Chapter IV

ORIGIN AND NECESSITY OF THE POWER TO REGULATE COMMERCE.

Among all the causes which led to the establishment of the Constitution of the United States, there is none more important, and none that is less appreciated at the present day, than the inability of the Confederation to manage the foreign commerce of the country. We have seen that, when the Articles of Confederation were proposed for adoption by the States, the State of New Jersey remonstrated against the absence of all provision for placing the foreign trade of the States under the regulation of the federal government. But this remonstrance was without effect, and the instrument went into operation in 1781, with no other restriction upon the powers of the States to regulate trade according to their pleasure, than a prohibition against levying imposts or duties which would interfere with the treaties then proposed. While the war continued, the subject was of comparatively little importance. But the return of peace found this country capable of becoming a great commercial, as well as agricultural nation; and it could not be overlooked, that its government possessed very inadequate means for establishing such relations with foreign powers as would best develop its resources and conduce to its internal harmony and prosperity. How early this great interest had attracted the attention of those who were most capable of enlarged and statesmanlike views of the actual nature of the Union and the wants of the States, there are perhaps as yet before the world no sufficient means of determining. We know, however, that, before the peace, Hamilton saw clearly that it was essential for the United States to be vested with a general superintendence of trade, both for purposes of revenue and regulation; that he foresaw the encouragement of our own products and manufactures, by means of general prohibitions of particular articles and a judicious arrangement of duties, and that this could only be effected by a central authority; and that the due observance of any commercial treaty which the United States might make with a foreign power could not be expected, if the different States retained the regulation of their own trade, and thus held the practical construction of treaties in their own hands.[271]

But it does not appear that, among the other principal statesmen of the Revolution, these ideas had made much progress, until the entire incapacity of the Confederation to negotiate advantageous commercial treaties, for want of adequate power to enforce them, had displayed the actual weakness of its position, and the oppressive measures of other countries had taught them that there was but one remedy for such evils. Then, indeed, they saw that the United States could have a standing as a commercial power among the other powers of the world, only when their representatives could be received and dealt with as the representatives of one, and not of thirteen sovereignties; and that, if the measures of other countries, injurious to the trade of America, were to be counteracted at all, it must be by a power that could prohibit access to all the States alike, or grant it as to all, as circumstances might require.[272]

The actual commercial relations of the United States with other countries, when the peace took place, were confined to treaties of amity and commerce with France, Sweden, and the Netherlands; the two latter transcending, in some degree, the powers of the Confederation. In 1776, the Revolutionary Congress had adopted a plan of treaties to be proposed to France and Spain, which contemplated that the subjects of each country should pay no duties in the other except such as were paid by natives, and should have the same rights and privileges as natives in respect to navigation and commerce.[273] When a treaty of amity and commerce came to be concluded with France, in 1778, the footing on which the subjects of the two countries were placed, in the dominions of each other, was that of the most favored nations, instead of that of natives.[274] The Articles of Confederation, proposed in 1777, and finally ratified in March, 1781, reserved to the States the right of levying duties and imposts, excepting only such as would interfere with any treaties that might be made "pursuant to the treaties proposed to France and Spain." The United States could therefore constitutionally complete these two treaties, and such as were dependent upon them, but no others which should have the effect of restraining the legislatures of the States from prohibiting the exportation or importation of any species of goods or merchandise, or laying whatever duties or imposts they thought proper.[275]

In 1782, negotiations were entered into for a similar treaty with the States General of the Netherlands. When the instructions to Mr. Adams to negotiate this treaty were under consideration in Congress, it was recollected that the French treaty contained a stipulation, the effect of which would enable the heirs of the subjects of either party, dying in the territories of the other, to inherit real property, without obtaining letters of naturalization.[276] The doubt suggested itself,--as it well might,--whether such an indefinite license to aliens to possess real property within the United States, was not an encroachment upon the rights of the States. It seems to have been expected, when the French treaty was entered into, that the States would acquiesce in this provision, on account of the peculiar relations of this country to France, and because of the saving clause in the Articles of Confederation in favor of the treaties to be made with that power and with Spain.[277] But such a stipulation as this was clearly not within the meaning of that clause; and it was received with great repugnance by many of the States.[278] In the treaty with the Netherlands, it was proposed to insert a similar provision; but it was found to be extremely improbable that the States would comply with a similar engagement with another power. The language was therefore varied, so as to give the privilege of inheritance only as to the "effects" of persons dying in the country;--an expression which would probably exclude real property, but which might possibly be construed to include it.[279]

With regard to duties and imposts, the Dutch treaty contained the same stipulation as the French, putting the subjects of either power on the footing of the most favored nations, and thereby holding out to the subjects of the United Provinces the promise of an equality, under the laws of the United States, with the subjects of France.[280] The same stipulation was inserted in a treaty subsequently made at Paris with the King of Sweden.[281]

If these stipulations were supposed or intended to be binding upon the States, so as to restrain them from adopting, within their respective jurisdictions, any other rule than that fixed by the French treaty, for the subjects of the United Provinces and the King of Sweden, it is quite clear that the Articles of Confederation gave no authority to Congress to make them. They could have no effect, therefore, in producing a uniformity of regulation throughout the United States, with regard to the trade with Sweden and the Netherlands.

The relations of the United States with Great Britain were, however, far more important, than their relations with Sweden or Holland. When the war was drawing to a close, and the provisional articles of peace had been agreed upon, a measure was in preparation in England, under the auspices of Mr. Pitt, designed as a temporary arrangement of commercial intercourse between Great Britain and the United States, and which would have enabled the government of this country to have formed a treaty so advantageous, that the States would doubtless have conformed their legislation to its provisions. That great statesman perceived, that it was extremely desirable to establish the intercourse of the two countries on the most enlarged principles of reciprocal benefit, and his purpose was, by a provisional arrangement, to evince the disposition of England to be on terms of amity with the United States, preparatory to the negotiation of a treaty.[282] But the administration, in which he was then Chancellor of the Exchequer, went out of office immediately after he had proposed this measure, and their successors, following a totally different line of policy, procured an act of Parliament authorizing the King in Council to regulate the commercial intercourse between the United States and Great Britain and her dependencies.[283]

Mr. Pitt's bill was designed to admit the vessels and subjects of the United States into all the ports of Great Britain, in the same manner as the subjects and vessels of other independent sovereign states, and to admit merchandise and goods, the growth, produce, or manufacture of this country, under the same duties and charges as if they were the property of British subjects, imported in British vessels. It also proposed to establish an entirely free trade between the United States and the British islands, colonies, and plantations in America. The new administration, on the contrary, believing that this would encourage the American marine, to the ruin of that of Great Britain, and would deprive the latter of a monopoly in the consumption of her colonies, and in their carrying trade, resolved to reverse this entire policy. In this course, they were encouraged by the views which they took of the internal situation of this country, and which were, to a great extent, justified by the fact. They believed that we could not act, as a nation, upon questions of commerce; that the climates, the staples, and the manners of the States were different, and their interests therefore opposite; and that no combination was likely to take place, from which England would have reason to fear retaliation. They supposed, that, inasmuch as the Confederation had no power to make any but general treaties, and as the States had reserved to themselves nearly every power concerning the regulation of trade, no treaty could be made that would be binding upon all the States; and that, if treaties should become necessary, they must be made with the States respectively. But they denied that treaties were necessary, and maintained that it would be unwise to enter at present into any arrangements by which they might not wish afterwards to be bound. They determined, therefore, to deal with this country as a collection of rival States, with each of which they could make their own terms, after the pressure of their policy, and the impossibility of escaping from its effects, had begun to be felt. They accordingly began, by excluding from the British West Indies, under Orders in Council, the whole American marine, and by prohibiting fish, and many important articles of our produce, from being carried there, even in British vessels.[284]

At the termination of the war, the foreign commerce of the United States was capable of great expansion.

It consisted of three important branches,--the trade of the Eastern, that of the Middle, and that of the Southern States; each of which required at once the means of reaching foreign markets. The rice and indigo of the South might be carried to Europe. The Middle States might export to Europe tobacco, tar, wheat, and flour; and to the West Indies, pork, beef, bread, flour, lumber, tar, and iron. The Eastern States might supply the markets of Europe with spars, ship-timber, staves, boards, fish, and oil, and those of the West Indies with lumber, pork, beef, live cattle, horses, cider, and fish. The whole of these great interests of course received a sudden and almost fatal blow from the English Orders in Council, and no means whatever existed of countervailing their effects, but such as each State could provide for its own people, by its own legislation.

Congress, however, awoke to the perception of an efficient and appropriate remedy, of a temporary character, and prepared to apply it, through an amendment of their powers. For the purpose of meeting the policy of Great Britain with similar restrictions on her commerce, they recommended to the States to vest in Congress, for the term of fifteen years, authority to prohibit the vessels of any power, not having treaties of commerce with the United States, from importing or exporting any commodities into or from any of the States, and also with the power of prohibiting, for a like term, the subjects of any foreign country, unless authorized by treaty, from importing into the United States any merchandise not the produce or manufacture of such country.[285] There was already before the States, as we have seen, in the revenue system of 1783, a proposal to them to vest in Congress power to levy certain duties on foreign commodities, for the same period; and if these two grants of power had been made, and made promptly, by the States, Congress would have possessed, for a time, an effectual control over commerce, and the practical means of forming suitable commercial treaties.

But the proposal of the 30th of April, 1784, met with a tardy and reluctant attention among the States. Only one of them had acted upon it, as late as the following February, when the delegates for Maryland laid before Congress an act of that State upon the subject.[286] New Hampshire was the next State to comply, in the succeeding June.[287] In the mean time, however, Congress prepared to prosecute negotiations in Europe, trusting to the chances of an enlargement of their powers, in pursuance of their recommendation. Accordingly, they proceeded, in the spring of 1784, to appoint a commission to negotiate commercial treaties, and settled the principles on which such treaties were to be formed. The leading principle then determined on was, that each party to the treaty should have a right to carry their own produce, manufactures, and merchandise in their own bottoms to the ports of the other, and to take thence the produce, manufactures, and merchandise of the other, paying, in both cases, such duties only as were paid by the most favored nation. The resolves appointing the commission also contained a very explicit direction, that "the United States, in all such treaties, and in every case arising under them, should be considered as one nation, upon the principles of the Federal Constitution."[288] Yet the Federal Constitution did not, at that very moment, make the United States one nation for this purpose. Its principles gave to Congress no authority which could prevent the States from prohibiting any exportations or importations whatever, as to their respective territories; and the validity of these treaties, thus proposed to be negotiated with fifteen European powers, depended altogether upon the precarious assent of the thirteen States to the alterations in the principles of the Federal Constitution which Congress had proposed.

That assent was not likely to be given, so as to become effectual for the purposes for which it had been asked. The action of the States was found, in the spring of 1786, to present a mass of incongruities, which rendered the whole scheme of thus increasing the federal powers almost hopeless. Four of the States had passed laws, conforming substantially to the recommendations of Congress, but restraining their operation until the other States should have complied.[289] Three of the States had passed the requisite acts, and had fixed different periods at which they were to take effect.[290] One State had granted full powers to regulate its trade, by restrictions or duties, for fifteen years, with a proviso that the law should be suspended until all the other States had done the same.[291] Another State had granted power, for twenty-five years, to regulate trade between the respective States, and to prohibit or regulate the importation only of foreign goods in foreign vessels, but restricting the operation of the act until the other States had passed similar laws.[292] Still another State had granted powers like the last, but without limitation of time, and with the proviso that, when all the other States had made the same grants, it should become an Article of the Confederation.[293] The three remaining States had passed no act upon the subject.[294] Upon these conflicting and irreconcilable provisions, Congress could take no other action, than to call the attention of the States again to the original proposal, and request them to revise their laws.[295]

While this discordant legislation was manifesting at home the entire impracticability of amending the Federal Constitution by means of the separate action of the State legislatures, the commissioners abroad were engaged in efforts, nearly as fruitless, to negotiate the treaties which they had been instructed to make. The commission was opened at Paris on the 13th of August, 1784, and its objects announced to the different governments. France was not disposed to change the existing relations. England perceived the real want of power in the federal government, and recognized nothing in the commission but the fact that it had been issued by Congress, while the separate States had conferred no powers upon either Congress or the commissioners.[296] Prussia alone entered into a treaty, upon some of the principles laid down in the commission, and soon after it was executed, the commissioners ceased to do any thing whatever.[297]

During the period which elapsed from the Treaty of Peace with England to the assembling of the Convention at Annapolis, the legislation of the different States, designed to protect themselves against the policy of England, was of course without system or concert, and without uniformity of regulation. At one time duties were made extravagantly high; at another, competition reduced them below the point at which any considerable revenue could be derived. At one time, the States acted in open hostility to each other; at another, they contemplated commercial leagues, without regard to the prohibition contained in the Articles of Confederation. No steady system was pursued by any of them, and the inefficacy of State legislation became at length so apparent, that a conviction of the necessity of new powers in Congress forced itself upon the public mind.

FOOTNOTES:

[271] Life of Hamilton, II. 233, 234. See also his resolutions on the defects of the federal government, intended to be offered in Congress in 1783, and especially the eighth resolution. Works of Hamilton, II. 269.

[272] Hamilton himself, in some papers which he published in 1781, under the title of The Continentalist, gave the general sum of American statesmanship and its opportunities, down to that period. The events of the next seven years gave it a wonderful development. "It would be the extreme of vanity in us," said he, "not to be sensible that we began this revolution with very vague and confined notions of the practical business of government. To the greater part of us, it was a novelty; of those who under the former constitution had had opportunities of acquiring experience, a large proportion adhered to the opposite side, and the remainder can only be supposed to have possessed ideas adapted to the narrow colonial sphere in which they had been accustomed to move, not of that enlarged kind suited to the government of an independent nation. There were, no doubt, exceptions to these observations;--men in all respects qualified for conducting the public affairs with skill and advantage;--but their number was small; they were not always brought forward in our councils; and when they were, their influence was too commonly borne down by the prevailing torrent of ignorance and prejudice. On a retrospect, however, of our transactions, under the disadvantages with which we commenced, it is perhaps more to be wondered at, that we have done so well, than that we have not done better. There are, indeed, some traits in our conduct, as conspicuous for sound policy as others for magnanimity. But, on the other hand, it must also be confessed, there have been many false steps, many chimerical projects and Utopian speculations, in the management of our civil as well as of our military affairs. A part of these were the natural effects of the spirit of the times, dictated by our situation. An extreme jealousy of power is the attendant on all popular revolutions, and has seldom been without its evils. It is to this source we are to trace many of the fatal mistakes, which have so deeply endangered the common cause; particularly that defect which will be the object of these remarks,--a want of power in Congress." Works, II. 186.

[273] Secret Journals, II. 7, 8.

[274] Ibid. 59.

[275] Articles of Confederation, Art. VI., IX. The expression in the _sixth_ article was: "No State shall lay any imposts, &c. that shall interfere with any stipulations in treaties entered into by the United States with any king, prince, or state, _in pursuance of_ any treaties already proposed by Congress to the court of France and Spain." The _ninth_ article saved to the States the general power of levying duties and laying prohibitions.

[276] Secret Journals, II. 65, 66. Art. XIII of the Treaty of Amity and Commerce with France. The expression employed was, "goods movable and immovable," and the right of succession was given, _ab intestato_, without first obtaining letters of naturalization.

[277] See a report on this _projet_ of the treaty, made by Mr. Madison, July 17, 1782. Secret Journals, II. 142-144.

[278] Ibid.

[279] Art. VI. of the Treaty of Amity and Commerce with the Netherlands, executed by Mr. Adams at the Hague, October 8, 1782. Journals, VIII. 96.

[280] Ibid., Art. II., III.

[281] April 3, 1783. Journals, VIII. 386-398.

[282] Mr. Pitt's bill was brought in in March, 1783, and he went out of office immediately afterwards.

[283] April, 1783.

[284] July, 1783. Their idea was, that, if the American States should choose to send consuls, they should be received, and consuls sent to them in return that each State would soon enter into all necessary regulations with the consul, and that nothing more was necessary. See Lord Sheffield's Observations on American Commerce.

[285] April 30, 1784.

[286] February 14, 1785. Journals, X. 53.

[287] By an act passed June 22-23, 1785; laid before Congress October 10, 1785. Ibid. 353.

[288] The commission consisted of Mr. John Adams, then at the Hague, Dr. Franklin, then in France, and Mr. Jefferson, then in Congress. Mr. Jefferson sailed from Boston on the 5th of July, and arrived in Paris on the 6th of August, 1784. (Works, I. 49.) The powers with whom they were to negotiate commercial treaties were Russia, Austria, Prussia, Denmark, Saxony, Hamburg, Great Britain, Spain, Portugal, Genoa, Tuscany, Rome, Naples, Venice, Sardinia, and the Ottoman Porte. Secret Journals, III. 484-489. May 7, 1784.

[289] Massachusetts, New York, New Jersey, and Virginia.

[290] Connecticut, Pennsylvania, and Maryland.

[291] New Hampshire.

[292] Rhode Island.

[293] North Carolina.

[294] Delaware, South Carolina, and Georgia.

[295] See a report made in Congress, March 3, 1786. Journals, XI. 41.

[296] The Duke of Dorset, the English Ambassador at Paris, wrote to the commissioners (March 26, 1785) as follows: "Having communicated to my court the readiness you expressed in your letter to me of the 9th of December to remove to London, for the purpose of treating upon such points as may materially concern the interests, both political and commercial, of Great Britain and America; and having at the same time represented that you declared yourselves to be fully authorized and empowered to negotiate, I have been, in answer thereto, instructed to learn from you, gentlemen, what is the real nature of the powers with which you are invested,--whether you are merely commissioned by Congress, or whether you have received separate powers from the respective States. A committee of North American merchants have waited upon his Majesty's principal Secretary of State for Foreign Affairs, to express how anxiously they wished to be informed upon this subject; repeated experience having taught them in particular, as well as the public in general, how little the authority of Congress could avail in any respect, where the interest of any one individual State was even concerned, and particularly so where the concerns of that State might be supposed to militate against such resolutions as Congress might think proper to adopt. The apparent determination of the respective States to regulate their own separate interests renders it absolutely necessary, towards forming a permanent system of commerce, that my court should be informed how far the commissioners can be duly authorized to enter into any engagements with Great Britain, which it may not be in the power of any one of the States to render totally fruitless and ineffectual." Diplomatic Correspondence, II. 297.

[297] Jefferson's Works, I. 50, 51. The whole proceedings of this commission may be found in the Diplomatic Correspondence, II. 193-346.