Within the niche arena of economic thought, a dedicated faction persists in examining the historical tapestry for connections between European political economy and the American Revolution and Founding. This pursuit is not without merit; the tantalizing possibility of Adam Smith’s influence on America’s Founding Fathers is particularly captivating. In straightforward terms, if such a link did not exist, it certainly ought to have.
By the eighteenth century, Americans had already cultivated a reputation for cherishing freedom and individual enterprise. Even their Puritan ancestors were known for their adventurous spirits, venturing deeper into the wilderness in search of better opportunities. Additionally, Americans were pioneers in various commercial endeavors, making a connection to Smith feel almost inevitable. [1] What could be more compelling than identifying ties between Smith and the initial author of the document that marked America’s debut as an independent nation? The Declaration of Independence and The Wealth of Nations both emerged in 1776, after all.
However, as with many historical narratives, caution is warranted. The colonists were actively trading and forming associations long before the grand theories of the Old World took shape. John Locke himself used America as a reference point for his notions of a state of nature and the roles of compacts and contracts in societal formation. He famously noted, “In the beginning, all the world was America.”
Similarly, Adam Smith, while illustrating the advantages of free trade and the drawbacks of regulations, often drew upon the experiences of Europe’s American colonies. Thus, the overarching narrative suggests that it was not merely Old World ideas that shaped America, but rather that the American experience significantly influenced Old World thought.
Yet it would be equally erroneous to assume that Americans were oblivious to, or dismissive of, European intellectual advancements. On the contrary, many who had the means eagerly absorbed the insights of leading thinkers, utilizing their works to deepen American concepts, particularly those surrounding liberty. Figures like Hume, Locke, Montesquieu, and even Smith played pivotal roles in this intellectual cross-pollination. So, what can we discern about Smith’s impact on the architect of the Declaration?
Smith on Self-Government and Order
Indeed, Thomas Jefferson was familiar with Smith’s work, but prior to 1776, he could only have engaged with The Theory of Moral Sentiments. He approached it for similar reasons as he did with other Scottish philosophers: each offered compelling justifications for the capacity of individuals to exercise personal and political self-governance. In essence, they argued that whether through convention (as Hume suggested) or inherent nature (as posited by Kames), humans tend to utilize their freedom in ways that foster a prosperous and orderly society, free from coercive authority.
Smith’s argument regarding moral sentiments aligns with ideas posited by Hume and Kames, all seeking to explain the natural orderliness of human interactions. While Smith later expanded these notions in The Wealth of Nations to encompass broader commercial relationships among merchants, his concepts were not entirely groundbreaking.
Before 1776, the idea of order in economic matters was already present in various tracts (e.g., Mandeville). Hume’s essays, which Jefferson recommended to Robert Skipwith in 1771, included similar arguments, particularly in his piece “On Commerce.”
These ideas were not unique to the so-called “Mercantilists” either (Appleby 1978, pp. 158–198). In many respects, Smith was merely synthesizing concepts that had been circulating for nearly two centuries (Clarke 2003, pp. 1–8). More crucial in understanding the parallels between Jefferson and Smith is recognizing their shared intellectual ancestry. Jefferson had indeed been influenced by sources that also shaped Smith, notably the French Physiocrats.
This intellectual tradition prioritized agriculture as a wealth source while equally championing free markets and individual liberties. Jefferson not only engaged with the works of the Physiocrats but was also friends with one of their leading figures, Pierre S. Dupont de Nemour. While some historians debate the extent of Smith’s borrowing from the Physiocrats, it’s clear he was aware of their arguments. (A useful overview can be found in Young 2002, pp. 7–28) Thus, the intellectual landscape was ripe for Jefferson’s eventual acceptance of the key arguments in The Wealth of Nations.
Jefferson acquired his first copy of the text during his stay in France in 1785. While he may have perused portions before this, explicit references and citations emerge only afterward. In a letter to his son-in-law, Thomas Mann Randolph (May 30, 1790), he remarked, “In political economy, I think Smith’s Wealth of Nations the best book extant.” However, subsequent correspondence suggests that the extensive nature of the work left a lasting impression on Jefferson, indicating it took time for him to fully digest its contents. Yet, the signs of its influence became increasingly apparent.
Reading Smith’s Very Big Book
For many readers of The Wealth of Nations, both then and now, the most formidable challenge lies in navigating Smith’s exhaustive and sometimes monotonous consideration of myriad perspectives.
Jefferson himself noted this in a brief comment to his political ally, Joseph Cabell, on January 31, 1814, referring to “the tedious pages of Smith.” Smith’s propensity for extreme caution has led to critiques from two opposing camps, both of which warrant attention if we aim to grasp the text within its historical framework and Jefferson’s application of Smith in particular.
On one side, staunch advocates of laissez-faire often argue that Smith was inconsistent, permitting contradictions within his own text (see Rothbard 1995, 435–474). A common example cited is his treatment of value, which appears subjective concerning price but objective regarding labor decisions.
Conversely, those advocating for a more proactive governmental role today often compile Smith’s exceptions to assert that he supported a robust governmental hand in managing commercial policy (Martin 2011, 110–125). This camp emphasizes Smith’s endorsement of a national bank as a vital state mechanism and his commendation of the Navigation Acts as essential for national defense. Both interpretations reinforce each other, yet neither captures Smith’s true essence.
In reality, Smith contended for a nuanced examination of costs in policy formation. He was essentially an early proponent of what we now refer to as opportunity costs. His focus on policy was not dissimilar to that of preceding mercantilists. However, by meticulously scrutinizing their claims and weighing potential advantages against disadvantages—essentially their costs—he significantly advanced the field of political economy beyond earlier frameworks.
In this context, Smith’s failure to present a consistent theory of value is somewhat irrelevant. His crucial insight was recognizing that each individual values their time expenditure, an understanding that must inform labor allocation decisions.
This marked a significant leap in economic thought. Smith’s articulation of cost considerations paved the way for David Ricardo to develop the vital concept of comparative advantage. This idea forms the bedrock of choice analysis. While Ricardo’s assertion that labor serves as the objective measure of all value may be an unfortunate inference stemming from Smith’s original phrasing, it underscores the complexities inherent in textual interpretation. Regardless, it does not detract from Smith’s substantive contributions.
Jefferson Reading Smith
Returning to Jefferson’s perspective on Smith, the core insight advocating for self-governance is hard to overlook when we examine his work without imposing contemporary political biases. From Smith’s standpoint in 1776, a thorough consideration of costs would bolster the argument for minimal governmental intervention. Neither an anarchist nor an absolutist, Smith evaluated exceptions to nonintervention exhaustively, weighing the costs of naval development against the benefits of forgoing such measures in a maritime nation like England.
Interestingly, after 1785, Jefferson’s views closely mirrored Smith’s along these same lines. In his Report on Foreign Commerce, delivered to Congress as part of his duties as Washington’s Secretary of State in 1793, Jefferson endorsed the principle of free trade globally but, much like Smith, qualified his support in terms of national defense.
During a period marked by trade restrictions that included outright bans on shipping and the seizure of sailors, Jefferson rationalized that “defensive and protecting measures become necessary on the part of the nation whose marine resources are thus invaded, or it will be disarmed of its defense.”
In a parallel vein, Smith asserted that “The defense of Great Britain” was significantly reliant on the number of its sailors and shipping, leading him to conclude that the Navigation Act was perhaps “the wisest of all the commercial regulations of England.” Jefferson similarly acknowledged shipping as “a valuable branch of industry, but as a resource of defense, essential.”
Of course, Jefferson could have derived such sentiments from various sources. The mercantilist Sir James Stuart expressed similar ideas, and he appears on Jefferson’s 1771 reading list, predating Smith’s second major work. Yet, there is more direct evidence of Jefferson’s engagement with The Wealth of Nations later on.
Reading Smith and Others
What emerges from Jefferson’s letters and remarks is a consistent engagement with Smith’s text over time. Jefferson frequently compared The Wealth of Nations with other political economy texts, emphasizing the necessity of understanding economic relations in conjunction with individual self-governance.
Throughout Jefferson’s correspondence, The Wealth of Nations is a formative text, though it gradually yields ground to increasingly refined and succinct articulations of its core principle: the unintended orderly relations arising from voluntary exchange. In a letter to the prominent French economist Jean Baptiste Say on February 1, 1804, Jefferson scrutinizes Say’s Political Economy in light of Malthus’s recent contributions, noting that it “ably examines some of the opinions of Adam Smith, as well as of the economists.”
A few years later, on June 14, 1807, Jefferson advised a young John Norvell from Kentucky that “If your views of political inquiry go further, to the subjects of money & commerce, Smith’s Wealth of Nations is the best book to be read, unless Say’s Political Economy can be had, which treats of the same subject on the same principles, but in a shorter compass & more lucid manner. But I believe this work has not been translated into our language.”
In a series of letters in 1813 to John Wayles Eppes, a relative of Jefferson’s wife Martha, Jefferson extensively utilized Smith’s discussions on money and banking to critique the prevailing ideas of paper money financing and public debt that had gained traction since Hamilton’s administration. Here, Jefferson made a significant correction regarding certain interpretations of Smith, clarifying that Smith actually advocated for a stable currency rather than paper for paper’s sake:
The only advantage which Smith proposes by substituting paper in the room of gold and silver money… is ‘to replace an expensive instrument with one much less costly, and sometimes equally convenient’; that is to say… ‘to allow the gold and silver to be sent abroad and converted into foreign goods,’ and to substitute paper as being a cheaper measure. But this makes no addition to the stock or capital of the nation. The coin sent out was worth as much while in the country as the goods imported and taking its place. It is only, then, a change of form in a part of the national capital, from that of gold and silver to other goods. (November 6, 1813)
Jefferson’s ultimate evaluation, however, was not reached until he engaged in the translation of another French economist: Destutt De Tracy. In a letter to fellow revolutionary John Adams on October 14, 1816, Jefferson noted that Tracy’s political economy articulated all the principles of the subject “with the severity of Euclid, and like him, without ever using a superfluous word.”
The prospectus for the translated work, released in 1817, further contextualized Smith within the broader intellectual discourse of the time. Jefferson succinctly summarized both The Wealth of Nations and the field of political economy in general, reflecting on their roles in shaping his thoughts:
Adam Smith, first in England, published a rational and systematic work on Political Economy; adopting generally the ground of the Economists, but differing on the subject before specified. The system being novel, much argument and detail seemed then necessary to establish principles which now are assented to as soon as proposed. Hence his book, acknowledged as able and of the first degree of merit, has yet been considered as prolix and tedious.
In France, John Baptist Say has the merit of producing a very superior work on the subject of Political Economy. His arrangement is luminous, ideas clear, style perspicuous, and the whole subject brought within half the volume of Smith’s work; add to this, considerable advances in correctness and extension of principles.
The work of Senator Tracy, now announced, comes forward with all the lights of his predecessors in the science, and with the advantages of further experience, more discussion and greater maturity of subject. It is certainly distinguished by important traits; a cogency of logic which has never been exceeded in any work, a rigorous enchainment of ideas, and constant recurrence to it, to keep it in the reader’s view, a fearless pursuit of truth, whithersoever it leads, and a diction so correct that not a word can be changed but for the worse; and, as happens in other cases, that the more a subject is understood, the more briefly it may be explained, he has reduced, not indeed all the details, but all the elements and the system of principles, within the compass of an 8 vo. of about 400 pages… (See Destutt de Tracy’s A Treatise on Political Economy at the Online Library of Liberty)
Endnotes:
Correspondence cited herein may be found online at the National Archives at https://founders.archives.gov/
[1] The best study of Smith’s influence situates him within the broader milieu of ideas available to Americans of the revolutionary and early republican periods. Unfortunately, it remains unpublished: Richard B. Vernier, “Political Economy and Political Ideology: The Public Debt in Eighteenth-Century Britain and America,” Oxford University D.Phil., 1993.
References:
Appleby, Joyce, Economic Thought and Ideology in Seventeenth-Century England (Princeton 1978).
Clark, Henry C., Commerce, Culture, and Liberty: Readings on Capitalism Before Adam Smith (Indianapolis, 2003)
Martin, Christopher, “Adam Smith and Liberal Economics: Reading the Minimum Wage Debate of 1795–96,” Econ. Journal Watch, 8,2 (May 2011) 110–125.
Rothbard, Murray N., Economic Thought Before Adam Smith (Auburn Al 1995).
Young, Jeffrey T., “Adam Smith and the Physiocrats,” History of Economic Ideas,10, 3 (2002), pp. 7–28.
This piece, which originally appeared at AdamSmithWorks, has been reposted as part of our celebration of the 250th anniversary of the Declaration of Independence.
