Shifting capital mercantilism and the economics of the act of union of 1707

PalgraveStudiesintheHistoryofEconomicThought
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AviCohen
DepartmentofEconomics,YorkUniversityandUniversityofToronto,Toronto,ON,Canada
GeoffreyColinHarcourt
SchoolofEconomics,UniversityofNewSouthWales,Sydney,NSW,Australia
PeterKriesler
SchoolofEconomics,TheUniversityofNewSouthWales,Sydney,NSW,Australia
JanToporowski
EconomicsDepartment,SchoolofOriental&AfricanStudies,London,UK

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AidaRamos

ShiftingCapital
MercantilismandtheEconomicsoftheActofUnionof1707


AidaRamos
UniversityofDallas,Irving,TX,USA

PalgraveStudiesintheHistoryofEconomicThought
ISBN978-3-319-96402-7
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“SomepeoplehavebeenoftheopinionthatTradeandwarcouldnotgotogether;butthis
isplainlyamistake.”
—CharlesDavenant,DiscoursesonthePublicRevenues,1698


Acknowledgments

Iamgratefulfortheassistanceandencouragementofmany.Firsttomyfamily,especiallymy
brotherRobRamosandmysisterRose,whoencouragedmetotakeSeamusDeane’scourse
ontheActofUnionlongagoatNotreDame.Myresearchasaneconomisthasnotbeenthe
samesince.Iamalsogratefultomyformeradvisor,alsolongagoatND,PhilipMirowski,who
allowedmetobranchsometimesveryfarafieldinexploringtheScottishpoliticaleconomy
andtaughtmehowtomakehardinquiriesofeconomictheory.Theworkhereinisalso
greatlyinfluencedbytheearlyguidanceIreceivedoneconomicdevelopmentfromthelate
Drs.DenisGouletandRoyE.Robbins,whoIwishcouldhavereadit.
IamgratefultotheEdinburghUniversityLibrary,GlasgowUniversity,theUniversityof
NotreDameHesburghLibrary,andtheScottishHistorySocietyforaccesstotheirspecial
collectionsanduseoftheirmaterial;theKingHaggarScholarsAwardfromtheUniversityof
Dallas,whichallowedmetoconducttheoverseasresearchnecessarytocompletethiswork;
andmyHistoryofEconomicThoughtstudentsatUDwhosediscussionsnotonlysharpenmy
thinking,butalsomakemehopefulforthefuture.Ithankthosewhoassistedwithresearch
conversation,company,andhousing,includingAaronB.Fricke,BrigidByrne,AdenaMoore,
andJeffJasinski.IamalsoverygratefulfortheeffortsofallofthestaffatPalgraveMacmillan,
especiallythepatientLauraPaceyandClaraHeathcock.Fortheirencouragement,
incentivization,andcheer,IalsowishtothankElisaGonzales,PatrickGary,KimberlySacher,
andLt.Col.ArmandoValdez.
Lastbutnotleast,Iwouldliketothankmyparents,ReynaldoandBeatrice,whohave
shownmethepowerofanenduringunion.


Abbreviations
EIC EnglishEastIndiaCompany
HMC HistoricalManuscriptsCommission
L GeorgeLockhart’sMemoirs
RPS RecordsoftheParliamentofScotland
WN WealthofNations

Contents
1Introduction
2ThePoliticalandEconomicContestandContext:​ScotlandandEnglandBeforethe
Union
3BeyondTrade:​MercantilistIdeasofDependency,Value,andTransmutationand
JustificationofUnion
4TrickorTreaty:​TheNegotiationandArticlesofUnionintheContextofMercantilist
Ideas
5BalancingAct:​TheEquivalent,PoliticalArithmetic,andMercantilistStructural
Violence
6ShiftingCapital
7UnintendedConsequences:​ScottishPoliticalEconomyasaReactiontoMercantilism
Index


©TheAuthor(s)2018
AidaRamos,ShiftingCapital,PalgraveStudiesintheHistoryofEconomicThought
/>
1.Introduction
AidaRamos1
(1) UniversityofDallas,Irving,TX,USA


AidaRamos
Abstract
ThischapterdiscussestheimportanceofexaminingtheActofUnionof1707asa
manifestationofmercantilisteconomicthought.PlacingtheUnioninthecontextofeconomic
ideasshedsfurtherlightonboththecontentsofthetreatyandtheactionsoftheEnglishand
ScottishParliaments.Thedefinitionofmercantilismusedinthebook,asystemoftheoryand

policiesthatseekstomaximizenationalpower,isexamined.KeyaspectsofEnglish
mercantilismemployedinlegislationbeforeandduringthenegotiations—warfarewithout
militaryconquest,theideaofsurplus,andparticularnotionsofwealth,power,trade,and
transmutation—areintroduced.Howtheseareconnectedtotheconceptofstructural
violenceisexamined.Theoutlineoftherestofthebookisalsodiscussed.
Keywords ActofUnion,1707–Politicaleconomy–Mercantilism–Structuralviolence–
Scotland–England–Eighteenthcentury–Imperialism–GreatBritain–Power–Development

1.1 EconomicsandtheUnion
OnMay1,1707,arathersplendidsceneunfolded,describedbySirJohnClerkofPenicuik,as
QueenAnneandherretinueof“atleast3or400coaches,”processedtoSt.Paul’sCathedralto
celebratetheUnion.InsideSt.Paul’s:
TheBishopsandPeerssatingalleriesonherMajestie’srighthand,andthelate
membersoftheHouseofCommonsofEngland,withsuchashadbeenchosento
representtheCommonsofScotlandinthefirstBritishParliament,wereonherleft
hand…1
…IobservedarealjoyandsatisfactioninthecitizensofLondon…Thewholeday
wasspentinfeastings,ringingofbells,andilluminations,andIhavereasontobelieve
atnotimeScotsmenweremoreacceptabletotheEnglishthanonthisday.(1892,pp.
68–69)
BellsalsoranginEdinburghonthemorningofMay1.However,ratherthansongsofjoy,
thebellsofSt.GilesCathedraltolledthebittersweettune“WhyShouldIBeSadonMy


WeddingDay?”Therewerenopubliccelebrations.HenryMaule(1707)reportedtotheEarlof
Mar,“Thereisnothingsomuchtakennoticeofheretodayasthesolemnityinthesouthpart
ofBritainandthewantofithere.”AlthoughtheActofUnionhadpassedboththeEnglishand
ScottishParliamentsandbeenratified,thepublicopinioninScotlandwasverymuchagainst
thetreaty.AsevincedbythetellingtuneatSt.Giles,Scotlandhadhadaweddingbutitwas
unclearwhetheritwastobeeitherahappyorfruitfulunion.

TheActofUnionof1707joinedtheparliamentsandfulladministrationofbothnations
intooneGreatBritain.ForScotland,theimplicationsoftheActwerefar-reachingpolitically
andeconomically.TheUnionnotonlydissolvedtheScottishParliament,andreducedthe
numberofnewministers,butalsomovedtheadministrationofthecountryfromEdinburgh
toLondon.AspartofGreatBritain,theScottishpeopleweresubjecttoanewsystemof
taxationandliableforthedebtthatEnglandhadaccruedthroughtheseventeenthandearly
eighteenthcenturies.WhileitisundeniablethatScotlandalsogainedeconomicbenefitsfrom
theopeningoftradewithEnglandanditsoverseasterritoriesandthedevelopmentofthe
domesticfisheriesandmanufacturingguaranteedbythetreaty,thebenefitswereslowto
manifest,anditisequallyundeniablethatthetreatyalsogeneratedeconomiclossesfor
Scotlandinthefirstfourdecadesafteritspassage(Whately1989,pp.169–176).
Publicprotestsinprintandinpersonbothduringandafterthetreatynegotiations
showedthatthepublicsentimentwasagainsttheUnion,asanalyzedinBowie(2007)and
Gibson(1988),andshowninthecontemporaryaccountsthatshallbeusedthroughoutof
ScottishministersGeorgeLockhart(1714)andJohnClerk(1993and1892),andEnglish
observer/propagandistDanielDefoe(1799).Therewasonlyonepublicaddresspresentedto
parliamentinfavorofthelegislation.2AndyetthemajorityofScottishministerspresent
votedinfavorofit.3WerethevotesinfavoroftheUnionamatterofbriberyandacorruption
ofinterestsonthepartoftheministers,asarguedbysomescholars,suchasShaw(1999),
MacInnes(1990),Riley(1964),andFerguson(1977)?Orweretheyamatterofconfrontation
ofthebeliefthatScotland’seconomycouldnotprosperwithoutcloseralliancewithEngland,
asSmout(1969,1964,and1963)argues,andthusUnionwasthebetterchoicethan
continuingtoengageincommercialhostilities?OrwasitsimplyamatterofseeingtheUnion
asawaytosecurethepromisesoftheRevolutionsettlementandtosecureScotlandfroma
returntoJacobitism?Thisbookoffersanalternativeexplanationofboththeconstructionof
theUnionandtheScottishministers’supportforit.
TheUnionhasbeenexploredfromavarietyofviewpoints:asafightagainstuniversal
monarchyandagainstcentrism,asapurelypoliticalexercise,asaninevitabilitydueto
geographyandhistory(Colley1992),asabetrayalofprinciple(Riley1964;Ferguson1977),
andsoon,butneveryetasanexerciseofmercantilism,thedominantsetofeconomic

theoriesofthetime.ThepoliticalandmilitaryreasonswhytheEnglishpursuedtheUnionare
knownandhavebeenextensivelyexplored(MacInnes1990,2007;Shaw1999).4Howeverless
explored,especiallywithintheeconomicsliterature,aretheeconomictheorybehindthe
languageandactionstakenaswellasthosecalledforinthetimeprecedingtheunion
negotiations,thedraftingofthetreaty,anditspassageandimplementation.Althoughthe
economichistoryofScotlandfrombeforeandduringtheUnionhasbeendetailed,most
notablybyT.C.Smout(1963,1964,and1969),R.H.Campbell(1964),T.M.Devine(1985),and
ChristopherWhately(1989),theeconomictheorythatunderlaytheUnionandthatguided
thedraftingofthearticles,fromthecontextofthehistoryofeconomicthought,hasnot.This


isacuriousomissiongiventhatthedominantcontemporaryEnglisheconomicdiscourse,
mercantilism,iswellknown,andthattheperiodthatfollows,theScottishEnlightenment,led
tothedevelopmentofpoliticaleconomyasadiscourse.Andyetthereisadearthofmaterial
thatreflectsupontheinfluenceofeconomictheoryonthecreationoftheUniontreatyandits
passage.5,6
WhiletheeconomichistoryofScotlandandtheUnionreportsontheeconomic
phenomenaoftimesandplaces,providingrichcontextfordiscussionofpolicyandtheory,it
doesnotnecessarilyinvestigatetheeconomicthinkingthatunderliestheinstitutionsofthe
times.ThehistoryofeconomicthoughtcanprovideadeeperanalysisofbothScottishand
Englishinstitutionsinvolved,whetherthoseinstitutionsareformal(legislationregarding
propertyandcommerce)orinformal(opinions,customs,andhabits).Inaddition,itanalyzes
howthoseinstitutionsareformedandunformed,andhowtheyarechangedandinfluenced
overtimeoratoneparticularpointintime.Thus,IwishtoprovideananalysisoftheActof
Unionfromtheperspectiveofthehistoryofeconomicthought.
ScholarlytreatmentsoftheUnionhavetendedtoseparatecontemporaryeconomic
thoughtfromanalysisofthepoliticalaimsoftheUnion’sauthors.Anunderstandingof
particularaspectsofmercantilistthoughtshedslightonboththeconstructionoftheUnion
andthechoicesofitsauthorsandnegotiators.IarguethattheActofUnionwascreated
withinthecontextofseventeenth-centuryEnglishmercantilistthoughtthatbothinformed

andwasformedbyEnglishstatepolicygoalstoremoveanyperceivedexternalthreats,
whethermilitary,political,orcommercial,andfocusedonexpansionthroughtradeandthe
absorptionofresourcesthroughcolonization.ViewingtheUnionasmerelyaboutthe
expansionoftrade,ortheremovalofthethreatofaStuartrestorationandmilitaryconflicton
thenorthernborderignoresanimportantaspectoftheintellectualhistoryoftheperiod,of
howtheprevalenteconomicideasinfluencedtheformationofpolicy.Idonotarguethatthe
otherinterpretationsoftheUnionasapoliticalorsecuritymeasureareincorrect,butonly
thattheyareincomplete.AnalyzingtheactionsofboththeScottishandEnglishministers
throughthelensofcontemporarymercantilistthoughtprovidesadditionalinsightintothe
particularitiesofwhatwasperceivedtobeatstake,whytheUnionpassed,andwhyaspectsof
itweresoproblematictotheScottishpublic.7
Ialsoarguethatthemercantilistthoughtthatinfluencedthedraftingofthetreatyof
Unionwasnovelinthatitachievedthemilitaryandeconomicaimsofthestatewithoutever
engaginginactualarmedorcommercialconflict.Therelevantmercantilisttheoriesthat
influencedtheUnioninvolvetwoformsofviolence:Oneispsychological,thethreatof
violencewithouthavingtoundertakeeithertheexpenseorthephysicalactionofengagingin
amilitaryinvasion,andtheotherisstructuralviolence,whereintheneweconomicand
politicalorderimposedbytheUniontreatyensuredthatonesidealwayshadapoliticaland
economicadvantage.Theseformsofviolencearepreferredtomilitaryactionbyanationstatethatseekstomaximizethesizeofitstreasury,ortheamountofitsborrowing,because
theycomeatlowermonetarycost,butstillaccomplishthestate’smilitaryandmercantile
aims.IstvanHont(2005)impliesthattohavethestateactinthecommercialrealmwastoput
itintoadifferentworldofcommercialaffairs.WhatIargueinsteadisthatmercantilism
exporteditseconomiclogicandrhetoricintothepoliticalrealm.Ratherthanseeingthestate
ashavingtocommititselftomoremilitaryaction,moreself-defenseinordertoassertits
commercialclaims,commercialactivitybecameaformofself-defenseandawayof


reinforcingthemilitarypowerofstatesthatweredominantorsuccessfulintradebecauseit
offerednotonlynewresourcesbutalsonewavenuesbywhichtoasserttheirpowerand
abilitytoincreasetheirmilitarypowerthroughtheincreaseofphysicalandmonetary

resourcesavailabletothestatetreasury.Therebyitisamoreefficientformofmercantilism.
TheActofUnionutilizesthisnewmercantilismandisthusamanifestationofthe
mercantilistprocessesthattheEnglishstateadministrationadoptedintheprotectionand
expansionofEngland’sempire.Thatthisissoisseenintherhetoricandthoughtprocessesof
thoseonbothsidesoftheUniondebateinthecraftingoftheTreaty,whetheritsprogenitors
wereconsciousofitornot.Ananalysisofthesethoughtprocessesandlanguageisthebasis
ofthisbook,andwillrevealtheprevalenceofthemercantilistconceptofthebalance,or
ratherasurplusthatbenefitsonesidemorethananother,asthedominantparadigmthrough
whichtheUnionwasfashioned.Fromtheperspectiveofmercantilisteconomicthinking,it
canbeshownthatdespitethebenefitsthatwereextendedintheUniontoScotland,the
EnglishministersdesignedthetreatysuchthatEnglandeitherbrokeevenor,inothercases,
alwaysmaintainedaseriesofadvantages,whichimpactedbothScotland’seconomic
outcomesandthefurtherdevelopmentofeconomictheory.

1.2 Mercantilism:Growth,Power,andViolence
AnexplorationoftheideasofEnglishmercantilismembeddedintheUnionisessentialto
understandingitscreationandoutcomes,andthereceptionandreactiontoitsoutcomes.The
ministersofbothsidesmaynothavealwaysbeenconsciouslyparticipatinginmercantilist
paradigms,buttheiractionsandeventhepoliciestheyvoteduponwereoftencoloredbya
largermercantilistworldview.AsJohnMaynardKeyneswrote,“Theideasofeconomistsand
philosophers,bothwhentheyarerightandwhentheyarewrong,aremorepowerfulthanis
commonlyunderstood…Practicalmen,whobelievethemselvestobequiteexemptfromany
intellectualinfluences,areusuallytheslavesofsomedefuncteconomist”(1936,p.383).I
arguethattheideasofcertainmercantilistthinkerswerenotonlyverymuchalivebutwere
pivotaltothecreationoftheUnion.
MyargumentfocusesnotonallfactorsofmercantilisminrelationtotheUnionbuton
certainaspectsofmercantilistthoughtandrhetoric,inMcCloskey’s(1998)senseoftheentire
setofarguments,logic,andevidenceusedtopersuade,thatwerebroughttobearonthe
craftingoftheUnionthathavebeenoverlookedorunderemphasizedintheliterature.The
economicaspectsoftheArticlesofUnionanditsdraftinghaveoftenbeenexaminedonlyin

relationtotrade.While,ofcourse,tradeisapivotalfoundationofmercantilisttheoryand
policy,therearemorecomplexideasdevelopedinmercantilistwritingtojustifycertain
actionsregardingtradeandpolitics.AdamSmithcharacterizedthe“mercantilesystem”in
theWealthofNations(1776)asconflatingwealthwithspecieandwhose“ultimateobject,
however,itpretends,isalwaysthesame,toenrichthecountrybyanadvantageousbalanceof
trade”(IV.8.1).8Helaterpointstothetrueerrorofthesystembeingitsfocusonproduction
forexportratherthanonconsumptionandhenceitsmisallocationofresources,butthe
criticismregardingwealthandspeciepersistedintheliterature.Whilealloftheeconomic
interpretationsofmercantilismhaveidentifiedthecommonelementofpromotinga
favorablebalanceoftrade,thereasonsgivenwhythestateshouldpursuesuchapolicytend
tofallintotwobroadcategories.Althoughtradeandproductivityisextremelyimportantto


mercantilisttheory,itencompassesamorecomplexsetofideasthantradealone.
OnelineofthoughtfollowsSmithinassertingthatthegoalofmercantilistpolicyisthe
materialbettermentofthenationthroughthepursuitofspeciegainedbytrade.J.R.
McCulloch,RichardJones,JohnIngram,andJacobVineradheredtothisposition.Theother
interpretationofmercantilismseesitasatoolforbuildingpoliticalpowerthrougheconomic
means.Thenineteenth-centuryGermaneconomistsGustavSchmoller,WilhelmRoscher,and
FriedrichListseetheaccumulationofbullionthroughtradeasalogicalmeansofstatebuildingintheearlynationalperiod.EliHeckscher(1935)arguesthatthegoalisthe
maximizationnotofthestate’swealthbutofthestate’spower.Thewealthgeneratedthrough
mercantilistpoliciesandpracticesallowsthestateasourceoffundstoconsolidateand
extenditspowerbyalsoconsolidatingandextendingitsterritory.Wealthandplentywill
likelyresult,butinthisviewmercantilismusestradeandmoneypoliciestobothexerciseand
increaseitspower.
LarsMagnusson(1994and2015)fallsintothelattercategorybutalsocontendsthat
mercantilistdiscourseandpracticerevealthatwealthandpowerwereviewedas
synonymousratherthanasmeanstoanend;bothareends.Anyattempttoenrichthenation
isultimatelyameanstobolsterthestate’spowerratherthantoincreasethenumberofgoods
forimprovedqualityoflife.Economicactivityismanipulatedtoachievethestate’sgoals,

suchasrestrictingthetradeofrivalcountries,andpoliticalactivityisusedasameansto
achieveeconomicgoals,suchasthegrantingofofficialmonopoliestoestablishcontrolover
traderoutes.AsMagnussonstates,“Thustradenecessitatedpowerbut—atthesametime
powerwasafunctionofplentyandtrade”(1994,p.152).Bothareexpressionsofstatepower,
andthemaximizationofthiskindofpowerisconceptuallydifferentthanmaximizingspecie
forfundingofstateunificationorincreasedlivingstandards.BothEnglandandScotland’s
policiesintheseventeenthandeighteenthcenturiesfitintoMagnusson’sframework.For
instance,England’srestrictionoftradeforcoloniesandcountriesviewedaspotentialthreats
toitsoverseasdominanceoftrademakessenseinaworldviewwheremaximizingtrade
routesisameanstointernationaldominance.Somewriters,suchasWilliamPetty,wroteto
justifytheirownpolicyproposals(Hutchison1988,pp.29–30).Meanwhile,CharlesDavenant
oftenwrotetojustifytheproposalsoftheEnglishgovernment(Waddell1958;Somers1730).
Whetherthetheoryandpolicyofmercantilismischaracterizedasaschoolofthought,arentseekingactivity(EkelundandTollison1981),asetofpolicies,oranapproachtogenerating
solutionsforspecificproblems(VaggiandGroenewegen2003,p.16),theendgoalof
mercantilistwritingisthesame:toenactpoliciesthatmaximizedthewealthandpowerofthe
nation-state.
Magnusson’sdefinition,however,underestimatesthemartialaspectofthefavorable
balanceoftrade/zero-sumviewofexchangepromotedbymercantilistpolicyandliterature.
Animportantsignofoverseasdominationisnotonlytheexpansionofterritorybutalsothe
abilitytogrowanddeployyourmilitaryoverseastodefendthatterritory.Mercantilismis
thusalsoanideologyofexpansionthroughforce,withinternationaltradeservingasone
meanstothatend.Magnusson’sperspectiverecognizestheroleofpowerandgrowththrough
expansioninatimeofexpandingnation-states,andthehallmarksofnationalpower:
commandoverspecietofundstateexpendituresandcontroloverterritoryandtraderoutes.
SternandWennerlind’s(2014)observationthattheadministrationsofthenation-statesof
theperiodwerenotasorganizedashasperhapspreviouslybeenassumed,ratherthan


counteringtheorganizationalfeaturesofmercantiliststatepolicy,reinforcestheneedforit.
Theadministrationsoftheperiod,whetherorganizedordisorganized,imposedvarious

tariffs,grantedbounties,passedlawsregardinglaborandproductionregulations,and
grantedmonopoliesandprivilegestoprivatetradingcompanies,eveniftheydidsoatthe
behestofcompetingfinancialandcommercialdomesticinterests.
Thebalancemetaphorhasalonghistoryineconomicthought.AsAndreaFinkelstein
(2000)demonstrates,theexaminationinthephysicalsciencesofthebalanceofforces
influencedeconomicthinkingintheseventeenthcentury,andwasalsoinfluencedbythe
emergenceofdouble-entrybookkeeping.Anotherinfluencethatsheclaimsisfoundinevery
contemporarypamphletpromotingatradesurplusisCato’sdictum,thateveryhousehold
shouldbeasellerratherthanabuyer(p.91).9Ratherthanseeingabalanceasmaintaininga
harmoniousbalanceandexchangeofequivalentsasinGreekandScholasticthought,in
Englishmercantilisttheorytheemphasisisnotonanevenbalance,butasurplusofexports
orpositivebalance.
SalimRashid(1993)showsthatinthecontemporaryEnglishliteraturethephrase
“positivetradebalance”isalwaysusedinthecontextofEngland’songoingconflictswith
Franceandthetradebalancewiththatcountry.Wealthisthusemphasized“becausetheword
‘wealth’carrieswithitconnotationsofbothrichesandpower”(p.140).Tradeisdiscussed
andunderstoodwithintheframeworkofthepoliticsoftheperiodandthereforeisputatthe
serviceofgeopoliticalpowergamesintheseventeenth-andearlyeighteenth-century
pamphletliterature.Thus,Englishmercantilistliteratureiscraftedtoadvanceaparticular
powerstructureoftheEnglishnation-stateinrelationtootherstates.Expansion,
competition,anddominanceareseenasnecessaryactionsthatmaximizethepowerofthe
nation-state.
Idefinepowerastheabilitytocontrolorlimittheactionsofothers,whichdefinitionis
influencedbytheworkofdevelopmentethicistDenisGoulet.FirstoutlinedinTheCruelChoice
(1971),Gouletanalyzedthepostcolonialrealitiesoflesser-developedcountriesandthe
actionsofdevelopedcountriesthatcontinuedtopreventformercoloniesfromexercisingfull
agency.However,theconceptappliesintheseventeenthandeighteenthcenturiesaswell.
Thepurposefulcraftingofpolicyinordertolimittheactionsofcountriesthatoneperceivesa
realorpotentialthreattothedominanceofthenation-stateisamercantilistaction.Thegoal
intakingsuchactionsisbothtolimitthepossibilityofcompetitionandtothereforeexpand

thedominantnation-state’spotentialarenaforaction.Ontheempireoftheseas,touse
Armitage’s(2000)phrase,tolimitanothercountry’sabilitytotradeallowsthepossibilitythat
onecanseizetheother’smarketorcontinuetheexpansionofone’smarketinaparticular
tradearea.10Topreventacountryfromevenbeingabletoparticipateinthewiderempireof
theseasisanevenmoreeffectivecounter,aswasthecasewithIreland.Throughthislens,the
purposeofmercantilisteconomicpolicyandactivityistolimitandexpandcertainactionsin
ordertoexpandtheactivitiesofthenation-state,whetherinthepresentorthefuture.It
seekstolowerinputcostsgainedatthedisadvantageofitscoloniesanddependent
territories,andtomaximizetheabilitytoexpandanddeployanavyandastandingarmyat
will,sothattheactionsofrivalsandpotentialrivalsseekingexpansionoftrade,territory,or
accesstophysicalorfinancialresourcescanbearrested.
Althoughitistruethattheviewofwhetherwealthwasfiniteorinfiniteshiftedoverthe
courseoftheseventeenthandintotheeighteenthcentury,theconceptthattherehadtobea


winnerandaloserinanyinteraction,usuallyattachedtotheideathatresourcesoftheworld
werefixed,remainedinplace.Foremergentnation-statesstrivingtobethewinner,they
couldimposeconditionsthatwouldensuretheywerethewinners.TheActofUnionisone
suchinstanceofthis.Themercantilistmentalityprovidesanadditionalexplanationofwhy
theEnglishusedsuchharshtacticstobringtheScottishministerstothenegotiatingtable,in
thedraftingoftheTreaty,andwhytheScottishMPs,giventheimbalanceofpoliticaland
commercialpower,hadlittleleveragetobendthetreatytotheircountry’sfullerbenefit.This
explanationalsoprovidesareasonwhytheScottishMPseventuallysignedthetreaty,despite
thepopularopinionagainstandmanyoftheirownreservations:Inamercantilistworld,there
wasstill,evenafterthefailureoftheScottishcolonyatDarien,orperhapsbecauseofit,nota
wayforthemtobecometheclearwinnerrelativetoEngland.
Theadoptionofmercantilistlogicwasnotone-sided.IarguethatboththeEnglishandthe
Scottishnegotiatorsusedmercantilistlogicandrhetoricintheirargumentsandproposals.A
workthatcomesclosesttotheaimsofthisbookisDavidArmitage’s(1995)discussionof
Scotland’svisionofempire.Withoutstrictlysayingso,hisanalysisofScotland’sactionsto

furtheritseconomicinterestsintheyearsbeforetheUnionshowsthattheyareworking
withinamercantilistparadigm.TheformationoftheCompanyofScotlandandattemptsat
colonizationinDarienandelsewherearetheforemostexamplesofamercantilist,imperialist
worldview.Suchmercantilistthinkingisstarklypresentinthespeechesandwritingofthe
ScottishministersofparliamentnegotiatingtheUnion.Thedominanceofthisframework
wassuchthatitcausedothermodelsofuniontobedismissed.AndrewFletcher’sproposalfor
federalunionandtheearlierActofSecuritypassedbytheScottishParliamentwereonly
acceptableifonewaswillingtocastasidemercantilistnotionsofwealth,valueandvaluation,
andgrowth,andthenecessityofforcetoattainthem.

1.3 MercantilismandVariantsofViolence
Mercantilismisinherentlyviolentduetoitsinternallogicthatonemustattainasurplusor
advantageoverothersineveryinteraction.Suchviolencehasbeenoverlookedinthe
literaturebutwasapparenttocontemporarywriters.AdamSmithrecognizedtheaggression
andmanipulationusedtobringaboutthepositivebalanceonedesiredinmercantilist
thought:
Mercantilejealousyisexcited,andbothinflames,andisitselfinflamed,bytheviolence
ofnationalanimosity:Andthetradersofbothcountrieshaveannounced,withallthe
passionateconfidenceofinterestedfalsehood,thecertainruinofeach,inconsequence
ofthatunfavourablebalanceoftrade,which,theypretend,wouldbetheinfallibleeffect
ofanunrestrainedcommercewiththeother.(WNIV.3.42)
Itisatheorythatinattemptingtohurttheotheralsohindersone’sowneconomicactivity.
WilliamPaterson,founderoftheCompanyofScotland,opinedthattrade,“withinthelastTwo
Ages,ithathmadegreateralterationsintheseplacesoftheworldthanthesword”(1701,p.
2).
ScottishparliamentarianandpoliticalphilosopherAndrewFletcherofSaltouncertainly
sawmercantilistlogicandthepotentialviolenceinherentintheUnion.InAccountofa


Conversation,hediscussesthepossiblefurtherdiscouragementofScottishtradeiftheUnion

shouldcometopass:
Tradeisnottheonlythingtobeconsideredinthegovernmentofnations:andjustice
isdue,eveninpointoftrade,fromonenationtoanother.Foreverygoodgovernment
hasalwaysencouragedindustry,becauseallmankindhavearighttothefruitsoftheir
ownlabor.Andonthataccountallgovernmentswhichputdiscouragementsonthe
industryoftheirsubjectsarenotuponarightfoot;butviolent,andconsequently
unjust.(1703,p.418)
TheEarlofSeymourrepliesthatFletcherspeaksofinjustice,“butIspeakofadvantage.”
Fletcherrespondsthatifanationproceeds“totakeawaybyforceanyadvantagethatbelongs
toaneighboringpeople,younotonlydoinjusticetothem,butinjureyourselfbytheexample”
(p.429).Thewinner-takes-allparadigmthusinsteadproducestwolosers.
Therhetoricofmercantilismincludesalanguageofviolence,whichcanbepoliticalor
economic.Davenantwrote,“SomepeoplehavebeenoftheopinionthatTradeandwarcould
notgotogether;butthisisplainlyamistake”(1698,p.399).Onecanseethisinthephrase
“RoughWooing”usedinconjunctionwithEnglisheffortstoenticeatdifferenttimesthe
ScottishandtheIrishtocooperateinwithEngland’sgoals.Defoe’spoemCaledonia(1706)
containsthejarringconclusionthat“whenshe’sforcedshe’sfree/Aperfectprostituteto
industry”andthatScotlandwoulddobettertosubmittoEnglishdominanceandhaveaUnion
(p.59).EvenEnglishparliamentariansconcurredthattheuseofviolencewaspartofthe
methodologyoftheUnionprocess.SirJohnPakington,oneofthemostvocalEnglishTory
opponentsofthetreaty,saidtheUnion,“waslikemarryingawomanwithoutherconsent:An
UnionthatwascarriedonbyCorruptionandBriberywithinDoors,andbyForceandViolence
without”(inMurdoch2008,p.80).Anon-forcefuloptionwasnotofferedbecauseitisnot
possibleinthemercantilistframework.ThelanguageofthepetitionsforandagainstUnion
alsoacknowledgesthisrealityofmercantilisteconomicviolence.
TheviolenceinherentinthetradelawsandhencetradepatternsestablishedbyEnglish
mercantilistpolicyareaformofstructuralviolence,asaresomeofthetermsoftheArticlesof
UnionandtheeconomicreasonsthatcausedScotlandtoentertreatynegotiations.Iusethe
termasdefinedbyPaulFarmer(2005)inhiswritingoneconomicdevelopment.Structural
violenceoccurswheninstitutions,againwhetherformalasencodedinlaworinformalas

encodedinattitudes,customs,andbeliefs,arestructuredinsuchawayastolimitothers’
agency.InthecontextoftheUnion,structuralviolenceisusedbothtoforcepeopletomake
choicesconsistentwithEnglishgoalsandlimitthepossibilitiesforexpansionofthoseforced
oncethechoicesaremadeandpoliciesimplemented.Onthewholeitwasaveryeffective
meansforEnglandtoexpanditsempirewithouthavingtoengageintheexpenseofmilitary
conquest.Militarythreatpriortoaneconomicagreementissufficienttoattainthe“empireof
theseas”orsimilarlyorwhatamountstothesame,the“empireofcommerce.”Theformof
powermanifestationinEnglishmercantilismisnotjustphysicalbutalsofinancial.AsKnights
(2016)andGauci(2001)haveshown,mercantilismrequiredtheparticipationofavarietyof
players.Theriseoftradingcompaniesandthesubscriberswhounderwrotethemmeantthat
advancinganationalpolicybyagovernmentrequiresthecooperationofanetworkof
personsoutsideoftheformalgovernment:merchants,financiers,andsubscribers.Because


merchantsandsubscribershavevestedinterestsinmaximizingtheirprofitontheonehand
anddividendsontheother,theinterestsoffinancialmercantilismisnotnecessarilyinthe
interestsoftheaveragepersonofthenation.Thebenefittothemajorityofpeoplewould
dependonanyparticularprojectbeingpursued.
TheUnionwasmerelyacontinuationofthemaximizationofEnglishstatepowerand
deterrenceofthepowerofothercountries,andthustheviolencecarriedoverintothe
formationofUnionaswell.Structuralviolenceisnotsimplyamatterofrent-seekingbutof
purposelymanipulatingasituationsuchthatanothergroupofpeopleareatadisadvantage.
Indeed,DavenantwrotethattheEnglishshouldnotjustmaximizeexportsoverimportsbut
that“manythingsmustperhapsbedonetothwarttheinterestsofothernations”(1698,p.
424).Fletchersawthistoo,asevidencedinthequoteregardingtheactiveremovalofone
party’sadvantage.TheTreatyofUnionthereforewasnotsimplyamatterofstructuring
governance,taxes,andtradeinEngland’sfavorbutalsoinScotland’sdisfavor.
IagreewithWhately(2008)thattheunionnegotiationsweremorecomplexthana
strugglebetweenanall-powerfulEnglandandaunitedandpoverty-strickenScottish
opposition(p.18).Iarguethatbothsidestendedtoviewtheirsituationrelativetoeachother

inmercantilistterms,andthatwithinsuchaviewoftheworld,duetoitsimbalanceof
commercialandmilitarypower,thatEnglandwasabletonegotiateatreatythatputitselfata
structuraladvantageintothelongterm.Bothusedthepositivebalancemodeltoassesstheir
actionsinthenegotiations.TheScottishministersfocusedonfreetradewiththecoloniesas
theirmajorgain.MeanwhileEnglandhadalonger-termview.JustasThomasMun(1664)
suggested,oneshouldviewimportsofresourcesasseedsforgreaterexports,England
negotiatedforalong-termharvest.England,morepracticedinmercantilistthinking,ensured
theirgainsinpowerinparliamentaryrepresentation,thelocationofthecapital,debtservice,
increasedtaxrevenue,andaccesstoincreasedfinancialandphysicalcapital.Thisisnotto
arguethatScotlandreceivednoeconomicbenefitswithintheunionframework,becauseit
certainlydid.However,itistosaythatignoringtheintellectualmindsetoftheministerswho
drafted,negotiated,andvotedontheunionistooverlookthestronginfluenceofmercantilist
economicthoughtintheshapingofGreatBritain.

1.4 ShiftingCapital
TheUnionisworthyofenduringinterestandinvestigation.EvenbeforetheBrexitconflictor
theoppositiontoTorypolicyinthe1980s,conflictsofeconomicvisionbetweengroupsin
ScotlandandEnglandcanbeobservedgoingbackto1707.Thebasicquestionsofwhether
ScotlandshouldorcouldsurviveeconomicallyapartfromBritain,howitwoulddoso,
whetherthecurrentsituationisfair,andifamoredevolvedgovernmentispreferableto
disunionalsopersist.Whileitmaybetruethatsharinganislandlandmassmayeventually
causedifferentnation-stateswithinittoeventuallymergeintoone,theActofUnionas
devisedin1707wasneitherinevitablenorenteredonequalterms.IarguethattheUnion,and
actionstakenbytheEnglishstateprevioustothedraftingofthetreatytocoercetheScottish
ministerstoopennegotiations,wasnotmerelyasolutionforbothcountriestothepersistent
militaryandcommercialthreatseachnationposedtotheother,butapurposefulmercantilist
measureonthepartoftheEnglishstatetoexerteconomicandmilitarypoweroverthe
Scottishstate.TheActofUnioncanbeseenasamanifestationofamercantilisteconomic

theorythatdominatedEnglishstatecraft.
ThepurposeofthemaneuveringsofmercantilismandoftheUnionistohavecontrolover
resourcesandtheirallocation.Thetitleofthebook,ShiftingCapital,referstoboththe
movementofEdinburgh’scapitaltoLondonandthemovementofministers,resources,and
people,orofphysical,financial,andhumancapital,intoEngland’scommandandcontrolin
manufacturing,themilitary,andadministration.Withasurplusofgoods,people,and
resources,theUnionensuredthatEnglandemergedthewinner,fromamercantilist
perspective,initsengagementwithScotland,asshallbearguedinthefollowingchapters.
ThemovementtowardUnionasresultofmercantilistforcesbeganbeforethedraftingof
theTreaty.Chapter2exploresthepoliticalandeconomiccontextofScotlandbeforethe
Unionandthefactorsthatcausedthemtoenterthetreatynegotiations.Theywerebothat
theeffectofEnglishmercantilistpoliciesandenactedtheirownmercantilist
countermeasures.AspreviouslydiscussedbyDavidArmitage(1995),Scotlandtoohad
encounterswithmercantilistimperialistgoalsandwithresistancetoEngland’sforeignpolicy
interferingwiththeirtrade.Theconsequencesofsuchactivitiesandengagementwiththe
mercantilistworldview,Iargue,leadmanyoftheScottishministerstoseeUnionasthebest
solutionandtodiscardalternativeplansforScotland’sgrowth.
Chapter3focusesonelementsofmercantilistthoughtandrhetoricintheworksof
ThomasMun,WilliamPetty,andCharlesDavenant,pamphleteersfromthreedifferenterasof
Englishmercantilism.Whilethereweremanyothervoicesinthemercantilistpamphlet
literature,thesethreearearepresentativesampleofmercantilismthatfocusesonthe
maximizationofstatepowerandthatadvocatesdoingsoattheexpenseofothernations,
evenone’sownalliedterritories.Theseauthorswerealsothemostwidelyknownbythe
readingpublicandgovernmentministerswhodraftedtheTreatyofUnion.Therearedifferent
strandsofthoughtintheworksoftheseauthors,butIfocusonthoseregardingpower,trade,
defense,anddependency,andhowtheywereputintheserviceofmaximizingthepowerof
theEnglishstateandminimizingthepowerofIrelandandScotland.Theargumentsmadeby
thepamphleteersregardingthethreatandyetdependentstateofIrelandismademoresubtly
inrelationtoScotlandbutisreplicatedneverthelessintheargumentsusedtojustifythe
Union.Theirargumentsregardingself-defense,resourceallocation,andtransmutationare

salienttothedevelopmentoftheArticlesofUnion.
AnanalysisofboththeargumentsforUnionandtheArticlesofUnionasanexercisein
mercantilismispresentedinChap.4.AlthoughoftentreatedasavictoryforScotlanddueto
freetrade,itwillbeshownthatthetermsoftheTreatyensuredthatEnglandwouldincurno
lossesinamercantilistsensedespiteeveryseemingconcessionmadetoScotland.Theways
inwhichthelogicofpoliticalarithmeticisusedtoconferrationalityinthewritingofthe
ArticlesofUnion,whicharesometimesveryirrationalinhindsight,areshowntobeelements
ofmercantilistlogic.Thus,thevotesoftheScottishministersaremademorecomprehensible
asIarguethatthemajorityofthemareviewingthesituationthroughamercantilistlens.In
particular,theEquivalent,thepromisedcompensationfortheinconveniencesandlossesof
theUnion,willbeexaminedinChap.5asamanifestationofmercantilistlogicandpolitical
arithmetic.
Ifthemercantilistworldviewisoneinwhichthetotalwealthoftheworldorinany
relationshipisfixedandonemustalwaysseektoemergeeitherwithanevenbalanceor
preferablytohavegainedfromtherelationship,whatwasitthatshiftedwiththeUnion?


Chapter6analyzesthe“gains”and“losses”ofbothScotlandandEnglandfromthe
mercantilistviewpoint.Inparticularthemovementtowardsecurityandtheabsorptionof
differentformsofcapitalareexploredinthetransmutationofEnglandandScotlandinto
GreatBritain.TheconcentrationofpoliticalcapitalinLondonandinthenumberofEnglish
parliamentarians,eachaformofstructuralviolence,ensuredthatScottishinterestscould
alwaysbeoutvotedwhennecessary.However,theless-immediateandmoreimmaterialgains
Scotlandmadefromthemovementofitspoliticalcapitalandthedevelopmentofitshuman
capitalpavedthewayfortheintellectualadvancesoftheeighteenthcentury.
Scottishpoliticaleconomythusismadepossiblebyandisalsoananswertothe
conditionsandcausesoftheUnion.Chapter7examinesthealternativetomercantilism,an
unintendedconsequenceoftheUnion,developedintheworksofSirJamesSteuartandAdam
Smith.AlternativesolutionsforScotland’seconomicproblemswereproposedbothbefore
andduringtheUnionnegotiations.Fletcher’sproposalsinparticularforafederalunionand

thelimitationsoftheActofSecuritypassedbytheScottishParliamentwereoneoption.It
wasrejectedhoweverinfavoroftreatingforunionnotduetoalackofviabilitybutforalack
ofcompatibilitywiththemercantilistworldview.TheoutcomesoftheUnion,bothplanned
andunplanned,laidthefoundationfortheemergenceofarejectionofthemercantilist
worldviewinScottishpoliticaleconomy.SteuartandSmithdemonstrateanewvisionof
economicstrength,value,andindependencethatfocusesondevelopmentandgrowthfrom
domesticinterdependentproductionratherthaninternationalcommercialwarfare.Scottish
politicaleconomyisthusbothareactionagainstmercantilismandanadaptationtothe
changeswroughtbytheUnion.

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Footnotes
1 Originalspellingsfromprimarysourceshavebeenpreservedthroughoutthetextinquotedmaterial.


2 TheonlyletterofpetitioninfavoroftheUnioncamefromtheBurghofMontroseonOctober15,1706.Ratherthanan
enthusiasticendorsementoftheArticleshoweveritismoreapieceofeconomicfatalism.The“advantageoftheUnion,”the
petitionsays,isitseliminationofthe“EnglishProhibitoryLawes”oftheAlienAct.Ifthelawsweretobereenacted“asthey
undoubtedlywill,weshallbedeprivedoftheonlyvaluablebranchofourtradebywhichthebalanceisonoutsideandthenone
needsnotthegiftofProphecytofortellwhatshallbethefateofthispoormiserableblindednationinafewyears.”TheUnion
wasseennotasaliberatoroftradeasmuchasameanstopreventfurtherdamage(inCookeandDonnachie1998,pp.20–21).


3 InactualityitwasnotthemajorityofallParliamentariansbutonlyofthosepresentwhodidnotabstain.Thenumberofthose
whovotedno,wereabsent,orabstained,113,outnumberedthosewhovotedinfavor,110,accordingtothesignaturesoftheact
tovoteonthefinaldraftJanuary16,1707(NationalRecordsofScotland1707).


4 ThereisalsoalargereligiousdimensiontotheUniondebatesinvolvingtherightsoftheScottishPresbyterianKirk,whichhas
beenexploredmostrecentlyinStephen(2007).




5 IstvanHont(2005)performsthisfunctionforcontemporarypoliticaltheory,mostlyinrelationtoAndrewFletcher,butdoes
notapplyeconomictheorytohisanalysis.HeassertsthatEnglandusedeconomicsforself-preservation.Iarguethatpolitical
theoryandeconomictheorycodetermineeachotherandmorethanself-preservation,economicpolicyisusedforself-expansion
andaggressivelimitationsofothers’expansion.

6 Thesameomissionhasoccurredinthehistoryofeconomicthoughtliterature.WhileeconomistssuchasS.ToddLowry,Tony
Aspromourgos,AnthonyBrewer,andAntoinMurphyhaveprovidedexcellentanalysesofthethoughtofindividualmercantilists
andtheirinfluenceoneconomicpolicies,theyhavenotexaminedhowtheirideasmanifestedinmajorpolicysuchastheUnion.


7 Theworkhereinisnotexhaustiveoftheresearchtheseissuesrequire,butispresentedasafirststeptowardfurtherinquiry.


8 CitationsfortheWealthofNationsrefertobook,chapter,andparagraphnumber.


9 Thephrase“oportetpatrem-familiasvendacemesse,nonemacem,”appearsinCato’sDeAgricultura.


10 Coincidentally,themainEnglisharchitectoftheUniontreaty,JohnSomers(1697),stressedtheideaoftradeasan“empireon
thesea”(pp.1–2).




©TheAuthor(s)2018
AidaRamos,ShiftingCapital,PalgraveStudiesintheHistoryofEconomicThought
/>
2.ThePoliticalandEconomicContestandContext:
ScotlandandEnglandBeforetheUnion
AidaRamos1
(1) UniversityofDallas,Irving,TX,USA

AidaRamos
Abstract
ThischapterdiscussesthepoliticalandeconomicpressuresScotlandfacedthatledtothe
creationoftheUnion.Itfocusesonissuesrelatedtotradeandsovereignty.Thepoliticaland
economicdisadvantagestoScotland’stradeduetotheUnionoftheCrownsarehighlighted.
Themercantilistactionsandcountermovesofeachcountryareexaminedinthepracticesof
theCompanyofScotlandinthefoundingoftheDarienprojectandEnglishattemptstothwart
it.Scotland’sreassertionofitssovereigntytoregaincontrolofitstradepolicyintheActof
Securityisexplained.IncreasingtensionbetweenEnglandandScotlandovercontrolof
overseastradeandthestructurallyviolentAlienActareexploredasimmediatecausesofthe
openingofthenegotiationsofUnion.
Keywords Union–Mercantilism–ActofSecurity–AlienAct–Darien–CompanyofScotland
–Trade–Surplus–Balanceoftrade–Structuralviolence–UnionoftheCrowns
Mercantilistthoughtprocessesdominatedtheformalinstitutionalrelationshipsbetweenthe
EnglishandtheScottishgovernmentsandtheirrespectivemerchantcompaniesbeforethe
Union.TherearenumerousaspectsoftheeconomicandpoliticalhistoryofScotlandbefore
theUnion.IwillfocusonthoserelevanttoEngland’snewstyleofmercantilistconquest,which
influencednotonlytradepolicybutalsotheeconomicworldviewofministersofstateand
others.Theeconomicandpoliticalhistoryoftheperiodwillbeanalyzedfromtheperspective
ofthesurplus/positivebalancemetaphor,thecontestovervariousformsofcapital,andthe
waysinwhichthisaffectedtheactionsofpolicymakers,merchants,andinvestorsofthe
period.

2.1 TheAbsentPresence:TheRegalUnionandEnglish
Supremacy
Partoftheargumentregardingthenew-stylemercantilismoftheperiodisthatitinvolves
conquestwithoutdirectphysicalaction.Thefirstphaseofthismovementoccursinthefirst
joiningofEnglandandScotlandintheUnionoftheCrowns.In1603,whenJamesVI,rightful

kingofbothEnglandandScotland,movedhiscourttoLondon,hebecameanabsentmonarch.
TheUnionoftheCrownsintroducedtheruleofScotlandatadistance,whichwouldalsobea
featureofthelaterUnionof1707.Jameswasalsoverymuchawareofthepowerofthis
changeinScottishpolitics:“HereIsitandgovernitwithmypen:Iwriteanditisdone;andby
aClerkoftheCouncilIgovernScotlandnow,whichotherscouldnotdobythesword”(quoted
inScott1994,p.23).TheregalunionwasnotasproblematicastheUnionof1707becausethe
Scotsstillmaintainedaseparateparliamentandthus,accordingtotheirownancient
constitution,sovereigntystilllay,asiteverhad,withthepeople.
However,theregalunionstillbroughtcomplications.AllanMacInnes(2007)outlines
threecontendingviewsofempirethatwereprominentthroughthe1650s:theBritannic,
whichsawBritainasthecenterofempireandsupportedincorporatingunion;theScottish
whichemphasizedrepublicanismandfederalunion;andtheGothic,whichpromotedthe
supremacyoftheEnglishParliamentinrelationtotherestofGreatBritainand“wasexclusive
inthreateningtoreduceScotland(likeIreland)toapoliticaldependencyofEngland”(p.54).1
TheGothicversionofBritaingainedascendancythroughtheCommonwealthyears,when
Cromwellforcedaunionthroughconquest,andtheefforttoincorporateScotlandintounion
withEnglanddidnotendattheRestoration.Intermsofthesupremacygrantedthepolitical
andtradeinstitutionsinLondon,Britainwasbeingusedtoincreasethe“appropriationof
BritainforEngland”(p.81).TheimpositionoftheNavigationActs,whichbarredScottish
tradersfromcommercewiththecoloniesandplantations,showedthattheprivilegesbeing
accordedtoEnglandintheregalunionwerenotonlypoliticalbutalsocommercial,astheacts
advantagedonlyEnglandandnottheThreeKingdomsasawhole.TheScottishsensiblymade
attemptsforcommercialunionin1664.Meetingsontheproposals,spearheadedonthe
ScottishsidebyJohnMaitland,theDukeofLauderdale,werenothelduntil1668and
ultimatelyyieldednoresults(p.83).
Whilethekeymercantilistengineofgrowth,maximizingexports,wasdeniedtoScotland
withthedenialofaccessoftradetothecoloniesandplantations,othermercantilistmethods
werenot.TheDukeofLauderdaleshiftedhiseffortstoanotherelementofmercantilist
growth,theestablishmentofcoloniestowhichtradecouldbeextendedandresourcesand

goodsextracted.HewasabletosecurepermissionfromthecourtforScotlandtoengagein
colonizationprojectsin1671.Inthelate1600s,Scottishcompaniesengagedinanumberof
colonizationprojectsintheCarolinas,NovaScotia,andEastNewJersey,noneofwhichwere
successfulinattainingthevolumeoftrade,oreventhepermanentpresenceofaScottish
colony,thattheirprojectorshadhoped(MacInnes2007,pp.164–169;Armitage1995,pp.99–
100).Withinthemercantilistframeworkhowever,giventhebarriersofEnglishtradepolicy,
therewerefewalternativestothesecolonialprojects.Thus,theeventualattemptbythe
CompanyofScotlandtobuildacolonyandtradeentrepotontheIsthmusofPanama,andthe
widespreadsupportitreceivedinScotland,becomesmorecomprehensible.

2.2 AdventuresinMercantilism:TheCompanyofScotland
andtheDarienColony
WilliamPaterson,founderoftheBankofEnglandandsometimemonetarytheorist,believed
thatDarienontheIsthmusofPanamawouldbeaprimelocationtoconnectthetradeofthe


AtlanticandthePacific.Establishmentofacolonyandtradingposttherewouldboost
Scotland’seconomicfortunesintothelongrun.Tradehadthepowertocompletelyaltera
country’sfortunes,andindeedhebelievedithadchangedhistory:“withinthelastTwoAges,
ithathmadegreateralterationsintheseplacesoftheworldthanthesword”(1701,p.2).
Thus,hebelievedtradetheultimatecureforScotland’seconomicillsofmonetaryshortage,
emigration,andlowoutputforexport:“Tradewillincreasetrade,andmoneywillbeget
money,andthetradingworldshallnomoretowantworkfortheirhands,butwillratherwant
handsfortheirwork”(p.58).HeknewthecountrycouldnotovertaketheEnglishEastIndia
Company(EIC),andsohedecided,ratherthancompetewiththem,tocircumventthemby
focusingelsewhere.However,ascanbeseeninhisProposals&ReasonsforaCouncilofTrade
(1701)andDialoguesupontheUnion(1706),despitehismercantilistoutlookPaterson’sgoal
wasmoretheenrichmentofScotland,whichwasalsoaformofmercantilistself-defense,than
thedefeatofitstraderival.Giventhesituationoftheworldinregardtotrade,allnationsmust
conducttheirtradeandindustrynotonly,hesays,“fortheiradvantage,buteventheir

defence,notonlyfortheirbenefit,butalsoofnecessity”(1701,p.3).
TheCompanyofScotlandbelievedintheviabilityofPaterson’sproposedtradingcolony.
JustasDarienwasnotthefirstScottishcolony,otherjointstockventuresprecededthe
CompanyofScotland.Since1617,previoustradingcompaniesincludedtheScottishEast
IndiaandGreenlandCompanyandtheScotsGuineaCompany.Theformer’stradingrights
werehoweversuspendedbyJamesVIafterprotestbytheEnglishEICandtheEnglish
MuscovyCompany,andthelatter,althoughinitiallysuccessful,sufferedfatallossesin1634
afteritsmainshipwascapturedbythePortuguese.Othercompaniesbothfortradeandfor
domesticimprovement,liketheLinenCompany,continuedtobeestablishedintothe1690s
andtherewasenoughcapitalavailabletosupportthem.TheconditionoftheScottish
economyinthelateseventeenthcenturyhasbeenexaggerated,accordingtomorerecent
accounts.Althoughthecountryhadexperiencedtwoharvestfailuresin1694and1695,which
causedalossofspecieduetotheneedtoimportgrain,furtherrecessingtheeconomy,
exchangehadrecoveredenough,bolsteredbythemoneymadeavailablebythenewBankof
Scotland.Indeed,therewereatleast47subscription-basedcompaniesestablishedfrom1690
to1695(Watt2014,pp.558–601).
In1693,theScottishParliamentpassedtheActforEncouragingofForraignTradewith
therationalethat“nothinghathbeenfoundmoreeffectualfortheImprovementand
enlargeingthereofthantheErectingandIncouragingofCompanieswherebythesamemaybe
carriedonbyundertakingstotheremotestparts,whichitisnotpossibleforsinglepersonsto
undergo”(RecordsoftheParliamentofScotland1693/4/107).Agroupofmerchantsfounded
theCompanyofScotlandinthesameyear,andwereofficiallyallowedtoconducttrade
overseaswhentheActfortheCompanyofScotlandTradingtoAfricaandtheIndieswas
passedin1695.Althoughthecompanyinvestedinotherprojects,itsmajorproject,andthe
oneforwhichitismostrememberedtoday,wastheestablishmentofPaterson’scolonyat
Darien.
Originally,theDariencolonywastobeajointstockventurebetweenEnglishandScottish
investors.However,mercantilistlogicsoonexerteditselfandofficersoftheEnglishEIC
lobbiedtheEnglishParliamenttoclosesubscriptionsinEngland.Theofficialargumentslaid
beforeparliamentconcernedthepotentiallossoftheAfricanandEastIndiestradetothe

Scottishcompany.Theirinitialconcernhoweverwasnotnecessarilythecompetitionfor