Did Great Britain benefit economically from the loss of America?

Question

I have been told by many acquaintances that the loss of the thirteen colonies actually BENEFITED the UK. Their claim is that the UK no longer had to pay for the colonies' defence and administration and whilst the tax loss was regretable, the colonists were not taxed very high anyway (thus why parliament voted to increase taxes in the US). On the other hand, trade boomed as the colonists prefer to do business with someone who speaks their language and has their customs.

Is there any truth in this statement? Were the 13 colonies really not profitable (i.e. defence + admin costs > tax revenue)? If so, then why do states bother with colonies at all, if a majority of the time they're not profitable?

Answer 1

There are three big questions there, with the second, on profitability of the colonies, a tricky one which can plunge us into discussion and the last, on why states bother, quite broad. Others may like to weigh in on them and I'll focus on your first part, "I have been told by many acquaintances that the loss of the thirteen colonies actually BENEFITED the UK...Is there any truth in this statement?"

The historical consensus seems to be a resounding yes to the broader question of general benefit in the long run.

The most recent restating of this I found is by Maya Jasanoff in her 2012 book Liberty's Exiles. Though it is primarily on the loyalists, she sums up some of the benefits of the loss of the conflict to Britain in her opening section on what she calls the "spirit of 1783," some of which speak directly to your interest in the economic aspects in particular:

• As a result the British empire significantly expanded - with the loyalist exiles she focuses on as agents and advocates [1:12]
• 1783 serves as a dividing line between old and new empire with new focus on Asia etc., the “swing to the east” [1:12], also similar point in 2:76, which says the loss “helped to consolidate a new focus of empire, and an empire that was markedly different from that which had gone before”
• there was a renewed commitment to authority but one that “joined liberal principles with hierarchical rule” [1:13] - others have described how, in particular this is seen in the case of its flexible response to a crisis in Ireland that enabled it to remain in power there, as well as new approaches to its other dependencies

The chapter on the impact on Great Britain in The Impact of the American Revolution Abroad concludes with:

The expansionist forces released by the Revolution worked, surprisingly, for the benefit of Britain. The growth of the American economy made for the vastly increased profit of Britain and enabled her to sustain a long and expensive war against France and Napoleon. [2:76]

You might want to have a look over this short summary on About.com about this as well:

About.com: The Effects of the American Revolutionary War on Britain

Note: The short-term calculations of economic benefit would be a trickier thing to work out, especially because fundamental transformations are in the works that are not directly tied to the course of events in the US and would be difficult to filter out. This comes through in the opening chapter "England 1783–1846: a preview" in A Mad, Bad, and Dangerous People?: England, 1783-1846 which lays out the foundations for the "Great Transformation" that is about to take place. At any rate, the historians in various sources I scanned over not cited here all focus on the broader long-term picture of renewed trade with the US and a shift in empire, which I think is appropriate when looking at the impact of a world-historical event like this.

Citations above in form [Source:Page Number]

Sources

1. Maya Jasanoff, Liberty’s Exiles: American Loyalists in the Revolutionary World (New York: Vintage Books, 2012). On Google Books

2. Library of Congress, The Impact of the American Revolution Abroad (The Minerva Group, Inc., 2002). On Google Books

3. Boyd Hilton, A Mad, Bad, and Dangerous People?: England, 1783-1846 (Oxford: Oxford University Press, 2008). On Google Books

Answer 2

While the UK 'lost' the 13 colonies, it still 'possessed' Canada. Therefore it still had trade opportunities and defense commitments in North America, and similar arrangements in Australia and New Zealand. The character of these in particular is that they were sparsely populated by aboriginals, they were at a significant distance from the 'mother country', and they were colonized largely by 'their own people'. India doesn't fit this description - India already had both advanced social orders and had been 'civilized' for thousands of years.

While the colonies were 'revolting', the British had other things on their mind, in particular the Industrial Revolution. Many of their more immediate concerns was the construction of steamships and railroads, dealing with the social costs of rapid industrialization, and restructuring the political order to deal with the emerging merchant and professional classes. In this respect Britain was trying to 'straddle the fence': they had both an external and internal focus. The colonial adventures were an attempt to secure raw materials, which often didn't work out as planned.

Britain granted Canada 'independence' in 1867 - without much more than a ceremony and signing some agreements. In short, it didn't take even another 100 years to realize that attempts at ruling North American territories wasn't worth it. Much of this would have been due to the massive investments needed to, for example, built railroads across 3000 mile expanses of wetlands, plains, and mountains. While resources were there, manpower wasn't. Populating North American involved massive waves of immigration from nearly every other country on Earth, a process that continues to this day.

Answer 3

Two very good answers while I was thinking about this and trying to find sources. I cannot match the scholarship of either of the other answers, but I want to provide some contextual backdrop. These are some lessons I've learned over my years of studying the American Revolution; things that surprised me because I hadn't put them together.

Great Britain had just finished the Seven Years War (known in the colonies as the French and Indian War). This was arguably the first world war - pretty much every nation that had the ability to project power beyond their borders was involved. Although the war was over, each of the nations retained the desire to create, maintain and exploit colonies. (There is an easy book here on the history of empire). 1. Britain acquired an Empire. Defeat of the French on North America (Quebec) can be considered the beginning of the British Empire. There was a huge difference in the obligation to protect colonies against indigenous forces vs the requirement to protect colonies against other superpowers. The French/Indian alliance also made it clear that although the American Indians didn't have artillery, they could still participate in logistics and in what would later become known as asymmetrical warfare. 2. Britain acquired the deficit spending that comes with Empire. The seven years war cost Britain so much money that the resulting economic crisis lasted until the Napoleonic wars.
3. Britain had to demobilized a huge military force. Although they didn't have modern economic theory, they knew that demobilization can lead to social instability. Furthermore, every officer had to be placed on half pay or retired. (Everyone with an interest in history should read the Aubrey/Maturin novels that detail Jack Aubrey's pathetic existence on half pay; it sounds like a good solution, but it wasn't.) One solution was to move the most valuable units to North America, use them to defend the colonies against the Native Americans and as a guard against the colonial ambitions of France (et. al.). The nice part being that the colonies could be convinced (forced by fiat) to pay for the support of the troops. 4. Remember that the Glorious Revolution wasn't that long ago. England hadn't yet finished designing the parliamentary government. Issues like the King's right to a standing army, and "taxes are the free gift of the people to the government" were far from settled. The King and Parliament were not arguing from a particularly long precedent, and precedent is much more important in the English "pure common law" system than it is in the American constitutional system that we have today.

One last point - OP asks if England benefitted economically; I think that is an unanswerable question. At the time England's economic policy was mercantilist. Mercantilists understand economic benefits in a way that doesn't map very well to our modern notion (informed by Smith, Keynes et. al.) I think it is safe to say that shifting the costs of troop maintenance to the colonies seemed to Parliament to be a solution to a problem. I think it overstates things to say that this was a policy.