This is a common trope in Portuguese-speaking “pop history” and to some extent I know this trade flow did indeed exist (Portugal using gold and it’s low-aggregate value products to buy British textiles, etc), as evidenced in David Ricardo’s examples (always involving Portuguese wine and British cloth), Adam Smith (who also liked to use Portugal in his examples, if memory serves me right), but also in events such as the Methuen Treaty. Being Portuguese and having studied in Portugal myself, this was also definitely something my high school history teacher used to say, and we spent quite some time reading up on Portugal‘s historical trade relationship with the UK. In addition, Brazil’s massive gold mines were also discovered precisely at this point in time. A key fact, however, that most people (choose to) ignore is that Portugal pursued this type of deals with Britain to safeguard its sovereignty against French-backed Spanish incursions, especially in Europe, so I already know things aren’t so straightforward to begin with.
But then I wonder - is this really the case? Or Portugal’s squandering of its resources, all flowing to Britain, is overstated? And if so was it that different from what was going on in Spain and the Netherlands, to use two other key colonial players that were also late to the industrialisation game?
I’m asking this because one of the go-to answers out in the street to both Portugal and Brazil’s current-day challenges often boils down to “18th century Portuguese were so dumb they exploited and stripped an entire country of its mineral resources and ended up with nothing to show - unlike the Dutch, for example!”.
Thanks
This is not my field of study, but I’ll try to answer to some extent in case no one more qualified shows up (and obligatory apologies for the poor grammar and any weird turn of phrases).
So, the main thing to understand is that Portugal was an absolute monarchy that strictly followed mercantilist principles and the main principle was to maintain a positive trade balance.
Portugal signed Methuen in 1703 with that in mind, gaining with it a market for their wine as well as miltary protection. Adam Smith, as OP pointed out, indeed commented on the Treaty and reckoned it better for Portugal than for England: their wine was not the best the English could get, but Portugal (and its colonies) would have bought English products either way. Why England signed the treaty, then? To avoid an alignment of the Portuguese with the French (so offering their market for the wine was a compensation for Portugal) and to openly have access to the Portuguese colonies (as well as some personal interest of the Methuen family). In the grand scheme of the Spanish Succession War (1702-1715), Portugal also gained protection against Spanish and French threat by siding with England and Holland. José Luis Cardoso traces the myth of Methuen as the original sin of Portugal’s industrialization to the 1820's liberals and states that it doesn’t hold up against evidence that Portugal still had wool mills after the Treaty (as well as through the rest of the century). Because the main goal was to have a positive trade balance, the gold from Brazil was an easier way of achieving it than the risky business of investing in an industry. In this regard, a lack of industry was a choice and a convenient one.
In the middle of the century, even if initially good for Portugal, the balance was way tipped in favor of England. Brazilian gold had helped, but it also began to decline. A change was needed and this where we find the Marquês de Pombal and his reforms. By 1760s, a crisis in Portugal’s import capacity led to a policy of import substitution, focusing on diversifying the products that were necessary to a bigger part of the population (not on luxury goods) and introducing new crafts. The limitation was that this reform was based on privileges and monopolies, so only a few benefited and the country remained mostly rural: no bourgeoise and no working class developed. These efforts, also didn’t manage to remediate the dependency from England, which only grew. Therefore, although based on Enlightenment principles, the reforms didn’t penetrate the fabric of the Portuguese society. Even with the expulsion of the Jesuits, Portugal remained extremely religious and structurally rural. On the other hand, Pombal’s reforms tried to rationalize the relationship between Portugal and its colonies: exploit their riches and develop a complementary commerce. The focus was the territory and it’s around this time that most of the Brazilian borders were consolidated, new villages and cities were created. Companhias de Comércio, monopolies as well, were created associating the Crown with a few individuals to explore raw materials, specially sugar and tobacco. All of this made with the collaboration of local elites in Brazil. Here you can see the role of mentality again, because while Portugal (and Spain, with some differences) were exploring and exploiting their territories to get more products and therefore more money, mainly through an enslaved workforce, England and French were getting more money though work, modifying nature through a free workforce and transforming it in capital and reinvesting it.
In Spain’s case, Pagden demonstrates that by mid-18th century, arguments against the mercantilist mentality were being raised by people like José del Campillo y Costo and Campomanes, reasoning for the mutual uplift of the metropolis and the colonies through open commerce. Pagden emphasizes that mercantilism thought about ways to get richer having colonies, while by laissez-faire one could prescind them. The argument didn’t take, in first place because the Spanish Empire was to be universal and a unity, and the belief was that a free market would bring external influences and threaten the integrity of the empire. In the second place, by mercantilist principles the only purpose of the colonies’ existence was to serve the metropolis so there was no need for mutual development. Their way of circumventing the crisis was not by stablishing a complementary commerce and integrating the criollos, like Portugal tried to do, but by doubling down on the exploiting aspect of the relationship while further alienating the local elites. This helps to explain the differences between the processes of independencies of Spanish and Portuguese America, way bloodier in the first case with a bigger emphasis on rupture with the metropolis.
A last point to make is that by this time Portugal was acting as an intermediary between Brazil, the new economic center of the Portuguese empire since mid-century, and England. Jobson Arruda (2001) estimates that by 1796-1800, around 85% of Portugal’s exports were cotton (England -> Brazil) and sugar (Brazil -> England). Portugal was becoming less and less relevant, not only in Europe but also to Brazil. Even after the gold rush passed, the Brazilian economy continued to grow and it's ports had an intense flux of commerce with Angola, for example, trading sugar (especially after the Haitian Revolution), cachaça, tobacco and, mostly, enslaved people and the local elite was building fortunes that were economically independent of the metropolis.
References
CARDOSO, José Luis. Leitura e interpretação do Tratado de Methuen: balanço histórico e historiográfico. In: CARDOSO et alii. O Tratado de Methuen (1703): diplomacia, guerra, política e economia. Lisboa. Livros Horizonte, 2003, pp 11-29
BARBOSA FILHO, Rubem. Tradição e artifício. Rupturas e independências. In: Iberismo e Barroco na Formação americana (2000)
FALCON, Francisco José. A prática mercantilista. In: A época pombalina (1982)
PAGDEN Anthony. Escuchar a Heraclides: el malestar en el império, 1619-1812. In: KAGAN, Richard L. y PARKER, Geoffrey (orgs). España, Europa y el mundo Atlantico. Madrid: Marcial Pons, 2002, pp. 420-438
FRAGOSO, J. Homens de grossa aventura: acumulação e hierarquia na praça mercantil do Rio de Janeiro1790-1830. Rio de Janeiro, Arquivo Nacional, 1992
ARRUDA, José Jobson de Andrade. O sentido da colonia. Revisitiando a crise do Antigo Sistema Colonial no Brasil (1780-1830). In TERRAGARRINHA, José (org). Historia de Portugal. (2001), pp 245-63
I don't necessarily think your teachers were crazy off base. I'm not an expert so will defer to those more informed but have a couple of sources to share if you want for further research (if that is alright by the mods).
In Eduardo Galeano's fiery criticism of colonialism in Latin America (The open veins of Latin America) he states that the English and Dutch received more than half of the precious metals that were coming out of Brazil at the time. This is both through illicit means of privateering and contraband trade as well as commercial agreements. He also asserts that the agreement of the deal of Meuthen was a big part in the degeneration of portuguese manufacturing. He also lumps in the Netherlands as a big beneficiary through similar means of selling goods but also privateering and smuggling gold illegally.
To highlight this point he cites Allan K. Manchester's British preeminence in Brazil: It's rise and fall to make reference how many gold mining slaves in Brasil were actually clothed by the British and there was a very direct relationship. Galeano explicitly calls the Portuguese metropole as a mere intermediary for the Gold.
As for the point on using the British as an alliance against the French backed Spanish I will say that the famous diplomat Alexandre de Gusmão wanted to annul treaties with the British but the Marquês de Pombal rejected it despite having criticisms over British influence in the Portuguese economy. So there was disagreement among Portuguese people on the balance of economics vs geopolitics. This last point was obtained from the following: Oliveira, Luiz Eduardo Meneses de. (2020). OS ESCRITOS POMBALINOS SOBRE A INGLATERRA E SUA RELAÇÃO COM O ENSINO DE INGLÊS EM PORTUGAL E NO BRASIL (1762-1809). História da Educação, 24, e96265. Epub December 04, 2020.https://doi.org/10.1590/2236-3459/96265
Additionally the scope of British military aid was not always that broad. Portugal feared British military aid in the Sacaramento dispute with Spain due to the possibility of having a dangerous neighbour on a new front. And, despite having a certain admiration for them, ultimately the Marquês de Pombal did personify them as the incarnation of an evil to Portuguese prosperity. From: A Inglaterra como vilã: Sebastião José de Carvalho e Melo e o discurso da anglofobia also by Luiz Eduardo de Oliveira.
Hopefully this can be an interesting point of further research that reflects not only the actions of Dutch and British at the time and the attitude of important political figures in the 18th century vis-à-vis British economic power over resources in Portuguese colonies.