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July 4, 2019 | The Stormy Seas of Liberty

Sean Brodrick

Sean is the natural resource analyst for Weiss Ratings. You can read his thoughts on gold, oil, cannabis, uranium and other natural resources at

A currency crisis … a superpower mired in an unconventional war … cutthroat capitalists preying on honest merchants … political activists mounting “tea party” protests …

These scenarios sound like they’re ripped from today’s headlines. But these were the earth-shaking events that shaped the world of the American Revolution.

The revolution still has lessons for us today.

In history class you’ll hear about the Battle of Saratoga … the Battle of Bunker Hill … the Battle of Yorktown. Those wouldn’t have been worth a popgun’s patoot if not for the critical role of privateers in the American Revolution. The colonists won more fights on sea than they ever could win on land.

Britain’s army overmatched anything the Americans could put in the field. The Americans had lots of guts, but an alarming lack of weapons, gunpowder and other supplies.

But when General Washington took over the Continental Army — and lost battles to his well-equipped enemy — he quickly realized that he didn’t have the assets to do more than wear down King George’s men by asymmetrical warfare and guerilla tactics.

So, after hotheads in Rhode Island and Massachusetts — never friends of British import duties, and habitual smugglers when they could get away with it — approached Washington with plans to arm several small ships to attack British maritime supply lines, he gave the go-ahead.

At first, only a handful of American privateers went out to sea, and they were up against Britain’s navy — the strongest in the world. But early on, the privateers scored stunning successes.

These “patriot pirates” seized the ships and cargoes of loyalist merchants, funneling much-needed supplies to the Continental Army and much-prized money into their own pockets.

Suddenly EVERYBODY wanted to be a pirate!

Fortunes to Be Made

On March 23, 1776, the Continental Congress passed an act that formalized the privateers. Over the course of the war, nearly 800 vessels were commissioned as privateers. Many of those were sunk or captured over the course of the war, but privateers are still credited with capturing or destroying more than 600 British and loyalist ships.

And with fortunes to be made some very familiar names got heavily involved …

   John Hancock, Boston’s richest merchant, served as president of the Continental Congress. He was also an organizer of the Boston Tea Party.

So it’s no surprise that he was in the privateering scheme up to his eyebrows. He arranged for one of his protégés to be named Congress’ prize agent in Boston, and that man quickly announced that all prize ships had to be settled and sold at “our worthy president’s wharf.”

Hancock made a nice cut off the millions of dollars in cargoes and ships the privateers brought to Boston.

   Nathaniel Greene was one of Washington’s best generals and a hero of the revolution. He also had a young wife who liked the finer things, and yet he was paid in Continental Dollars — a currency that lost 97% of its value over the course of the war. To keep his wife in style, Greene became a partner in a company that financed dozens of privateer vessels.

Revolutionary hero Paul Revere was one of the top investors in the privateer Minerva, which bagged a cargo worth $80,000. But fortune was fickle. Later, Revere joined a privateer raiding party that ended in defeat and disgrace, with Revere personally cited for “disobedience of orders and unsoldierlike behavior tending toward cowardice.”

   Robert Morris, the so-called “Financier of the Revolution,” had a hand in every significant strategic decision made by the Continental Congress. He also invested heavily in outfitting privateers.

   Benjamin Franklin and another American, Silas Deane, helped create a dummy French corporation for the American privateers; this company used privateer profits to help fund and supply the American Revolution.

Franklin also craftily used the privateers to stir up animosity between Britain and France. Ol’ Ben’s plan worked incredibly well, and laid the groundwork for France’s entry into the war after the Battle of Saratoga in 1777.

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The privateers were not liked by regular Navy men like John Paul Jones, but he was as prickly as a porcupine in a cactus overcoat, so the feeling was mutual.

And the fact is, the British had 100 ships of the line (the battleships of the day), while the Americans had none. The Continental Navy fielded at most 31 ships.

One of those, when captured by the British, was deemed too unseaworthy for anything but scrap. Bottom line — without the privateers, American sea trade would have been strangled, and the American Revolution along with it.

Luckily for the Americans, Britain’s Lord of the Admiralty was the Earl of Sandwich. Yeah, the same guy who claimed he invented the sandwich. He put off needed maintenance on the fleet, sent too few ships to deal with the rebellion, and generally dithered, delayed and denied the British navy the resources it needed to crush the colonial pirates.

When the Earl of Sandwich died, his detractors suggested that his tombstone should read: “Seldom has any man held so many offices and accomplished so little.”

The Americans had their own share of scoundrels along with heroes. Indeed, it was hard to tell them apart …

The Problem With Profits

The early profits sparked a “privateer rush” in America. But the profit motive was also problematic. American “patriot” financiers often charged Congress top dollar and delivered half of what they promised.

Some well-connected privateers of the American Revolution became very adept at funneling taxpayer dollars into their own pockets. Does that remind you of anyone today? Maybe the “pirates” who are running Wall Street banks?

Eventually, the seas between America and Europe became a hunting ground for “wolf packs” of privateers that preyed on merchant fleets.

Outraged, the Earl of Sandwich — better late than never — finally agreed to grant letters of marque (a license to kill and rob on the seas) to British privateers. A thousand British privateers joined the maritime melee.

The situation descended into chaos! Ships were snatched and captured back again multiple times on the same voyage. Insurance rates soared!

And those privateers had an effect. Total damage to British shipping by American privateers is estimated to be about $18 million by the end of the war, or just over $310 million in today’s dollars.

The sea of red ink began to take its toll on British support for the war effort. Captured supplies made their way to Patriot forces and, now better-equipped, the Americans started winning battles.

It all came to a head when France entered the war in 1778. The English realized they couldn’t fight wars in both Europe and the Colonies, and King George’s supporters lost control of Parliament. The king grudgingly agreed to America’s freedom with the Treaty of Paris in 1783.

The guns of Lexington and Yorktown are long silent, but there are four important lessons for investors today …

1. Seize Opportunities Early. Men who made some of the biggest fortunes as privateers jumped in the game early. Those who got in the game late almost always came to regret it.

2. Profits are a Powerful Motivator. If it weren’t for private enterprise, America’s high-seas rebellion never would have left port. Of course, that private enterprise involved stealing other people’s ships and goods, but nobody’s perfect.

3. Conflicts of Interest Cause Trouble. Scoundrels in the Continental Congress passed laws that put money in their own pockets, put their comically inept friends in positions of power, and generally abused their offices.

In other words, Congress hasn’t changed much over the centuries. And the Revolution’s version of Wall Street — the powerful financiers of Philadelphia and Boston — were the worst offenders. Most escaped punishment, which only led to further abuses.

4. Debt Can Lead to Bigger Problems. America ended the Revolution saddled with debt — $34 million ($710 million in today’s dollars).

It seems like a pittance now, but it was a constitutional crisis back then. America decided to pay its debts. I wonder what we’ll do with the record $22 TRILLION in debt we’re sitting on right now?

Let’s hope we do better than France. The debt that country racked up during the war became unserviceable, and France went bankrupt.  France spiraled into an economic crisis, which helped feed a revolution that followed America’s example. France’s King Louis went to the guillotine knowing the mob howling for his head was inspired by a war he’d financed.

There are some great books about the American Revolution and the privateers who were so essential to securing liberty. I’ll mention one: “Patriot Pirates” by Robert H. Patton. It’s a gripping read, full of colorful characters and exciting events, and I highly recommend it.

All the best,


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July 4th, 2019

Posted In: Wealth Wave

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