Those who have followed the Competitive Enterprise Institute over the years and over our three-and-a-half decades know that one of our main grievances is “Regulation Without Representation.” The phrase—an apt description of laws effectively made by unelected regulatory agencies instead of the people’s representatives in Congress—also connotes the battle that George Washington and other American patriots fought against taxation without representation.
But in researching my new book—George Washington, Entrepreneur: How Our Founding Father’s Private Business Pursuits Changed America and the World—out today and available at fine book sellers, I found that “regulation without representation” is more than just a connotation to the causes of the Revolutionary War. It was an actual grievance of the colonists that was almost as important as taxation without representation in turning George Washington and other patriots against the rule of Great Britain.
In my book, I document George Washington’s amazing entrepreneurship and innovation. Starting out from a background that was humble compared to the other Founding Fathers and lacking resources for a college education, Washington became an apprentice surveyor for the Fairfax family (the namesakes of Fairfax County, VA, that is now part of the Washington, D.C., metro area) at 16. He quickly built a lucrative freelance surveying practice and speculated in real estate by purchasing or asking for compensation in some of the undeveloped land he surveyed.
Later, after he acquired Mount Vernon, Washington abandoned tobacco as the farm’s cash crop, diversified into wheat and dozens of other crops, and built a grist mill to sift that wheat into flour that he would export throughout the colonies and to the West Indies and Great Britain. In addition, he turned Mount Vernon into what historian Harlow Giles Unger has called “a vast agro-industrial enterprise” that included a blacksmith shop to make tools such as horseshoes and nails and a mini textile factory to make clothing, the latter of which was run largely by Martha Washington.
But these very ventures caused George and Martha to run into the vortex of British regulation foisted upon its colonies. The red tape stemmed from Great Britain’s mercantilist trade policies. As I write in George Washington, Entrepreneur, “Parliament’s Navigation Act of 1651 gave Britain complete control of trade routes, and colonists could generally only export and import to and from the mother country.”
With limited trade routes and heavy shipping costs for goods from Britain, colonists began to make things as well as grow things, just as Washington did with his enterprises at Mount Vernon. The Industrial Revolution that had taken hold in Great Britain in the 18th century was also coming to the colonies on a small-scale basis due to the efforts of individual entrepreneurs like Washington.
But the British Parliament saw colonial manufacturing upstarts like the enterprises at Mount Vernon, small as they were when compared to companies in Britain, as a threat to British manufacturers. Parliament passed laws such as the Iron Act, Hat Act, and Wool Act to sharply restrict or ban colonial entrepreneurs from making everything from nails and horseshoes to hats and wool carpets.
In the 1760s, when the British started aggressively levying new taxes on the colonists, they also started ramping up the anti-manufacturing edicts. In fact, the taxes and regulations sometimes worked hand in hand. As I write in George Washington, Entrepreneur:
The Stamp Act, for example, did more than just tax the colonies on the paper they used from Britain. That in itself might not have been so bad, as the colonists could simply build more paper mills to supply their growing needs. Yet it also mandated that virtually all printed material in the colonies—including legal documents, magazines, newspapers, pamphlets, and even playing cards—be produced with stamped paper from Britain.
And even if no law specifically forbade the manufacture of a product, entrepreneurs knew that their new mill or factory could be closed at the whim of British officials if domestic manufacture of the product made the colonies less of a captive market. As business and social historian Lyman Horace Weeks writes in A History of Paper-Manufacturing in the United States, 1690–1916:
As soon as there were indications that manufacturing industries were like to develop in the colonies the jealousy of the British manufacturers was aroused, for they had always regarded America as an altogether exclusive market for their goods.
As I write in my book, seeing the arbitrary nature of new British taxes and regulations, “Washington increasingly perceived a threat to all he had built.” He expressed this fear in a 1769 letter to his neighbor George Mason, who would also become a significant Founding Father. In the letter, Washington worries that if Great Britain can “order me to buy Goods of them loaded with Duties,” they may also “forbid my manufacturing.”
British regulation that would shut down his enterprises seemed to be Washington’s biggest worry, and his fear was shared by many colonial manufacturing entrepreneurs. In his book Forced Founders, historian Woody Holton calls the British taxes the proverbial “straw that broke the camel’s back,” on top of the “heavy tax” already paid “to Britain in the form of its costly monopoly of their trade” and the regulations accompanying these mercantilist policies.
A few years later, Washington would be appointed head of the Continental Army and lead the American colonies to independence. Then, he would lead the new nation as president under a Constitution that tackled both taxation and regulation without representation by reserving “all legislative powers” to the U.S. Congress in Article I, Section I.
Today, while agencies largely carry out the tax laws as Congress enacted them (though the actual tax policies can still be heavily critiqued), the administrative state now promulgates regulations that have no basis in the laws enacted by Congress. Washington warned against exactly this type of encroachment on the legislative branch in his Farewell Address upon serving two terms as our first president, calling for “caution in those entrusted with its [the federal government’s] administration to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another.”
On this upcoming Independence Day, we should celebrate George Washington’s achievements and heed his warnings from his experience with Regulation without Representation.
And now for an author plug—here are couple of places where you can order my book. Here is the link to buy the book on Amazon. And here is the St. Martin’s Press book page, with reviews and endorsements and links to order the book on many book sites. CEI is also having a virtual event on the book, with special guest Professor Deirdre McCloskey, on Tuesday, July 7. CEI Research Associate Joshua Rutzick contributed to this post.