Below is a transcript of our conversation with CMU Economics faculty member Dr. Robert Wright
David Nicholas:
I’m David Nicholas and this is Central Focus, a weekly look at research activity and innovative work from Central Michigan University students and faculty. The early years of the French and Indian War, the late 1750s, were an economic boon for the colonists in the emerging America. But as the conflict wound down into the 1760s, loans between the colonies and loans from England came due. What followed was the road that led to revolution. Dr Robert Wright, faculty member in CMU's Department of Economics recently published a piece in the Journal of the American Revolution titled “Cruel Bedlam: Bankruptcies and the Break with Britain.” Dr Wright sat down with me and picks up the story as the money problems began…
Robert Wright:
They knew the war was going to end, but they didn't know that the boom was going to end because of new British policies cutting off the colonists from both their major supplies of money, which back then took two forms. One form was gold and silver coins, which we call specie, so that was hard money, so they're not actually, (had) substantial gold or silver content in them. And then something called bills of credit, which are very similar to our Federal Reserve notes today. So, a Fiat paper money not really backed by anything other than the government saying we'll accept this stuff for taxes.
DN:
How long a period, then, are we talking about? I mean, you said during the French and Indian War, so 1750s, 1760s, then these policies taking hold, how close is that getting us then along the way to 1775?
RW:
Well, so the booms in the seven, in the late 1750s… collapse and the crunch is really full bore by 1763 and into 1764 is when you start to see a big uptick in the number of lawsuits. The colonists can no longer pay their debts. They get sued. Then the sheriff comes along and puts up their property, you know, real estate and personal effects (DN: Um hm), um at (at) auction. But there's insufficient money for anyone to pay a decent price for anything. So then in 1765, the British passed the Stamp Act and it (it) was long my thesis that the reason why they reacted to the Stamp Act so vigorously was because they already felt their backs were up against the wall. It wasn't just an ideological thing, like a lot of historians believe they were economically very pressed, depressed (DN: And that’s…) at the time.
DN:
And that's the story that I think most of us hear the most is that it (it) in terms of, there's the reference to debt, debtors prisons, and then we kind of jump right into that the series of taxes. Obviously, you're laying the (the) groundwork that this was a long evolving, developing issue, obviously, that got us to what eventually was the breaking point.
RW:
Absolutely, because this monetary stringency continued even after the Stamp Act is repealed. They pull back a little bit on enforcing the laws, you know, on river crossings and whatnot, or within colonies, because they were even enforcing them along the Hudson River in New York. The colonists tried various ways of getting some money circulating. And every time the British stomped down on it. Like they tried to form commercial banks in Philadelphia and New York and Boston, and the British said no. They invoked something called the Bubble Act to say, no, (you cannot) you cannot do this. Well, that…the importation agreements were all about this, the non-importation. So, the colonists said, oh, we're not going to import anything from Britain. And that did put some pressure on (on) British merchants to try to get these policies changed, but what it mostly did was just stop the flow of ports so the colonists didn't have to take what little money they were collecting and sending it to (to) Britain to pay for imports from there. And they tried some domestic manufacturing to start to make things themselves so that they didn't have to import it from Britain and then have to come up with the coin to, to make good on.
DN:
A lot more than a couple of very well-known and well documented tax policies. In fact, a whole series of economic measures that brought us on the road to revolution. It was a recent piece in the Journal of the American Revolution called “Cruel Bedlam: Bankruptcies and the break with Britain.” Dr Robert Wright from the economics department here at Central Michigan University, thanks so much for telling us a lot more of the back story than we knew and giving us the insight to all that was going on during those times. We appreciate it.
RW:
Thanks for having me.
