Revolutionary War - Business in United States of America
The Event: The American colonies’ fight for and achieve independence from Great Britain
Date: April 18, 1775-September 3, 1783
Place: Eastern North America
Significance: The war established the United States as a sovereign nation, allowing it to set up its own system of taxation and trade. The newly formed nation became a strong competitor with European countries in the trade of goods as a result of its considerable natural resources.
In 1606, the London Company sponsored an expedition to Virginia; Jamestown was founded the next year. Thirteen years later, the Mayflower sailed to Cape Cod (now in Massachusetts). The Mayflower Compact was then created, and it established a form of local government whereby the colonists agreed generally to abide by the rule of the democracy, based on decisions that were for the general good of the colony. Other British colonies were set up in a similar manner over the next century.
The economies in the northern and southern colonies were dramatically different in the time period leading up to the Revolutionary War. In the South, the economy relied on plantations that were worked primarily by slave labor. Trading crops such as rice, corn, tobacco, sugar, and cotton with the British quickly became the backbone of the southern colonies’ revenue, and they eventually sought to expand their trade to other countries in Europe and the West Indies.
In the northern colonies, wheat was the principal cash crop, while cattle, horses, and sugar were also essential to the colonies’ trade with Europe and the West Indies. While large plantation owners had the lion’s share of wealth in the South, merchants became the most influential group in the North, acquiring over half of the wealth in the region.
During the colonists’ first century, major changes occurred to the government structure and economy of their home country, and Britain began to place restrictions on the economic freedoms that the burgeoning governments in the colonies were enjoying. Aware that the colonists had developed economic systems that were independent of Britain, a concern developed that the colonists could soon become competitors rather than resources. The Navigation Acts of 1651 and 1660 were passed, severely limiting the colonies’ take in any traded goods and successfully weakening the independence that they had established. Britain also began to restrict the overall amount of the trade that the colonists could partake to detract from any competition the home country would receive from its own colonies. Although many of the causes that contributed to the Revolutionary War were yet to materialize, the economic independence that the British sought to halt might already have existed for too long, causing an eventual revolution to be inevitable.
Causes of the War
There are dozens, perhaps hundreds of events or situations that have been considered as causes of the Revolutionary War, but perhaps none of them is more important than the very nature of the people of the colonies. By the eighteenth century, some colonists were several generations removed from Britain and knew very little about the country that wanted to exercise control over them via their tax money and limitations on their trade. Thus, they began to resist British rule. The colonies had also grown considerably in over a century of development, and they no longer were threatened by the dangers from Native Americans, starvation, and disease that they had originally encountered. A growing perception in the colonies was that they were now capable of protecting themselves from intruders and did not need the protection or resources of Britain.
The colonists were also irritated over the effect that the tightening restrictions of the British had on their way of life. Many colonists believed that it would be nearly impossible for their economy to flourish if they were not able to govern themselves and their trade as they saw fit. This idea coincided with the strong belief that there should be no taxation without representation. In other words, taxes should not be placed on citizens unless they have a voice in the government levying the taxes. The colonists were beginning to perceive that their taxes were not being used on themselves, but rather to aid the lifestyle of Britain.
Although taxation was a central issue between the colonists and Britain, there were a number of events that took place that fueled the colonists’ resentment of taxation. One of the major sources of tension was the colonists’ anger at their treatment in the French and Indian War during the middle of the eighteenth century. The British and colonists eventually won the war after nearly a ten-year struggle and the brutalization of many colonists’ homes and communities. The outcome of the war allowed the British to expand their territory, and they began to place heavy taxes on the colonists to pay for the war effort and the costs of maintaining their new land. This was met by heavy opposition from the colonists, many of whom were already in debt as a result of the war.
Other critical elements helped transform mere annoyance over taxes to rebellion. The Enlightenment movement was spreading ideology that was critical of government power and abuse, and it coincided with the advent of newspapers in the colonies that began to publicize the concept of revolution. The colonists also were able to watch Canadian provinces lose much of their local independence while they were being centralized, which engendered a resistant attitude to the possibility of similar centralization occurring in the American colonies.
Conduct of the War
As the 1770’s began, there were already a series of ongoing skirmishes between colonists and British government officials. Most of these were conflicts between customs officials who were attempting to collect taxes and small groups of colonists. British military began to intercede in these skirmishes, and incidents such as the Boston Massacre further enraged the colonists. The British also passed a series of new acts that extended British taxes.
The British continued their military aggression, and on the night of April 18, 1775, Massachusetts militia men encountered British troops. They remained in a standoff, until an unauthorized shot was fired. Both sides then began to fire on each other and the Revolutionary War had begun.
The beginning of the Revolutionary War caused economic decline in the colonies. The colonists had difficulty organizing their economy to support a war effort, particularly because of the disjointed collection of states involved. The need for manpower led to a decrease in the merchandise and agricultural supplies necessary to acquire goods in trade, and this in turn decreased the success of the initial war effort. Adding to the colonists’ troubles were the extreme hardships of the colonists not fighting in the war. Soldiers on both sides trampled the lands, and British soldiers commonly looted or seized colonists’ houses. Despite financial assistance from Spain and France, the Continental Army often lacked food, clothes, ammunition, and cannons. Moreover, British ships blockaded the colonists’ ports, which made it difficult and costly to import and export necessary goods.
The economic turmoil faced by colonists was amplified by the colonies’ use of paper money and reluctance to levy taxes in order to finance the war effort. Confidence in the value of this money began to decrease, and many colonists were reluctant to sell goods in return for paper money from the Continental Army, which further deflated the value of the money. By 1780, the value of the paper money was as low as one-fortieth of what it had been before the war.
The first battles of the war were won by the British military, which had superior numbers, resources, ships, and experience in warfare. By the early 1780’s, however, the British had reached a plateau in their war effort, and fatigue began to take its toll. American troops were becoming successful in nontraditional warfare, and their ranks could easily be replenished with local young men of fighting age and slaves offered freedom. The British had to wait for new arrivals and resources through ports that were now being blockaded by French ships. It was the British soldiers who now lacked food and were running low on ammunition and manpower, and the British people became weary of paying taxes to support what was increasingly seen as a losing effort.
A peace treaty was negotiated in France, where Benjamin Franklin represented the new American nation. By 1783, British forces and loyalists had left American borders, and major countries such as Russia, France, Germany, and Spain had all recognized the United States as a sovereign nation.
Military Cost of Revolutionary War, 1775-1783
- In current year dollars = $101 million
- In constant fiscal year (2008) dollars = $1,825 million
Source: Data from Stephen Daggett, “CROS Report for Congress: Costs of Major U.S. Wars,” Congressional Research Service, July 24, 2008
After the war, the United States began to draft a new constitution. The Articles of Confederation, the constitution that had been in effect during the war, was perceived to lack sufficient provisions for central federal authority to enable the national government to oversee an entire nation. It lacked even the power necessary to tax states in the event of future wars. Thus, the U.S. Constitution was adopted in 1789, allowing greater strength to the federal government.
Despite their success in the war and newly established political order, the colonies witnessed their economic system suffer greatly long after the end of the war. They no longer enjoyed aid from the British, and their partnership with British merchants was largely diminished. Local merchants also had difficulty competing in price with imported European goods, causing many to shutdown operation.
By the late 1780’s, the United States’ success in the trade of wheat and flour helped decrease its reliance on imported goods. The French Revolution and Napoleonic wars over the next decade would bring even greater demand for American products, representing an end to the country’s economic woes and introducing it as a new power in international trade.
Breen, T. H. The Marketplace of Revolution: How Consumer Politics Shaped American Independence. Oxford, England: Oxford University Press, 2004. Explicates some of the underlying complexities that ultimately led to the war between the colonies and the British. The book’s greatest emphasis is placed on the development of the colonists as important international consumers and how this affected their relationship with the British.
Buel, Richard. In Irons: Britain’s Naval Supremacy and the American Revolutionary Economy. New Haven, Conn.: Yale University Press, 1998. Examines the impact of the British navy on the economies of both Britain and the colonies during the Revolutionary War.
Cook, Don. The Long Fuse: How England Lost the American Colonies, 1760-1785. New York: Atlantic Monthly Press, 1996. Details the causes of the Revolutionary War, with particular emphasis on some of the British government’s actions that caused economic hardship to the colonists.
Ferguson, E. James. The Power of the Purse: A History of American Public Finance, 1776-1790. Chapel Hill: University of North Carolina Press, 1961. Analyzes economic issues surrounding the American colonies at the beginning of the Revolutionary War and into the early years of the newly formed country.
Middlekauff, Robert. The Glorious Cause: The American Revolution, 1763-1789. Oxford, England: Oxford University Press, 2007. Provides a comprehensive history of the Revolutionary War, including an analysis of the economic conditions that contributed to the war.
See also: Boston Tea Party; Colonial economic systems; Depression of 1784; Royal Charters of North American colonies; Tea Act of 1773; War of 1812; George Washington.
Tea Act of 1773
Royal Charters of North American colonies
Parliamentary Charter of 1763
French and Indian War