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The Rise of Free Trade
in Western Europe
CHARLES P.KINDLEBERGER
Charles P.Kindleberger, a leading economic historian, examines
the process by which mercantilist trade restrictions were dismantled
and evaluates several of the best-known theses concerning the
ascendance of free trade in Western Europe. Presenting a domestic
society-centered argument, Kindleberger contends that free trade
in many instances arose as individual entrepreneurs pressured their
governments to lift restrictions on international trade and finance
so that they could pursue overseas business opportunities. Yet
Kindleberger points out that political activity by entrepreneurs
cannot explain the rapid expansion of free trade in Europe after- He suggests that this “second wave” of free trade may have
been motivated by ideology rather than by economic or political
interests. This important article offers a persuasive explanation of
how and why the market principle gained dominance within the
international economy during the nineteenth century.
I
... The beginnings of free trade internationally go back to the eighteenth century.
French Physiocratic theory enunciated the slogan laisser faire, laisser passer to
reduce export prohibitions on agricultural products. Pride of place in practice,
however, goes to Tuscany, which permitted free export of the corn of Sienese
Maremma in 1737, after the Grand Duke Francis had read Sallustio Bandini’s
Economical Discourse. Beset by famine in 1764, Tuscany gradually opened its
market to imported grain well before the Vergennes Treaty of 1786 between
France and Britain put French Physiocratic doctrine into practice. Grain exports
in Tuscany had been restricted under the “policy of supply,” or “provisioning,”
or “abundance,” under which the city-states of Italy limited exports from the
surrounding countryside in order to assure food to the urban populace. Bandini
and Pompeo Neri pointed out the ill effects this had on investment and productivity
in agriculture.
The policy of supply was not limited to food. In the eighteenth and early
nineteenth century exports were restricted in, among others, wool and coal (Britain),