The Economics of Valley Forge.

Every American child is taught all about Valley Forge. This quote from http://www.eyewitnesstohistory.com/valleyforge.htm tells the official version.

The winter of 1777-8 was the low point of America’s struggle for independence. The troubles began the previous August when the British fleet unloaded a force of Redcoats at the top of the Chesapeake Bay with the objective of capturing the American capital at Philadelphia. The Americans were routed by the British at the Battle of Brandywine on September 11, leaving Philadelphia undefended. Members of the Continental Congress fled the city. The British entered Philadelphia on September 26.

The Continental Army suffered another defeat at the Battle of Germantown just north of Philadelphia on Oct. 4. General Washington led his weary and demoralized army to Valley Forge a few miles away where they would camp for the winter and prepare for battle with the return of warm weather.

Conditions in the camp were horrendous. Forced to live in damp, crowded quarters, Washington’s army of approximately 12,000 suffered from a lack of adequate clothing and food.

And by “lack”, we mean enough lack to close down the whole army forever. Washington wrote “unless some great and capital change suddenly takes place…this Army must inevitably…starve, dissolve, or disperse, in order to obtain subsistence in the best manner they can.”

That “lack” of clothing was pretty bad, too. Clothing was wholly inadequate. Many wounded soldiers from previous battles died from exposure. Long marches had destroyed shoes. Blankets were scarce. Tattered garments were seldom replaced. At one point these shortages caused nearly 4,000 men to be listed as unfit for duty. [Wikipedia].

One third of the army unfit for duty because they did not have clothes.

“General Washington, Father of Our Country, the British are coming.”

“Gather all the 12,500 men for one last stand.”

“Actually, General, you mean 10,000, because the rest have starved to death.”

“I knew it. I predicted it. 10,000 then.”

“General, you mean 6,000, because one third of the 12,500 is unfit for duty.”

“Why?”

“They can’t fight naked, sir.”

But why? Why is it that just exactly then they ran out of food and clothing, just when they needed them most? Keep this q. in mind as we continue.

Diseases such as typhoid, dysentery, typhus and pneumonia ran rampant.

Wikipedia adds sheer starvation to that list, just as Washington predicted.

An estimated 2,500 died.

Morale plummeted.

And by morale plummeting, we’re talking about “Forget this whole USA thing, guys. I’m outta here.” As Wikipedia puts it,

Soldiers deserted in “astonishing great numbers” as hardships at camp overcame their motivation and dedication to fight for the cause of liberty. General Varnum warned that the desperate lack of supplies would “force the army to mutiny.” 

Gouverneur Morris of New York later stated that the Continentals were a “skeleton of an army…in a naked, starving condition, out of health, out of spirits.”

General Washington was in despair as he watched his army disintegrate. [eyewitnesstohistory.com]

But then, for some reason, things got better. Eyewitnesstohistory.com says it was Washington’s leadership that magically made food and clothing and new recruits show up.

Devil’s Advocate: That’s unfair, Dave. Eyewitnesstohistory.com says imposing German military discipline was the single most important thing. I guess that means it was what made the food and clothing magically show up. Or maybe he means better an army starving to death, naked and diseased, but disciplined, than one healthy and clothed and well fed, but lacking German discipline. I mean, that’s what the soldiers were proud of. Let me quote it to you:

However, as time progressed, a transformation occurred. Under Washington’s inspired leadership, conditions improved: more food, equipment and new recruits reached the camp lifting spirits. Most importantly, the training efforts of Baron von Steuben increased discipline and reinvigorated pride among the troops. A former member of the General Staff of the Prussian Army, Steuben arrived in camp in February bearing a letter of introduction from Benjamin Franklin whom he had met in Paris

Washington immediately assigned the seasoned soldier the task of training his army. Drilling started immediately. From dawn to dusk individual soldiers, companies, regiments and battalions were incessantly schooled in the art of war. What had been a ragtag and undisciplined collection of individuals became a cohesive fighting force.

Wave that flag, bro.

“Man, I may be starving and naked and dying of disease, with no horses, but I can drill like nobody’s business. I am so proud. I wanted to mutiny, or just run away and be done with it, but now that I’m marching around from dawn to dusk all that has changed.”

“It’s what makes for cohesion, bro. And look at all the food that’s magically growing on the parade grounds in the dead of winter.”

“Sieg Hiel!”

Of course, it would have been better had 20% of the army not starved to death, right? Wrong, says, eyewitnesstohistory.com. It was a good thing, because all that starvation and nakedness and potential mutiny is what won us the war:

Out of this terrible winter emerged a new Army, confident and ready to do battle. On June 19, 1778 the British abandoned Philadelphia and marched back to New York City. Washington led his Continental Army in pursuit. The subsequent battle at Monmouth, New Jersey ended in a draw. The War for Independence would last another five years, but a major victory of the spirit had been won during the winter at Valley Forge.

Yep, that’s the story all little kiddies are taught in America. For some unknown reason, it was cold and hungry out there, and 2,500 people dropped like flies, not to mention 700 horses starving to death [Wikipedia]. But Washington stuck it out, and for some unknown reason, [possibly incessant drill from dawn to dusk, naked and hungry in the freezing cold and damp], everything got better after a while.

DA: Unknown reasons. Pretty odd.

SD: And isn’t it odd that there was famine and nakedness in Valley Forge, but right next door things were fine? As Wikipedia writes, Washington appointed Nathanael Greene as Quartermaster General to take charge of the supplies, who “found” caches of food and clothing and “hauled” them there for the troops and horses.

I mean, what’s that about?

And caches? Who “caches” food and clothing? Enough to feed an army?

DA: Just one of life’s mystery’s, I guess. Valley Forge, the Bermuda Triangle of 1777.

SD: Actually, the answer is well documented, and is a basic lesson in Austrian Economics.

Let’s quote the minor masterpiece, Forty Centuries of Wage and Price Controls: How Not to Fight Inflation, by Robert L. Scheuttinger and Eamonn F. Butler [available free at mises.org]:

WASHINGTON BATTLES STARVATION
In Pennsylvania, where the main force of Washington’s army was quartered in 1777, the situation was even worse. The legislature of that commonwealth decided to try a period of price control limited to those commodities needed for use by the army. The theory was that this policy would reduce the expense of supplying the army and lighten the burden of the war upon the population.

DA: What’s not to like? Cheap food and clothes for the soldiers, a lessened burden on the civilians. And freedom is preserved, too, somewhat. The price controls only applied to commodities needed by the army.

The result might have been anticipated by those with some knowledge of the trials and tribulations of other states. The prices of uncontrolled goods, mostly imported, rose to record heights. Most farmers kept back their produce, refusing to sell at what they regarded as an unfair price.

DA: So that’s where the caches came from.

SD: And it didn’t lessen the burden for anybody, either. The Congress started printing paper money on top of everything else, which AE predicts will cause price inflation. And sure enough:

The prices of uncontrolled goods, mostly imported, rose to record heights.

SD: And with higher inflation comes lower patriotism:

Some who had large families to take care of even secretly sold their food to the British, who paid in gold [=as opposed to the Americans, who paid in paper money].

DA: They needed some Prussian drilling from dawn to dusk to lift their spirits.

Dave, have you nothing good to say about the Continental Congress? We’re talking about the Founding Fathers here.

SD: They learned from their mistakes:

After the disastrous winter at Valley Forge when Washington’s army nearly starved to death (thanks largely to these well-intentioned but misdirected laws), the ill-fated experiment in price controls was finally ended. The Continental Congress on June 4, 1778, adopted the following resolution:

Whereas. . . it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purposes proposed, but likewise productive of very evil consequences to the great detriment of the public service and grievous oppression of individuals. . . resolved, that it be recommended to the several states to repeal or suspend all laws or resolutions within the said states respectively limiting, regulating or restraining the Price of any Article, Manufacture or Commodity.

DA: Did it work? Did the soldiers finally get their food and clothing?

SD: You bet:

One historian of the period tells us that after this date, commissary agents were instructed “to give the current price. . . let it be what it may, rather than that the army should suffer, which you have to supply and the intended expedition be retarded for want of it.” By the fall of 1778 the army was fairly well-provided for as a direct result of this change in policy. The same historian goes on to say that “the flexibility in offering prices and successful purchasing in the country in 1778 procured needed winter supplies wanting in the previous year.”

In the immortal words of an economist of the period, Pelatiah Webster:

Trade, if let alone, will ever make its own way best, and like an irresistible river, will ever run safest, do least mischief and do most good, suffered to run without obstruction in its own natural channel.

EDIT: The learned Kakugo of mises.org and libertyhq fame, has allowed me to add his comments:

May I also add that Von Steuben’s contribution was not the introduction of “Prussian discipline” (which caused enormous problems to the French who had adopted it after the Seven Years War) but in schooling American officers into the benefits of having a proper General Staff and something akin to a chain of command, very much like Kosciuzko taught the Colonials military engineering and the value of tactical reconnaissance.

For Kosciuszko quote Kajenci, Francis, Thaddeus Kosciuzko: Military Engineer of the American Revolution, 1998, Hedgesville, Southwest Polonia Press

For Von Steuben quote Fleming, Thomas, Washington’s Secret War: The Hidden History of Valley Forge, 2006, New York, Harper Perennial

You may also add Von Steuben personally attempted to drill a company of Colonials but they could not understand his constant swearing… because the general spoke almost no English. When that failed, he decided to train officers and instructors (to pass his knowledge along) and write a handbook for the army with the help of a translator. In that he was far more successful.