Death and Starvation at Valley Forge. Early Valley Girls call it “Like, Grody”

Get out your powdered wigs and snuff boxes readers and get ready for a game of Hunt the Slipper (Which sounds a whole lot more ribald than it really is) because we’re getting in the way back machine and looking at the American Revolution. (I’m wearing my waistcoat and breeches as I write this to get into the mood.) We all know the standard story of the Revolution or we should but let’s talk about the Revolution from the viewpoint of economics……….Alright, now that we’ve dispensed with the casual readers let’s set this post up for the true believers and bring it on home. I want to look at two concepts, a little one and a big one. ( A wimp and a blimp)

The first thing I’d like to discuss concerns one of the most sacred of all occurrences in the history of the republic. Ah-hah! Not the Boston Molasses Disaster reader, nice try at preempting me! No I want to discuss the plight of the Continental Army at Valley Forge. Again, most of us have a rough idea what went on down there and most of it was plain misery and starvation. That we know. But what rarely gets mentioned is why these men were put through that type of ordeal for several months while camped in one of the most prosperous states in the colonies in one of the more prosperous regions of the world. Hmm. You’ve probably never read of mass starvation and inadequate clothing killing untold numbers of civilians in the towns surrounding the Valley Forge encampment and that’s because it didn’t happen. What did happen was that a number of states, Pennsylvania being foremost, decided that they would put price controls on products and establish price ceilings that would not allow farmers to charge more than a government decided amount for their products. This was considered the best way to cope with the runaway inflation (which we’ll deal with later. Patience reader!) that was gripping the young nation. So price controls went into effect and Voila! You get shortages. Farmers, many of whom may have been wary of the Continentals or in fact loyalists, were not willing to sell their products to the army at some pre determined price so they either stockpiled their produce, or sold it to the British for hard currency. The price of imported goods that weren’t covered by the price controls naturally shot through the roof since demand for them spiraled upward. So this leads you to starving soldiers who no doubt found a place in our hearts, and our history books, though if you could talk to them they would have gladly traded a mention in a fifth grade textbook for a chicken leg and a new pair of shoes.

Now let’s turn, or sort of pivot, or just keep reading about the next topic in this post. What was the reason for the kooky idea of price controls to begin with? As I stated 178 or so words ago inflation was running through the young nation like green grass through a goose.  And why did the country have such a blistering case of the flation’? It probably had something to do with the balls out (sorry 7 female readers) running of the money printing presses. Actually, it had everything to do with that. It may be obvious to you, you intelligent Free Cheese reader, but it still needs to be stated that excessive money printing causes inflation. Also, the British clearly understood the implications of an inflated money supply because they made a serious effort to flood America with counterfeit American money. Have you ever heard the saying “not worth a Continental”? Probably not but if you did you probably thought it was referring to a Lincoln Continental, after all, homespun sayings about Revolutionary era money aren’t exactly hot stuff, or topping as they’d say in the 1700’s. Instead it was referring to the Continental, the paper money cranked out by the United States during the Revolution to pay for, uh, the Revolution. Revolutions for all their frivolity can get expensive after all and the States were less than forthcoming with funds to keep the thing moving. Taxing people was also less than fruitful, I mean weren’t they fighting at least partially against taxation? So the young nation decided to go for broke and start dropping money, a la Greenspan and his bearded clone Ber-bank-e, from the 18th century version of the helicopter, the hot air Montgolfier (which technically came around about a decade later but I’ve never been known for my hot-air-balloon-invention-date-accuracy).

Besides France, most nations wouldn’t touch the young rebel republic with a barge pole so money was less than forthcoming from abroad. So against the warnings of some who knew better, the Continental Congress began to churn out irredeemable paper notes that would be used as payment for taxes. Then, it was believed, the States could levy taxes and take the notes in return and retire them. Not only did this not happen but the States began to make their own funny money and well, you can get a feel for what happened. “That smashing pair of pantaloons I’ve been eyeing up at the haberdashery? What ho? They’ve were just three farthings a fortnight ago and now they’re nine?” That’s right young revolutionary dandy, prices are going up all across the land because your government has decided to play a game of Monopoly.

Milton Friedman once said that inflation was taxation without legislation. Unfortunately throughout the ages politicians have often thought of that as an endorsement of the idea rather than a criticism. The temptation is just too great for the suits and that was no different during the American Revolution as the colonists were forced to work like dogs just to live like dogs. This included the poor souls at Valley Forge after they ate all the dogs. These facts will never make it into that fifth grade textbook and I don’t expect them to but sadly they’ll never make it into a college textbook or our national consciousness either.

H.R. Gross