Financial matters: American independence and economic freedoms – Helena Independent Record

On Tuesday we proudly celebrate Independence Day. We celebrate the signing of the Declaration of Independence which proclaims that all men are created equal, that they are endowed by their Creator with certain unalienable Rights That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed

In a time of kings and monarchs it was a bold declaration to state that governments derive their powers from the consent of the governed. It was equally as bold to define the proper role of government as securing a persons unalienable rights to Life, Liberty, and the pursuit of Happiness.

In declaring their independence from England the colonies had several complaints against King George III and the State of Great Britain; the one we all remember is taxation without representation.

Under British rule the colonies operated under an economic and trade system known as mercantilism. Leading up to the American Revolution, British mercantilism required that all goods and trade imported or exported through the colonies had to travel on British ships and through British ports. In this way those goods and trade could be taxed and levied with tariffs and duties.

The most famous of the taxes Great Britain levied on the colonies were the Stamp Act of 1765 and the Tea Act of 1773. The Stamp Act required that all legal documents and printed material must bear a stamp provided by commissioned distributors who would collect the tax in exchange for the stamp. It applied to wills, deeds, newspapers, pamphlets, and even playing cards. The Tea Act imposed duties on imported tea. It was an effort to rescue the financially weakened British East India Company. The Tea Act led to the famous Boston Tea Party.

Smuggling was a big problem for the British Crown in the colonies. The colonies smuggled goods in and out to avoid the taxes and duties that the British Crown was able to levy under mercantilism. For much of the colonial period the Crown had a policy of salutary neglect which meant that the trade laws which most hurt the colonies were not enforced. However, that changed with the implementation of the Stamp and Tea Acts which helped spark the American Revolution.

It is important to understand our history and heritage, including the principals set forth in the Declaration of Independence. As the British statesman and philosopher Edmund Burke who served in the House of Commons and spoke out in support of the American colonies in their dispute with King George III said, Those who dont know history are doomed to repeat it.

In the Declaration of Independence Thomas Jefferson and our founding fathers established that the new United States would be based upon the principals that our liberties and rights are not granted by government, but are instead unalienable and that government derives its powers from the consent of the governed, not that the governed are granted rights from the government.

As we watch and listen to the debates on healthcare legislation, tax policy, financial and other types of regulation, the debt ceiling, the federal budget, etc., take place over the next several months, try to think about those issues in the light of the principals set forth in the Declaration of Independence. For example, how will a rise in the debt ceiling and a corresponding increase in the federal debt help to secure our unalienable rights to life, liberty, and the pursuit of happiness? And does the passage of any proposed piece of legislation or implementation of regulation serve the government or the governed?

I suspect our founding fathers would have a vastly different view of our laws and government than is common place in our day.

Barry Nielsen has worked in capital markets for over 20 years with a focus on fixed income portfolio and risk management. He has an MBA from George Mason University and holds the Chartered Financial Analyst designation. He currently works for Opportunity Bank of Montana.

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Financial matters: American independence and economic freedoms - Helena Independent Record