400 International Organization ized.The new American states were granted free trade with Britain and much of its empire.In 1785,London offered essentially free trade to Ireland in exchange for moderate taxation.The change in Britain's approach to its adversaries was equally dramatic.Between 1785 and 1793,Britain pursued more than ten recipro- cal trade agreements.25 While most of these negotiations became stymied,its 1786 agreement with France-Britain's chief rival-proved nothing short of revolution- ary.Previously,Britain had embargoed most French goods.The remaining imports faced an average tariff rate of more than 75 percent ad valorem.The Anglo- French Commercial Treaty of 1786 eliminated tariffs on many goods and reduced the rates on most of the rest to just 10 to 15 percent.26 While the ensuing military conflicts reignited commercial warfare,Britain returned to its strategy of commer- cial liberalization after victory had been assured.27 Thus,the 1780s brought Britain's first decisive shift from mercantilism to laissez- faire liberalism.Under the old system,policymakers pursued "power and plenty" by redirecting foreign trade into intra-imperial commerce.Under the new system, policymakers pursued these same goals with different means.They dismantled the system of mercantile restrictions,allowing trade to flow "naturally"among friends and foes alike. The Independent Variable:Ideational Versus Material Explanations It may be that Britain's hegemonic ascent was necessary to transform the structure of the international trading system in the nineteenth century.But the "distribution of potential economic power"clearly cannot explain Britain's shift toward laissez- faire in the 1780s.At that point,Britain was only slightly more competitive than its European rivals.28 To all but a few leading policymakers,Smith's calls for trade liberalization seemed not merely utopian but downright dangerous.After all,mer- cantilism was widely celebrated as the cause of Britannia's development from a collection of middling,factious kingdoms into an"opulent"world power.29 Those familiar with the history of Britain's shift toward openness have offered no shortage of explanations for the dramatic policy shift.Recognizing that states the extent to which government intervention was required to secure these goals.Beneath his rhetoric Smith understood this disagreement in the same terms.Wyatt-Walter 1996,14. 25.Ehrman1962,1. 26.Heckscher1922,13-20. 27.Harlow overstated the case when he suggested that"Shelburne's slogan...'We prefer trade to dominion'was...the general principle on which the Second Empire was...established."The bitter- ness left by the American Revolution did not diminish Britain's appetite for territorial acquisition.In its "second"empire,however,Britain granted its colonies more autonomy and pursued trade liberal- ization with allies and adversaries alike.See Harlow 1952,1-11;and Hyam 2010,76-77. 28.See Pares 1953;Henderson 1957,111-12;and Ehrman 1962,203-9. 29.See Parliamentary History,vol.26,346-47;and Crowley 1993,13.ized+ The new American states were granted free trade with Britain and much of its empire+ In 1785, London offered essentially free trade to Ireland in exchange for moderate taxation+ The change in Britain’s approach to its adversaries was equally dramatic+ Between 1785 and 1793, Britain pursued more than ten recipro￾cal trade agreements+ 25 While most of these negotiations became stymied, its 1786 agreement with France—Britain’s chief rival—proved nothing short of revolution￾ary+ Previously, Britain had embargoed most French goods+ The remaining imports faced an average tariff rate of more than 75 percent ad valorem+ The Anglo￾French Commercial Treaty of 1786 eliminated tariffs on many goods and reduced the rates on most of the rest to just 10 to 15 percent+ 26 While the ensuing military conflicts reignited commercial warfare, Britain returned to its strategy of commer￾cial liberalization after victory had been assured+ 27 Thus, the 1780s brought Britain’s first decisive shift from mercantilism to laissez￾faire liberalism+ Under the old system, policymakers pursued “power and plenty” by redirecting foreign trade into intra-imperial commerce+ Under the new system, policymakers pursued these same goals with different means+ They dismantled the system of mercantile restrictions, allowing trade to flow “naturally” among friends and foes alike+ The Independent Variable: Ideational Versus Material Explanations It may be that Britain’s hegemonic ascent was necessary to transform the structure of the international trading system in the nineteenth century+ But the “distribution of potential economic power” clearly cannot explain Britain’s shift toward laissez￾faire in the 1780s+ At that point, Britain was only slightly more competitive than its European rivals+ 28 To all but a few leading policymakers, Smith’s calls for trade liberalization seemed not merely utopian but downright dangerous+ After all, mer￾cantilism was widely celebrated as the cause of Britannia’s development from a collection of middling, factious kingdoms into an “opulent” world power+ 29 Those familiar with the history of Britain’s shift toward openness have offered no shortage of explanations for the dramatic policy shift+ Recognizing that states the extent to which government intervention was required to secure these goals+ Beneath his rhetoric Smith understood this disagreement in the same terms+ Wyatt-Walter 1996, 14+ 25+ Ehrman 1962, 1+ 26+ Heckscher 1922, 13–20+ 27+ Harlow overstated the case when he suggested that “Shelburne’s slogan +++ ‘We prefer trade to dominion’ was +++ the general principle on which the Second Empire was +++ established+” The bitter￾ness left by the American Revolution did not diminish Britain’s appetite for territorial acquisition+ In its “second” empire, however, Britain granted its colonies more autonomy and pursued trade liberal￾ization with allies and adversaries alike+ See Harlow 1952, 1–11; and Hyam 2010, 76–77+ 28+ See Pares 1953; Henderson 1957, 111–12; and Ehrman 1962, 203–9+ 29+ See Parliamentary History, vol+ 26, 346–47; and Crowley 1993, 13+ 400 International Organization