(We couldn't have done it without them!)
Historical Examples of the
Free Market utilizing Percentage As You Earn (%AYE) Finance & Finansurance for
solving major problems and with large numbers of individual agreements.
Written by Brock
d’Avignon, 1978; Edited by Melinda Pillsbury-Foster, 2017
Historical Probe #2
Privateering Goes to War 1775 –
1782, & 1812 - 1815
Privateers' %AYE Financed Defense of Free-Market America
Once upon a time, 792 stock-share
owned and privately armed rebel warships set sail against their government's
barriers to free trade. Over 3, 100 of His Majesty's vessels were captured or
destroyed by American Revolutionary warships, each entirely outfitted and
operated with Percentage As You Earn (PAYE) finance. Joining the fray to end
the Crown's legalized monopolies, the Colonial Burgesses and later Continental
Congress taxed or printed enough money to finance in a similar manner, 64
republican warships.
On 15 April 1775, four days
before the Lexington Commons and Concord Bridge Battles, the Massachusetts
State Ship Tyrannicide
hoisted anchor. Congress requested dividends from its U.S. Navymen of 66%
percent of any captured prize-ship and cargo. By contrast, typical American
investors, such as little old ladies with 20-dollar gold pieces, who were
interested in thwarting subsidized tea monopolies; invested into capitalist
cruisers. The investors in Privateer
ships, requested dividends of only 33% percent, leaving to the crew the
two-thirds of whatever enemy vessels the Privateersman boarded and brought to
ports' maritime title company courts' condemnation hearings, or government
Admiralty courts to verify they were actually British ships that were captured.
Not surprisingly, the skilled seamen signed aboard the instruments of war that
would be loaned to them at the much lower rate:
Comparative List of
American Armed Vessels: Years 1776 - 1782
Class of
Warship
|
1776
|
1777
|
1778
|
1779
|
1780
|
1781
|
1782
|
Continental
|
31
|
34
|
21
|
20
|
13
|
9
|
7
|
Privateer
|
136
|
73
|
115
|
167
|
228
|
449
|
323
|
Edgar S. Maclay, A History
of American Privateers, D. Appleton & Co. , New York & London, 1899, p.
iv,
Circa 1775, Americans calculated the return-on-investment in
the quite literal removal of the British Roi's taxation-subsidy cycle. Idle
ships were bottled up in harbors and were thus useless to the owners. Their
" opportunity cost" was no less beneficial in risking the equal loss
of the ship at sea, while enlistee privateersmen loaded a gesture of defiance
at the Crown's enforced protectionism. Since blockaded shipowners were often
broke, the outfitting of the vessels was usually underwritten by a popular
stock offering to other colonial rebels who had seen the strategic wisdom of a
unilateral declaration of free-trade. The number of American stockholders grew:
Comparative Number of Guns
Carried By the American Vessels: Years 1776 - 1782
Class of
Warship
|
1776
|
1777
|
1778
|
1779
|
1780
|
1781
|
1782
|
Continental
|
586
|
412
|
680
|
462
|
266
|
164
|
198
|
Privateer
|
1,360
|
730
|
1,150
|
2,505
|
3,420
|
6,735
|
4,845
|
Edgar S. Maclay, A History
of American Privateers,D. Appleton & Co. , New York & London, 1899, p.
iv,
According
the author of Pirates, Privateers, and Profits, by James G. Lydon. Introd. by Richard B.
Morris, both owners and operators floating on percentages, decided to
structure privateering's merit pay incentives aboard ship in three ways:
1) Smugglers like John Hancock had early
defined 18 basic jobs in high-risk operations plus 2 incentives; so aboard
Privateers the 2/3rds "earnings" of the crew were formally divided
into brackets of 20ths by shipboard tasks.
Custom
was established aboard square-rigged ships that cabin boys, for instance, no
matter how many, received a sub-bracket of 1/5th of 1/20th; still a sum enough
on some voyages to place a boy into the middle class economically. If seven or
eight cabin boys were optional, then they decided if they wanted more hands-on
task, or cut their numbers down to seven so as to receive a larger payout per
cabinboy. The same 1/20th bracket
concept applied, no matter how many occupied that bracket, all the way up to
the First and Second Mates who split a full 20th each. Sometimes the ocean-crossing privateers
captured six ships and manned them.
2) The "captain's purse", however, was a notably
outsized 3/20ths or 15% of crew booty. There were two good reasons for the size
of the captain's purse, and they were encouraged by the crew. It was widely
recognized by these sea-going mercenaries that no one dies for money.
Tactical ideas counted as did obligated duty; but risking
death more than other crewmates were willing to risk, had better account for
something more than the thrill of a fight. The captain allotted merit pay
percentages from his purse based on sub-bracket percentages according to any
specified success totaling 1/20th of the booty, equaling a third of his
purse. Examples: for gallantry (the
first man to board an enemy vessel would receive an extra meritorious wage, or
his widow at home would); for marksmanship (the first Kentucky Rifle up in the
marines' "fighting tops" to pick off the enemy captain); for a
lookout's eyesight from the crow’s nest; or for an excellent cook. The captain usually kept 1/20th for his own.
3) The
last third of the captain's purse merit pay incentives was a 1/20th designated
by the captain and the owners for the crew if they achieved some
extra-un-ordinary feat. This action might be the burning of a specific revenue
cutter or capturing a patrolling frigate.
This 1/20th or third of the
captain’s purse was often nailed to a mast, and the impossible became the
routine. For instance, Privateer Captain Jonathan Haraden captured over 1, 000
British naval cannon during the Revolution. Never heard of him, hmmm.
The Revolution's
sea-power became self-financing within 3 years, which attracted more
participants, Unlike most forms of capitalism that make money, privateering set out to take
money back as a reprisal for financial suppression and impressment servitude.
Privateers went to sea with an overload of men and materials for the purpose of
re-outfitting and skeleton crew re-manning several captured prize vessels.
Fortunes rose or sank in prize vessels on their way to American or French
ports, Prisoners-of-war often rose to recapture prizes back from the skeleton
crew; sometimes a ship changed hands and navigation several times.
For
this reason of disparity of luck among the same original privateer crew, the
admiralty courts judged that all hands who sailed off together would be
entitled to their agreed portion of wages and dividends in the overall venture.
This trend concerning reprisals was standard throughout the former colonies.
All previous and future reprisals, accrued to the privateersman no matter where
they
are now, "in heaven, in port, at sea, in hell, or worse as prisoners in
Britain" dank hulks. If the original Privateer ship was lost, it was not
usually deducted from the crew's pay but from the stockholders' “capital
gains"; although a refundable insurance bond accumulated from prizes sent
in, until the original ship's return. The admiralty courts clearly sided with
the sailors since they were in fact risking their lives on the high seas
whereas the stockholders were not. Many sailors became "men of property"
and could vote in the title company maritime courts or State admiralty courts to sustain judges on
their bench.
they
are now, "in heaven, in port, at sea, in hell, or worse as prisoners in
Britain" dank hulks. If the original Privateer ship was lost, it was not
usually deducted from the crew's pay but from the stockholders' “capital
gains"; although a refundable insurance bond accumulated from prizes sent
in, until the original ship's return. The admiralty courts clearly sided with
the sailors since they were in fact risking their lives on the high seas
whereas the stockholders were not. Many sailors became "men of property"
and could vote in the title company maritime courts or State admiralty courts to sustain judges on
their bench.
During
this era, through the Revolution and the War for Free Trade and Sailors’
Rights, there were two female privateer captains who inherited their ships at
sea. The daughters and wife of Captain
Uriah Sears, returning from China trade, were surprisingly attacked by French
privateers in the Caribbean on their way back in 1803, and sunk the French ship. My ancestors’ armed merchantman wommaned by
Chloe, Keziah, and Hannah Sears sunk the French ship. The French had cracked
the hull of their prey, allowing water to expand silks and tea to burst their
planking. A British frigate out of
Jamaica rescued both crews.
When a prize vessel came in, it often carried financial
instructions from some of the privateersmen who captured it regarding
investment in it to create yet another Privateer. Some privateersmen
used their wages from the prize to buy or barter stock shares
in its venture or re-outfitting. This
practice aided cash flow in the war effort and became known as "waging
war" against England's not-so-commercial empire. Several such wage warrior stockholders in a
prize vessel, for some reason, made the best watchful prize crew imaginable.
Thus, whenever a spyglass sighted a convoy of the Crown's mercantilistic “business"
underway with a warship, eyeing it was referred to as “taking stock" in
the situation.
Indeed, the word “enterprise” means to enter a captured prize. It has
come to mean more peaceful ventures since yet still requiring courage to be
creative.
Many
privateersmen who didn't invest in gambling that prize vessels would reach
port, retained their bloody hard-won hard silver specie while sailing the
currents of war. A Privateer captain
could rely on his crew's stout self-interests down in the holds of captured
ships; much in contrast to the U. S. Navymen who were paid in ever-inflationary
paper currency.
While subsidized British commerce lobbied in the lobby of Parliament
for more restrictive laws, sail, and cannon to inflict more economic woe on the
untaxable colonials---American seaboard political pressure in October 1776 rose
with the tide of Congress' inflation of money. Congress acquiesced to lower its
66% "rePAYEment" from Navymen to 50% on cargo craft captured. Congress
would forego revenue if the crew captured an enemy man-o-war or British
Privateer; and would pay in paper money a bounty for the destruction of any British
vessel of half its adjudged value in a governmental admiralty tax court. For
the Continental Navy then, the policy to attract volunteers was translated into
the orders: burn, sink, & kill. To an American Privateersman's point of
view, it seemed as if Congress had institutionalized the bloodthirsty failure
to bring capturable ships of any sort to any port. Glance again at Maclay's table to see how well
regarded these measures of vague "national interest" were, and how
few signed aboard USN warships in the name of "national security”
Navy Captain John Paul Jones wrote Congress decrying,
"the impossibility of manning a government vessel whenever a Privateer was
outfitting and recruiting in the same harbor, which is most all the time. Alas
without a Navy!" Some republican navy captains became desperate enough to
try involuntary servitude, which crossed against the individualist grain of
most other revolutionaries and what they thought they were fighting for. Congress was dominated by Privateer interests;
the man they chose to command the fledgling U.S. Navy was Commodore John Barry
due to an incident of principle on the Delaware River. He was selected because
as Privateer Captain Barry, he had been already primed to fire a broadside into
a Continental sloop commanded by a USN lieutenant under Navy Captain Seth
Harding. The Navy ship had sent an impressment gang to Barry's Privateer to
conscript his privateersmen. Barry piped the would-be draft board aboard and
simply pointed to a gunner's mate holding a lighted fuse and silently saved the
Revolution. It is Commodore Barry's statue in front of Independence Hall today
that stands as a testimony against upholding the sins of governance with
efficient PAYE finance.
Barry knew that State mis-determinations will cause
tax-revenue over-reliance, causing inept use of bonds, causing a desperate need
for inflated printed money. As
government loses its power base to the free-market using the same financial
method: governments will excuse their lack of insurance liability on its
"good faith & credit" based on its tax-supported military's ease
in killing and enslaving to "man" its programs of "national
service' -- all ironically in the name of" national defense education acts
for liberty. Perhaps we won't get fooled
by that line anymore than the Commodore.
Freedom makes living worthwhile, and a living worthwhile.
Percentage As You Earn (%AYE) finance is determined by both "worth"
and "while". Its PAYEment systems are relevant to only those tools
and services that increase a borrower's erratic yet ever-increasing capability to be more productive. Freedom
itself, in this case was the service sought, the tools were gun platforms. PAYE
finance was well suited to build freedom's defensive infrastructure in 1775,
again, in 1803, as Jefferson cut the Navy budget in order to encourage
privateer action against the Barbary Pirates. Six United States Marines, two US
Navy ships, along with six hundred ship-wrecked Greek sailors and a Libyan army
under the command of a 7-foot tall, black, Egyptian Republican Revolutionary in
Haiti and a future American privateer named King Dick, captured Tripoli after
sweeping across the desert. Declaring a
constitutional sultanate of the United States of North Africa, its victory was
given away in diplomacy to save the sensibilities of US southern states. How different American history would be if
there were neither a Pentagon today nor slavery yesterday.
Thus, the investors' strategic orders were very precise: raid
only British commerce, since that was the raison d'etre of the Royal Navy
blockades and its influence in Parliament. American Privateers' orders were
aimed at protecting the salubrity of all vessels in a fight, making the resale
of enemy vessels profitable. Privateers captured 16,000 well-equipped
"redcoats" on the high seas during the Revolution, as compared to the
8, 000 not-so-well-equipped Kingsmen that George Washington captured on land,
until Yorktown. Prisoners were worth $20 at the exchange rate in America. The
investors' orders translated into: capture, extinguish fires, minimize loss of
life, and run blockades to port with prize vessel, cargo, and exchangeable prisoners,
Thus, new Revolutionary warships returned to sea flying the 13 gold and
black striped Privateer ensign emblazoned with an American rattlesnake
proclaiming, "Don't Tread On Me”.
The British Navy was embarrassed by American Privateer tactics
being blatantly concerned with retaliation against their commercial empire.
Instead of a suicidal nationalistic urge to go up against the King's majestic
ships-of—the-line with three times their armament; the American's lightweight,
fast, shallow-draft, 16-gun platforms would dart from Merchantman to
Merchantman. Privateers found themselves capturing several 36-gun frigates
anyway, as they turned the Merchantmens' carronades upon King George's folly.
The only desire the Americans ever had to dare attack the even
larger "hell ships" manned by the impressment of Americans enslaved
for years, was to show-off gunnery skills. The Royal Navy did not practice
gunnery as did the pecunious Privateers who had to make every shot count; but
relied on massive multi-decks of firepower. The Americans would quickly capture
and sail away the dreadnought' s little cargo convoy, leaving the lumbering
slow warship without a purpose.
The British taxpayer quickly grew tired of paying for such
worthless objects of nautical art.
Lloyds of London ship insurance went up 6,000% and was the major
contributing argument in the House of Commons for making peace with their
break-away cousins.
Whenever a British fleet actually nabbed an American Privateer
that wasn't quite quick enough downwind, the British sailors couldn't handle
the amount of sail crowded on them because it wasn't Navy Regulation. "Going
by the book" they cut down masts and spars, and then after filling the
hull with rock ballast; they wondered why it couldn't catch other Yankee
designed vessels. Meanwhile, Yankee
Privateer Captain Jonathan Haraden invented the “jackass brig” air rudder to
run circles around enemy ships; as well as the swinging plumb-bob to order
level broadsides. When out of ammunition Haraden loaded his cannon with silverware and crowbars, tearing an English
Privateer to shreds off the Spanish coast.
This inspired a Spaniard named Farragut to join the American Revolution,
his son would command the Union Navy in the Civil War.
Thomas Paine's 1776 challenge to Americans was to build with
their forests enough Privateers to deny British business the fruits of its Navy's
tyrannical canvas and cannons. Paine had been in America one year before he
gave this advice. He was probably not expecting ocean-crossing Privateers to
dare attack English cities in the Thames, nor sink the Dover fishing fleet for
being loyal to the royal's protectionism. After such actions, Ben Franklin
personally financed three Privateers from France with Irish crews to raid the English
Channel. These too were PAYE financed and PAYEment operated.
The Royal Navy could not fathom the lack of concern American
Privateers had for not carrying permission of a government to attack them; a ”letter of marque and reprisal" or in modern business
license parlance, a " certificate of public need". The British
Admiralty always referred to their own few Privateer ships as "letters of
marque" and hoped they would envelope something. Fortunately, the British
did recall the Elizabethan principle of a stock market deciding on the number
of warships at sea instead of a maritime bureaucracy, so only early in the
Revolution were any rebels hung as pirates. Yet as monarchists they could not
comprehend people contracting on their own as sovereign individuals without a
Sovereign authority. To Americans of the era, corporations were not creatures
of the State; to the British they were chartered by the Crown. British
political pressure at sea ironically caused the legitimacy of the Congress to
rise, at least in the subjective eyes of the British sailor.
The Continental Congress and the various United States were
happy to remedy the difficulty in gaining Royalist and Loyalist respect by
issuing letters-of-marque like they were licensing the waves of the sea, 3, 000
marque "coasters" from Massachusetts alone kept their ports and sea lanes open before they returned to peaceful pursuits of
happiness.
The British mind was satisfied, but to Americans such national
permission was a sham. Investors were
interested in eventual free trade with England. When the Crown recognized its
loss by surrender and treaty, only 2 American Privateers remained at sea to
become pirates in 1783. Seaboard America defined them as rebels without a cause
and sent a fleet of Privateers with one Navy ship to end their aggression. Only three US Navy ships were left operable
in 1782.
Most muskets and gunpowder that General Washington had to use,
came from intercepted royal vessels. The General lamented to Congress for
supplies for years, yet they came not from Congress but Privateers -- often
given him or a severe discount for mere transport to his ever retreating army. Little
was said in the "London Times" about Washington or Congress;
the news was all maritime disasters. When Lloyd's of London
insurance rates rose 6000%, it was time to tell the Royal Navy that the war for
mercantilism's empire in the Atlantic was over. They decided to send Cornwallis
to India to impose intolerable acts upon a different set of Indians -- who
didn't use such savage PAYE finance incentives against their imperialism. The
British merchant-adventurers has used %AYE finance to send dissident emigrant
religionists to America. It was no surprise the new Americans used this
successful business model against their forceful arrogance not allowing them a
voice in counter-productive government policies.
Such lessons did not go unheeded 29 years later during the War
for Free Trade and Sailors’ Rights, according to Privateer Captain Coggeshall’s
History
of American Privateers, published in 1856; and Theodore Roosevelt’s War of 1812. This time 517 ocean-crossing American
Privateers again captured over 3, 100 vessels from the British Navy and
Merchant Marine. The U.S. Navy's 23 ships didn't do too bad either. The Navy honors names like Jones, Preble,
Decatur and Rogers. However, tax-supported
history books in schools do not tell the amazing tales of Privateer Captains
like Haraden, Crowninsheild, and Boyle, nor commodores Barney and Barry who
believed in popular defense instead of centralizing it.
Perhaps the most valuable lesson taught us by American Privateers
was their keen insight into how to motivate employees within wide-spread
sophisticated, contractual enterprises that floats on a percentage-of-income.
Their activities were deadly yet hold managerial lessons for those into
constructive pursuits of Human Investments in collegiate education for all in
the free market, medicine for all in the free market, subscription
anti-ballistic missile systems, mortgages without fixed installments nor
repossession, and craftsperson tooling today allowing retail sales to expand.
These lessons are: an objective view of organizational co-operation with
individual contracts, pay scale identification by function, merit pay for both
individuals and the crew, and benefits recognized for brave souls whose buckle
got swashed. These were ordinary beings who could calculate the odds of risk
that today we call econometrics, and gambled with their lives on improving
those risks with commensurate rewards. Heroism increased their capacity to
"earn" beyond the stockholders' investment in rigging masts with “green hands”. Freedom isn't free; yet it can have its rewards
in peace.
Brock d’Avignon - has been a student of privateering issues since 1977 as it was relevant to providing as example for paying employees in a hospital empire that would use Percentage As You Earn (%AYE) finance & medical finansurance for all to provide finance of pre-existing conditions and insurance for unexpected events. William E. Simon Sr., then recent Secretary of the Treasury asked him about how this could be done when he was advising 11 medical empires while with Booz Allen and Hamilton Management Consultants as a actuary. William H. Donaldson, Chair of the New York Stock Exchange, couriered Brock's research to the Clinton Economic Summit to Vernon Jordan who had endorsed PAYE finance for collegiate tuition at Duke and Yale to get minority and female faces into the Ivy League, for relay to a former Yale Law School student who had once used PAYE finance to get through college. Jack Kemp, Secretary of Housing and urban Development, used Brock's research to sell all government housing to the people with erratic incomes that were living in them, never fearing repossession and gaining pride of ownership with no defaults. This at one time eliminated homelessness. Kemp later used Brock's research to raise $596-million for Habitat for Humanity for fixer-uppers that could be sold to people with inconsistent income. Brock is today a credentialed Social Sciences teacher in California, and economist and Adjunct Professor with the Women's Institute for Individual & Political Justice, when not ramping up a PhoneVoter Interactive TV Networks. He describes himself as an individualist feminist.
