An Empire of Wealth

John Steele Gordon

• Publisher: HarperCollins e-books
• Year: 2009
• ISBN:
  9780061847646
• Topic: Geschichte
• Subtopic: Lateinamerikanische & karibische Geschichte

Throughout time, from ancient Rome to modern Britain, the great empires built and maintained their domination through force of arms and political power. But not the United States. America has dominated the world in a new, peaceful, and pervasive way -- through the continued creation of staggering wealth. In this authoritative, engrossing history, John Steele Gordon captures as never before the true source of our nation's global influence: wealth and the capacity to create more of it.

This P.S. edition features an extra 16 pages of insights into the book, including author interviews, recommended reading, and more.

PART I

A VAST AND ROARING WILDERNESS

They must come into, and go through a vast and a roaring Wilderness, where they must be bruised with many pressures, humbled under many overbearing difficulties…before they could possess that good Land which abounded with all prosperity, flowed with milk and honey.

The Reverend Thomas Hooker
The Application of Redemption, 1659

Chapter One

THE LAND, THE PEOPLE, AND THE LAW

ABRAHAM LINCOLN thought that a nation—however much the whole might exceed the sum of its parts—consists of nothing more than its people, its land, and its laws.

For the nations of the Old World, the three parts are inextricably bound up together in the long individual histories of those nations. But the United States, like all nations founded by European settlers in the great expansion of Western culture that began in the late fifteenth century, has no ancient history. At the beginning of American history, there was only the land.

The land that would become the United States presented a world that was at once hauntingly familiar and quite unlike the one in which the first European explorers and settlers had grown up. Western Europe was a world of dense population, concentrated in cities, towns, and villages; intense cultivation of arable areas; limited wildlife; and limited and carefully husbanded forests.

America was located in the same temperate zone and featured often familiar trees, plants, and animals, along with some exotic new ones, such as raccoons, skunks, maize, and rattlesnakes. But beyond the rocky shore of what is now the state of Maine and the vast sandy beach that stretches nearly unbroken from New Hampshire to Mexico and far beyond, lay a wilderness, upon which the hand of its human inhabitants had lain very lightly indeed.

This wilderness was a forest larger than all of western Europe, broken only by the occasional beaver meadow, bog, swamp, rock outcropping, mountain bald, and the slash-and-burn fields of Indians. It stretched from the water’s edge to well past the Mississippi. From there it extended fingerlike along river and creek bottoms into the great plains that covered the center of the continent.

This huge forest was, of course, not uniform. In the North, great stands of white pine—the preferred wood for the spars and masts of sailing ships—alternated with hardwood forests, where maples, sycamores, and ash predominated in the lowlands, oaks and hickories on the drier and higher slopes. Farther south were stretches of different species of pine along the Atlantic seaboard, and these reached inward to where they met hardwood forests at higher elevations.

The eastern shore of North America is a welcoming one. A broad coastal plain made for easy settlement. Peninsulas such as Cape Cod and Delmarva; islands such as Long Island; and the barrier beaches farther south provided shelter for the early sailing ships. A series of rivers—the Merrimac, the Charles, the Thames, the Connecticut, the Housatonic, the Hudson, the Raritan, the Delaware, the Susquehanna, the Potomac, the Rappahannock, the York, the James, the Peedee, the Ashley, the Cooper, the Savannah—provided access to the deep interior for the small and relatively shallow-drafted vessels of the day. As early as 1609, Henry Hudson, an Englishman in the employ of the Dutch, sailed his full-rigged ship Half Moon 150 miles up the river later named for him, reaching as far as present-day Albany. An overland trip so far inland would have required a month or more. Hudson, although moving cautiously in unfamiliar and narrow waters, covered the distance in a week.

And because these rivers had been formed when the sea level was lower than it is today, the subsequent rise drowned the rivers’ mouths and provided harbors that rank among the finest on the North Atlantic. Many of the country’s first cities—Boston, Newport, New London, New York, Baltimore, Norfolk, and Charleston—sprang up where these harbors are located.

The climate of North America that the first settlers encountered was, like the land, both familiar and exotic. It is temperate rather than arctic or tropical, and with abundant rain. But, being on the eastern edge of a great continent, the climate is continental in nature, whereas western Europe’s is maritime, and greatly tempered by the warmth of the Gulf Stream. American winters are much colder than western Europe’s while the summers are hotter. The high and low temperature records for London, located north of the fifty-first parallel of latitude, are 99 degrees and 2 degrees and only rarely approach either extreme. The records for New York, just north of the forty-first, are 106 degrees and-15 degrees, and the extremes are approached with disconcerting frequency. By European standards, New England winters and southern summers were long and brutal.

This vast area was not uninhabited. Dubbed “Indians” (les indiens in French, los indios in Spanish) through the ignorance of the first European explorers, who thought themselves on the fringes of Asia, the aboriginal inhabitants of North America lived throughout the continent. But by European standards, their population was very low relative to the size of the land. Exact figures are impossible to come by and even estimates vary widely, but the Indian population of eastern North America was probably somewhere between one and two million people at the time of Colombus. The number declined, sometimes rapidly, as increased European contact prior to settlement introduced diseases to which the Indians had no immunity.

And the Indians were anything but culturally homogeneous, even by diverse European standards. There were approximately 250 languages being spoken in North America at the beginning of the European exploration (and about 2,000 in the Western Hemisphere as a whole). Even within languages, the people of North America were divided into many small, often mutually hostile tribes. Low-level warfare was chronic among these groups.

Only the Indians of the Mississippi Valley, socially organized as chiefdoms, depended primarily on agriculture for sustenance. The Indians who lived on the eastern seaboard, mostly organized as tribes, were primarily hunter-gatherers. Less than 1 percent of the arable land of eastern North America was used for growing food crops. Using slash-and-burn methods, the Indians would grow corn, squash, and beans on a patch of land for a few years and then move to new fields as the fertility of the old ones declined.

Technologically the eastern Indians were Neolithic, using sophisticated tools but lacking metal. Their culture was a highly advanced one, however, using hundreds of different materials and techniques in what James Fenimore Cooper, two centuries later, would call “the gentle art of the forest.” Developed over thousands of years of extracting a living from the land, these arts, taught to the settlers, would more than once save them from disaster and even extinction as they struggled to establish themselves in the unfamiliar New World.

The more technologically advanced culture that these settlers brought with them and traded with the Indians, however, would, in turn, destroy the latter. Once the Indians became used to the superior metal tools, cloth, and firearms of the Europeans, the skills needed to use the raw materials at hand began to disappear. Before long, the Indians had no choice but to trade for what they needed on increasingly unequal terms and, inevitably, lost their economic sovereignty. Once that was gone, their political sovereignty and the rest of their culture soon followed.

TWO OF THE MOST SIGNIFICANT technological developments in human history had brought the European medieval world to an end by the beginning of the sixteenth century and made the settlement of the New World possible. The printing press had greatly reduced the cost of books, and thus of knowledge. In the mid-fifteenth century there had been only about fifty thousand books in all of Europe, most of them controlled by the Church, which ran the universities. By the end of the century there were more than ten million books in Europe, on an endless variety of subjects, many of them technical and agricultural. They were largely in the hands of the burgeoning merchant class and the landed aristocracy. The Church’s monopoly of knowledge was broken and, soon, so was its monopoly of religion, as the Protestant Reformation swept over much of northern Europe in the early sixteenth century, setting off more than a century of warfare as a result.

The other great invention of the late Middle Ages was the full-rigged ship, capable of making long ocean passages. As late as 1400, European ships were mostly small and single-masted, not very different from those that had been used by William the Conqueror almost four hundred years earlier to cross the channel to England. But by 1450, far larger ships with three and sometimes four masts had appeared, and they were pushing out the boundaries of the world known to Europeans.

They had need to. In 1453 the Turks had taken Constantinople, the ancient capital of the eastern Roman Empire. A Muslim power now sat athwart the trade routes to the East, extracting taxes on all goods that passed. More, the Turks were expanding into Europe itself, and by the middle of the sixteenth century would be at the very gates of Vienna. Christendom felt itself under attack as it had not since the Dark Ages a thousand years earlier.

But thanks to the full-rigged ship, western Europeans could do an end run around the Muslim control of the ancient trade routes. By the end of the fifteenth century, the Portuguese had rounded the Cape of Good Hope at the southern tip of Africa and reached India. By 1510 they had reached the Spice Islands, source of the spices, such as pepper, that yielded fabulous profits once brought to Europe.

Columbus, working on a sound theory but with a flawed idea of the size of the globe, stumbled onto the New World when he tried to reach Asia by sailing west in 1492.

Once it was clear that Columbus and other early explorers had, indeed, found a New World, explorations were funded by all the major west European maritime powers. The Spanish were the first to hit the jackpot, with the conquest of Mexico and, ten years later, Peru. Huge sums in gold, silver, and precious stones began to flow into Spain, which became the dominant power in Europe as a result. Portugal began producing sugar in Brazil by the middle of the sixteenth century, an immensely profitable crop when grown with slave labor. By the end of the century, the French had begun to use the St. Lawrence River to sail deep into the continent of North America and establish a great fur trade with the Indians who lived around the Great Lakes.

But, except for a Spanish settlement in the Chesapeake Bay that was attacked by Indians and abandoned in 1572, the eastern shore of what is now the United States was largely ignored. It was too far north for tropical crops such as sugar to be grown there, and too far south for the best furs to be found there. Nor was there any sign of precious metals.

England had funded the explorations of Giovanni Caboti (an Italian known in the English-speaking world as John Cabot) in search of a northwest passage. But it came late to the race to exploit the New World by colonization. Here was an opening. In 1585 and again in 1587, Sir Walter Raleigh had tried to establish a colony on Roanoke Island in Albemarle Sound, in what is now North Carolina. The colony vanished, leaving only a cryptic message carved on a tree trunk. But twenty years later England tried again, and this time succeeded.

THE COLONY AT JAMESTOWN was not founded by the English state; it was founded by a profit-seeking corporation.

Tangible inventions, such as the printing press and the full-rigged ship, usually get far more attention from historians, but intellectual inventions are often just as important. And two intellectual inventions of the Renaissance, double-entry bookkeeping and the corporation, proved vital to the development of European civilization in the New World and particularly in what is now the United States.

Accounting had been known since civilization arose in Mesopotamia. Indeed, writing, the defining attribute of civilization, was in all likelihood invented to help keep the books. But accounting did not advance much for several thousand years thereafter, until double-entry bookkeeping was developed in Italy in the fifteenth century. Double entry makes it much easier to detect errors and allows a far more dynamic financial picture of an enterprise to emerge from the raw numbers. Because of double-entry bookkeeping, it became possible for people to invest in distant enterprises and still keep track of how their investment was doing. Ferdinand and Isabella saw to it that an accountant sailed with Columbus on his first voyage, to ensure that they got their full share of the hoped-for profits.

The joint-stock company proved equally important. Exploring far-distant lands in full-rigged ships was both hazardous—many ships simply never returned—and extremely capital-intensive by the standards of the sixteenth century. At first, it was largely done by expeditions funded by the crown in each country. But England was a small country with a small population and lacked the financial resources available to France and Spain. The Dutch Republic as well, once it revolted from Spain in 1572, needed another method to finance these costly but potentially immensely profitable enterprises that were far beyond the financial reach of even the wealthiest individual private citizens.

Partnerships, of course, had been around since ancient days. But in a partnership, each partner is liable for the debts of the entire enterprise. Thus an investor, by investing even a small sum, might find himself bankrupt if the enterprise failed. Few were willing to take on such risks, especially in an enterprise over which they would, necessarily, have very limited control. The joint-stock company solved the problem by limiting each investor’s liability to what he had invested. This, of course, shifted some of the risk to the corporation’s creditors but made it possible for large sums of capital to be amassed from many small investments. Next to the nation-state itself, the joint-stock company was the most important organizational development of the Renaissance and, like the nation-state, made the modern world possible.

Several English joint-stock companies for purposes of facilitating trade in various areas were established in the latter half of the sixteenth century, the Moscow Company (1555), the Levant Company (1583), and the East India Company (1600) among them. The Dutch also established an East India company. It quickly wrested away most of Portugal’s far eastern empire and made the Netherlands, a country with few natural resources, the foremost trading nation in the world and the richest country in Europe in the early seventeenth century.

The Virginia Company, established by a group of London merchants, was chartered by King James I in 1606. The charter stated that the purposes of the company were to help build up England’s merchant fleet, increase the number of the country’s able mariners by broadening its trade, find precious metals, found a Protestant colony in a land that was under Spanish threat, and, while they were at it, convert the heathen.

The last objective would, in fact, receive precious little attention. Indeed, the English sent no missionaries at all. Instead, they apparently intended to Christianize the Indians through a sort of economic osmosis, intending “to settle and plant our men and diverse other inhabitants there, to the honour of Almighty God, the enlarging of Christian religion, and to the augmentation and revenue of the general plantation in that country, and the particular good and profit of ourselves.”

Thus, from the very beginning, the English approach to colonization was profoundly different from that of the Spanish and French. The governments of Spain and France sought to control all aspects of their subjects’ activities in the New World and made concerted efforts to bring the Indians to the Catholic religion, whether they wanted to convert or not.

Further, only approved colonists were permitted to immigrate to New Spain and New France, lest heretics and ne’er-do-wells taint them. But the government of England had little at stake in the enterprise and was only too happy to get rid of its troublemakers—religious and criminal—and the unemployed, of which it had far too many.

The English economy had been going through wrenching change for most of the sixteenth century. The population had grown rapidly, from about three million in 1500 to four million a century later and five million by 1650. But employment did not keep pace. The cloth industry, the mainstay of English manufacturing since Flemish weavers had settled there in the mid-fourteenth century, had been losing ground to its continental competition.

Meanwhile, the old feudal system of landholding had been decaying rapidly. The gentry and the aristocracy—the 5 percent of the population who owned most of the agricultural land in England—had been enclosing their estates, dispossessing tenants to run far more profitable flocks of sheep with hired hands. In the century between 1530 and 1630, about half the English peasantry lost their tenancies, and many of them had great difficulty in finding other employment.

In addition, the great influx of gold and silver into the European economy from the New World, thanks to the Spanish conquests, had set off a rapid inflation, and prices rose about 400 percent in the sixteenth century.

The dispossessed peasants and unemployed cloth workers, known as “sturdy beggars” to distinguish them from the traditional beggars disabled by disease or injury, took to the road, often pushed from parish to parish by local officials who did not want to have to care for them. They tended to gravitate toward the market towns and seaports. London, by far the largest city in England already, saw its population rise from 120,000 in 1550 to 200,000 only fifty years later. By 1650, London’s vast rabbit warren of narrow, crooked streets and tenements was home to 350,000 people, many of them desperately poor.

It was people from these ranks, fleeing starvation or the sheriff, whom the Virginia Company recruited, together with gentlemen adventurers, often the younger sons of gentry families. In December 1606 three ships, the Susan Constant, the Godspeed, and the Discovery, left England and arrived in the Chesapeake Bay on April 26, 1607, with 105 men on board (39 had died at sea). Sailing some sixty miles up the James River to make their presence less obvious to the Spanish, the three ships anchored on May 13 at the site of what became Jamestown, named, like the river, for England’s king.

But other than its relative security from Spanish assault, the chosen site, on the north bank of the James and beside a swamp, had very little to recommend it. The swamp, while perhaps providing some protection from ...