Cody asked in Arts & HumanitiesHistory · 9 years ago

How was the Revolutionary War financed?

Where did the money come from for Britain and colonists to fight the war? Britain was still in debt from the French and Indian War and the colonists were still a young almost-country, so where did money flow from?

9 Answers

  • 9 years ago
    Best Answer

    ~The colonial civil war (it was not a revolution) was financed on behalf of the rebels from sources abroad. The British debt from the Seven Years War, including the minor theater of that war in North America called the French and Indian War was devastating. To relieve the onerous tax burden on the folks at home, Parliament called on the colonials to pick up some of the tab incurred on their maintenance and defense and, naturally, the rebels balked. Taxes and borrowing are the engines on which governments run, then as now.

    The rebels never enjoyed much support at home. In July 1776, about 20% of the population supported the movement for separation and independence. Spain, France and the Netherlands will still a little sore about the losses of colonial empire they had suffered in the Seven Years War. When Benedict Arnold and Horatio Gates defeated John Burgoyne at the Battles of Saratoga and forced the capitulation of his entire army, France saw her chance to recoup some of those losses. She declared war on Great Britain. As importantly, France convinced the Netherlands and Spain to do the same, and forged an alliance with Prussia whereby the Prussians would declare war on the British if they, the Brits, attempted to land troops on the continent. At that point, the colonial insurrection became a small part of a global war. Parliament devoted the bulk of British troops and British funds to theaters and regions far more important to the Empire than the North American colonies. British armies (and navies) dispatched to put down the colonial rebellion was always undermanned, underpaid and ill equipped. The theater was simply not important enough in the overall scheme of things on which to waste precious assets and resources. In spite of those facts, support in the colonies for the cause never exceeded 33%. That naturally ignores the Canadian and Caribbean colonies. When asked to join the treason, those colonists flatly refused.

    The colonial rebels were financed mainly by the Netherlands, at the time the leading world bankers. France and Spain kicked in and without the 100,000 or so muskets and bayonets provided by the French, the Continental Army would have been virtually unarmed. When Admiral Francois Joseph Paul, Compte de Grasse, defeated Admiral Sir Thomas Graves at the Battle of the Chesapeake, France won the war for the colonials. Not only did de Grasse close off the Chesapeake to British ships and preventing the resupply, reinforcement or evacuation of Cornwallis and his army - approximately 40% of the British strength in North America, but he also landed an entire division of of French regulars under Maj. Gen. Marquis de St. Simon to join the French army of Jean-Baptiste Donatien de Vimeur, comte de Rochambeau. The combined French forces were the largest unit in the field, outnumbering both Washington's Continental Army and companion militia as well as Cornwallis' British, loyalist and allied forces. Meanwhile, Admiral Jacques-Melchior Saint-Laurent, Comte de Barras, in a remarkable piece of sailing for the day, had broken off his engagements in the Caribbean, leaving the Spanish fleet to mop up there, and met de Grasse's fleet in the Bay. With him, he brought the artillery that decided the Yorktown siege. More importantly, Washington's Continental Army was a shambles. The men hadn't been paid, were low on food and had no supplies and little ammunition. Desertions were rampant and yet another mutiny was imminent. De Barras brought with him hard French and Spanish currency that was turned over to Washington, probably salvaging the very existence of the Continental Army in the process. The French weren't there out of any love for the rebels or their cause. They were there to beat the British and to recover the empire they had lost in 1767.

    Ben Franklin said that the Currency Acts more than anything else led the rebels to secede from the empire. Actual hard currency was always scarce in the colonies. The colonial smugglers like John Hancock and Sam Adams and the tax cheats like Patrick Henry and George Washington were always cash poor, as were the legitimate colonial businessmen. To pay their debts, those owning to fellow British businesses and banks as well as to they empire enemies with whom they regularly dealt - even in war goods even during time of war - they needed a cheap out. The colonies printed money and gave bills of credit. This specie was backed by nothing and the value rose and fell with the tide. The combination of the depression and recession occasioned by the Seven Years War together with the worthless colonial currency forced Parliament to enact sound and sane fiscal policy. The term "not worth a Continental" was coined long before Lexington and Concord and the currency acts essentially prevented the colonies from printing their own money, thus requiring the colonials to pay their bills with something of actual value. This led to runaway bankruptcy among the colonial elite. As Adam Smith noted in "The Wealth of Nations" colonial paper money was nothing but "a scheme of fraudulent debtors to cheat their creditors".

    The currency acts were mostly repealed or largely modified to the point of being meaningless, but the colonial free ride had ended and the wealthy colonials were finally forced to pay debts with something of value approaching the amount due. This was not well received. Even before "declaring independence" on July 2, 1776 by passing the Lee Resolution, the Second Continental Congress (a self pro-claimed de facto government that was never elected or authorized by a majority of the colonial citizenry) returned to the good old days and began printing useless money in earnest. They printed bills so fast and furious that they couldn't retire them by redeeming them or taxing them into retirement. Speculators such as Abigail Adams (John didn't quite grasp the concept and rode his wife's petticoats to his fortune) bought them up at a fraction of their face value and later redeemed them at par from the fledgling government once independence was granted. Eventually, the government redeemed them at about 4% of face value, but not before the speculators had made their killings. Ben Franklin called the losses suffered by those who accepted the 'currency' in good faith "taxes" to pay for the war. I guess things were different now that he was dishing it out rather than on the receiving end.

    Colonial goods such as furs, lumber, corn, wheat, tobacco, rice and indigo were traded on international markets, as were flour and grain. Manufactured exports, such as cloth and leather, naval stores, iron goods, were less prevalent. Income and tariffs from such goods helped defray some of the costs of those waging war. Militiamen were not paid until their enlistments were completed. The large scale desertions within the militia saved untold sums. Scavenging and foraging supplemented the food and clothing supply and the capture or enemy arms, horses, wagons, cannon, tents and the like helped immeasurably in provisioning and supplying more than a few units. On the British side, troops were poorly paid (one major reason the colonials resented the stationing of British troops in the colonies was that the enlisted men often had to take a second job to make ends meet and they competed with the locals for the scarce jobs, thus keeping wages low) but they were paid by taxes raised throughout the empire - but mostly on the British Isles. The patriots who remained loyal to the government were paid from British coffers but loyalist militias more often than not had to fend for themselves, although some did receive token payment from the government.

    The colonies were not a young country. They were part of the Empire and the colonials were British citizens. Foreign immigrants frequently applied for and received British citizenship in order to emigrate to the colonies where they enjoyed the rights, privileges and freedoms of British subjects - and those in the colonies were enjoyed more rights, freedoms and personal liberty than the homeland British because Parliament elected to pursue the misguided and suicidal policy of Salutary Neglect for decades. Independence was not attained until it was given to the colonies by Great Britain via the Treaty of Paris in 1783. At that time, thirteen new nations were created. The Continental Congress never pretended to be a national government and it relied on the cooperation of the individual colonies (or states - nation states) in order to function. The civil war was not intended to, and did not, create a unified nation consisting of the former colonies. That fact not only made prosecuting the insurrection a difficult task, but made it nigh impossible to finance it. Militarily and financially the movement would have collapsed but for the intervention of the French, Spanish and Dutch.

    • Moriarty
      Lv 7
      5 years agoReport

      I wouldn't, Brian, as it's actually thoroughly well researched and not from the hilarious American version of history that seems to whitewash the sections that doesn't paint the country in a "heroic" light.

  • 9 years ago

    At the end of the Revolutionary War, the country was $25 million in debt to other countries and to wealthy persons who loaned much of the money that financed the War (when the government assumed all the debts it came to 79 million dollars, but assumption is another day). The Dutch, now Holland, but then called the Republic of Batavia loaned Robert Morris, "The Financier of the Revolutionary War," almost $13 million. The balance of the money was loaned to the United States by other countries such as France and Spain, all enemies of England. The Continental Congress also floated promissory notes, promising to pay the buyer face value at the end of the War.

  • Anonymous
    4 years ago

    This Site Might Help You.


    How was the Revolutionary War financed?

    Where did the money come from for Britain and colonists to fight the war? Britain was still in debt from the French and Indian War and the colonists were still a young almost-country, so where did money flow from?

    Source(s): revolutionary war financed:
  • Anonymous
    9 years ago

    Britain kept taxes at home high after the French and Indian war and by the time The American Revolution came to an end they were near bankruptcy owing money to Germany and Russia.

    The Americans borrowed heavily from the French and Denmark where John Adams and Ben Franklin and a few others were able to secure financing through loans and trade.

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  • 9 years ago



    The Netherlands.


    all enemies of Britain during the war, paid for or lent money to finance the colonist war effort.

    In Britain, taxes on luxury goods were increased, and the Land Tax (a major source of finance during wartime) was reintroduced, as it had been during the Seven Years War. Deficit spending through loans to the government from the Bank of England (which could be paid back over an extended period) was the main source of finance for Britain during the war.

  • Anonymous
    9 years ago

    paper money, Promissory note

    lead to the phrase "Not worth a continental"

    big problems paying off the debts after the war.

    lots of American history

    Big arguments about central banks and who gets to print money, government or private bankers

    WW II paid for with promises and government price controls

    Washington's army almost starved to death at Valley forge

    Most wars are run on credit

    Source(s): general history
  • 5 years ago

    WHEN Washington Ran out off money to pay "the voluntaries" ONLY Cubans from Santiago de Cuba, the Cuban LADIES give Jewel y voluntaries to figt in Revol Army and Navy. USA FORGOT , damm

    • J R M5 years agoReport

      One cuban owas Com. in the Ship SANTIAGO DE CUBA
      another mayor in the Army. (COLONIES INDEPENDENCE WAR!!) jrm

  • 3 years ago

    Financier Of The American Revolution

  • Anonymous
    5 years ago

    Apply now for your business and christmas loan.

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