Free trade has become a highly politicized term, but its origins, historical context, and application to policy decisions have been largely overlooked. This book examines the relationship between liberal political economy and the changing conception of empire in the eighteenth century, investigating how the doctrine of laissez-faire economics influenced politicians charged with restructuring the transatlantic relationship between Britain and the newly independent America. As prime minister during the peace negotiations to end the American Revolution in 1782-3, Lord Shelburne understood that the British Empire had to be radically reconceived. Informed by the economic philosophies of Adam Smith, he envisioned a new commercial empire based upon trade instead of the archaic model of territorial conquests. Negotiations between Shelburne and the American statesmen Benjamin Franklin and John Adams demonstrate the application of Smith's commercial theories to the British-American peace settlement. By tracing the genealogy of laissez-faire, this book locates the historical background from which modern ideas of free trade, empire, and cosmopolitanism emerged. Benjamin Vaughan, confidential secretary to Shelburne during the peace talks, is established as an important historical figure, and his treatise, New and Old Principles of Trade Compared (1788), is identified as a significant contribution to the literature of political economy. An interdisciplinary study integrating history, economics, and philosophy, Trade and Empire offers a new perspective on the intellectual history of the eighteenth-century Atlantic world.