Commercial Discrimination, [31 January] 1794
Commercial Discrimination
[31 January 1794]
In Committee of the Whole, JM continued his speech from the previous day.
Resuming the train of his observations, he proceeded to explain the remedial operation of his propositions.
First. They will make the British nation sensible that we can, by just and pacific means, inflict consequences which will make it her interest, to pay a just regard to our rights and interests.
To enforce this tendency, he enlarged on the ideas he had formerly expressed in relation to the dependence of Great-Britain on the commerce of the United States, and the obvious and essential dependence of the British West-Indies, on the supplies of the United States.
On the latter subject, he entered into a particular reply to the member from Massachusetts (Mr. Ames,) who had argued that the British regulation of the trade between the United States and the West-Indies, was conformable to the principles of the Colony system as established by the commercial nations of Europe, and could not therefore be reasonably complained of. 2. That the West-Indies could obtain supplies from other quarters, and did not therefore depend on the United States; nay, that there was danger, by forcing these supplies into other channels, of our losing that branch of trade altogether. 3. That the trade would hardly employ more than a dozen brigs, and was therefore not worth contending for.
In answer to the first argument of Mr. Ames, Mr. M. undertook to shew, that Great-Britain had not pursued, but violated the principle of the colony system. The true spirit of this system, he said, was to confine the trade between the parent country and the colony, to their own vessels, and to allow as little trade as possible, between the colony and foreign countries; but when a trade with a foreign country became necessary to the colony, to allow the foreign vessels the same carrying privileges allowed to their own. Colonies, he said, were to be considered as parts of a common empire. The trade between one part and another, as between London and Kingston in Jamaica, was to be considered, equally an internal trade with the coasting trade between London and Liverpool, or the trade between different ports of the United States: and might, if deemed expedient, be equally restrained to domestic bottoms. But when a trade was opened between a colony and a foreign country, the case was changed: the foreign country became a party, and had a reciprocal claim to the use of its bottoms, as much in the trade with the colony, as with any other part of the empire, to which the colony belonged. In support of this doctrine, Mr. M. referred to the example of every nation in Europe, except that of Great-Britain, which had American colonies. Denmark, Sweden, the United Netherlands, France, Spain and Portugal, had their colonies, as well as Great-Britain; and some of them, rigorously attached to the principles of the colony system: yet not a single one of these nations had refused, whenever a trade was permitted at all between the colonies and another country, to make the carriage common to the vessels of both the parties. Great-Britain alone had attempted a monopoly in such cases for her own vessels. Her example therefore was an innovation on the colony system, as well as an infraction of the rights of reciprocity.
In answer to the 2d position of Mr. A. he denied that permanent supplies of provisions and lumber could be derived from any other part of the world than the United States: not from the northern parts of Europe, which either did not produce, or were too remote to send them: not from the southern parts of Europe, which depended themselves on the northern parts and on America: not from Great Britain, which imported bread, for her own use, amounting one year with another according to the report of the committee of the privy council,1 to the sum of near three hundred thousand pounds sterling, and was, certainly not an exporter of lumber: not from Ireland, which could not pretend to rival the United States in any article but that of salt provisions; and this was so much dearer that a prohibition alone of ours, could gain a market for hers. The gentleman had relied on the capacity of Ireland to extend her cultivation of wheat, so as to spare supplies of this article also. Such a revolution in her interior state was not very probable. But he ought at least to have remembered, that as the pasture lands of Ireland should be turned into wheat fields, her export of beef would decrease, in proportion as she might be enabled to export bread.
It was a waste of time, Mr. M. said, to disprove by minute enquiries, the possibility of supplying the British West Indies from the old continent, on terms that would not be worse than abandoning them altogether. The truth was, that the gentleman, (Mr. A.) had, in this particular, gone beyond the most sanguine advocates of the British policy, Mr. Knox and Lord Sheffield themselves; who limited their ultimate hopes of supporting the West-Indies without the aid of the United States, to the remaining possessions of G. Britain on this continent. He would proceed, he said, to shew what foundation there was for the opinion of these gentlemen, and the gentleman from Massachusetts, in favour of this resource. And he was able to give the most full and decisive evidence in the case, by recurring to an authentic document of our own, from which it appeared, that the continental colonies of Great Britain, instead of being able to furnish the West India colonies, were themselves dependent for the very articles wanted there, on the supplies of the United States.
In the official statement of our exports for the year as late as 1791,2 most of the articles sent to the British continental colonies, were of a sort and an amount so directly to the point, that he hoped the committee would excuse him for repeating them in detail. He stated them as follows:
The total of the exports, including a few articles under other heads, amounted to two hundred seventy thousand two hundred fifty and nine dollars.
Here then, it is seen, that not only in the bread stuffs and meats of every sort, but in the articles of lumber and live stock, for which, by universal acknowledgment, the West Indies must depend either on the United States, or the British Continental colonies; the latter are so far from being a rival to us, or a resource to the West Indies, that they continue, at this day, to supply their own deficiencies from our market.
Mr. M. said, that he should not have employed so much of the time of the committee on this head, if the gentleman (Mr. Ames) had not attempted to revive the arguments with respect to Canada and Nova Scotia, which had misled G. Britain in her political calculations and her present views. He had heard the language of the gentleman on this subject, with astonishment. That Mr. Knox and Lord Sheffield, British subjects, viewing the prospect with British eyes, at the distance of three thousand miles, in the year 1783, when little enquiry and no experiment could assist them, should have run into the error, was perhaps not so marvellous. But, that an enlightened Citizen of America, seeing with American eyes, living in the neighbourhood as it were of the scene, in a state whose wharves afford proofs of the daily dependence of the British Continental colonies for the necessaries of life, on the market of the United States, should, in the year 1794 adopt the opinion that those colonies could supply the Islands, after a trial of nine years had probably forced the authors of the opinion, Knox and Sheffield themselves, to abandon it, could not be heard without some surprize; and must be considered at least as the fullest proof, that the gentleman had not given sufficient attention to the present subject, to claim that weight which was in general due to his observations.
Mr. M. said he was not less surprised at the 3d position of the gentleman from Massachusetts, viz. that the West-India trade could be carried on by a dozen brigs; and consequently, was not an object worth our pursuit. The plain answer to this argument was, to state the fact, that the shipping entered in one year from the British West-Indies, was not a dozen brigs, but 107,759 tons.3
Besides the immediate importance of this auxilliary resource for our navigation, he remarked, that there were two considerations which enhanced the value of the object: one, that as the West-India articles could be brought cheaper in American vessels, they would come cheaper to American consumers; the other, that as our supplies would at the same time be carried cheaper to the West-Indies, the people there could afford to consume the more of them.
It had been urged that the proposed restrictions on the trade with Great-Britain would produce clamors here as well as there, and that Congress might be obliged to recede, before the British government would be under the necessity of doing so. To this Mr. M. replied, that he was under no such apprehension. He thought more favorably of the good sense as well as virtue of his fellow citizens. On the side of Great-Britain it had been shewn there would be the greatest distress, and the least ability to bear it. The people there were not accustomed, like the people of the United States, to self-denying regulations. They would not have the same confidence in the justice of their cause. And it was particularly worthy of remark, that the people of Great-Britain would be disheartened, and the government alarmed, by reflecting, that their losses from the shifting of commerce into other channels, and not only of their manufactures, but manufacturers, to other places, would be permanent and irretrievable; whereas on our side, they would be temporary sacrifices for durable and valuable acquisitions.
Secondly. The resolutions would have the effect of increasing our marine, and thereby at once cheapening and securing the carriage of our productions, and providing for our safety. These advantages having been already sufficiently explained, need not, he said, be again developed.
It had been remarked by a member from Massachusetts, (Mr. Ames) that if, as stated by a report of Mr. Jefferson,4 Great-Britain was so often at war, her wars, by depriving us of her shipping, would soon have the wished effect, of replacing it with American shipping. This reasoning Mr. M. said, supposed what was contrary to prudence and probability. What merchants would build ships, which a peace, always more or less in prospect, would throw out of employment; unless it were for special purposes, where the momentary gain might outweigh the eventual sacrifice.
It had been said that our tonnage was proved by the official returns to be increasing with an unexampled rapidity. To this Mr. M. answered: that the increase ought not to be compared with other examples, but with our own natural faculties, and reasonable expectations—that the increase of our population required an annual increase of at least five per cent; that an assumption by foreigners of American names, had probably increased the apparent quantity of our shipping; that the war or preparations for it, by withdrawing foreign shipping, had probably also had some little temporary effect; that the principal cause of the increase, was the extension of our trade with the French dominions, which some members seemed so little inclined to secure and foster, by measures which appeared to him best fitted for the purpose.
He reminded the committee of an argument, which had, on former occasions, been much pressed by several mercantile members, for encouraging our own navigation; to wit: that American vessels, from a spirit of enterprize, and a unison between private and public interests, would explore new fields of commerce, and new markets for our produce, which foreign carriers would leave unattempted. The trade to China opened by American vessels, had been often ascribed to this cause. Mr. M. said the argument seemed to be countenanced also, by the present state of our mediterranean trade; which had, since our independence, been confined by the Barbary corsairs to foreign bottoms. Previous to the revolution, when American vessels could be the carriers, the trade was very considerable. Since the exclusion of our vessels, though the carriage of our produce is safe to British, and several other foreign vessels, yet this branch of trade had withered as much as most others have grown. In 1790, the exports cleared for the mediterranean, were but 31,726 dollars; and in the year following, the imports no more than 11,522 dollars.
Thirdly. Another effect incident to the proposed measure, would be an additional encouragement to domestic manufactures.
A gentleman from Massachusetts (Mr. Dexter) had said, he could read no such tendency in the propositions. Mr. M. thought it impossible to read the propositions with attention, and not perceive, that they must have the like tendency with the other means, by which manufactures had been promoted. If the duties already laid, were calculated to produce this effect, an increase of those duties in any instance, must have a tendency to increase the effect. In answer to the objection that, a change in the policy of G. B. might put an end to the additional duties, and ensnare those who should proceed under the influence of them, he remarked, 1. That the same might be said in some degree of the regulations now in force. A treaty with Great Britain might stipulate changes which would affect our manufacturers. But as there was a just confidence, that the interests of this class of citizens would in this case be attended to by the government; it might be expected, that equal attention would be paid to them, in any other case. 2. The progress of things in this country, and the probable accession of foreign manufacturers, might be relied on to support whatever undertakings shall have once got a footing.
4thly. The proposed resolutions would favor an advantageous competition and distribution of our trade among the manufacturing nations of Europe. At present, it may be said to be monopolized by one; so great is the disproportion of its manufactures which come to our market. That this is an evil, has been admitted, and cannot be doubted. It exposes us to the greatest and most sudden embarrassments from the caprice, the passions, the mistaken calculations of interest, the bankruptcies, and the wars of a single foreign country. Many of these embarrassments are felt at the present moment. If it were possible to liquidate them into a pecuniary statement, it would be found that, in a permanent view of our interest, there would be economy in making very considerable temporary sacrifices, for the purpose of dividing our custom among a number of competitors. It was not true, that G. Britain alone can supply the manufactures we want. France, the United Netherlands, and several other nations, are capable of supplying us with a variety of articles, as well as the nation from which they now come; and, if invited to our markets by prudent encouragements in the first instance, will soon learn to fashion their manufactures to the wants and tastes of this country. The policy of favouring particular branches of trade, even at some expence, in order to guard against the evil of depending on a single one, was exemplified by the conduct of G. Britain herself. Although he viewed her discriminations generally, respecting us, in the light he had explained; yet, he thought it possible, that in the instance of naval stores and ship-timbers, it might be her intention to foster a rivalship in a more distant quarter, in order to provide against a casual privation of the supplies of a nearer quarter. These articles are essential to the marine of G. Britain; as her marine is essential to her greatness. Were she to have no resource but in the Baltic, a war with the Baltic powers might be fatal to her. It may be wise in her, therefore, to keep open the American resource, even at the price of a tax on herself. In this case she must quarrel with both the Baltic powers and the United States at the same time, before the supplies will be cut off.
A member from Massachusetts, (Mr. Dexter) had not, Mr. M. said, been very consistent in his reasoning on this subject. He had contended against all attempts to excite a beneficial competition, on the idea that no competition could be beneficial which would not spring up of itself; and yet he had warned us against the danger, that G. Britain, by exciting a competition against the United States, in those parts of Europe, which most resemble the infant situation of our country, might establish new sources from which supplies would afterwards spontaneously flow to her, without being ever again wanted from the United States. The same remark was applicable to the reasoning of the other gentlemen who had represented the danger of exciting a permanent rivalship for the West India market, in favor of Canada and Nova Scotia.
Fifthly. The plan of the resolutions tended to conciliate nations in treaty, or disposed to be in treaty with us, into arrangements still more favourable to our commerce. This argument had peculiar weight in relation to France. It had been said that Great Britain was our best customer. The fact, he said, was that we were her best customer: but that France was our best customer. We consume more of British manufactures than any other nation in the world consumes. France consumes more of our productions, than any other nation consumes. He referred to the statements he had before offered for proof of this. Her consumption was also of the most valuable kind; and under favourable regulations would be a very growing one. It consisted of wheat and flour, salt provisions, and fish; articles which were not admitted by Great Britain; and which without the market of France, would glut every other. Of our fish she consumed five eighths of the whole exportation. Her use of our live animals was another important consideration. It amounted, in the list of our exports, to 352,795 dollars, for the year 1791. In the same year, the British demand amounted to no more than 62,415 dollars. The superior proportion of navigation we enjoyed in the French channels of intercourse had already been shewn. In examining the policy of cultivating and securing the French markets, he said it ought not to be forgotten, that the profits and revenue arising from the rum distilleries, depended on an article obtained almost, if not altogether, from the French dominions alone; and which was the only raw material of any consequence imported into the United States. It was paid for also, as had been much urged on other occasions by members on the opposite side, in the worst fish, which could find a vent in no other part of the world. The molasses imported into the United States in one year, amounted to upward of seven millions of gallons, more than one half of which went into the state of Massachusetts. He took notice also of the article of sugar, as rendered of great importance by our habits and our finances; and of which more than one half was supplied by the French West Indies. Out of 17,142,723 pounds imported, 9,321,829 pounds were received from that source. The residue came from the Danish, Dutch, and British dominions, in the following proportions. To wit, Danish, 2,833,016 pounds, Dutch 2,707,231 pounds, British 2,280,647 pounds. This statement was taken from the imports of 1790, the only year he had been able to examine on this point.
It had been said, Why grant privileges before a mutual grant should be secured by positive stipulation? Why throw away, by a legal regulation, what ought to be the price of treaty? He answered, that the legal regulation threw nothing away, as it was always revocable: that in the present instance, it was only meeting the legal regulations of which France had set the example: that instead of being a bar to treaty, such a course of proceeding, more than any other, would smooth the way to it, by explaining the objects, and establishing a confidence, on both sides—that it would be happy, if in all cases, where treaties are in view, this open and conciliatory process, could take the place of that reserve and mysterious negociation, with which the parties approach each other. Were Great Britain desirous of forming amicable arrangements by treaty, he asked what readier or more prudent step could she have taken for the purpose, than to have followed the example set her, by holding out in her laws, the spirit in which she was willing to meet us in negociation?
Having gone through these explanations, Mr. M. entered into a view of the principal objections to the resolutions proposed.
1. It was said they would diminish the revenue, and endanger the funds.
With respect to the public debt, his general ideas had been expressed by several who had spoken before him. He acknowledged that he had disliked and opposed the modification given to it; but after it had received the sanction of law, he had entertained no other wish on the subject, than that the debt might be honorably discharged, as fast as the circumstances of the country would permit. This he was well satisfied was the prevailing sentiment of the great body of the people. He did not believe, that there was a single state in the union, or any considerable part of a single state, that did not acquiesce (where they did not approve) in the provisions which had been made in behalf of the public creditors. At the same time, he was equally sure, that it never was either meant by congress, or understood by the public, that in mortgaging the impost for their security, it was to be an hostage to foreign countries for our unqualified acquiescence in their unequal laws, and to be worn, as long as the debt should continue, as a badge of national humiliation. The nature of the obligation could certainly import no more in favor of the creditors, than that the fund appropriated should be applied, as far as requisite, to their use; unless equivalent funds should be substituted; nor more against the public, than that all deficiencies in the fund should be made up, whether arising without, or in consequence of, a change in the laws. If it should happen, then, that in consequence of any measure, dictated by the general good, the impost should become inadequate to its object, all that could be exacted by the public creditors, would be some other provision that would supply the defalcation; and it ought not to be doubted, that the people at large, whose good was pursued, would readily support whatever other provision might become indispensible. He had made these remarks, however, with reference to an event, which he did not by any means admit to be probable. The more he had revolved the subject, the more clearly it appeared to him, that a very operative addition might be made to the duties on the enumerated articles, without endangering the aggregate product of the importations. And he entirely concurred in opinion with those, who had observed, that the greatest injury which could be done to the class of citizens holding the public paper, was to represent their interests as more to be regarded than any national considerations whatever; and to oppose to the latter, even the most imaginary contingencies to the former.
2. It was objected, that the operation of the resolutions would be more favorable, in some instances to nations in treaty than was merited; and more unfavorable, in others, to nations not in treaty, than was politic.
In answer to this objection, he observed, that Sweden and Prussia, two of the nations in commercial treaty, had but little intercourse with us; would be in any respect but little affected; and, besides, the treaties with them were limited to a short term, the greatest part of which had elapsed.
France and the United Netherlands, the two other nations to be favored, could not reasonably be grudged the advantages they might derive from treaties, for which we had long ago received a valuable consideration in their assistance towards the establishment of our independence.
As to the nations not in treaty—
Denmark would not be affected. She had no navigation act, within the description of the resolutions; and could not feel the duties on manufactures. The whole of the imports from Denmark amounted in the year 1791 to 9,957 dollars only. Her islands also, with which the trade is carried on in our vessels, depend for their subsistence on our market.
Russia has little or no shipping in our trade, and it would not be affected if she had; as she has no such navigation act. Her unwrought iron may come as before. Duck and sheeting are the only two manufactures on which the resolutions would sensibly operate; and with respect to these as will presently be observed, it would be easy to make special exceptions.
The Hanse Towns, having no navigation act, would not be affected in that respect. Linens are the only articles falling within the proposed enumeration; and might, if thought requisite, be easily excepted.
Spain, has little shipping in our trade; has no navigation act, such as is to be reciprocated; and would not be sensibly touched by the duties on manufactures. She also needs our exports, and will be influenced by that consideration.
It had been asked why Spain, against whom we had complaints as well as against G. Britain, ought not to be equally an object of our regulations? He said that such a question could be best answered when the communications from the President relating to Spain,5 should be taken up.
Portugal, like Spain, will not be affected in her navigation; nor sensibly, if at all, in the article of manufactures; and is, more than Spain, supplied with necessaries from our market. According to Zimmerman,6 Portugal does not raise within herself, more bread than will feed her three months in the year. It is certain that she depends much on external resources, and that occasions are frequent when she can find them no where else than in the United States.
Mr. M. said he considered these explanations as a sufficient answer to the objection. He would add, however, that there were other answers some of which had been before hinted, that would afford an option of modes for the exemption of nations not in treaty.
Besides the opportunity which such nations have of removing all difficulties, by meeting us in liberal treaties they may be provided for; either by limiting every part of the measure to nations having a navigation act: Or by limiting it to nations within a geographical description; a practice familiar to the British code: Or by naming the nations to be excepted; a practice also familiar to Great-Britain: Or by naming the particular articles to be excepted; a practice no less familiar to that nation.
By some or other of these modifications the committee could be at no loss to accommodate the plan, to their own sense of propriety, and the public good.
Here Mr. M. took occasion to remark, that much of the argument against the resolutions, had proceeded from an inattention to their import, and would be answered by a simple explanation of them.
The first resolution, which was immediately the subject of debate, decided nothing with respect to a discrimination between different nations. It declared only, in general, that the situation of the United States required something to be done, in the way of commercial restrictions and duties. And yet it had been combated by many members, as if a vote in favor of it would involve all the embarrassing preferences, which their fancies could suggest.
The succeeding resolutions on the subject of additional duties on manufactures, and of a variation of the tonnage duties, were founded on a discrimination between nations in treaty, and nations not in treaty; but admitted, as he had observed, of whatever modifications or exceptions, might be judged equitable or politic. The proposed reduction of the tonnage on vessels in treaty, had been suggested by the complaint made by France of the existing tonnage on her vessels, as exceeding the burden imposed by her on ours, as well as an unkind return for the commercial benefits of which the United States were partaking under her laws. At present the tonnage imposed by us, on all foreign vessels was the same. This would not seem to be right on any principle, unless the tonnage imposed on our vessels, by all foreign nations, was the same which was not to be presumed. Whether the change he had proposed, would be an amendment of the existing law was a point to be examined. It was certainly a part of the plan which he did not regard as the most essential.
With respect to the resolutions reciprocating navigation laws, it was evident, he said, that these had no reference to the question, whether a nation were in treaty or not. They would operate equally, wherever there might be the same departure from the principle of reciprocity. If they should bear on one nation particularly, it would be because they ought to do so.
3. It had been much insisted, that trade ought to be left free to find its proper channels, under the conduct of merchants; that the mercantile opinion was the best guide, in the case now depending; and that that opinion was against the Resolutions.
In answer to this objection, he said it was obvious to remark, that in the very terms of the proposition, trade ought to be free before it could find its proper channel. It was not free at present, it could not, therefore, find the channels in which it would most advantageously flow. The dykes must be broken down before the waters could pursue their natural course. Who would pretend, that the trade with the British West Indies, or even with Great Britain herself, was carried on, under the present restrictions, as it would go on of itself, if unfettered from restrictions on her part, as it is on ours? Who would pretend, that the supplies to the West Indies for example, would not flow thither in American bottoms if they flowed freely? Who would pretend that our wheat, our flour, our fish, &c. would not find their way to the British market, if the channels to it were open for them?
It seemed to have been forgotten, that the principle of this objection struck at every regulation in favour of manufactures, as much, or even more, than at regulations on the subject of commerce. It required that every species of business ought to be left to the sagacity and interest of those carrying it on; without any interference whatever, of the public Authority. He was himself, in general, a friend to this theory: but there were a variety of exceptions to it, arising out of particular situations; as must be admitted by all who would mingle practical with theoretic views; and as has been already decided by a number of our laws.
With respect to the mercantile opinion, he was disposed to pay all due attention to it. The mercantile class of citizens was certainly an enlightened and a respectable one. Their information ought always to be received with respect, and their interests protected with care. But it did not follow that their opinion, even on questions of trade, ought to be consulted as an oracle, by those who were equally bound to watch over the interests of every class of citizens, and over the joint concerns of the whole. There were considerations of different kinds which suggested caution on this subject.
However intelligent and constant the merchant might be, in directing his operations, for commercial purposes, he might not be equally in the habit of combining with these, the various other national objects which the Legislature might be bound to consult.
The interest of the mercantile class may happen to differ from that of another class; and possibly both may differ from that of the whole community. For example, it is, generally speaking, the interest of the merchant to import and export every thing: the interest of manufacturers to lessen imports in order to raise the price of domestic fabrics, and to check exports, where they might enhance the price of raw materials. In this case it would be as improper to allow the one to judge for the other, as to allow either to judge for the whole.
It may be the interest of the merchant, under particular circumstances to confine the trade to its established channels; when the national interest would require those channels to be changed or enlarged. The best writers on political œconomy have observed, that the regulations most unfriendly to the national wealth of Great Britain, have owed their birth to mercantile counsels. It is well known, that in France, the greatest opposition to that liberal policy which was as favourable to the true interest of that country as of this, proceeded from the interest which merchants had, in keeping the trade in its former course.
If, in any country, the mercantile opinion ought not to be implicitly followed, there were the strongest reasons why it ought not, in this. The body of merchants who carry on the American commerce is well known to be composed of so great a proportion of individuals who are either British subjects, or trading on British capital, or enjoying the profits of British consignments, that the mercantile opinion here, might not be an American opinion; nay, it might be the opinion of the very country, of which, in the present instance at least, we ought not to take counsel. What the genuine American mercantile opinion would be, if it could be collected apart from the general one, Mr. M. said he did not undertake positively to decide. His belief was that it would be in favor of the resolutions.
It could scarcely be necessary, he said, to add that his remarks were not meant to be, as they were not in fact, the least reflection on any part of the mercantile order among us. They only suppose, what in political reasonings ought always to be supposed, that the prejudices of birth and personal interests will be a bias on the judgment.
4. It had been an objection to the resolutions, that they might deprive us of the aid of British capital and credit, which were necessary to the prosecution of our commerce.
Mr. M. did not admit either that the effect would happen, or that it would be ruinous to our commerce.
Unless Great Britain should, of her own choice, put a stop to the commercial intercourse with us, which for reasons before given would be so much more hurtful to herself than to this country, that it never could be presumed; the resolutions would operate only by abridging some of our importations, and by varying the channels of others. Her capital, as far as requisite here, might continue to be employed here.
On the general question concerning our dependence on British capital and credit, he observed that it could not be denied that more use was made of them at present, than was either necessary or beneficial. Credit when extended to consumers, as was the case throughout the southern states, was extremely injurious; as had been well explained by a member of Virginia (Mr. Nicholas), and as he himself had equally witnessed. When confined to merchants, it might, within certain limits, be an advantage; but it was not only his own opinion, but that of better judges, that the credit given to our merchants, was at present excessive and injurious.
In order to form a very precise judgment on this subject, it would be necessary, he said, to calculate the amount of our own capital, and its proportion to the amount of our trade. This was a thing he supposed, which could not well be done. If he had concurred in the doctrine, of which so much had been heard both within and without doors, that a funded debt and banks of discount, were equivalent to active capital, he should have a ready answer to the difficulty. The paper of the two kinds, in the United States, cannot amount to less than one hundred millions of dollars; whilst the amount of our exports or our imports, does not exceed one fourth of that capital. It is true, a part of both the public and the bank stocks, is in foreign hands; but, with the most ample deductions on that account, the residue, if operating in any considerable degree, as active capital, would be a competent resource.
As he did not however view the doctrine in the particular light in which it had been painted; it would be more to his purpose, to observe, that there was certainly in this country a real mercantile capital to a very respectable amount—that this was fast increasing with our increasing population and wealth: that if the foreign capital of one country should be withdrawn, the vacancy would probably by degrees be occupied by that of other foreign nations; that if it should happen otherwise, there was reason to believe, that a restriction of our use of foreign credit, would be rather salutary than disadvantageous; that in fine, as long as we had twenty millions of dollars worth of produce, wanted by other nations; and were willing to take for it, twenty millions worth of what they wished to part with, he was under no apprehension that the means of effectuating an exchange, would not be found. Both merchants and capital would quickly be generated by such a state of things, if they did not previously exist.
5. It had been observed by several members, in allusion to the alledged proportion of British manufactures consumed by us to the entire mass of her manufactures, that Great Britain would never part with her navigation act, in order to avoid a loss of four per cent. in the demand for her manufactures.
To this objection he answered; that the comparison ought to be our consumption, not with the entire mass of her manufactures, but with the part entering into her foreign trade; and then the loss would not be four per cent, but, at least twenty per cent; that this would not be the only loss she would sustain, if she should be unwise enough to stop the intercourse between the United States and her dominions; that it had been already shewn, that when she apprehended a restrictive system on our part, she was willing to prevent it, by relaxing her restrictive system; that in times of war, when an adherence to that system would distress her, she frequently suspends her navigation act; that at this moment it is suspended in relation to the West-Indies; that there could be little doubt, if the temporary necessity, were likely to be made permanent by firm and judicious measures on our part, that the remedy for it would be made permanent also.
6. It was objected that the present was an improper time for such resolutions.
The principal reason given for this was, that the negociation between the secretary of state and the British minister here, was still depending. To shew that this reason was unsound, Mr. M. went into an historical view of what had passed in reference to commercial arrangements. He read the message of the President to the House of Representatives, on the 14th of February, 1791,7 acquainting them, that steps had been taken to ascertain the dispositions of the British court on the subject, and that there was no ground for favorable expectations. He stated, that in consequence of this communication, a committee was appointed, who reported that foreign vessels ought not to be allowed to bring into the United States any articles not of the produce or manufacture of the country to which they belong, and that an additional duty of twelve and an half cents ought to be laid on all distilled spirits, the production of any country or place from which vessels of the United States were not permitted to bring them; that it being very near the end of the session when this report was made, it was referred to the secretary of state, with an instruction to report to the next session an account of the foreign commercial regulations affecting the United States, with his opinion, &c. that at the next session, a letter was received from that officer, intimating that in the actual state of circumstances, the report would not be given in, unless called for by the House; that at the present session, the report now before the committee, was given in, without being called for; and was therefore a proof, that the circumstances which had caused the delay had vanished, and that at present there was nothing in train, according to the opinion of the secretary of state, which ought to restrain the Legislature from proceeding in the business.
In answer to suggestions, that the British minister had, in the correspondence with the Secretary of State, lately communicated by the President,8 manifested a favourable disposition, which had not been improved—Mr. M. recurred to the passages which related to this point. He read from the first letter of Mr. Jefferson to Mr. Hammond, dated Nov. 29, 1791, a paragraph requesting Mr. H. “to say, whether he was authorized to conclude, or to negociate arrangements with us which may fix the commerce between the two countries, on principles of reciprocal advantage?” To this request Mr. H. on the 30th of Nov. 1791, answered, “That the king was sincerely disposed to promote and facilitate the commercial intercourse between the two countries, and that he was authorized to communicate to this government, his majesty’s readiness to enter into a negociation for establishing that intercourse upon principles of reciprocal benefit.” On Dec. 6, he wrote to Mr. J. in order to prevent misapprehension, that although he was not yet empowered to conclude any definitive arrangement with respect to the commercial intercourse, he still meant it to be understood, that he was fully authorized to enter into a negociation for that purpose, &c. The reply of Mr. J. on the 13th of Dec. informed Mr. H. that he had laid his letters before the President, and was ready to receive a communication of his full powers, for entering into the negociation, &c. This was followed on the next day by a letter from Mr. H. stating, that he had no special commission to conclude any definitive arrangement upon the subject of commercial intercourse—but that he conceived himself fully competent to enter into a negociation, and the discussion of principles that might be the basis of such definitive arrangement—and that this opinion of his competency was founded on the instructions which were to regulate his personal conduct, and the general plenipotentiary character in which he had been sent and received.
This letter, Mr. M. observed, closed the correspondence on the subject of commercial arrangements, being justly considered by the executive as a final proof, that the powers of Mr. H. were incompetent, and irrelative to the object; and that it would be improper to open a formal negociation with him, under them. His instructions might be a rule and a warrant to himself, but not being even exhibited, could be no evidence of his authority, to the executive. And his plenipotentiary commission in the ordinary form, could never be understood as relating to the special objects he proposed to discuss. According to the usage of nations, a special commission is, in such cases, always furnished and required. Mr. M. was persuaded, that no sovereign in Europe would listen for a moment to such a claim as that of Mr. H. and that the British court would have been offended at such an one from an American minister. He thought therefore that the executive had equally consulted dignity and prudence, in silently dropping the subject in the same manner they did, until Mr. H. should receive and produce adequate powers in the accustomed form; as might reasonably be expected, if his court was duly disposed to meet the United States, in an amicable arrangement of commerce, by treaty.
That the construction put by Mr. H. on his powers, was inadmissible, appeared to Mr. M. to result from the construction itself. Either the general Plenipotentiary commission was to be taken in the technical and limited sense in which it is applied to the ordinary diplomatic objects of a stationary public minister; or, in a literal sense, without regard to such limitation. In the former sense, it clearly does not extend to negociations for a treaty. In the latter sense it would extend to the conclusion of a treaty, and not merely to negotiation, as Mr. H. explains and limits it.
Mr. M. adverted next to the state of the correspondence relating to the treaty of peace. It appeared, he observed, that as long ago as the 29th of May, 1792, the Secretary of State had addressed to Mr. Hammond, a full explanation of our rights and demands, under that treaty—that on the 2d June, Mr. Hammond informed the Secretary, that he should transmit it without delay for the consideration of his court; and accordingly did forward it in the course of a few days; that on the 13th Nov. 1793, previous to the present meeting of Congress, Mr. H. was desired by the Secretary, in pursuance of a charge from the President, to let him know whether an answer could yet be given to the letter of May 29, 1792. Mr. H. replied that it could not; but that he was confident the delay was to be ascribed to the continuance of the cause alluded to in a former answer to a similar request.
The cause alluded to was the interesting posture of things in Europe, which it was said, had diverted the attention of the British government to objects of a more pressing nature; and this consideration had been urged by several members, as an apology for the silence observed towards the United States. Mr. Madison thought very differently. The interval between the receipt of the letter written by the Secretary in May 1792; and the accession of Great Britain to the war against France, had been sufficient for the purpose of preparing and sending the proper instructions to Mr. H. Mr. M. added, that the prospect of being engaged in new controversies of a more serious kind instead of justifying an inattention to an existing one, ought to have quickened the efforts for a previous settlement of the latter. This is the course dictated by prudence, to nations as well as to individuals; and where a right disposition concurs, it is the natural course.
It had been mentioned as a further reason against the commercial propositions, at this time, that they might draw upon us the resentments of the Combined powers. Mr. M. could see no ground for such an apprehension. The Combined powers were pretty fully occupied with France; they could have no pretext for concerning themselves with us, in a case where we did not concern ourselves with them; and there was the less room for imagining that the combination could misconstrue the measure into an offence against them; as two of the parties, Prussia and the United Netherlands were in treaty with the United States, and are favored by the propositions.
7. It was finally contended that admitting our situation to be such as had been described, the mode proposed was an objectionable one.
Mr. M. said he had no predilections for the mode that could prevent his giving a ready preference to a better, if a better should be offered. And unless it should be said, that the Legislature ought to adjourn without doing any thing for the public relief, he thought it incumbent on those who objected to one proposition to substitute another that would be less objectionable. By this he meant a proposition not merely better in itself; but one that would probably be thought so, both within and without doors; and be more likely to coincide with the sentiments of every part of the union, as well as to conciliate a majority of voices in the public councils.
The first question, he said, was whether any thing ought to be done. If this be decided in the affirmative; as he presumed to be the sense of a majority of the committee; and if war was not in contemplation as of course was taken for granted; the next question could only lie between negociation, and commercial regulations. Negociation it had been shewn was in no train, or prospect, that could justify reliance on it. Commercial regulations alone remained. They would be pacific in their operation. They were the means best suited to the temper of our constituents. And he sincerely believed, that, if judiciously framed, they would be more likely to answer the reasonable purposes of the community, than any others that could be proposed.9
Philadelphia Gazette, 3, 4, 5, and 7 Mar. 1794 (reprinted in Gazette of the U.S., 8, 13, 15, and 18 Mar. 1794 [incomplete; misdated 30 Jan. 1794], and Madison, Speech in the House of Representatives, pp. 45–69; also reported in Philadelphia Gazette, 1 Feb. 1794). Trade figures were given in dollars rather than pounds (errata notice in Philadelphia Gazette, 5 Mar. 1794) and have been silently corrected here. This speech and the one JM delivered a day earlier are printed as a single speech under the 29 Jan. entry in , 3d Cong., 1st sess., 366–95.
1. [Charles Jenkinson, first earl of Liverpool], Representation of the Lords of the Committee of Council, … for … Trade and Foreign Plantations, upon the Present State of the Laws for Regulating the Importation and Exportation of Corn (London, 1790), p. 4, declared that during the years 1774–80 “this Country has upon an Average sustained a loss in this [grain] Trade of £.291,000 per Annum.”
2. Tench Coxe’s statement, which Hamilton submitted to the Senate on 16 Mar. 1793 (, Commerce and Navigation, 1:104–38).
3. JM gleaned this information from a manuscript abridgment of a British Board of Trade report in Jefferson’s possession (DLC: Jefferson Papers; printed as Worthington Chauncey Ford, ed., Report of a Committee of the Lords of the Privy Council on the Trade of Great Britain with the United States [Washington, 1888], p. 20). Prepared under the direction of Lord Hawkesbury (then president of the Board of Trade and later first earl of Liverpool), this report was first printed in full in January 1791 for official use only. William Temple Franklin sent the abridgment to Jefferson (, 18:267–72).
4. “Report on the American Fisheries by the Secretary of State,” 1 Feb. 1791, appendix no. 18 (, 19:236).
5. On 16 Dec. 1793 Washington sent to Congress his administration’s correspondence relating to negotiations with Spain on commerce, Mississippi navigation, and other matters (, Foreign Relations, 1:247).
6. Eberhard August Wilhelm von Zimmermann, A Political Survey of the Present State of Europe (Dublin, 1788), pp. 283–84.
7. Washington’s message is printed in , Foreign Relations, 1:121–22.
8. The letters to which JM subsequently referred were those which Washington submitted with his message to Congress of 5 Dec. 1793 (ibid., 1:189, 201–16, 237, 238).
9. In Committee of the Whole on 3 Feb., while JM was absent from the chamber, Swift moved to strike out his first resolution. His political allies, led by Nicholas, managed to postpone consideration of the motion until he arrived. To objections that the resolution had been phrased in too general terms, JM responded: “I intentionally made the first resolution as vague as it is, and not more so. I regarded this generality of expression as necessary.” After further debate, the committee approved the first resolution (Philadelphia Gazette, 4 Feb. 1794). On 4 Feb. a proposal was made to name Great Britain in JM’s first resolution as the country against which the increased customs duties were directed. JM “said, that he had at first avoided the particular mention of Britain, because he had been solicitous to expedite the business, in as civil a way as possible. It was of no concern to him whether Britain was specially mentioned or not. Her statute book had afforded many examples of that kind of stile.” Smith (Maryland) and Boudinot urged that the resolution also be directed against Spain. JM “observed, that Britain had issued a proclamation respecting the stoppage of the vessels of neutral nations, of these there were but three, Denmark, Sweden, and the United States. The two former had been expressly excepted from the consequences of these restrictions. He said, that the proclamation was, in itself, a breach of the law of nations.” Ames argued that the U.S. should not adopt commercial reprisals against Britain while negotiations for a treaty were pending. JM “considered the conduct of Britain as extremely atrocious. He read some extracts from the correspondence between Mr. Pinkney, and the American government. In these, the behaviour of Britain was represented, as very arbitrary and tyrannical; and it was strongly stated, that there was not the least chance of obtaining redress from the court of London, for the violences committed on the American flag” (ibid., 5 Feb. 1794).