In June 1764, Ezra Stiles, the Congregationalist minister of Newport, Rhode Island, and future president of Yale College, was provoked by the policies of the new British Prime Minister George Grenville into musing about the rise and fall of empires. “The measures and despotisms of the crowns of France and Spain towards their provinces have been the cause which has prevented the growth of their colonies, between which and ours there is a confessed difference principally owing to our politics and liberty,” Stiles informed his friend and fellow minister John B. Hubbard, “by means of which we have surpassed them, though they had a century’s advantage of us in settlement.” “Among the Greeks, Romans, and every colonization in the world, even those of Goths and Vandals,” Stiles continued, “franchises, liberties, legislative powers were in the nature of things necessary to be granted to their adventurers.” His wide-ranging reading in history had convinced Stiles that “there never has been any successful plantation in ancient ages or modern times without this.”^{Footnote 1} Yet Stiles was a modern. When he came to examine the British Empire, and Stiles was a great admirer of the British empire-builder William Pitt the elder, he argued that its unique success was the result not of Britain’s commitment narrowly to constitutional liberty, but to political economic prosperity.^{Footnote 2} “Whatever tends to render us a wealthy and flourishing people,” Stiles concluded, “must naturally make us the most beneficial to the Mother Country.”^{Footnote 3}

For Ezra Stiles and a wide variety of commentators on both sides of the Atlantic, the crisis that American historians have come to call the Stamp Act Crisis was in fact a much broader, even global, crisis in the political economy of empires. Stiles understood that in fact the events were part of the “worldwide struggles for liberty and revolution AD 1765 and 1766.”^{Footnote 4} Stiles was right. As a consequence of the immense national debts accumulated during the Seven Years’ War (1757–63), the French, Spanish, and British empires all ratcheted up their imperial policies of austerity and extraction. These new policies provoked colonial revolts that threatened to break apart these great European Empires in Quito, Vera Cruz, Saint Domingue, as well as in colonial North America. They also led to widespread uprisings in Europe—the Spitalfields riots in London, the Whiteboys and Liberty Boys uprisings in Ireland, the widespread Parlementaire revolts in France, and the great Esquilache riots in Madrid and provincial Spain.^{Footnote 5}

In the British Empire, and throughout Europe, these uprisings gave rise to a profound and wide-ranging debate about the political economy of empires. Most American historians who have studied this period have followed Edmund and Helen Morgan in asserting that the “Stamp Act crisis,” understood in narrow geographic and chronological terms, was a crisis of political liberty understood in the most restricted sense. For these historians, indeed this represents the default position of those who still care to write about the crisis of the 1760s, the Stamp Act—a tax measure that provoked Americans to enunciate their commitment to the priority of political over economic liberty: “no taxation without representation.” If this was indeed the first stage of the American Revolution, this implied that the Revolutionaries were committed to separation from the British Empire because they understood that they could have no economic liberty without first achieving political liberty through self-government.

I argue, in contrast, that historians have misunderstood this fundamental moment in the history of liberty – political and economic, civil and religious – because they have understood it as a narrowly national or anticolonial moment.^{Footnote 6} Instead, the later eighteenth-century crisis was an imperial crisis—an imperial crisis that affected the Spanish and French as well as the British empires. And that crisis was debated not in narrowly constitutional terms, or exclusively within the conceptual framework of moral philosophy, but in terms of political economy, the unifying language of the enlightenment.^{Footnote 7} While there is evidence for a political economic debate about Empire taking place in France and in Spain, the most public and wide-ranging debate took place within the British Empire. There the fierce argument pitted defenders of George Grenville’s extractive imperial reforms (Grenvillians) against Patriot defenders of a political economy of Empire that emphasized stimulus and growth. The triumph of the Grenvillians and their successors, politicians who not only prioritized paying down the debt but also gave preference to military as opposed to economic investments, ultimately did significant damage to both the domestic and colonial economies, leading Patriots on both sides of the Atlantic to insist on dramatic and extensive reforms. In North America the Patriots succeeded. They failed in Britain itself, in Bengal and in the West Indies.

The Patriots, as I will suggest, argued that economic and political liberty went hand in hand. They came to their position as a result of an economic rather than a constitutional crisis. They therefore placed much more emphasis on political economic reform than on narrowly constitutional solutions. They understood well that while the British Parliament had issued the Declaratory Act in 1720 insisting on the political subservience of Ireland to the Westminster Parliament, that deprivation of political liberty had had little consequence in Ireland because the Whig governments had until then refrained from extracting resources directly from Ireland, and in fact directed resources to infrastructural improvement.

The general lesson that I draw from this is that empires grow and develop as long as the imperial governments do not deprive their colonials of economic liberty, by which I mean their capacity to improve their well-being rather than absence of government interference.^{Footnote 8} Imperial governments succeed as long as they do not extract so much from the colonials that they perceive it to be in their interest to exit from the empire. As such, I am arguing for sympathetic modification of Paul Kennedy’s thesis that he advanced long ago in The Rise and Fall of the Great Powers. In that opus Kennedy argued that “if … too large a proportion of the state’s resources is diverted from wealth creation and allocated instead to military purposes, then that is likely to lead to the weakening of national power over the longer term.” Further, he suggested that “if a state overextends itself strategically—by say, the conquest of extensive territories or the waging of costly wars—it runs the risk that the potential benefits from external expansion may be outweighed by the great expense of it all.”^{Footnote 9} Kennedy pitched his argument in terms of nations and economic capacity. I suggest instead that we think in terms of empires and political economy. But, in general, I agree that a political economy that prioritizes wealth creation as against a narrow preference for political/constitutional liberty is and was necessary to sustain empires.

Why focus on empires? Empires, we are generally told, are a thing of the past. Empires have long since been replaced by states or nation-states.^{Footnote 10} Instead, empires need to be understood as a state form—not an alternative to states.^{Footnote 11} Usually an empire is understood to be “a large political body that rules over territories outside its original borders. It has a central power or core territory—whose inhabitants usually continue to form the dominant ethnic or national group in the entire system—and an extensive periphery of dominated areas.”^{Footnote 12} Of course such a broad definition includes most states. Most processes of state formation involved a core group or region subordinating in some form or another other groups. This was true in the making of Britain, the forming of France, the consolidation of Spain, and the assertion of power by the Federal Government of the United States after the ratification of the constitution.^{Footnote 13} Empires, historically, have done all this without making claims to national specificity. Empires do not, and have not, insisted on ethnic exclusiveness as the basis of power. Understood in this way empires, not nation-states, have been the predominant state form throughout human history. Empires long predated the common era. There were Egyptian, Hittite, Assyrian, Chinese, Persian, and Hellenistic empires among many others before the birth of Christ. There have been innumerable long-lived empires more recently: the Ottoman, the Mughal, the Russian, the Aztec, the Inca, the Holy Roman. Nation-states are a relatively recent and, perhaps, ephemeral phenomenon. Nation-states are instances in which a single people, real or imagined, inhabit and rule over a defined space in which only they are present or are dominant. In that sense, as a state form, the nation really only came into existence some time after the Napoleonic Wars.^{Footnote 14} And, it could be argued, nation-states are becoming more rather than less rare. New supernational states, like the European Union and perhaps ISIS, have come into being that look much more like empires than nation-states. So if one wishes to explore the relationship between economic and political liberty in human history, it makes sense to focus on empires rather than nation-states.

In the face of what had become a European-wide crisis of sovereign debt, Great Britain’s new Prime Minister George Grenville chose to pursue a wide-ranging and innovative program of imperial reform.^{Footnote 15} Grenville, like Henry St. John Viscount Bolingbroke almost exactly fifty years before him, believed that the national debt amassed during a great imperial war had created a fiscal and political crisis.^{Footnote 16} Grenville was sure that political liberty in Britain was under threat because of the licentiousness and luxury that resulted from the unfettered commercialism generated by the national debt. The debt had, he believed, created the conditions for the emergence of a new moneyed class in Britain that knew nothing of political virtue. Grenville therefore responded to the debt crisis with a new (for Britain) and sophisticated political economy of austerity and colonial extraction.^{Footnote 17} Grenville and his fellow ministers sought to increase Britain’s revenue and narrow the budget deficit by implementing a comprehensive reform program. Grenville and his friends, ironically after Britain’s victory, in the Seven Years’ War, sought to model their reforms on the French imperial structure. They admired French hierarchy and order, and valued the economy with which the French had built its empire.^{Footnote 18} The Grenvillians sought to eliminate or drastically reduce subsidies for colonial immigration and support for the creation and expansion of colonial infrastructure. They ramped up enforcement of the Navigation Acts in order to eliminate illicit trade with Spanish and French America. They pushed through the American Revenue Act, which both increased enforcement provisions for earlier legislation and also made it harder for North Americans to import molasses from the French sugar islands. The Grenvillian Currency Act of 1764 eliminated the possibility that British American provinces could borrow money and print paper money in order to settle their transatlantic debts. And finally, in 1765 George Grenville and his supporters passed the Stamp Act in order to levy a duty on the colonists, who would in turn pay for a new standing army in America.^{Footnote 19}

Against this political economy of austerity and extraction, Patriots on both sides of the Atlantic gave voice to a program of stimulus and growth. Where the Grenvillians adopted the French imperial model in order to protect a version of political liberty at home, the Patriots insisted on a uniquely British imperial program. The Patriots were well aware, in ways that historians, sociologists, and political scientists seem not to be, that Britain had diverged from the European pattern of state expenditure in the wake of the Revolution of 1688–89. Whereas narrowly extractive states like the Holy Roman Empire, Spain, Denmark, and Russia spent about 90 percent of their available revenue on warfare, and states focused on improving production like France and the Dutch Republic spent about 80 percent of available revenue on warfare, Britain spent between 65 and 70 percent. While France may have spent more than Britain on creating domestic industries, the British state spent much more than all its competitors on developing colonial infrastructure. The British state paid to settle political and economic refugees in New York, North and South Carolina, and Georgia. Colonial harbors, colonial roads, colonial churches, and even colonial marketplaces were built by the British state. When Charleston, South Carolina, burned to the ground in 1740, it was the British state that rebuilt it. When hurricanes devastated the Caribbean, the French and Spanish states did almost nothing in the eighteenth century, but the British state delivered disaster relief on a grand scale. All of this was because British Whig politicians believed that economic growth depended on the creative interplay between producers and consumers.^{Footnote 20}

In the face of Grenvillian articulation of the political economy focused on slave production in the sugar colonies and extraction from the rest—all based on the French model—Patriots on both sides of the Atlantic insisted that British imperial liberty depended on a political economy of growth based on the creative interplay between production and consumption. In this model, the value of the colonies depended not on the revenue that could be extracted from them, but in their ever-growing consumption of British manufactured goods.

While many Patriots enunciated these views on both sides of the Atlantic, four commentators articulated these views with particular clarity: John Huske and Samuel Garbett in Britain and John Dickinson and William Bollan in North America. John Huske, MP for the port city of Maldon in Essex and formerly a Boston merchant, had turned against his former friends in the Grenville administration in 1764 because of his adamant opposition to their political economic strategy. He had made such a name for himself as an expert on American questions that he was apparently asked to draw up an alternative strategy by members of the political opposition. His sophisticated and elaborate memorandum has survived among the papers of the Duke of Newcastle. Like other opposition figures on both sides of the Atlantic, Huske began his analysis with a bitter denunciation of Grenvillian policies. “Great Britain ever since the late peace, hath contrary to sound policy and the truest commercial principles, taken such measures for destroying the paper currency of the continent of America; for the obstructing or the obtaining any other currency by all the colonies; for preventing the superfluous produce of the American continent and British goods from all our colonies from being exported to foreign colonies. Huske fumed that “many in North America have been deprived of the means of paying the enormous taxes they were subject to in consequence of the late war in particular, of carrying on their trade, and making good their engagements with one another, of making remittances to Great Britain for what they owed, and of demanding from her such goods as they required for the usual course of their trade and business.” The consequence was “such a scene of distress and bankruptcy” in America “as is not to be described.” Grenville’s colonial policies were just as destructive for the Mother Country. “The export of Great Britain to her colonies is reduced” in Huske’s estimation “more than fourth per annum, and the decrement is still going on.”^{Footnote 21} For Huske, the most important fact to be grasped in analyzing the colonial trade was that “the export from hence would be vastly more than it ever was for their own consumption if they could find out ways and means to pay for it.” The remarkable demographic growth of British America made it the most dynamic consumer market for Britain’s manufactured goods. And, Huske argued, if the trade with Spanish America and “other foreign colonies” could be recuperated after the Grenvillian restrictions, “there would be a further demand on Great Britain and Ireland for their produce and manufactures to a very great amount.” Instead of adopting a policy of austerity and extraction, Huske insisted, Britain should provide an economic stimulus to the colonies. “Great Britain ought incontrovertibly to countenance and encourage every direct and circular method of enabling her colonies to make remittances for what they and the colonies of foreigners do and would demand from these kingdoms,” Huske concluded.^{Footnote 22}

The Birmingham industrialist and future abolitionist Samuel Garbett also outlines a colonial growth strategy in a memorandum he submitted to William Petty 2nd earl of Shelburne. “The greatest commercial object of this nation,” Garbett argued, “is to maintain a medium to enable the Americans to purchase the manufactures of Great Britain.” He thought Britain should try and rationalize land policy in America in the hopes that it would encourage migration, that “population may go on” and generate even more consumers. Above all, he believed that a policy of colonial extraction was counterproductive. “Every means of taxing America is playing with edge-tools,” he argued, “and however easy the Americans may appear or really be, under any mode of taxation” American consumption will be diminished. An extraction policy “though it may artfully, it will injudiciously increase the revenue; for every shilling obtained to the revenue will, as trade is now circumstanced with America, stop the circulation of many shillings in our manufactures and thereby prevent an annual clear gain to our country by lessening our manufactures.”^{Footnote 23}

British Americans advanced nearly identical arguments in favor of an imperial political economy of growth as against the Grenvillian policy of extraction. The former agent for Massachusetts, William Bollan, argued powerfully that the recent “sudden changes of British policy” had “plunged” British America “into a state of distress, difficulty and danger.”^{Footnote 24} Bollan knew that Grenville’s political economy would also hurt Britain itself because the protectionist policies “of other princes and states” meant that “our foreign trade collectively hath declined apace.” The dynamism of consumer demand in British America prior to Grenville’s reforms had “exceeded all these diminutions” and provided a growing market for British manufactures.^{Footnote 25} Bollan thought the whole tendency of Grenville’s extractive policies ran exactly counter to the interests of Britain as a manufacturing nation. “In a country dependent on commerce,” Bollan maintained, “the primary object of political consideration” had to be “the increase and exports of its manufactures, the benefits whereof are diffused through all parts.” Grenville’s “revenue project,” by contrast, “would by its natural operations certainly have caused so great a diminution in the exports of British commodities that for every penny collected in the colonies by way of revenue, this kingdom would very soon have lost sixpence, and probably in a short time considerably more.” Patriot governments had previously helped stimulate the colonial economies by assisting “in providing for them such profitable employment as might enable them to pay for large quantities of British manufactures.” “This “new project” of the Grenville administration, Bollan was sure, “hath a direct tendency to drive the inhabitants out of trade, and from the seacoasts into the inland parts of the country, where everyman living upon his freehold will eat his own mutton and clothe himself with the skin and the wool.”^{Footnote 26} Bollan concluded that “the cherishing and regulating is so far preferable to the impoverishing system” employed by the Grenvillians because “the flourishing trade and condition of the colonies will ever best secure and augment their commercial and beneficial connection with this kingdom.”^{Footnote 27}

The Pennsylvanian John Dickinson, born in Maryland and a prominent politician in both Pennsylvania and Delaware, offered a similar defense of a consumption-based growth policy. Dickinson argued that Great Britain’s “prosperity depends on her commerce; her commerce on her manufactures; her manufactures on the markets for them; and the most constant and advantageous markets are afforded by the colonies, as in all others the rest of Europe interferes with her.”^{Footnote 28} By consuming British manufactures in large quantities, British Americans “pay a heavier tax to Great Britain, than if they were consumed at home,” Dickinson reasoned, “for in bringing them here, a vast number of merchants, factors, brokers and seamen are employed, everyone of which must have a profit, as will enable to support himself and his family, if he has any, in a country where everything is dear by reason of high taxes.”^{Footnote 29} In fact, Dickinson argued from historical evidence that “the foundations of the power and glory of Great Britain are laid in America.”^{Footnote 30} Grenville’s policies ran exactly counter to those political economic principles. By the Grenville administration’s actions, “we are prohibited by new and stricter restraints laid on our trade from procuring these [foreign] coins as we used to do; and from instituting among ourselves bills of credit in the place of such portions of them as are required in our internal traffic; and in this exhaustive condition, our languishing country is to strive to take up and to totter under the additional burden of the Stamp Act.” The consequences of the Stamp Act would be nothing short of disastrous for the British economy as well. “Our demand will be much less for British manufactures, as the amount of the sums raised by the tax,” Dickinson reasoned.^{Footnote 31} This was why Parliament refused to lay “any further taxes” on the colonies during the Seven Years’ War, instead granting “indemnifications from the too heavy expenses in which we had involved ourselves.”^{Footnote 32}

In early 1766, a number of prominent British Patriot politicians articulated their defense of British imperial liberty in both houses of Parliament. William Pitt the elder, Secretary of State Henry Seymour Conway, Colonel Isaac Barre, and many others defended the British imperial political economy of growth based on colonial consumption. By March 1766, they had succeeded in repealing the Stamp Act and began work on rolling back other elements of the Grenvillian program.

Across the Atlantic, many Patriots articulated the same political economic arguments. The prominent Boston maltster and former tax collector Samuel Adams argued (along with his former employer Thomas Cushing) that “Great Britain can make her colonies useful to her by no more effectual means than encouraging their trade.” They argued that it was “certainly” much “more for the interest of Great Britain to encourage the trade of the colonies, by which means their riches flow spontaneously into their lap, than to exact revenues from them at the expense of their trade.”^{Footnote 33} “I wish that Trade Policy … was better understood and exercised by the Mother Country with regard to the colonies,” Samuel Adams later wrote, “by restrictions and duties she has even now endangered the loss of their usefulness to her, whereas, by relinquishing these duties, and giving them indulgencies, they might even make the French colonies in America tributary to her in the way of trade and repay her an hundred fold.”^{Footnote 34} Adams and Cushing made clear that they hoped for imperial reform, not independence. They fumed against an accusation that the Americans wanted independence printed in a London paper. “The contrary is most certainly true,” they insisted. “There is at present no appearance of such disposition as this writer would insinuate, much less a struggle for independence” and “there never will be” unless a future British ministry adopted new oppressive measures.^{Footnote 35} The views of the mercantile New Englander were echoed by the Virginia planter George Washington. “Certain it is,” Washington wrote in September 1765, “our whole substance does already in a manner flow to Great Britain and that whatsoever contributes to lessen our importations must be hurtful to their manufactures.” The net effect of Grenvillian political economy had been to decrease the ability of Americans to consume British manufactured good, “where then is the utility of these restrictions,” Washington asked.^{Footnote 36} The future president hoped that Grenville’s political economy would be replaced by a “commercial system” in which the colonies were “put on a more enlarged and extensive footing than it is, because I am well satisfied that it would ultimately redound to the advantages of the Mother Country.” Colonial profits from trade “would center in Great Britain, as certain as the needle will settle at the poles.”^{Footnote 37}

The crisis of the 1760s crystalized the main themes in the debate about the British Empire, and empire more generally. The Grenvillians argued that political liberty could only be maintained at home by restricting economic liberty, the commercializing spirit, in both the colonies and in Britain itself. Patriots responded by arguing that political and economic liberty were inextricably intertwined, as were the interests of Britain and its empire. British liberty required economic growth and British economic growth demanded a state that stimulated the economy through support of infrastructure, subsidizing immigration, and providing bounties for agricultural products. In dozens of newspaper essays, pamphlets, and letters Patriots insisted—in responding to the Grenvillian insistence that their views were virtually represented in Parliament—that sensible policies to guarantee economic liberty required that the interests of all localities in the empire be represented. For the Patriots, economic liberty required political liberty. But the political liberty of Britain depended on a dynamic economy that could only be maintained by the state’s fostering a vibrant consumer society.

In the medium term the Patriot imperial program was defeated in Westminster. Grenvillian political economy triumphed and the political and economic liberty not only of the North Americans but all British subjects was severely threatened. Most scholars have pointed to the Declaration of Independence and its articulation of general principles of political liberty as evidence that for the Founders no economic liberty could be achieved without political liberty. Yet this seems to me to emphasize a small part of the document and ignore the majority. By far the largest part of the Declaration outlines the crimes committed by George III. The authors of the Declaration in enumerating George III’s crimes made clear their broader political economic program. George III had failed prevented colonial trade with Spanish and French America, thus lessening the consumption of British manufactured goods. He had not subsidized migration of political economic refugees to British America, thus lessening the numbers who could consume. And, at least in Thomas Jefferson’s initial draft, he had failed to put an end to the traffic in slaves. Slaves, as Jefferson and the framers knew, might have been good producers, but they were never going to drive economic growth through frequent purchases of fashionable attire. In fact, the American founders simply translated the Patriot program for imperial reform onto their vision for the new republic. Once again they hoped for a state that would foster economic growth through consumer demand. The Founders did not create a new form of state; instead they translated the Patriot imperial program to North America.

Against the prediction of all contemporary observers, it was the British and not the French or Spanish Empire that broke apart in the 1770s. Why had this happened? In the British case, it confirmed the Patriot prediction that an unrepresentative Parliament would pursue a political economic program that gave preference to those areas that were represented and overrepresented. Absent the voice of British Americans, and with a very limited representation from Britain’s own manufacturing communities, the Parliament opted for a policy of colonial extraction rather than colonial stimulus.

But why were France and Spain able to forestall revolution? The outline of an answer was suggested in David Hume’s famous essay on Civil Liberty. “Trade,” Hume noted, “was never esteemed an affair of state till the last century.” That revolution in conceptualizing political liberty, Hume knew, was because of “the great opulence, grandeur and military achievements of the two maritime powers.” It was England and the Dutch Republic that had “instructed mankind in the importance of an extensive commerce.” While the free states had set the standard, the absolute monarchies soon followed suit. “Though all kinds of government be improved in modern times,” Hume pointed out, “yet monarchical government seems to have made the greatest advances towards perfection.” Europe’s monarchies had embraced the importance of political economy: “property is there secure; industry encouraged; the arts flourish.” And, unlike in popular governments, the enlightened despots of the eighteenth century were not beholden to the narrow interests of those who supported them.^{Footnote 38} So, in the wake of the imperial crises of the 1760s, the French and Spanish monarchies pulled back from their extractive policies and implemented a set of reforms that improved the economic well-being of the creoles. In the French and Spanish Empires economic liberty did not require political liberty.

One might speculate more broadly that except in the case of the first movers, economic prosperity does not depend on political liberty. Enlightened absolutist or autocratic states, states that realize their very survival depends on improving the economic welfare of the majority of their subjects, have every incentive to promote economic growth. And Modern China is only the latest state to demonstrate that economic prosperity does not depend on political liberty. However, as Hume himself was aware, the first, movers did meld political and economic liberty. And, it seems to me, it was precisely because the British Empire invested so heavily in creating colonial consumers to drive forward British manufacturing that Britain became the First Industrial nation.^{Footnote 39}

In this article, I have advanced the hypothesis that empires fall when they fail to maintain the economic liberty—understood in the sense of economic prosperity—of their subjects. When the costs of staying in the empire outweigh those of exiting, imperial subjects revolt. This was the case for early modern empires. At this point I would like to test that hypothesis against the secondary literature of other empires. In testing that hypothesis I want to leave open the possibility that early modern European empires were different, as some enlightenment commentators maintained. It strikes me that it is also possible, though I suspect this was not the case, that extensive land-based empires such as the Chinese, Russian, Mughal, or Holy Roman had a different trajectory than the overseas empires such as those held by France, Spain, and Britain.