How Big Government Discovered America

by Benjamin Studebaker

In the 15th century, when Christopher Columbus needed money to make his voyage to the Americas, he approached several heads of state. He came to the John II of Portugal, to the doges of Genoa and Venice, to Henry VIII in England, all of whom declined to fund his grandiose and zany project. Finally, he went to Ferdinand II and Isabella I of Spain. Their ministers, like the ministers in the previous nations, deemed the voyage impractical, too costly, too foolish. A bad investment. All the same, the Spanish monarchs decided to appoint Columbus Admiral of the Seas and dumped a pile of state investment upon him. And so, from the bosom of state largesse, the discovery of America began.

It did not stop there, however. It was not enough to find America. The economic and political advantages that made Spain the global superpower of the 16th and 17th centuries was gained by the conquistadors, agents of the state who when on missions of exploration and conquest to seize new lands for Spain and, more importantly to the Spanish national interest, clear out the existing inhabitants. The Aztecs fell to Cortez, commissioned by the Spanish governor of Cuba to make Mexico suitable for colonisation. The Incans fell to Pizarro, commissioned by the Spanish governor of Panama to explore the lands to the south. The Spanish crown extended the reconquista effort to the newly seized lands, the process of removing, subjugating, and converting non-Christians within Spanish territory, and the Spanish viceroyalties of New Spain and Peru funded further expansion and construction, huge sums of money flowed into the Spanish monarchy’s coffers, making it by far the richest of the world’s nations. And why? There was nothing remarkable about the Spanish culture or the Spanish people. During this same time, the inquisition was driving out the intellectual minds who would go on to advance the nations to which they immigrated, primarily Britain, and would prove, in the long-run, the downfall of the Spanish Empire.

The only reason Spain seized power for a couple of centuries was that the Spanish government made the investment. Exploring and colonising America was a far-fetched venture the financial merits of which were perceived to be quite dubious. It was a very high risk, very high reward scenario, the sort of investment one can only undertake with vast, expendable resources and a large time scale for payoff. It is the kind of investment that only big government can make. As a result, fortunes only reversed when England and France began to make the kind of investments that only Spain had deigned to make previously.

In England, it began with Elizabeth I and Sir Francis Drake, a paid agent of the state sent to circumnavigate the globe and seize lands in the name of the crown. However, the English found their shipping and colonising harassed by the Spanish fleet, and so the state invested in creating a navy strong enough to protect and secure English overseas investment. The British, unlike the Spanish, attempted at first to develop its colonies through the private sector–James I picked the London Company as the exclusive winner of the right to develop the territory in Virginia. The company developed the territory between 1607 and 1624, when it went bankrupt, and had to have its territories nationalised by the state, becoming the first crown colony, the system which would gradually become the predominant of method of British colonial expansion–direct state investment and control. By the dawn of the 18th century, the majority of British colonies were administrated in this state-led manner. The British state was also quite willing to invest in seizing neighbouring foreign colonies–both the Swedes and the Dutch lost their colonies to superior British naval investment, including what became New York City.

The French did things rather differently, and paid the price. Like England, the French state commissioned explorers (the most famous of which is Jacques Cartier). The French however did not make the large state investment Britain made in possessing a dominant navy or in manning and developing its territories, choosing instead to invest in European land wars. The result? France expended its resources trying to unite Spain and Austria under a single French Bourbon king (a remarkable ambition, had they been able to pull it off–alas, they failed narrowly, but the legacy is preserved, as King Juan Carlos I of Spain remains a member of the Bourbon dynasty), and when the Seven Years’ War came, it lacked the colonial manpower to defend itself from the state-developed military, economic, and human infrastructure of the British Empire, which exceeded it in naval power, industrial development, and population density. In what would prove the final example of France turning from America to wage futile land wars in Europe, Napoleon sold the Louisiana Territory to Thomas Jefferson in 1803 for a pittance to finance the Napoleonic Wars and spite the Spanish.

What is the moral of this story? History turns on which states invest and which do not, and on which states invest wisely and which foolishly. The United States and Canada speak English because of investments made by kings hundreds of years ago. Latin and South America speak Spanish (and, to a lesser extent, Portuguese) for the same reason. There is no major French state in the Americas because the French government mismanaged its funds. If you’re reading this from the Americas, or from any place that was, at one point in time, a colony of some European power or other, your life is the way it is, for better or for worse (though in the American and Canadian cases, almost certainly for better) because at some point in history, a government decided to take a chance.  The private sector did not build the new world; the state did.

Today, the next frontier is space. The moon, Mars, and beyond are likely rich in all sorts of mineral resources we have yet to discover. The earth only has so much of the various elements necessary for the various materials, only so much potential for productive output by itself. Of course, the lunar or Martian colony proposal sounds mad to us, just as the voyages to the Americas sounded mad to the people of centuries past. All the same, the country that makes that high risk, high reward investment will likely be dominant, its people rich in living standards and material wealth. Is the United States that country, or is our faith in the public sector’s ability to invest and create jobs so weak that we will abandon the task to another? We shall have to see…