Misconception Regarding the Original Tea Party

[bigmike]

I've been spending some time reading about possible solutions to the monetary policy dilemma and stumbled across some history I haven't heard before.

Anyone that went through public schools and learned about the tea parties as the basis for the lead up of the Revolutionary War was taught they were actually about a tax on tea and "no taxation without representation". Of course public school textbooks rarely give the subject more than a few paragraphs. As it turns out, if what I'm reading now is correct, the colonies would have paid the little tax on tea in order to have England stay out of the affairs of colonial monetary policy. Here are the cliff notes:

Bad policy decisions of the New England colonies (MA,RI,CT,NH) led to rapid depreciation of their paper money that that threatened investments of British merchants, leading to the merchants into pressuring parliament to prohibit the colonies from issuing their own paper currency.

King George II enacts a ban on the colonies issuing paper money in 1751, forcing the colonies to borrow from British bankers.

Benjamin Franklin travels to London in 1764 to try to get the ban lifted and discovers rampant poverty and unemployment among the British working class to which the Brits credit to an excessive supply of labor in the workforce. In fact there were so many poor people that the Brits couldn't afford to tax their wealthy anymore to pay for "poor houses" and jails that they sent their poor to the colonies.

In discussion, Franklin explains that the colonies have no unemployment and no beggars. The Brits, in disbelief, ask Franklin to explain the booming economy in the colonies. His response below is taken verbatim from Web of Debt written by Ellen Hodgson Brown.

"This is simple. In the colonies we issue our own money. It's called Colonial Scrip. We issue it to pay the government's approved expenses and charities. We make sure it is issued in proper proportions to make goods pass easily from the producers to the consumers...In this manner, creating for ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one. You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money into circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury."

To the Brits the point of the colonies was to provide raw materials to Britain, not have robust economies. In 1764 the Bank of England pressured Parliament to pass a currency act that made it illegal for the colonies to print their own money.

This forced the colonists to pay all future taxes to Britain in gold and silver and if they didn't have enough precious metals (which they didn't; hence the issuing of paper money to begin with), they had to borrow them at interest from British banks.

One year later the streets of the colonies are filled with beggars and poverty is rampant. The money supply had been reduced by half and there were not enough funds to pay for goods and services the workers provided.

Franklin felt strongly that "the poverty caused by the bad influence of the English bankers on the Parliament has caused the hatred of the English and...the Revolutionary War." The real reason for the Revolution was "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction."

This argument was reinforced by English historian John Twells that stated "In a bad hour, the British Parliament took away from America its representative money, forbade any further issue of bills of credit, these bills ceasing to be legal tender, and ordered all the taxes should be paid in coins. Consider now the consequences: this restriction of the medium of exchange paralyzed all the industrial energies of the people. Ruin took place in these once flourishing Colonies; most rigorous distress visited every family and every business, discontent became desperation, and reached a point, to use the words of Dr. Johnson, when human nature rises up and asserts its rights."

And again by Alexander Del Mar, who wrote in 1895: "The creation and circulation of bills of credit by revolutionary assemblies...coming as they did upon the strenuous efforts made by the Crown to suppress paper money in America were acts of defiance so contemptuous and insulting to the Crown that forgiveness was thereafter impossible...There was but one course for the Crown to pursue and that was to suppress and punish these acts of the rebellion...Thus the Bills of Credit of this era, which ignorance and prejudice have attempted to belittle into the mere instruments of a reckless financial policy were really the standards of the Revolution. They were more than this: they were the Revolution itself."

OK, so it became a little more than cliff notes. This is a version of history I hadn't heard before and was curious what you might think about it being that the present day Tea Parties are sure to continue.

[Keyser Soce]

"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction."

Good stuff. More reason to keep collecting and spending silver.

[John Edward Mercier]

Its why I refer to the Currency Act of 1764.
I think Jefferson's proposal was to set the coin's content and weights... and allow for the market to determine exchange value.

[Raineyrocks]

Wow, I thought this was about the TeaParty forum! 

[J’raxis 270145]

Wow, I thought this was about the TeaParty forum! 

Yeah, everyone's using "NH Tea Party" to mean something completely different nowadays.

[Raineyrocks]

Wow, I thought this was about the TeaParty forum! 

Yeah, everyone's using "NH Tea Party" to mean something completely different nowadays.

It seems so, but this was about the original history about revolting against taxes by throwing Brittish tea off of a boat or something, right?

[J’raxis 270145]

Wow, I thought this was about the TeaParty forum! 

Yeah, everyone's using "NH Tea Party" to mean something completely different nowadays.

It seems so, but this was about the original history about revolting against taxes by throwing Brittish tea off of a boat or something, right?

Yep—which was of course both the reason Michael called the forum "NH Tea Party" and why these modern anti-tax protests are calling themselves tea parties.

[Raineyrocks]

Wow, I thought this was about the TeaParty forum! 

Yeah, everyone's using "NH Tea Party" to mean something completely different nowadays.

It seems so, but this was about the original history about revolting against taxes by throwing Brittish tea off of a boat or something, right?

Yep—which was of course both the reason Michael called the forum "NH Tea Party" and why these modern anti-tax protests are calling themselves tea parties.

Oh, okay, thanks! 

[bigmike]

Wow, I thought this was about the TeaParty forum! 

Yeah, everyone's using "NH Tea Party" to mean something completely different nowadays.

It seems so, but this was about the original history about revolting against taxes by throwing Brittish tea off of a boat or something, right?

That's the reason I posted this topic. I had always thought the same thing but, if the version of history I was reading about is right, the tea parties actually had more to do with the British monetary policy forced on the colonies than they did with any new taxes.

It bothers me that we're taught the history this way, if this were the case, because the colonies were forced into the same debt-based policies that are doing such a good job of bringing economic armageddon on us now.

It's almost like "they" don't want us to know the truth

I just figured readers would appreciate knowing the alternative to public education's history being that these anti-tax tea parties are popping up. Of course, I only read this in one book and haven't verified it from other sources.

[John Edward Mercier]

Actually my public education included the Currency Act of 1764, along with the Articles of Confederation and the US Constitutions enactment in voilation of Article XIII of that document.

Even got taught that a certain British officer by the name of Lt. Colonel George Washington initiated the 'War of Aggression' leading to the expansion of the Province of New Hampshire and establishment of Roger's Rangers.

If you wondering what isn't being openly touted. With the fed discount rate at zero, and US Treasuries having a strong foreign influence. The FedRes can't quantitatively ease... it lowers the value of the USD and makes foreign investors run, especially from fixed instruments... causing interest rates to rise rather than fall as in the past easings.
This means that the FED is really out of ammo... and with the US Congress on a spending splurge, we either get higher interest rates or higher taxes. Which is what I personally think the Cap and Trade legislation was all about.

[CJS]

 
  Thanks for this thread bigmike ! 

  I thought I knew stuff about my rights , the Constitution and what it meant to be a free citizen of this country before I started snooping around here .. i just can't believe how ignorant I  really am about everything ... and your thread has just given me another great " civics" lesson ... to bad the overpriced public education I received never mentioned stuff like this .

[bigmike]

Actually my public education included the Currency Act of 1764, along with the Articles of Confederation and the US Constitutions enactment in voilation of Article XIII of that document.

Even got taught that a certain British officer by the name of Lt. Colonel George Washington initiated the 'War of Aggression' leading to the expansion of the Province of New Hampshire and establishment of Roger's Rangers.

If you wondering what isn't being openly touted. With the fed discount rate at zero, and US Treasuries having a strong foreign influence. The FedRes can't quantitatively ease... it lowers the value of the USD and makes foreign investors run, especially from fixed instruments... causing interest rates to rise rather than fall as in the past easings.
This means that the FED is really out of ammo... and with the US Congress on a spending splurge, we either get higher interest rates or higher taxes. Which is what I personally think the Cap and Trade legislation was all about.

Yeah JEM, there's a lot not being openly touted right now. I find it a little suspicious that the tax dollars that went to the major lending institutions (you know, so they could start loaning money again) were probably lent to the Fed. I'm curious as to your take on that.

[bigmike]

  Thanks for this thread bigmike ! 

  I thought I knew stuff about my rights , the Constitution and what it meant to be a free citizen of this country before I started snooping around here .. i just can't believe how ignorant I  really am about everything ... and your thread has just given me another great " civics" lesson ... to bad the overpriced public education I received never mentioned stuff like this .

Thanks CJS. I never really appreciated history in school but now that I'm a little older I find myself fascinated by stories like this.

[John Edward Mercier]

Since the FED had investments in AIG, the later inclusion of TARP money would have bought out the FED's position.
I think what we may have been seeing is the orchestrated leveraged short sale attacks on the financial fabric were stretching the FED's resources.