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Authors: Murray N. Rothbard

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At this point there occurred another of the near misses at victory that were to stud this campaign. Carleton’s fleet, sailing down the St. Lawrence, reached American positions at Sorel, at the junction of the Richelieu and St. Lawrence rivers. Major John Brown managed to dupe the British into believing that great cannon were stationed at Sorel, thus convincing the British fleet to surrender on November 19. Canada could
have been conquered then and there, but the redoubtable Carleton slipped past the American lines, disguised in peasant costume, and managed to reach Quebec.

He reached Quebec just in time for the British cause. The Americans had decided to strike on two fronts; while Schuyler and Montgomery were to make for Montreal, another force was to march overland across an extremely rugged route through Maine following the Kennebec, Dead, and Chaudiere rivers to assault Quebec. The daring plan for the expedition had been drawn up by the restless Benedict Arnold, who, having won the support of General Gates, was selected by Washington to lead the expedition with the rank of colonel. The plan was a brilliant one, and Arnold was happily given a free hand. But time was growing short. The decision to go forward with the invasion was made in mid-August—and “General Winter” was near at hand.

There was no dearth of volunteers for the Arnold expedition from the bored and fretting troops in the army around Boston. The assembled force of over a thousand men consisted of ten companies of musketeers from New England and three companies of backwoods riflemen from Virginia and Pennsylvania. Working at breakneck speed, Arnold was able to assemble the troops at Cambridge on September 11. They set sail for the Kennebec from Newburyport, Massachusetts, on the nineteenth, reaching Gardiner on the twenty-second.

Arnold now organized his army into four divisions, the lead division of riflemen under the command of Capt. Daniel Morgan, head of the Virginia rifle company. It was Morgan’s task to clear a path for the army through the wilderness over the numerous carrying places. This giant, burly frontiersman, teamster, and veteran Indian fighter was to prove to be
the
great guerrilla fighter of the Revolutionary War. Overcoming incredible difficulties and hardships, Arnold and Morgan led their men to Quebec in one of the most famous marches in history, ranked by many with Xenophon’s. But tragically, Lt. Col. Roger Enos, in charge of the rear-guard division, decided to betray his post at the end of October and took his force back home, absconding also with the bulk of the scarce remaining food. Enos’ defection subtracted three hundred crucial men from the expedition, a loss that might well have spelled the difference between victory and defeat.

Still, Arnold and his gallant seven hundred might have taken Quebec. They arrived at Point Levis, across the St. Lawrence from Quebec, on November 9. The city was weakly defended, and a quick thrust across the river could have meant its capture. But high winds forced fatal delays in the crossing, allowing the highland Scot, Allan MacLean, who by sheer accident had learned of the Arnold expedition, to reach Quebec with one hundred men before Arnold could mount his attack. Finally crossing on
November 13, Arnold tried to provoke MacLean to leave the walls and fight, as Montcalm had done against the British over a dozen years before. MacLean sat tight, so Arnold, lacking men for a siege, went up-river to Pointe Aux Trembles to wait for Montgomery.

But the months of delay were now taking their toll, and the terms of enlistment of Montgomery’s troops were about up. He was left with only 800 men, and after leaving garrisons at St. John’s and Montreal, he could join Arnold with only 300, making a total American force of 1,000 before Quebec.

Montgomery and Arnold now found themselves besieging a city where 1,800 men had been mobilized, and with soldiers whose terms of service expired at the end of the year. The Americans were therefore forced to strike quickly. But the number of men was now too few, and the decision for coordinated surprise attack by the two leaders was betrayed to the enemy by deserters.

Two columns struck at Quebec on the night of December 30. Trying desperately to rally his column, the gallant Montgomery was cut down. The rest of the force promptly retreated in a rout, despite efforts of the brilliant young volunteer, Capt. Aaron Burr, son of the president of the College of New Jersey at Princeton, to rally the troops.

The collapse of the Montgomery column left the British free to concentrate on Colonel Arnold’s force. Arnold was wounded in the attack, but Morgan, taking command, braved countless bullets and crashed the barrier. Morgan’s every instinct was to strike while the iron was hot and the British were in panic, but unfortunately, he complied with the advice of his officers against any further advance. If not for this amorousness, which Arnold would certainly have overridden, Morgan might well have seized all of lower Quebec. The delay proved fatal.

Now surrounded by the British, the undauntable Morgan offered to personally cut a swath through the British troops to gain an escape route, but the other officers refused. Instead, they decided to surrender. Morgan, completely alone and personally surrounded, steadfastly refused to surrender until the very end.

The battle of Quebec had been absolutely disastrous for the Americans, and most of the finest leaders in the American army were put out of commission. Allen had been captured, the great Montgomery was dead, Morgan was captured, and Arnold was gravely wounded. The brave Kennebec marchers were wiped out, with one hundred casualties and four hundred taken prisoner. Even so, Arnold, now a brigadier general, issuing orders from a hospital bed, refused to give up, and his few hundred half-starved men lay futile siege to Quebec for the rest of the winter.

For his noble efforts, Arnold once again received mainly humiliation;
He had asked for Charles Lee or someone like him to take command and lead the assault, but when reinforcements came in early April 1776, he was replaced by craven commanders who abandoned the siege. Now he moved disconsolately behind the lines to take charge of the occupation of Montreal.

At this strategic moment, in early May 1776, Carleton surged forth from Quebec with nine hundred men to rout the American forces. In early June, New Hampshire’s Gen. John Sullivan was appointed commander of the forces in Canada. Sullivan was as bold as Arnold and Montgomery but lacked their brains. Now that strategic retreat was called for, Sullivan, on June 7, rashly launched an attack against the town of Three Rivers on the St. Lawrence. The result was collapse. Two hundred Americans (including the leader of the actual attack, Gen. William Thompson, commander of one of the Pennsylvania rifle regiments) were taken prisoner. Faced with the crushing defeat at Three Rivers, Sullivan had had enough, and he proceded to beat a hasty and ignominious retreat. Rushing back from Canada and abandoning all positions there, the American forces returned to Ticonderoga in early July 1776.

Thus ended the American push against Canada, a tragic and disastrous failure. Yet, few campaigns in military history have been so marked by so many hairline turning points: the delays of Congress and of Schuyler bringing on winter weather and the end of American enlistment terms; the failure of Brown to meet Allen; the melodramatic escape of the formidable General Carleton from capture by the Americans; the decimation of Montgomery’s army by the end of enlistment terms; the desertion by Colonel Enos; the high winds delaying Arnold’s crossing of the St. Lawrence; the accidental discovery by MacLean of Arnold’s advance; the hasty attack on Quebec impelled by the end of enlistment terms; the killing of General Montgomery and the subsequent rout of his column; the wounding of Arnold and subsequent hobbling of Morgan’s advance; and the replacement of Arnold the following spring. Some of the most daring and progressive leaders, those most sensitive to guerrilla-type warfare, had been lost: Allen, Morgan, Montgomery, Thompson. The inordinately expensive campaign had succeeded in losing 5,000 American troops to death and capture. And Canada was lost forever.

10
Paper Money Financing

Armies, especially European-style armies, have to be systematically financed, and it was up to the Continental Congress, which had assumed responsibility for the Continental Army, to decide on its financing. The financing of an activity by any organization may be either voluntary or compulsory; and the anarchically formed revolutionary bodies in the separate colonies, as well as the Congress, were now spontaneously constituted bodies, teetering on the edge of becoming governments. Whether they would become governments or not depended largely on how they would finance themselves, for the mark of government, the feature distinguishing it from all other organs in society, is that it finances itself by compulsory levy rather than by voluntary gift or purchase of service.

The Continental Congress, however, was in a bad spot. A purely guerrilla force might well have been naturally financed by voluntary contributions—in money and in kind—on the spot. But to finance regular armies on a centralized basis from voluntary contributions was completely outside the ken of the world at the time. On the other hand, it was out of the question for either the Congress or the local revolutionary bodies to impose
taxation,
the usual method of financing governments. Much of the thrust of the Revolution after all was against taxation, and the spirit of liberty among the American people was too strong to succumb immediately to similar taxation at home. Americans were in the throes of an anarchic uprising against their “legally authorized” government and its taxation. They were not yet prepared to slip on a new tax yoke in the cause of breaking the grip of the old. Later this would occur, but not yet in 1775. Furthermore, Congress had no power to tax, no power to impose
its will on the separate colonies or the people therein.

One time-honored method of evading and postponing the point of coercion is to borrow the needed money—a method seemingly voluntary, but resting on the pledge of future coercion (taxes) to provide repayment. The Congress began tentatively in mid-June 1775 to move toward borrowing by appointing a committee to consider borrowing 6,000 pounds sterling for supply of powder, a loan which Congress would undertake to repay.

At this fateful crossroads Congress hit upon a device, coercive but seemingly painless, a device that the British colonies had pioneered in the western world, the issue of paper money. Paper issues fraudulently pretend to be equivalent to units of specie and are used by the issuer to bid away resources in society from the producers and consumers, in the process depreciating the money unit itself. Its nature and consequences are equivalent to the process of counterfeiting.

Historians who believe that paper money agitation is invariably the product of the lower classes or of impoverished farmers might well ponder the identity of the man who led the Continental Congress down the primrose path of paper money, a young scion of the New York landed aristocracy, Gouverneur Morris. The highly conservative Morris, grandson of Lewis Morris, royal governor of New Jersey, was delegate to the Congress from Westchester County.

Once paper money was decided upon, the next decision was whether each colony would be responsible for eventual redemption of its proportion of issues—for everyone recognized that paper money would only circulate if some sort of redemption were pledged for the future. This would mean that each colony would stand on its own bottom, and one of the advantages of Continental paper for the northern colonies was inducing the other colonies to take on some of the former’s financial burden. Hence Massachusetts and New Hampshire, on the firing line, were understandably eager to foist their expenses onto the shoulders of the other colonies. Finally, on June 22, Congress decided to issue $2 million in paper, or “bills of credit,” a sum that was soon to be rapidly expanded. Each colony, it was decided, would be pledged in seven years to redeem a pro rata share of the common Continental issue, based upon its relative population; but significantly, all the colonies were pledged to redeem any default by a particular colony. Redemption was to begin at the end of 1779. The process, however, was not envisioned as genuine redemption in specie, but merely the levying of taxes in Continental paper itself, which would then be used to retire the paper. In short, the redemption charted by Congress would not give hard-money backing to the new paper dollars; the bills would not be redeemed but retired. The prospect was only of a massive tax burden in a few years, which would
be superimposed upon the previous “tax” burden imposed by paper inflation.

In short, the seemingly inexhaustible fount of new Continental money had begun, and an insistent clamor soon arose for ever greater shares in the new bonanza. As Edmund Burnett phrased it, “Such was the beginning of the ’federal trough’, one of America’s most imperishable institutions.”
*

From the very start, the Continentals followed the sociological law that, once turned on, the engines of paper inflation accelerate as the clamor mounts for shares in the new cornucopia. By the time the $2 million were ready to emerge from the press in a few weeks, Congress had already concluded that the issue was insufficient. By the end of July, another $1 million of new money was authorized. What, after all, was to be the criterion for halting the money engine? Before the end of 1775, a full $6 million in three issues of new paper were issued or authorized. This issue for the year contrasted with a total money supply of approximately $12 million at the beginning of the war—a 50 percent increase in the money supply in less than one year!

Congress had no power to make its notes “legal tender” (compulsory for creditors to receive in payment of debts), but Rhode Island in 1775 pioneered in making the Continental paper legal tender for all debts in the province. Furthermore, any person refusing to accept these notes as equivalent to real specie dollars was to be denounced as an enemy of his country who “should be debarred from all communication with good citizens.”

The separate provinces themselves were not to be denied use of the new bonanza. Even before Congress acted, during May 1775, embattled Massachusetts, Connecticut, and Rhode Island voted their own paper issues. At the end of June, the Massachusetts Provincial Congress rashly made not only its own bills legal tender, but also those of all colonies. Anyone refusing to accept any of the notes at par with specie would be deemed an enemy of his country.

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