Colonialism has always been about who owns the capital. The colonizer owned it all. The colony owned no capital and, more important, had no means to produce it. The central bank in the colonizer’s state produced money and capital. Capital was transferred to the colony and had the same power and efficacy there as in the home country. What changed when colonies became independent nations? Could they establish banks and a national currency and create capital like their former colonizing country? Yes and no. Yes, their banks could lend money in their new currency and thus create capital but, no, they did not have the power to create the large amounts of capital necessary to start industries to compete with those already established in developed countries.The former colonies were forced by international financial practices to set the value of their currencies in direct relationship to what it was worth in pounds or francs or other monies of developed countries. The new free nations were set up as a new development of colonialism and they were still colonized in the sense that they still did not have the power to create most of the capital they needed and were forced to import it.
The government established in America in 1790 and that later located itself in Washington in the District of Columbia was not a fully sovereign government like those in Europe who became the masters of colonies. Washington had no central bank with the power to create the money supply for its union of 13 states. It was not a state it and it had no power to rule its 13 states as colonies. They were sovereign states and had granted Washington sovereignty only over the military and diplomacy. Thus it acquired new territories for its union of states not by ruling them as subservient colonies but by accepting them as sovereign new states of its union. Already the banking systems in each of the existing states were creating the money supply and thus the capital for America’s economic development. The banks of the newly admitted states became automatically part of the same banking system with the right just like the older states to create new money in the same currency, the dollar, which already existed. This was a completely new and revolutionary way to develop new territories. Territories that have been developed in any other way like those that were formerly colonies of European states can obtain the fully sovereign power to create their own capital only by becoming new states of the American union. Only by becoming an integral part of a highly developed banking system and a part of a well developed economy can they free themselves to create their own capital.
Daniel McNeill
Daniel McNeill’s books are shown at his author’s page.
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