Celebrating Independence Part I: Did Bankruptcy Cause the American Revolution?

Ben Franklin

Okay, so there were probably a few other reasons for the American Revolution – democratic ideals, self-governance, yadda, yadda, yadda.

But would you be surprised to find out that American Debt Relief was one of the factors motivating the Colonists to declare independence?

The British Parliament imposed taxes on the Colonies to pay for Britain’s victory against France in the Seven Years’ War. The Currency Act of 1764 and The Stamp Act of 1774 both seriously interfered with the Colonists’ ability to print their own paper money. Benjamin Franklin wrote in his autobiography that Britain’s policies in taking away the “Colonial Scrip” created “unemployment and dissatisfaction,” which, according to Franklin, was a basic cause of the Revolution.

In the Colonial arrangement, the American Colonists were the debtors and Britain was the creditor.*  Ultimately, the only way for the Colonists to get out from under that debt was to make their own country.

And the country that came out of that revolution eventually created a bankruptcy system which encourages the risk-taking and entrepreneurship that has made our country so successful.

Luckily for us, we don’t have to start a Revolution to get some protection from voracious creditors. ¬†We have a Bankruptcy Code which creates an automatic stay on all collection activity so we can get our affairs in order and get a fresh start.

Happy Fourth of July!

Tune in tomorrow for Part II of Celebrating Independence: Thomas Jefferson, from Declaration to Debtor

* Source: Simons, A.M., The Social Forces of the History of the United States, Chapter 6, Causes of the Revolution, pp. 66-69 (1911)

http://www.archive.org/stream/socialforcesina00simogoog#page/n84/mode/2up

One Response to Celebrating Independence Part I: Did Bankruptcy Cause the American Revolution?
  1. Cate Eranthe
    July 9, 2011 | 1:47 pm

    Thank you for the interesting historical perspective. So many people I see think they’re alone in having debt.

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