The Tobaccomen of Glasgow and the Myth of Scottish Thrift

Arthur Herman | Posted on 09/01/04

Thrift is the bleakest of all the virtues, especially in an era of consumerism, credit cards, and shopaholics. It is the perpetual spoilsport, refusing to rise to the bait of advertising, or the need to party, or to relieve the tedium, or simply to keep up with the Joneses. It makes parental authority grate even more when, instead of being allowed to spend our allowance or a birthday check on candy or a new baseball glove, we are told to sequester it in that hated instrument of personal fiscal restraint, the savings account. Then when we grow up, governmental authority does the same thing, forcing us to invest whatever money we have left after the tax bill in a dismal array of IRA's, SEP's, and 401(k)s.

Thrift disdains our most basic human instincts, and so we return the disdain with interest. It's the only virtue we associate with cultural bigotry. It is a bigotry historically directed at two Western ethnic groups, the Scots and the Jews. I cannot say very much here about the Jews. Certainly no one enjoys being smeared as a race of cheapskates, especially when that cheapness has been presented over the centuries as a ruthless desire to take a profit at any cost. On the other hand, I have met Jews who do not mind a reputation for tight-fistedness in their business dealings, and I know Scots who are positively proud of it. Like the Jews, they often tell jokes on themselves about their tightfistedness: some are even the same jokes (Example: Do you know how the Scots invented copper wire? Two Scotsmen fighting over a penny). Economist John Kenneth Galbraith grew up in a farming community of Scottish immigrants in lower Ontario, and remembered that neighbors who were frugal to the point of making their families go around in shabby clothes and shoes, were known as being "very Scotch" even among their fellow Scotsmen.

Yet there is a difference, an important difference, between being thrifty and being cheap. A cultural stereotype can be an iron chain that binds, or an iron girder that bolsters and supports. The Scots have found that it pays to be thought of as people who know the value of a dollar or a pound (that is precisely what the miser does not know; he overrates its value, just as the spendthrift underrates it). The Scottish reputation for thrift became merely the reverse side of his reputation for hard work, good business sense and fiscal responsibility, and his penchant for success. "There are few more impressive sights in the world," says Sir James Barrie, "than a Scotsman on the make." And making it big time is ultimately what Scottish thrift has all been about.

Of course, others have seen it in a more negative light. In Punch cartoons, the thrifty Scot was always portrayed as a country bumpkin of the Harry Lauder type, with a tattered bonnet, a tartan cloak, and an almost impenetrable Scottish burr. "E-eh mac! Ye're hame again!" says one in a typical cartoon, to a friend who has cut short his visit to London. "E-eh, it's just a ruinous place, that," the other replies. "Mun, a had na' been the-erre abune twa hoours when - bang - went sixpence!" Yet at about the same time, Scotsmen were coming to dominate not only British industry, but the military and civil service, the universities and the hospitals, as well as British politics (three of the five English prime ministers who succeeded William Gladstone - whose father was a Glasgow businessman - were Scots, and a fourth was married to one), English critic T.W.H. Crosland could write of the typical Scot that, "Thrift and punctuality clothe him with virtues like a garment" - a remark not meant to flatter.


So where did the Scots get this penchant for frugality, as well as material success? That in itself is an interesting puzzle. Part of it no doubt reflects a long legacy of national poverty. Scotland was for centuries one of the poorest countries in Europe, and like the poor everywhere the Scots learned not to squander the few resources they did have. That included their own currency: right through the seventeenth century most specie ended up being used to balance payments for imports from the rest of Europe. A man with a coin in his pocket, especially a poor man, learned to hold onto it, and hold on tight.

Part of it, too, may reflect Scotland's Calvinist legacy, a lean Presbyterian version of the Protestant work ethic, which Max Weber famously identified as the engine of modern capitalism. Certainly, the Calvinist world-view did not frown on the accumulation of wealth; it made hard work and its rewards as much a matter of godliness as cleanliness, or any of the other virtues. "You can praise God by peeling a spud," as the Scottish saying goes, "if you peel it to perfection." And if you are well paid for it, all the better.

Calvinism also encouraged a rigorous self-examination of conscience, by keeping written track of one's daily thoughts as well as one's transactions, in order to measure them against an ideal of saintly perfection. Just as one's thoughts about the other sex were supposed to reflect the ideal of chastity, so one's use of money was supposed to reflect an ideal of frugality and high moral purpose. This, of course, puts us squarely in the world of Weber's favorite exemplar of the Protestant work ethic, Benjamin Franklin, for whom a penny saved was always a penny earned, and John Wesley, who kept a record of every single cash outlay he made until his eighty-seventh year.

But Wesley was not a Scot, and neither was Franklin. Indeed, Franklin himself hardly fits the mold of the austere puritanical Calvinist Max Weber was looking for (was Weber aware that Franklin had once written a history of farting?). There are problems with the Weber thesis, especially when it comes to the Scots. The Reformation came to Scotland in the sixteenth century; but Wallace Notestein, a historian who has studied these things, could find only one reference to Scottish stinginess before the late eighteenth century.

That date is significant. By the middle of the eighteenth century the impressive sight of Scotsmen on the make was glaringly apparent to all. What had started as a trickle of talented and ambitious immigrants from the north into Georgian London, among them James Thomson, Britain's first great nature poet and the author of "Rule Britannia," had become a flood. They included the king's tutor, the Earl of Bute, who would rise to become prime minister; the lawyer, diarist, and biographer James Boswell; the architect brothers Robert and James Adam; and the physician and anatomist Dr. William Hunter.

Hating people who succeed is a time-honored human institution. Englishmen struck back at this Scottish invasion with a massive popular backlash. Political radical John Wilkes published a regular scandal sheet accusing Scots of greed, corruption, and taking jobs away from deserving Englishmen - not the first or the last time an immigrant group would face that charge. For a time it was unsafe for a Scot to appear unescorted in the streets. James Boswell would slip out in the evenings to the theater where before the performance the audience would chant as one, "No Scots! No Scots!"

None of this deterred Boswell or anyone else. The Adam brothers insisted on playing golf in St. James Park with their Scottish friends, and enjoyed a backlog of orders from both English and Scottish patrons for building and remodeling people's country estates. In 1764 when the Adams arrived in London their account at Drummonds Bank totaled £6,620; in 1771 it had grown to over £40,000. Artist Allan Ramsay made a fortune painting the portraits of London's most elite families, much as John Singer Sargent would do a century later. Ramsay and the Adam brothers helped to form the Caledonian Club, where London's Scottish expatriates could meet and enjoy each other's company. By the end of the nineteenth century, it came to include Scottish writers, artists, physicians, lawyers, civil servants, and bankers - so many bankers, in fact, that rumor began to spread that the Caledonian Club was the secret heart of London's financial world.

Explaining away someone else's success is almost as gratifying, and reassuring, as despising them for it. The popular image of the greedy, grasping Scot emerged from the shadow of this English-inspired opprobrium. What is surprising is that the Scots themselves should take to it, since the Scots who did make it big in those years hardly fit the stereotype.


The most spectacularly successful businessmen in eighteenth-century Britain were the tobacco merchants of Glasgow, men who were known even in their own day as the Tobacco Lords for their immense fortunes and aristocratic lifestyle. The great Glasgow trading houses of Cunninghame and Company, of Spiers Bowman, and of Glassford and Company dominated the lucrative trade in the addictive leaf until the American Revolution, carrying away the tobacco from the plantations in Virginia and Maryland and re-exporting it to England and across Europe. The fortunes of Alexander Spiers, James Buchanan, William Cunninghame, and John Glassford made them among the richest commoners in Britain.

What part did frugality play in their success? Certainly they were ruthless cost cutters, as another Scot, Andrew Carnegie, would be when he made his fortune in the steel industry a hundred years later. But the real key was their ability to raise capital like no one else. They found family members a useful way to do that (much as Korean-American businessmen do today), but they did not raise money exclusively from them. Virtually anyone, including nonmerchants, could become a partner in a firm like Glassford and Company if they could raise the thousand pounds needed to buy a share. Of the twenty-four firms dominating the Glasgow trade with America in those years, fifteen had more than four partners; four had more than seven. Partnership brought profits, of course, as well as risk - although the more partners there were, the more it spread the risk. However, partnership in a Glasgow tobacco firm also carried an important proviso. No one could draw more than 5 percent interest on the capital he held in the firm. All the rest, year by year, had to be ploughed back into the business - an enormous sum of money in boom years.

This not only made Calvinist hearts happy, it was good business sense. This enforced frugality meant that the Glasgow tobacco trade was one of the most heavily capitalized industries in Britain. Spiers Bowman started in 1744 with a total capital of just over £16,000; in 1773 that had swelled to more than £150,000. Even 5 percent interest on sums of that size was enough to support a very lavish life-style by any standard - and the Scottish tobacco lords were in no way cheap. Arrayed in silk suits and carrying gold-handled canes, they swaggered around town with a distinctly proprietary air. They built beautiful houses, filled them with paintings and statues, and maintained magnificent estates outside Glasgow. The townhouse William Cunninghame built for himself in Glasgow cost him more than £10,000; Alexander Spiers built one rivaling it for more than £5,300. Another tobacco merchant, James Buchanan erected his gleaming Virginia Mansion, at the end of a magnificent drive that would later become Glasgow's Virginia Street. It was one of the great houses of Scotland until it was demolished in the nineteenth century; an earlier house by another Glasgow merchant, Shawfield Mansion, could lay claim to being the first Palladian house in Britain.

The tobacco lords were not just interested in making and spending money. They spent time and energy organizing the Glasgow Literary Society, the Sacred Music Institution, and the Hodge Podge Club, which invited philosophers Adam Smith and Thomas Reid to speak. They supported charitable foundations, gave money to local hospitals and churches, subsidized chairs for university professors. They were true prototypes for the role of philanthropic civic-minded entrepreneur at which Scottish businesspeople would excel for the next two centuries - and like Andrew Carnegie's philanthropy, all of it done in an era before tax deductions.

And through the entire process they could sit back and relax, knowing that their personal fortunes were secure behind a vast wall of capital built up by the 5 percent rule. Savings gave them the flexibility either to expand the business when things went well, or sit out the storm when they did not. Whatever one may say now about the product they sold, the Glasgow tobacco lords proved that deferred gratification was the cornerstone of successful capitalism.


Among those watching the profits roll in was their sometime speaker at the Hodge Podge, Glasgow University's Professor of Moral Philosophy, Adam Smith. The tobacco lords would become his model of the entrepreneurial businessman; and although he never specifically mentions the 5 percent rule in his Inquiry into the Wealth of Nations, without a doubt it helped to inspire his thoughts about the centrality of capital to modern economics, and of thrift as a social as well as moral virtue.

"Wherever capital predominates, industry prevails," he wrote, "wherever revenue [meaning unearned income], idleness." Capital enables human society to grow and expand; it enables dreams to be pursued as well as profits to be made. Smith concluded that it was thrift that lay at the root of capital accumulation.

"Whatever a person saves from his revenue he adds to his capital," he wrote, and "the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains."

The tobacco lords had taught Smith that thrift was not just a good idea; it was an essential business tool. In fact, individual frugality is for Smith the essential fuel of economic growth, without which the division of labor would sputter out and die. "Parsimony, and not industry, is the immediate cause of the increase of capital" - and without capital, there is no capitalism.

Yet Smith also saw that the roots of "this frugality" ran much deeper than Calvinist cant or even moral rectitude. "This capital has been silently and gradually accumulated," Smith explained, because of human beings' "universal, continual, and uninterrupted effort to better their own condition" - with the thrifty saver intending to better it sometime in the future.

"The uniform, constant, and uninterrupted effort of every man to better his condition" is of course one of the basic principles of Smith's understanding of human nature. It "comes with us from the womb, and never leaves us till we go into the grave." As a student of social psychology, Smith had no illusions about how it usually worked. He recognized that most people look for some immediate gain and take it when it comes - a bigger car, a bigger salary, a bigger plate at the buffet. But some, a special minority, are willing to pass up immediate payoffs in order to set his or her sights on a much bigger gain down the road.

Adam Smith described this condition in his earlier work, The Theory of Moral Sentiments. There he described how "the pleasures of wealth and greatness...strike the imagination as something grand and beautiful and noble, of which the attainment is well worth the toil and anxiety which we are so apt to bestow upon it." This, then, is what sets the capitalist in action. He is the man or woman propelled by the vision of "the pleasures of wealth and greatness" to make the boring and wearisome sacrifices, including saving money, that will ultimately fulfill their most expansive dreams.

Without capital, there can be no industry or commerce. Without thrift, there can be no capital. And without imagination, "which rouses and keeps in continual motion the industry of mankind," and its power to inspire and motivate human beings to plan for a future advantage or gain, there is no thrift. The tight-fisted paragon of frugality and the modern consumer turn out to have more in common than one might have thought.

Indeed, Adam Smith was convinced they had far more in common with each other than they did with the two institutions whose habits with money tended to decrease, rather than increase, a nation's wealth. The first was the landed aristocracy, which dominated the social landscape of Georgian Britain. They lived primarily on the rents paid by their tenants and spent their funds to enhance their political and social status. In Smith's mind, they were the true exploitative class. Their extravagant lifestyle with endless parties and banquets, fleets of carriages and armies of servants, soon turned the stream of income they squeezed from their tenants into rivers of debt, ruining everyone who had any dealings with them.

By contrast, the rising middle-class consumer, "contenting himself with a frugal table and few attendants," spends his money on more durable goods: house, furniture, clothing, books, paintings, cars and home entertainment centers, all of which employ the productive capacity of others and push economic growth. Thinking no doubt of his friends John Glassford and William Cunninghame, Smith could write that it is "the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own conditions...which has maintained the progress of England towards opulence and improvement" both in the past and in the future.

The other big spendthrift was government. Here again, Smith had no illusions. Kings, ministers, and politicians are "always, and without any exception, the greatest spendthrifts in society." The entire tendency of government is to spend everything it collects, and then some. Left to their own devices, they would soon ruin the general economy, just as the aristocrat crashes his private fortune. But the "frugality and good conduct" of private citizens, Smith believed, could "be sufficient to compensate, not only the private prodigality and misconduct of individuals, but the public extravagance of government" and "the greatest errors of administration." From that point of view, "every frugal man [becomes] a public benefactor," as well as the creator of "private opulence" and prosperity.


This is the other surprise Smith springs on us: his insistence that thrift is a natural impulse rather than a moral constraint. Just as there is hardly any individual "who is perfectly and completely satisfied with his situation, as to be without any wish of alteration or improvement of any kind," so even the giddiest consumer would prefer to buy the Mercedes convertible or the Earl Jeans or the Viking grill for less, if he or she can. Although the desire to spend "prevails in almost all men upon some occasions, and in some men upon almost all occasions, yet in the greater part of men, taking the whole course of their life at an average, the principle of frugality seems not only to predominate, but to predominate very greatly."

So, following the lead of one of the two greatest minds of the Scottish Enlightenment, we realize we are asking the wrong question. We should ask, not what makes the thrifty Scot so different from other people, but why aren't there more people like them?

It is the other original mind, Smith's friend and mentor David Hume, who supplies the answer.

The fact is, Hume implied, in modern society people do act more like Scots, whether they want to or not. If it is thrift that generates capital and lets the wheels of commerce and affluence turn, then it is commerce that generates thrift simply by keeping people busy earning money. "By giving occupation to men, and employing them in the arts of gain," Hume asserted, making money eventually consumes all their attention and strips away "all relish for pleasure and expense."

Affluent people, in short, become too occupied to spend their own income, forcing others to step into the breach. This has played out very clearly in our own day. The workaholic becomes the complementary type to the shopaholic, so that the savings of the one make possible the mall trips of the other - as the lives of the families of top business executives, investment bankers, trial lawyers, and Hollywood producers amply attest.

No wonder, then, that in the succeeding generation the Scottish doctor and Victorian self-help guru Samuel Smiles could write an entire book on Thrift and equate the virtue with civilization itself. Drawing heavily from the chapters in Wealth of Nations, Smiles made it clear that it is private savings on which the health of the larger economy must depend - by then an axiom of classical economics. Smiles was only paraphrasing Smith when he proclaimed that "every thrifty person may be regarded as a public benefactor, and every thriftless person as a public enemy."

However, Smiles was keenest on the personal aspect of thrift. Hume and Smith were interested in how thrift transformed society from stagnant poverty to productive affluence. Smiles focused on how it transformed the individual. Its effects were in his view as much psychological as financial, and even more startling. "Possessed of a little store of capital, a man walks with a lighter step, his heart beats more cheerily." He realizes that the misfortunes of life, like losing a job or a home, or disastrous illness, may bow him down but can never break him. "By prudential economy, we can realize the dignity of man; life will be a blessing, and old age an honor." The man who saves even a few pennies from his wages is a man on the path of self-realization and self-improvement. And: "The man who improves himself improves the world."

It is easy to dismiss Samuel Smiles's breezy optimism, which also radiates out of his most famous pick-yourself-up-by-your-own-bootstraps book, Self Help; we can scoff at his notion that saving a little money would transform the life of Britain's working poor. But Smiles had a point.

There is no reason why thrift has to be a bleak exercise in puritan self-denial. It could be a rich source of pleasure to know that one has money set aside to provide for one's family when times are hard, or to afford nice things when times are good; to know that as the savings accumulate, one's opportunities grew, along with one's freedom, independence, and that most elusive of all human qualities, one's self-respect.

And what about today? Today, we have the Oprahs and Dr. Phils to replace the John Calvins and Samuel Smiles. The idea of self-respect has been replaced by its scrawny, narcissistic offshoot, self-esteem. Consumer debt has reached Himalayan heights, and keeps climbing. As for the Scots, the tobacco lords are long gone, their mansions and warehouses torn down. The shipyards of Glasgow and factories of Paisley and Dundee, once symbols of Scottish enterprise, are nearly all closed. Only in politics do the Scots continue their miraculous progress: something like half of Tony Blair's cabinet are Scots or of Scottish descent, including Blair himself.

More ominously, the stock jokes today about Scots are not about how much money they save, but about how much alcohol they consume (How do you get a Scotsman onto your roof? Tell him the drinks are on the house). The general national mood can only be described as one of prolonged depression. Yet at the same time, one Scottish industry has managed to make a remarkable comeback in the last decade, that of banking. When asked, clients say that they prefer Scottish banks to London-based ones because Scots are supposed to be so hardworking, so conscientiously honest - and so careful about the value of money. Such is the restorative power of a reputation for thrift, even a century later - a thought that must comfort Scottish bank managers when they open their credit-card bills.