On Adam Smith, The Great Free Trader

We will never understand Adam Smith unless we understand that he stood above all for free trade – and, that too, in the interests of the poorest and the least developed regions.

John Rae’s Life of Adam Smith (1895) contains the full text of a letter he wrote to Lord Carlisle, then First Lord of Trade and Plantations. The letter is dated 8 November, 1779, or about three years since the publication of the Wealth of Nations. Smith’s opinion had been asked for by the government on the question of free trade for Ireland. Smith defended the idea wholeheartedly. Ireland was then wretchedly poor, but labour was cheap – “pauper labour,” it was called – she possessed many natural advantages; but the vested manufacturing interests of England were opposing the idea vehemently. This particular paragraph from this letter is truly FANTASTIC:

Should the industry of Ireland, in consequence of freedom and good government, ever equal that of England, so much the better it would it be not only for the whole British Empire, but for the particular province of England. As the wealth and industry of Lancashire does not obstruct but promote that of Yorkshire, so the wealth and industry of Ireland would not obstruct but promote that of England.

In another letter to Henry Dundas, then War Secretary under the younger Pitt, Smith begins by opposing the vested manufacturing interests of England and Scotland. He writes:

I perfectly agree with your Lordship too that to crush the industry of so great and fine a province in order to favour the monopoly of some particular Towns in Scotland or England is equally injurious and impolitic. The general opulence and improvement of Ireland must certainly, under proper management, afford much greater Resources to Government than can ever be drawn from a few mercantile or manufacturing Towns.

The letter concludes advising the cabinet minister that it would be “madness” not to grant free trade to Ireland. Madness is a strong word, coming from Smith. This, in a letter to a senior cabinet minister.

John Rae points out that Adam Smith was a free trader long before his books were published. He had converted the entire business community in Glasgow to free trade – so much so that a politician canvassing support for protectionist measures in the 1750s found none in Glasgow willing to take up his cause. There is another story of a coach ride between Edinburgh and London during which he converted his traveling companion, a youthful Lord Shelbourne, to free trade.

Cobden, Bright, Bastiat, John Prince-Smith – they all championed free trade guided by Adam Smith’s ideas. It is this idea above all that is in the best interest of all nations, rich and poor. India should set the example by embracing free trade unilaterally. And these words of Adam Smith should be made immortal:

Should the industry of Ireland, in consequence of freedom and good government, ever equal that of England, so much the better it would it be not only for the whole British Empire, but for the particular province of England. As the wealth and industry of Lancashire does not obstruct but promote that of Yorkshire, so the wealth and industry of Ireland would not obstruct but promote that of England.

Hear! Hear!