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refined sugars and chocolate

Are among the number of extensive and prosperous domestic manufactures.

Drawbacks of the duties upon the materials of which they are respectively made, in cases of exportation, would have a beneficial influence upon the manufacture, and would conform to a precedent which has been already furnished in the instance of molasses, on the exportation of distilled spirits.

Cocoa, the raw material, now pays a duty of one cent per pound, while chocolate, which is a prevailing and very simple manufacture, is comprised in the mass of articles rated at no more than five per cent.

There would appear to be a propriety in encouraging the manufacture by a somewhat higher duty on its foreign rival, than is paid on the raw material. Two cents per pound on imported chocolate would, it is presumed, be without inconvenience.

The foregoing heads comprise the most important of the several kinds of manufactures which have occurred as requiring, and, at the same time, as most proper for public encouragement; and such measures for affording it as have appeared best calculated to answer the end, have been suggested.

The observations which have accompanied this delineation of objects, supersede the necessity of many supplementary remarks. One or two, however, may not be altogether superfluous.

Bounties are, in various instances, proposed as one species of encouragement.

It is a familiar objection to them that they are difficult to be managed, and liable to frauds. But neither that difficulty nor this danger seems sufficiently great to countervail the advantages of which they are productive when rightly applied. And it is presumed to have been shown that they are, in some cases, particularly in the infancy of new enterprises, indispensable.

It will, however, be necessary to guard, with extraordinary circumspection, the manner of dispensing them. The requisite precautions have been thought of, but to enter into the detail would swell this report, already voluminous, to a size too inconvenient.

If the principle shall not be deemed inadmissible, the means of avoiding an abuse of it will not be likely to present unsurmountable obstacles. There are useful guides from practice in other quarters.

It shall, therefore, only be remarked here, in relation to this point, that any bounty which may be applied to the manufacture of an article, cannot, with safety, extend beyond those manufactories at which the making of the article is a regular trade. It would be impossible to annex adequate precautions to a benefit of that nature, if extended to every private family in which the manufacture was incidentally carried on; and, being a merely incidental occupation which engages a portion of time that would otherwise be lost, it can be advantageously carried on without so special an aid.

The possibility of a diminution of the revenue may also present itself as an objection to the arrangements which have been submitted.

But there is no truth which may be more firmly relied upon, than that the interests of the revenue are promoted by whatever promotes an increase of national industry and wealth.

In proportion to the degree of these, is the capacity of every country to contribute to the public treasury; and where the capacity to pay is increased, or even is not decreased, the only consequence of measures which diminish any particular resource, is a change of the object. If, by encouraging the manufacture of an article at home, the revenue which has been wont to accrue from its importation should be lessened, an indemnification can easily be found, either out of the manufacture itself, or from some other object which may be deemed more convenient.

The measures, however, which have been submitted, taken aggregately, will, for a long time to come, rather augment than decrease the public revenue.

There is little room to hope, that the progress of manufactures will so equally keep pace with the progress of population, as to prevent even a gradual augmentation of the product of the duties on imported articles.

As, nevertheless, an abolition in some instances, and a reduction in others, of duties which have been pledged for the public debt, is proposed, it is essential that it should be accompanied with a competent substitute. In order to this, it is requisite that all the additional duties which shall be laid, be appropriated, in the first instance, to replace all defalcations which may proceed from any such abolition or diminution. It is evident, at first glance, that they will not only be adequate to this, but will yield a considerable surplus. This surplus will serve:

First. To constitute a fund for paying the bounties which shall have been decreed.

Secondly. To constitute a fund for the operations of a board to be established, for promoting arts, agriculture, manufactures, and commerce. Of this institution, different intimations have been given in the course of this report. An outline of a plan for it shall now be submitted.

Let a certain annual sum be set apart, and placed under the management of commissioners, not less than three, to consist of certain officers of the government and their successors in office.

Let these commissioners be empowered to apply the fund confided to them, to defray the expenses of the emigration of artists and manufacturers in particular branches of extraordinary importance; to induce the prosecution and introduction of useful discoveries, inventions, and improvements, by proportionate rewards, judiciously held out and applied; to encourage by premiums, both honorable and lucrative, the exertions of individuals and of classes, in relation to the several objects they are charged with promoting; and to afford such other aids to those objects as may be generally designated by law.

The commissioners to render to the Legislature an annual account of their transactions and disbursements; and all such sums as shall not have been applied to the purposes of their trust, at the end of every three years, to revert to the treasury. It may, also, be enjoined upon them not to draw out the money, but for the purpose of some specific disbursement.

It may, moreover, be of use to authorize them to receive voluntary contributions, making it their duty to apply them to the particular objects for which they may have been made, if any shall have been designated by the donors.

There is reason to believe that the progress of particular manufactures has been much retarded by the want of skilful workmen. And it often happens, that the capitals employed are not equal to the purposes of bringing from abroad workmen of a superior kind. Here, in cases worthy of it, the auxiliary agency of government would, in all probability, be useful. There are also valuable workmen in every branch, who are prevented from emigrating, solely, by the want of means. Occasional aids to such persons, properly administered, might be a source of valuable acquisitions to the country.

The propriety of stimulating by rewards the invention and introduction of useful improvements, is admitted without difficulty. But the success of attempts in this way must evidently depend much on the manner of conducting them. It is probable that the placing of the dispensation of those rewards under some proper discretionary direction, where they may be accompanied by collateral expedients, will serve to give them the surest efficacy. It seems impracticable to apportion, by general rules, specific compensations for discoveries of unknown and disproportionate utility.

The great use which may be made of a fund of this nature, to procure and import foreign improvements, is particularly obvious. Among these, the article of machines would form a most important item.

The operation and utility of premiums have been adverted to, together with the advantages which have resulted from their dispensation, under the direction of certain public and private societies. Of this, some experience has been had, in the instance of the Pennsylvania Society for the promotion of manufactures and useful arts; but the funds of that association have been too contracted to produce more than a very small portion of the good to which the principles of it would have led. It may confidently be affirmed, that there is scarcely any thing which has been devised, better calculated to excite a general spirit of improvement than the institutions of this nature. They are truly invaluable.

In countries where there is great private wealth, much may be effected by the voluntary contributions of patriotic individuals; but in a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful, as in prompting and improving the efforts of industry?1

All which is humbly submitted.

Alexander Hamilton,

Secretary of the Treasury.

hamilton to jefferson

January 1, 1792.

Mr. Hamilton presents his compliments to Mr. Jefferson. Being engaged in making a comparative statement of the trade between the United States and France, and between the United States and Great Britain, and being desirous of rendering it as candid as possible, Mr. H. will be obliged to Mr. Jefferson to point out to him the instances in which the regulations of France have made discriminations in favor of the United States as compared with other foreign powers. Those of Great Britain appear by its statutes, which are in the hands of Mr. H., but he is not possessed of the general commercial regulations of France.

Mr. H. also wishes to be informed whether the arrêt of the 9th of May, 1789, mentioned by Mr. J. in the notes to this table, be the same with the ordinance of the Governor-General of St. Domingo, which is at the end of the collection of arrêts which Mr. J. was so obliging as to lend to Mr. H., which is of that date.

COMMERCIAL RELATIONS

outline of smith’s speech on madison’s resolutions of january 3, 1794

Draft by Hamilton

January, 1794.

The table which is annexed takes the year 1790 as the proper period to show the commercial policy of France previous to the revolution just terminated. The notes accompanying that table explain the alterations which have since taken place. There is, however, no mention of the expiration of the time limited for the premium on French fish imported into the French colonies, which happened in 1790, because this makes no alteration in the general complexion of the policy of France in this particular. It is usual for greater caution to limit the duration of premiums to a certain period, even where it is supposed that a further continuation may be necessary, and if the premium in question has not been renewed, it, as the situation of France at the time of the cessation, and since, may be presumed to have precluded arrangements affecting the trade of the colonies.

If any have been made, it may be inferred from Commères’ pamphlet, that though the duty on foreign fish has been reduced from five to three livres, the premium on French fish has been raised from ten to twelve, which makes the aggregate of duty and premium, operating as a bounty on French fish, the same as before, namely, fifteen livres.

General Observations

1. The commercial system of Great Britain makes no discriminations to the prejudice of the United States as compared with other foreign powers.There is therefore no ground for a complaint on the part of the United States, that the system of Great Britain is particularly injurious or unfriendly to them.
2. The commercial system of Great Britain makes important discriminations in favor of the United States as compared with other foreign nations. This is exemplified in the instance of tobacco, lumber, pot- and pearl-ash, tar and pitch, pig and bar iron, which, when carried from the United States to Great Britain, are either exempt from duties, which are paid on the same articles brought from other foreign countries, or pay so much less duty as to give them a clear advantage in the competition for the British market. Our vessels in the direct trade with Great Britain are in various instances exempted from duties, which are paid by the ships of other nations, and in general are on the same footing in that trade with the vessels of the British colonies. Admission is also given to a variety of the commodities of the United States in the British West Indies, which is not given to similar commodities of other foreign countries.There is therefore ground to assert, that the commercial system of Great Britain is more favorable and friendly to the United States than to other foreign countries.
3. The commercial system of France previous to the revolution, made fewer and less important discriminations in favor of the United States, as compared with other foreign nations, than that of Great Britain. In the West Indies our privileges were the same. The same commodities only, and upon the same terms, might be carried thither and brought from thence from and to the United States, which might be carried thither and brought from thence from and to other foreign nations. The discriminations in favor of the United States in direct trade with France, are not known to have extended beyond the articles of fish oils

∗ ∗ ∗ ∗ ∗ ∗ ∗

and vessels of the build of the United States when owned by French subjects, were admitted to naturalization, and so far promoted the building of ships as an article of trade with France. This last discrimination is now abolished, and no new ones have been made in our favor.

There is therefore ground to assert that the commercial system of France towards the United States as compared with other foreign nations, has been and now is less favorable and friendly than that of Great Britain.

Particular Observations

1.—As to flour. This article, previous to the revolution in France, was subject to but a very light duty on its importation there. At present it is free to all the world. But unless material changes take place in the state of France, the United States are likely to derive little benefit from this circumstance.

The ordinary price of flour in France is about $5.66 cents per barrel (of Pennsylvania).

In Pennsylvania it may be stated at1illigible upon an average; the freight to France is¹illigible other charges amount to about¹illigible, which would make the costs and charges of a barrel of American flour in France $6.33 cents; of course it cannot, except on extraordinary occasions, be sent there without loss.

In Great Britain it has been stated that flour was subject to a prohibitory duty till the price there was about 48 shillings the quarter. The flour of the United States can therefore only be carried occasionally to Great Britain as well as to France, but the occasions have hitherto been more frequent in Great Britain than in France.

Accordingly, in the course of the years 1786 and 1788, the whole quantity of flour sent from Pennsylvania to France amounted to 2,396 barrels; that sent to Great Britain, to 828 barrels.

But the act of Parliament of the¹illigible puts this article upon a worse footing than heretofore, and experience only can decide, whether flour can be henceforth sent with most advantage to Great Britain or to France.

The quarter, however, which in relation to both nations, it most interests the United States to have access to, as a market for their flour, is the West India Islands. Here the comparison is decidedly in favor of Great Britain. The general system of France is to prohibit the reception of our flour in her West India markets—that of Great Britain to permit it.

It is true that occasional suspensions of the prohibition take place; but these suspensions being confined to cases of necessity, the system of France, which excludes us as far as possible, cannot on this account be viewed as less unfavorable to the United States, than if no such suspensions took place.

Flour appears to be the principal staple of the United States. This principal staple is, upon the whole, more favored by the regulations of Great Britain than of France. Accordingly, in the year 1790, the exportations to the British dominions, amounted to $1,534,276; to the French dominions to $1,483,195. The comparison is the stronger in favor of Great Britain, from the circumstance that this year was one of extreme scarcity in France. In ordinary years the difference must be far greater.

II.—As to tobacco. It may be presumed that this is an article of such a nature that it is immaterial to the United States what duty is laid upon it in either of the two countries, if the same duties affect all other imported tobacco. ’T is a case in which neither of the countries produces itself the article, to enter into competition with that of the United States. The duty, therefore, must essentially fall upon the buyers, not the sellers.

Previous to the French Revolution, there was no import duty in France upon tobacco, but it was under a monopoly of the Farmers General; a situation far more disadvantageous to the United States than any tolerable duty could be, by destroying a free competition among purchasers.

The decree of January, 1791, has laid a duty upon this article, if brought from the United States to France in American vessels, of 25 livres per kental; if brought in French ships, of only 18 livres and 15 sous. The tobacco of the United States has been, and is, upon no better footing than that of some other foreign nations.

In Great Britain, as has been stated, a considerably higher duty is paid on other foreign tobacco than on that of the United States, and it may be carried to Great Britain, in vessels of the United States, upon the same terms as in British bottoms, while the ships of other nations, bringing tobacco, are subjected to a greater duty on the tobacco which they bring than the ships of Great Britain.

Although, therefore, there is a higher duty on tobacco in Great Britain than in France, yet as in France the duty is the same on other foreign tobacco as on ours; as in Great Britain a higher duty is charged on other foreign tobacco than upon ours; as the comparative rate, not the quantum, of the duty in either country is the only thing which concerns us, it is evident that our tobacco is much more favored by Great Britain than by France. Indeed the difference of duty operates as a positive bounty upon the tobacco of the United States.

As it regards our navigation, the comparison is still more striking. Here, too, we are more favored by Great Britain than other countries, while the existing regulation of France is in the degree the most exceptionable to be found in the code of any country. It amounts to a prohibition of carrying our own tobacco to France in our own ships.

Several European nations have aimed at a monopoly of the carrying trade of their colonies, but the spirit has not extended to their home dominions. Slight differences have been made between foreign and national ships in favor of the latter, but a difference amounting to an exclusion of the former is perhaps without example, except in the regulation in question.

The principle of this regulation would prostrate the navigation of the United States more effectually than any which is to be found in the system of any other country.

Hence, in respect to the article of tobacco, the staple of the United States which may be deemed second in importance, the regulations of Great Britain are far more favorable than those of France.

Great Britain took from us in the year 1790, $2,777,808, while France took only $427,746.

Hence also it appears that Great Britain is a far better customer for the article than France.

III.—As to fish and fish oil. The regulations of France as to these articles are incomparably more favorable in their operation than those in Great Britain, though there is no material difference in principle.

Great Britain lays a prohibitory duty on oil, which excludes all but the finest kinds occasionally, and absolutely prohibits fish.

France lays such duties on the fish and oil of other countries, and grants such premiums and encouragements in relation to the products of her own fisheries, as amount completely to a prohibition, so far as her capacity to supply her own dominions extends.

The duty on foreign fish in the French West Indies, and the premium on French fish, as stated in the table, amount virtually to a bounty on French fish of nearly one hundred per cent. of the value. In France the duty is alone about seventy-five per cent., and it is understood that the premiums and bounties in favor of the French fisheries are enormous.

The distinctions, nevertheless, which have been made in favor of the whale fisheries of the United States have been of material aid to them; but there is reason to apprehend, from the means which have been successfully used to detach our fishermen, and the vast encouragements which are given by the government, that the whale fishery of France is establishing itself on the ruins of that of the United States.

The cod fishery stands on a different footing. Our natural advantages are so great as to render it difficult to supplant us; but as far as we have been able to maintain, in this respect, a competition with the French fisheries in the French markets, it is to be attributed to their incapacity to supply themselves, which has counteracted the effect of a system manifestly prohibitory in its principle.

The real spirit of the system of France on this head, not only appears from what has been done, but from the manner of doing it.

In August, 1784, the arrêt giving admission to foreign fish in the West India markets was passed. In September, 1785, another arrêt was passed, granting a premium of ten livres per kental on French fish. Seven days after, so great was the anxiety, another arrêt was passed, raising the duty on foreign fish from three to five livres. An arrêt of the 29th of December, 1787, grants a right of storing for six months in France all the productions of the United States, in order to re-exportation, paying only a duty of one per cent. In February following, another arrêt passed, excepting from this right all the products of the fisheries, evidently from a jealousy of our interference with the French fisheries.

A further explanation of the spirit of the French system on this point, is to be found in the passage of a report to the National Assembly, in the year 1789, from the Committees of Agriculture and Commerce. After stating a diminution of the product of the French cod fishery, during the year 1789, the report proceeds thus: “This diminution ought to be attributed to the collusion of the English and free Americans who contrived to disappoint the French fisheries, by finding means to supply us with their fish, while they eluded the payment of the duty imposed on importation, in order to establish a preference in favor of the cod of the French fisheries.”

But however similar the principle of the French and English regulations may be, in regard to their fisheries, the result to the United States is vastly different.

The dominions of France take of the fisheries of the United States to the extent of $724,224; those of Great Britain, to the extent only of $88,371.

IV.—As to wood, particularly number. The regulations of France have not made, and do not make, any distinction as to the articles of this kind in favor of the United States.

Those of Great Britain make material distinctions in favor of the United States and their ships, putting the citizens and ships of the United States, in this respect, upon the same footing as those of their own colonies, as far as regards the European market.

Great Britain is also a much better customer than France for articles of this kind.

The amount in value taken from us by the dominions of the former in 1790 was $622,635; that of the latter, $476,039.

V.—As to rice. This article has stood and now stands upon a better footing in France than in Great Britain, being free in the former country, and subject to a high duty in the latter, and there being no discrimination in either country in favor of the rice of the United States.

It is to be observed, however, that as the article is produced in neither country, and as the rice of the United States is on the same footing in the British market as that of other countries, the observation made in respect to the duty on tobacco may in some sort be applied to this article.

But it applies with far less force, because tobacco has no competitor, while rice, as far as it is a substitute for bread or vegetables, has competitors in all the articles which fall under either description.

This article, however, stands upon a somewhat better footing in the British than in the French West Indies, being free in the former, and subject to a duty of one per cent. in the latter. The difference, however, is not considerable.

The British dominions took in 1790 of this article, in value, $953,939; the French, $322,926.

VI.—As to grain, namely, wheat, rye, Indian corn, oats. As they respect the European dominions of France and Great Britain, they may be considered nearly in the same light with flour.

All these articles are free in the British West Indies; wheat and rye are prohibited in the French; but Indian corn and oats are admitted upon a duty of one per cent. The result upon the whole is, that the English have been better customers than the French.

The British dominions took of these articles in the year 1790, in value, $685,071; the French, $280,792.

The act of Parliament of illigible is likely to make a difference hereafter in the British European market. According to that act illigible But experience alone can determine with certainty the effect.

VII.—As to pot- and pearl-ash. These articles have stood and still stand upon a better footing by the British regulations than by the French.

By the regulations of France, the pot- and pearl-ash of other countries are upon the same footing with those of the United States.

By the regulations of Great Britain, those of the United States are free, while those of other countries are subject to a duty of about five per cent.

Great Britain, in 1790, took from the United States of these articles, in value, $747,078; France, $20,720.

VIII.—As to indigo. This article (eighth in value of our exports) stands upon decidedly a better footing in the system of Great Britain than in that of the United States. France is herself our competitor in the supply of her own market, and she aims at securing to herself the monopoly of it, by adding to the advantage of a superior quality of her own indigo, as stated by the Secretary of State, the discouragement of ours of double the duty paid on her own. Great Britain admits the article into her home market free of duty. Both countries exclude it from their West India markets. Neither make any distinction for or against us.

In 1790 Great Britain took of this article, in value, $479,530; France, $12,649.

IX.—As to live animals. The regulations of both countries may be considered as pretty equal in respect to these articles; the duty of one per cent. paid in the French West Indies, while none is paid in the English, being of no consequence in relation to articles in which the French themselves can maintain no competition.

The dominions of France took in 1790 of these articles, in value, $352,795; those of Great Britain, $62,415.

X.—As to naval stores, namely, pitch, tar, and turpentine, the regulations of Great Britain are more favorable than those of France; for though the duties are higher in the former than in the latter, yet France places these articles from all countries on the same footing, while England lays higher duties on them when brought from other countries, than when brought from the United States. The difference as remarked in other cases, is a bounty upon the productions of the United States. The rate of duty here is of no consequence for the reason assigned in respect to tobacco.

Great Britain, in 1790, took from us of these articles, $196,832; France, $7,366.

XI.—As to salted provisions. The regulations of France as to these articles are evidently more favorable than those of Great Britain; being tolerated by the former, and prohibited by the latter.

The duties, however, are high, and even in respect to beef, are a serious incumbrance upon the sale with a living profit. In respect to pork, they amount essentially to a prohibition in France, which has great means of internal supply, and in the French West Indies the article is prohibited.

The dominions of France took of these articles in 1790, in value, $318,454; those of Great Britain, only $7,557.

XII.—As to flaxseed. It does not appear that any difference exists in the regulations of the two countries in respect to this article, but Great Britain is by far the better customer. Her dominions took, in value, in 1790, $219,924; the French, $3,290.

XIII.—As to iron. The regulations of Great Britain are more favorable to the United States, in respect to this article, than those of France; for France admits the iron of other countries upon the same footing with that of the United States, and lays a small duty upon bar iron.

Great Britain admits the iron of the United States free from duty, and lays a considerable duty on the article brought from other countries.

Great Britain took from us of this article in to the amount of $196,832; France, to the amount of $2,143.

XIV.—As to ships built in the United States. The regulations of France did favor more the building of ships for sale than those of Great Britain; for ships built in the United States and purchased by the French, were capable of being naturalized in France. This distinction in our favor is now done away. In England ships built in the United States have been and are entitled to be recorded, and being recorded and owned by British subjects, enjoy the same privilege as British-built ships in the trade between the United States and Great Britain.

A general distinction in favor of the United States runs through the regulations of Great Britain in this particular, that most articles of foreign countries brought in foreign ships, pay a higher duty than if brought in British ships; but not so of the same articles if brought in ships of the United States.

In the West India trade of France, the United States stand upon the same footing with other foreign nations; in one instance, perhaps upon a worse, as it regards the operation of the thing—namely, as to salted beef, which, though foreign, if brought from France in French ships, is exempted from the duty which is paid on the same article carried from the United States directly to the islands. The proximity of Ireland to France seems to render this an advantage to her over the United States.

In the West India trade of Great Britain, the United States have the peculiar advantage of their commodities being introduced upon the same footing as if brought from the British dominions in America, except as to the article of salt carried in ships of the United States. Here is a distinction in favor of the United States.1

Note.—Mr. Jefferson’s table refers to an arrêt of 9th of May, 1789, as making certain alterations in the trade of the United States with the French West Indies.

But this arrêt (which is merely an ordinance of the Governor-General of St. Domingo) is confined wholly to the south part of the island of St. Domingo, on very special reasons relative to the improvement of that particular spot, and with very severe restrictions to prevent an extension. It is no permanent part of the system of France—no part of the general system of the West Indies, and is not known to have received the sanction of the king. It was, besides, passed at a moment of revolution.

Ships.—This article is to be viewed in a twofold light, as a salable manufacture and as a vehicle to convey the productions of the country. The laws of France at the period to which this table refers permitted vessels built in the United States, when purchased and owned by French citizens, to be naturalized, and thereby enjoy the privileges of French vessels. The laws of Great Britain did not permit the same. Our vessels, owned by our own citizens, in the trade between the United States and France, enjoyed the same privileges with the most favored nations, and not greater. In the trade between the United States and Great Britain, they enjoyed equal privileges with British bottoms, greater than the vessels of other foreign countries in the trade between those countries and Great Britain (certain productions of those countries being subject to higher duties when carried in their own than when carried in British bottoms, which was and is not the case in respect to vessels of the United States carrying their own productions). In the trade between the United States and the French West Indies, our vessels of sixty tons and under might carry thither and bring from thence the articles permitted to be imported and exported—but other foreign vessels enjoyed the same privilege with ours. Between the United States and the British West Indies, our vessels could carry nothing except salt from Turk’s Island.

The arrêt of the 29th of December, 1787, gave the citizens of the United States like privileges with French subjects in the Asiatic dominions of France. It is also understood that our citizens enjoyed useless privileges in the Asiatic dominions of Great Britain.

No notice is taken of the trade of exports from France and Great Britain to the United States, because the policy of each country was in that respect nearly similar and unexceptionable. The exceptions made from time to time by the French Colonial Government are not taken notice of—because they were exceptions from the general system of the mother country, founded on the necessity of particular emergencies. The true complexion of a system is to be determined by the general permanent rules which govern it—not by special exceptions from fortuitous circumstances and cases of necessity.

The special authorities upon which the following table has been formed are, with regard to France, the arrêt of the 29th of December, 1787; with regard to the French West Indies, the letters patent of October, 1727, and the arrêts of the 30th of August, 1784, and the 18th and 25th of September, 1785; with regard to Great Britain, the proclamation of the 26th of December, 1783, yearly continued, explained by sundry statutes; with regard to the British West Indies, the Act of Parliament of the 28th of George Ⅲ., chap. ⅵ.

FOREIGN RELATIONS

speech on the treaty of paris1

Wednesday, March 19, 1783.

Mr. hamilton urged the propriety of proceeding with coolness and circumspection. He thought it proper, in order to form a right judgment of the conduct of our ministers, that the views of the French and British courts should be examined. He admitted it as not improbable, that it had been the policy of France to procrastinate the definite acknowledgment of our independence on the part of Great Britain, in order to keep us more knit to herself, and until her own interests could be negotiated. The arguments, however, urged by our ministers on this subject, although strong, were not conclusive, as it was not certain that this policy, and not a desire of excluding obstacles to peace, had produced the opposition of the French court to our demands. Caution and vigilance, he thought, were justified by the appearance, and that alone. But compare this policy with that of Great Britain; survey the past cruelty and present duplicity of her councils; behold her watching every occasion and trying every project for dissolving the honorable ties which bind the United States to their ally, and then say on which side our resentments and jealousies ought to lie.

With respect to the instructions submitting our ministers to the advice of France, he had disapproved it uniformly since it had come to his knowledge, but he had always judged it improper to repeal it. He disapproved highly of the conduct of our ministers in not showing the preliminary articles to our ally before they signed them, and still more so of their agreeing to the separate article. This conduct gave an advantage to the enemy, which they would not fail to improve for the purpose of inspiring France with indignation and distrust of the United States. He did not apprehend (with Mr. Mercer) any danger of a coalition between France and Great Britain against America, but foresaw the destruction of mutual confidence between France and the United States which would be likely to ensue, and the danger which would result from it in case the war should be continued. He observed that Spain was an unwise nation, her policy narrow and jealous, her king old, her court divided, and the heir apparent notoriously attached to Great Britain. From these circumstances he inferred an apprehension that when Spain should come to know the part taken by America with respect to her, a separate treaty of peace might be resorted to. He thought a middle course best with respect to our ministers; that they ought to be commended in general, but that the communication of the separate article ought to take place. He observed that our ministers were divided as to the policy of the court of France, but that they were all agreed in the necessity of being on the watch against Great Britain. He apprehended that if the ministers were to be recalled or reprehended that they would be disgusted, and head and foment parties in this country. He observed, particularly with respect to Mr. Jay, that, although he was a man of profound sagacity and pure integrity, yet he was of a suspicious temper, and that this trait might explain the extraordinary jealousies which he professed. He finally proposed that the ministers should be commended, and the separate article communicated. This motion was seconded by Mr. Osgood, as compared, however, with the proposition of the Secretary for Foreign Affairs, and so far only as to be referred to a committee.

Monday, March 24th.1

Mr. Hamilton said that whilst he despised the man who would enslave himself to the policy even of our friends, he could not but lament the overweening readiness which appeared in many to suspect every thing on that side, and to throw themselves into the bosom of our enemies. He urged the necessity of vindicating our public honor by renouncing that concealment to which it was the wish of so many to make us parties.2

LETTERS FROM PHOCION1

To the Considerate Citizens of New York, on the Politics of the Times, in Consequence of the Peace

1784

[1]The report on manufactures is, with the exception of the first report on the public credit, the most important state paper written by Hamilton, and to say this is to say a great deal. Unlike most of his reports, it produced no immediate and direct results in legislation, but it laid the foundation of the protective policy in the United States; and was an integral part of that national system of measures which was the polestar of Hamilton’s statemanship. Its principles were all subsequently adopted; its doctrines have prevailed as a rule in the political contests to which the tariff at various periods has given birth, and it has colored and guided the views of our statesmen and the economical and industrial policy of the country for nearly a century. For many years Hamilton had been a close student of political-economical questions. After reading all the earlier writers, he read Adam Smith with great care, and wrote in 1783, while a member of Congress, an extended commentary, no longer in existence, upon the Wealth of Nations. His training and preparation are shown fully in this report, not only in discussing the protection principle, but in the able treatment of the general theory of taxation. As an exposition of the reasons for the protection of nascent industries—a doctrine accepted by Mill—this report has never been surpassed, and as an argument for the adoption of the protective principle as the true policy for the United States, without reference to other countries, it has never been successfully answered. The question, under very different conditions, is a living one to-day,* and it is therefore desirable to give very briefly the facts which show the rise and the course of the protective policy since the day when Hamilton first developed it for the consideration of the American people.

The question of giving protection to industries came up in the first Congress, and after much debate and constitutional wrangling, what might be called the theory of incidental protection prevailed, and was recognized in legislation. This policy, very mild in its actual application, received an immense impetus from Hamilton’s report to the next Congress in 1791; but there was no change in the system for many years to come. In 1800 there was an increase of duties; in 1804 some three per cent. increase over the tariff of 1800, but in both cases it was for purposes of taxation and not avowedly protectionist. Jefferson, in accordance with his general theories of government, was a strict constructionist and a free-trader. Yet, by the Louisiana Purchase, he not only strained to its utmost, but actually violated the Constitution, and he was the author of the most severely protective measure this country has ever known. His embargo was of course laid without any view to protection, but in effect it was the highest kind of absolutely prohibitory tariff, and the sharpest stimulus that could have been applied to nascent industries. Madison was a modern protectionist, not differing materially from Hamilton, and his views are apparent in the tone of his messages and in his strong advocacy, at a later period, of the protective tariff. Henry Clay, too, was now upon the stage of public life, and in the session of 1809-10 made a protectionist speech. The policy was coming nearer and nearer to open and confessed existence. In 1812, just before hostilities were declared, the tariff was again raised—this time about seven per cent. higher than its predecessor. Still it was only for purposes of taxation. The war, however, was in direct continuation of the embargo, and amounted, of course, to prohibitory protection. Thus stimulated the infant industries rapidly increased, and in 1814 Mr. Calhoun made a strong speech in favor of the war duties as protective measures. Two years later, when the country was struggling in a sea of financial difficulties, and the infant industries were paralyzed by the influx of English goods, Mr. Calhoun brought in and carried through the famous tariff of 1816, an open and avowed measure of protection and the beginning of the protective policy. There was another tariff in 1820 in the same direction, another in 1824, and finally the tariff of 1828, known as the “bill of abominations,” which was carried through at the instigation of the woollen interests.

Now came a shifting in the political forces. New England, under the lead of Webster, went over finally and definitely to the side of protection, while the South, under the lead of Calhoun, prepared for revolution against it. The embargo was a Southern measure, so was the War of 1812, so was the tariff of 1816. To all alike New England had been opposed, and as the commercial part of the country, she offered a steady resistance to the advance of the protective system. The Southern policy prevailed; the Southern policy built up New England industries, and did not help the South. Finally the interests of New England swayed heavily over to protection, the Middle States and the North generally went with her, and the lines were drawn.

Then the agitation against the tariff began. A bill to somewhat lighten the duties passed in 1832, but the issue had become too deep for such a measure. South Carolina, guided by the champion of protective tariff of 1816, had nullified the existing law. The upshot was the Clay compromise, providing for a twenty-per-cent. annual reduction for ten years. In 1842 the country was again in financial difficulties, the compromise was swept aside, a new tariff bill passed, and the duties were raised twenty per cent. Reviving business and increased prosperity made the tariff of 1842 popular, and to retain their hold upon Pennsylvania the Democrats inscribed on their banners in that State: “Polk and Dallas and the tariff of ’42.” The tariff of ’42 had, of course, the support of the Whigs, but they were defeated, while the Democrats in power soon forgot their Pennsylvanian promises, and the tariff of 1846 practically neutralized its predecessor. It was a tariff for revenue only, made in accordance with the recommendations of the Secretary of the Treasury, Robert J. Walker, in what the London Times called “the only properly free-trade report ever made by an American Minister of Finance.” The Mexican War, the discovery of gold, and the darkening clouds of the slavery question, drew men’s minds away from the tariff, and the policy of lowering duties was continued until, in Buchanan’s time, we had reached practical free-trade. Then came the financial crash of 1857, and public attention began to revert fitfully to the tariff, but of course nothing could be done when the country was distracted by the raging agitation over slavery and the approach of civil war. The advent of the Republican party and the pressing need of funds brought the Morrill tariff of 1861, which was a complete embodiment of the protective principle. There have been heavy reductions of duties in various directions and at various times since then, but the principle of protection has remained predominant. The payment of the debt, the increase of the revenue, and the need of revision and reform in the existing system of duties, have made the tariff again an immediate and pressing issue, and a very living question.

This brief outline suffices to show that Hamilton’s policy has been, in the main, the policy of the country, although it has lacked the uniformity and steadiness, and, at times, the moderation which he would have given it. But the importance of his influence in this direction cannot be overlooked or overestimated. Apart from its intrinsic merits as an argument, and apart from the principles it advocates, Hamilton’s report on manufactures, especially when the tariff is an immediate issue, is very wholesome reading. Whether a man is a free-trader, a tariff-reformer, or a strong protectionist, he will do well to study this report, for it contains one thoroughly good lesson. It clears the mind from cant. It shows the true way in which this subject should be discussed, from whatever point of view one approaches it. Hamilton always looked facts in the face. He knew that the question of free-trade or protection was purely a question of business expediency, and as such he discussed it. Probably nothing made Carlyle more violent in his denunciations of the “dismal science,” than the cant which the Manchester school brought into it, which became well-nigh universal in England. Free-trade was good business policy for England, and so far so good, but when its supporters undertook to make a moral question out of it, to elevate it as a fetich which was to cure all human ills, and to hold up the “laissez aller” principle as a sort of religious creed, Carlyle crying in the wilderness revolted. He, like others who had studied history, knew that the waste places of the earth had not been built up, and civilization painfully extracted from barbarism, by “laissez aller” and “laissez faire,” and he was nauseated by the humbug with which the whole matter was enveloped. This is why Hamilton’s report is good reading for any one. He may have been hopelessly wrong in his views, but at all events he did not cant. He did not attempt to treat a question of profit or loss as if it were the Protestant reformation or the abolition of slavery. He wished to advocate a policy which would pay best for the United States, and he argued his case in plain, business terms. Whether right or wrong in his opinions he was supremely right in his method of discussion, and the sooner his method is adopted by all sides the better, and the nearer we shall be to a proper solution. When free-trade paid, England adopted it, and not one instant sooner. The business sense of the American people is unsurpassed; they have protection because they think it pays, and when they are convinced that free-trade will pay better they will have it instead, and not before.

[1]These blanks occur in the original, which is rough and incomplete.

[1]This draft of a speech is the only exposition we have of Hamilton’s views upon our commercial relations and foreign trade, and is, of course, closely allied with the question of our policy in regard to manufactures. It is little more than a brief, but it is valuable to us from what it indicates and suggests rather than for what it actually is. It is in reality an answer to Jefferson’s report on commerce, embodying the policy of the Secretary of State. In January, 1794, the opposition opened their campaign on the question of preference to France as against Great Britain, and Madison, on January 3d, introduced a series of resolutions based on Jefferson’s report and proposing duties discriminating against England. It was an attack on the administration from what was deemed advantageous ground. January 13th, Mr. Smith, of South Carolina, replied with the speech of which this is an outline or draft, putting the question on business and commercial principles, and lifting it above national prejudices and resentments. The effect of the argument was very great, and it was published and widely circulated in pamphlet form. The speech is reported in the Annals of Congress, 1793-1795, p. 174, and should be compared with the draft. William Smith was an able man, well known in his day. He was a stanch Federalist, and a warm friend and admirer of Hamilton. He was a representative in Congress for the years 1789-1799, and then resigned to accept the mission to Portugal, to which he was appointed by John Adams.

[1]This supplementary paper helps to fill up the outline of the speech of Wm. Smith on the Madison resolutions. Like the main draft it is incomplete—and the accuracy of the figures cannot be vouched for, as they were supplied by the editor from that speech to fill up the blanks. They are believed to be correct.

[1]This speech was delivered in Congress during the debate on the treaty of peace which concluded the war for independence.—See Madison Papers, i., 394.

[1]See Madison Papers, i., 411.

[2]These two speeches show that Hamilton’s natural inclination was toward France, a significant commentary on Jefferson’s pet accusation that Hamilton was “British” in feeling.

[1]These letters are inserted here because they are largely devoted to a discussion of the treaty with England, and our relations with that country. Feeling in New York against those who had been Tories ran very high and Clinton threw all his weight into the scale against them. Bills were introduced to disfranchise them forever, and to confiscate their property; while there was still another to confiscate the property of the Society for the Propagation of the Gospel. Against these measures, which were in violation of the treaty and of a good and generous policy, Hamilton determined to protest, and in order to check the current of popular feeling, and bring about, if possible, more moderate, wiser, and more magnanimous counsels, he wrote the papers signed “Phocion,” an act requiring much courage in the existing condition of popular feeling. These two essays were originally published in pamphlet form.

[*]Written (by the editor) in 1885.

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refined sugars and chocolate

hamilton to jefferson

COMMERCIAL RELATIONS

COMMERCIAL RELATIONS

outline of smith’s speech on madison’s resolutions of january 3, 1794

General Observations

Particular Observations

FOREIGN RELATIONS

FOREIGN RELATIONS

speech on the treaty of paris1

LETTERS FROM PHOCION1

To the Considerate Citizens of New York, on the Politics of the Times, in Consequence of the Peace