This term stems from the colonial era
. Even though England believed in a system of Mercantilism
where the colonies existed for the benefit of the Mother Country, Sir Robert Walpole decided to try something different to stimulate commerce. Walpole, the first Prime Minister of Great Britain, espoused a view of salutary necglect whereby the actual enforcement of external trade relations was lax. In other words, the British did not strictly enforce commerce laws with the colonies. As Walpole said, "If no restrictions were placed on the colonies, they would flourish." This unofficial British policy was in effect from 1607-1763.
Once the British government became stricter in their enforcement of commerce laws after 1763, protests and eventually calls for independence became more pronounced amongst the colonists. This would, of course, lead to the American Revolution.
See also the Secondary Education site's American Revolution Background Lecture.