Was the Industrial Revolution the period of great free-trade thinkers like Adam Smith and David Hume? Yes.
Was it a period of free trade? No.
One of the things that has struck me in my study of the Industrial Revolution (1750 to 1850) is how much protection the British government gave to various industries through tariffs or bans on imports.
Let’s start with wool, once Great Britain’s largest industry. From the mid-1600s, the woolen-cloth industry had kept its raw material prices low through a ban on the export of raw wool. Then at the end of the century calicoes (printed cottons from India) became quite popular. The wool industry responded by getting Parliament to ban imports of calicoes in 1700.
The law kept out Indian cotton but it opened the door to homemade British cottons! First, British companies began printing imported cloth to create calicoes; then they started producing the cloth itself.
The wool industry tried to ban all such cottons, whether they were made in Britain or not, with a law passed in 1721. That worked, perhaps, while cottons were a small industry. But the production of cotton cloth took off anyway, as producers relied on a loophole allowing the production of low-level fustians, and in 1771 Richard Arkwright built his path-breaking Cromford Mill. In 1774 the ban on cotton production was repealed. So, instead of strangling the little cotton-cloth industry, the wool industry spurred it on.
“The early history of the use of cotton is largely a history of the attempts of the old-established woollen trade to strangle its young rival,” J. L. and Barbara Hammond stated in 1920.[1]
The woolen industry may have failed in its effort to benefit from government protection, but the silk industry mastered the lobbying process. England had little or no comparative advantage in producing silk cloth. Silkworms couldn’t be grown in England (although a trial had been made in the previous century). They didn’t grow very well in the colonies, either, although efforts were made in South Carolina.
Add to that, Britain’s chief competitor, France, had a long history of making fine silk cloth—finer than England’s, at lower wages, and using raw silk that was conveniently available in Italy.
So, to protect the silk producers, high duties were placed on silk imported into Britain between 1713 and 1765—followed by a complete ban on finished silk. Even when William Eden was hammering out the French-English treaty of 1786 under the banner of free trade, Britain’s prime minister refused to let French silk into the country. And when a law was passed to regulate child labor in factories in 1833, the silk factories were exempt; in that year nearly 8 percent of silk workers were under age 10.[2]
When free trade did finally come along in the form of the 1860 Anglo-French Treaty, French silk could be imported without duties. Bereft of its traditional protection, the British silk industry collapsed. [3]
Did cotton textiles at least thrive under free trade? No. Since 1661, England had operated under the Navigation Acts. These laws required all trade to and from Britain to be in British ships, and all goods from the colonies had to go to Britain (even if they were ultimately headed elsewhere). So the nation had a monopoly on cotton purchased from its colonies and on finished cloth sold to its colonies. That was a great advantage.
No one can claim that international free trade was the source of British strength or innovation in the Industrial Revolution. Some forms of freedom did, however, make the Industrial Revolution possible. I hope to discuss those at another time.
[1] J. L. and Barbara Hammond, The Skilled Labourer, 2nd ed. (London: Longmans, Green, and Co., 1920), 46-47.
[2] Clark Nardinelli, “Child Labor and the Factory Acts.” Journal of Economic History 40, no. 4 (Dec. 1980), 739-755, at 742.
[3] Frank Warner, The Silk Industry of the United Kingdom: Its Origin and Development (London: Drane’s Danegeld House, 1921), 78.
Excellent analysis, Jane. I also appreciate the comments from Rob and Charles.
The protectionism of the 18th century has important consequences for constitutional interpretation—specifically the precise meaning of the power the Constitution gives Congress to “regulate Commerce with foreign Nations, among the several States, and with the Indian Tribes” and to enact laws “necessary and proper” (i.e., incidental) for doing same.
Some libertarians have argued that Congress’s power to regulate interstate commerce was intended only to create an American free trade market and that the power is limited to “making commerce regular.” The Supreme Court’s Dormant Commerce Clause jurisprudence builds on this idea as well.
But this idea is erroneous. The 18th century legal term “regulate Commerce” included imposing the kinds of trade barriers you found characteristic of the time: prohibitive tariffs and other duties; quotas; and even outright bans on traffic in certain kinds of items. It also included labeling and quality requirements; extensive power over navigation, including construction of navigational facilities; and some control over ground traffic. The clear meaning of the Constitution empowers Congress to impose these sorts of regulations not only on foreign commerce, but on interstate and Indian commerce as well. If Congress wants to set trade restrictions among states or ban certain items in foreign, interstate, or Indian commerce, it may do so.
That having been said, liberals (including the modern Supreme Court) are also in error when they claim that “regulating Commerce” includes sweeping power over the entire economy. The 18th century legal term was never intended to include direct power over production (manufacturing, agriculture, labor) or over land use or most kinds of insurance, for example—and certainly not over health care (other than for those involved in navigation).
Yes. Cobden and Bright’s Anti-Corn Law League was not successful in its attempt to repeal the Corn Laws until 1846. Mercantilist policies were the status quo and Smith, Ricardo, and other free traders were arguing against them. It is so ironic that today, government favoritism for certain businesses – mislabeled “crony capitalism” – is frequently said to be what we get for listening to Smith, when in fact it is exactly what he was arguing against.