IMPERIALISM, FREE TRADE (Western Colonialism)

Free trade imperialism was a nineteenth-century English political movement that advocated a primary focus on commercial domination, rather than formal colonization and territorial expansion. Over time, the phrase came to refer to the use of military and diplomatic power to force underdeveloped, or militarily weaker, countries to grant access to their markets to more powerful states. The result of this policy was the rise of an informal economic control that stopped short of outright colonization, but significantly curtailed the sovereignty of weaker countries. Free trade imperialism was practiced by many colonial states, but was primarily associated with British policies, especially in Latin America and Asia. As economic expansion became increasingly intertwined with empire, critics of imperialism, including Karl Marx and his later adherents, focused on the economic implications and motivations of imperialism and neocolonialism.


The advocates of free trade imperialism, who were initially referred to as ”Little Englanders,” rejected broader arguments in favor of imperialism that were based on the supposed strategic or cultural advantages associated with the acquisition of new areas. The increasing emphasis on accruing national economic benefits on the part of leading figures such as Richard Cobden resulted in the growth of the ”informal” empire, and caused both pro-and anti-colonial factions to support commercial expansion into underdeveloped regions of the world.

During the late 1700s and early 1800s, the older, less formal era of British colonialism came to an end with the loss of North American colonies and the subsequent acquisition of new colonies and territories as a result of the Napoleonic Wars. Concurrently, mercantilism, the dominant economic theory of the early imperial period, also gave way to a greater emphasis on free trade and laissez-faire economics. Adam Smith’s concept that markets could regulate themselves through competitive equilibrium, combined with the lessons of the post—American Revolution period, led to a shift in British policy. When England continued to dominate trade with the new United States and to control markets following the loss of the North American colonies, many English supporters of anticolonial free trade pointed out that England continued to reap many of the economic benefits it had previously enjoyed, but without the costs of administering and defending the colonies. Pro-free trade factions also allied themselves with the antislavery Whig faction in Parliament to promote the eradication of slavery and the slave trade. With the abolition of the slave trade within the British Empire in 1807, free traders argued that the ban needed to be applied universally in order to ensure that other countries did not gain an advantage over British goods because of lower labor costs. Similar arguments were used against the institution of slavery itself (namely that it resulted in unfair labor costs) and in 1834 Britain abolished slavery outright, although various forms of indentured servitude continued.

There was, however, a strategic dimension that linked colonialism and free trade. From the early formation of the empire onward, Britain sought colonies as a means to protect other colonies. For instance, the acquisition of Cape Colony was motivated by a desire to control sea-lanes around the bottom of Africa and thus ensure that goods from India would flow freely. Expansion of the empire within the Indian subcontinent (including conquest of Indian territories and the later expeditions in Afghanistan) was viewed as a means to protect the profitable coastal colonies.

The nexus between free trade and imperialism became highly apparent toward the end of the 1830s. By this time, the British and other European powers had developed commercial interests in China. A particularly profitable trade for British merchants was the importation and sale of opium. The British East India Company cultivated opium in India, shipped the drug to China, and then traded it for highly sought-after goods, such as silk or tea. In 1839 a new Chinese customs official sought to enforce his government’s ban on the import of opium (a ban that corrupt officials had previously been bribed to ignore). In response, England used naval power in 1840 to forcefully open Chinese ports. The Chinese eventually bowed to British pressure and in 1842 signed the Treaty of Nanking, which granted England most-favored-nation trade status, opened new ports to British merchants, and granted extraterritoriality to the British, making Britishers accused of crimes in China subject not to Chinese but to British law and courts.

From the 1840s through the 1870s, the so-called Manchester school of free trade advocates held political and economic sway in England. Supported by factory owners, as well as many in the working class, adherents to this style of free trade emphasized the importance of exports and the need for the government to undertake action to remove foreign impediments to British products. Free trade was seen both as a means to enhance the nation and as a mechanism to promote universal values (in this case, British values). However, while the Manchesterites believed it was the government’s role to champion free trade, they sought to limit government expenditures on the military or on colonial administration, as they considered such expenditures to be a diversionary use of resources.

One of the early leaders of the free trade movement was Richard Cobden (1804-1865). Cobden earned a fortune early in life through trade and became a staunch advocate of imperial retrenchment and commercial expansion. Cobdenism was a strong belief in the market and opposition to state intervention in the economy. Cobden himself believed that free trade would promote peace and provide the best means to improve the social conditions of England’s poor. With John Bright (18111889), Cobden led the Anti-Corn Law League, an anti-tariff organization that was able to force a repeal of England’s strict agricultural protectionist laws in 1846. As British markets were opened to foreign competition, London increasingly pursued policies designed to force other states to adopt reciprocal trade policies. Cobden was also an early campaigner for arms reductions and international arbitration as an alternative to war (Cobden and his supporters believed that war was an unnecessary waste of resources and manpower). Cobden’s opposition to armed conflict and his sense of ethics led him to join Bright and other liberals of the time in opposing British military action during the Second Opium War in 1857, and he worked with other parliamentarians to bring down the government of Lord Russell over the conflict. Cobden made several visits to France to argue in favor of free trade and against tariffs and is generally credited with fostering reforms in French economic policy during the period. In 1860 Cobden negotiated a major tariff-reduction treaty with France. Cobden was a vocal supporter of the Union during the American Civil War, but died of bronchitis in 1865 before the war had ended.

By the 1840s the free trade movement could claim credit for several significant accomplishments. The repeal of major protectionist legislation within England spurred the expansion of the popularity of free trade principles. By 1860 some tariffs on around four hundred items had been removed. Income from tariffs fell from 25.3 percent of government revenues in 1846 to 11.5 percent in 1865 and 5.3 percent in 1900. The lower tariffs led to reduced consumer prices for the growing British middle class, as well as for the working class. The result was widespread political support for free trade. Victorian voters embraced Cobdenism and supported the efforts of successive governments to open markets to British goods and products. However, whereas Cobden supported means that would promote international peace, other British politicians believed that free trade could be spread through military and diplomatic coercion. In addition, British governments mainly supported only those free trade policies that benefited England and the empire.


The costs of empire constrained British expansion from the 1840s through the 1860s. Though new territory was added, successive governments sought to exercise control through informal means rather than outright colonization. Nonetheless, the 1840s saw significant growth in both the formal and informal empires. During the period, the British expanded into, or took some degree of control over, areas such as Hong Kong, the Gold Coast, Natal, New Zealand, the Punjab, and Sierra Leone. The return of Lord Palmerston as foreign secretary in 1846 marked an increasingly assertive British foreign policy in regards to trade issues. Palmerston sent a British fleet to Portugal to pressure the Portuguese government during a trade dispute, and the British used military intervention in Borneo and Africa to open markets. More significantly, in 1848 Palmerston issued a clear endorsement of free trade imperialism when, in a diplomatic note, he declared that Britain would use diplomatic and political pressure to protect “investments” if it deemed that the loss of those investments threatened the stability or security of England. Cobden and his supporters in Parliament sought to limit Palmerston’s aggressive policies by reducing the government’s military expenditures, but successive bills were rejected in Parliament. Instead, Britain’s formal and informal empires began a period of sustained growth.

In 1848 British traders seized a port in Nicaragua and ultimately forced the Nicaraguan government to sign an advantageous commercial treaty. That same year, British troops occupied the Boer area of Natal and seized Natal’s main port after British merchants began cultivating cotton on formerly Natalese territory that had been annexed into the Cape Colony in 1847. In 1843 James Brooke created a personal fiefdom in Sarawak in the north of Burma. Meanwhile, throughout Africa and Asia, British merchants began negotiating and signing a series of trade treaties with local leaders. In some cases, charter companies led the commercial expansion. In addition to the well-known British East India Company, a range of smaller, but in many cases just as successful, companies such as the Royal Niger Company or the Royal South Africa Company, were able to expand British commercial hegemony.

In order to protect commercial interests, the British undertook military action to either prevent encroachments from neighboring powers or expand access to resources. Often conflicts were initiated in remote areas, and London responded by sending troops to suppress native populations. On a grand scale, the 1857 Sepoy Revolt and the subsequent dissolution of the East India Company by an imperial administration is demonstrative of this trend in which minor disagreements were used by colonial officials, merchants, and so-called adventurers to expand the formal empire. Indeed, the economist John Galbraith’s “man-on-the-spot” thesis asserts that individuals were responsible for much of the expansion of the empire, because they initiated colonial agreements or conflicts that London would have avoided.


From the 1840s through the 1860s, British governments attempted to sign free trade agreements with their European counterparts and to gain most-favored-nation trade status with states on the continent. This effort was initially successful and British merchants increased their market share in a range of European states. However, the depression of 1870 led a number of European countries to reinstate tariffs. This closed markets to the British. Indeed, the British began to develop a trade deficit in the 1870s, but nonetheless continued to vigorously support the principle of free trade throughout the period. One result of the closure of European markets was a rise in support for imperialism. Merchants began to publicly endorse imperialism because they hoped that the acquisition of new territories would provide new markets to offset the loss of revenues caused by the new round of European tariffs. Concurrently, the “scramble” for colonies in Africa and Asia added a new strategic emphasis as imperial governments sought territory in order to protect their commercial interests. By the early 1900s, almost 60 percent of British manufacturing was directed toward the empire or dependent on the colonies for raw materials. The British also benefited from imperialism in general, as 40 percent of the world’s products and services were transported by British ships.

Consequently, from the 1870s onward, the expansion of both the formal and informal empires accelerated. Between 1870 and 1914, there was a dramatic increase in the amount of surplus economic capital in Great Britain. By this time, London had firmly established itself as the commercial and financial center of the world and British firms dominated the global shipping, insurance, and manufacturing markets. British promotion of free trade was perceived by both the public and elites as a means to further enhance the nation’s wealth. As other European states developed their colonial empires, and often shut British merchants out of trade in the colonized regions, commercial leaders in Britain lobbied various governments to support increased access to new markets and materials. Other states emulated British tactics. For instance, after the first Opium War, the United States and France used the threat of military force to gain concessions from China that were similar to those granted to Great Britain under the Treaty of Nanking.

During these years there was still considerable debate over the cost and benefits of formal colonization. For instance, the financial and manpower costs of the 1879 Afghan War led to the fall of the government of the proexpansionist Benjamin Disraeli. However, his successor, William Gladstone, also found himself dragged into colonial wars such as the First Anglo-Boer War. One compromise solution was the creation of protectorates that minimized British financial outlays for administration or defense, but secured for the British commercial advantages. British agents had chiefs sign protection treaties in which the local leader surrendered sovereignty in exchange for British diplomatic or military protection. The treaties were inevitably written in London (and in English) and local leaders often did not understand the implications of the agreements. Examples of such treaties include the 1884 Treaty of Protection with the Itsekiri in present-day Benin.

The Waters of Free Trade. This cartoon, published in England on August 21, 1852, ridiculed the trepidation of British politicians toward the economist Richard Cobden's philosophy of free trade.

The Waters of Free Trade. This cartoon, published in England on August 21, 1852, ridiculed the trepidation of British politicians toward the economist Richard Cobden’s philosophy of free trade.


The importance of trade in spurring the drive for new colonies led many scholars and philosophers to assert that trade was the overriding factor in imperialism. At the core of the argument was the assertion that powerful states naturally sought outlets for their investments and products. The role of surplus capital and the drive for economic expansion influenced several of the most significant scholars of the nineteenth and twentieth centuries, including Karl Marx (1818-1883). Marx tied imperialism to the rise of a global capitalist economic system. He believed that the capitalist system would lead to a worker’s revolution and then a utopian socialist society. In 1902 the British political philosopher J. A. Hobson, a follower of Marx, published Imperialism: A Study, in which he argued that the financial sector was the only area of the economy that actually benefited from imperialism. In other areas, the military and administrative costs of empire outweighed any financial gains. Hence, Hobson contended that imperialism only benefited a small group of elites and did not provide long-range economic gains for the lower and working classes.

Hobson significantly influenced Vladimir Lenin, whose 1917 work Imperialism: The Highest Stage of Capitalism attempted to explain the causes of World War I by portraying the conflict as a logical outcome of ongoing imperial competition. Lenin asserted that capitalist states had delayed Marx’s worker’s revolution through imperialism. Through imperialism, capitalist powers were able to establish new markets and to gain access to cheap labor and raw materials. In this fashion, the developed imperial nations managed to create dependencies among their colonies, as these territories were never able to keep more than a small portion of the wealth created by their resources and labor (instead, much of the wealth and resources were transferred to the colonizing state). This led to a pattern of under-development in most colonies.

In many ways, these early Marxist critics were reacting to shifts in the philosophy of imperialism. The heyday of free trade imperialism was the period between 1840 and 1870. During this era, the Little Englanders broadly supported disengagement from the empire as a means to lower public expenditures. However, the new wave of imperialism of the 1880s, combined with increased economic competition from Europe and the United States, led many in the British business class, who had previously been Little Englanders, to reassess their stance toward empire. As a result, there was an increasing degree of support for some level of continued engagement and even expansion of the empire. One method to lower expenditures while retaining imperial ties was home rule through dominion status and varying degrees of self-government. In 1867 Canada was granted dominion status, followed by Australia (1901), New Zealand (1907), and South Africa (1910). Once the period of decolonization began, other means, including the Commonwealth system, were developed to maintain economic, political, and military ties between the former colonies and Great Britain. Other imperial powers used similar tactics, including the French Francophone system.

Such overt and tacit efforts to maintain economic suzerainty in the former colonies led many Marxist scholars to contend that the decolonization period simply marked a transition to a different form of imperialism: neocolonialism or neoimperialism. For instance, dependency theorists asserted that even after the formal colonial institutions departed, foreign actors were able to maintain control over resources and exploit local populations, with the assistance of pliable local regimes. These regimes, in turn, grew wealthy through bribes or through manipulation of contracts and enjoyed military support from foreign powers. A range of former imperial powers, including Great Britain, France, and Italy, engaged in neoimperialism, as did emerging world economic powers such as the United States, Japan, and Germany.

Neoimperialism, furthermore, was not really even “new”; instead, it was simply a more sophisticated manifestation of free trade imperialism. The tactics and strategies employed by the postcolonial powers mirrored the tactics utilized by the British during the latter half of the nineteenth century in areas such as Latin America. For instance, by 1913 the British had almost one billion pounds invested in Latin America (about one-quarter of total British overseas investments), despite having scarcely any formal colonial presence in the region. The British also used political and military intervention to support client regimes, as happened in Guatemala and Colombia in the 1870s. The British were also able to gain commercial concessions by linking recognition of colonies with trade agreements. Consequently, British recognition of new colonies in Africa resulted in commercial clauses that opened markets to British merchants in such treaties as the Anglo-Congo Arrangement (1885) or the Anglo-German Agreement on East Africa (1886). The informal methods of empire advocated by the free trade imperialists of the mid-1800s continue to be utilized and remain a major component of the ongoing debate over the causes and results of imperialism.

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