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.