#WealthofTweets: Book 4.7

1776 and the american founding chattel slavery american colonies colonization christopher columbus colonialism #wealthoftweets #smithtweets role of capital ancient greece ancient rome triangle trade trade restrictions capital theory

Of Colonies

15 Feb • 21 tweets • adamsmithworks/status/1361314842053931010

OK. Chapter 7 of Book 4 of #WealthOfNations is tough going. It's long. It's serious. It's all about colonies.

 We can take comfort, though, in knowing that the chapter  # AdamSmith says is about colonies is, in fact, about colonies. (IV.vii) #WealthOfTweets #SmithTweets
Colonies were a vexed subject when #AdamSmith was writing, and they’re even more complicated now. So, before we even get to the tweeting, here’s a link to that thread on Smith and “savage nations.” (IV.vii) #WealthOfTweets #SmithTweets

The reason for the ancient Greeks and Romans to settle colonies was straightforward: they didn’t have enough space for their growing populations. Their colonies were treated as “emancipated children”—connected but independent. (IV.vii.a.2) #WealthOfTweets #SmithTweets

(Both these things are in contrast to the European colonies, as we'll see.) (IV.vii.a.2) #WealthOfTweets #SmithTweets

Ancient Greeks and Romans needed more space because the land was owned by an increasingly small number of citizens and farming and nearly all trades and arts were performed by slaves. It was hard for a poor freeman to improve his life. (IV.vii.a.3) #WealthOfTweets #SmithTweets

Colonies, for Rome, relieved the pressure on land and population, allowed freemen to do better than at home and served as “a sort of garrison” in newly conquered provinces. They were (say Smith and the Romans) necessary and useful (IV.vii.a.3) #WealthOfTweets #SmithTweets

European colonies in America and the West Indies were not necessary. Even their usefulness wasn't so obvious. They turned out to be advantageous, but not for the reasons they were colonized. (IV.vii.a.4) #WealthOfTweets #SmithTweets

And now: a history of European colonization, including some # SmithSnark about Columbus misnaming the Indies. (IV.vii.a.5–10) #WealthOfTweets #SmithTweets

Smith calls out Columbus: Columbus not only misidentified the places he landed. He also reported that they are much wealthier than they are. This caused a LOT of trouble for the people who live there. (IV.vii.a.7–10) #WealthOfTweets #SmithTweets

(And yes, Smith uses appalling terminology for the Indigenous populations he discusses. The vocabulary we use to talk about people who are different from us will probably be similarly appalling to people who read our tweets in 250 years.) (IV.vii.a.8) #WealthOfTweets #SmithTweets

Columbus did not find plants or animals that would make him rich. (Iguanas? Useless!) So he turned his attention to mineral wealth. IOW, gold and silver. He pumped up rumors about how much there was. (IV.vii.a.11–14) #WealthOfTweets #SmithTweets

Spain got uppity at the idea of so much gold and set out to conquer these places that were basically helpless to resist.

Smith does not buy for one second the claim that conquest was about spreading Christianity. Spain wanted gold. (IV.vii.a.15) #WealthOfTweets #SmithTweets

Remember: Smith is under *no illusions* about the goals of colonizers nor about the ill effects for the colonized. (IV.vii.a.15) #WealthOfTweets #SmithTweets

Via a tax, half (!) the plundered gold from this conquest went to the King of Spain. But it turns out once they had to start mining gold instead of just stealing it from Indigenous people, that tax seemed excessive. (IV.vii.a.16) #WealthOfTweets #SmithTweets

The “thirst of gold” that drove colonization is “perfectly ruinous.”  Worst. Lottery. Ever: It costs you your fortune to play, and you ain't gonna win. Smith is NOT A FAN. (IV.vii.a.18) #WealthOfTweets #SmithTweets

People are so absurdly confident in their good luck! They keep believing that they can find and get rich from gold mines. It’s a destructive dream. "Argh!" - Adam Smith (probably) (IV.vii.a.19) #WealthOfTweets #SmithTweets 

(You can tell that it must drive Smith absolutely crazy that Spain got lucky by finding gold in Mexico and Peru.) (IV.vii.a.21) #WealthOfTweets #SmithTweets

Commerce was Columbus’s goal, but bragging and greed turned it into conquest for gold and silver. Most of the colonies produced no precious metals. (IV.vii.a.21) #WealthOfTweets #SmithTweets

It took more than 100 years of European settlement in Brazil to find precious metals. None had, by Smith’s time, been found in any English, French, Dutch, or Danish colonies, in spite of the fact that it was all done in hopes of gold. (IV.vii.a.22) #WealthOfTweets #SmithTweets

We, the SmithTweeters, sometimes get a little frustrated by Smith's relentless reminders that gold isn't wealth. But this chapter drives home that the history of the Western hemisphere was shaped by that mistaken belief. It wasn't academic. (IV.vii.a) # WealthOfTweets #SmithTweets

So, if colonies don’t get rich and make others rich by being El Dorado, how *do* they work? More on colonies tomorrow! (IV.vii.a) #WealthOfTweets #SmithTweets

16 Feb • 33 tweets • adamsmithworks/status/1361677844187873286

In yesterday’s discussion of colonies, # AdamSmith was really good on a lot of issues—particularly on condemning murdering Indigenous people, despoiling colonies in search of gold that ain't there, and then pretending you're doing it all for God. #WealthOfTweets #SmithTweets

Today, Smithketeers, will not be such a feel-good day. You will not be heartened. You might want to pour a cup of tea. Or something much stronger. #WealthOfTweets #SmithTweets

Smith starts by noting that the colonies of developed nations where the “natives easily give place to the new settlers” get rich and cultured faster than anywhere else. That phrase “give place to” cloaks a lot of horrors. (IV.vii.b.1) #WealthOfTweets #SmithTweets

The reason colonies can do so well (for everyone but the Indigenous peoples, that is) is that settlers import the social, political, and technical know-how from the old country. (IV.vii.b.2) #WealthOfTweets #SmithTweets

There’s lots of land, which means you need lots of workers and are willing to pay them high wages. Workers + land + money ➡ kids! And more people ➡ prosperity. (IV.vii.b.2–3)  #WealthOfTweets #SmithTweets

You know what else is great for economic growth? Being very far away from the old country. Land gives scope to grow and prosper, but distance gives independence. (IV.vii.b.6) #WealthOfTweets #SmithTweets

[It’s probably some kind of wacky coincidence that Smith is publishing stuff like this in 1776. It’s not like independence and colonies were hot topics or anything. <Waving to our friends in the Mother Country @iealondon>] (IV.vii.b.4) #WealthOfTweets #SmithTweets

Spanish colonies were flashy successes at first because of all the plundering. Other European colonies were less immediately splendid. Being less immediately splendid helped with the independence. (IV.vii.b.7) #WealthOfTweets #SmithTweets

Smith finds himself in the awkward position of approving of the progress the colonies have made in spite of his opposition to the "cruel destruction of the natives". (IV.vii.b.7) #WealthOfTweets #SmithTweets

It takes a minute—#AdamSmith gonna Adam Smith—but he gets to the real point of this section: No colonies have made more rapid progress than the English colonies in North America. (IV.vii.b.7–15) #WealthOfTweets #SmithTweets

Why are the English colonies in North America doing so well? Land and liberty, y'all! (IV.vii.b.16) #WealthOfTweets #SmithTweets

English colonies have good institutions, like minimal engrossing of land, minimal or no primogeniture, moderate taxes, and a wide market for their goods. All those things help them flourish. (IV.vii.b.17–21) #WealthOfTweets #SmithTweets

A quick word on taxes, because our @CollegeBoard #APUSH exams didn’t prep us for this. Smith says colonies are expensive, and the English colonists have never contributed to the defense of England or to the support of its government. (IV.vii.b.20) #WealthOfTweets #SmithTweets

Smith also says that tithes are unknown in the colonies and that their clergy are supported by small stipends or by voluntary contributions. (IV.vii.b.20) #WealthOfTweets #SmithTweets

(He’s probably right. He *is* #AdamSmith. But we, the SmithTweeters, had to recalibrate our thinking here for a bit.) (IV.vii.b.20) #WealthOfTweets #SmithTweets

Know what else is great for prosperity? Not being under the control of the East India Company. Unlike other colonies, American colonies could directly export many commodities: grain, lumber, salted provisions, fish, sugar, rum, etc. (IV.vii.b.22–31) #WealthOfTweets #SmithTweets

And sugar and rum take us to the triangular trade, which Smith passes over in one sentence. 😑 You can learn more about it here. (IV.vii.b.32) #WealthOfTweets #SmithTweets

Smith provides (as Smith does) a long list of commodities the colonists were forced to send to England rather than trade freely. The goal was to keep the prices down so English merchants could profit. (IV.vii.b.34–36) #WealthOfTweets #SmithTweets

Colonists were allowed to trade freely in raw materials but as soon as anything was manufactured, even for use *in the colonies*, things got dodgy. Like. Hats had to be bought from England. (IV.vii.b.42) #WealthOfTweets #SmithTweets

Wool (the English are very. protective. of. their. wool. industry) can only be processed at home, not in mills. (IV.vii.b.42) #WealthOfTweets #SmithTweets

These restrictions, says Smith, are an unjust violation of the most sacred rights of mankind. Like. Sure. But MAN. He couldn't have said that about the triangular trade?! Especially since he compares these restrictions to slavery. (IV.vii.b.44) #WealthOfTweets #SmithTweets

We just...we wish he’d done better. Even though we know he’s already doing better than the vast majority of 18th-century thinkers. (IV.vii.b.44) #WealthOfTweets #SmithTweets

In general, Smith says, the policies of Great Britain towards its colonies are less repressive than most. # LowBar Politically, they're independent: local legislatures, representative government, non- tyrannical executives. (IV.vii.b.50–51) #WealthOfTweets #SmithTweets

Now Smith is going to talk about the sugar colonies and about slavery. Smith does not like slavery. He’s opposed for moral and economic reasons. But he does need to analyze it. (IV.vii.b.54) #WealthOfTweets #SmithTweets

Sugar cultivation is carried on by slaves in all the European colonies. This may be because the work is so punishingly hard. But the profit and success of these colonies depend on the good treatment of the slaves. (IV.vii.b.54) #WealthOfTweets #SmithTweets

[As much, that is, as it is possible to say that any enslaved being is “treated well.” He DOES call slavery an “unfortunate law”...but again. We wanted more.] (IV.vii.b.54) #WealthOfTweets #SmithTweets

French planters generally treat their slaves better than English planters do because their government keeps a closer eye on them. English planters, having more liberty, used it to be awful. (IV.vii.b.54) #WealthOfTweets #SmithTweets

Free governments are bad for slaves in two ways. First, free governments depend on the support of the people. Including slave owners (who tend to be wealthy and powerful). This makes it hard to pass laws to protect slaves. (IV.vii.b.54) #WealthOfTweets #SmithTweets

Second, governments can only protect slaves by arbitrarily interfering with the "property" of enslavers. On both counts, this is where the focus on freedom in the English colonies is a bad thing. (IV.vii.b.54–55) #WealthOfTweets #SmithTweets

Smith's verdict? The policy of Europe “has very little to boast of” in the establishment, government, or prosperity of its colonies. They were begun in folly and injustice and led to the destruction of harmless peoples. (IV.vii.b.58–59) #WealthOfTweets #SmithTweets

Even in colonies that weren’t established for greed and conquest, it was "the disorder and injustice of the European governments, which peopled and cultivated America.

"No points awarded for war and persecution. #Good (IV.vii.b.61–62) #WealthOfTweets #SmithTweets

Even the best of Mother Countries has done almost nothing to aid their colonies’ success. The most they’ve been able to do is provide the people and the institutions they bring with them. (IV.vii.b.64) # WealthOfTweets #SmithTweets

So we’d like to have had some ringing abolitionist rhetoric from Smith here, but that’s not his project in this work. He IS making a solid case that colonies aren’t good for ANYONE, really. We’ll take it for what it’s worth. More tomorrow! #WealthOfTweets #SmithTweets

17 Feb • 28 tweets • adamsmithworks/status/1362044075776634885

It's been a whole day since we tweeted Part 2 of this chapter, so let us remind you: #AdamSmith just said that the colonies got nothing that helped them succeed from the mother country. (IV.vii.c) #WealthOfTweets #SmithTweets

So these two opening sentences are pretty heckin’ sarcastic: Now we've seen the great advantages the colonies got (they got nothing!) (IV.vii.c.1) So what have been the great advantages to Europe! (IV.vii.c.2) 

Seems like there’s a...tone there. #WealthOfTweets #SmithTweets

Europeans buy goods from America, and Americans buy European goods as well. Even countries that don’t trade directly with America have benefited. (IV.vii.c.3–8) #WealthOfTweets #SmithTweets

The mother countries restrict colonial trade (esp the exclusive right to buy from or sell to their colonies). That's a dead weight on the increase of the wealth of nations. Everything is more expensive, everyone enjoys less of it. (IV.vii.c.9 #WealthOfTweets #SmithTweets

Maybe European countries get added security? In ancient times, empires expected military support and revenue from their colonies, and they got it. 18thC colonies? Not so much. (IV.vii.c.11–13) #WealthOfTweets #SmithTweets

Only Spain and Portugal were able to tax their colonies heavily enough to make a profit. For everyone else, colonies were an expensive luxury. (IV.vii.c.13) #WealthOfTweets #SmithTweets

Monopolies that mother countries gave themselves over (some enumerated) colonial goods are really the only "advantage" of colonies. And it's only a relative advantage—enumerating the goods makes others poor, it doesn't make you rich. (IV.vii.c.15–18) #WealthOfTweets #SmithTweets

And #Monopolies? Not sure if you know this but... Smith hates ‘em.

Here's the #TLDR for the next 45 pages, Smithsters: colonial monopolies aren't special. They suck, too. (IV.vii.c) #WealthOfTweets #SmithTweets

No one:
Absolutely no one:
#AdamSmith: Let me tell you the disadvantages of monopoly trade with one’s colonies! #BuckleUpButtercup…(IV.vii.c) #WealthOfTweets #SmithTweets

1. Trade with the colonies requires so many resources that other trades are decaying. (IV.vii.c.20–23)
2.  Rates of profit on English trade are all out of whack and that messes with many things. (IV.vii.c.24–28)
3. The colony trade means we trade in a round-about rather than a direct fashion. With Smith's theory of capital, that's expensive and inefficient. (IV.vii.c.36)
4. The colony trade pulls us away from trading with neighboring countries. Also expensive/inefficient. (IV.vii.c.37)

5. Colonies are always understocked/in debt. (IV.vii.c.38)
6. Commodities that can only be sold to Great Britain oversupply Great Britain, which then has to be re-export them. (Smith finds this painfully dumb.) (IV.vii.c.40)
7. Resources that should be used to import good stuff to Britain get used to re-export stuff they require colonies to sell them, but can’t use. (IV.vii.c.41–42)
8. British trade is overdependent on colonial trade. That single focus is dangerous.( IV.vii.c.43)

A lot of these downsides stem from Smith's theory of capital which is...not how we think about capital today. Frankly, it's amazing that we still think that so much of what he said here is right. Just not for the reasons he thought. (IV.vii.c.20–43) #WealthOfTweets # SmithTweets]

We, the SmithTweeters, are very into early modern medicine (who isn't?), so let's geek out at Smith’s blood circulation metaphor. The circulation of blood keeps a body healthy. The circulation of trade keeps a nation healthy. (IV.vii.c.43) #WealthOfTweets #SmithTweets

So to save Great Britain from the equivalent of a national aneurysm, these restrictions on colony trade should be reduced. Free Trade! The statins of….okay, we’re stopping. (IV.vii.c.44) #WealthOfTweets #SmithTweets

The dangers of overdependence weren't theoretical. In 1774, 12 American colonies boycotted all British trade. The effects weren’t immediately awful, but Smith predicted gradual distress. (IV.vii.c.45) #WealthOfTweets #SmithTweets

The monopoly on colony trade also interfered with liberty and justice, not just wealth. Mercantile regulations were dangerous and hard to fix without more regulations. Which are also dangerous. (IV.vii.c.44) #WealthOfTweets #SmithTweets

Colony trade is “always and necessarily beneficial”.
𝙈𝙤𝙣𝙤𝙥𝙤𝙡𝙮 colony trade is “always and necessarily hurtful.” (IV.vii.c.46–51)  #WealthOfTweets #SmithTweets

Colony trade is SO beneficial, in fact, that mother countries benefit from their colonies in spite of their rigid restrictions.
But it is 𝗗𝗘𝗦𝗣𝗜𝗧𝗘, not because of trade restrictions. (IV.vii.c.52–55) #WealthOfTweets #SmithTweets

Smith will never, ever stop listing reasons that monopoly colony trade is bad. But here’s the big one:
It is wrong to promote the interests of one small group in one country by hurting the interests of everyone else in the world. (IV.vii.c.60) #WealthOfTweets #SmithTweets

“To found a great empire for the sole purpose of raising up a people of customers may...appear a project fit only for a nation of shopkeepers. It is, however, a project...for a nation whose government is influenced by shopkeepers. (IV.vii.c.63) #WealthOfTweets #SmithTweets

Dominion over colonies (as opposed to trade with them) gets Great Britain nothing. It only costs them... (IV.vii.c.66–80) #WealthOfTweets #SmithTweets

...but suggesting Britain voluntarily give the colonies up would offend national pride and private interests.
Smith wouldn’t dream of suggesting such a thing. (He’s suggesting it.) (IV.vii.c.66–80) #WealthOfTweets #SmithTweets

OK, fine, Dr. Smith. ONE MORE TIME: Monopolies derange the natural distribution of stock, and that’s always bad. (IV.vii.c.88–97) #WealthOfTweets #SmithTweets
Smith's language about the African colonies and East Indies grates, but he clearly deplores the depredation of colonies. (IV.vii.c.100–102) #WealthOfTweets #SmithTweets

The East India company is particularly bad. As bad as sovereigns are at being merchants, merchants are just as bad at being sovereigns. (IV.vii.c.103–106) #WealthOfTweets #SmithTweets

So yeah, like we said... SmithTweeters out!

See also the AdamSmithWorks Reading Guide for this chapter.