Panic, Prosperity, and Progress: Five Centuries of History and the Markets

CHAPTER 4

American Revolution in the Colonies

When asked about the revolutionary war, most Americans probably conjure up images of a freedom-loving populace striving to unchain themselves from their distant British overlords. In popular folklore, the year 1776 is the kickoff point of a great political struggle that gave birth to our Constitution and a new land.

This is largely true, of course, but the American Revolution was as much about commerce and taxes as it was about political philosophy. The currency problems that the young nation grappled with during this period shaped the framework of our country, and the motivations behind the founding fathers’ fight against Britain was not always as pure as has been taught to schoolchildren for centuries.

■ Prosperous Colonies

North America, as a thinly-populated landmass, offered its European settlers tremendous advantages that would be enjoyed for hundreds of years after its discovery in the late fifteenth century. It was a tremendously fertile land, replete with wildlife, vegetation, waterways, and natural resources that made it a vast, undiscovered treasure chest for its new inhabitants.

As the population tamed the wilderness in the late seventeenth and early eighteenth centuries, the 13 colonies enjoyed a long period of robust and steady economic growth. Between 1650 and 1770, the economy of the American colonies expanded 20-fold, and most historians agree that in spite of the abbreviated history of the colonial region, it already ...