America Lost? The Birth of Britain’s Capitalist Empire

Justin B. Clement, Ph.D. Candidate in United States History, University of California, Davis

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The 1783 Peace of Paris brought a grueling eight-year war to an end, but its generosity shocked many Britons to the core.  By offering lenient terms in the treaty negotiations, Prime Minister William Petty, Lord Shelburne, hoped to draw the United States away from the Franco-American alliance and foster a mutually beneficial trade with Britain.[i]  Yet many in Parliament staunchly opposed granting fishing rights off the coast of Newfoundland.[ii]  John Holroyd, Earl of Sheffield proclaimed: “the Navigation Act itself, the guardian of the prosperity of Britain, has been almost abandoned by the levity or ignorance of those who have never seriously examined the spirit or the consequence of ancient rules.”[iii] But if the Georgian Papers Project reveals anything, King George III certainly understood the “ancient” traditions of his country—as well as the stakes involved.

In the Royal Archives at Windsor Castle, nestled among the papers of George III, a single essay proclaims: “America is lost! Must we fall beneath the blow?”[iv]  At first glance this declaration seems to reinforce the stereotyped image of a bitter and mournful King George III. But under closer scrutiny, the essay champions a radical notion: that Britain can profit from commerce outside its colonial reach.  In short, the treaty favored laissez-faire capitalism in place of colonial mercantilism.  Opposing this, Lord Sheffield declared, “The independence of America, has bewildered our reason and encouraged the wildest sallies of imagination; systems have been preferred to experience; rash theory to successful practice.”[v]  So how did King George III—a staunch opponent of American independence—come to embrace the unproven capitalist model?  Context in the Georgian Papers provides clues.

George III’s essays include notes taken almost verbatim from a variety of texts, often without attribution of source material.  Rather than slavishly copying, he transcribed specific quotes to the exclusion of other material.  The “America is lost!” essay contains text mostly excerpted from Arthur Young’s 1784 volume, Annals of Agriculture—or perhaps an earlier unpublished draft.[vi]  Young asks the rhetorical question: “have we resources that may repair the mischief?”[vii]  George III’s editorial discretion in answering this question highlights a departure point between the two men’s views.  The king transcribed what he perceived to be useful wisdom, and because of this editorializing, his essay on the loss of the American colonies is particularly revealing.

Young follows a humanistic and anti-imperial stance, arguing: “the loss of India! That day must come.—It ought to come. …we must be driven out of India with abhorrence and contempt, and all the people of the globe would rejoice in the event.”[viii]  By leaving these segments out of his copied excerpt, George III would not admit to defeatism, nor would he abandon the idea of empire wholesale.  Where Young stressed isolationism and contracting British imperial holdings, the king’s choice of excerpts instead emphasized international trade.

The old “Colonial Scheme” comprised a mercantilist system where much of the wealth from commerce stayed within the empire.  This proved advantageous when the American colonies “became a market for the Manufactures and Commerce of the Mother Country” and the West Indies and American South provided cash crops.  But the Mid-Atlantic and New England colonies “were in reality our very successful rivals in… the carrying freight trade, and the Newfoundland fishery.”  Spared the expense of defending them, Britain would “reap more advantages from their trade as friends than ever we could derive from them as Colonies.”[ix]

Throughout the piece, words like “actually” or “in reality” describe a sea change in thought.  Historians have long placed 1783 as the watershed moment separating the First and Second British Empires.  In this moment, King George III envisioned a laissez-faire policy that did not wholly depart from mercantilism or settler colonialism, but reinforced a radical new alternative: informal empire and conquest by capitalism.[x]  “The situation of the Kingdom is novel,” he wrote, “[and] the policy that is to govern it must be novel likewise.”[xi]

George III Essay, America is Lost!, ‘Essay on America and future colonial policy’, RA GEO/ADD/32/2010-2011
[i] Piers Mackesy, “Conclusion,” in The War for America: 1775-1783 (Cambridge, Mass., 1964), 505-22.
[ii] Article 3, Treaty of Paris, 1783; International Treaties and Related Records, 1778–1974; General Records of the United States Government, Record Group 11; U.S. National Archives.
[iii] [John Baker Holroyd, 1st Earl of Sheffield], Observations on the Commerce of the American States with Europe and the West Indies; Including the Several Articles of Import and Export (London, 1783), 1.
[iv] King George III, “America is lost!” essay, ca. 1783-1784, Royal Archives, Additional Georgian Papers, Add. MSS 32/2010/11.  Historian John L. Bullion argues that this essay must be written before the peace treaty was concluded in 1783, but a generous interpretation of “time must tell” could expand the timeframe.  See: Bullion, “George III on Empire, 1783,” William and Mary Quarterly LI, no. 2 (Apr., 1994), 305-10.
[v] [Lord Sheffield], Observations, 1.
[vi] I am indebted to Angel-Luke O’Donnell of King’s College of London for this insight.  See: Arthur Young, Annals of Agriculture; and Other Useful Arts, Vol. I (London, 1784), 13-19.
[vii] George III, “America is lost!”
[viii] Young, Annals of Agriculture, 17.
[ix] George III, “America is lost!”
[x] Young criticized the economist Adam Smith, but there are still echoes of his ideas throughout the essay nonetheless.  See: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 2 vols., ed. Edwin Cannan (New Rochelle, N. Y., 1966), 535-626, 895-900; and Bullion, “George III on Empire, 1783,” WMQ LI, no. 2 (Apr., 1994), 305-10, esp. 307-08.
[xi] George III, “America is lost!”

Transcription: America is Lost! (Essay on America and future colonial policy)

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	America is lost! Must we fall beneath the blow? Or have we resources that may repair the mischiefs? What are those resources? Should they be sought in distant Regions held by precarious Tenure, or shall we seek them at home in the exertions of a new policy? The situation of the Kingdom is novel, the policy that is to govern it must be novel likewise, or neither adapted to the real evils of the present moment, or the dreaded ones of the future. For a Century past the Colonial Scheme has been the Government. It was thoroughly known that from every system that has guided the Administration of the British Country there always exists an active emigration of unsettled, discontented, or unfortunate People who failing in their endeavours to live at home, hope to succeed better where there is more employment suitable to their poverty. The establishment of Colonies in America might probably increase the number of this class, but did not create it; in times anterior to that great speculation, Poland contained near 10.000 Scotch Pedlars; within the last thirty years not above 100. occasioned by America offering a more advantageous asylum for them. A people spread over an immense tract of fertile land, industrious because free, and rich because industrious, presently became a market for the Manufacturers and Commerce of the Mother Country. An importance was soon generated, which from its origin to the late conflict was mischievous to Britain, because it created an expence of blood and
and treasure worth more at this instant if it could be at our command, than all we ever received from America. The wars of 1744. of 1756. and 1775. were all entered into from the encouragements given to the speculations of settling the wilds of North America.It is to be hoped that by degrees it will be admitted that the Northern Colonies, that is those North of Tobacco were in reality our very successful rivals in two Articles the carrying freight trade, and the Newfoundland fishery. While the Sugar Colonies added above three millions a year to the wealth of Britain, the Rice Colonies near a million and the Tobacco ones almost as much, those more to the north, so far from adding any thing to our wealth as Colonies, were trading, fishing, farming Countries, that rivalled us in many branches of our industry, and had actually deprived us of no inconsiderable share of the wealth we reaped by means of the others. This compartative view of our former territories in America is not stated with any idea of lessening the consequence of a future friendship and connection with them; on the contrary it is to be hoped we shall reap more advantages from their trade as friends than ever we could derive from them as Colonies, for there is reason to suppose we actually gained more by them while in actual rebellion, and the common open connection cut off then
	than when they were in obedience to the Crown; the Newfoundland fishery taken into Account, there is little doubt of it.The East and West Indies are conceived to be the great commercial supports of the Empire; as to the Newfoundland fishery time must tell us what share we shall reserve of it. But there is one observation which is applicable to all three; they depend on very distant territorial possessions, which we have little or no hopes of retaining from this internal strength, we can keep them only by means of a superior Navy. If our marine force links, or if in consequence of wars, debts, and taxes, we should in future find ourselves so debilitated as to be involved in a new War, without the means of carrying it on with vigour, in these cases, all distant possessions must fall let them be as valuable as their warmest panegyrists contend. It evidently appears from this slight review of our most important dependencies, that on them we are not to exert that new policy which alone can be the preservation of the British power and consequence. The more important they are already, the less are they fit instruments in that work. No man can be hardy enough to deny that they are insecure, to add therefore to their value by exertions of policy which shall have the effect of directing any stream of capital, industry, or population into those channels, would be
be to add to a disproportion already an evil. The more we are convinced of the vast importance of those territories, the more we must feel the insecurity of our power; our view therefore ought not to be to increase but preserve them.
	than when they were in obedience to the Crown; the Newfoundland fishery taken into the Account, there is little doubt of it.The East and West Indies are conceived to be the great commercial supports of the Empire; as to the Newfoundland fishery time must tell us what share we shall reserve of it. But there is one observation which is applicable to all three; they depend on very distant territorial possession, which we have little or no hopes of retaining from this internal strength, we can keep them only be means of a superior Navy. If our marine force sinks, or if in consequence of wars, debts, and taxes, we should in future find ourselves so debilitated as to be involved in a new War, without the means of carrying it on with vigour, in these cases, all distant possessions must fall let them be as valuable as their warmest panegyrists contend. It evidently appears from this slight review of our most important dependencies, that on them we are not to exert that new policy which alone can be the preservation of the British power and consequence. The more important they are already, the less are they fit instruments in that work. No man can be hardy enough to deny that they are insecure, to add therefore to their value by exertions of policy which shall have the effect of directing any stream of capital, industry, or population into those channels, would be
be to add to a disproportion already an evil. The more we are convinced of the vast importance of those territories, the more we must feel the insecurity of our power; our view therefore ought not to be to increase but preserve them.