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Sir James Steuart Denham, 4th Baronet was a Scottish economist who was the leading expositor of mercantilist views.
Denham was educated at the University of Edinburgh (1724â25). In the course of continental travels following his qualification as a lawyer (1735), he became embroiled in the Jacobite cause. His involvement in the 1745 rebellion of the Stuart pretender to the throne forced him to remain in exile until 1763, when he finally returned to Edinburgh. He then retired to Coltness. In 1773 his father obtained the estates of his uncle, Sir Archibald Denham, on the condition that he and his son adopt Denham as a surname (their given surname was Steuart). In 1780 James Denham succeeded his father in two baronetcies.
His chief work, Inquiry into the Principles of Political Economy (1767), is probably the first systematic treatise on economics written in English. As an exponent of mercantilist economics, Denham accorded government a key role in the economic development of society, particularly in the management of population and employment. Government intervention was also desirable, in his view, to bring about market equilibrium. Consistent with his mercantilist views, Denham assumed that an industrializing country would experience loss of demand from international markets because rising wages would make the countryâs products less competitive. He therefore stressed the importance of internal markets and urged the protection of domestic industries from foreign competition.
Denham also advocated the issuance of paper money by government banks and supported a wide range of government policies, including export subsidies, price supports for agriculture, and government job-creation programs. He understood that all such programs would require higher taxes but felt this to be a fair trade-off, given his assumption that tax revenues would come mainly from the wealthy. He believed that these programs would benefit politicians by keeping their âsubjects in awe.â
One of Adam Smithâs main goals in writing The Wealth of Nations was to refute Denham. As Smith wrote in a letter, âWithout once mentioning [Denhamâs book], I flatter myself that every false principle in it will meet with a clear and distinct confutation in mine.â Had Smith mentioned him, Denhamâs work might be better known today.
