Adam Smith and the Navigation Acts: A New Interpretation

Adam Smith is frequently cited as a supporter of the Navigation Acts. The Navigation Acts were a diverse set of English trade regulations that formed the cornerstone of English mercantilist policy. Adam Smith plainly opposed large parts of the Navigation Acts, notably those that restricted the freedom of American colonies to trade with other countries. But he is cited as supporting other parts, not specific to the colonies, which were restrictions that promoted and protected Britain’s maritime or seafaring capability. An important motivation was that such capability enhanced Britain’s naval defenses. These provisions restricted foreign trade with Britain to encourage ships and crews operating within the country to be largely British owned and British manned. In that respect, they were similar to the modern American Jones Act. These parts of the Navigation Acts are here referred to as the “seacap provisions” for their supposed British seafaring-​capability promotion. The rationale of such measures was that they induced greater development and readiness in British maritime capabilities, and lesser development in that of other countries, all to enhance the security and military interests of Britain.

Smith’s supposed support for the seacap provisions is celebrated by protectionists and has been a thorn in the side of those who want to deregulate shipping. Defenders of the Jones Act, for example, often say that even Adam Smith was not in favor of unregulated free trade in shipping. In their arguments, they draw on Smith’s well-​known statements that read in isolation like unequivocal endorsement of the seacap provisions. But there is something about these well-​known statements that is very curious.

I have disaggregated the Navigation Acts into two large categories: the colonial-​trade provisions and the seacap provisions. Smith heavily criticizes the colonial-​trade provisions, and his endorsements of the seacap provisions are of “the act of navigation” as a whole. But, later in the book, Smith expounds at length that he does not entirely endorse the Navigation Acts, since he heavily criticizes the colonial-​trade provisions.

I believe that the claim that Adam Smith supported the seacap provisions is misleading and possibly entirely false (Petitt 2025). My position prompts the question: If Smith did not support the seacap provisions, why didn’t he make his position on the Navigation Acts clear? That is an important question, but space constraints dictate that I merely pose it and not attempt to answer it.

Smith’s Exoteric Endorsements of the Seacap Provisions

There are three well-​known passages in which Smith seems, on the surface, to endorse “the act of navigation”:

Quote 1: “The act of navigation, therefore, very properly endeavours to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases, by absolute prohibitions, and in others by heavy burdens upon the shipping of foreign countries” (WN 463.24).

Quote 2: “[The regulations of this famous act] are as wise, however, as if they had all been dictated by the most deliberate wisdom. National animosity at that particular time aimed at the very same object which the most deliberate wisdom would have recommended, the diminution of the naval power of Holland, the only naval power which could endanger the security of England” (WN 464.29, italics added).

Quote 3: “Defence … is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of England” (WN 464-5.30).

Most scholars regard the three quotations as conclusive evidence that Smith supported the seacap provisions. I am not convinced. A review of Smith’s other writings on the Navigation Acts and their historical context will reveal that we should not take Smith’s words on the seacap provisions as plain and unequivocal endorsement.

Act or Acts?

Notice that in Quote 1 and Quote 3 Smith says “the act of navigation”—singular. Modern scholars tend to use the plural form, Navigation Acts or Acts of Navigation, because the Navigation Act of 1651 was modified several times. Smith uses “the act of navigation” approximately twenty times, and never the plural. On those occurrences, it is often unclear whether he means only the original 1651 Act, the 1660 Act (the first act with royal approval), the combination of all the modifications that had been made by the time of historical context he speaks of, or by the time that Smith wrote, i.e., 1776.

Smith Against the Colonial-​Trade Provisions

When I speak of the colonial-​trade provisions of the Navigation Acts, I mean especially the requirement that imports into the colonies had to pass through Britain and that an enumerated set of exports from the colonies also had to pass through Britain. Smith plainly condemns these provisions. He thought that the colonies should be able to trade with people in other countries in the same way that they traded with people in Britain.

Smith was unambiguous in his criticism of the enumeration of commodities. He argued that it redirected trade from Europe without increasing the total volume of trade, it weakened British defensive capabilities, and that the regulation should be gradually relaxed until the trade of Britain’s colonies was “rendered in a great measure free” (WN 596.22, 598.23, 606.44).

Scholarship fully recognizes Smith’s objections to the colonial-​trade provisions. I believe it is likely that Smith opposed the Navigation Acts in their entirety.

The Purpose of the Seacap Provisions

The Navigation Act of 1651 was passed “for the increase of the Shipping and the Encouragement of the Navigation of [Britain]” and for the country’s “Welfare and Safety” (Navigation Act of 1651, reproduced in 2017). Although it is frequently viewed simply as a defensive policy today, at the time of its passing and of Smith’s writing the Wealth of Nations, it was also seen as a source of British opulence.

Smith rejected the claim that the Navigation Acts promoted the opulence of the nation, saying that the Navigation Acts are “not favourable to foreign commerce, or to the growth of the opulence which can arise from it” (WN 464.30). Although Smith did not support the idea that the Navigation Acts promoted opulence, he did apparently support them as a defense policy. But what kind of defense policy were the Navigation Acts supposed to be?

The Navigation Acts were meant to increase the number of English ships and sailors so that the Royal Navy could recruit (or impress) them into service during a time of war. The means for increasing English ships and sailors was by outlawing the Dutch carrying trade. “Carrying trade” refers to ships carrying goods from one country to another when neither the exporting nor the importing country was the country of origin for the ship carrying the goods.

The Navigation Acts required that ships had to be owned by the English and have the majority (later a ¾ supermajority) of English crewmen. However, these requirements were dropped if the goods originated from the ship’s country of origin. So, the English could ship Spanish wine to England, the Spanish could ship Spanish wine to England, but the Dutch could not ship Spanish wine to England. The Navigation Acts essentially outlawed the carrying trade, in which the Dutch were heavily invested: the overwhelming majority of traders involved in the carrying trade at the time were, in fact, Dutch. That means that the Navigation Acts were not a general defense policy. Rather, they were particularly aimed at undermining the Dutch carrying trade to cripple the Dutch and to increase English trade.

Military Threats to Britain

Most modern readers of Smith do not know that the seacap provisions were targeted against the Dutch, nor is there great awareness of England’s conflicts with the Dutch. Those details are not a trivial matter. They are significant for understanding how Smith saw the seacap provisions and for understanding the efficacy of those provisions.

The Navigation Acts were first passed in 1651, a time when tensions were high between the English and the Dutch. Smith acknowledged that the national animosity may have played a role in them getting passed, but then notes that “national animosity at that particular time aimed at the very same object which the most deliberate wisdom would have recommended, the diminution of the naval power of Holland, the only naval power which could endanger the security of England” (WN 464.29, italics added). By saying “at that particular time,” Smith points to the justification of the Navigation Acts being based on historically-​contingent circumstances. But the Dutch were by no means the “only naval power which could endanger the security of Britain” in 1776, the time of Smith’s writing.

The Dutch ceased being a naval threat to Britain almost one hundred years prior to when Smith published Wealth of Nations. The English and Dutch fought three naval wars from 1652 to 1688. When William, who was Dutch, and Mary assumed the English throne at the request of Parliament, Dutch and English interests coincided. The Dutch assisted the English in securing victory during what is now known as the “Glorious Revolution” by fighting with them against the French, who tried to put the Catholic James II back on the throne. From 1689 to 1776, the Dutch and the English were always either allies or neutral with each other in all conflicts that took place.

The Dutch Navy also severely declined from the late seventeenth century (Dull 2009, vii). The actual threats to English security were the French, and to a lesser degree the Spanish. The Navigation Acts did nothing to hamper the French or Spanish.

Although it is possible that Smith genuinely thought the Navigation Acts were wise policy at the time of their passing, it is clear that circumstances had changed by 1776 to make the seacap provisions irrelevant at best and counterproductive at worst.

The Carrying Trade

As mentioned above, the seacap provisions were aimed at undermining the Dutch carrying trade. The Dutch were the only ones who could rival the English Navy in the mid-​seventeenth century. Moreover, the English believed that there was something uniquely beneficial about the carrying trade.

Smith argues against the myth that the carrying trade was a uniquely beneficial form of trade, specifically in its ability to increase the ships or sailors of the nation (WN 371.31). The same capital could be used for the foreign trade or for the home coastal trade. Instead, he says that it is the bulk of goods in proportion to their value, as well as the distance of trade, that determines the number of sailors and ships employed in a particular branch of trade:

To force, therefore, by extraordinary encouragements, a larger share of the capital of any country into the carrying trade, than it would naturally go to it, will not always necessarily increase the shipping of that country. (WN 371.31)

By questioning the uniqueness of the carrying trade, Smith undermines a central component of the economic justifications used to support the seacap provisions since 1651.

The Effectiveness of the Seacap Provisions

Smith’s supposed support of the seacap provisions would make sense if he thought that they improved the defensive capabilities of Britain. However, Wealth of Nations is peppered with comments that indicate that Smith did not think the seacap provisions worked.

When he describes the principal dispositions of the seacap provisions, he notes that each one targeted the Dutch, but the Dutch were still dominant in the part of trade that the seacap provisions were meant to affect (WN 463-4.26-8). If the Navigation Acts had been effective, they would have severely hampered the extent of Dutch trade. However, Smith thought that the seacap provisions had not seriously impacted Dutch trading capabilities (WN 463-4.26-8).

If the seacap provisions had been effective, then they would have improved England’s fighting abilities against the Dutch. Smith claims that the seacap provisions became law too close to the outbreaks of the first two Anglo-​Dutch wars (1652–54, 1665–67) to have any effect during those conflicts (WN 597.23). He did not mention that the Dutch won the third Anglo-​Dutch war (1672–74), the war furthest removed from when the Navigation Acts were passed. If the seacap provisions had been effective, they should have made England more effective at fighting the Dutch.

Finally, and perhaps more importantly, Smith notes that during the Second Anglo-​Dutch War, England’s navy was equal or superior to the united navies of France and Holland. He adds that “in the present times,” Britain’s “superiority perhaps, would scarce appear greater… ; at least if the Dutch navy was to bear the same proportion to Dutch commerce now which it did then” (WN 597.23, italics added). If the seacap provisions had been effective, then they would have undermined the Dutch Navy by crippling her merchant fleet. However, Smith noted here that the only reason for Britain’s naval superiority to the Dutch at the time of his writing was because the Dutch had failed to invest in their navy in the same proportion to their merchant fleet as they had done earlier.

Smith did not think that the seacap provisions crippled the Dutch merchant fleet.

The Defense-​Opulence Tradeoff

As noted, Smith asserts that the Navigation Acts harm British opulence, but then adds that “defense, however, is of much more importance than opulence” (WN 464-5.30). Taken in isolation, this line suggests that Smith believed there was a simple tradeoff between defense and opulence.

In the chapter “Of the Expense of Defense,” however, Smith provides his reader with a much more nuanced relationship between defense and opulence. He presents history as developing in stages, with each stage making people less ready for war. When people were organized in small bands or nomadic tribes, the group traveled and acted together and was always ready for combat. In a later chapter, Smith writes: “In those barbarous societies, as they are called, every man, it has already been observed, is a warrior. Every man too is in some measure a statesman” (WN 783.51). With agriculture, people’s work still prepared their bodies for war, but military leaders had to get the army home for planting or harvest, so they had less seasonal flexibility for military campaigning. Commercial people were the least prepared for war. They lived in cities, did not cultivate martial virtues, and always had a high opportunity cost for going to war.

The dynamics changed with the development of firearms. Before firearms, it took a lifetime of training to be an effective warrior. But with firearms, a soldier could be proficient in a matter of weeks. Therefore, firearms favored the commercial nations. A commercial nation could quickly raise an army. The wealthiest nation, moreover, had the funds to raise the largest armies. After the development of firearms, it was not the strength or martial prowess of a people that won wars, but rather their fiscal capacity. Who spent the most could win the war. The invention of the firearm broke down the easy tradeoff between defense and wealth. In a world with guns, opulence is the key to victory. Indeed, Smith looked forward to a day when every nation caught up in technology and wealth such that it could sufficiently arm itself to fend off European governments (WN 626.–27.80).

The nuanced relationship between defense and opulence raises the bar that protectionists have to clear to make a sound argument for a policy. It is not enough to show that a particular industry is important for defense. If the economic impact of the policy reduces economic growth and taxable resources available to fund military expenditures, the policy could potentially reduce a nation’s defensive capabilities.

Is a Literal Reading Tenable?

Defenders of the idea that Smith supported the seacap provisions might object that while there may be some passages that seem to run against the idea of Smith supporting provisions, none of those passages are as clear or unambiguous as the endorsements that he makes. Some might believe that the most professional approach is to read Smith literally in his seacap endorsements.

But is a literal reading of his support tenable? Smith says in Quote 2 that the regulations of the act of navigation “are as wise, however, as if they hadall been dictated by the most deliberate wisdom” (WN 464.29, italics added). He says that they are all wise, which cannot possibly be his position, because he openly, clearly, and emphatically condemned the colonial-​trade provisions and called for their repeal. That makes it impossible to read the line “as if they had all been dictated by the most deliberate wisdom” literally.

We need to take a closer look at what Smith actually said about the Navigation Acts. He never said that they worked. In Quote 1, he writes that the Navigation Act “properly endeavours to give the sailors and shipping of Great Britain the monopoly of the trade” and in Quote 2 that “at that particular time aimed at the very same object which the most deliberate wisdom would have recommended” (italics added).

Smith does not say the pieces of legislation are good or that they achieved the desired outcome. He describes the “endeavors and aims” of the Navigation Acts, not any of the provisions themselves, as wise for the particular time.

Smith’s final note of support, in Quote 3, is when he calls the Navigation Acts the “wisest of all commercial regulations.” Some see this line as a ringing endorsement for the Navigation Acts, but Smith hated commercial regulations. The Navigation Acts were the heart of the British commercial system, and Smith described the Wealth of Nations as a “violent attack … upon the whole commercial system of Great Britain” (Corr. 251). Smith’s description of the Navigation Acts as the “wisest of all commercial regulations” is a sarcastic and ironic backhanded comment.

Conclusion

Smith’s discussion of the Navigation Acts has been a boon for protectionists and a thorn in the side of those who love Smith and support free trade and liberty. A deeper examination reveals that Smith was not the wholehearted supporter of the Navigation Acts that he is made out to be. He openly calls for the repeal of the colonial-​trade provisions, which was the most important part of the regulations at the time of his writing Wealth of Nations. As for the seacap provisions, the focus of this essay, Smith was consistently critical:

• He challenged the idea that the Navigation Acts promoted British wealth.
• He did not praise the Navigation Acts themselves, but rather their aims and endeavors.
• He did not think that they were effective at limiting Dutch trade or helping England in times of war.
• He highlighted the historically contingent circumstances that got the Navigation Acts passed.
• He argued against the idea that there was anything special about the carrying trade.
• He presented a nuanced relationship between defense and opulence too often overlooked.

Smith did not think that the seacap provisions worked to achieve their stated goal. The totality of his writing on the seacap provisions reveals his disfavor of them.