To Rufus King
Department of State Washington
Decemr. 22nd. 1801
In my last of the 10th. instant, I took occasion to remark to you the extensive injury threatened to our navigation by the countervailing act of Great Britain, the inconsistency of that act, in our judgment, with the true sense of the Treaty of 1794, and the several remedies for the case which occured for consideration; among which, that of a revision of the British act, and an adjustment of it to a more equitable rule was suggested, as an object proper to be sought by your immediate interposition with the British Government. The circumstances of haste and indisposition under which the letter was written rendered the developement of the subject so incomplete that it cannot be too soon resumed.
I must repeat that the treaty of 1794, in authorizing a countervailing duty on the part of Great Britain can be fairly understood to mean no more than that the navigation of the two Countries might be put on as equal a footing as it would have remained on, if the regulations of Congress to be countervailed, had never passed. This position does not appear to be susceptible of denial or of controversy. In order to re-establish such an equality, either of two courses would have been sufficient; first, that of repealing the regulations of Congress charged with introducing an inequality in our favour; or secondly that of enacting in Great Britain regulations countervailing or balancing the inequality, and consequently having the like effect of re-establishing an equality. As the first course, was not taken by the United States, and as that taken by Great Britain has produced a greater inequality in her favor than before existed against her, an important question now to be considered is, by what re-modification her countervailing act can be made to produce the just equality contemplated by the Treaty, in place of that transposed and augmented inequality resulting from the Act in its present form.
It seems clear, that the British Act in its present form has departed from the rule of justice and equality by making her own tariff instead of that of the United States, the basis of an act for countervailing and equalizing a discrimination founded on the latter tariff. The deviation, though leaving a sufficient advantage to the British navigation, would be more striking if the Act had adhered to the rigor of the British tariff, as the assumed construction of the Treaty would have authorized. The difference, for example of one shilling and six pence sterling per hundred pounds of Tobacco, might have been raised as high as five shillings Sterling, amounting to 12 or 15 dollars per Hogshead. Pig Iron is another example: The difference of six pence half penny per ton, might have been raised to more than 30 per cent of the value of the article. The British Tariff in general being much greater than that of the United States, one tenth of the former operating as a bounty in favor of British ships, must proportionally exceed the operation of one tenth of the latter in favor of American ships.
Another observation to be made is, that the British act, by imposing the countervailing burden on the productions of the United States has made it impossible to regulate it according to any principle of sufficient uniformity and equality in relation to the ships of the two countries. How compare together things so different as the merchandizes and manufactures of the one Country, with the heterogeneous productions of the other? In what mode is the value of the latter to be ascertained in British ports; as exactly as the value of the former is ascertained in the American ports? or if this difficulty should not be insurmountable, in the articles taxed according to their value; how, in what proportions, and by what classifications, are the American articles to be subjected to different rates in Great Britain corresponding with the different rates of 7½. 10. 12½ per cent &c assessed in the United States on the articles of Great Britain? or by what rule could an average of these rates, considering the inequality in value and bulk of the several classes of articles to which they are applied, be deduced, that would put the navigation of the two Countries on that bona fide equality which the Treaty requires? or again, laying aside all these perplexities, how is it possible, ever to find a practicable rule of comparison and equalization for articles taxed not according to value, but according to quantity; and where the quantity may be defined in articles on one side by weight, and in articles on the other side by measure, and in some instances without any precise reference to either.
In addition to these considerations, it is of decisive importance that the tendency of a countervailing regulation applied to the productions of the United States imported into Great Britain is to favor the carriage of them in British Bottoms; as the carriage of British manufactures in American Bottoms, is favored by the discriminating duty of the United States. Now as the productions of the United States from their bulky character, employ at least ten times the tonnage which is required for the exports of Great Britain and as it is always to be kept in view that the object of the Treaty was not to encourage or discourage the productions or manufactures, or even the commerce of either or both Countries, but merely to give a fair equality and competition to the vessels navigating between them, it follows both that an undue advantage accrues to the British navigation, and that the object of the Treaty is proportionally violated, by any discriminating burden on the productions of the United States which will give to British Bottoms a preference in the carriage of them. If a regulation of this sort could be just or within the meaning of the compact at all, it ought to be so contrived as to give a preference to the same number of British vessels in carrying the productions of the United States to Great Britain as there is of American vessels enjoying under our laws a preference in bringing British merchandize to the United States; that is to say, on the supposition that our exports to Great Britain employ ten times as many vessels as her exports to this country, that her countervailing regulation ought to secure to her vessels the carriage of one tenth only of our productions; or in any point of view, such a proportion only as would leave to the vessels of the United States as much of the carriage of our productions as with their carriage of the manufactures of Great Britain imported into this country, would divide equally between American and British vessels, the joint amount of the carriage between the two countries. It is manifest however, that no regulation could be so skilfully shaped as to produce such a result. And it is equally certain that the regulation actually adopted by Great Britain must have the effect of monopolizing the transportation of the whole mass of our bulky articles, whilst the most that can be hoped by the United States will be a monopoly for their vessels of British articles not amounting to one tenth of that bulk. Nay even this very unequal monopoly cannot be expected; because, of the many British vessels bound for our productions, it would often happen that some instead of coming in ballast, would take a cargo without freight or with little freight, and in that way increase the balance of their navigation against the American side of the account.
If these remarks be in any degree just, they must prove that with a view to a bona fide & practicable mode of imposing a countervailing duty, Great Britain must withdraw it from the American productions which are so various in themselves and so dissimilar to her articles of merchandize as to admit of no rational comparison between them for the purpose in question, as well as renounce the use of a tariff so much exceeding that which is the basis of our discriminating duty; and must seek for a countervailing rule, where alone it can be found viz: in the application of the same duty to the same objects which in the regulation of the United States produced the state of things which is to be countervailed. She must impose on her exports to this country in American bottoms, the same discrimination of 10 pr Cent as our law imposes on her exports to this country in British Bottoms. This will produce a real and precise countervailing effect, and this alone can produce one that will be real and precise.
To this expedient for redressing at once the existing inequality in favor of British bottoms, and the inequality in favor of American bottoms complained of at the date of the treaty, and provided against by that instrument, it may be objected that the American tariff applied to British articles in American ports, might not be applicable to the same articles on their leaving British ports. But it is probable that the adjustment of our tariff to the latter case, could be made with as little difficulty and in fewer words, than are now employed in the complicated regulations on this subject contained in the British Statute. It may also be objected that as American vessels bound with cargoes from Great Britain to the United States might clear out for other countries the additional duty of 10 per cent, might be eluded, and the British vessels thereby deprived of the benefits of the treaty. To this objection the answer is, that the abuse might be guarded against, by requiring in Great Britain security from American vessels that they shall produce a certificate of their having delivered their cargoes, elsewhere than in the ports of the United States; or by an engagement on the part of the United States to require from their vessels bringing cargoes from Great Britain a certificate of their having there paid the discriminating duty; or by both of these regulations. It may be further answered that however imperfect or inconvenient these precautions may be, they are less objectionable than the palpable violation of equality existing under the present countervailing act. Lastly it may be said by the British Administration that such a modification of the countervailing act, would be the same thing with a repeal of all discrimination, and that the latter as the more simple and convenient remedy, ought to be preferred. Should this be said, it will amount to an admission of the solidity of our objections to the present countervailing Act which works a very different effect, and will lead to the measure of repealing both that act and the act of Congress so far as they relate to the additional duty of 10 per cent. If this measure can be immediately accomplished, it claims a preference, on the whole, over any other expedient; and if the British Government is disposed to come into it, an act of Parliament can readily be passed with a clause suspending its operation, on a Proclamation to be issued by the Executive authority on due notice of a correspondent repeal by Congress. And Congress if so disposed, can also immediately pass an Act for the purpose with a like suspending clause. This may be the more expected, as it is probable the difficulty hinted in my last, as incident to a repeal of the discriminating duty here may be got over, and as such a proposition which you will find in the news-papers herewith sent, is now depending before the House of Representatives.1 In the mean time however until these concurrent repeals shall be put into force, our navigation will continue to suffer, unless some alleviating regulation can be obtained from the equity and liberal policy of the British government.
Were the Constitution not a barrier to duties on exports, it would not be very difficult for Congress to provide a remedy of themselves, by repealing the present discrimination on imports, and imposing on our exports in British Bottoms precisely the same duty, which her countervailing clause adds on the importation of them in American Bottoms into Great Britain. Such a measure could not be complained of by Great Britain, and the principle of it is exactly the same, with that of the measure above contended for as a necessary substitute for the present countervailing act of Great Britain, in case the better remedy of a repeal of the acts on both sides, cannot be put into immediate train.
From the view here taken of the subject it seems adviseable that you promote through the medium of proper representations and explanations to the British Government a repeal of the countervailing part of the British Statute, on the condition above stated, so far as respects the difference of 10 per Cent. With respect to the tonnage duty, which is made the same in its rate with that of ours and which in case the 10 per Cent duty be removed, is not likely to operate on more of our vessels than our tonnage duty will on British vessels, it may perhaps be well not to include that in the repeal, especially as it would have the effect of subtracting that much from our revenue. A better course will be if the British Parliament be pliant on the occasion for their repealing act to be so modified as to apply to one or both discriminations as may concur with the act of Congress, which also if Congress should view the subject in the same light can be modified in a similar manner.
The temptation of Great Britain to detain our Seamen in her service, having expired with the war, it is hoped there will be no difficulty in obtaining a general discharge of them, without the further trouble of proof or particular enquiry. And you will perceive the propriety of hastening the measure as much as possible for the sake of those who may be on board of Ships allotted for distant stations or services. Wherever these unfortunate people may be discharged, justice will require that their dues of every sort, be paid off, and their return to their own country be provided for.
The Convention with France has received the sanction requested from the Senate by the President, and his proclamation of it has issued accordingly. You will find it in one of the inclosed news-papers. With sentiments of the highest respect & consideration I remain Sir Your Most Ob. hble Servt