Happy 214th birthday, America!

Henry Ford wasn’t sure what century the American Revolutionary War belonged to. Quizzed under oath by a hostile attorney, he guessed the US won its independence from Britain in 1812.

A newspaper dubbed his mistake “the Revolutionary War of 1812 incident.”

The line of questioning was part of the attorney’s effort to portray Ford as unintelligent. (Asked to identify Benedict Arnold, Ford guessed he was a writer.)

But I think that’s unfair. Ford was a titan of industry. Why should he fill his brain with trivia?

Also, America was a country of business, not history. And not just then, in 1919, when Ford was building a world-changing manufacturing business. But from the very beginning.

In Americana: A 400-Year History of American Capitalism, Bhu Srinivasan argues that the Mayflower voyage that carried Pilgrims to New England is best understood as a commercial enterprise more akin to venture capital investing than a quest for religious freedom.

“Far from needing escape from the King’s persecution,” he writes, “the Pilgrims voluntarily entered the business of carrying His Majesty’s sovereignty overseas.”

Srinivasan notes that the Pilgrims departed from the Netherlands, not England, and sailed on an English ship with an English crew. The entire undertaking was financed by English investors — the profit-seeking Merchant Adventurers of London.

Half of the Mayflower’s passengers, he adds, were not even members of the Pilgrims’ church, but settlers added to the journey by the investors for their marketable skills.  

It was all remarkably businesslike. The Pilgrims even signed a formal profit-sharing agreement with their investors — the equivalent of a letter of intent or term sheet, as Srinvasan describes it.

He thinks that’s telling.

“Political refugees generally do not spend the final days before departure negotiating financial considerations and distribution of assets seven years into the future,” he reasons. “But the Pilgrims were never refugees to begin with; they were critical instruments in a speculative venture, one that equally served to expand the Crown’s sovereignty to the New World. Religious liberty was but one component of the overall enterprise.”  

That, I think, is a history Ford would have remembered.

Thomas Jefferson certainly did. 

In A Summary View of the Rights of British America — a foundational text of the Revolution — Jefferson wrote that colonial America was built by “the lives, the labours, and the fortunes, of individual adventurers” — a stirring tribute to the risk-taking Pilgrims and their profit-seeking investors.

Srinivasan further notes that, before the Founding Fathers addressed freedom of speech or religion in the Bill of Rights, they had already addressed matters of commerce in the Constitution, including the federal government's power to grant copyrights and patents.

That’s not to say they deliberately ordered the issues by importance — copyrights ahead of religious rights, for example.

But that is kind of how it worked out: “The entire modern American experiment depended on respecting and demarcating abstract property rights,” Srinivasan writes: “trademarks, copyrights, patents, zoning laws, frequencies, airspace.”

They created these rights “out of thin air,” he adds, “based on ideas and abstractions.”

The results, however, were concrete.

In Srinivasan’s telling, America’s unique elixir of government rule-setting, abstract property rights, and Pilgrim-esque risk-taking is what made it — for 200-odd years now — the world’s great engine of economic progress.

He cites many illustrative examples. Like Walt Disney, who borrowed multiples of his company’s worth to cover the cost of making Snow White when the film went five times over budget.

(Disney later bet the entire company again, against all advice, to build a theme park.)

Srinivasan adds that David Selznick needed Gone with the Wind to be the biggest film of all time — just to break even.

“Both [Disney and Selznick] would have been ruined if their bets didn’t pay off in historic fashion,” he notes.

He then asks why the commercial internet is so distinctly American when the World Wide Web was invented by a British computer scientist working for CERN in Switzerland. 

“One answer is that America had the unique capability to finance ideas at the earliest stages,” he explains, “and an ecosystem in Silicon Valley that allowed embryonic companies in nascent markets to develop quickly.”

All of which was enabled by America’s appetite for risk and tolerance for failure.

Here, Srinivasan cites Ford again, who had already endured two automotive failures when he founded Ford Motor Company.

That he "could still raise any capital at all was an affirmation of the principles laid out by Adam Smith,” Srinivasan writes. “Despite the risk of total loss, money finds its way to opportunity when the potential rewards are high enough."

Especially in America, home of the modern-day Merchant Adventurers.

Which is something to celebrate on July 4th.

(No need to remember the year.)

— Byron Gilliam