being “taxed” on a graduated basis. In other words, the closer your GPA is to 100, the more you will contribute.

At the same time the principal tells you about your GPA tax, he is also insists you continue to work your buns off so you can continue to contribute 25 GPA points. But, you ask, what about the others who are the beneficiaries of your effort, why don’t they have to work as hard I do?

His response is a gobbledygook collection of socioeconomic excuses as to why their GPAs are always below 75 before he returns to the core message, i.e. you have to continue to work your ass off to maintain a 100 point GPA.  because if you don’t, you will contribute to the failure of the system. You wouldn’t want that to happen, now would you?  More guilt comes with the rhetorical question that you don’t want those who aren’t as fortunate as you are to suffer do you? The principal’s answer comes with a threat that if you object or try to return to the normal practice of rewarding students for their effort, you’ll be branded with some ugly word like Nazi or Fascist or, or, or …

Her reaction was predictable. The words “that’s not fair!” came flying out of her mouth followed by “I would never agree to that!”

Welcome to some of the proposals coming out of the mouths of some of our elected officials since the 2018 election. A lot of what they are proposing sounds nice, but in reality, are unworkable and un-affordable to say nothing of just plain dumb. “Nuff said.

Piracy – the Midwife to the Rebirth of the U.S. Navy

The United States has always has been a maritime nation. Geography dictates it. Our western border is the Pacific; our eastern one is the Atlantic; we have the Gulf of Mexico in the south; and the Great Lakes and the St. Lawrence River to our north. The Thirteen Colonies depended on trade with the world before, during and after the American Revolution.

When the war ended, we were deep in debt to our own citizens and to the French. The war left the economy in shambles. Under the Articles of Confederation the government could not levy taxes, it could only request funds from the states who rarely paid what was asked. Without money to support an Army and Navy, they were disbanded within months after the war. Our founding fathers recognized that the military, monetary and foreign policy situation was unworkable. By March 4th, 1789, the Constitution that governs us today was ratified by all 13 states.

The constitution was (and still is) not a magic wand that solved all our governmental problems. It was merely the framework that allowed us, as a country to deal with them.

High on the agenda was protecting our merchant ships that were vital to the nation’s economy. The protection the French provided in the Mediterranean evaporated in 1783 the moment the Treaty of Versailles was signed. Since we were no longer a British colony, our ships were no longer covered by British treaties with the rulers along the North African coast.

Morocco recognized us in 1777 and in 1786, we signed the Treaty of Friendship. It is still in force in 2019 and is the U.S.’s longest unbroken treaty of friendship.

By 1792, Louis XVI had lost his head – literally – in the French Revolution and the new government was demanding that we repay our debt. President John Adams refused reasoning that we owed it to a government that was no longer in existence.

In the Mediterranean, there was another threat. The Barbary Pirates operating from ports in what is now Algeria, Tunisia and Libya – were seizing our ships and demanding ransoms. At first, we tried to buy them off but the demands kept increasing. Without the hammer of a viable navy, we had little leverage. By 1794, tribute to these nation states amounted to almost 20% of the Federal budget.

Congress got the message and on March 27th, 1794, Congress passed the Naval Act of 1794 that authorized and funded a Navy as well as the construction of six frigates. The first three ships – Constellation, Constitution and United States – came down the ways in 1797. Chesapeake and Congress were at sea by the end of 1799 and the President was launched in 1800.

So, in a perverse way, we can thank Muslim pirates (terrorists?) for the birth or the rebirth of the United States Navy!

Where Does Maduro Go?

If you haven’t read the news lately, there’s a constitutional, economic and humanitarian crisis going on in the country with the world’s largest oil reserves. No, this not about a kingdom in the Arabian Gulf, it is about Venezuela.

Hugo Chavez’s socialist/Marxist policies turned a healthy Venezuelan economy into one suffering from shortages of everything. Maduro assumed Chavez’s mantle and after a narrowly being elected with 50.52% of the vote, he has ruled by decree. In attempt to legitimize his regime, Maduro held a special election in May 2018 that most of the country’s population and the world viewed as fraudulent. His opponents were jailed, threatened or killed and still took to the streets to protest.

The majority or the world supports Juan Guaidó, president of Venezuela’s General Assembly who was sworn in as President. Cuba, Russia, Iran, North Korea, Syria, the People’s Republic of China (PRC) and Turkey are among a handful who still recognize Maduro’s regime.

So, if you believe Maduro’s time as Venezuela’s leader is limited, where could he go? Countries may consider accepting Maduro to provide support to return him to power. Or, they would receive a large chunk of money from Maduro or another government willing to pay the host country (or its leaders) for the headaches associated with giving him sanctuary.

The possible list has two front runners – Cuba and Iran – and several outliers – Russia, North Korea, the PRC and maybe Bolivia or Panama. All have the security apparatus that can protect Maduro and control his access to the rest of the world.

The Cubans are helping keep Maduro in power and would help him destabilize Guaidó’s government. Iran courted Chavez and Maduro and may take him as a way to poke at the U.S. It’s the enemy of my enemy is my friend game.

In tier two is Russia and the PRC. Putin may see taking Maduro as a way to create mischief.  However, Maduro may not like the restrictions that come with living in Moscow or Bejing. The Chinese may decide Maduro is not worth the headache.

What about North Korea? It is an option but if you were Maduro, would you want to live in Pyongyang? Its shortages make Venezuela’s current situation look like the land of plenty. And, would you trust Kim Jung-Un with your life?

Which leaves Panama or Bolivia. Both are not far from Caracas but, if you were Maduro, would you trust either government with your safety?

Maduro is getting desperate despite his statements that he is the victim of a coup. Guaidó, has offered Maduro amnesty if he steps down.  Sadly, he will leave office when the Venezuelan military leadership decides that the perks Maduro offers are not worth a bloody civil war or being sent to prison after he is gone. Maduro will leave office in the near future and it is a question of where will he go – a country willing to give him sanctuary or a cemetery.

The Third from the Last Invasion of England

Combined, the Atlantic Ocean, English Channel, North and Irish Seas, are an effective moat around the United Kingdom and, for the sake of this post, Ireland. Successful invasions are few and far between.

William the Conqueror managed to do it in 1066. The French came again in 1215 after King John disregarded the Magna Carta.

During the Scottish Wars of Independence, the French joined their Scottish “friends” in 1385 and in 1388 tried to take the Channel Island of Jersey in 1338 but were ultimately driven out.

In 1588 the Spanish sent an armada. Most of its ships were sunk in the English Channel by the Royal Navy or wrecked by bad weather. Thinking they were safe, a succession of British Kings and the Parliament allowed the Royal Navy to wither. The country got a rude awakening when the Dutch fleet severely damaged an unprepared Royal Navy fleet at Medway in June 1667. It was a ship-to-ship battle, not raid. At the invitation British Protestant noblemen, a Dutch Army arrived to limit the power of King James II, a Catholic who fled to France.

Never again would the British government allow its navy to wither. In 1744 during the War of Austrian Succession, the French invasion fleet sailed from Brest headed for the south coast of England. Weather and the Royal Navy prevented the landing.

In 1759, early in the Seven Years War, the French attempted an invasion to put a Catholic king – James III – on the British throne. French losses in naval battles with the Royal Navy prevented the landing.

During the American Revolution, the French and Spanish planned to invade the Isle of Wight and then cross the bay to take the Royal Navy’s main base at Portsmouth in August 1779. While trying to decide to whether to take the Isle of Wight or land in Falmouth on the southeastern tip of England, the Royal Navy and the weather drove them off.

So, imagine the surprise and shock amongst member of the British parliament when they learned John Paul Jones – rebel, a native Scotsman and a bloody Catholic no less – disabled all Whitehaven’s (the town where Jones was born and raised) guns, burns shipping and slips off into the night.

Since Jones’ attack, there were only two more successful raids on English soil, both by the French. In February 1797, a group of French revolutionaries landed in Scotland and tried to rouse the Scots against King George III. The rebels were captured at the Battle of Fishguard a few weeks later.

The last came in 1798 when the French landed in Ireland to support its rebellion against the British. They, along with the rebels, were defeated and reinforcements kept away by the Royal Navy.

Both Napoleon and Hitler considered invading England before rejecting the idea. Neither wanted to take on the Royal Navy. The message here is that if one has long coastlines like we do, one needs a strong, well-led and equipped navy.

The Frigate USS Chesapeake Lives On

There are only a few ships left from the Age of Sail and the Napoleonic Wars. Two, the USS Constitution (36 guns) launched in 1797 and the ship-of-the-line HMS Victory (104 guns) – Nelson’s flagship at the Battle of Trafalgar – launched in 1765 are still in commission.

Next oldest still in existence is HMS Trincomlee (38 guns) which was built in India and launched in 1817 and HMS Unicorn which was built in 1824 and never had its masts and rigging installed. The remaining warships still afloat – USS Constellation, the Portuguese Dom Fernando II e Glória and others – were built decades later.

All the rest were broken up and their wood used for everything from firewood to building homes. Where it all went is difficult, if not impossible to trace, except for one ship, the USS Chesapeake.

The Naval Act of 1794 authorized building six large frigates – Chesapeake, Congress, Constitution, Constellation, President and the United States. Congress stipulated the ships would be built to one design in shipyards in six cities –Baltimore, MD; Boston, MA; Gosport, VA; New York, NY; Philadelphia, PA; and Portsmouth, NH.

All had distinguished careers during the Quasi War against France in 1799, the First Barbary War in 1802 and the War of 1812. Chesapeake’s captured six prizes on her first cruise during the War of 1812.

Unfortunately, she was not fully prepared for war when she set sail from Boston on June 1, 1813 and met HMS Shannon (38 guns). In the battle that ensued, Chesapeake’s captain – James Lawrence is mortally wounded. As he is carried below, he utters his famous words – “Don’t give up the ship.”

The captured Chesapeake was sailed to Halifax, Nova Scotia where it was repaired and renamed HMS Chesapeake. The loss so moved Oliver Hazard Perry that he named his flagship Lawrence after the Chesapeake’s captain and used his words as a rallying cry when he beat the British on Lake Erie on September 13th, 1813.

In July 1819, the Royal Navy no longer wanted Chesapeake and Joshua Holmes bought the wood from a British timber merchant who acquired the ship. Holmes used the ship’s wood to build a water-powered gristmill in Wickham, Hampshire County, England. Named the Chesapeake Mill, it operated until 1976. Today, the building is a shopping mall for antique sellers and gift sellers. The ship’s wood still makes up the building’s structure two hundred and ten years after they were part of the Chesapeake.

A fragment from the mill was donated to the Hampton Roads Naval Museum and other artifacts from the Chesapeake are in museums outside the U.S. The ship’s blood stained flag was bought by William Waldorf Astor in 1908 and is on display at the National Maritime Museum in Greenwich, England. One of its 18-pounder guns is mounted next to Province House, in Halifax and Canada’s Maritime Museum of the Atlantic has an officer’s sea chest, a kettle and other items.

So USS Chesapeake sails on, just in a different shape!

Britain vs. France – 750+ Years of Conflict

The enmity between the France and Britain goes back not years, not decades, but seven and a half centuries. Except for two short periods of about twenty years when they were allied against Spain, the two countries were either at war, preparing for war or recovering from one.

When Edward The Confessor died without an heir in January, 1066, Harold Godwinson ascended to the throne. He defeated an attempt by his brother Tostig supported by King Harald III of Norway to claim his throne setting the stage for his cousin, William, Duke of Burgundy, to invade England. At the Battle of Hastings in October 1066, Godwinson was killed by William’s army.

This was only one of the machinations that went on between the two countries. Between William’s reign and the fall of Napoleon in 1815, France and Britain spent 126 years at war (or 17% of the years) in 21 separate conflicts over territory, religion, and/or royal succession. It was not until the Crimean War in 1853, 38 years after Napoleon’s defeat, did France and Britain ally themselves in the Crimean War.

Why is this important to understand Britain’s initial reaction to the American Revolution? When it began in 1775, the British viewed our efforts as a sideshow in the context of its traditional rivalry with France that had been going on for centuries.

Louis XVI saw the American Revolution as a low risk/low cost way to stick a needle in the eye of his traditional rival after his country was soundly defeated in the Seven Years War that ended in 1763. France lost Canada and the islands of Grenada, St. Vincent, Dominca and Tobago along with several colonial enclaves in India. Most of the gunpowder bought by Colonial militias came from French Navy’s base on St. Lucia and the Dutch forts in the Antilles and the. Our victory at the Battle of Saratoga convinced Louis XVI to commit the French Army and Navy.

It was the much-maligned French Navy that made the biggest difference. First, the French fleet forced the British away from Boston and Newport, RI. Then, the Battle of the Chesapeake, the French fleet forced the Royal Navy to withdraw leaving Cornwallis with no hope of rescue.

What Louis XVI didn’t anticipate or probably believed would never happen, did. In 1792, he was dethroned and decapitated in the French Revolution that also set off the French Revolutionary Wars that pitted Great Britain and Prussia against the French. These lead to a coup by Napoleon Bonaparte in 1799 and sixteen years of continuous global war fought on a scale (inconceivable at the time) that culminated in another French defeat in 1815.

Fast forward to the 20th Century. Britain rushed to France’s aid in 1914 and the cost put the British Empire figuratively into Chapter 11. The French collapse in 1940 at the beginning of World War II turned it into Chapter 7. It is this history that still colors French British relations because it is in their DNA.

Birthplace of the American Navy

Last week, driving through a town in upstate I saw a sign in Whitehall, NY, that says, “Welcome to the Birthplace of the U.S. Navy….” Huh!!!

Research followed, so here’s the story. The “official” date for the birth of the United States Navy is October 13, 1775. On September 2nd, 1775, Washington sent a letter to James Broughton to take command of a schooner called the Hannah along with a list of missions he wanted him to accomplish. Hmmmm….

The plot gets thicker. In June 1775, Georgia formed its own navy and started building ships to defend its coast and venture out to sea to take prizes. Technically, this predates the “official” formation of the Continental Navy.

Shortly after the fighting started at Lexington and Concord, the Continental Congress decided to invade Canada and take control of the St. Lawrence River at Quebec. From a military perspective, the strategy was sound because if it succeeded, it would prevent the British from using the town as a base to launch and attack down Lake Champlain and the Hudson River. For a fledgling Army, this was an ambitious plan that failed even though the army captured Montreal but did not capture Quebec City. Nor did the French Canadians rise up against the British as hoped. Defeated, Arnold’s strategy shifted from invasion to keeping the British from taking the forts along the lake.

The Vermont/New York border was then and is still today rugged, heavily wooded, and mountainous. Back then, roads were primitive, if they existed at all and the most efficient route was via boat up and down the 120-mile long Lake Champlain. Both sides knew control of the lake was critical because the New York/Vermont border was then and is still today, rugged, heavily wooded and mountainous.

The Brits who brought prefabricated ships from the U.K. to the northern most navigable portion of the Richelieu River in St. Jean, Quebec. Near the southern tip of Lake Champlain’s South Bay, the Americans under the command of Philip Schuyler and Benedict Arnold (he didn’t turn traitor until the late summer of 1780) were busily building a small fleet of their own in a town called Skenesboro (later renamed Whitehall after the war) to support the invasion. Two hundred shipwrights were imported from because shipbuilding skills were not common in upstate NY or Vermont.

On October 11th, 1776, the two “fleets” met at Valcour Bay in Lake Champlain and the Americans had fewer ships (15 to the Royal Navy’s 29), were outgunned but not necessarily outfought. The surviving ships retreated to what is now known as Arnold’s Bay where they were burned. The British took the forts at Crown Point and Ticonderoga and control of the lake thus setting the stage for the Burgoyne’s invasion that ended in his defeat at the Battle of Saratoga in October 1777.

The Battle of Valcour Island was the Continental Navy’s first “fleet” action and in 1960, the New York State Legislature passed a bill signed by Governor Nelson Rockefeller declaring Whitehall, NY as the “Birthplace of the U.S. Navy.” Now you know!