Front Page Titles (by Subject) no. xxviii - The Works of Alexander Hamilton, (Federal Edition), vol. 6
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
no. xxviii - Alexander Hamilton, The Works of Alexander Hamilton, (Federal Edition), vol. 6 
The Works of Alexander Hamilton, ed. Henry Cabot Lodge (Federal Edition) (New York: G.P. Putnam’s Sons, 1904). In 12 vols. Vol. 6.
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
An extraordinary construction of the last clause of the fourteenth article has been assumed by the writer of Cato; his mistake in this instance has been the foundation of many of the errors with which that performance abounds. The article stipulates that there shall be a perfect and reciprocal liberty of navigation and commerce between our territories and those of Great Britain in Europe, subject always to the laws and statutes of the two countries, respectively. This navigation and commerce, says Cato, must be subject to, and defined and regulated by, the laws and statutes of the two countries which existed at the time of making the treaty; all future laws, that either party might be disposed to make, relative to the same, being excluded.
The reason assigned in support of this interpretation is, that the article would be nugatory, did not the laws and statutes alluded to mean only those in existence at the making of the treaty, since future laws might impair or destroy what the article confers.
Nothing in the expressions themselves requires this interpretation.
The customary and established meaning of them in other treaties would lead to a rejection of it. The object of the clause is not the limitation of the legislative power of the parties, but the subjection of their mutual navigation and commerce to their respective laws. This end is most fully attained by understanding the parties to mean their future as well as their existing laws. Besides, the interpretation must be such as will not destroy the use and meaning of other parts of the treaty. If this construction is just, some of the most important stipulations of the fifteenth article would really become useless. For instance, if the laws, existing at the time of making the treaty are alone to prevail, the articles of commerce, admitted or excluded by those laws, must remain entitled to admission or liable to exclusion. Why then say in the fifteenth article “that no prohibition shall be imposed on the exportation or importation of any articles to or from the territories of the parties respectively, which shall not extend to all other nations?” If a prohibition, applying to all foreign nations, may be imposed (as the clause allows), this would be a new or subsequent law, varying the law existing at the time of making the treaty, and consequently defeating the construction in question.
The reason adduced by Cato to support his construction is equally defective with his interpretation itself. The fourteenth article is in general terms, and similar, as has been shown, to the introductory articles of other treaties; so far from the last clause thereof being capable of destroying the preceding stipulations, it is the peculiar province of the next article to ascertain the points which the parties mutually agree to except from their legislative power. In all cases not thus excepted, the navigation and commerce of the parties is subject to their existing or future laws.
It is not necessary to remark on the several objections which have proceeded from the opinion that the treaty restrains us from imposing prohibitory duties and exclusions; they are but subdivisions of the error that has been just combated.
Another objection which has been stated by several writers, and much labored by Cato, is that, under the right reserved to the British Government to countervail an alien tonnage duty, by the imposition of an equivalent one on our vessels entering their ports, they would gain and we should lose.
Several methods are adopted to prove this opinion. The observation that we have a tonnage duty on our own vessels, and that Great Britain has none, is repeated by way of objection against this as well as against the proposed adjustment contained in the twelfth article. The same reply already given might be sufficient in this place.
But [is it true] that British ships entering their own ports in Europe are wholly free from a tonnage duty? The contrary is the fact; since it is understood that they pay a tonnage duty for the support of light-houses, and some other institutions, connected with their navigation, which [in all their ports1 ] exceeds the tonnage duty of six cents per ton, that we levy on the entry of our own vessels employed in foreign trade. But Great Britain (it is alleged) will not only impose, in virtue of this reserved right, fifty cents per ton on our vessels entering her ports, but in every port except that of London she will furthermore exact one shilling and ninepence sterling, or thirty-nine cents per ton, for light-money and Trinity-dues, more than is paid by her own vessels; this, added to the difference before stated, would have, it is said, a very discouraging effect upon our navigation. Our tonnage duty is a tax not divided and appropriated, like the light-money or Trinity-dues in Great Britain, to specific and particular objects, but when levied, goes into the treasury with the duty of impost, and stands appropriated to the various objects to which that duty is appropriated. Among those objects is the support of light-houses. It is not the object to which the tax is applied that gives a denomination; whether it goes to support the civil list, or to pay annuities, or to maintain light-houses, or to support hospitals, it is equally a tonnage duty. A tonnage duty, then, of a certain amount, is now paid by American vessels entering the ports of Great Britain. This duty is not uniform, being less in London than in the other ports, and, in some instances, less than the tonnage duty paid by British ships entering our ports. The object of this clause (8th of the 15th article) is to equalize the alien tonnage duties of the parties. Hence the reservation of a right to the British Government to impose on our vessels entering their ports in Europe, a tonnage duty equal to that which shall be payable by British vessels in our ports. It would be against the manifest views of the parties, as well as against the explicit terms of the articles, to impose a tonnage duty (whether for light-money, Trinity-dues, or any other purpose) which should exceed that which shall be payable by British vessels in our ports.
The right reserved is expressly to impose on our vessels an equal, not a greater tonnage duty than we shall impose on their vessels. This objection, therefore, must be abandoned.
But again, it is urged that our navigation, should it weather Scylla, must perish on Charybdis; for we are gravely told by Cato that, under the right reserved to the British Government to impose such duty as may be sufficient to countervail, or, which is equivalent, to balance the difference of duty payable on the importation into our ports of Asiatic or European goods by American or by British vessels, our ships will be thrown out of the trade with the British European dominions; because, under this right, the British Government will impose a duty on our productions carried to their ports in our own ships equal to the whole duty payable on the goods and merchandises imported into our ports by British ships; and as the goods and merchandises which we receive from them exceed in value those that they receive from us by one third, and as the duty to be countervailed is at least ten per cent. ad valorem on the goods received from them, the consequence will be, that the countervailing duty must amount to fifteen per cent. on the value of all our productions carried in our own ships to the British ports in Europe, while the same will be free in British ships. A more extravagant construction,1 or an argument more inaccurately formed, can scarcely be imagined.
The countervailing right is not applicable to the whole duty payable on goods and merchandises imported into our ports in British ships, but expressly confined to the difference of duty now payable on the same when imported by American or by British vessels. This difference is one tenth part of the duty upon all European goods—that is to say, these goods pay one tenth part more duty when imported in British vessels than is paid on the same when imported in an American vessel. In all cases, therefore, where our impost is ten per cent. ad valorem, the difference of duty to be countervailed amounts to only one per cent. on the value of the goods, instead of ten per cent., as is alleged by Cato; in the instance of teas imported from Europe the difference is greater. Again, it is not an aggregate sum that is to be apportioned under this countervailing right, for this sum would be liable to constant variation, according to the quantity and species of goods imported into our ports from time to time by British vessels; and besides, the British Government possess no means whereby the amount thereof could be ascertained.
Cato feels and admits the force of these remarks as decisive against an average duty, without perceiving that they possess equal strength against his project of countervailing the whole duty paid on the importation of goods and merchandises into our ports by British vessels; for the same variation in the amount, and the same want of the means to ascertain it, will operate in both cases. The reasons which he himself employs to prove that an average duty cannot be ascertained, equally show the impracticability of the method which he considers as the one that will be employed in the execution of the countervailing right reserved to the British Government. It has before been stated that the natural, as well as the equitable, mode of executing this power will be to impose a duty on the goods imported by us from their European ports exactly the same as makes the difference of duty on the importation thereof into our ports by American or by British vessels.
Admitting that the execution of the countervailing right reserved to Great Britain will do no more than place the navigation of the parties on an equal footing in their mutual intercourse, still we are told that for this, likewise, the treaty is blamable, because even equality will be such an advantage to our rival, that we shall be unable to maintain the competition.
This objection brings with it a quality rarely to be discovered in the opinions of the cavillers against the treaty. Their usual error is a false and magnified estimate of the comparative resources, strength, and importance of our country; in this instance, shifting their ground, they fall into the opposite extreme, and contend for our inferiority in a branch of business in the prosecution of which we are unquestionably able to meet a fair competition with any nation.
With what propriety could we have proposed or expected an adjustment of our intercourse by which our vessels should have been placed on a better footing than those of the other party? As the trade was mutually beneficial, why could we, more than Great Britain, ask for an arrangement that should subject our rival to comparatively heavier burdens? Does any considerate man believe, that it would have been proper for us to ask, or that there is the least probability that Great Britain would have acceded to, an arrangement on the subject of our mutual navigation, that should have secured to us advantages denied to them? To place the navigation of the parties on an equal footing, was all that could be rationally expected by either; and so far from such a settlement being injurious to us, the contrary has long been the opinion both here and in Great Britain. If it is true that we are unable to maintain a competition with the British navigation, how are we to account for the jealousy [that is understood] to have shown itself on their part on this subject.
But the fact is otherwise—British ships cannot be built and equipped as cheap as American ships, nor are they victualled and manned1 on as good terms. Our country abounds with excellent materials for ship-building. Great Britain is in a great measure dependent upon other countries for a supply of them. The materials for the construction of ships are much cheaper in America than in Great Britain; and intelligent characters in Great Britain as well as in America have affirmed, that an American merchantship of any given burthen can be built and equipped for sea one third cheaper than a British, Dutch, or French ship of equal goodness. Mr. Coxe informs us, that the cost of an American ship, built of our live oak and cedar, is from 36 to 38 dollars per ton, completely finished; while an oak ship in the cheapest part of England, France, or Holland, fitted in the same manner, will cost from 55 to 60 dollars per ton. The capital employed on the American merchantmen is therefore one third less on any given amount of tonnage than that employed in the same amount of British tonnage; or the money requisite to build and equip for sea two British merchantships, will be sufficient to build and equip for sea three American merchant-ships of the same burthen and of equal goodness. It is not only the difference in the first cost, but to this should be added the difference of interest and insurance, the annual amount whereof is ascertained by the value of the ships.
If we add to this the comparative advantages that we possess in victualling and manning our vessels, independent of the acknowledged and distinguished skill and enterprise of our seamen, it may be safely affirmed, that no American who knows the character of his countrymen, and who is not ignorant of our peculiar resources for ship-building, will doubt our superiority in an equal and fair competition with any other nation.
It is further alleged, that the treaty wants reciprocity, inasmuch as the whole territory of the United States is laid open to the British navigation and commerce, while in return, the British territories, in Europe only, are open to us. The short answer to this allegation is, that it is not true. All the British territories in Europe are laid open to us; all their territories in Asia are also opened to us; the treaty likewise opened all their territories in the West Indies. The article relative to this branch of trade, as has already been observed, is excepted from the ratification of the treaty, and made the subject of future negotiation. The British territories on our continent, that of the Hudson’s Bay Company excepted, are also opened to us in like manner as ours are opened to them. The intercourse is confined on both sides to the interior communications, the inhabitants of those colonies being equally destitute of a right to resort, by sea, with their ships to our ports and harbors, as we are of the right to resort, by sea, with our ships to their ports and harbors.
The territory of the Hudson’s Bay Company, the island of Newfoundland, and the establishments on the coast of Africa, are the only British dominions to which the treaty, in its original form, does not give a right of intercourse and trade.
The settlement in the Bay of Honduras is on Spanish lands, and the right of precedence is conceded for specified objects, beyond which the Spanish Government are vigilant to restrain the settlers.
Spain may possibly be induced to allow us a right in common with Great Britain to cut mahogany and dye-woods in this region; but Great Britain cannot, consistently with her convention with Spain, share with us the privilege that she enjoys.
Newfoundland is a mere establishment for the British fisheries. The African trade has been, and might hereafter be, pursued, if our humanity and the force of public opinion did not impede it, without procuring a right to resort to the British ports in that quarter; and in respect to the unsettled territory of the Hudson’s Bay Company, about which so much has been noticed and written, it is of no sort of importance, except in a small Indian trade that employs two or three annual ships, which arrive there in August and escape in September; besides that, this trade belongs to a company who possess a right to the exclusive enjoyment of it even against their fellow-citizens. It is finally alleged that the treaty will bind up and restrain our Government from making more specific and beneficial treaties of commerce with other nations.
Those who urge this objection have generally placed great reliance on another objection, which asserts that the treaty with Great Britain violates the Constitution, because it amounts to a regulation of commerce, the power to regulate which is vested in Congress and not in the Executive. Yet these very characters, in the next breath, maintain that the treaty is bad, because it precludes our Executive government (for no other power can make treaties) from making more minute and beneficial commercial treaties with other nations. If these observations can be reconciled, it must be thus: the Constitution does not authorize the Executive, with the aid of the Senate, to make a commercial treaty with Great Britain, having vested in Congress the power to regulate the trade between us and that nation; but it allows the Executive to make commercial treaties with any other nation, which may establish the most material and minute commercial and revenue laws, without affecting the power vested in Congress to regulate trade. That we may have characters among us sufficiently intemperate to wish that such was the Constitution, I am not prepared to deny; but that such a construction can be made out, yet remains to be proved.
The objection, as usual, is made in a loose and inaccurate manner; literally interpreted, we should infer that the treaty contained an article, whereby we had agreed with Great Britain that we would not form any future treaties of commerce with any nation; but no such stipulation exists.
Is it meant by the objection to be alleged that we can form no commercial treaty, whereby, for an advantage yielded on our part, we may acquire a privilege in return, unless we yield the same advantage to Great Britain gratuitously and without receiving from her the equivalent?
Admitting the truth of this objection, it might be replied: So, on the other hand, Great Britain can form no commercial treaty, whereby, for an advantage yielded on her part, she may acquire some privilege in return, unless she yields the same advantage to us gratuitously and without receiving from us the equivalent; and as Great Britain, whose commercial relations are equally extensive with ours, and whose capital far exceeds ours, is equally restrained on this point, our chance of gain would be fully equal to our chance of loss.
But the allegation is not generally true, and the objection, when examined, will be found to be of little weight, even with those who may imagine that nations do sometimes make good bargains by the purchase of privileges and exemptions in their foreign trade. The case that has been chosen to enforce the objection, shall be employed to invalidate it.
Admit that the treaty with Great Britain is in operation; that the oil and provision merchants of the United States, and the wine and brandy merchants of France are desirous of a treaty between the two countries, whereby those commodities shall be received from each other on low duties or freely; admit further, that the governments of the two nations are disposed to make such a treaty (this is the case again put by the opposers of the treaty as impracticable), what will restrain the conclusion of this treaty? The disadvantage that will arise from our treaty with Great Britain? No; for Britain produces neither wines, nor brandy made from wines, with which she could supply us; she therefore could gain nothing, nor should we lose any thing, by the conclusion of such a treaty. All that will be requisite, therefore, in the formation of such treaties, will be to choose for the purpose such articles of the growth, manufacture, or produce of any country with whom we desire to treat, as are not common to it and the British dominions, and any skilful merchant will quickly make the selection. Hence it appears that the objection is not well founded in point of fact.
But though it may be practicable, will it be politic in us to conclude no commercial treaties of this character with any nation? If we resort to precedents as guides, we shall discover few, the history of which would encourage us. Indeed, they are a description of conventions not often formed between nations.
They are of difficult adjustment, and necessarily increase the provisions of the commercial code, sufficiently intricate, when only one rule prevails in respect to all nations. Besides, however perfect may be the right of nations in this respect, yet, when the productions of one nation are received at lower duties than the like productions of another, the discrimination will scarcely fail to awaken desires and to produce dissatisfaction from their disappointment.
Again, unless we are prepared, at the expense of the whole, to procure advantages or privileges for a part of the community, we shall doubt the policy of such stipulations. Between two manufacturing nations, in each of which the manufactures have attained to great perfection, a tariff of duties may be established by treaties, in the payment of which the manufactures of the two countries might be freely exchanged and mutually confirmed; such was the commercial treaty between France and Great Britain in the year 1786. But the subject was so intricate and involved such a variety of apparently independent circumstances, such as the price of provisions, the amount and the manner of levying of the taxes, and the price of the raw materials employed in their respective manufactures, that neither party felt entire confidence in the equity and reciprocity of the treaty; and with all the skill in negotiation, that France in a superior degree has been supposed to have possessed, the opinion of that nation has finally been, that the treaty was burdensome and disadvantageous to them.
We have another specimen of this species of treaty in a short convention between England and Portugal, concluded in 1703. The object was to procure a favorable market for dissimilar commodities, and such as were not the common production of the two countries. But this treaty, which has been so much applauded, is essentially defective in point of reciprocity. England agrees to admit the wine of Portugal on payment of two thirds of the duty that shall be payable on French wines; and in return, Portugal agrees not to prohibit the English woollens. She does not agree to receive them exclusively of the woollens of other countries, nor to admit them on payment of lower duties. The advantage, therefore, is manifestly on the side of Portugal. By the treaty of commerce between France and Great Britain, concluded in 1786, it was agreed, that the wines of France imported into Great Britain should pay no higher duties than those which the wines of Portugal then paid. The consequence must have been a reduction, without compensation or equivalent from Portugal, of the existing duties on the wines of that country brought into Great Britain, equal to one third of the amount of such duties. This is an instance of inconvenience and loss, resulting from the species of treaties, which it is alleged as an objection to the treaty concluded between us and Great Britain, that we are prevented by it from making with other nations.
A small compact nation, likewise, who excel in some one species of manufacture that is established throughout their territory, and in the conducting and success whereof there is a common interest, may find it useful to procure the exclusive supply of some foreign market; provided, in this as in all other bargains, the compensation shall not be too high. But in a nation like ours, composed of different States, varying in climate, productions, manufactures, and commercial pursuits, it will be more difficult to enter into treaties of this kind. Should Great Britain, for example, be inclined to admit our fish-oils freely, or on payment of low duties, on condition that we would receive their woollens or hardware freely, or on payment of low duties, would the Middle and Southern States be satisfied with such a treaty?—would they agree to a tax on their estates sufficient to supply the deficiency in the revenue arising from the relinquishment of the impost on British woollens or hardware? Would it not be said that such a tax was a bounty out of the common treasury, on a particular branch of business pursued alone by a portion of the citizens of a single State in the Union? Instances might be multiplied in the illustration of this subject; but they will readily occur to every man who will pursue a little detail in his reflections. We have once made an experiment of this kind; its fate should serve as a caution to us in future. By the eleventh and twelfth articles of our treaty with France, it was agreed that France should never impose any duty on the molasses that we should import from the French West Indies; and in compensation of this exemption, that we should never impose any duty on the exportation of any kind of merchandise by Frenchmen, from our territories, for the use of the French West Indies. These articles produced much dissatisfaction in Congress: it was said to be a benefit that would enure to the use and advantage of only a part, but which must be compensated by the whole. Those arguments which will show themselves in future, should similar conventions be formed, were displayed on this occasion. The treaty was ratified; Congress applied to the king of France to consent to annul these articles; this request was granted; and the articles were, by the several acts of the parties, annulled.
Not only the few instances of the existence of these treaties among the nations, added to the peculiar difficulties which we must meet in their formation, should lead us to doubt their utility, but also the opinion of our own country, which, if explicit on any point, has been repeatedly so in the condemnation of this species of national compact.
The introductory article of our commercial treaty with France asserts, that the parties willing to fix in an equitable and permanent manner the rules which ought to be followed relative to their correspondence and commerce “have judged that the said end could not be better obtained than by taking for the basis of their agreement the most perfect equality and reciprocity, and by carefully avoiding all those burdensome preferences which are usually sources of debate, embarrassment, and discontent.”
The same language is employed in our subsequent treaties with Holland and with Sweden; the public voice is unequivocal on this subject.
On the whole, the more closely this question is examined the more doubtful will the policy appear of our entering into treaties of this description. We shall have to encounter not only the intrinsic difficulties that always attend a fair and precise adjustment of the equivalents, together with the national discontents that proceed from errors on this point; but, moreover, a still greater embarrassment from the circumstance that our great staple exports are not the common productions of the whole Union, but different articles are peculiar to different parts thereof. If, notwithstanding, our Government shall discover an instance in which, consistent with the common interest and sound policy, such a treaty might be desirable, we have scope sufficient to form it without incurring loss or disadvantage by the operation of our treaty with Great Britain.
[1.]Unless London be an exception.
[1.][If I mistake not, the assertion of Cato, as to the whole duty, has been retracted; but the residue of his error on this point remains unrecalled.]
[1.][In the comparison in this particular, we must combine the number of hands with the terms of compensation according to which the vessels of the two countries are navigated.]