Trade and empire in the eighteenth century atlantic world

Adam Smith’s Wealth of Nations 1776 systematized new theories of political economy and had far-reaching effects on ideas of society, international relations, and politics.. Trade and Em

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Trade and Empire

in the Eighteenth-Century Atlantic World

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Trade and Empire

in the Eighteenth-Century Atlantic World

By Andrew Hamilton

Cambridge Scholars Publishing

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Trade and Empire in the Eighteenth-Century Atlantic World, by Andrew Hamilton

This book first published 2008 by Cambridge Scholars Publishing

12 Back Chapman Street, Newcastle upon Tyne, NE6 2XX, UK

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Copyright © 2008 by Andrew Hamilton All rights for this book reserved No part of this book may be reproduced, stored in a retrieval system,

or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or

otherwise, without the prior permission of the copyright owner

ISBN (10): 1-84718-837-0, ISBN (13): 9781847188373

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T ABLE OF C ONTENTS

Acknowledgements vii

Introduction Political Economy and the Changing Face of Empire The language of commercial ideology viii

Liberalism and mercantilism: disaggregation as a method xvi

Chapter One Laissez-faire and Reason of State A genealogy of laissez-faire 1

Anglo-American or French genealogy? 4

Gournay, d’Argenson and laissez-faire 7

The providential argument and its early modern carriers 12

Reason of state and the rich country-poor country model 17

Chapter Two Toward a Common Liberal Vision of the Atlantic World Shelburne and his circle 25

Shelburne’s views on commercial expansion in the modern world 29

Shelburne’s theory of informal empire 32

Shelburne and the Dissenters 35

Benjamin Vaughan enters circle 41

Chapter Three Commonwealthmen, Dissenters, and American Radicals: Benjamin Vaughan in his Circle Positioning Vaughan within the larger circles 51

Early biographical connections and the Club of Honest Whigs 54

Importance of Vaughan’s editing of Franklin’s writings 61

The Wedderburn Affair 66

Vaughan and the peace negotiations of 1782-3 69

Interlude between peace and revolution 72

Remnants of the circle 74

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Table of Contents vi

Chapter Four

From Conquest to Commerce

The Union debate as context 77

Raison d’état and the shift from the passions to the interests 82

Doux-commerce, Hugo Grotius, and society 90

The Spanish question, mercantilism, and the shift to doux-commerce as a policy decision 97

Conquest to commerce as a philosophy of history 105

Chapter Five Benjamin Vaughan and the Liberal Moment Vaughan’s writings before 1788 111

Vaughan’s New and Old Principles of Trade 124

The rich country-poor country model in Vaughan’s writing 125

Doux-commerce language in New and Old Principles of Trade 132

Theory and practice 135

Providential distribution of goods and the cosmopolitan vision 138

Chapter Six John Adams, Nationalism, and the Retreat from the Liberal Moment John Adams and free trade 147

The collapse of the liberal moment 150

Bibliography 157

Index 166

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A CKNOWLEDGEMENTS

I take great pleasure in acknowledging my graduate advisor, Laurence Dickey, for his clear direction and continuing support of this work, originally begun as a Ph.D dissertation at the University of Wisconsin-Madison I am indebted to him for introducing me to the study of intellectual history I also wish to thank the staff of the Clements Library

at the University of Michigan in Ann Arbor for their assistance in procuring access to the Shelburne and Paine papers in their collection, as well as the archivists and librarians at the American Philosophical Society

in Philadelphia Much of the formative conceptual work concerning empire and the Atlantic world benefited from the astute comments and critiques of participants in the 1999 International Seminar on the History

of the Atlantic World, 1500-1800, conducted by Bernard Bailyn at Harvard University I am most grateful to my loving wife, Krista, for her assistance in the preparation of this manuscript, and for her tireless push for clarification in my writing

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I NTRODUCTION

P OLITICAL E CONOMY AND THE C HANGING

F ACE OF E MPIRE

The language of commercial ideology

In the late eighteenth century, revolutionary ideas about commercial society began to cause momentous change in Western political thought

Adam Smith’s Wealth of Nations (1776) systematized new theories of

political economy and had far-reaching effects on ideas of society, international relations, and politics Some of the most remarkable transformations in the conceptions of modern social and political life took place within the context of the British-American Empire As the North American colonies pressed for independence from Britain, political figures

on both sides of the Atlantic, including Lord Shelburne, Benjamin Vaughan, and John Adams, used Smith’s economic doctrines to defend policy decisions during the period leading up to and directly following the American Revolution This study traces the development of early modern theories of trade and empire for the purpose of revealing the practical application of Smith’s theories to political settlements during a time of considerable change and upheaval, when the definition of empire was shifting from military conquest to commercial domination

The conceptual models central to this book principally derive from three historians The first is J.G.A Pocock, whose emphasis on language has added a productive new approach and vocabulary to the study of political history, and has equipped intellectual historians with innovative tools for engaging texts, their authors, and readers The work of Pocock and the closely aligned Cambridge School has significantly increased our understanding of political economy and the nuances of the Scottish Enlightenment, “the period of great intellectual achievement in eighteenth-century Scottish history that is associated with the names of Hugh Blair, Adam Ferguson, David Hume, Lord Kames, John Millar, William

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Trade and Empire in the Eighteenth-Century Atlantic World ix

Robertson, and James Steuart, as well as Adam Smith.”1 The second figure, Bernard Bailyn, is recognized for his influential explorations of British-American culture and politics, and as the originator of the new field of historical study known as Atlantic History His approach calls attention to the transatlantic connections that existed in the early modern period between the metropolis in Europe and the colonies in the New World, in contrast to conventional interpretations that separate such studies along continental or national boundaries The third historian is

Felix Gilbert, whose largely overlooked publication, To the Farewell

Address, identified the complex role of commercial ideology in forming

early American foreign policy.2 In his book, Gilbert suggested the subtle manner in which competing discourses of commercial relations informed the attitudes of eighteenth-century Americans toward their new country and its relationship with Europe The models developed by these three authors form the foundation of this historical investigation of trade and empire theories in the early modern era

As mentioned, Pocock’s work has given historians a new historiographical model for understanding texts In the introduction to his

landmark study, Virtue, Commerce, and History, he described the

changing landscape of political history, suggesting that intellectual historians have witnessed a

movement away from emphasizing history of thought (and even more sharply, ‘of ideas’) toward emphasizing something rather different for which ‘history of speech’ or ‘history of discourse,’ although neither of them unproblematic or irreproachable, may be the best terminology so far found 3

1 Laurence Dickey, “Editorial Preface,” Adam Smith, An Inquiry into the Nature

and Causes of the Wealth of Nations, ed L Dickey (Indianapolis/Cambridge:

Hackett Publishing Co., 1993), p vii

2 Felix Gilbert, To the Farewell Address: Ideas of Early American Foreign Policy

(Princeton: Princeton University Press, 1961) Gordon Wood pointed out that while many historians have ignored the issue, Gilbert has shown how early American foreign policy “attempted to embody…liberal ideas about war and

commerce.” Gordon Wood in David Womersley, ed., Liberty and American

Experience in the Eighteenth Century (Indianapolis: Liberty Fund, 2006), p 442,

n 42

3 J.G.A Pocock, Virtue, Commerce, and History: Essays on Political Thought and

History, Chiefly in the Eighteenth Century (Cambridge: Cambridge University

Press, 1985), p 2

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Introduction x

Pocock’s reorientation of the historical field places emphasis on an author’s discourse in an effort to discover what the author “was doing.”4

To this end, historians have begun to analyze the interaction between

langue and parole, between language context and speech act, with the

underlying contention that recovering an author’s language is no less important than recovering the author’s intentions Pocock has demonstrated that intentions cannot exist apart from the author’s language(s) The language context determines the range of arguments an author constructs, as well as how the author conveys those ideas in a text

As Pocock explained, this theory

…asks not only whether intentions can exist before having been articulated

in a text, but whether they can be said to exist apart from the language in which the text is to be constructed The author inhabits a historically given world that is apprehensible only in the ways rendered available by a number of historically given languages; the modes of speech available to him give him the intentions he can have, by giving him the means he can have of performing them At this point the history of political thought becomes a history of speech and discourse; …the claim is made not only that its history is one of discourse, but that it has a history by virtue of becoming discourse 5

It should be noted that this approach does not reduce the author to a passive representative of a particular language Rather, the author is recognized as actively manipulating the available languages in an effort to articulate specific, sometimes original ideas In this interactive, two-way approach, the author is constrained or even controlled to an extent by the language context, but in turn, may influence and develop that context.6

The contextual intricacies of Pocock’s method are attributable in part

to his deliberate application of Thomas Kuhn’s paradigm model to the

4 Pocock, Virtue, Commerce, and History, p 5 See also, Quentin Skinner, The

Foundations of Modern Political Thought (Cambridge: Cambridge University

Press, 1978), vol I, p xiii

5 Pocock, Virtue, Commerce, and History, p 5

6 Gabrielle Spiegel elaborated upon this point in “History, Historicism, and the

Social Logic of the Text in the Middle Ages,” in Speculum, 1990, no 65, p 77:

“All texts occupy determinate social spaces, both as products of the social world of authors and as textual agents at work in that world, with which they entertain often

complex and contestatory relations In that sense, texts both mirror and generate social realities, are constituted by and constitute the social and discursive

formations which they may sustain, resist, contest or seek to transform, depending

on the case at hand.”

Trade and Empire in the Eighteenth-Century Atlantic World xi

history of political language Kuhn’s famous model explained how it is that established concepts and theories (paradigms) come to play a role in science, of not only pointing to the answers to scientific problems, but also defining the very types of problems that are to be taken as requiring solutions As Pocock suggested, paradigms dictate “the direction, the pattern, the distribution and organization of intellectual endeavor, [and] indicate further the ascription and definition of authority among the individuals and groups composing the ‘scientific community.’ ”7 Thus, Kuhn’s methodology “treats a branch of the history of thought as a process both linguistic and political.”8 The paradigm has an intellectual role, and it comes to bear on the question of authority as well Pocock applied Kuhn’s concept to the history of political thought in order to articulate the full context in which an author acted:

Men think by communicating language systems; these systems help constitute both their conceptual worlds and the authority-structure, or social worlds, related to these; the conceptual and social worlds may each

be seen as a context to the other, so that the picture gains in concreteness The individual’s thinking may now be viewed as a social event, an act of communication and of response within a paradigm-system, and as a historical event, a moment in a process of transformation of that system and of the interacting worlds which both system and act help to constitute and are constituted by We have gained what we lacked before: the complexity of context which the historian needs 9

Pocock’s historiographical model has been applied with success to the Scottish Enlightenment He and the Cambridge School have used this model to reinterpret the development of a commercial ideology in

7 Pocock, Politics, Language, and Time: Essays on Political Thought and History

(Chicago: University of Chicago Press, 1971), p 13 In Kuhn’s terms,

“…paradigms provide scientists not only with a map, but also with some of the directions essential for map-making.” Kuhn’s paradigms determine “the legitimacy

both of problems and of proposed solutions.” Thomas Kuhn, The Structure of

Scientific Revolutions, International Encyclopedia of Unified Science (Chicago:

University of Chicago Press, 1962), vol II, no 2., p 109

8 Pocock, Politics, Language, and Time, p 14

9 Pocock, Politics, Language, and Time, p 15 Refer to Salim Rashid, “Adam Smith’s Rise to Fame: A Reexamination of the Evidence,” in The Eighteenth

Century: Theory and Interpretation, vol XXIII, 1982, no 1, pp 84-85, for a

discussion of the applicability of Kuhn’s model to The Wealth of Nations.

Introduction xii

seventeenth- and eighteenth-century Britain.10 Historians of political thought have long recognized that this period witnessed the emergence of

a modern commercial worldview conceiving of states and citizens in economic terms One important general revision made by the Cambridge School is their presentation of “the rise of a commercial ideology,” not as

a “straight success story, the natural and undistorted accompaniment to the growth of commercial society,” but rather as “contingent” to—and not logically dependent upon—the growth of commercial society.11 Pocock maintained that a commercial ideology had to be constructed in the face of firmly established paradigms, most notably that of civic humanism, or classical republicanism, and that a new ideology defining the citizen primarily as a commercial being would have to contend with the civic humanist paradigm, which emphatically defined the citizen in political language, and not in economic terms According to Pocock, a commercial ideology as we know it today developed as a reaction to the civic humanist challenge:

We have found that a “bourgeois ideology,” a paradigm for capitalist man

as zoon politicon, was immensely hampered in its development by the

omnipresence of Aristotelian and civic humanist values which virtually defined rentier and entrepreneur as corrupt, and that if indeed capitalist thought ended by privatizing the individual, this may have been because it was unable to find an appropriate way of presenting him as citizen 12

The Cambridge School has underscored the importance of the different languages used in the eighteenth century to construct a viable alternative

to that of civic humanism Their line of inquiry led to the recovery of various discourses of the Scottish Enlightenment, such as natural jurisprudence, civil jurisprudence, and neo-Harringtonian language An alternative language to civic humanism of particular relevance to the

present study is that of doux-commerce Described by Albert Hirschman in his groundbreaking book, The Passions and the Interests, this language

was used by apologists for commercial society to suggest that commerce was not only monetarily beneficial to a society, but would bring with it

10 See especially, Istvan Hont and Michael Ignatieff, eds., Wealth and Virtue: The

Shaping of Political Economy in the Scottish Enlightenment (Cambridge:

Cambridge University Press, 1983)

11 Pocock, Virtue, Commerce, and History, p 32

12 Pocock, The Machiavellian Moment: Florentine Political Thought and the

Atlantic Republican Tradition (Princeton: Princeton University Press, 1975), pp

460-461

Trade and Empire in the Eighteenth-Century Atlantic World xiii

non-material improvements as well.13Doux-commerce provided a modern

alternative to ancient civic humanist language, and promised vast civilizing effects to a society that embraced commerce.14

Bernard Bailyn was one of the first historians to recognize the significance of the different European discourses in the origins of the American Revolution.15 Bailyn’s insistence on the importance of various European Enlightenment languages and concepts in forming the ideological context for the American Revolution has since grown into a general recognition of the value of identifying connections between the different peoples and cultures on all sides of the Atlantic His research has yielded the new academic field known as Atlantic History.16 Bailyn’s approach considers American colonial culture and politics in the context of the British metropolis Though America was separating from Britain in the second half of the eighteenth century, its connections remained strong in many respects, and the newly emerging American nation was still on the western periphery of European society Bailyn reminded us that it is anachronistic to concentrate on the American colonies as the “origins of a later American civilization…a forward- and outward-looking, future anticipating progress toward what we know eventuated….” Rather, he explained,

American culture in this early period becomes most fully comprehensible when seen as the exotic far western periphery, a marchland, of the metropolitan European culture system 17

Various religious and political movements that started in Britain found their fullest expression in this new periphery Puritanism reached its limits

in New England, and many radical elements of English political reform, largely constrained in the political culture of the metropolis, were realized

in American Revolutionary politics Bailyn noted that

…ultimately the colonies’ strange ways were only distensions and combinations of elements that existed in the parent cultures, but that

13 Albert Hirschman, The Passions and the Interests: Political Arguments for

Capitalism Before Its Triumph (Princeton: Princeton University Press, 1977)

14 For example, see Pocock, Virtue, Commerce, and History, pp 113-114

15 Bernard Bailyn, The Ideological Origins of the American Revolution

(Cambridge: Harvard University Press, 1967), p viii

16 The most recent description of the field is in Bernard Bailyn, Atlantic History:

Concepts and Contours (Cambridge: Harvard University Press, 2005)

17 Bernard Bailyn, The Peopling of British North America: An Introduction (New

York: Vintage Books, 1988), pp 112-113

Introduction xiv

existed there within constraints that limited, shaped, and in a sense civilized their growth 18

This is not to suggest there was nothing new or inventive occurring in the American colonies, but rather to claim that these innovations are best viewed within the contemporary context of metropolis and colonies From this perspective, the colonies could, and often did, have as much influence upon the center of empire as it did upon them

Like Bernard Bailyn, in To the Farewell Address Felix Gilbert

depicted revolutionary America within a larger international context, but with a concentration on commercial ideology In tracing the development

of American foreign policy in the early years of the new nation, Gilbert revealed how the American leaders drew from English political theorists,

and especially the philosophes in France, to envision, as one of his

reviewers put it, “a happy state combining political isolation and commercial profit.”19 However, there existed an opposing strain in American foreign policy, one exemplified in Alexander Hamilton’s recognition that physical power and real political relations would be necessary to secure America’s place in the world of competing nation-states This tension between a utopian vision of peaceful cosmopolitanism and Machiavellian rivalry marked the early years of American foreign policy; Gilbert demonstrated the role of commercial ideology in the discordant combination of attitudes The intent of this study is to reexamine Gilbert’s broad field of vision using the language aspects that Pocock has shown to be of central importance

The combination of approaches and historical methods developed by the scholars described—Pocock, Bailyn, and Gilbert—provides the tools

to take up a related problem, which was raised quite pointedly some fifty

years ago In The Founding of the Second British Empire, Vincent Harlow

emphasized the need for further study of the practical implications of Adam Smith’s theory of political economy He stated that

much research remains to be done on the influence of [Adam] Smith’s doctrines upon the economic policy of British political leaders during the late 18 th Century 20

18 Bailyn, Peopling of British North America, p 122

19 Bradford Perkins, review of To the Farewell Address, in The New England

Quarterly, vol 34, 1961, p 546

20 Vincent T Harlow, The Founding of the Second British Empire, 1763-1793

(London, New York, Toronto: Longman’s, Green and Co., 1952), vol I, p 200, n 79.

Trade and Empire in the Eighteenth-Century Atlantic World xv

Harlow’s recommendation was the starting point for this investigation of the relationship between liberal political economy and changing conceptions of empire at the end of the eighteenth century; in particular, the ways in which Smith’s doctrines informed visions of empire and were interpreted to bolster political positions The policy decisions of Lord Shelburne illustrate the influence Smithian principles had upon a working politician in the late eighteenth century As prime minister during the peace negotiations to end the American Revolution, Shelburne recognized that in order to be saved, the British-American Empire must be radically reconceived In this endeavor, Shelburne relied heavily on speaking notes and suggestions provided by his private secretary, Benjamin Vaughan, a resolute proponent of Smithian free trade principles This book establishes the connection between Vaughan and Shelburne as a promising means of investigating just how the doctrines of Adam Smith may have informed a politician who was embroiled in an attempt to save the first British Empire

in some form

During the course of research, the British-American merchant, Benjamin Vaughan, became an increasingly consequential character His roles as arbitrator and confidential secretary to Lord Shelburne during the peace negotiations only hint at his significance Vaughan had extensive connections to French economic and political reformers and the leading British and American luminaries of his era, including Benjamin Franklin, John Adams, and Joseph Priestley Although overshadowed by the famous company he kept, Vaughan was a catalyst of important ideas that circulated through him to some of the great minds of his time

Furthermore, the recent attribution of an anonymously published commercial treatise of 1788 to Vaughan establishes him as a key contributor to the literature of political economy.21 It is now evident that

he was a vital historical figure in his own right Certainly his letters and advice to Shelburne on topics of trade and commerce are noteworthy, but Vaughan’s own contributions to commercial theory surpassed those of his patron, and in some respects, may be said to demarcate the far limits to which the principles of liberal political economy would be pushed prior to the French Revolution In this study, Vaughan is repositioned from the periphery to the center, and located in the contemporary disputes surrounding trade and empire, cosmopolitanism and nationalism

The other subject addressed within this book is the extent to which commercial ideology, particularly in the context of empire, was essential

21 This is Vaughan’s New and Old Principles of Trade Compared (see Chapter

Five).

Introduction xvi

to the vocabulary of the American founding fathers There has been resistance on the part of some American scholars to include political economy in their assessments of early American thinkers For example, two recent biographers of Benjamin Franklin and John Adams chose not to factor political economy into explanations of their subjects.22 The present study suggests the influence of political economy in the philosophies of these early American theorists We cannot hope to understand the ideas of American thinkers like Adams and Franklin without looking to such British theorists of political economy and empire as David Hume, Adam Smith, and Josiah Tucker The dialogue of ideas that the British thinkers exchanged with their American counterparts is imperative to understanding how the new country would position itself in relation to other nation-states

So far in this Introduction, various claims have been made regarding the importance of considering eighteenth-century commercial ideology in the context of empire, but much is included under these broad headings The different ideas and languages that have begun to be uncovered here require more complete articulation To this end, it will be helpful to isolate the interwoven discourses and discover their relationships to one another

Liberalism and mercantilism: disaggregation as a method

In 1984, in a collection of essays on British Colonial America, W A Speck indicated that “a comparative approach to the imperial context of colonial history will pay dividends as our knowledge of the societies

22 In his 2003 biography of Franklin, Walter Isaacson made only passing reference

to Franklin’s theories on commerce and commercial empire Isaacson did allow that Franklin was a “sophisticated economist,” though he did not pursue this claim

It will be suggested that Franklin’s role in the history of political economy is critical to fully understanding the great Philadelphian See Walter Isaacson,

Benjamin Franklin: An American Life (New York: Simon and Schuster, 2003), pp

150-151; 201; 222 David McCullough, in his 2001 biography of John Adams, remarked on his subject’s interest in free trade with Europe, and emphasized Adams’s desire to avoid entangling alliances with the Old World In an interesting passage, McCullough described how Adams, a believer in free trade in theory, backed away from that stance in the face of British intransigence Again, these remarks only hint at the importance that political economy held for Adams There was no mention of political economy in McCullough’s biography, nor of Thomas Pownall, whose writings on political economy were of signal importance to

Adams, as will be shown in Chapter Six See David McCullough, John Adams

(New York: Simon and Schuster, 2001), esp p 351

Trade and Empire in the Eighteenth-Century Atlantic World xvii

involved is enhanced.”23 Speck’s claim already seems to have been substantiated In fact, forty years earlier Klaus Knorr had taken such an

approach in his British Colonial Theories, 1570-1850.24Unquestionably, Knorr’s piece is an informative resource for understanding colonial American history, and his thoroughness of scholarship cannot be denied However, newer studies have shed light on some of Knorr’s sources that might be rewardingly revisited This study will recast his claims about the basic economic theories and policies that shaped Anglo-American relations during the eighteenth century Historically, economic writers of the colonial period on both sides of the Atlantic have been classified in terms of mercantilists and liberals, but recent scholarship has suggested that those terms, if they are to be kept at all, must be reevaluated

Knorr began his book by problematizing the concept of mercantilism

He asked, what is it exactly that sets mercantilism as an economic theory

at odds with liberalism? Looking to the writings of Eli Heckscher for a possible solution, Knorr cited Heckscher’s differentiation of mercantilist thought from post-mercantilist theories along the question of power Heckscher claimed that for mercantilists, power was the ultimate goal In

an age of power politics, mercantilists viewed wealth only as a means to their end Liberal post-mercantilists, as represented by Adam Smith, argued the opposite, and identified opulence as the primary goal To them, power was a consideration, but one of distinctly secondary importance:

There can be no doubt that an essential distinction is discernible here Adam Smith’s argument was undoubtedly that the endeavours toward opulence must make such sacrifices as security demanded For him, power was certainly only a means to an end Mercantilists usually believed the reverse, and mercantilism as a system of power was then primarily a system of forcing economic policy into the service of power as an end in itself 25

Knorr countered this interpretation with a claim made by Jacob Viner,

a source who recurs throughout his volume Power and wealth, Viner reasoned, are not the distinguishing categories around which to demarcate mercantilist and post-mercantilist thought Knorr quoted Viner’s claim that

23 W.A Speck, “The International and Imperial Context,” in Colonial British

America, ed Jack P Greene and J.R Pole (Johns Hopkins University Press, 1984),

Introduction xviii

there were no discernible differences in attitudes toward wealth and power between the seventeenth and nineteenth centuries:

For both periods power and wealth were both ultimate ends, i.e., valued for their own sakes In neither period were they ordinarily regarded as conflicting ends, and on the contrary it was the general view in both periods that the attainment of the one was a means to the attainment of the other; power bred wealth, and wealth power 26

Knorr and Viner agreed that both power and wealth were ultimate ends for mercantilists and post-mercantilists alike, but Knorr diverged from Viner when he claimed that for mercantilists power bred wealth, while for post-mercantilists, power was obtained at the expense of wealth The break, according to Knorr, came with Adam Smith:

It was Adam Smith who popularized the idea that opulence and power were incompatible ends and that considerations of power, though necessary in the interest of national self-preservation, conflicted with considerations of plenty 27

Though he admitted that both mercantilists and post-mercantilists viewed wealth and power as supreme goals, Knorr maintained that there was a shift, however subtle, in the “scale of preferences” between the two periods

Knorr attempted another categorization of mercantilist/post-mercantilist thought later in his work In a discussion of state intervention into economic affairs, he made what at first appears to be a reasonable distinction, claiming that mercantilists supported government meddling in the economy, while post-mercantilists vigorously opposed any state interference:

To the mercantilist faith in the efficacy and benefit of state actions in matters of trade and production, Adam Smith and his fellow economists

opposed the idea of laissez-faire.28

In his book, Before Adam Smith, Terence Hutchison suggested this

26 Jacob Viner, “Mercantilism,” in Economic History Review, VI (1935-6), p 100,

quoted by Knorr, p 9

27 Knorr, p 10

28 Knorr, p 159

Trade and Empire in the Eighteenth-Century Atlantic World xix

characterization may have been overstated.29 Hutchison noted that many historians have fallen into error by using the categories mercantilist and

laissez-faire in an unnecessarily rigid and exclusive manner He insisted

the line between these attitudes might be very thin or even porous at certain points:

There is nothing necessarily contradictory in recognizing, generally, the

efficacy and beneficence of free market forces, or laissez-faire, over wide

areas of the economy, while, at the same time, supporting government intervention with regard to this or that issue or sector—even in respect of the closely linked problems of foreign trade and the money supply 30

Hutchison referred to Bernard Mandeville as a prime example of a thinker whose positive attitude toward issues ranging from the public benefit of free markets to the government management of foreign trade, cannot be labeled simply “mercantilist” or “liberal economist.” Despite his praise of Viner’s scholarship, Hutchison suggested that Viner fell into this trap when he categorized the eighteenth-century pamphleteer, Josiah Tucker, as

a mercantilist:

Jacob Viner dismissed Tucker as a “mercantilist,” perhaps a reductio ad

absurdum of that problematic term, the ultimate extremity of which would

be to call Adam Smith a “mercantilist” because he supported retaliatory import restrictions, Navigation Laws, and the regulation of interest rates 31

Indeed, the description of Tucker as a mercantilist is inadequate.32 As a

29 Terrence Hutchison, Before Adam Smith: The Emergence of Political Economy,

1662-1776 (Basil Blackwell, 1988), p 125

30 Hutchison, p 125

31 Hutchison, p 238

32 It is my contention that Hutchison gave Viner an unfair reading on this matter In

his Studies in the Theory of International Trade (New York: Augustus M Kelley,

1965), Viner located Tucker in the category of moderate mercantilist, an intermediate position between extreme mercantilist and free trader Citing Tucker’s

Instructions for Travellers (1757), Viner wrote, “although in the field of foreign

trade policy he continued to be a protectionist of a somewhat extreme type, at one point [Tucker] vigorously asserted the identity of private and public interests and

drew laissez-faire conclusions therefrom” (p 99) This intermediate position was

not uncommon, according to Viner He found Jacob Vanderlint to have staked out

a similar position in Money Answers All Things (1734) In fact, there were

numerous moderate mercantilists who found themselves “in the rather paradoxical position of adhering to crudely mercantilist doctrines with respect to the balance of trade, the superiority of exports over imports, or the importance of money, while

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Introduction xx

theologian and contemporary economist of Adam Smith, Tucker actually

anticipated the commercial system found in the Wealth of Nations by some

twenty years When the relatively liberal-minded Lord Shelburne came to office in 1763, he sought out Tucker’s recommendations concerning Britain’s newly acquired islands in the West Indies.33 There is good reason

to believe that categorizing the economic theories of figures like Tucker into mercantilist and post-mercantilist periods is not the most effective way to understand such thinkers Mercantilist theories of trade held sway

for a good fifty years after the publication of the Wealth of Nations, but

Knorr argued that the sea change in trade literature came with Smith’s book in 1776.34 Prior to Smith, the economic theory of mercantilism

predominated, and after the Wealth of Nations, free trade and laissez-faire

prevailed Historicizing these concepts as Knorr did, with one attitude preceding the other, is inaccurate Rather, it is best to think of the two attitudes as aggregated together, at least through the seventeenth and eighteenth centuries, and often being used in combination by economic theorists

Following this line of reasoning, the question becomes not how to historicize the two economic discourses sequentially, but how to separate—or disaggregate—them from one another in the long period

during which they were intertwined In his influential study, Inventing the

French Revolution, Keith Baker presented an intriguing tactic for

disentangling the clustered strands of discourse which together make up a contextually-located language As discreet strands of rope are twisted together to form a single cable, one might imagine the cable of a historical language being comprised of disparate strands of discourse; just as a dense rope may be pulled apart to show its basic strands, so too may a linguistic tradition be unwound to reveal its constituent discourses Baker called this process the “disaggregation” of a language The disentangled vocabularies

advocating complete or very nearly complete free trade” (p 106) And, far from

“dismissing” Tucker (or Vanderlint, or the other moderate mercantilists), Viner pointed to the significance of these writers and their contributions to the contemporary trade literature: “…[B]efore Hume there is scarcely any discussion

of the anticipations of free-trade doctrine examined [in the trade literature]…even for purposes of refutation, and most of the controversy is between exponents of rival schemes of regulation, or between extreme and moderate mercantilists, rather than between mercantilists and free traders” (p 109)

33 Harlow, vol I, pp 203-204

34 Knorr, p 157 Knorr claimed, p 64, that mercantilist theories were never

“completely routed,” but the change in emphasis from mercantilist to classical economy occurred right around the time of Smith’s famous publication

Trade and Empire in the Eighteenth-Century Atlantic World xxi

often may be competing discourses, though the tension is more or less hidden when they come together to form the complex language Baker used his powerful model to explain the political culture in France from 1750-89; that is, the political culture within which revolutionary language became possible.35

Baker’s model may answer many of the questions raised in the discussion of the distinguishing traits between mercantilists and liberal political economists Hutchison, recall, claimed there is no contradiction in

admiring the benefits of laissez-faire in general, while supporting

intervention into certain limited areas of the economy Baker’s approach interprets this position not as a contradiction, but as a tension within the language of free trade At least two strands of discourse are combined to

form this language The first is the discourse of laissez-faire and

cosmopolitanism The second stems from the “rich country-poor country” debates that began with Ireland’s demands for greater independence after

1688, and continued through the debates surrounding Scottish-English union in 1707 This discourse may be termed the vocabulary of nationalism or reason of state While the two were wound together fairly

tightly in Smith’s Wealth of Nations, the strands began to unravel in the

last quarter of the eighteenth century The different vocabularies reveal the tensions contained within the traditional language of free trade, and once provided various means for liberal economists to disagree with one another, while still claiming to embrace a doctrine of free trade The two discourses, often in competition with one another, informed the language

of late eighteenth-century liberal political economy, and are best understood in the context of empire Depending upon which discourse they wished to emphasize, economic theorists could split over a wide variety of topics relating to the empire and the American colonies (and, after 1783, the new American nation)

This method of disaggregation will be used in the following chapters to explain commercial ideology in the context of the British-American Empire in the late eighteenth century Thus far, arguments surrounding the distinction between mercantilism and free trade, and the problems associated with traditional intellectual history’s tendency to historicize economic attitudes toward mercantilism and liberal political economy into distinct periods have been identified Chapter One describes the intellectual setting for eighteenth-century discussions of free trade, and argues that it is more useful to consider the range of attitudes toward

35 Keith Baker, Inventing the French Revolution (Cambridge University Press,

1990), p 25

Introduction xxii

international trade in the early modern period as distinct strands or discourses, which, aggregated together, make up the language of free

trade After tracing the two main strands—the vocabulary of laissez-faire

and the strand referred to previously as reason of state—this study will demonstrate that certain economic theorists in the seventeenth and eighteenth centuries may be understood best in light of these aggregated strands of discourse, especially in reference to what is known as the rich country-poor country problem

Having established the methodological foundation of this investigation, Chapter Two explains Lord Shelburne’s liberal ideas of empire and how they were formed The main character, Benjamin Vaughan, will be introduced in the context of Shelburne’s circle When Shelburne entered into the peace conference as prime minister in 1782, Vaughan informally mediated the negotiations in Paris, advising Shelburne and convincing the skeptical American commissioners, including Benjamin Franklin, of his patron’s sincerity Vaughan thought continued British interference in North America counterproductive to both parties, and counseled in favor

of granting independence on mutually beneficial terms of unrestricted trade Shelburne’s beliefs, shaped by Vaughan and other liberal theorists

of the age, greatly influenced his attitude toward the British holdings in North America His political vision eschewed military conquest in favor of strong trade relations between Britain and the former colonies During the Paris peace talks, Shelburne brought forward an innovative vision of a transatlantic trading community at a time when most of his colleagues were defending cumbersome and outworn theories of territorial empire Chapter Three plots the wider circles of remarkable figures in Europe and America with whom Vaughan had ties Born to an English plantation owner in Jamaica, Vaughan’s early years foreshadowed the cosmopolitanism that he would embrace later in life Indeed, it will become apparent that Vaughan was the center of various circles extending across the Atlantic In addition to Lord Shelburne, Vaughan’s connections included the likes of Joseph Priestley, Richard Price, Richard Oswald, John Adams, and Antoine Caritat, the Marquis de Condorcet His close and lasting personal friendship with Benjamin Franklin played a unique role in securing trust between Lord Shelburne and the American representatives in Paris in 1782-3 Vaughan’s assurances to his friend, Franklin, saved the negotiations from stalling at several critical moments This chapter establishes Vaughan as a man of international stature, the center of various influential circles, and a figure of historical significance The second half of the book reveals how Vaughan pushed the theory of liberal political economy, as developed in the context of empire, to its

Trade and Empire in the Eighteenth-Century Atlantic World xxiii

limits in the late 1780s By way of setting the context for Vaughan, Chapter Four investigates what Anthony Pagden and others have pointed

to as a growing preference in eighteenth-century European empires for control of markets over territorial jurisdiction, the ideological move from

conquest to commerce As Pagden observed, by the end of the eighteenth

century, forward-looking theorists of empire had become

overwhelmingly concerned with undoing the deleterious consequences of the ‘spirit of conquest’ and the military ethos of glory, Machiavellian

grandezza and, its ecclesiastical counterpart, evangelization and doctrinal

orthodoxy What all this came to was the quest for an ideology, driven in part by the new languages of moral philosophy and political economy, of a rational, but also humanly rich calculation of the benefits to be gained from empire for all those involved, for the metropolis as for colonies, for the colonized as for the colonizers 36

In terms of empire, this shift from conquest to commerce suggested the idea of federation Pagden explained it in this way:

The only kind of international political order that would allow the market

to exercise its natural benevolence was one in which empires had been transmuted into international federations of states, united not politically or militarily, but by common cultural ties and economic interests 37

Ideally, a federation bound by commercial, not political, ties was the way for humanity to reach its full cosmopolitan potential On more practical grounds, the French Physiocrat, Turgot, pointed out that Britain was losing money through its colonial system in North America Pagden asserted that

what Turgot had in mind was the replacement of the existing political and legal ties between the metropolis and its former dependencies by a trading partnership, bound together by a loose and indeterminate political association Adam Smith agreed 38

In 1776, Adam Smith argued that since the present mercantilist empire of Britain was unprofitable, it was logical for Britain to voluntarily relinquish control and form a federal union based upon trade with the American

36 Anthony Pagden, Lords of all the World (New Haven, London: Yale University

Press, 1995), p 125

37 Pagden, p 186

38 Pagden, p 192

Introduction xxiv

colonies.39 According to Harlow, “when Shelburne came to negotiate a peace settlement with the United States his aim was precisely that.”40 As Shelburne’s representative in Paris, Vaughan shared this evolving view of empire

Chapter Five focuses on Vaughan’s most salient contribution to commercial theory Vaughan began to formulate a complete theory of liberal trade doctrines in his own writings, and in 1788, released a

remarkable piece titled, New and Old Principles of Trade Compared; or a

Treatise on the Principles of Commerce Between Nations His confidence

in the peaceful effects of international free trade is apparent throughout this treatise, which advocated replacing punitive trade restrictions with mutually beneficial free trade agreements Published anonymously, this bold statement of liberal commercial theory has since been attributed to Vaughan

In Chapter Six, Vaughan is located in relation to John Adams, another influential proponent of Smithian doctrine in the early 1780s Unlike Vaughan, Adams eventually retreated from his liberal position to one of staunch protectionism As Felix Gilbert noted, while independence from Britain was still being negotiated, Americans like Adams were prone to use Smithian language (or more specifically, language identified by Albert

Hirschman as doux-commerce) to describe a future relationship between

America and England based solely upon free trade In this light, it is certainly fair to cast Adams as an internationalist and a cosmopolitan who envisioned an Atlantic community held together not politically, but rather

by the economic policy of free trade However, once American independence had been secured, Adams began defending American interests against the larger, more established British markets His tone changed to that of a nationalist, willing to enact trade restrictions in order

to avoid being the loser in a rich country-poor country contest By contrast, Vaughan remained a cosmopolitan thinker From his correspondence with Shelburne, it is evident that he used the language of free trade to strike a cosmopolitan tone regarding future relations between

the new American states and Britain New and Old Principles of Trade

showed Vaughan to be perhaps even more optimistic about the possibilities to be gained from free trade

The final section of Chapter Six describes a period in the 1780s when liberal political economy, emerging from the language and theories of Adam Smith, unraveled abruptly In this moment of crisis, theorists like

39 Adam Smith, Wealth of Nations (ed Cannan), vol II, pp 116-117, quoted in

Harlow, p 200

40 Harlow, p 201

Trade and Empire in the Eighteenth-Century Atlantic World xxv

Adams suddenly found the discourse they had been using to be unwieldy and in need of modification, if not outright abandonment Vaughan, on the other hand, was able to sustain and even expand the argument for cosmopolitanism and free trade

C HAPTER O NE

A genealogy of laissez-faire

In his biography of Adam Smith (1794), Dugald Stewart remarked on

the writers he thought might have informed the Wealth of Nations.1

Perhaps it is not surprising, in hindsight, to find Stewart connecting Smith

to those French thinkers who were formulating similar theories during the same period.2Stewart pointed out that Smith traveled to France in 1764, and returned for a longer stay in 1765, at which time he met with such figures as Turgot, Quesnay, Morellet, Necker, d’Alembert, and Helvétius.3

Stewart noted the effect these French trips had upon the development of Smith’s system:

But whatever were the lights that [Smith’s] travels afforded to him as a student of human nature, they were probably useful in a still greater degree, in enabling him to perfect that system of political economy, of which he had already delivered the principles in his lectures at Glasgow, and which it was now the leading object of his studies to prepare for the public The coincidence between some of these principles and the distinguishing tenets of the French economists, who were at that very time

in the height of their reputation, and the intimacy in which he lived with some of the leaders of that sect, could not fail to assist him in methodizing and digesting his speculations; while the valuable collection of facts, accumulated by the zealous industry of their numerous adherents,

1 Dugald Stewart, Account of the Life and Writings of Adam Smith, LL.D., in the

Glasgow Edition of the Works and Correspondence of Adam Smith, ed W.P.D

Wightman, J.C Bryce, and I.S Ross (Oxford: Clarendon Press, 1980), vol III, pp 263-351 The biography, according to Ross, was conceived of in 1790, first presented to the Royal Society of Edinburgh in March of 1793, and then published

in 1794.

2 Stewart, Life of Smith, pp 302-304.

3 Stewart, Life of Smith, pp 302-303.

Chapter One 2

furnished him with ample materials for illustrating and confirming his theoretical conclusions 4

At other points in the biography, Stewart denied any French influence

upon the Wealth of Nations Referring to the French Physiocrats and

economists, Stewart noted that “although some of the economical writers had the start of [Smith] in publishing their doctrines to the world, these doctrines appear, with respect to him, to have been altogether original, and the result of his own reflections.” Stewart had not overlooked the free

trade argument in a 1756 Encyclopédie article by Turgot, but insisted that

Smith had anticipated his French colleague: “Mr Smith’s political lectures, comprehending the fundamental principles of his Inquiry, were delivered at Glasgow as early as the year 1752 or 1753; at a period, surely, when there existed no French performance on the subject, that could be of much use to him in guiding his researches.”5

In his Lectures on Political Economy, which he continued to revise

through 1810, Stewart elaborated on a decidedly British-American

genealogy for the Wealth of Nations.6 He stated that Hume, Tucker, Franklin, and Smith were all linked by the same “liberal principles concerning trade.”7 Stewart left no room for a possible French contribution

to the tradition that culminated in Adam Smith’s acclaimed work:

It would require more time than we can now afford to bestow, to trace the origin and progress of those liberal and enlightened ideas which abound in

Mr Smith’s writings I shall content myself, therefore, with remarking, that although it was by some French writers that they were first presented

to the world in a systematical manner, yet the earliest hints of them seem to have been suggested in this country [i.e., Britain] 8

Returning to the biography of Adam Smith, there are further indicators

4 Stewart, Life of Smith, pp 302-303.

5 Stewart, Life of Smith, p 320 Later, in note I, Stewart pointed out that Smith

began lecturing on economic materials at Edinburgh earlier, in 1748 This claim

was upheld by Peter Groenewegen and Joseph Halevi, eds., Altro Polo: Italian

Economics Past and Present, 1983, p 36 Stewart once presented a fragment of

paper written by Smith in 1755 that contained the basic principles of Smith’s system already laid out Unfortunately, Stewart’s account of the paper is all that

has survived See Life of Smith, pp 266, 321

6 Stewart, Lectures on Political Economy, ed Sir William Hamilton (Edinburgh,

1855), 2 volumes, vol I, p vii.

7 Stewart, Lectures on Political Economy, vol II, p 33.

8 Stewart, Lectures on Political Economy, vol II, p 34.

Laissez-faire and Reason of State 3

of Stewart’s repositioning on the genealogy of laissez-faire In a note

added to the biography after 1821, Stewart specified that the French economists had been anticipated by earlier British theorists.9 He wrote,

“how far Mr Smith has availed himself of the writings of the Economists

in his Wealth of Nations, it is not my present business to examine All that

I wish to establish is, his indisputable claim to the same opinions which he professed in common with them, several years before the names of either Gournay or Quesnay were at all heard of in the republic of letters.”10 At the start of his explanatory note, Stewart justified his purpose for adding the note:

When this memoir was first written, I was not fully aware to what an extent the French Economists had been anticipated in some of their most important conclusions, by writers (chiefly British) of a much earlier date 11

Stewart then proceeded to make a list of mostly English theorists, including Locke, Sir Josiah Child, John de Witt, and John Cary of Bristol,12 who, he claimed, had developed commercial theories earlier than their Continental peers He explained that this British lineage should not

be unexpected:

That the writers of this Island should have had the head start of those in the greater part of Europe, in adopting enlightened ideas concerning commerce, will not appear surprising, when we consider that ‘according to the Common Law of England, the freedom of trade is the birthright of the subject.’ 13

As an example of just how much the economic writings of the French

9 Stewart, Life of Adam Smith, p 340 Ross, p 267, concluded that Stewart worked

on these notes after 1821, for one of the notes refers to Morellet’s Memoires,

published in that year.

10 Stewart, Life of Adam Smith, p 347.

11 Stewart, Life of Adam Smith, p 340.

12 John de Witt (1625-1672) is the Dutch exception in this case Groenewegen tells

us that he was a “prominent Dutch statesman” and an author whose writings were

translated into English and French See P.D Groenewegen, ed., The Economics of

A.R.J Turgot (The Hague: Martinus Nijhoff, 1977), p 22, n 5 De Witt, the author

of the popular work, Elements of Curved Lines, became pensionary of his

hometown of Dort in 1650, and Holland in 1653 He promoted an edict for abolishing the office of Stadtholder and enjoyed popularity as a great patriot for some time However, after Holland was invaded by France, popular opinion shifted against him, and he and his brother, Cornelius, were brutally assassinated in 1672.

13 Stewart, Life of Adam Smith, p 341, quoting Lord Lauderdale.

Chapter One 4

theorists were anticipated by their counterparts across the Channel, Stewart pointed to the English trade theorist and author, Jacob Vanderlint

Referring to a passage on taxation in Turgot’s Eloge de Gournay, Stewart

claimed that:

In a note upon this passage by the Editor [DuPont], this project of a territorial tax, together with that of a free trade, are mentioned among the most important points in which Gournay and Quesnay agreed perfectly together: and it is not a little curious, that the same two doctrines should have been combined together as parts of the same system, in the Treatise

of Vanderlint, published almost twenty years before 14

Nevertheless, even as he attempted to establish a distinctly British

genealogy of Smith’s Wealth of Nations, Stewart again cast the French in

an important role In yet another note, he expanded upon Turgot’s Eloge

de Gournay, acknowledging that “some of these liberal principles found

their way into France before the end of the seventeenth century.”15 On the basis of his inconsistent claims, it appears that Stewart had difficulty resolving the question of whether or not to include the French in a history

of the Wealth of Nations.

Anglo-American or French genealogy?

Why should Stewart, a devoted student of Smith’s teachings, reposition himself so frequently regarding the probable genealogy of the

Wealth of Nations? Were his ideas still under development? Did he

become nervous about associating Smith with influences that were later linked to the brutalities of the French Revolution?16 Should the French

economists be excluded from the genealogy of the Wealth of Nations? And

what of Stewart’s reference to the French theorists of the seventeenth century?

14 Stewart, Life of Adam Smith, p 346.

15 Stewart, Life of Adam Smith, p 345 Stewart added a note specifically naming Boisguilbert in this regard He pointed to Boisguilbert’s book, Le Detail de la

France sous le Regne Present, described in Hazel Van Dyke Roberts, Boisguilbert: Economist of the reign of Louis XIV (New York: Columbia University Press,

1935) Stewart also suggested earlier (pp 276-277) that Smith was unusually interested in the Continental writers at a time when they were unpopular in England (around 1755)

16 A possible reference to the Revolution, and the Terror in particular, is provided

in note I where Stewart referred to the “violent and fantastic metamorphosis” of

the French government See Life of Adam Smith, p 344.

Laissez-faire and Reason of State 5

Certainly Stewart’s references to Hume and earlier theorists from England and Scotland as precursors to Smith were well-founded.17IstvanHont has proven that the rich country-poor country debate informed Smith’s classic work,18 and although Hont limited his discussion of the debate to the half-century 1752-1804, it is evident that closely related ideas were set forth by earlier British theorists For example, in 1734 Jacob Vanderlint anticipated Hume’s model of a mechanism for ensuring an international equilibrium for free trade.19 His argument for the “automatic mechanism of specie flows,” later refined by Hume, was of central

importance in the Wealth of Nations.20 Similar English theories supporting freedom of trade in comparable terms may be traced even further back.21

While none of these early English or Scottish theorists was able to produce a clear and unified explanation of political economy of the level

of Smith’s significant work, earlier British writers had anticipated Smith’s fundamental theories But what of the French side of Stewart’s claims of influence?

Peter Groenewegen considered the possibility that Smith’s ideas originated with the French Physiocrat Turgot, but his detailed comparative study was unable to verify any direct influence Smith’s library contained

about two-thirds of Turgot’s Reflections, and the two men agreed on many

aspects of political economy, yet Groenewegen dismissed these overlaps and similarities as “no more than coincidence.”22 In his final analysis, Groenewegen concluded that the two arrived at their theories regarding economic policy “independently,” and “early in their respective careers.”

For instance, both developed laissez-faire attitudes in the 1750s, before

17 Stewart made the claim for Hume on p 321 He also included a number of English precursors in his biography of Smith, notably the fascinating but little- known trade theorist, Jacob Vanderlint, p 342.

18 Istvan Hont, “The ‘Rich Country-Poor Country’ Debate in Scottish Classical

Political Economy,” ch 11 of Wealth and Virtue, ed Istvan Hont and Michael

Ignatieff (Cambridge: Cambridge University Press, 1983).

19 Jacob Vanderlint, “Money Answers All Things,” in A Reprint of Economic

Tracts, ed Jacob Hollander (Baltimore: Johns Hopkins Press, 1910), ch 3.

20 See Laurence Dickey’s edition of Smith’s Wealth of Nations

(Indianapolis/Cambridge: Hackett Publishing Co., 1993), Appendix III: “On Book IV: Smith’s Critique of Mercantilism and the problems of the ‘Automatic Mechanism’ and Investment in Agriculture,” pp 226-242.

21 Jacob Viner, Studies in the Theory of International Trade (New York: Augustus

M Kelley, 1965), chs 1 and 2.

22 P.D Groenewegen, “Turgot and Adam Smith,” in the Scottish Journal of

Political Economy, 16, 1969, pp 271-287, p 286

Chapter One 6

there was any evidence of influence between them.23

Groenewegen defined Turgot’s place in eighteenth-century economic thought, describing him as “one of the major contributors to the rise of economic liberalism in Europe in the eighteenth century.”24 The French political economist was well-versed in two topics in which Smith and Hume took great interest, the automatic mechanism and balance-of-trade theory Groenewegen noted that Turgot was “familiar with the theory of the automatic mechanism of international specie distribution, and clearly understood the limitations of the balance-of-trade argument.”25 According

to Groenewegen, Turgot “may be considered as one of the clearest theoretical writers in economics of the century.”26

Thus, in trying to resolve the issue of influence between Turgot and Smith, Groenewegen’s inquiry has raised more questions If the two men developed their models independently of one another, as he claimed, then how can their similar results be explained? Moreover, why is Smith regarded as the great theorist of classical economics, while Turgot, with his comparable conclusions, remains relatively unknown? Groenewegen offered a convincing answer to the question of similarities between the independently-conceived systems of political economy He established that the two theorists (along with Beccaria in Italy) shared a common heritage of brilliant foundational writers in economics Both Smith and Turgot read Locke, Cantillon, Hume, and Quesnay In fact, “ nearly every important work on economics cited by Adam Smith was also familiar to Turgot, while a full and detailed comparison of the contents of their libraries would reveal that the same conclusions would apply to many less

important sources cited in the Wealth of Nations.”27

Groenewegen also speculated on why Smith is remembered as the great eighteenth-century theorist of political economy, and Turgot is not

By the 1760s, Groenewegen noted, the basic building blocks of a new science of political economy had been laid by the earlier writers mentioned above Beccaria, Smith, and Turgot, drawing from these common sources, launched fully-developed systems “The success of

23 “Turgot and Adam Smith,” p 287, see also note 83.

24 Groenewegen, “Turgot’s Place in the History of Economic Thought,” in History

of Political Economy, 15:4, 1983, Duke University Press, republished in Pioneers

in Economics, vol 9, ed Groenewegen and Blaug, p 590 of journal, p 229 of

collection.

25 Groenewegen, “Turgot’s Place,” p 593 of journal, p 232 of collection.

26 Groenewegen, “Turgot’s Place,” p 593/232.

27 Groenewegen and Halevi, Altro Polo, ch 2, “Turgot, Beccaria, and Smith,” p

51.

Laissez-faire and Reason of State 7

Smith’s version of this system,” wrote Groenewegen, “is explained by the fact that it was the most polished, most elaborate, and most coherent, a consequence (as Schumpeter argued) of the fact that he had the time to devote nearly a decade of uninterrupted work to its construction.”28

Whatever the explanation for the comparative success of Smith’s system, the question remains as to the genealogy of the liberal trade ideas

presented in the Wealth of Nations Revisiting Stewart’s Lectures on

Political Economy, referred to earlier, it becomes apparent that he

inadvertently linked his Anglo-American genealogy to the very French

theorists whose effects on the Wealth of Nations he was attempting to

deny

Stewart pointed to Hume’s “Jealousy of Trade” essay as a representative example of the type of British free trade argument that informed Smith.29 Stewart claimed that the attitudes set forth by Hume were adopted by Josiah Tucker and popularized by Benjamin Franklin:

The same liberal principles concerning trade, which were advanced by Mr Hume, were soon after adopted, and very zealously enforced, by Dean Tucker, in various judicious performances; and, particularly, in a small

work entitled Four Tracts on Political and Commercial Subjects,

published in the year 1774 Much about the same time they attracted still more general attention, at least among practical men, in consequence of the sanction they received from the pen of Dr Franklin 30

This argument exemplifies Stewart’s attempt to define an Anglo-American genealogy that presents the French writers as a footnote, or at best, a minor chapter in the story of liberal trade ideas Unknowingly, by introducing Franklin, Stewart identified a decisively French genealogy for Smith’s

Wealth of Nations.

Gournay, d’Argenson, and laissez-faire

Stewart referred to Franklin as a promoter of free trade attitudes, and quoted him at length in this respect To be sure, Franklin wrote in the tone

of a free trade advocate, but the language he used was extracted from key French sources, and not the long British tradition to which Stewart was attached The French sources are evident in the following passage from

28Altro Polo, p 53.

29 David Hume, “Of the Jealousy of Trade,” in Essays Moral, Political, and

Literary, ed Eugene F Miller (Indianapolis: Liberty Classics), pp 327-331.

30 Stewart, Political Economy, p 33.

Chapter One 8

Franklin, reproduced by Stewart:

Perhaps, in general, it would be better if government meddled no farther with trade than to protect it, and let it take its course .When Colbert assembled some wise old merchants of France, and desired their advice and opinion how he could best serve and promote commerce, their answer

after consultation was, in three words only, Laissez nous faire, “Let us

alone.” It is said by a very solid writer of the same nation, that he is well advanced in the science of politics who knows the full force of that maxim,

Pas trop gouverner, “Not to govern too much;”—which, perhaps, would

be of more use when applied to trade, than in any other public concern 31

Stewart followed Franklin’s revealing quote with a patent denial of

anything but a British tradition leading to the Wealth of Nations, but he

had unwittingly pointed across the Channel

Franklin’s quote contains unambiguous references to French liberal trade ideas The source of his references was identified in an informative passage from a French commercial journal in 1768 In the essay, the

Marquis d’Argenson was mentioned in connection with the maxim “pas

trop gouverner,” and Turgot’s friend and mentor, Vincent de Gournay,

was linked to the phrase, “Laissez faire et laissez passer.”32 In other words, Franklin was drawing from an established and recognizable set of French attitudes and maxims when he made his quote

D.H MacGregor uncovered the French print origins of some of these

maxims.33 MacGregor found important clues in the French Journal

Oeconomique—perhaps the earliest economic journal—of March 1751

The issue carried a review of a 1750 publication, mercantilist in tone, by the Marquis Beloni The review in question spurred an anonymous letter to the editors in April in which the author of the piece, later identified as the Marquis d’Argenson, argued for more liberty of trade In defense of his position, d’Argenson included a short anecdote about Colbert assembling various deputies of commerce to seek their advice on improving trade in

France One of the deputies responded by stating “Laissez nous faire.”34

31 Political Economy, pp 33-34 As Stewart’s editor, Sir William Hamilton,

pointed out, the quote is from Franklin’s Principles of Trade, sect 38 See The

Works of Benjamin Franklin, ed Jared Sparks (Chicago, 1882), vol II, p 401

32 Éphémérides du citoyen, ou Chronique de l’esprit national (Paris: Nicolas

Augustin Delalain, 1768), Tome Septieme, pp 156-157.

33 D.H MacGregor, Economic Thought and Policy (London: Oxford University

Press, 1949) The following discussion was taken from chapter 3.

34 An English translation of the anonymous letter to the editors is included in

Selected Essays on Commerce, Agriculture, Mines, Fisheries, and other Useful

Laissez-faire and Reason of State 9

D’Argenson’s anecdote was the same one relayed by Franklin and reproduced by Stewart

MacGregor discovered that in his Eloge de Gournay, Turgot recounted the same story as if it were well known Although the phrase “laissez-faire

et laissez-passer” has been attributed to Gournay at times, he was not an

author, and most of his economic teachings were restricted to private meetings and consultations Turgot identified an enigmatic figure, Le Gendre, as Colbert’s plain-spoken deputy of commerce who first voiced the phrase.35 MacGregor was quick to point out that both Le Gendre’s formulation and Gournay’s extension of it were topical and relatively

narrow in scope, compared to what laissez-faire would later come to represent Le Gendre’s original phrase, with the word nous intact, referred

to freedom of occupation To be precise, it was specifically intended to refute the monopolistic tendencies of the guild system in France that enforced long apprenticeships and strict regulations on the manufacture of

most goods Later, the nous was dropped, and the phrase laissez-faire (or Gournay’s laissez-faire, laissez-passer) became a “principle of policy

instead of a slogan of merchants.”36 What began as an assertion of business freedom by French merchants, eventually transformed into a national economic policy

One of the earliest theorists of laissez-faire as an economic maxim was

Jacques Claude Marie Vincent, Marquis de Gournay (1712-59).37 Born in

Subjects (London: D Wilson and T Durham, 1754), pp 328-335, under the

heading, “A Letter to the Author of the Journal concerning the Dissertation upon Commerce, by the Marquis Belloni.” Intriguingly, the University of Wisconsin- Madison’s Memorial Library Special Collections contains a copy of this book, which bears a frontispiece signed by a “Samuel Vaughan, Esq ” A comparison of the family crest that appears in this copy with known copies of the crest suggests that the book at the University of Wisconsin once belonged to Benjamin Vaughan’s father I am grateful to Laurence Dickey for bringing this clue to my attention, and I thank Mark Harwell of the American Philosophical Society Library for comparing the family crests

35 Groenewegen suggested that the merchant in question was “possibly Francois

Legendre, author of L’Arithmetique et sa perfection selon l’usage des Financiers,

Banquiers, et Marchands which was published in several editions between 1657

and 1687….” See Groenewegen, The Economics of A.R.J Turgot, p 40, n 29

36 MacGregor, p 59.

37 Gustave Schelle, Vincent de Gournay (Paris: Guillaumin and Co., 1897) remains the standard biography Schelle provided his own short history of laissez-faire doctrine, pp 214-217 See also, Traites sur le Commerce de Josiah Child avec les

Remarques inedites de Vincent de Gournay, ed Takumi Tsuda (Tokyo:

Kinokuniya Company, 1983) I have taken the following biographical material

Chapter One 10

Saint-Malo to a successful merchant family, he left for Cadiz, Spain, at seventeen to gain experience in international trade In Cadiz, Vincent studied political economy with traders from Holland, Spain, and especially England, and learned much about trade negotiations between nations He left Cadiz in 1744 to travel, returning to France in 1747 Little is known of his activities in the intervening years as the young Vincent apparently was involved in a secret mission for the Minister of Marine Affairs, Maurepas The event that called him back to France was the death of Jametz de Villebarre, his father’s business associate Villebarre divided his inheritance between his daughter, Clothilde, and Vincent, desiring the property to be reunited in their marriage The two were wed in 1748 and Vincent obtained his title, Marquis de Gournay His wealth had been doubled by their union, which permitted him to abandon commerce as a profession and become an administrator in the government In 1751, he accepted the post of Intendant of Commerce, acting as a liaison between manufacturers and the government Affairs he concerned himself with included the silk trade and other industries around Lyons, Beaujolais, Bourgogne, La Rochelle, and Bordeaux

Though his office was purely consultative, Gournay was unusually active in it He took anti-monopoly and anti-privilege stances that were not entirely compatible with his post at that time, and made detailed reports to the Bureau of Commerce and his direct superior, the Intendant of Finance, counseling for the reform of regulations and corporations He remained stubbornly protectionist in certain regards, a position consistent with an

intendant of commerce, but continued to be a partisan of laissez-faire,

laissez-passer At the same time, Gournay served another important role as

tutor in economic studies to a group of young intellectuals In this capacity, he focused on presenting and/or translating the works of English and Spanish economists To Turgot, one of his students, he recommended

Tucker’s Questions Importantes sur le Commerce.38 Gournay himself translated Josiah Child To André Morellet, who traveled from Lyons to study under Gournay, he suggested Cantillon

Several of the translations and analyses produced by this group began

to be published around 1753 in the bibliographic review, Journal des

Sçavans, which presented translations, reviews, and broader Physiocratic

debates The French Journal Oeconomique, as noted earlier, began to

control the publication of economic materials around the same time The

from Schelle and also from Tsuda’s biographical sketch, “Un economist trahi,

Vincent de Gournay (1712-1759),” pp 445-485

38 Also alluded to in Richard Cantillon’s Essai sur la Nature du Commerce en

General, Henry Higgs, ed., (London: MacMillan and Co., 1931), p 385

Laissez-faire and Reason of State 11

interesting point about the Journal Oeconomique, according to Takumi

Tsuda, is that it afforded equal significance to mercantilist and mercantilist texts, a policy that signaled the transitional thinking of the age Gournay himself held seemingly contradictory views as a proponent

anti-of limited protectionism and a staunch promoter anti-of faire,

laissez-passer In this sense, Tsuda claimed, it is appropriate to call the period the

“temps de Gournay.”39

Gournay’s life ended in relative obscurity Eventually his lingering protectionism caused him to grow increasingly isolated from his more liberal-minded students His health began to fail in 1754, and by 1756/1757, French political economy had turned away from the Physiocrats with whom Gournay had become associated He tendered his resignation in 1758, and died the following year Gournay’s vigorous promotion of free trade ideas strongly influenced some of the most avant-garde French economic theorists of his age, but most of the available material on him is second hand because he wrote very little; and of that small source, even less has survived

Another distinguished commercial theorist, the Marquis d’Argenson, left behind more evidence for historians to pore over According to

MacGregor, d’Argenson is the author of laissez-faire as an economic

principle He was the first to document the Colbert/Le Gendre story in print,40 and had begun using the phrase as a maxim as early as 1755 As

MacGregor pointed out, Gournay may have verbally promoted

laissez-faire as an economic maxim before d’Argenson, but d’Argenson must be

recognized, through posthumous knowledge of his writings, as the true

“literary author of the maxim of laissez-faire.”41 A journal entry made by d’Argenson on 17 April, 1755, reveals how close the two men were in their thinking and influence:

I had a conversation yesterday with M de Sechelles, controller general of finances I was excited by the system I found in place, a system of

allowing a great liberty of commerce [de laisser une grande liberté au

commerce] He was pleased to elaborate on Gournay, intendant of

commerce, who pursued this idea to great lengths and applied it very well

He proposed that the jurandes, that is the corporations of artists and

39 Tsuda, p 462.

40 MacGregor, p 58, hypothesized that this meeting may have occurred at Lyons in 1680.

41 MacGregor, p 65.

Chapter One 12

merchants, be broken in such a way that all the trades be open, an idea which I strongly support 42

Perhaps it is best to heed Nannerl Keohane’s warning about the “innate absurdity of fixing beginnings in such matters,”43 but plainly both d’Argenson and Gournay were important early French influences on the

development of laissez-faire in particular, and free trade principles in

general Both men deserve a prominent place in any genealogy of liberal

trade ideas or the Wealth of Nations.

How far back can early French free trade theories be uncovered?

Stewart, expanding upon Turgot’s Eloge de Gournay, referred to liberal

trade ideas that appeared in France before the end of the seventeenth century.44 A growing body of research indicates that the origins of free trade ideas can be located in seventeenth-century France, but that these ideas are rooted in a much older, Christian providential tradition To discover how this tradition eventually informed the seventeenth-century French economic reformers, it must be traced from its early sources

The providential argument and its early modern carriers

The specific Christian tradition that eventually informed century French commercial theorists was identified by Jacob Viner in his

seventeenth-unfinished lecture series, The Role of Providence in the Social Order.45

Viner maintained that he could distinguish attempts dating back to the early centuries after Christ by certain thinkers to find evidence in nature of the benevolence of providence relating to humankind’s earthly existence His argument differentiated between two providentialist ideas The earlier

42 Tsuda, p 484, n 22 (my translation) Tsuda was quoting from the Marquis

d’Argenson, Journal et Memoires, ed Rathery Tom VIII (1866) p 478

43 Nannerl Keohane, Philosophy and the State in France: The Renaissance to the

Enlightenment (Princeton: Princeton University Press, 1980), p 352.

44 Gary Langer remarked that despite his efforts to construct an Anglo-American genealogy of free trade ideas, Stewart himself wrote “that Smith told him personally that had not [Francois] Quesnay, the founder and leader of the

Physiocratic school, died in 1774, he would have dedicated the Wealth of Nations

to him.” See Gary F Langer, The Coming of Age of Political Economy, 1815-1825

(New York: Greenwood Press, 1987), p 17

45 Jacob Viner, The Role of Providence in the Social Order: An Essay in

Intellectual History (Philadelphia: American Philosophical Society, 1972) The

argument that Viner traced is, of course, distinct from various other views of providence Most notably, Viner’s providential argument is quite opposed to that

of St Augustine.

Laissez-faire and Reason of State 13

of the two ideas “expounds a providential relative abundance of necessaries

as compared with luxuries.”46 Providence, it seems, had thoughtfully endowed the earth with a plenitude of those things required for human existence For example, God provided a relative glut of water and air in most areas of the earth, but was more sparing with those things that are nonessential to human survival, such as diamonds Viner found one of the earliest expressions of this providential argument in the writings of Epicurus: “ ‘Gratitude,’ he wrote, ‘is due to blessed nature because she has made life’s necessities easy of acquisition and those things difficult of acquisition unnecessary.’ ”47

The second idea within Viner’s providential argument has two parts The first part contends that providence sanctions trade between people to encourage human fellowship, and the second claims that providence dispersed the world’s products unevenly in order to make it advantageous for people to trade with each other Viner explained it in this way:

The second idea whose history I will trace in this lecture can perhaps be most clearly formulated by presenting it as consisting of the combination

of two sub-ideas: (1) providence favors trade between peoples as a means

of promoting the universal brotherhood of man; (2) to give economic incentives to peoples to trade with each other providence has given to their respective territories different products 48

One of the clearest signs of God’s benevolence is the ease that the earth’s geography lends toward commerce It is clear, so Viner’s providential argument goes, that “God created commerce as a unifying factor for all mankind.”49 Viner located an early, well-developed expression of this

providential argument in the Orationes of Libanius (fourth century A.D.):

God did not bestow all products upon all parts of the earth, but distributed his gifts over different regions, to the end that men might cultivate a social relationship because one would have need of the help of another And so

he called commerce into being, that all men might be able to have common enjoyment of the fruits of the earth, no matter where produced 50

46 Viner, Providence, p 29.

47 Viner, Providence, p 27.

48 Viner, Providence, p 32.

49 Viner, Providence, p 37.

50 Viner, Providence, pp 36-37 Viner also found the argument in Adam Smith’s

writings (Viner, pp 40-41) Benjamin Franklin gave his formulation of the argument in 1729: “As Providence has so ordered it, that not only different countries, but even different parts of the same country, have their peculiar most