I went to Boston this week to speak at The Oxford Club’s Private Wealth Seminar. Boston is one of my favorite towns. I love its historical links to liberty, American independence and… commodities.
How do commodities figure into American history?
People forget that the Boston Tea Party was really a protest over price-fixing of a vital commodity.
The American colonists thought drinking tea prevented horrible ailments like dysentery and cholera.
The colonists didn’t just like to drink tea. For their health and the health of their children, they thought they needed to drink tea. (Sure, it was the boiling of water for the tea that killed the germs that caused disease. But they didn’t know about germs yet.)
The East India Company had a special license to bring tea to the colonies. This was part of a tax the British levied to help pay for the French and Indian War.
In Boston, a city of then-15,000 people, only 11 people had a license to import tea. Boy, did that get the colonists boiling mad.
So, in 1773, a group called the Sons of Liberty disguised themselves as Mohawk Indians. They boarded three ships moored in Boston Harbor and subdued the guards. Then they dumped 432 crates of tea overboard. The tea was worth 18,000 pounds sterling – roughly $3 million in today’s money.
Commodities and Liberty
That wasn’t the only time commodities played a crucial role in America’s path to independence.
On March 23, 1776, the Continental Congress passed an act that formalized privateers. They’re basically pirates who take sides in a war. And every colonist with a leaky rowboat suddenly set out in search of riches.
The seas between America and Europe became a hunting ground for “wolf packs” of privateers who preyed on British merchant fleets.
What did they plunder? Guns, powder, cotton, linens, foodstuffs, copper, tin, sugarcane, molasses, rum, whiskey, manufactured goods, jewelry, cash, documents and the ships themselves.
Over the course of the war, nearly 800 vessels commissioned as privateers. They captured or destroyed more than 600 British and loyalist ships.
Those privateers saved the American Revolution.
Without them, American sea trade would have been strangled, and the American Revolution along with it.
Getting Wealthy on the Revolution
Many shrewd investors made a fortune without setting foot in a boat.
- Robert Morris was the so-called “Financier of the Revolution.” He had a hand in every significant strategic decision made by the Continental Congress. He also invested heavily in outfitting privateers.
- Benjamin Franklin helped create a dummy French corporation for the American privateers. This company used privateer profits to help fund and supply the Revolution.
- John Hancock was Boston’s richest merchant. He was also into the privateering scheme up to his eyebrows. He arranged through an associate to have all prize ships settled and sold at his wharf, netting a nice cut off of each one.
American privateers racked up $18 million in damage to British shipping by the end of the war. That’s about $315 million today.
Capitalism made America possible. If it weren’t for private enterprise and the profit motive, our high-seas rebellion never would have left port.
Commodities continue to shape America’s destiny. That’s true in the grain fields of America’s heartland; in America’s revived oil and gas industry; and in the gold-rich hills of Nevada.
P.S. I’ll soon be heading for those Nevada hills to check out five up-and-coming mining companies. They’re all developing new projects, and I can’t wait to see what they’re up to. I’m planning to report what I learn, so stay tuned.
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