INTERNATIONAL TRADE ACROSS THE CENTURIES

For over a decade, the British Crown had been at war with the American colonies. One could argue that April 6, 1776 was the day that the American colonies had finally had it.

The sundering of the bonds between two peoples is not something that happens in a day. The relationship between Great Britain and what was to become the United States of America began as a close-knit bond. The link between these frontier territories and their mother country was tight and fond at first; Americans were proud to think of themselves as British citizens, and even our most rabid patriots regretted having to give that up in the end (with only the odd Francophile as exceptions). But so they did, and the events of April 6, 1776 were a turning point.

After the costly French and Indian War, the British government was broke. They decided, understandably, that the American colonists should contribute to that burden more directly, through some form of taxation. Fair enough. The American colonies all had their own state legislatures, and had for a century or more; reasonable discussions about how America might share the burden would certainly have been justified.

But from the very start, the pompous George III had no interest in seeking advice or finding common ground through negotiations. He felt “constrained by the constitution” (as another tyrant has put it), as the Magna Carta and its successor documents rendered the nation a limited monarchy, sometimes very limited indeed. But his view was that these limits only applied to England proper, and that Parliament should have no reach beyond the island’s shores.

So he operated as a dictator in matters concerning the colonies, and used bribery and other plums of office to get a majority in Parliament to endorse his every counterproductive idea.

From their very beginnings, the English colonies in North America were a mixed economy. These colonies had to be largely self-sufficient, harvesting enough crops and raising enough meat, because of the long one-to-three month ocean crossing back to Europe. But for whatever they couldn’t raise, or chose not to, they could trade, so they also raised crops for export, to be traded for the complex manufactured products that need a more developed economy to produce.

We could make simple homespun clothes ourselves, but finery needed the looms and tailors of Europe, so we exported cotton and wool, and we imported suits and ball gowns. We exported tobacco, rum and beer; we imported china and tea sets. The economy worked, and grew, and our people prospered.

Radio host Michael Medved has often stressed how amazingly well fed American colonists were, and his belief that this one set of statistics – the amount of meat they ate and alcoholic beverages they consumed – shows a key difference between the colonists and the Europeans that King George simply didn’t understand. He viewed us as hungry, desperate frontier settlers, which we hadn’t been for a century or more. Our cities – Philadelphia, Williamsburg, New York, Charleston – were full-fledged cities with theater and inns and society parties. We had state capitols and a proven tradition of legislative activity. We had in some ways progressed beyond England already, and we were on target to progress infinitely further, but George III’s understanding of the Americans was two centuries behind the times; he thought we were the starving denizens of the Mayflower landing, sick, weak, and dependent. No wonder we clashed so terribly.

The farmers and merchants on this side of the Atlantic had long used middlemen – known as factors – in London as their principle agents. Americans would ship a boatload of cargo to England, and their factors would enter it through Customs, pay the Customs duties, warehouse it and sell it. The factors would then set out to acquire the goods that the Americans requested from them (the representation worked both ways), and send them back by the next ship with a balance sheet.

Over the years, the Americans tended to think, more and more, that the British factors were taking more than their fair share as brokers… that they accepted too low a price for the American goods and paid too much for the British goods they sent back. But they could never really be sure, since they were here, not there, and didn’t necessarily know the going prices of goods. The Americans – particularly the southern plantation owners – would therefore sink deeper and deeper into debt as their largely raw material sales never seemed to be enough to pay for their finished goods purchases.

One way to find out, of course, was to offer to sell their goods to other countries too. Sell tobacco, apples, or salt pork to not just England, but France, Italy, Holland, and Spain. See who pays the best, see which market provides the best deals for goods in return. But just as the Americans were beginning to develop this more sophisticated import/export marketplace in the mid-18th century, the French and Indian War (or Seven Years’ War, if you prefer) was to end all that progress.

To pay for the costs of the war, George III decided to start taxing Americans, without asking Americans for ideas on how they’d like to contribute. Rather than working with our state capitols in the 1760s, he just issued edicts, or arranged for his corrupt party in Parliament to pass laws. Stamp tax, tea tax, goods and services tax.

All kinds he tried, and all kinds failed. Every new tax proposed by London irritated Americans more. From a Stamp Act Congress to the appointment of representatives like Benjamin Franklin, nothing worked. The Americans finally gave up and decided to boycott all British goods outright, with a coastwise boycott that commenced in the late 1760s after George III declared martial law on the colony of Massachusetts and started quartering troops in Bostonians’ private homes.

When American legislatures objected, George III shut them down. Committees of correspondence rose up, then the Sons of Liberty, and before you knew it, the American colonies had been pushed and pushed into a state of rebellion. What else could they do when martial law had been declared, legislatures dismissed, ports closed to all but British ships, all non-British trade routes forbidden by a king whose only desire seemed to be to bring all economic activity under the control of London?

The last straw came in December of 1775, when Lord North’s government – the king’s lackeys in the House of Commons – passed the American Prohibitory Act, finally banning the colonies from trading with anyone else but England. The Continental Congress, which had built an army, engaged British troops in battle, captured British ports, and set up a national government in opposition to that of the king, had STILL never yet declared independence, or even allowed so much as an open debate on the topic. The Continental Congress still had many delegates who prayed for a full reconciliation.

But on April 6, 1776, the Continental Congress took the next step, denouncing the American Prohibitory Act and announcing the exact contrary. If England wanted us to trade only with England, then we would only trade with anybody else but England.

As of this date, the colonies were united in a way they had not been before. The northern colonies were in full rebellion, and had been for some time, but the middle and southern colonies had generally been left alone by the British, and many still didn’t quite know what the fuss was all about. The British weren’t quartering soldiers in people’s homes in South Carolina; they hadn’t put Savannah under martial law like they had done to Boston… many southerners just didn’t see the tyranny, and thought it was just a simple “tax dispute.”

But Virginia had seen its House of Burgesses dissolved by the British governor, and reports were shared among the delegates in Philadelphia that had never made it to the southern hinterlands. The Continental Congress was perhaps ahead of the curve, and now just needed to bring their constituents up to speed, which is exactly what happened as 1776 progressed.

The United States was and remains a trading nation – an economy dependent on both imports and exports. In the days of merchant ships, that meant that the United States needed either a powerful navy of its own or a sponsor with such a navy. While our ships were protected by Great Britain, they were less likely to be boarded by privateers afraid of irritating the greatest naval power on earth; France and Spain could provide similar protection by reputation in many shipping lanes, once we became independent of the British empire.

Still, our early decades were beset with risks as we found our way in the world as an independent nation. When nations were at war in those days, they would authorize “privateers” – mercenary battleships that would harass, board, and conquer ships flying the flag of their enemies, both to deny the enemy the economic benefits of trade, and to win bounties to fund the effort. It was legalized piracy.

There was also, of course, regular piracy, independent, non-sanctioned piracy. The Barbary Coast along North Africa was long known as the home of violent muslim pirates, a criminal network that harassed the trade with the north Mediterranean. We couldn’t trade with Italy or France without passing through the Straits of Gibraltar; these pirates jeopardized our trade for decades as they alternately shook us down for tribute and captured our ships when the tribute didn’t satisfy their greed.

Eventually, America finally built its own navy, capable of defending its merchant ships with a reputation for meeting force with force. But this took time to build, and many lessons had to be learned before the American people were willing to spend the money to build a navy that would defend not only our borders but our commerce as well.

The American economy has grown immeasurably since the Founding era, but that doesn’t mean that these conditions have changed. The nation remains an import/export powerhouse, an economy with a significant – critical – percentage of its wealth moving in and out every day. Hundreds of cargo ships dock and depart daily, bringing billions of dollars worth of imports in; taking billions of dollars worth of exports out.

Our cargo on the high seas or sitting in foreign ports – every day – has a value exceeding the worth of many of our states; we are that much of a trading nation. Slight drops in this international trade shake our economy to the core; a boom in this trade creates jobs ranging from manufacturing to distribution, from transportation to investment. As substantial is domestic commerce is, America’s international commerce is even bigger.

In addition, American citizens and American businesses own cargo sitting in warehouses and stores all over the world… businesses and buildings, all over the world… oil refineries and drilling rigs, power plants and manufacturing enterprises, all over the world. There are hundreds of billions of dollars worth of American property all over the globe, and people too – millions of Americans at any time, traveling for business or pleasure, temporarily stationed abroad, on projects ranging from hotel management to archeological digs to scientific research to executive leadership at American factories and sales offices.

All these people and property are on foreign soil, far from their home country, an ocean away, a continent away, virtually a world away, from the protection of a Chicagoan’s neighborhood patrol car, a Texan’s local ranger or a Tennessean’s county sheriff. When American people and goods are abroad, they are dependent on the police of their host country. Perhaps those local police will usually protect foreigners’ goods and persons without prejudice, but what about when they don’t?

When nations are allies, their governments normally extend all the usual police protections to each others’ citizens. Americans in Canada, and Canadians in the USA, should be able to sleep in peace in their hotel rooms, confident that they’re as safe as local citizens next door. Not that crime is unknown, but they should be confident that the local police will support a victimized visitor just as diligently as they would support a local.

But what of nations that are not allies? What of our relations with countries that may not be outwardly at war with us, but whose governments, people, or both, at any given moment, are not exactly the dearest friends of the United States?

We have embassies in nearly every nation on earth, and embassies are considered the sovereign land of their nation, however far they may be from home. But what of all that other property? What of all the other workers, and tourists, and families, and land, and goods? They are at the mercy of fortune, and local authorities, and of the vagaries of public opinion and international relations.

For this reason, we need armies and navies even more than we did in the Founding Era. What protects our oil rig workers in the Pacific Ocean? Our power plant engineers in the middle of the Sahara? Actors performing in a touring company visiting Moscow or St Petersburg? Executives managing a joint venture in Shanghai, plant managers in a factory in Indonesia, manufacturers’ reps calling on customers in Saudi Arabia? Tourists skiing K2 or hiking the Great Wall, photographing the pyramids at Macchu Picchu or Giza?

Our national security needs do not end at our nation’s borders; they never did. The reason we have aircraft carrier groups in every ocean, and both army and navy bases all over the world, is that American interests are also all over the world.

The United States armed forces have to serve as a constant warning to any attacker, big or small, nation or individual, that if an American person or property is attacked, anywhere on earth, the local authorities had better respond just as diligently as they would for a local, or America will interpret it as an act of war.

This isn’t bluster; the entire American economy is dependent on the security of our people and our holdings all over the earth. So is most of the rest of the world’s economy, for that matter. Our friend Great Britain has company-owned BP gas stations in the USA, just as our current enemy Venezuela has company-owned Citgo facilities here too. American law enforcement doesn’t distinguish between locally-held franchises and foreign-owned shops; a store is a store and it merits protection. We expect exactly the same from every other country on earth…

…but we know we won’t get it. We know there are places on earth where the locals wouldn’t stand up to defend someone from the next town, let alone someone from a foreign nation. There are places where police can’t protect themselves, let alone civilians. There are places where American citizens and their property are safe only because the locals fear the American aircraft carrier that passed by last month, or the army base that they know is just over the border, or the artillery base on the next island.

In recent years, we have seen our international presence curtailed by budget cuts and “peace dividends,” by misguided policies and “strategic retreats.” Is it any wonder that pirates are emboldened in the Straits of Malacca, the Gulf of Aden, the Caribbean Sea? Is it any wonder that American reporters are mugged in Europe, raped in the Middle East, beheaded in the Subcontinent?

With every attack that results in a wordy non-response from Washington D.C., the villains of the world are energized. They believe they have received carte blanche to attack; it’s open season on American citizens and American interests.

An American embassy was attacked in Benghazi; the White House told the military to stand down, blamed an unseen YouTube video, and threw an unknown American preacher in jail. A natural gas plant in Mali, employing some Americans, was taken over by terrorists, and the American Secretary of State muttered that it was unacceptable, while the Pentagon was nowhere to be seen. The latest member of the Kim family takes over North Korea and fires missiles toward us, and we are so dismissive of their missiles’ range that we don’t bother to respond… what if one day they surprise us?

Shaken and exhausted from the War on Terror, American security experts who do understand these issues are now a minority in Washington. We have the anti-war left and the libertarian right, the capitulating middle and the shortsighted independents, all colluding to react to every threat with sanctions, to every action with inaction, to every attack with retreat.

In 1959, Fidel Castro of Cuba saw such weakness in America, and nationalized billions of dollars in American property. Hugo Chavez of Venezuela saw the same, and did the same in 2007 and 2008. Most authorities only respect other, stronger authorities, authorities that prove their willingness to use their strength.

This nation is the keystone of the world economy, with assets and citizens all over the world. Virtually every nation is dependent on American activity, but some are jealous of that relationship, others are too blind to see it, still others dismiss it in the belief that they could do better without it.

This is a time when Americans need a global military presence more than ever before. Just like two centuries ago, when our nation was just beginning its meteoric rise to prosperity, American leadership in global trade is critical to global economic growth, critical to peace, critical to domestic tranquility half a world away from our own shores. But this is not universally recognized.

As much as American personnel and property fuel the world, a lack of American resolve to defend our people and property –wherever they be – may jeopardize that same world. America needs to fix what ails our economy, sure… through corporate tax rate reductions and the reduction of oppressive regulations like obamacare… but we need to fix our defenses as well.

The American global footprint – both commercial and personal, from manufacturing to the tourist trade – requires an overlay of committed American defense to protect it.

Once upon a time in 1904, over a century ago, an American citizen named Ion Perdicaris was kidnapped by pirates under a leader named Raisuli… pirates operating under the sanction of the sultan of Morocco. American diplomats were stymied; the sultan of Morocco didn’t admit that these pirates operated under his protection, so we couldn’t force him to apply the pressure of an overlord. The American President dismissed such concerns; Theodore Roosevelt cabled the message: “Perdicaris Alive or Raisuli Dead in 24 Hours.” The message was received; the unspoken pressure was applied, and the prisoner was quickly freed, establishing TR’s reputation and sending a message all over the world that American protection extended to every citizen and every citizen’s property, and always would.

This tale grew in the telling, but the lesson is the key. For what we have here at home to be safe – our factories, our jobs, our investments, our citizens – they must be safe when they’re abroad as well, from second homes to factories, from offices to warehouses.

We started down a path in 1776 that lit up the world with prosperity, culture, and often even a taste of freedom. This generation has inherited an obligation to keep that path clear and safe. As long as American interests are far flung, American defenses must be there alongside them, tall and strong, as well.

John F. Di Leo is a Chicago-based Customs broker and international trade compliance lecturer. He has been involved in international trade for some forty years.

Permission is hereby granted to forward freely, provided it is uncut and the IR URL and byline are included. Follow John F. Di Leo on Facebook or LinkedIn, or on Twitter at @johnfdileo.

Yes, the US is broke.

But tell me something, if you own a jewelry store and you’re broke, do you save a few bucks by disconnecting the $50/month burglar alarm and pawning the iron bars on the windows?

No, you still have to defend what you have.

Our nation has massive economic interests all over the world, and if we don’t defend them, they WILL be taken or destroyed by our enemies.

And then where will we be? “Ooh, we saved $20 million by shutting down this one base... but a billion dollar American business was nationalized.”

We can’t put this genie back in the bottle. Our economy is all over the world, so our defenses must be as well.

I am not advocating abandoning our resources.

I am saying, bring them home.

AMERICA needs resources. Right now.


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Thanks jfd1776. Just adding to the catalog, not sending a general distribution. To all -- please ping me to other topics which are appropriate for the GGG list.

US Manufacturing is here. It just doesn’t employ as many people. You sound like a broken I/O port.

A broken record would have already ground itself to dust by now.

“US Manufacturing is here.”

Yes, we have all noticed the prevalence of ‘Made in America’ on the thousands of consumer items that we all buy.

The Japanese embarked on a plan for securing strategic industries decades ago, back when American plants turned out consumer electronics, cars and car parts, and virtually everything that we bought.

To see how that worked out one needs only to look at the condition of Japan’s great cities compared to America’s. Detroit was one of America’s great cities well into the 1960s. The same for most that are now disparaged as being ‘the Rust Belt’.

But hey, who needs jobs? Not the complacent and glib, that’s for sure.

Well there is lots of manufacturing out there in the world.

Do not, however, see much of it here.

Just saying.

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