Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, concludes its extensive treatment of colonies with a penetrating reflection on the relationship between Great Britain and its North American possessions. Smith observed, in the final paragraph of the book, that the political connection binding the colonies to the mother country was in many respects abstract and tenuous. The physical distance, the rapid growth of colonial wealth and population, the distinct economic interests of the settlers, and the practical impossibility of effective metropolitan control all pointed toward an eventual rupture.
He noted that no nation willingly relinquishes dominion over a province, however burdensome or unprofitable, because such a sacrifice wounds national pride and deprives the governing class of patronage and prestige. Yet he also recognised that the colonies’ prosperity rested on land and liberty rather than on the mercantilist restrictions imposed from London. The bond, in short, was sustained more by historical habit and imperial imagination than by mutual advantage or genuine consent.
The Abstract Nature of the United Kingdom
This analysis of an abstract imperial connection finds a striking parallel in the contemporary debate over Scottish independence. The United Kingdom itself is a political construct of relatively recent origin. The 1707 Acts of Union joined two previously distinct kingdoms under a single parliament, creating a unitary state that has evolved, through successive accommodations, into the present multinational polity.
Like the eighteenth-century British Empire, the UK rests on legal and constitutional arrangements that can appear distant from the daily experience and historical self-understanding of one of its constituent nations. Scotland entered the Union as a recognised kingdom with its own institutions, legal system, and international personality.
Its status as a sovereign realm long predated the consolidation of the English kingdom; the kingdom of the Scots can be traced to the ninth century under Kenneth MacAlpin, while England’s political unity emerged more gradually from the Anglo-Saxon and Norman periods.
The persistence of distinct Scottish institutions – law, education, church, and, more recently, a devolved parliament – underscores that the Union is not an organic inevitability but a negotiated framework whose durability depends on continued consent.
Monetary Sovereignty: A Crucial Parallel
One of the most concrete illustrations of the abstract nature of imperial control in Smith’s time concerned monetary sovereignty. The British Parliament’s Currency Acts of 1751 and 1764 restricted the colonies’ ability to issue paper money as legal tender. Colonial economies, chronically short of specie, had relied on locally issued bills of credit to facilitate trade and public finance. Restrictions on this practice created friction, contributed to economic grievance, and formed part of the broader pattern of metropolitan interference that fuelled revolutionary sentiment.
Although Thomas Jefferson’s Declaration of Independence does not single out currency as the sole or primary cause, the monetary restrictions belonged to the catalogue of economic controls – alongside trade monopolies and taxation without representation – that demonstrated the colonies’ subordinate status. Jefferson and his contemporaries understood that the power to create and regulate currency is fundamental to political autonomy. Without it, a community remains dependent on the monetary policy and fiscal priorities of a distant authority.
Scottish independence supporters have not always accorded this issue the import it deserves. Debates frequently focus on fiscal transfers, oil revenues, European Union membership, or cultural identity, while the question of an independent currency receives less sustained attention. Yet control over money remains as decisive today as it was in the eighteenth century.
An independent Scotland that retained British pound, or that adopted the euro, under the current fiscal constraints regulated by either union, would cede critical levers of economic policy – interest rates, exchange-rate flexibility, and the capacity to act as lender of last resort – to institutions outside its democratic control. Smith’s insight that prosperity flourishes under conditions of liberty applies directly here: monetary sovereignty is not a technical detail but a prerequisite for genuine self-government.
Lessons from the 2014 Referendum
In an interview with William Thomson in the year before his death, Alex Salmond stated that he had been interested only in political sovereignty, not monetary sovereignty. This approach is widely regarded as the hill on which the 2014 independence referendum was lost: Salmond’s insistence that an independent Scotland would continue to use the pound was met by Alistair Darling’s blunt assertion that the rest of the UK would not permit such an arrangement, exposing a fundamental vulnerability in the Yes campaign’s economic case.
The American experience demonstrated that political independence without the capacity to manage one’s own medium of exchange leaves a polity vulnerable to external constraint. Scottish advocates of independence would do well to treat currency as a foundational rather than secondary concern.
True Self-Determination: Declaration versus Permission
The manner in which American independence was achieved further illuminates the principle of self-determination. The Continental Congress did not petition London for permission to separate; it declared the colonies free and independent states. The act was unilateral, grounded in the assertion that governments derive their just powers from the consent of the governed and that a people may alter or abolish a form of government that has become destructive of their ends.
This was true self-determination: the exercise of constituent power rather than the request for a grant of autonomy. The subsequent war confirmed that independence, once asserted, had to be defended, but the moral and political claim rested on the declaration itself.
Applied to Scotland, the same logic suggests that genuine self-determination cannot consist solely in seeking permission through a referendum framed by the UK Parliament or in negotiating the terms of departure under the shadow of residual sovereignty. The Union of 1707 was a treaty between two kingdoms; its dissolution, if desired by the Scottish people, would restore a prior status rather than invent a new one.
Scotland’s historical existence as a recognised kingdom supplies a stronger claim to continuous peoplehood than the colonial status of the American provinces. The SNP Scottish Government have previously shown firm belief in the historic sovereignty of the Scottish people, but this has never been transferred into action. The most obvious route being to assert the legislative competence of the Scottish people through the Holyrood parliament.
The United Kingdom, for all its longevity and institutional sophistication, is no less an abstract construct than the United States that emerged from the Revolution. Both are political forms created by human agreement; neither is ordained by nature. The difference lies in the willingness of a people to reassert the right of self-definition when the existing arrangement no longer commands their allegiance.
Conclusion
Smith’s closing reflections on the American colonies thus offer more than historical curiosity. They reveal the fragility of political connections that rest primarily on hierarchy, distance, and the interests of a governing class. The American colonies severed that connection by declaring independence and by securing the practical means – including eventual control of their own currency – to sustain it.
Scotland’s situation is not identical: the relationship, although colonial in some aspects, defies the definition in others. It participates in a modern democracy, and the constitutional pathways available to it differ from those of 1776. Yet the underlying questions remain analogous.
How tenuous is the abstract bond of Union when weighed against distinct historical identity and divergent economic interests? How essential is monetary sovereignty to authentic self-government? And does true self-determination require the assertive declaration of independence rather than the perpetual request for permission?
Answering these questions honestly requires recognising that political forms are contingent. The United Kingdom is a construct whose legitimacy depends on the ongoing consent of its peoples. Scotland’s prior existence as a kingdom supplies historical depth to any claim of distinct peoplehood.
The American precedent, anticipated with remarkable clarity by Adam Smith, demonstrates that the power to print and manage one’s own currency is not a peripheral technicality but a central attribute of independence. Until Scottish independence supporters fully internalise this last point, their vision of self-determination will remain incomplete. The lesson of 1776 is that liberty, once claimed, must be equipped with the practical instruments—monetary as well as political—necessary to preserve it.
