Profit is every hour becoming capital

Editor’s Note: Samuel Negus is our second contributor for “John Jay at SHEAR 2018”. Negus is an Upper School History Teacher at the Atlanta Classical Academy

During the autumn of 1794 John Jay and the British foreign secretary William Grenville negotiated a treaty of amity and commerce in London. Jay’s mission followed two years of transatlantic controversy complicated by attendant domestic political tumult. The Royal Navy’s seizure and forcible purchase of American-owned grain cargos bound for France incited controversy in mid-1793. Worse followed in November of that year, when commanders of a British expedition against the French Leeward Isles seized more than three-hundred U.S.-flagged merchant ships and condemned them as de facto enemy property.

Jay met with sympathy from Grenville, who shared his desire to both expand Anglo-American trade and reduce the rate of British naval depredations against neutral shipping. Partisan critics at home later attacked Jay’s treaty for agreeing to limits on the British seizure of neutral ships and cargo as contraband of war. Any such concession, though limited in duration by the treaty’s ten-year lifespan, fell short of the liberal ideal that ‘neutral ships make neutral goods’—i.e. that belligerents have no right to disrupt neutral commerce. Such criticism notwithstanding, the treaty dramatically reduced the rate at which British ships captured, and prize courts condemned, American goods. Lord Grenville explicitly wished for as much. He wrote to Jay shortly after the latter’s departure from London in 1795, mentioning Parliamentary legislation to reduce the number of vice-admiralty courts in the West Indies. Grenville hoped that “the regulation will not stop there, but that the effect of it,” under the terms of the treaty they had lately drafted, “may render the practice of those [courts] which remain more correct and cautious than I fear it has hitherto been.”[1]

Jay viewed the treaty’s commercial terms with similar optimism. Access granted for U.S.-flagged ships to British colonial ports in Asia and the West Indies fell short of the full equality to British ships that Americans desired. But, as Jay reflected to Senator Oliver Ellsworth of Connecticut, “further concessions on the part of Great Britain cannot… be attained.” Grenville felt certain “that some of the [commercial] articles will be received as unequivocal proofs of goodwill.”[2] Jay professed confidence that valuable if limited concessions constituted a vital “break [in the] ice,” and that “to enlarge the aperture [in future] would be more easy… if we should be reasonably temperate and prudent.” Jay pointed to the treaty’s express stipulation “that the arrangement to succeed it shall have in view the further extension of commerce.”[3]

The frenzied political battle over ratification of and funding for the controversial treaty dragged on into the spring of 1796. In its defense, the prodigious Alexander Hamilton collaborated with New Yorker Senator Rufus King to produce thirty-four essays under the pseudonym ‘Camillus’. These influential tracts focused primarily upon the promise of shared prosperity deriving from the capital gained in expanded trade with Britain’s empire. The treaty’s commercial terms promised, Hamilton urged, “the advantages of an interchange of commodities for the supply of mutual wants and… reciprocal creation of industry.”[4]The treasury secretary’s Federalist Party allies employed like terms during congressional debate on the treaty. In urging the House of Representatives to fund its execution, Fisher Ames of Massachusetts asked whether any true America could wish to interrupt the transatlantic trade “by which our citizens are gaining everything.” Ames exulted that America’s “field for exertion is fruitful and vast,” and, if preserved, “peace and good government” could not but enable “the acquisitions of our citizens” to operate “as instruments of their future success.… Profit is every hour becoming capital. The vast crop of our neutrality is all seed and wheat, and is sown again to swell almost beyond calculation.”[5]

Louis Hacker emphasized the intimate connection in the Federalist political economy between “domestic and foreign policy—funding, a revenue, and a national bank in one part, and neutrality as war raged in the other—[these] underwrote and ensured survival and the beginnings of economic growth and prosperity.” Foreign specie gained through commerce during the Jay Treaty’s lifespan increased circulation of coin from $9 million to $20 million. As a result, “American capital eagerly embarked on promotions… by 1800 there were 34 banks, of which 27 were established after 1789.” For a retrospective on the fruits of the Federalists’ symbiotic trade and financial policies Hacker quotes the Earl of Liverpool’s 1820 statement to Parliament that since independence the United States had grown “in wealth, commerce, [industry], population, and strength, more rapidly than any nation in the history of the world.”[6]

Liverpool was correct in his appraisal. And though much derided by some at the time, John Jay’s Anglo-American treaty of 1795 proved a great catalyst of this economic fecundity.

[1] Lord William Grenville to John Jay, 11 May 1795. Henry Phelps Johnston, Correspondence and Public Papers of John Jay, 1763-1826 (New York: G.P. Putnam’s Sons, 1890-93), 4:173-76 [hereafter cited CPJJ]; John Raithby, Statutes Relating to the Admiralty, Navy, Shipping, and Navigation of the United Kingdom (London: Eyre and Strathan, 1823), 645-48.

[2] John Jay, draft treaty of amity and commerce, 6 August 1794.CPJJ, 4: 69-70; Jay to Oliver Ellsworth, 19 November 1794. CPJJ, 4: 132-33.

[3] James Monroe to Jay and reply, 17 January and 5 February 1795. CPJJ, 4:154-7. For Jay’s comments on the Whiskey Rebellion see Jay to Washington, 25 February 1795.CPJJ, 4: 160-62; Jay to Washington, 6 March 1795.CPJJ, 4:162-70.

[4] ‘The Defence’ no. 10. Harold Coffin Syrett and Jacob Ernest Cooke, eds. The Papers of Alexander Hamilton (New York: Columbia University Press, 1961-87), 19:172-86.

[5] Winfred Bernhard, Fisher Ames: Federalist and Statesman, 1758-1808 (Chapel Hill: University of North Carolina Press, 1965), 257-75; Joseph Gales, ed., The Annals of the Congress of the United States (Washington: Gales and Seaton, 1834), 5: 1239-64.

[6] Louis M. Hacker, The Course of American Economic Growth and Development(New York: John Wiley and Sons, 1970), 55-69.

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