Adam Smith

By Dr Stephen Mullen, Research Associate in History, School of Humanities, University of Glasgow

Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (1776) remains the starting point for historians intent on examining the economics of the imperial system during the British slavery era. As Professor of logic, then Professor of moral philosophy at Old College (now the University of Glasgow) between 1751-1764, Smith was said to have associated with the city's famous tobacco merchants. In The Wealth of Nations, however, Smith argued that Britain’s colonies represented 'mere loss instead of profit' which was a famous critique of the closed mercantile system that created a mutual monopoly between Great Britain and its colonies in the Americas. Whilst Smith doubted slavery was an efficient labour system, he did concede the mercantile system made merchants and planters fabulously wealthy. For Smith, while the Atlantic system was inefficient on a national scale, it created vast private profits for special interests, some of whom he had known personally.  

This powerful critique of merchant capitalism informed the work of abolitionists after 1787. The Wealth of Nations also established research agendas that have become distinct 'Adam Smith questions' in the fields of Atlantic history and British slavery studies. The first relates to the significance of the mercantilist system to Great Britain prior to 1776. Richard Sheridan examined the wealth of Jamaica on the eve of the American Revolution and, by drawing up a 'balance sheet of empire' concluded the lucrative West India trade was a significant contributor to the metropolitan economy. By contrast, R.P. Thomas took up Adam Smith's hypothesis that the colonies were an economic drain, adopting a counter-factual approach to argue that the capital deployed in the West Indies could have produced more profits at less cost elsewhere.  

Adam Smith also argued in The Wealth of Nations the Atlantic commercial system was sustained by metropolitan credit 'the progress of our North American and West Indian colonies would have been much less rapid had no capital but what belonged to themselves been employed in exporting their surplus produce'. This established another Adam Smith 'question': was the wealth of the West Indies based upon credit advanced by British merchants, or was the wealth generated planters reinvesting the profits from slavery on their estates? 

In 1937, historian Richard Pares initially agreed with Adam Smith: 'since the colonies absorbed as much capital as they could get, they cannot have done much to build up capital in England and thereby to promote the Industrial Revolution…the planters themselves seem to have been recipients of capital rather than sources'. However, Pares radically shifted position in the classic Merchants and Planters (published posthumously in 1960, two years after death), claiming 'Adam Smith was wrong: the wealth of the British West Indies did not all proceed from the mother country; after some initial loans in the earliest period which merely primed the pump, the wealth of the West Indies was created out of the profits of the West Indies themselves, and, with some assistance from the British taxpayer, much of it found a permanent home in Great Britain'. This particular Adam Smith 'question' continues to attract the interest of historians. In 2002, S.D. Smith disputed Pares' 'ploughed back profits' thesis, concluding Adam Smith’s vision of British riches overflowing into the West Indies was accurate: long-term mortgage capital from British merchants underpinned the late eighteenth-century 'sugar-boom’' Both Adam Smith 'questions' remain foundational historiographical debates British Atlantic world studies.  

Since the The Wealth of Nations was published in 1776, Adam Smith could not have predicted the cataclysmic effect that West India commerce would have upon Scottish economic development after the American Revolution. Glasgow-West India merchants and planters facilitated the shift from the commodity trade (in tobacco) to manufacturing and export (based upon slave-grown cotton) which employed large swathes of the population during the Scottish Industrial Revolution, c.1778-1830. It was the mercantilist system, rather than free trade, which established Scotland as an economic powerhouse. Smith's 'special interests', therefore, were instrumental to economic transformation, ensuring that Caribbean slavery became one of the foundations in the development of modern Scotland. 

Photo credit: 'It Wisnae Us: The Truth About Glasgow and Slavery' website. Text by Stephen Mullen. Photographs by Alan Crumlish, Jon Jardine, Charles McKean and The Mitchell Library (Culture and Sport Glasgow).

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More resources

Learn about Glasgow’s Built Heritage, Tobacco, the Slave Trade and Abolition

• It Wisnae Us: The Truth about Glasgow and Slavery

First published: 6 March 2023