Salutary Neglect and the Wealth of Nations
How Great Britain learned, then forgot the lessons of the American Revolution
Why should a nation have colonies? That’s really the fundamental question at the heart of this article. In the age of 18th-century enlightenment, this was one of the serious philosophical questions being debated in England. The prevailing thought of the day was of a zero-sum gain with your rivals. Colonial actions either made you stronger and richer or they made your enemies stronger and richer. As a result, it was just assumed that the purpose of a colony was to increase the wealth of the mother country at the expense of other countries. However, as the British Empire expanded some began to question that equation.
But, That’s How It’s Always Been Done
At Great Britain’s founding in 1707, the empire consisted of most of the eastern seaboard of North America, a few colonies in the Caribbean, and some scattered outposts in Africa and Asia. Sixty-five years later the empire had grown to include everything east of the Mississippi, a sizable portion of India, and a number of other new or enlarged colonies. Behind this territorial expansion was the assumption that the purpose of colonies was to enrich the mother country. This idea is wrapped up in the term mercantilism. That by having a system of colonies a country can gain exclusive access to their raw materials. In turn, the colonies become an exclusive market for the manufactured goods of the mother country. This not only increases the wealth of the mother country but it denies these resources to their rivals.
The idea of increasing national wealth through conquest and colonization was ancient in origin. Once England’s North American colonies were firmly established they soon began instituting mercantilist policies for this aim. The first was the Navigation Act of 1651, with additional acts tightening the provisions coming over the next half-century. These acts required British colonies to import and export most goods exclusively with Great Britain. In many cases, the colonies couldn’t even trade with each other.
Mercantilism was good for British merchants but not really anyone else. It was terribly inefficient and made many products more expensive or impossible to acquire. Salutary neglect was a push back against that policy. Salutary means, “producing good effects,” so salutary neglect refers to a policy of inaction that produces a positive result. That was exactly what happened. Both Individual wealth and the volume of trade with the mother country increased tremendously during these years.
A Wise and Salutary Neglect
Pretty much everyone agrees the British policy of salutary neglect was a contributing factor in the American rebellion of the 1770s. However, underlying that general agreement are considerable differences of opinion. Even the dates of this era are in dispute. I’ve seen 1607 (the founding of Jamestown), 1640, 1650, 1690, and 1721 listed as the beginning date. Prior to the 1651 Navigation Act England didn’t have any specific colonial trade policy, so the term could apply. However, from 1651 to 1720 England imposed trade restrictions and tariffs on America, but only had mixed results enforcing compliance. The American colonies had a lot of shoreline and England simply was incapable of preventing illicit trade.
The rise of Robert Walpole as Great Britain’s first Prime Minister in 1721 was a turning point. For the twenty years he led Parliament, Britain tended to take a hands-off position in regards to America. To a lesser degree that continued after he left as well. It’s really with Walpole that the era of salutary neglect began. But even then the name is a bit a misnomer. Rather than repealing the earlier Navigation Acts, Parliament actually passed several additional measures intended to restrict colonial entrepreneurial efforts. However, Walpole believed that England benefited when the colonies flourished because they could afford to buy more British goods. That in turn increased the wealth of British merchants and the taxes they paid. As a result, he reasoned that Great Britain’s mercantilist laws were ultimately harmful to their own interests.
Rather than repealing the Navigation Acts, they simply didn’t enforce them. There is still debate among historians concerning exactly what Walpole’s intent was. The policy of salutary neglect was never called that at the time. Irish philosopher and member of Parliament Edmund Burke coined the term in 1775, thirty years after Walpole’s death. On the eve of the American Revolution Burke referred to Walpole’s “wise and salutary neglect” of the American colonies in a speech before parliament.
Walpole used government positions in America as patronage to reward supporters. It’s not clear if he actively didn’t want the Navigation Acts enforced or if he simply appointed people who weren’t interested in enforcing them. Either way, he never expressed any desire for stricter enforcement. Over the course of Walpole’s tenure, the colonies operated as de facto independent states. There were still royally appointed governors, but the colonial legislatures increased their authority over political matters during this period.
Historians also debate how the unofficial policy of salutary neglect affected the rebellion of the 1770s. Did the decision to be more active in governing the colonies following the French and Indian Wars, including raising taxes, cause the rebellion? Or, was it Walpole’s negligence in enforcing the laws and allowing self-government to thrive that led to revolution? This was a hot issue of debate. The one thing everyone agrees on is by 1763 the policy of salutary neglect was over. With a sizable war debt hanging over them, England began eyeing the colonies as a source of revenue.
Give Up the Colonies, Madness
In the middle of this stepped Adam Smith in 1776 with his book An Inquiry into the Nature and Causes of the Wealth of Nations. Many consider this book the beginning of modern economics. Smith makes a comprehensive argument for free trade between nations but also devotes a chapter to the subject of colonies. In Wealth of Nations, he makes a practical argument that the economics of colonies doesn’t pan out. He even makes the stunning suggestion that Great Britain should give up its colonies. Smith went so far as to predict failure to do so would result in losing them by force. This of course was borne out only a few years later in the American Revolution.
Smith dispels the notion that the accumulation of gold and silver makes a nation wealthy. Rather, trade for a range of goods that others can produce more cheaply elsewhere makes a nation more materially wealthy. That the cost of maintaining and defending colonies is a drag on the economy rather than a driving force of wealth. The fact that Great Britain was in deep debt from its wars of colonial expansion seemed to bear this out.
The book was well-received, however, it’s probably not too shocking it didn’t immediately convince Britain to renounce colonialism. Over time though it reframed the colonial equation. Great Britain’s colonial policies often swung back and forth depending on who was in charge at the time. Yet, over the first half of the 1800s, Britain tended to take a different approach to its empire.
Old Dog, New Tricks
This becomes apparent looking at how Great Britain addressed an independence movement in Canada 60 years after the American Revolution. At the time two colonies, Upper and Lower Canada, comprised Britain’s North American holdings. By the 1830s a combination of economic problems, British corruption, and violations of their rights led to insurrectionist movements in both provinces.
Britain’s initial reaction was similar to 1776, military suppression. Unlike in the 1770s, this military action was largely successful in defeating the immediate rebellion. Despite this, Parliament understood sustained military occupation to force Canadian subservience didn’t serve anyone’s interest. They eventually recognized the rights of Canadians and endorsed the idea of allowing Canada to have a parallel government. Although short of what Canadian leaders wanted, it took the steam out of the opposition. If Great Britain had come to a similar realization in 1775 perhaps their other thirteen North American colonies would still be in the Commonwealth.
This new attitude towards empire was also on display in Great Britain’s dealings with South and Central America. After the collapse of Spain’s massive new world empire, by the 1820s most of Latin America had gained its independence. At the same time, Great Britain’s power was surging. Rather than move in to expand their empire, as they would have in earlier times, they used their global strength to secure trading rights. This gave them most of the economic advantages of colonization without the expense and bother of ruling far-off lands.
I’m King of the World
One reason they were able to reject their old mercantilist ways was due to the hegemony they enjoyed over much of the globe. With Europe bogged down in wars and revolutions, Britain was effectively the only superpower of the first half of the 1800s. Later in the 19th century, France and the new unified Germany emerged as international rivals to Great Britain. To prevent their rivals’ access to their overseas markets, Britain began fiercely holding on to their colonies. Rather than embracing Adam Smith’s free markets, they fought to expand their empire in Africa and Asia.
Yet, even as the European powers spent the waning years of the 19th century and the opening years of the 20th scrambling to expand their empires, the world was changing. Within a lifetime all the European empires began to unravel. Today, no country has a 19th-century style colonial system. The few places that remain in a colonial status typically operate autonomously from the mother country. And is Europe poorer for it? No. Adam Smith’s analysis of 1776 was accurate. Free trade and open markets have raised global standards of living. In the end, the collapse of the British Empire was a win, not only for the former colonies but for Great Britain as well.
Partial List of Sources
Brooks, Rebecca Beatrice. “What Was the British Policy of Salutary Neglect?” History of Massachusetts, https://historyofmassachusetts.org/what-was-the-british-policy-of-salutary-neglect/.
Buckner, Phillip A. “Rebellions of 1837–38.” The Canadian Encyclopedia, https://www.thecanadianencyclopedia.ca/en/article/rebellions-of-1837.
Henderson, David R. “Adam Smith’s Economic Case Against Imperialism | Adam Smith Works.” Adam Smith Works, https://www.adamsmithworks.org/documents/adam-smith-s-economic-case-against-imperialism.
Henretta, James. “Salutary Neglect.” Encyclopedia Virginia, https://encyclopediavirginia.org/entries/salutary-neglect/.
Mills, David. “Durham Report.” The Canadian Encyclopedia, https://www.thecanadianencyclopedia.ca/en/article/durham-report.
