During the brief regency of Philippe II, duc d’Orléans (1715-23), a Scotsman named John Law urged the French monarchy to adopt his “System” of public credit and paper money. Law fell out of favour and was exiled in 1720, when the failure of his joint-stock vehicle, the Mississippi Company, caused France’s newly established Banque Générale to collapse. France did not issue paper banknotes again until 1795, but Law believed that if his System had lasted “it would have kept the peace of Europe”. The American academic John Shovlin calls Law’s legacy “jealousy of credit”, by which he means “wary scrutiny of a rival’s public credit with a view to imitating its innovations or undermining its successes”.
Shovlin challenges the conventional perception of unbridled Franco-British rivalry and aggression in the 18th century by giving greater emphasis to the cumulative process by which diplomats negotiated and merchants lobbied to cut cross-channel tariffs and pursue other means of enabling free trade. As today’s world veers towards increased geopolitical rivalry in matters of trade, “we can benefit by looking back upon the earliest stumbling efforts to institutionalise a stable and peaceful global order”.
The period following Britain’s Glorious Revolution of 1688, which confirmed parliamentary and Protestant primacy, was the first in which geopolitics was driven primarily by capitalism rather than religious or dynastic rivalry. Britain stole a march on France by introducing public credit, expanding its money supply, and thereby stimulating commerce, when it founded the Bank of England in 1694. If France, with its agricultural resources and vast population, had persisted with Law’s system, he believed it would have grown to dominate Europe as a “benevolent hegemon” without the need to compete with Britain and the Dutch Republic for Spanish American trade and thus secure the silver specie that sustained its currency and held back its money supply. Paper money was the key to ending jealousy of trade, Shovlin argues, because although there would still be some need for silver, it “would no longer be the lifeblood of the kingdom”.
Instead, intense French and British trade rivalry spilled into a series of wars. As Shovlin puts it: “Hegemony once established was stabilising; hegemony in prospect could loose tremendous violence.” The first of these wars had lasted from 1688 to 1713, when France, Britain and the Dutch Republic signed the Treaty of Utrecht. (The ingenious John Law also came up with the idea, in 1717, of converting 250m livres of unfunded French war debt into highly liquid company shares that contributed to the money supply.) In the 1720s and 1730s there was a long peace between Britain under Sir Robert Walpole and France under Cardinal Fleury. Walpole fell from power in 1742, Fleury died in 1743, and the following year Britain and France were at war again, this time for four years. Then in 1756 the Seven Years’ War began, with Franco-British conflict in America, Canada, the Caribbean, and India as well as Europe.
In the 1760s, Britain tried to use smuggling between the British and Bourbon empires to undermine its rivals, while the French used freeports as a counterpunch. Free trade was not so much a goal as one strategy among several for maintaining the balance of power between trade rivals.
But Shovlin is more interested in the various attempts that were made to move away from war policy and the various schemes proposed by diplomatic officials, men of letters, and philosophes to encourage trade as a substitute for war. For example, the French Physiocrats, originally wanted France to become an agricultural dynamo above all else, but later changed their mind and proposed a Franco-British partnership to control global trade on the grounds that no other nations could sustain conflict without either British or French finance. David Hume deplored the retarding effect on the economy of Britain’s war debts and opposed Pitt the Elder’s dream of a universal monarchy of trade because the burden of maintaining sovereign imperial territory far outweighed the commercial gains from a closed empire.
And Thomas Pownall MP, a former governor of Massachusetts and South Carolina, had been a staunch defender of Britain’s monopoly of American trade, but post-1776 he embraced, in Shovlin’s words, “an expansive vision of a new global free-trade order centred on America” and urged Britain to pursue a leading role therein. Indeed, American commercial independence was the game-changer and the benefits of free trade to Britain in the 19th century would more than compensate for the loss of her American colonies. At the same time a new French India Company reached a rapprochement with Britain’s East India Company over trade in Bengal, while the count de Vergennes negotiated a trade treaty between France and Britain. Those who agonise over Brexit should perhaps take note.
For Shovlin it is not so much a question of how different things would have been had certain counterfactuals prevailed as it is a question of to what extent such counterfactuals caused policymakers to temporise and change course. He is careful not to over-emphasise the influence of Physiocrats and Scottish political economists on policy. “Officials borrowed ideas eclectically,” he writes, “and mobilised them instrumentally in line with their own priorities.” Free trade became the gospel of the 19th century, but its advocates were laying a path for it throughout the 18th century and on both sides of the English Channel.
Trading With The Enemy: Britain, France, and the 18th-Century Quest for a Peaceful World Order by John Shovlin, Yale, £25, 416 pages
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Source: Economy - ft.com
