The Power and the Money

Economic history is hard

Lyman Stone has a post up about population growth in the Caribbean. It’s interesting stuff; worth reading. But it suffers from a historical mistake.

I am hesitant to point out this mistake because Lyman has recently been beaten up by a bunch of rather rude people who appear to be deliberately distorting his argument about the recent American (and French!) fertility decline. So I will endeavor to be neither rude nor deliberately distorting. 

As part of a broader discussion of Caribbean population trends, Lyman uses British migration restrictions to test the effect of migration controls on West Indian population growth rates. He identifies two points where migration was restricted: the date of independence and the Nationality Act of 1981.*

The problem is that neither independence nor the 1981 act had any effect on the ability of West Indians to migrate to Great Britain. 

The U.K. first imposed migration restrictions on the West Indies in 1962. The Commonwealth Immigrants Act said that only U.K. citizens with passports issued in Great Britain or Ireland could freely enter the U.K. If you were a “Citizen of the United Kingdom and Colonies” but your passport had been issued by a Commonwealth government, even one still part of the British Empire, you were subject to restrictions. And those restrictions were pretty draconian: you needed either a work permit or the ability to show that you could support yourself without working.

The U.K. migration data is a mess, but taking the Home Office statistics for annual net migration (in thousands) at face value (page 10) indicates that it was pretty effective. The below chart puts a vertical line at 1962. Net migration from the West Indies surged in ‘61, as people rushed to beat the new law. It then collapsed in ‘62 and ‘63 and remained low thereafter.

Moreover, the Nationality Act of 1981 had no effect on the ability of West Indians to migrate to the United Kingdom! That freedom had been removed in 1962. Rather, all the 1981 act did was take the class of U.K. citizens who were not allowed to live in the U.K. and rename them British Dependent Territories citizens. They could not freely move to the U.K. before and they could not freely move after. (In 2002, the Blair government finally granted all Dependent Territories citizens full British citizenship.)

If you really want to see if migration restrictions affected population growth rates, then you want to use 1962 for your test, not independence or 1981. 

What if America had been unpopulated in 1492?

The long Twitter debate between Pseudoerasmus and Gabe Mathy was triggered by an essay in Jacobin by my friend and colleague Suresh Naidu. He wrote a piece about what North America would have been like had the native population avoided decimation from infectious disease.

As a piece of counterfactual history, the essay has problems. The first is that we really do not know the pre-contact population of North America. Using his assumption of 0.5% population growth thereafter, we get a range of 26 million to 234 million native Americans today. Needless to say, those are radically different scenarios. The second is that the presence of large-settled native populations would have changed the dynamics of later immigration; would as many Europeans have arrived if North America had 45 million people in it around 1800? Finally, it seems likely that a large native population would have derailed the development of the institutions that sustained rapid North American economic growth. 

But as a polemic, the essay is quite successful. The latter two arguments unambiguously strengthen Suresh’s overall point, which is that there was nothing inherent in English culture that insured that its settler colonies would become rich and democratic places. The presence of an exploitable settled population would have permanently derailed the American experiment. Pseudoerasmus and Mathy were debating whether the English would have created an apartheid scenario (Mathy) or something more like Mexico (Pseudoerasmus). Neither seemed to doubt that the resulting society would be more oppressive and less democratic than what really emerged in the northern United States and Canada. Nor does Randy McDonald in his discussion of the piece. 

The essay raises an interesting question, however. If larger native American populations would have prompted the creation of a more extractive and generally nastier North American state, potentially with multiple rounds of civil war, what would have happened if there had been no native Americans when the Europeans first arrived in 1492? What would have been different?

It turns out that James Axtell was there in 1987.

First and foremost, Spanish colonization changes completely. Without the great civilizations in the highlands of Mexico and Peru, the Spaniards take much longer to move inland. Without the Taíno in the Caribbean, it is entirely plausible (albeit unlikely) that the Spaniards give up on the whole enterprise. Still, somebody would eventually set up Caribbean and Brazilian plantations based on African slavery but Mexico and Peru will remain backwaters. Nobody settles in the Río de la Plata until the 19th century. (And I suspect that it will be British settlers who land there, claiming it from a moribund Spanish empire.) With no silver fleets there is no Sir Walter Raleigh and his tropical adventures. So no British Guyana, just a vague area where Venezuela meets Brazil. Ditto, there is no French empire in Canada. No fur trade, no New France. 

Second, when the British finally do settle the eastern seaboard, later than in our world, their expansion is slower and messier. There are no American domesticated food crops. There are no native American agricultural techniques to learn. And with no seasonal burning by the native Americans, the forests are that much harder to clear. There is no native American medicine. No snowshoes. No toboggans. No longhouses. No canoes. And idiotic English hunters crashing around in bright colors and scaring off the game. In short, the colonists will have to invent a lot of wheels for themselves that in our world they got from the Native Americans and that is going to slow initial settlement by a lot, decades at the very least, possibly a century.

New York and Pennsylvania in particular will develop more slowly; without the profits from the Indian trade, it will be much harder to raise capital for settlement. North America will be even more skewed to the slave south.

Third, no independence until well after 1776. Once the eastern settlements are finally established, expansion is going to rocket westwards with no Indians, French, or Spanish to slow it down. Slaves will get sucked into the south even faster, but there will also be more escaped slaves lighting out to form colonies in the interior. Axtell postulates, plausibly but without a whole lot of solid evidence, that absent the Indian threat American society would be a lot less religious and lose its “garrison mentality.” In his words:  “The jeremiads of New England would certainly have been less shrill in the absence of the Pequot War and King Philip’s War, when the hostile natives seemed to be ‘scourges’ sent by God to punish a sinful people. Without the military and psychological threat of Indians within and without New England’s borders, the colonial fear of limitless and unpredictable social behavior would have been reduced.”

With much more evidence, he also postulates that with no wars, there is no need for Britain to raise colonial revenues. Nor is there any reason for Britain to restrict westward expansion. That is probably enough to head off the Revolution. And if later revolts should occur, the colonists will have two huge problems. First, they will be more separated from any martial habits. No militias, no real combat experience, just a vasty totalitarian infrastructure of slave catchers. Second, they will have no Indian opponents from which to learn guerrilla tactics. 

So by 1850 you have a British slave empire that sprawls over the entire continent, well into northern Mexico. (Who knows? Maybe it will British Americans heading south who discover the mines in Zacatecas and exploit them with slave labor.) The northern reaches will not have slavery, for the same reasons as in our world, but they may be less religious and less moralistic, more crassly commercial and more dominated by large landowners. 

You have a Caribbean and a Brazil that do not look entirely unlike our own ... but which have less European settlement. (With no natives to conquer and no native women to marry, Iberian migration will be slowed.) You have growing slave populations around the Mexican lowlands, parts of Central America, and possibly parts of the Peruvian coast ... but I would venture not much in the latter. There is no Panama Real or Camino de Cruces across Panama; those routes, primitive as they were, were constructed by native American slaves captured from Nicaragua.

American silver was less important to sustaining Spanish imperialism in Europe than many realize, but there will be no Price Revolution or Columbian Exchange ... and that will change Europe in unpredictable ways. 

But in America, well, things look ugly. If a Revolution does come, it looks likely to take the form of a Treasonous Slaveowner’s Rebellion against the Crown, but that assumes that a British government unexposed to the shock of the American Revolution will be as open to the movement of public opinion as our own. This British crown might not take any serious moves against the horror, and thus provoke no rebellion. The strain of New England moralism that produced abolitionism in our world might be weaker, or not there at all. 

How Canada stopped being British

Montreal is a fascinating place. And so, in honor of being here, a few random Canadian posts.

You may be aware of the recent Australian citizenship kerfuffle. Basically, the Australian constitution prevents anyone with double-citizenship from holding public office. The exact phrase is, “Is under any acknowledgement of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or citizen of a foreign power.”

That is a little weird. As is the fact that the Australian high court held that it was enough to be eligible for foreign citizenship. Weirder still is that people appear to have only recently realized that this clause exists, and so a number of politicians have had to resign.

But what really struck me was the identity of three of the four “foreign powers” causing the trouble: New Zealand, Canada, and Britain. (Plus Italy.) None of these were foreign in 1901, when the Australian constitution was written. Anyone born in Canada, Australia, New Zealand, South Africa, or Newfoundland was a natural-born British subject. (The link goes to the British Nationality Act of 1914, versions of which also passed in all the Dominions.)

Today, though, Australian law treats all the former dominions (including Ireland, which was grandfathered in at independence) as completely foreign countries. Since 1984, Commonwealth citizens have had no benefits in Australia, although they are still allowed to vote if they arrived before that year. In Canada, Commonwealth citizenship also confers no benefits of which I am aware. In the U.K. itself, there are a few.

So, in honor of the fact that I am in Montreal, when did Canadians stop being British? Well, the short answer is 1946, when Canada passed the Citizenship Act. Except that is not quite right! The separation started earlier and took longer to complete.

The Canadian government first limited the right of Britons to settle in Canada in 1910, under the Canadian Immigration Act of 1910. The act allowed the government to deport immigrants who were “unsuited to the climate or requirements of Canada” or who had traveled courtesy of a charitable organization. The first requirement was laser-aimed at black Americans; the second at poor Britons. The act introduced the phrase  “Canadian citizen” which included “a British subject who has Canadian domicile” but which also made it clear that such domicile was not automatic. 

Ironically, the Canadian attempt to discourage Britons from emigrating flipped to encouragement after WW1, when the Empire Settlement Act of 1922 authorized Parliament to spend up to £3 million per year, the equivalent of roughly C$167 million today. Canada wanted Britons, you see, but only the right sort of Briton. 

In 1921, the Canadian Nationals Act defined Canadian nationals as British subjects who were born in Canada or who legally resided in Canada for more than five years. Weirdly, anyone naturalized in Canada would become British subject able to freely move to Britain, but being a British subject did not mean that you automatically had the right to move to Canada. 

So there was a de facto Canadian citizenship in place well before 1946.

Moreover, the special place of British subjects did not disappear after 1946. British subjects could still vote in Canadian elections after only one year of legal residency. In fact, British subjects Commonwealth citizens didn’t lose the right to vote in federal elections until the Canada Elections Act of 1970; even then, they could vote in provincial elections in B.C. and Ontario until 1985, New Brunswick until 1999, and Nova Scotia until 2006. (See pages 12-13.*) 

The slow distancing of Canada from the United Kingdom seems to have been an entirely unplanned thing. I would have thought that Québécois opinion had a lot to do with that, but I would be wrong. London just kept handing off autonomy to its North American colonies bit by bit. Each bit of devolution became harder to reverse. Moreover, London refused to graft any institutional meat onto the rotting bones of its Empire, forestalling any chance that the Commonwealth might turn itself into something like NATO or the E.U. or even a glorified free trade zone.

My current hypothesis is that the key decision was to grant the Dominions the right to set trade policy. Once they had that, they had interest groups that would refuse to reverse integration in that key sector. Add to that a very understandable reluctance to get the colonies to contribute towards their own defense and you had nothing but straight decline into irrelevance. In other words, socialist beer destroyed the British Empire.

Still, it is sort of amazing just how weak the links have become between the U.K. and its settler colonies, the ones that didn’t fight a war of independence.

* Willem Maas, “Access to Electoral Rights Canada,” Access to Electoral Rights Report RSCAS/EUDO-CIT-ER 2015/9 (July 2015). 

No, a British victory in the Revolutionary War would not have ended slavery early

July 4th is upon us, and here we go again with a bunch of “The American Revolution was a mistake” posts. Now it’s Dylan Matthews at Vox, giving us three reasons why 1776 and all that was a “monumental mistake.”

Reason number one? “Abolition would have come faster without independence.” His evidence for this? Well, only that Parliament in fact abolished slavery in 1833. 

So lets look at that abolition for a moment. The British parliament voted to raise £20 million in bonds to compensate slaveowners in the West Indies and South Africa. The Abolition Act valued slaves at their average price in 1822-30, using a database of 74,000 transactions. They then divvied up the £20 million among all the colonies according to their proportion of total slave value. Across all the islands of the West Indies, that came to 780,993 enslaved people valued at £58 each, for whose freedom slaveowners received £26 per person. (Actual valuations varied from £115 in British Guiana to £27 in Bermuda.)

This brings us to the first problem facing a hypothetical British Empire contemplating abolition: using the same methodology, North America possessed 2.1 million slaves in 1833. Using the same methodology as the Abolition Act, that would have cost British taxpayers an additional £53 million pounds, on top of the £20 million for the West Indies. 

How much was £73 million? Well, the entire nominal GDP of the United Kingdom came to only £440 million in 1833. More relevantly, perhaps, total public spending came to only £51 million. Financing an additional £50 million in bonds at 3.4% would have cost £1.8 million per year ... almost 4% of all public spending. In the abstract, that was easily affordable ... in the concrete, the additional expense could have sunk the bill.

But there is a second problem. Slave prices in the West Indies were sinking in the 1820s along with the price of sugar, which dropped (net of shipping costs) from 2.3p per pound in 1818 to 0.8p per pound in 1829. (Prices are contemporary, but expressed in modern decimal values. Data from Robert Martin, Statistics of the Colonies of the British Empire, 1839, Appendix p. 3.) There were exceptions, of course: slavery was booming in Trinidad and British Guiana. But in general slave prices were declining across the West Indies and British policy prevented slaves in declining areas (like Jamaica) from being sold on to booming places. Barbadian slave prices, for example, fell by half between 1823 and 1831. (Table 5.)

That is not to say that the British planters supported abolition: slavery was obviously more profitable to them than free labor would be. (J. R. Ward looked into that back in 1978.) It is to say that they were willing to accept compensation at 44% of the average market price because market prices were falling fast.

Contrast that with the southern United States, where the cotton boom was just getting started. By 1833, the South was starting a prolonged cotton boom driven by exploding British demand for cotton textiles. In addition, American slave populations were growing fast. Combine the two and you have rapidly growing wealth tied up in slaves:, expressed below as a percentage of the U.K. GDP:

It doesn’t take a political scientist to realize that the politics of abolition are going to look very different in the above world. West Indian interests reluctantly capitulated to compensated abolition; North American slaveowners are going to fight a lot harder. Any compromise is going to result in a much higher compensation per slave than the West Indian slaveowners received. 

We then add the third problem: in the 1830s, cotton is a strategic crop. Sugar is nice; cotton drives the U.K. economy. It is the oil of the day. Politicians could contemplate a disruption of sugar production in the West Indies with equanimity. After all, the product is available from elsewhere and who cares if it comes from within the Empire or outside? Those same politicians could not easily contemplate a reform that might disrupt the flow of cotton to British textile mills. 

Fourth, we have to think about how American independence was avoided. There are basically two scenarios: (1) British diplomacy avoids conflict, and (2) Britain wins on the battlefield. Scenario (1) implies that the British government accepted that it could not tax the American colonies. Scenario (2) implies that the U.K. repeals most or all of its exactions on the American colonies. Both make it unlikely that the U.K. would impose taxes on North America to pay for the freeing of North American slaves.

An abolitionist U.K. government will face a Hobson’s choice. They can abolish with insufficient compensation, even if it could get such a bill through Parliament — which is unlikely — they would risk triggering a revolt by Southern planters. The British Empire could probably win such a revolt (strangling Southern commerce and trying to mobilize Northern armies), but no government would take such a threat lightly. They can abolish with sufficient compensation — which would be extremely expensive and risk triggering a planters’ revolt regardless. Or they can ignore public opinion (10% of the British population signed an anti-slavery petition) and hope the problem goes away.

The problem is that the longer Parliament waits, the less tractable the problem becomes. 

 

It is certainly possible that the British Empire would have abolished slavery earlier than the United States. Johnny Pez has a post showing the roots of how that might happen in a world where Britain defeats the Continental Army. (He is currently engaged in a magisterial project of re-writing For Want of A Nail, by Robert Sobel. It promises to be awesome.) 

But the British Empire was ruled by human beings. And those human beings would have faced a situation where their medium-term political and economic self-interest conflicted with their morals and long-term interests. The result, I suspect, would be delay and half-measures, with a high likelihood of ending in a war. 

The American Revolution might have been a mistake. But it is probably not because the horror of slavery would have ended much sooner. 

Was Sykes-Picot treacherous?

 I used to go to the Middle East a lot. But then stuff happened. I got disinvited by the government of Bahrain, wound up on Hezbollah’s side of a debate over energy policy in Lebanon, and experienced a surprisingly less-than-warm trip to Israel. Plus, the one time my wife and I get to Dubai, the Burj was closed! These days I have not been travelling there as much.

But this is the 100th anniversary of the Sykes-Picot. So let’s visit the agreement. In the Arab middle east, Sykes-Picot is usually used as a shorthand for the European carve up that laid out the modern borders of the region between Turkey and Saudi Arabia. (Inasmuch as those borders still mean anything.)

But Sykes-Picot, in fact, laid out a rather different plan from the borders that actually emerged, as the below map shows.

Well, the map sort-of shows the agreement. You need to read the text of Sykes-Picot to really make sense of it. In essence, it worked as follows:

1. There would be an Arab state encompassing both area A and area B on the map. France and Britain would each retain preferential rights in A and B respectively, but those rights were economic, paralleling the Anglo-Russian Entente in Persia:
   • Preferential investment rights;
   • Limits on the presence of advisors to the Arab state from the other country.
2. France and Britain would engage in separate negotiations with the Arab state over their “direct or indirect administration or control” of the territories colored blue and red. 
3. The brown area around Jerusalem would be internationalized, with the exceptions of Haifa and Acre, which will go to Britain. 

The agreement is often blamed for the current chaos, In the words of the Economist:

Even so, Sykes-Picot has become a byword for imperial treachery. George Antonius, an Arab historian, called it a shocking document, the product of “greed allied to suspicion and so leading to stupidity”. It was, in fact, one of three separate and irreconcilable wartime commitments that Britain made to France, the Arabs and the Jews. The resulting contradictions have been causing grief ever since.

 Except, well, the agreement does not seem to have contradicted British promises to the Arabs. See the Hussein-McMahon Correspondence. In letter no. 4, the British say, “With regard to the vilayets of Bagdad and Basra, the Arabs will recognise that the established position and interests of Great Britain necessitate special administrative arrangements in order to secure these territories from foreign aggression, to promote the welfare of the local populations and to safeguard our mutual economic interests.” The Arabs agree to that in letter no. 5, as long as the occupation is temporary and accompanied by compensation. In letter no. 6, the British state that they have to give Aleppo and Beirut to the French; the Arabs agree in letter no. 7.  

As for the Zone A/Zone B division, that was not a partition; rather, it laid out spheres of influence inside a sovereign state, along the lines (as mentioned above) of the Anglo-Russian Entente in Persia. The British were committed to handing back the “indirect” administration in the east ... but the Arabs agreed to allow London to decide for how long it would be held.

In other words, Sykes-Picot only violated Arab expectations by hiving off the Mutasarrifate of Jerusalem ... although the Sharif of Mecca was to get a seat at the table in administering it. Otherwise, Sykes-Picot wasn’t the betrayal; the betrayal was that the ultimate borders didn’t follow it. 

That said, it’s hard to see how the Sykes-Picot borders would have been any, you know, better. You would have had one giant state combining most of what we call Syria, Jordan, and Iraq, including big swathes of Kurdish territory. You would have had an “Iraqi” province, mainly Shia, eventually turned over to the giant Arab state. (I am sure that would go well, as the peoples of East Timor and Spanish Sahara can attest.) France would have carved out a strange country combining Arab Alawites, Arab Christians, Arab Shia (non-Alawite Shia), Druze, Arab Sunnis, and a whole bunch of Turkish peasants. Jewish settlers would have still flowed into the area under international administration. It would have been a mess, albeit a different mess.

Just not a “shocking” mess.

The U.N. did not just give the Falklands back to Argentina

 There seems to be some confusion about a recent U.N. decision to let Argentina expand its territorial waters. Some correspondents seem to think that the U.N. stripped away the Falklands’ exclusive economic zone. That’s not what happened.

What happened: In 2009, Argentina filed a claim to its continental shelf under Article 76, paragraph 8, of the United Nations Convention on the Law of the Sea (aka, UNCLOS). The Obama administration gently reminded the U.N. that the United States does not recognize Argentina’s Antarctic territory, and so the U.N. did not consider it. (The Russians did the same.) The U.N. agreed.

The U.K. also rejected Argentine claims to Antarctic waters but went a little further. It pointed out that the Falklands lie on the same continental shelf, and so the U.N. had better not apportion out any territory adjacent to the Falklands’ maritime zone, because, you know, the Falklands might also want to expand its claim. This map shows the total Argentine claim (absent Antarctic waters) and divides that claim up into the parts that the U.K. was okay with and the parts to which it strenuously objected:

If you want to see a map with all Argentine claims on it, see this post. A dagger pointed at the heart of Antarctica.

The U.N. just made a preliminary advisory ruling granting all of Argentina’s claims. So nothing is settled. But for reasons unclear in this age of low oil prices, British observers are quite upset that the U.K. might possibly be locked out of the bonanza that is the South Atlantic. The Falklands will be encircled! Or something. It isn’t clear. 

But there you have it. I wonder what Donald Trump thinks?

When Britain took back Newfoundland

 Lot of traffic from Facebook looking for socialist beer and the British Empire. Weird. 

This post is a brief comment on a weird episode in North American history. Basically, the Dominion of Newfoundland went bankrupt at the beginning of the Great Depression. The U.K. sent over an investigatory commission (its full report is here) which bizarrely ignored the fact that the country was, you know, hit badly by the Depression. Unsurprisingly, it recommended against default, since no part of the British Empire had ever defaulted. But it also recognized that Newfoundland could not pay. So it recommended that British taxpayers should assume future deficits ... in return for which the Dominion of Newfoundland would suspend democracy by putting the Governor (for some reason there was no “General” after Governor in the Dominion of Newfoundland) and a six-person Commission in charge of the country.

I managed to cobble together some statistics from various sources. (The link goes to the main one.) Looks like the Commission managed to reform bloody little.

First, British aid essentially matched Newfoundland’s interest payments: $20 million in aid against $21 million in interest. That was not a coincidence. Basically, Newfoundland ran at a primary surplus, just as it would have done had the country just up and defaulted. 

Second, the territory’s finances began to recover in 1935. (Page 390.) It would be nice to think that this was due to putting steely-eyed incorruptible Britons in charge of the financial system. Instead it seems to have come almost entirely due to an increase in customs revenue ... less than the increase in trade. Customs revenue went up 32% because imports went up 74%. That is, the economy recovered and so did revenues.

And what drove the economic recovery? Well, iron exports started to increase in 1935 and skyrocketed in 1937 ... driven by exports to Germany. Oh boy. More seriously, Newfoundland’s exports recovered because of  the U.S. devaluation in 1933-34. (Newfoundland used the dollar pegged one-to-one to the U.S. dollar; see comments.) The dollar plunged from £0.28 when Roosevelt took office in March 1933 to £0.20 when it finally settled down at the beginning of 1935. 

Third, public services did not really get better. Infant mortality skyrocketed from 106 per 1,000 in 1933 to 123 by 1937, before suddenly (and weirdly) plunging to 93 in 1938 and then rising back . (Page 258; it was 40 in the United States.) School enrollment went up a bit, from 67% in 1933 to 69% by 1940. (Page 67.) I think it would be unfair to blame the Commission for the first but also find it hard to credit them for the second. Would a self-governing country have done worse?

In short, the episode seems bizarre and pointless. I can understand why Newfoundland might have preferred British aid to default. And I can understand why Britain did want a Dominion to default and go off with its own unilateral devaluation. But the Newfoundland government had to spend as if it had defaulted and recovery happened because the United States devalued. And having British bureaucrats take over the government appears to have accomplished little. So as a lesson in the merits of modern-day imperialism, it is not.

Any implications for the European Union are left as an exercise for the reader.

How socialist beer destroyed the British Empire

 A long time ago, an internet forum that I was involved with considered how the world would have been different had the settler colonies of the British Empire been able to hold themselves together into some sort of federation. Imagine a 125 million-strong country consisting of Canada, the British Isles and Australasia. A federated Commonwealth might not quite have gotten out of World War 2 as a superpower but it would have been much more of an equal to the United States. 

To a casual observer, in fact, it seems a bit mysterious that the U.K. allowed colonies whose initial settlement came overwhelmingly from Britain (save Canada) to just drift away. Why not give them seats in Parliament and keep the new territories in the fold? 

Well, one thing that surprised me is just how early Britain began allowing the settler colonies to impose their own tariffs. Even before responsible self-government, for example, New South Wales began taxing imports from Great Britain. Up until 1843 imports from the U.K. received preferential access ... but they still paid tariffs. And after 1843, tariffs had to apply equally to imports from everywhere in the Empire. That had the effect of ratcheting up tariffs on British goods, rather than (as London seemed to hope) lowering rates on imports from India. 

One of the things that made Imperial Federation a nonstarter was that the Dominions, by the late-19th-century generally democratic and self-governing (I am going to ignore the abominable Union of South Africa) had little desire to fight the political battles necessary to create a common Imperial economic space. Moreover, the U.K. had pledged to defend them and was seen as unlikely to renege on that commitment. So why pay more for Imperial defense when the U.K. taxpayer was going to pay for most of your defense for you? Even in retrospect that proved to be a pretty good deal: sure, the U.K. failed to defend Australia in any serious way in WW2, but it seems unlikely that an Imperial Federation would have been able to devote more resources to the south Pacific than our far-less-organized British Empire actually managed. 

But how did those Dominions come to have their own trade policies? Well, here it gets strange: London seems to have actively encouraged them to tax imports and set up local industries.

Consider Australia. New South Wales (NSW) started taxing alcohol imports in 1800; alcohol was the obvious thing to tax and most booze was imported, so the tariffs were also, in fact, the first taxes in the country. (Raised to pay for a pair of jails, which seems somehow ironic.) The import taxes rapidly gave rise to import substitution ... directly financed by the government in London. “The introduction of beer into general use among the inhabitants would certainly lessen consumption of spiritous liquors,” wrote the colonial secretary in 1802 (page 7). “I have therefore in conformity with your suggestion taken measures for furnishing the colony with a supply of ten tons of Porter, six bags of hops and two complete sets of brewing materials.”

Sadly, the subsidized importation of brewing equipment by the authorities back in London failed, so the colonial government set up its own brewery in 1804. In 1821, the British Parliament cut the alcohol tax on alcohol distilled in NSW from £0.50 to £0.13 while leaving the tax unchanged on imported spirits. 

You got that right: parliamentarians in London kick-started import substitution in New South Wales. In 1827 they added insult to injury by taking a 5% duty on manufactured imports from places other than Britain and extending it to Britain. 

Er?

Eventually the Australian colonies gained self-government, but by the then the urge to protect was well-established. South Australia separated from NSW in 1836; by 1846 it had ad valorem tariffs on even more goods than NSW. Victoria separated from NSW in 1851; by 1859 it had an organized “Tariff League” and in 1866 there came an openly protectionist Customs Act designed to promote the local manufacture of textiles, hats, leather goods, woodenware, furniture, toys, woollen blankets and rugs, glass and glassware, earthenware and porcelain. (Page 9.) Cigarettes soon followed. 

By this point, Australia was clearly on its own economic policy path. Even had London been able to get its act together about inviting Dominion representatives into the Parliament, the negotiations would have been difficult. It is more surprising that the Australian colonies managed to knit themselves together into the Commonwealth of Australia than that they failed to build lasting economic links to Britain.

One has to wonder if things would have been different had British bureaucrats been more proactive about keep Oz and Albion in the same economic space. More concretely, I have to wonder why those self-same bureaucrats put Australia on the road to economic independence, to the point of passing an Act of Parliament. It seems strange and goes beyond simply wanting to make the Dominions self-financing. (Which they never were, if you count the cost of imperial defense.) 

I understand why once you had local booze, independence was near inevitable. What I don’t understand is why London wanted them to have their own booze. But either way, the first sign of the inevitable end of the British Commonwealth came when that first Ozzie cracked open that first locally-brewed government beer. 

Sometimes the Europeans could do no right

 There is an overwhelming amount of evidence that the European empires did very little right in Africa. I will admit that these results came as a surprise to me; my prior would have been that the Europeans would have left behind some institutional innovations or physical infrastructure of value. That case, however, turns out to be extremely hard to demonstrate outside of Southern Africa. 

The slave trade, of course, was one of the most egregious ways in which the Europeans managed to play havoc with Africa. It follows, of course, that ending it should have positive effects. And it did! The Middle Passage was a horrifying meatgrinder ... no possible cost could outweigh the reduction in human suffering from insuring that fewer people would suffer in it.

But the passage of the U.K. Slave Trade Act of 1807 may have had the consequence of boosting conflict in Africa. James Fenske (Oxford) amd Namrata Kala (Yale) argue that it did, by weakening the authorities whom had enriched themselves off slave exports. They take advantage of the fact that the British were rather more successful in reducing human trafficking from West Africa than elsewhere as a form of natural experiment to test their hypothesis.

The time series evidence is fairly compelling that something happened around then:

But I am not wholly convinced of the validity of their experiment. First, look at the above figure: there are a disconcerting number of zeroes among the controls. Second, look at the map to the right, which shows the treatment area in red and the control in blue. Are they really comparable regions?

The authors do vary the treated area and find the same result. In the map, the treated area consists of everything within 1,000 kilometers of a slave-trading port. They varied that distance to as low as 250 kilometers, with the same result. They also defined the treated zone as the current borders of countries with historical slave ports; again, similar results. Finally, they threw out the four territories annexed by European powers in 1807-40: Sierra Leone, Gambia, and Côte d’Ivoire. They also threw out Liberia for similar reasons. Again, the results hold.

Nonetheless, it still seems as though there may be a data problem: we know less about conflicts in the interior. And even if we did have comparable information, the interior likely had a radically different state structure and a much lower population density. The comparison seems forced.

Even without the experiment, the time series certainly make it seem like something happened to increase conflict in coastal Africa in 1807! The Slave Trade Act is the most probably culprit. Moreover, it is hard to argue reverse causality, i.e., that the Act was a response to rising levels of intra-African conflict. They do a good job of demonstrating that British interest in the slave trade had no correlation with interest in African conflict. (Google Ngrams is pretty neat.) In short, the experiment may be unconvincing ... but it also may be unnecessary. Read the paper!

But if they are right, it is depressing to think that ending the slave trade may have done as much to weaken African states as the trade itself. 

Gender shock

 We know that European colonization affected Africa in multiple ways. The direct effects were generally, well, at best neutral. Outside a few long-standing enclaves (like Dakar) and (maybe) Tunisia and South Africa, it’s difficult to imagine a counterfactual in which the Europeans never extend sovereignty and the Africans have a harder time of it in the 20th century.

One understudied way in which the Europeans might have affected Africa negatively is through gender norms. If there were benefits to, for example, learning English or French, but the colonial authorities only taught men, then gender inequality would increase. One can imagine many other channels in which this effect could have operated.

On the other hand, it is far from given that pre-colonial Africa was a paragon of gender equality, relative to Europe. It hard to see how colonization might have improved the situation, but it is possible.

So what was the effect? Well, Felix Meier (Utrecht)  and Jacob Weisdorf (Southern Denmark)  have an answer! It turns out that the Protestant churches in Kampala kept incredibly detailed occupational data going back to the 19th century. They found that the initial impact of colonialism was what you’d expect … but it didn’t last:

“We find that the arrival of Europeans in Uganda ignited a century-long transformation of Kampala involving a gender Kuznets curve. Men rapidly acquired literacy and quickly found their way into white-collar (high-status) employment in the wage economy built by the Europeans. Women took somewhat longer to obtain literacy and considerably longer to enter into white-collar and waged work. This led to increased gender inequality during the first half of the colonial period. But gender inequality gradually declined during the latter half of the colonial era, and after Uganda’s independence in 1962 its level was not significantly different from that of pre-colonial times. Our data also support Boserup’s view that gender inequality was rooted in indigenous social norms: daughters of African men who worked in the traditional, informal economy were less well educated, less frequently employed in formal work, and more often subjected to marital gender inequality than daughters of men employed in the modernized, formal economy created by the Europeans.”

In other words, the British conquest had little overall effect at the end of the day … or at least by the end of the 20th century. Thoughts?

Was independence essential to American economic success?

 A couple of posts down, I cast some doubt on the assertion that continued British rule would have slowed American economic growth after 1776. I have now come across a Gavin Wright essay that makes just that case. 

Wright argues, correctly I think, that a lot of early American growth was based on the creation of a labor market that excluded slavery from the Northwest (i.e., Wisconsin, Michigan, Illinois, Indiana and Ohio), a relatively egalitarian land distribution, a unified national product market and deep capital markets. If those three things do not happen under continuing British imperial rule, then North America will be poorer. 

On page 294, Wright suggests that the British parliament might have done less to exclude slavery from the Northwest. I am skeptical of that proposition. It is true that Indiana only rejected slavery because Congress would not have admitted it as a slave state under the written conventions on Senate balance. But it is also true that the imperial British parliament could have even more clearly and less contentiously banned slavery from the area. I do not see why London would be slower to act than Washington. After all, the Empire did ban slavery almost three decades before the United States. 

Wright raises the issue of a more egalitarian land distribution but then drops it. It seems uncontestable that American policy fostered a more equal land distribution. (Certainly in what was then called the Northwest.) two propositions remain unclear: (1) how much those policies worked relative to an imperial counterfactual and; (2) how much they mattered to growth as opposed to distribution. Color me agnostic.

It is true that independence fostered the growth of American capital markets. But Canada developed solid capital markets and a strong banking system. It is possible that internal disunity under British rule would have delayed the creation of an American capital market, but I am skeptical. There certainly would have been less fear of default among British colonial provinces than American federal states. 

What does that leave? Continued British rule might have led to interprovincial protectionism from each other combined with lower tariffs against Britain. Both outcomes are possible. Canadian history suggests otherwise, but only after a span of decades. For example, Canada, Nova Scotia, and New Brunswick only established reciprocal free trade in 1846. That on a continental scale would have made British North America poorer than our United States.

In short, had continued British rule fostered multiple small and protectionist provinces (as it did in Canada for a remarkably long time), then it would have been bad for North America.

But was that a likely outcome?

The Commonwealth Realms of the Caribbean and the end of the British Empire

 This post has been substantially expanded. It was about nothing; now it’s about the slow withering of the British Empire, Margaret Thatcher notwithstanding.

Trinidad and Tobago was the first member of the Commonwealth Caribbean to become a republic, in 1976. After the Black Power disturbances of 1970, the government set up the Wooding Commission to review the clauses of the 1962 constitution. All sides of the political spectrum supported constitutional revision: some thought that its conservatism contributed to the instability; others worried in the aftermath of the Williams government’s powerful response to the riots that the pure Westminster system didn’t provide enough checks on the Prime Minister’s power. One solution to that problem was to strengthen the position of Governor-General ... but that caused a problem, since the Governor-General served officially as the Queen’s representative, and “among young people in particular the British Sovereign has no symbolic meaning.” The report did state some advantages of the monarchy — namely, a head of state “above the clash of race and class and ideology which makes up politics” — but they rejected them as inappropriate in the context of a head-of-state with actual executive authority, no matter how weak.* Williams did not accept all the recommendations of the Wooding Commission, but Trinidad got a new constitution ... and an elected President replaced the Queen as head-of-state.

Dominica followed Trinidad into republican status in 1978. One would have expected Grenada to follow.

In 1979, the New Jewel Movement shot its way into office. That came a surprise to nobody: the man who had ruled Grenada for the previous 12 years, Eric Gairy, was little more than a slightly more colorful version of Fulgencio Batista. His opposition knew this; they went so far as to unsuccessfully try to annex the island to Trinidad in order to prevent him from coming to power. (Unfortunately, Indo-Trinidadians were not particularly keen on bringing more African voters into the polity, so the idea failed.) After 12 years of increasingly corrupt Gairyismo (including a bizarre attempt to steal a Miss World competition) nobody was surprised when a small group of Marxist revolutionaries overthrew what was left of his government while Gairy was out of the country.

The rebels proceeded to issue a number of “people’s orders.” They mostly read like something out of an old Monty Python skit. People’s Order Number 1 declared, “The People’s Revolutionary Government now formerly enacts the Constitution of Grenada as hereby, has been suspended.” People’s Order Number 2 said that the People’s Revolutionary Government “shall be vested of executive and legislative power and the People’s Revolutionary Government shall appoint a Prime Minister.” People’s Order Number 4 went on to end all appeals to West Indian or British courts, People’s Order Number 7 established the People’s Revolutionary Army, People’s Order Number 8 created “preventative detention,” and People’s Order Number 10 reiterated the fact that the PRG was, in fact, issuing people’s orders: “For the time being, all People’s Laws shall become effective upon oral declaration and/or on publication of Radio Free Grenada by the Prime Minister or in the official Gazette under the hand of the Prime Minister.”

The weird thing was People’s Order Number 3. “The Head of State shall remain Her Majesty The Queen, and her representative in this country shall continue to be the Governor General who shall perform such functions as the People’s Revolutionary Government may from time to time advise.”

This became a problem when the U.S. was groping around for a legal rationale to intervene. They found a Governor-General, Paul Scoon, ready and waiting to provide them with one. In one of the stranger episodes in the long slow replacement of Britain’s empire with America’s not-empire, the British high commissioner to Grenada carried messages to the Governor-General on behalf of the United States and OECS, without London’s knowledge.

David Montgomery met Scoon on the Sunday before the invasion and asked him, “Would you welcome intervention?” Scoon replied that he saw it as the only thing that could prevent a civil war. He then agreed to issue an oral request for intervention, followed by a written order as soon as it was safe. A written letter to the Prime Minister of Barbados followed on Monday, October 24, 1983.

You are aware that there is a vacuum of authority in Grenada following the killing of the Prime Minister ... I am requesting your help to assist me in stabilizing this grave and dangerous situation. It is my desire that a peacekeeping force should be established in Grenada to facilitate a rapid return to peace and tranquility and also a return to democratic rule. In this connexion I am also seeking assistance from the United States, from Jamaica, and from the OECS through its current chairman the honorable Eugenia Charles (Prime Minister of Dominica) in the spirit of the treaty establishing that organization to which my country is a signatory.**

The Marines’ helicopter assault began at 5:00am on Tuesday.

The story gets stranger when you take into account Margaret Thatcher’s uncharacteristic reaction:

If you are pronouncing a new law that wherever Communism reigns against the will of the people, even though it's happened internally, there the United States shall enter, then we are going to have some really terrible wars in the world.

Who knew?

Why would a self-proclaimed socialist government, willing to ally itself with the Soviet Bloc, keep the Queen as its head of state? Especially when two nearby Commonwealth states had shown themselves completely willing to chuck her out? My guess would be that attachment to the monarchy must run very deep in the smaller islands. But that deep? Or perhaps they only played out two steps along the game tree. They knew that Britain almost certainly would not intervene under any circumstances, but it never occurred to them that the United States could as easily take advantage of the fact that the personal representative of Grenada’s head-of-state was not an appointee of the People’s Revolutionary Government.

Maybe so. I honestly do not know. The evidence is confusing. What is the role of the monarchy in the Commonwealth Caribbean? What should be its role? Does it persist out of popular sentiment, or simple inertia? 

The decolonization that wasn’t

 Spain holds two small enclaves on the Moroccan coast.  The twin cities are currently heavily-fenced enclaves of the European Union. Their presence causes occasional minor spats between Madrid and Rabat, but in general relations are very good. Neither government would gain any internal advantage from risking a conflict. The two countries had a brief spat over Perejil island in 2002, but war was never in the cards. (For a rather silly exploration of a 2002 Spanish-Moroccan war, go here.) If I had to bet, I would bet that Spain will still have control over Ceuta and Melilla 93 years from now, in the year 2103.  

It turns out, however, that if things had gone slightly differently 93 years ago, in 1917, the territories might indeed be Moroccan today. The British Foreign Office wrote a memo suggesting that it would make strategic and diplomatic sense to swap Gibraltar for the North African enclaves. The General Staff and the Air Ministry concurred; the Royal Navy, unsurprisingly, did not. Foreign Secretary Arthur Balfour concluded that “the difficulty of negotiating such an exchange (of Gibraltar for Ceuta) would be great, and that to raise the question at the Peace Conference would, therefore, only be justified if the naval and military advisers of His Majesty’s Government were in complete accord on the subject.” So nothing happened. Seven years later, in 1926, the Spanish government raised the possibility of making the swap, but this time the U.K. rejected it.

So what if Ceuta and Melilla became British in either 1919 or 1926? Well, given the history of British imperial retreat in the 1960s and 1970s, I’m having trouble imagining that London wouldn’t return the territories to Morocco. Why not? It buys goodwill with a strategic ally at no political, strategic, or economic cost. The Spanish inhabitants might or might not drift back to Spain (Britain certainly would not have allowed them entry) and that would be that.

OK, this is not a big change, as these things go. And it’s hard to see how the Royal Navy would have been convinced to change its position, or why Balfour would have decided to overrule the R.N. But it is an amusing little wrinkle in history; something I only noticed because of the earlier discussion of Britain’s proposal to “buy” an Indonesian island during the 1979 Vietnamese refugee crisis.

Thoughts? Not that I’m expecting any, but surprises are always welcome.

Margaret Thatcher and island-buying in 1979: less than it seems

 Did Britain and Australia really propose to create a new Hong Kong in the Philippines to be populated by Indochinese refugees?  The Guardian says yes.  The documents from the National Archives say no.  Unless there is more than the Archives made available, or I missed the juicy stuff in my long skim, nobody seems to have really considered the creation of a new Crown Colony in 1979.  I can’t find any references to an entrepreneurial city or opposition from Lee Kwan Yew; I certainly can’t find any references to an actual transfer of sovereignty.

Judging from the documents, the story does have a grain of truth.  There was a bilateral meeting between Australia and Britain, although little seems to have been discussed other than the possibility of a joint position at the U.N. conference.  (Both countries had already tried and failed to get the main Western powers in for a sit-down before the U.N. meeting.)  The British ambassador to Jakarta did raise the possibility of buying an island from Indonesia for an expanded refugee camp capable of housing up to 200,000 people.  The thing about that is that the report about the British suggestion and the Indonesian response is phrased in vaguest possible terms.  It isn’t clear who exactly would have put up the money.  (I suspect that the British were thinking about the UNHCR, not HMG)  It certainly isn’t clear that the use of the term “buy” meant “transfer sovereignty” as opposed to a simple land purchase. 

The rest of the stuff in the Guardian story is easy to find, from the worries about riots to the weird decision to try to make it harder for immigrants to bring their spouses into the U.K.  But the island-buying and rival Singapore?  Can’t find it. Maybe I’m not reading carefully enough. 

The full story, best as I can tell, is below.

On June 15th, 1979, the U.K. cabinet sat down to discuss the refugee problem, after receiving from hysterical letters from Thailand and threatening ones from Malaysia.  The Thais bluntly stated that they believed that the Vietnam intended to displace or kill the entire Cambodian population and “replace them with Vietnamese immigrants.”  The Singaporeans were more limited in their assessment:  they believed that the Vietnames aimed at expelling a potential Chinese fifth-column.  The Malaysians didn’t care about the reason; they simply stated that they intended to start sinking refugee-laded ships. 

This prompted a lot of worry back in London.  There was some discussion about allowing some into Britain, if only to convince other countries to take them, but Margaret Thatcher ixnayed that.  “Sir Murray Maclehose said that … he hoped that the U.K. would feel free to make a bid of her own.  The Prime Minister explained the difficulties created for the British government by the pressure of 2 million immigrants on our large cities.” (1)  I assume that meant two million existing immigrants, and not the possibility that Britain would accept two million Vietnamese refugees.

On June 22nd, the Malaysian foreign minister, Tan Sri Ghazali, stated that he believed that the Vietnamese were determined to expel their entire Chinese population.  He also believed that if the refugees were not allowed to depart by sea, the Vietnamese would push them over the border into Thailand—interestingly, and accurately, he no longer bothered to refer to Cambodia as a separate country.  He therefore proposed upping the capacity of the proposed Galang facility to 200,000.  “He commended this idea to HMG and … hoped that it would receive HMG’s support.” (2)  The British believed that the total number of additional refugees would not exceed 800,000; I have no idea where that number came from.  (3)

On June 26th, France put some pressure on London. “Since the tragedy of refugees from Vietnam, Cambodia, and Laos has begun to assume the character of a veritable transfer of population … the President of the Republic has decided that France will welcome 5,000 additional refugees … for every 1,000 inhabitants of France, there is one refugee from Indochina … France urges all states able to do so to add their efforts.” (4)  By that point, France had accepted 51,500 refugees; proportionately about the same as 230,000 who had arrived in America and far above the 2,316 that had arrived in Britain. (5)  The southeast Asian countries were losing patience.  The Indonesians had agreed to set up a 10,000-person processing center on Galang Island, but the U.K. suspected that their plan was to shunt the refugees they had already accepted to Galang, rather than take more.  Of course, that would imply packing 32,000 people into a facility built for 10,000 … ugh. (6)  Britain, meanwhile, had given £3.5 million to the UNHCR in 1978, and expected to give £4.75 in 1979.  That, however, still left the UNHCR underfunded to the tune of US$67 million … assuming that the problem didn’t get any worse. (7)   

On July 6th, Belize agreed to accept 1,000 refugees, as long as the U.K. provided funds for their “health, education, and welfare.” (8)  One July 12th, Britain pledged another £5 million for the UNHCR. (9) The next day, Britain’s ambassador in Jakarta reported that they had approached the Indonesian government “about the possible purchase of an Indonesian island,” and had been rebuffed. (10) The same day, the FCO reported that Britain would be on the hook for US$7.503 million for refugee aid and resettlement. (11)

The Malaysian government then reiterated its proposal for a 200,000 person settlement on an island, somewhere. It proposed that the United States set up a “United Nations Processing Centre for Vietnamese Refugees,” preferably on its own territory, but also possibly Hainan (!), Okinawa, Darwin, or New Caledonia.  All the refugees would then be transferred to the Centre, and “security and other matters affecting sovereignty and ownership of the land should be determined by the government of the United States of America … but ways must be found to overcome difficulties in the municipal law, e.g., the writ of habeus corpus … in order that these U.N. processing centres are immune from the process of local laws.”  (12) It is too bad that the Malaysians didn’t have better lawyers, or they would have known that the Constitution already did not apply to America’s Pacific territories, save Hawaii.

And that seems to be pretty much it.  Unless I missed something, which is quite possible. 

Thoughts?

(1)  J.S. Wall to Stephen Wall, “Vietnamese Refugees,” 15 June 1979. Reference PREM/19/130.
(2)  Telegram 204, “Vietnamese refugees,” 22 June 1979.
(3)  Telegram 644, “Your Telno 284:  U.N. Conference on Indo-Chinese Refugees,” 20 June 1979. 
(4)  Telegram 268, “France : Council of Ministers : Indo-Chinese Refugees,” 26 June 1979.  Reference PREM/19/130.
(5)  Lord Carrington to the Prime Minister, “Vietnamese refugees,” 25 June 1979, p. 6.  Reference PREM/19/130.  Canada had accepted 15,000.  The FCO didn’t have up-to-date Australian numbers, but stated that the country had taken in 19,500 as of May 1st.
(6)  Ibid, p. 9.
(7)  Ibid, p. 14. 
(8)  George Price to Margaret Thatcher, “6 July 1979.
(9)  JS Wall, “Indo-China Refugees,” 12 July 1979. 
(10) JS Wall to Brian Cartledge, “Possible State Visit by President Suharto of Indonesia,” 13 July 1979. 
(11) Telno 318, 13 July 1979.
(12) Tan Sri Ghazali Shafie to HMG, “The Vietnamese ‘Boat People’—An Outline of Malaysia’s Proposal to Resolve the Problem,” 14 July 1979.  Reference PREM/19/130

This goes out to James and Randy

  I am told that it can be difficult to get the Daily Show in Canada.  So, under the assumption that you might not regularly tune it in on the internets, I present to my Canadian friends the following very insightful group of talking heads:

 

The Daily Show With Jon StewartM - Th 11p / 10c

Provinces in Peril

Barack Obama Interview
John McCain Interview

Sarah Palin Video
Funny Election Video

 

 

Want to know more?  The preceeding story, “Provinces in Peril” is below the fold.

Imperialism can pay

There's a debate out there about imperialism.  Did it pay?  The consensus answer is:  no, it did not.  The British spent far more in defense than they earned from imperial investments; in fact, by the 1880s, the profitability of imperial investments had fallen below domestic and non-imperial ones.  The French believed that their empire after WW2 helped them maintain their balance-of-payments; the numbers don't support that idea either.  The big counterexamples involve the Nazi conquest of France, and the Soviet occupation of Eastern Europe after 1945 ... but after 1970 or so the balance on the Soviet empire hinges on how much you believe control of the Warsaw Pact armies was worth to Moscow.

But there is a case of imperialism paying, and paying quite well:  Panama in 1903. 

Here's the simple story.  A French company, see, had tried and failed to build a canal across Panama.  In 1904, as per the terms of its concession, the assets of that French company would revert to the government of Colombia, which could then sell them to (say) the United States, which wanted to build a canal.  Those assets included a whole lot of big ditches, and a working railroad, and were worth around $40 million — $21.3 billion as an equivalent share of national income today.  So when the U.S. comes sniffing around to strike up a canal agreement, the Colombians rather intelligently decide to stall. 

The shareholders in that French company, though, want a deal quickly.  So does the United States, run by, you know, Teddy Roosevelt.  (Any resemblance to a current postulant for the Oval Office is entirely coincidental.)  Of course, the U.S. isn't a dictatorship, Congress matters, so it kinda helped that the shareholders of that French company had made rather large donations to the GOP and hired all the best lobbyists of the time, including a Brooklynite named William Cromwell.   

So one of the shareholders of the French company cuts a guy named Manuel Amador a personal check for $100,000 in a New York City hotel room ($53 million) to make sure that a revolt gets organized on schedule.  It does, and coincidentally enough American ships are right offshore to make sure that Colombia can't intervene.  The new government then appoints the French dude who cut the personal check to be its foreign minister, and he negotiates a canal treaty with the United States.  When the people in Panama City see the agreement they balk, but their foreign minister (and, uh, the U.S. secretary of state) warn them that if they don't sign then the half-life of their new republic is going to be significantly less than its two-month history, and poof, Panama signs.  Without a Spanish translation.

So far, so sordid, but honestly, that tells you nothing.  After all, there was competition between the Panama and Nicaragua routes.  I don't care that there was skullduggery in the dealings, and I don't care that Colombia got screwed.  What I want to know is whether the U.S. got a better deal because it used military force than it would have gotten in the absence of force.

Fortunately, we have indeed got six existing deals struck with either Colombia or Nicaragua which did not involve force or the threat of force.  (Well, one of them involved the implicit threat of force.)  All of them incorporated the fear of competition from another route.  And all of them gave the owner of the Isthmus a hella lot more squeeze than the deal Panama actually received.

Here's a table showing the net present value of how much less the U.S. would have received under various other agreements compared to the one it foisted on Panama in 1903:

	% of U.S. GDP	2007 dollar equivalent	% of Canal cost	% of Panama GDP
Hay-Herrán treaty	0.07%	$10.1 bn	4.3%	117%
Concha memorandum	0.10%	$13.4 bn	5.7%	155%
MCC-Nicargua contract	0.10%	$13.6 bn	5.8%	157%
French-Colombia concession	0.10%	$13.8 bn	5.8%	159%
Senate counteroffer	0.17%	$22.9 bn	9.7%	265%
Nicaragua-U.S. treaty	0.23%	$31.7 bn	13.4%	366%

So, yes, sometimes imperialism does pay.