ABSTRACT
BernstorŠ administration was enlightened, favouring liberal policies in the spirit of Adam Smith and the physiocrats. In 1785 a second Royal Commission was appointed to examine the commercial state of Iceland. It concluded that the trade monopoly was damaging to the Icelanders and successfully proposed the trade be thrown open to most Danish subjects. The subsequent ‘free trade’ (f ríverslun) took eŠect from the beginning of 1788, the major change being that individual independent Danish merchants throughout the kingdom, with the exception of the inhabitants of the Faroes and Greenland, but including those of Iceland, could participate in the Iceland trade. All nonnative merchants had to become ‘burghers’ (borgarar) of their trading districts and were obliged to own property there worth at least 3,000 rixdollars. There was, however, a strict ban in force against commercial dealings with ‘foreigners’ (i.e. those not subjects of the King of Denmark). After its introduction the Free Trade Charter was in full force throughout the rest of the period in question. The level of education, as Banks was to note, was higher in Iceland than in most other
European countries at the time,3 literacy being widespread (conrmation in the Lutheran church insisted on this), and the sons of the elite were educated at the University of Copenhagen.4
