Adam Smith penned Wealth of Nations prior to the colonial uprising in British North America. When the book was going to print, the First Continental Congress had just signed the Declaration of Indepence. On the surface, then, Smith's literary and economic endeavor had nothing to do with the War for American Independence. While certainly the leaders of the uprising could not have been influenced by Smith, certain concepts that Smith describes are certainly a cause of colonial discontent. One could argue that from an economic standpoint alone, the colonies were right to rebel.
Perhaps the most pertinent idea Smith promotes comes from Book 1 Chapter VII concerning monopolies and price. "The price of monopoly is upon every occasion, the highest that can be got. The natural price, or the price of free competition, is the lowest which can be taken...for any considerable time together". Smith had just finished explaining that when left alone, the market price of any good or service gravitates toward the natural price (which is the natural price one would get should they combine the costs of labor, land (resources) and profit). According to Smith's observations (and this is key...these are predictions, but observations on what truly happens in a market), market price is impacted by effectual demand and effectual supply. When left alone, demand and supply will cause the market price to alter from its "natural" state. The market price, then, always reflects the reality of demand, supply, and cost. Smith ensures the reader that a monopoly is different. Rather than naturally react to the effectual demand of the consumer, the monopolist ensures that supply remains low, to drive up demand and therefore price.
When we reflect on such a situation, we should be drawn immediately back to the situation in colonial North America. Smith observations on free competition and market forces could not influence British Parliamentary debates on colonial policy because they came to late. As early as the 1650s, Parliament began the process of regulating trade in the colonies severely. The Navigation Acts of 1660 mandated that only trade with British vessels was legal in the colonies. Thus colonial merchants couldn't sell their wares to French, Dutch, Spanish, Italian, Portuguese, or any other foreign merchants. This greatly inhibited their ability to get a fair price for their wares. Likewise, colonists couldn't purchase foreign goods unless they were purchased from an English merchant (who came from England). This severely limited the ability of colonists to pay a decent price for almost anything. These acts are clearly monopolistic. A single entity (in this case, the government) is severely restricting supply and artificially regulating price well above its natural rate. Obviously, the colonists were bearing the brunt of such policies, while the lawmakers in Britain (most of whom had financial interests invested in these mercantile endeavors) benefited.
It is bad enough when one good or service is monopolized, but when every good or service is monopolized, conflict is bound to ensue. This atmosphere led to arguably the most well-known event in the pre-rebellion era: the Boston Tea Party. Parliament not only raised the price of tea, but forced all colonists to purchase their tea from one source: the East India Trading Co.. The Company had no significant holdings or presence in the North American colonies. Rather, to the East India Trading Co., the North American colonies were simply a market to manipulate. This incensed the colonial inhabitant of Boston, and thus, several men, dressed as American Indians, stormed the tea ship, and dumped the tea (still in its chests), overboard (there is some debate on whether the colonists were going to salvage the tea later, or if it was effectively ruined...that is of no concern here).
Consider the single phrase of Smith's: "The price of monopoly is upon every occasion, the highest that can be got." The colonists rightly recognized that their government was purposely limiting their ability to make a living, and purposefully limiting their ability to acquire necessities (and luxuries). It should have been obvious to the colonists that their government saw them not as individuals, but as mere means to an end. Parliament wasn't overly concerned with the lives of the people in their North American colonies; colonists were important only as long as they were consumers of British goods made available from British merchants. Could Parliament and the Crown really have expected anyless from the North American colonies?
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