Christopher Hollis
Two Nations

Chapter VI — The Americans and the Whigs

It is a commonplace of history, as she appears in popular table-talk, that the Whig inheritors of the great Revolution of 1688 had a natural sympathy with the American demand for freedom and self-government, that, if they had only had their way, those demands would have been satisfied within the framework of the Empire but that the Americans were compelled into independence by the obstinacy of a stupid King.  Nothing could be more false.  The Whigs had no intention of establishing beyond the seas a land in which “Government of the people for the people and by the people should not perish from the earth.”  On the contrary Lord Shaftesbury, the Whig leader, engaged John Locke, the Whig philosopher, shortly before 1688 to draw up a constitution for the new colonies of the Carolinas.  Locke proposed that the colony be handed over to eight proprietors, Shaftesbury himself, Monk, Clarendon, and five others, these proprietors to be called palatine, admiral, chamberlain, constable, chief justice, high steward, and treasurer.  To these eight gentlemen one fifth of the land of the colonies was to be given.  The next concern should be to provide adequate estates for the resident aristocracy, whose land was to be worked by hereditary serfs bound to the soil.  What land was left over was to be sold by the proprietors to freeholders.  The grand purpose, said Locke, was to avoid “a numerous democracy.”(60)

Locke’s scheme was not, it is true, exactly adopted, but the spirit of it was adopted.  The essential object of all Whig policy towards America was to keep the cost of labour low.  For the Whigs had invested capital in America as in Ireland, and it is an evident and important law that, where wages are low, then there is money to be divided in dividends, and the product of the low-wage country can also be used to force workers in other countries to accept wages as low or to starve.  Now it is important to understand that in the early years of the eighteenth century the Whigs succeeded in their object.  America was a low-wage country — or at least certain American industries were carried on with low wages, or rather with low labour-costs.  How was that done ?  It was done thus.  The labour-market was supplied either by African slaves or by white indentured labourers — by criminals shipped out there and compelled to work for the term of their sentence without wages, or, should the supply of criminals run short, by wretches kidnapped in the London streets by creatures of the capitalists known as “spirits,” hustled on board a ship and then compelled in America to earn their freedom by a service of from five to seven years on an estate. [Ibid., i, 104.]  Bancroft, the American historian most widely recommended at the English universities and schools during the last century, confessed to having collected “a handful of data about the sources from which the American labour market was supplied in those days” and of “having opened his little finger”(61) and said nothing about it.

It was because of the cheapness of its labour that America was able to attract English capital.  Now a new colony in its first years cannot keep itself but must live on loans, for its members must consume and they are not yet able to produce.  But, if the country be wisely founded, after a short time they will start to produce and, a short time afterwards, they will be able to produce a surplus.  Then their first natural concern will be to get themselves out of debt.  This was the condition to which the American colonies were beginning to come by the middle of the eighteenth century.

But the Americans, like the Irish, could never get out of debt so long as they were compelled for monetary purposes to import precious metals and to regulate their currency by the strict rule that the amount of money in the country should rise and fall in exact proportion to the amount of gold and silver.  Therefore, like Bishop Berkeley in Ireland, they began to agitate for the right to make a fiduciary issue of paper-money.  The answer of the British Parliament was in 1751 to pass an Act prohibiting the issue of paper-money in New York, and this prohibition was afterwards extended to the other colonies.  “On the slight complaint of a few Virginia merchants,” said Benjamin Franklin,(62) “nine colonies had been restrained from making paper money, become absolutely necessary to their internal commerce, from the constant remittance of their gold and silver to Britain.”

There was thus no possibility for the Americans to get out of debt, and the English financiers looked forward to drawing steady and permanent dividends from their American investments.  The result, complained Franklin, was that the American “whole wealth centres finally among the merchants and inhabitants of Great Britain.”  Of the nature of the Americans these “merchants and inhabitants” knew little and cared less.

After the Seven Years’ War it was widely felt in England that it would be just that the Americans should make some contribution to Imperial taxation.  Whether that feeling was a right one or a wrong one, we need not discuss.  It was a general and national one, shared by King and people, Parliament and financiers.  The later Whig legend that it was a special project of George III’s brain is sheer fabrication.  “The shame of the darkest hour of England’s history,” writes Green(63) of poor George, “lies wholly at his door.”  It is nonsense.

The first attempt to raise revenue from America was made by the Sugar Act of 1764, putting a duty on American sugar.  But, since sugar could be produced as easily and abundantly in the West Indies as in America, that duty proved to be a protective but not a revenue duty.  Its effect was but to ruin the American sugar industry and to make the West Indies almost the sole source of England’s sugar supplies — an effect which, it is not perhaps unduly cynical to suggest, may possibly have been foreseen by the seventy-four owners of West Indian sugar plantations who sat in the Parliament which voted the Act. [Op. cit., Beard, i, 195.]  The problem was tackled again by the Stamp Act.  The Stamp Act was proposed by Grenville, a Whig, a man personally distasteful to George III.  It was supported by the whole Whig Parliament and passed both Houses of Parliament “with less opposition than a turnpike bill” — in the House of Commons by 205 votes to 49, in the House of Lords without a division.  “I well remember,” said Burke, [Ibid., i, 210] “that Mr. Townshend, in a brilliant harangue on this subject, did dazzle them by playing before their eyes the image of a large revenue to be raised in America.”  Townshend was a leading Whig.  So far indeed was the Act from being the personal policy of George III that it so happened that the poor man was insane at the time, and the royal assent was only given to it by a regency.

Grenville fell from power for reasons entirely unconnected with America and was succeeded by the Government of Rockingham, the very archetype of Whiggery.  The Government was formed in July, 1765.  For the first six months of its life it had no particular American policy.  Conway, the Secretary of State, occupied them with writing feeble letters to the American governors about the disorders.  Then at the end of the year it began to discover that the result of the Stamp Act and of the boycott of English goods was that the dividends were not coming in to the English investors.  The merchants of London, Liverpool, and Glasgow sent in a petition complaining that £4,000,000 of debts were owing to them in America and that they were unable to collect them.

It was then, and not till then, that the light of divine illumination fell upon the gentlemen of England.  At that date about one person in four hundred in England had a vote.  Yet the Whig Members of Parliament, representative of of one four-hundredth part of the people of Great Britain, found that the American cry of “No taxation without representation” was a righteous and a freedom-loving cry.  Was not the American cause their own cause of 1688 ?  The more prosaic truth was that they saw that the Americans would not pay both the Stamp Act’s dues and their private debts, just as the financiers of our own day saw that the Germans would not pay both reparations and the interest on the Dawes and Young Loans.  Therefore high Christian and Whiggish principles demanded the repeal of the Stamp Act.  Chatham, the City of London’s man, made a speech in which he said that liberty was too noble a thing for her rights to be settled by the nice precedents of the Statute Book.  Rockingham repealed the Stamp Act.  “The whole trading interest of this Empire crowded into your lobbies,” said Burke.  But it was beneath the dignity of Chatham’s great rhetoric to advert to the restraint on liberty of a prohibition on the issue of paper-money, a prohibition which had been expressly reaffirmed by the Whig Government of Grenville and which was not removed by the Whig Government of Rockingham.  The Americans accepted the repeal of the Stamp Act with gratitude but sent a petition to the House of Commons concerning their other grievances — among them that of the prohibition on paper-money.

Rockingham fell and was succeeded by Chatham who appointed Townshend as his Chancellor of the Exchequer — the hero of the “brilliant harangue” in favour of the Stamp Act.  The Whigs, as the Declaratory Act proved, had no principled objection to the taxation of America.  If possible, they wanted to get both taxes and dividends out of the Americans.  It was only in case of necessity that they were prepared to jettison the taxes in order to keep the dividends.  Therefore Townshend attempted to raise by duties on tea, glass, and paper the revenue that Grenville would have raised by the Stamp Act, thinking that the Americans would object less to external than to internal taxes.

He miscalculated.  There was indeed nothing at all novel in the principle of taxation of the Americans in one form or another.  But Rockingham’s repeal of the Stamp Act had proved to them — what they had not previously understood — that they could get out of paying their taxes if only they made sufficient fuss.  Hence the riots and acts of protest with whose story every one is conversant.  The Whig Government paid no attention to these protests, nor was it till the advent of a Tory Government under North that all the duties except that on tea were repealed.

Then the situation was complicated by an extraneous accident.  The East India Company was in financial difficulties because the shareholders had depleted its reserves by paying themselves an excessive dividend.  To save it from bankruptcy the Government had come to its rescue with a loan, and, in order to get its money back, the Government was exceedingly anxious to increase the Company’s receipts.  Most reasonably it occurred to North that, if Indian tea were sent direct to America, there was no reason why the Company’s profits should not be increased to the benefit of the American consumer but at the expense of the two sets of middlemen, the English and the American, who up till then had had the handling of it on its journey from the producer to the market.  It was the destruction of this tea, organized by the American middlemen afraid that, like Othello, their occupation would be gone, which first caused the British ministry to pay serious attention to American unrest.

Lord North made attempts to compose the quarrel, which, as is known, failed.  It came to the arbitrament of war and the Americans in their Declaration of Independence saw fit to ascribe all their grievances to the personal malignity of George III, hoping thus to gain for themselves the support of English Whigs.  But the pretence, though perhaps an astute political manoeuvre, had no truth behind it.  Nor did the manoeuvre succeed.  In spite of the efforts of Whig historians in the last century, such as May, or Sir George Trevelyan, to collect evidence of the unpopularity of the war with the English people and governing classes, there is no doubt that every section of English society was solidly behind the Government in its ambition to coerce the Americans.  It may be convenient politics to pretend that it was not so but it is not good history.  “All the worst measures of American coercion that preceded the Declaration,” writes Lecky,(64) “were carried by enormous majorities in Parliament.”  And indeed, so far was George from being the architect of repression, obtaining for his odious policy formal approval from a bribed and servile Parliament, that, where he did bring personal pressure to bear on Members, during North’s régime, he did so, in 1775 in order to overcome their strong opposition to the Prime Minister’s conciliatory resolutions.

The General Election of 1774, fought, in so far as elections in those days were fought on any issue, on the American issue, gave to Lord North’s Government a strong majority and on divisions it could usually muster about 260 votes against 90.  In 1776, when after the capture of New York it looked for the moment as though the British cause might be victorious, the opposition sank to 47.  The mercantile classes were also, according to Burke, for the war.  “The mercantile interest,” he said,(65) “which ought to have supported with efficacy and power the opposition to the fatal cause of all this mischief, was pleaded against us, and we were obliged to stoop under the accumulated weight of all the interests of this kingdom.”  “The merchants,” he said again, “are gone from us and from themselves.  The leading men among them are kept full fed with contracts and remittances and jobs of all descriptions and are indefatigable in their endeavours to keep the others quiet.... They all, or the greatest number of them, begin to sniff the cadaverous haut gout of lucrative war.”  The generality of the people of England were also, according to Burke, on the same side.  Violent measures, said Rockingham, received the support of a majority of the population “of all ranks, professions or occupations in the country.”(66) Sir George Saville, an opponent of the war, estimated in a confidential letter to Rockingham, that “ninety-nine in one hundred”(67) were in favour of it.  When the war broke out, “the majority both in and out of Parliament,” recorded the Duke of Grafton, “continued in a blind support of the measures of administration.”(68)

Burke’s voice, it is true, was of course raised on the other side, but it was well understood at the time — and has not perhaps been so well understood since — that Burke was a poor man and that since 1771 he had been the salaried English agent of the province of New York.(69) It is not suggested that his advocacy was therefore merely hired advocacy.  Human nature does not work so crudely as that.  But there is no absolute measure to tell us the relative strength of contending arguments, and there are few of us therefore who do not come honestly but easily to believe that in a quarrel the side that butters our bread has a better case than the side that offers us nothing.

It was not until after the surrender of Saratoga and the French intervention that a vigorous pro-American party began to make its appearance, and it was then that the Whigs took advantage of the King’s obstinacy to pretend, for party purposes, that they from the first had been against the coercion of the Americans and he alone in favour of it.  The truth of the matter was that the City interests would, as has been said, have preferred to have extracted both dividends and taxes from the Americans.  But, after the French intervention, as the City saw the American debts to French and Dutch financiers mounting and mounting, it realized that there was no longer any possibility of extracting taxes, and a prolongation of the war, by ruining the dollar, would very likely rob it of its dividends.  Therefore they threw the King overboard, turned against North, on his fall gave their support to Rockingham and made a deal with the Americans by which they agreed to recognize the independence of the United States on condition that the new American Government placed no impediment in the way of the collection of English debts in America.  In practice the collection of those debts was to prove no easy matter — but that is another story.

But the war had not been without its compensations.  For, while in favour of the war, the money interests had not of course been in favour of paying for it.  They had played on George III just the same trick that their predecessors had played on William III nearly a hundred years before.  They had let him have his war, provided that he borrowed the money for it from them.  The war cost £97,599,496.  Of that Parliament voted in taxation £3,039,427.  The other £94,560,069 was raised by loan.(70) The National Debt was doubled.  The American War completed what had been begun in William III’s time — the definitive establishment of a considerable class of moneyed men as the permanent pensioners of the State.

It is not argued for one moment that George III was not in favour of coercing the Americans, and, if such coercion was a blunder or a crime, then he was guilty of that blunder or that crime.  But it is argued that he was not especially guilty.  Every interest in the country shared the guilt with him — the moneyed interest neither more nor less than the rest.  Well, it may be asked, what of it ?  This of it.  The money power did not take its share of the blame when that policy failed.  There still lingers among men a vague tradition that the financial world has managed and still manages its affairs with an almost superhuman competence.  The whole record of history stands open in refutation of that tradition.  But it persists because there is one particular trick that they have learnt how to play with a skill that is almost uncanny.  It is the trick, when things go wrong, of leaving somebody else to hold the baby.  We have already seen how in 1672 they left the impression that it was Charles II who was entirely to blame for the country’s financial breakdown.  So now again the monarch was easily degraded into the whipping boy of the nation.  And we shall see in the coming chapters the financial system breaking down again and again and the breakdowns ascribed to every cause except that inherent defect in the system which Berkeley had pointed out.  We shall see all working up to the final catastrophe of 1931, when the whole of Christian civilization was brought to the very verge of collapse by the financiers’ obstinate refusal to understand the laws by which their own system worked and when, after our escape from calamity, those who had led us to the precipice’s brink were allowed to pose before us as our saviours in the hour of peril.


60. Rise of American Civilization, C. and M. Beard, i, 66.

61. Ibid., i, 103.

62. Rise of American Civilization, Beard, i, 195.

63. History of the English People, viii, 17.

64. History of England, Lecky, iii, 525.

65. Rise of American Civilization, Beard, i, 282.

66. Political History of England, Hunt, p. 158.

67. Life of Buchingham, Albemarle, ii, 305.

68. MS. Autobiography, quoted by Lecky, iv, 66.

69. Political History of England, Hunt, p. 136.

70. England under ehe Hanoverians, Grant Robertson, App. iv.