A history of commerce

by Clive Day

Returning to the table, to analyze the part borne in the changes by domestic and by foreign exports respectively, we find that the foreign exports were chiefly responsible for the great fluctuations. No figures can be given for the earlier years, but it can be stated with assurance that of the total exports in 1790 only an insignificant fraction, probably much less than one million, was composed of the products of other countries. There had been a tremendous gain, therefore, in this branch of our trade, before 1796, and it proved capable of great expansion afterwards, while, on the other hand, it declined in one year almost to nothing. Domestic exports, also, showed a great increase in the early years of the table, but they soon came near to the limit of their expansion, and hovered generally about the figure of forty millions; the table shows, moreover, that they resisted depressing influences better than the foreign exports.

603. Varying fortunes of foreign trade not explained by conditions at home.—The reasons for the growth of American trade after 1790 are to be sought mainly in conditions abroad. There was no development of resources at home sufficient to account for the great expansion of trade. The United States, it is true, gained a new export product in cotton, which was shipped in rapidly increasing quantities after the invention of the cotton-gin in 1793. Cotton took the first place among southern exports after 1800, and the extension of the cotton culture helps to explain the growth of domestic exports. Still cotton did not rise to the position of king among exports until the following period, and the description of the rise of the cotton trade will be referred to a later chapter.

We cannot give American statesmen the credit for removing the restrictions on our commerce, described above, and so enabling it to expand uncramped. In spite of all their persistence and ingenuity they secured only slight and partial concessions. The treaty with England, negotiated by John Jay in 1794, removed some of our grievances, but proposed to open the West India trade on such humiliating conditions that the offer was indignantly refused. A treaty with Spain gave us merely the right to navigate the lower Mississippi River, without other commercial privileges; and even the acquisition of Louisiana, in 1803, had but an inconsiderable effect on our commerce at the time.

604. Conditions abroad; effect of the European wars on domestic exports.—We owed our rapid commercial growth not to our own strength, and not to the favor of European states; we owed it to the necessities of the position in which the countries of Europe found themselves after the outbreak of the wars following the French Revolution. These wars were of decisive importance to our commerce in two ways. In the first place they caused an immense increase in the demand for our foodstuffs. When the states of Europe were fighting for their very existence they could not afford to uphold the principles of their former protective policy, and welcomed the means of subsistence, from whatever source they might come. The withdrawal of men from agriculture to serve in the armies diminished the supply of food in Europe and called for large exports from the United States, for which high prices were paid. Taking for illustration the little country of Portugal, we find that our exports to that country increased about ten-fold in the course of the period, being especially large in the years from 1810 to 1813. These years mark the time when the Peninsular War was at its height, and when the large armies quartered in the country demanded a supply of food which could not possibly be met from native sources.

605. Effect on foreign exports and the carrying trade.—The European wars were not only responsible for a great gain in our domestic exports; they were the sole cause of the tremendous increase in the foreign exports, which figured so largely in our commerce at this period. The wars involved most of the important states of Europe. A ship flying the flag of France or of any of her allies was constantly exposed to capture by British cruisers; a ship flying the flag of Great Britain or of one of her allies was a fair prize for the French privateers which swarmed over the seas. In the great conflict there was but one country, with an extensive merchant marine, which managed to maintain neutrality, and this was the United States. The carrying trade of the world fell into our hands. The countries of Europe, forced by the exigencies of war, gave up the cherished principles of their colonial policy, and threw open the trade with their colonies and themselves. The rights of neutral states in time of war were, it is true, still unsettled. American ship captains and merchants were subject to arbitrary and humiliating interference on the part of the belligerents. In the early part of the war, however, the results of this interference were of sentimental rather than of practical importance, and means were found to evade the restrictions which the belligerents imposed. When England forbade all trade between her enemies (France, Spain, the Netherlands) and their colonies, American skippers did not sail direct from the West Indies to Europe, but touched at some port of the United States, entered the cargo for import, and sometimes actually landed it. It was not meant for consumption in this country and was soon withdrawn and exported to its destination in Europe, as though it were composed of domestic products.

606. Prosperity of American commerce and shipping.—The European wars, therefore, introduced American commerce to a new era of prosperity. “No one was limited to any one branch of trade; the same individual was concerned in voyages to Asia, South America, the West Indies, and Europe.” Our ships gathered the products of distant countries, coffee, sugar, tea, pepper, etc., and purveyed them to the people of Europe. In many years the value of foreign exports exceeded that of domestic exports; in 1806 it was half as large again. The reader will better appreciate the contrast with present conditions when he learns that in 1914 the foreign exports of the country amounted only to one sixty-seventh part of the domestic.

The merchant marine of the United States grew rapidly under these favoring conditions, and in spite of complaints that former conditions had been reversed, and that ships could be built cheaper abroad than at home. The national tonnage engaged in foreign trade, which in 1789 appeared to be not much in excess of 100,000, exceeded 500,000 in 1795, and 900,000 in 1810. The proportion of American ships in the total of those entering the ports of the United States grew correspondingly; and the merchant tonnage of the United States was second only to that of Great Britain and superior to that of any other country in the world.

607. Checks to prosperity after 1800.—The check on the growth of our commerce apparent in the figures for the few years after 1801 is explained by the conclusion of a peace between the states of Europe, which lasted from 1801 to 1803. Had the peace proved permanent there would have been, without doubt, a further decline in American commerce, as the European countries resumed their former commercial relations. With the reopening of war, however, the Americans enjoyed the advantages of their previous position; the exports of 1806 and 1807 exceeded a hundred millions in value, and marked a height which exports did not again reach for nearly twenty years. Our commercial prosperity at this time was very precarious. It was the period in which Napoleon and England were waging war over the Continental System, as described in a previous chapter. Each belligerent looked on the neutral carrier now not as a source of gain to itself so much as a source of help to the enemy, and determined to restrict neutral trade, even though it were necessary to destroy it. In the period between 1803 and 1812 some 1,500 American ships were seized in Europe, and the greater part of them condemned, for violating the restrictions then carried into effect. The best sailors were impressed from American ships to fight the battles of England. American shipping was involved in an unequal struggle.

608. Decline of commerce; embargo and war.—The United States was not prepared to enforce by arms the rights which it claimed for its merchants and sailors. The government shrank from war, and adopted instead the policy of commercial restriction, hoping to bring the European powers to terms by refusing to trade with them until they reformed their conduct. A short trial was made with an act forbidding the importation of English manufactures, and in December, 1807, a general embargo was laid on all vessels, forbidding them to leave port for a foreign country. The embargo was evaded in various ways, but its effect on our foreign commerce and export industries was disastrous, and forced the substitution of milder measures in February, 1809. Our commerce, now suffering both from the attacks of its enemies abroad and the restrictions of its friends at home, could not recover the position which it had reached before the embargo, and declined still further after the declaration of war with England, to which we were finally forced in June, 1812.

609. Effect of the decline of commerce on the development of American manufactures.—While the people maintained an active commerce with Europe they obtained most of their manufactured wares from that source, as they had done in colonial times. The interruptions of commerce due to acts like the embargo and to the war with England cut them off from this source of supply, and home manufactures grew up as commerce declined. The letters of Jefferson, written at this period, contain many references to the growth of manufactures in his State, Virginia, and in other parts of the country, especially in New England, the development of a native manufacturing industry was even more marked. American manufactures began, in this period, to outgrow the simple forms of domestic industry, and to attract the capital necessary for the establishment of regular factories. Many companies were incorporated to manufacture goods by means of power machinery, and industrial methods which had long been practised in England were now first introduced in this country on an extensive scale. The development of the textile industries was especially rapid. It was estimated that in 1800 the cotton factories of the country had consumed only 500 bales of raw material, while in 1810 the number had risen to 10,000 and in 1815 to 90,000. A cotton factory established by Francis C. Lowell at Waltham, Mass., in 1814, is said to have been the first in the world in which all the processes involved in the manufacture of goods, from the raw material to the finished product, were carried on in one establishment, under a carefully studied system.