Financing America's independence

I'm delighted to be here.

I wanted to take some time to talk a little bit about the role that banking and finance played in the early years of the fight to win America's independence and to become a, not just a politically independent entity, but a, a power of its own on the world stage.

I think a really fascinating topic for us to explore, to think about for our audience of bankers, that it's a, it's one that a l- often gets overshadowed by the drama of the Revolutionary War battles or the, the excitement over the political debates around the Declaration of Independence, the Continental Congress, the, the Articles of Confederation, the Constitutional Convention.

This is a, but it's a really important topic.

So I guess I'll just start by saying, John, when I talk about the, the role of banks or finance in the American Revolution, part of the challenge is that there really, for most of the war, there was no role for banks in the Revolution because there were no banks in the United States.

There were no banks in colonial America.

And so as we look at the Continental Congress where the delegates are gathering to make this decision about, about independence, marshaling the resources to fight a war against Britain that had already broken out, what tools did the Continental Congress and the 13 colonies declaring independence have at their disposal to ensure that they might be able to win this war against, against Britain? What financial tools did they have to, to, to prosecute the war?

It's an old Chinese expression that wars are fought with silver bullets, and unfortunately, we didn't have any.

As you said, there, there were no banks in the, in, in the colonies because Britain didn't allow them, and Britain also bade the export of British coinage.

And so the money supply that we had was a hodgepodge of Spanish dollars and bits and pieces of some British coins, but not many, and things like tobacco warehouse certificates which passed as money.

Um, so we were in a very poor shape when it came to the most expensive public policy of all is war.

I think the...

I'm not sure they articulated it, but the British had to fight a war with a 3,500-mile supply line, and that was very difficult, and turned out too difficult thing for them to do.

From a, from a tactical point of view-

They simply financed things by hocus pocus.

From a tactical point of view, the British had a, were at a significant disadvantage in terms of fighting at great distances.

They did not have a significant s- home army at the time.

They had to bring in mercenaries from Europe to prosecute many of the battles in the earlier part of the war, and yet they were successful at many stages of the campaign, I think, is that, I think lar- in large part because of the, the penury of the Continental Army.