A major gripe of the American colonists against the British in the run-up to the American Revolution was over economic policy. The philosophy of the British was that Americans should provide the mother country with raw materials at a reasonable price and buy finished products in return. The British statesman William Pitt the Elder went so far as to declare that “…if the Americans should manufacture a lock of wool or a horse shoe,” he would “…fill their ports with ships and their towns with troops.” This led to a somewhat bizarre situation in which an American who wanted to wear a hat made of an American beaver pelt could only buy it after the pelt had been shipped to England, turned into a hat, and shipped back to America to be sold.
Professor of Economics at Wesleyan University and author of WRONG: Nine Economic Policy Disasters and What We Can Learn from Them, Richard S. Grossman is sharing seven little-known facts about economic disasters all this week on Tumblr.
Image credit: Oil on canvas portrait of a seated w:William Pitt, 1st Earl of Chatham, also known as William Pitt the Elder. From the National Portrait Gallery, UK. Author, studio of w:William Hoare via Wikimedia Commons.