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Backdoor Economics

The American obsession with smuggling, from the Boston Tea Party through today’s drug trade

Photo: Tristan Scow, License: N/A

Tristan Scow


“No taxation without representation”—that’s understood to be a patriotic rallying cry of the people who became the founders of the United States of America. Early Americans, so the story goes, protested taxes by the British as part of defending their freedom in the colonies. It’s one of the popular stories of the lead-up to the American Revolution. Visit the Wikipedia page for the slogan and read that the Dec. 16, 1773, Boston Tea Party, where Boston merchants dumped the tea cargo of the British East India Company into the harbor, was an opposition to the Tea Act of 1773.

In reality, argues Peter Andreas in Smuggler Nation: How Illicit Trade Made America (Oxford University Press), the Tea Party had less to do with protesting tax burdens than protecting smuggling interests: The British East India Company delivered to the colonies low-priced tea that undercut the price of Dutch tea smuggled by colonial merchants who then dominated the local market. Citing letters and papers of then-acting governor of the province of Massachusetts Bay Thomas Hutchinson, Andreas points out that, in the summer of 1771, 80 percent of the teas consumed in Boston were smuggled into the city. Yes, the Tea Act did grant a tea monopoly to the British East India Company, but that wasn’t in and of itself a broad affront to freedom. The Tea Act quite plainly curtailed the freedom of early smugglers to put money in their pockets.

Such is the fascinating lens through which Andreas, a professor of political science and international relations at Brown University, views the story of America in his indispensible history saga, Smuggler Nation. Andreas isn’t just pointing out that some of the country’s early accumulations of wealth were rooted in illicit business—although he does remark that John Jacob Astor, the first American multimillionaire was also America’s first multimillionaire smuggler; that Boston’s Hancock family traded illegally with the West Indies; and that Rhode Island’s John Brown, the founder of Andreas’ employer, Brown University, built his wealth in privateering and the slave trade.

Smuggler is an exhaustive examination that sees the rise and success of American capitalism as being intimately tied to illegal capitalism, from prerevolutionary times to the present. It’s an argument that clarifies and contextualizes some odd economic facts. How did the northern colonies become such an economic hub when the region didn’t produce anything of value in the world market? How did the South thwart the Union Army for so long when the North had such a military advantage? Why are the tomatoes we eat today so cheap? And why does the United States “have such a massive criminal justice system, including the world’s largest prison population”?

Andreas says the shadow economy unites those questions, and he brings two powerful allies to his argument. The first is prodigious research. Andreas turns to documentation when telling the history of American smuggling: official government documents, seized smugglers’ accounting books, letters, new stories, whatever is at hand. He admits it’s often difficult to ascertain with any certainty the economic facts of early smuggling, as it by nature wants to go unnoticed by governing policies. So he turns to anecdotal evidence in history’s margins to supplement ideas, such as the Hutchinson letters and papers he cites when discussing the era of the Boston Tea Party. This research produces not only some fascinating facts but comic moments. In early colonial times, English smugglers were known as “free traders”—which perhaps offers a different view of NAFTA as the North American Smuggling Agreement.

More impressive is Andreas’ refreshing lack of theoretical framework. Andreas takes a deliberate approach to smuggling in the book, which he defines as the “bringing in or taking out from one jurisdiction to another without authorization.” It’s a radically common-sense approach, one that allows him to examine America’s smuggling history in simple economic terms. There are consumers who want products; there are producers who manufacture products. How producers delivers their goods to consumers is a structure defined by what is and isn’t considered illicit, and what is and isn’t illicit is a function of economic and political power.

It’s a long view of the country that frames its current superpower status in the tension of how a country founded on evading import/export regulations would police those very same economic transactions, a tension that has sometimes fueled and frequently conflicted with foreign and domestic policies: How does a new government generate revenue but at the same time protect merchant “freedom”? By defining and controlling what is and isn’t legal trade. Smuggler documents how the American Industrial Revolution was fueled by the expertise of people and technologies—what we’d call intellectual property today—smuggled into the country, how American business followed the relationships made by illicit trade to penetrate new markets, and how protecting the interests of those relationships turned into a global economic force.

Smuggler’s centerpiece is a systematic demystification of drug prohibition that stretches back to the 19th century, showing how the outlawing of certain types of trade—alcohol, marijuana, cocaine, heroin—professionalized, organized, and made violent the people doing it. It’s a breathtaking historical analysis and synthesis, demonstrating how economic decisions (the Harrison Narcotics Act of 1914, which rooted federal drug control in the power to tax) turned into the regulation of substances; how regulation combined with politics to shift the discussion onto the types of people who use these substances; and how such social and political measures created a need for law-enforcement infrastructure. As Andreas points out, by the late 1920s, “one-third of the inmates in federal prisons were serving sentences for violating the Harrison Act.” Still to play out: the Narcotics Drugs Import and Export Act of 1922, which allowed the federal government to track legal narcotics shipments; Congress banning the domestic production and medical use of heroin (effectively creating a supply hole for an illegal import business); Harry Anslinger, the country’s first drug czar, who effectively dictated the cultural temperament toward drug control; and President Richard Nixon laying the groundwork for drug war we have today with the Comprehensive Drug Abuse Prevention and Control Act of 1970, which shifted regulation from the federal government’s power to tax to the broader power to govern interstate commerce; and the consolidation of drug control into the Drug Enforcement Administration.

The above paragraph is a reductive glance at Andreas’ work, but it’s a suggestive framework for the big economic picture in which he works. He’s written about the political and economic outcomes of the U.S. drug policy in a number of papers published in academic publications such as Foreign Policy, World Policy Journal, and International Security, and in Smuggler’s preface he remarks that during fieldwork for his research he learned that the inflated price of toilet paper in Bolivia was due the cocaine industry—it was used to dry and filter coca paste that would be turned into powder cocaine—and that the precursor chemicals used to process cocaine were exported to the country by American manufacturers.

This fact highlighted for him that, as the U.S. drug war combatted the incoming supply of drugs, it overlooked America’s export of the materials needed to manufacture drugs, a practice that Smuggler demonstrates has historical precedent. Andreas cites New York Lieutenant Governor Cadwallader Colden, writing in the 1760s, that the city’s merchants were “accustomed to despise all laws of trade”—a sentiment that ties the rum runner to the slave trader, the hedge-fund manager to corner boys selling product: In America, the pursuit of happiness is all about that paper, and I’m gonna get mine.

The illustration for this review is the product of an assignment for students in CP freelance illustrator Alex Fine’s Sophomore Illustration 2 class at Maryland Institute college of art. View the sketches and final illustrations from the class below.

     

Absalom Marshall

 

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Cait May

Kelly Lalama

 

Kirsty Hambrick

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Louis Fratino

 

Meghan Keft

 

Nicole Mannino

 

Tam Mosher

 

Tristan Scow

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