the founding fathers made scottish lords rich -- 11/3/17
Today's selection -- from A History of Scotland by Neil Oliver. When America's Colonial tobacco planters -- who primarily included Virginians with such vaunted names as Washington, Jefferson, Madison and Monroe -- sold their crops overseas, much of it was to the "Tobacco Lords" of Glasgow, Scotland. When these planters bought European goods, it was often on credit to these same merchants. And when our Founding Fathers grumbled about the debts they owed to England, it included these debts. One young observer to this scene was Adam Smith, later to pen a book called The Wealth of Nations:
"While [Benjamin] Franklin was [traveling to] form his opinions about Scotland and Britain, Adam Smith was paying close attention to developments in the American colonies, and those closer to home. The burgeoning tobacco trade that was so enriching Glasgow in general -- and the city's new breed of oligarch, the self-styled 'Tobacco Lords', in particular -- drew much of his interest. He certainly loved the energy and buzz of it all and enjoyed every minute he spent amid the hubbub of the thriving world of commerce developing on the banks of the [river] Clyde. The Broomielaw had been so named in honour of the broom bushes that grew in profusion along the water's edge, but by Smith's time it was dominated by the rattle and hum of the business of making money.
|A Tobacco Lord relaxing with his pipe|
"With their ships at sea for months at a time, the city's tobacco merchants had plenty of spare time. They spent much of it in the new Tontine Hotel, at Glasgow Cross, sipping coffee or fashionable rum drinks, often promenading along the riverside in their trademark purple cloaks, gold-topped canes in hand. They were among the celebrities of their day and they liked to be seen and heard. Smith admired the newness of the society evolving on the other side of the Atlantic, its energy and optimism. But he was easily intelligent enough to see that there were lessons to be learned from Glasgow's tobacco trade -- and that not all of them made for comfortable reading.
"He had, after all, grown up knowing the lengths to which some men would go in pursuit of wealth. His father had been a customs officer in Fife, and the stress of trying and failing to deal with the local smugglers had driven him to an early grave, six months before his son was born. This knowledge, that even punitive laws were insufficient to discourage illicit trade and the pursuit of self-interest, would persuade Smith that the money-making urge ought to be harnessed rather than discouraged.
"During the 1750s, Glasgow's hold upon the American tobacco trade grew tight as a vice. Before 1740 Glasgow merchants were importing no more than 10 per cent of Britain's share of the crop, but by the late 1750s they were handling more tobacco than all English ports combined. By far the majority of the trade was controlled by a handful of Glasgow men and their families. William Cunninghame, John Glassford and Alexander Spiers were the big three and they were to become legends in their own lifetimes.
"In the years running up to the outbreak of the American War of Independence in 1775 even the least of the Scots tobacco merchants grew rich. For the giants among them, the fortunes being made were on a scale almost beyond belief. Mr Darcy, the fictional hero of Jane Austen's Pride and Prejudice, was wealthy beyond the dreams of avarice on an income of £10,000 a year; Glassford, a real-life figure living in the time Austen wrote about, was earning up to £500,000 a year.
"The Tobacco Lords were among the first members of the newly formed Political Economy Club, where businessmen met to discuss the skills of their trade. By working his way into their company Smith was able to develop contacts and learn about commerce. He befriended Glassford and was therefore able to base his study of the tobacco trade on first-hand research. He saw that his friend and his ilk had secured their stranglehold by bold, cut-throat business practices: while English tobacco traders acted as middlemen -- selling the stuff onto the European markets on behalf of the growers, for an agreed commission -- Glasgow's Tobacco Lords bought the crop at source for pre-arranged prices. When the time came to sell their wares on the Continent, the profit margins were colossal.
"All year their placemen would allow the tobacco growers to buy luxury goods and other commodities from their stores in the colonies. Most, if not all, of the purchases were made on credit -- on the understanding that the Glasgow merchants would, in return for the favours, be given first refusal on the eventual harvest. It was a brilliant scheme and one that required the Tobacco Lords to have access to large amounts of capital from home. This was achieved by building networks of family backers who were made shareholders in the companies as quid pro quo for investment."