Trade and empire in the eighteenth century atlantic world

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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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TABLE OF CONTENTS

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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vi

Table of Contents

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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ACKNOWLEDGEMENTS

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 WisconsinMadison. 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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INTRODUCTION
POLITICAL ECONOMY AND THE CHANGING
FACE OF EMPIRE

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 eighteenthcentury 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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x

Introduction

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.


xii

Introduction

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.13 Doux-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.


xiv

Introduction
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 nationstates. 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 18th...Century.20
18

Bailyn, Peopling of British North America, p. 122.

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.
19


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).


xvi

Introduction

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, 1570-1850.24 Unquestionably,
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),
p. 405.
24

Klaus Knorr, British Colonial Theories, 1570-1850 (University of Toronto
Press, 1944).
25
Eli Heckscher, Mercantilism (London, 1935), p. 17, quoted by Knorr, pp. 8-9.


xviii

Introduction

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 postmercantilists, 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

www.ebook3000.com


xx

Introduction

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.


xxii

Introduction

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.


xxiv

Introduction

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.