The Shift to Free Trade in the British Empire
The British shift to free trade was the central economic event of the nineteenth-century British Empire, and the British state is, in the 2020s, still working through its consequences. The shift had three phases. The first phase, 1776–1846, was the period of intellectual preparation: Adam Smith’s Wealth of Nations (1776), the Bullion Committee Report (1810), the political economy of David Ricardo, and the Anti-Corn Law League of Richard Cobden and John Bright. The second phase, 1846–1914, was the period of the free-trade order itself: the repeal of the Corn Laws (1846), the repeal of the Navigation Acts (1849), the Cobden Treaty with France (1860), the incorporation of free trade into the 1871 Paris Treaty, and the Berlin Labour Conference of 1890. The third phase, 1914–1973, was the period of the gradual dismemberment: the First World War, the 1932 Ottawa Conference, the 1947 GATT, and the 1973 British accession to the European Economic Community. Anthony Howe’s Free Trade and Liberal England, 1846–1946 (1997) is the indispensable single-volume account.
The Intellectual Preparation
The theoretical case for free trade was made by the Scottish Enlightenment and refined by the British political economists of the 1810s, 1820s, and 1830s. Adam Smith argued, in Book IV of the Wealth of Nations, that “the general industry of society … can never be in the most flourishing state, when it is confined to a particular set of commodities.” The argument was directed against the mercantile system: the system of Navigation Acts, of colonial monopoly, of high tariffs on European manufactures, and of prohibitions on the export of British machinery. Smith’s argument was, by 1815, a generation old. The political case for free trade was made, in the 1810s and 1820s, by the Whig economists and by the radical press. The 1819 Manchester cotton merchants’ petition, the 1820s London merchant petitions, and the 1840s Anti-Corn Law League agitation were the political expression of the case.
The Anti-Corn Law League, founded in Manchester in 1838 by Richard Cobden and John Bright, was the first substantial extra-parliamentary pressure group in British politics. The League’s three-year campaign — petitioning, public meetings, pamphlet publishing, the election of parliamentary candidates — produced the conditions for the 1846 repeal. The repeal was passed by the Conservative government of Sir Robert Peel, who had been converted to the cause by the 1845 Irish potato famine and by the cost of the relief operation. The 1846 repeal was the first time the British state had, on a major commercial question, accepted the principled case for free trade.
The 1846–1914 Free-Trade Order
The 1846 repeal of the Corn Laws and the 1849 repeal of the Navigation Acts were the domestic political moments of the free-trade order. The international extension of the order was the work of the 1860 Cobden Treaty with France, the 1860s commercial treaties with Belgium, Italy, Austria, and the Zollverein, and the 1871 Paris Treaty’s commitment to most-favoured-nation treatment in European commercial treaties. By 1870, the British state was committed, in principle and in substantial part in practice, to free trade. By 1900, the United Kingdom had one of the lowest average tariff regimes in the world.
The economic effect was a transformation of the British industrial structure. The 1846–70 period saw the rapid expansion of the British export trades in cotton manufactures, iron and steel, machinery, and shipping services. The 1870–1914 period saw the consolidation of the British lead in international trade in the face of the German and American industrial competition. The economic history of the period, in Lars Magnusson’s Britain, Germany and the Free Trade Tradition (2002) and in Bernard Semmel’s The Rise of Free Trade Imperialism (1970), is the standard scholarly account.
The free-trade order had a political side. The 1850s and 1860s saw the incorporation of free trade into the Liberal Party’s political programme, the conversion of the Manchester school into a national coalition, and the 1867 Second Reform Act’s extension of the franchise to the urban working class — the political base of the free-trade order. The 1880s and 1890s saw the extension of the free-trade principle to the empire through the advocacy of the fair-traders, who argued that the British colonial trade should be opened to British manufactures on the same terms as foreign trade. The 1890s saw the 1894 Colonial Conference’s discussion of the issue and the 1897 Colonial Conference’s commitment to imperial preference as a future option. The decision to defer imperial preference was the work of the free-trade majority at the Colonial Office under Joseph Chamberlain’s successor, Lord Selborne, and at the Treasury under Michael Hicks Beach.
The 1914–1973 Dismemberment
The 1914 outbreak of the First World War was the moment the classical British free-trade order ended. The 1915 Defence of the Realm Act, the 1916 McKenna duties on luxury imports, and the 1921 Safeguarding of Industries Act were the first substantial protectionist measures the British state had enacted since 1815. The 1921 abandonment of free trade by the Lloyd George coalition government, the 1923 General Election in which the Conservatives committed themselves to protection, and the 1929 re-imposition of duties on manufactured imports marked the gradual re-imposition of protection.
The 1931 abandonment of the gold standard, the 1932 Import Duties Act, the 1932 Ottawa Conference, and the 1932 establishment of the imperial preference system were the political moments the British state officially reversed the 1846 settlement. The 1932 Ottawa Conference produced the system of imperial preference: a network of bilateral preferential tariffs between the United Kingdom and the Dominions, Canada, Australia, New Zealand, and South Africa, and a system of quotas on Japanese and continental European imports. The system was, in Andrew Phillips’s work on the Ottawa Agreements, the political economy of the sterling area in its inter-war phase.
The post-1945 international economic order re-imposed a version of the free-trade principle on the British Empire. The 1947 General Agreement on Tariffs and Trade, the first of the post-war multilateral trade agreements, was the institutional moment the British state renounced imperial preference as a regional system. The 1947 Havana Charter’s failure in the US Senate, the 1948 failure of the London and Geneva trade conferences, and the 1950s gradual conversion of the GATT into a de facto international trade body completed the change. The 1973 British accession to the European Economic Community, by which the British state committed itself to the EEC’s Common External Tariff and the Common Agricultural Policy, settled the question of the United Kingdom’s place in the international trade system. The Brexit referendum of 2016, the 2020 Withdrawal Agreement, and the 2021 Trade and Cooperation Agreement are the latest chapter in the long story.
Historiographical Note
The historiography of the shift to free trade has been shaped by three interventions. Bernard Semmel’s The Rise of Free Trade Imperialism (1970) argued that the Cobdenite free-trade doctrine was, in the 1840s and 1850s, a coherent programme of commercial imperialism that anticipated the late-Victorian partition of Africa. Anthony Howe’s Free Trade and Liberal England, 1846–1946 (1997) re-framed the 1846–1946 period as the construction of a national political coalition. Peter Cain’s and Antony Hopkins’s British Imperialism: 1688–2015 (2016) re-described the period as the moment gentlemanly capitalism of the City of London took over the leadership of the imperial project. The unresolved question is the weight to assign to economic interest and to ideological commitment in explaining the 1846 settlement. The present generation of historians has, on the whole, declined to give the British Empire’s commercial legacy a clean bill of health.