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Title: Tricked on the Fourth of July (I would like opinions on this please))
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URL Source: http://lewrockwell.com/north/north1002.html
Published: Jul 6, 2011
Author: Gary North
Post Date: 2011-07-06 00:57:03 by christine
Keywords: None
Views: 242
Comments: 12
I do not celebrate the fourth of July. This goes back to a term paper I wrote in graduate school. It was on colonial taxation in the British North American colonies in 1775. Not counting local taxation, I discovered that the total burden of British imperial taxation was about 1% of national income. It may have been as high as 2.5% in the southern colonies. In 2008, Alvin Rabushka's book of almost 1,000 pages appeared: Taxation in Colonial America (Princeton University Press). In a review published in the Business History Review, the reviewer summarizes the book's findings. The colonists had a sweet deal in 1775. Great Britain was the second freest nation on earth. Switzerland was probably the most free nation, but I would be hard-pressed to identify any other nation in 1775 that was ahead of Great Britain. And in Great Britain's Empire, the colonists were by far the freest. I will say it, loud and clear: the freest society on earth in 1775 was British North America, with the exception of the slave system. Anyone who was not a slave had incomparable freedom. Jefferson wrote these words in the Declaration of Independence: I can think of no more misleading political assessment uttered by any leader in the history of the United States. No words having such great impact historically in this nation were less true. No political bogeymen invoked by any political sect as "the liar of the century" ever said anything as verifiably false as these words. The Continental Congress declared independence on July 2, 1776. Some members signed the Declaration on July 4. The public in general believed the leaders at the Continental Congress. They did not understand what they were about to give up. They could not see what price in blood and treasure and debt they would soon pay. And they did not foresee the tax burden in the new nation after 1783. In an article on taxation in that era, Rabushka gets to the point. So, as a result of the American Revolution, the tax burden tripled. The debt burden soared as soon as the Revolution began. Monetary inflation wiped out the currency system. Price controls in 1777 produced the debacle of Valley Forge. Percy Greaves, a disciple of Ludwig von Mises and for 17 years an attendee at his seminar, wrote this in 1972. The people and the Congress refused to listen to his wise advice. With more and more paper money in circulation, consumers kept bidding up prices. Pork rose from 4¢ to 8¢ a pound. Beef soared from about 4¢ to 100 a pound. As one historian tells us, "By November, 1777, commodity prices were 480% above the prewar average." The situation became so bad in Pennsylvania that the people and legislature of this state decided to try "a period of price control, limited to domestic commodities essential for the use of the army." It was thought that this would reduce the cost of feeding and supplying our Continental Army. It was expected to reduce the burden of war. The prices of uncontrolled, imported goods then went sky high, and it was almost impossible to buy any of the domestic commodities needed for the Army. The controls were quite arbitrary. Many farmers refused to sell their goods at the prescribed prices. Few would take the paper Continentals. Some, with large families to feed and clothe, sold their farm products stealthily to the British in return for gold. For it was only with gold that they could buy the necessities of life which they could not produce for themselves. On December 5, 1777, the Army's Quartermaster-General, refusing to pay more than the government-set prices, issued a statement from his Reading, Pennsylvania headquarters saying, "If the farmers do not like the prices allowed them for this produce let them choose men of more learning and understanding the next election." This was the winter of Valley Forge, the very nadir of American history. On December 23, 1777, George Washington wrote to the President of the Congress, "that, notwithstanding it is a standing order, and often repeated, that the troops shall always have two days' provisions by them, that they might be ready at any sudden call; yet an opportunity has scarcely ever offered, of taking an advantage of the enemy, that has not been either totally obstructed, or greatly impeded, on this account…. we have no less than two thousand eight hundred and ninety-eight men now in camp unfit for duty, because they are barefoot and otherwise naked…. I am now convinced beyond a doubt, that, unless some great and capital change suddenly takes place, this army must inevitably be reduced to one or other of these three things: starve, dissolve, or disperse in order to obtain subsistence in the best manner they can." Only after the price control law was repealed in 1778 could the army buy goods again. But the hyperinflation of the continentals and state-issued currencies replaced the pre-Revolution system of silver currency: Spanish pieces of eight. The proponents of independence invoked British tyranny in North America. There was no British tyranny, and surely not in North America. In 1872, Frederick Engels wrote an article, "On Authority." He criticized anarchists, whom he called anti-authoritarians. His description of the authoritarian character of all armed revolutions should remind us of the costs of revolution. After the American Revolution, 46,000 American loyalists fled to Canada. They were not willing to swear allegiance to the new colonial governments. The retained their loyalty to the nation that had delivered to them the greatest liberty on earth. They had not committed treason. The revolutionaries are not remembered as treasonous. John Harrington told us why sometime around 1600. "Treason doth never prosper: what's the reason? Why, if it prosper, none dare call it treason." The victors write the history books. What would libertarians – even conservatives – give today in order to return to an era in which the central government extracted 1% of the nation's wealth? Where there was no income tax? That the largest signature on the Declaration of Independence was signed by the richest smuggler in North America was no coincidence. He was hopping mad. Parliament in 1773 had cut the tax on tea imported by the British East India Company, so the cost of British tea went lower than the smugglers' cost on non-British tea. This had cost Hancock a pretty penny. The Tea Party had stopped the unloading of the tea by throwing privately owned tea off a privately owned ship – a ship in competition with Hancock's ships. The Boston Tea Party was in fact a well-organized protest against lower prices stemming from lower taxes. So, once again, I shall not celebrate the fourth of July.
Rabushka's most original and impressive contribution is his measurement of tax rates and tax burdens. However, his estimate of comparative trans-Atlantic tax burdens may be a bit of moving target. At one point, he concludes that, in the period from 1764 to 1775, "the nearly two million white colonists in America paid on the order of about 1 percent of the annual taxes levied on the roughly 8.5 million residents of Britain, or one twenty-fifth, in per capita terms, not taking into account the higher average income and consumption in the colonies" (p. 729). Later, he writes that, on the eve of the Revolution, "British tax burdens were ten or more times heavier than those in the colonies" (p. 867). Other scholars may want to refine his estimates, based on other archival sources, different treatment of technical issues such as the adjustment of intercolonial and trans-Atlantic comparisons for exchange rates, or new estimates of comparative income and wealth. Nonetheless, no one is likely to challenge his most important finding: the huge tax gap between the American periphery and the core of the British Empire.
The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States.
Historians have written that taxes in the new American nation rose and remained considerably higher, perhaps three times higher, than they were under British rule. More money was required for national defense than previously needed to defend the frontier from Indians and the French, and the new nation faced other expenses.
Our Continental Congress first authorized the printing of Continental notes in 1775. The Congress was warned against printing more and more of them. In a 1776 pamphlet, Pelatiah Webster, America's first economist, told his fellow men that Continental currency might soon become worthless unless something was done to curb the further printing and issuance of this paper money.
A revolution is certainly the most authoritarian thing there is; it is the act whereby one part of the population imposes its will upon the other part by means of rifles, bayonets and cannon – authoritarian means, if such there be at all; and if the victorious party does not want to have fought in vain, it must maintain this rule by means of the terror which its arms inspire in the reactionists.
Would they describe such a society as tyrannical?
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#12. To: christine (#0)
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I tend to agree with North on this one, we were better off from a financial and tax perspective under King George than our present situation. Regarding the Y2K issue, I don't recall him falling for that, but I do recall warnings coming from FEMA, state and local governments,etc., so it is understandable that one might get caught up in it. I did not, I always thought it was a joke, but am I always right ? No. Is Gary North always right? No. But I think he is pretty much spot on this one. Here is an interesting comment on the subject over at LRC: Gary North's Powerful Truth: When I first read Gary North's powerful article on July 4th at LRC, it seemed very disconcerting and filled me with cognitive dissonance and confusion. It boldly put forth a position that was very radical and challenging to almost everything I believed about the American Revolution and the founding of our country. And radical it truly was, for "radical" means — "of, or pertaining to the root, fundamental." This article was addressing the fundamental premise (or national myth) upon which the United States of America is based. Over the next couple days I have given it much disinterested reflection and sober thought. What North described is similar to a powerful statement found in Vernon L. Parrington's Pulitzer Prize-winning Main Currents in American Thought: Volume One: The Colonial Mind 1620–1800. Published in 1927, it is one of the most famous and influential works by an American historian in the 20th Century. Parrington has been a key seminal resource for me for 40 years since first becoming acquainted with his three-volume masterwork. The striking passage below is that crucial statement concerning the American Revolution which has perplexed and challenged me for four decades: But a new economic order required a new political state, and as a necessary preliminary, the spirit of nationalism began that slow encroachment upon local frontiers which was to modify profoundly the common psychology. Americanism superseded colonialism, and with the new loyalty there developed a conception of federal sovereignty, overriding all local authorities, checking the movement of particularism, binding the separate commonwealths in a consolidating union. This marked the turning point in American development; the checking of the long movement of decentralization and the beginning of a counter movement of centralization — the most revolutionary change in three hundred years of American experience. The history of the rise of the coercive state in America, with the ultimate arrest of all centrifugal tendencies, was implicit in that momentous counter movement. Gary North has finally clarified its meaning and consequence.
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