in the imports of European finished manufactures. The manufacturing industries did not become the object of special attention, until the embargoes and restrictive commercial policy, which became effective in 1807, ended the 18-year period of prosperous foreign trade and suddenly deprived the United States of many necessary articles previously obtained from abroad. It was not until then that the Federal Government endeavored to ascertain the state of the manufacturing industries of the country. In 1810 the value of their product was placed by the census at $145,385,000. An estimate made by Tench Coxe placed the total value of all the manufactures of the country, including those of households, at $198,614,000. It is probable that the value of the entire manufacturing product was not over $200,000,000.1 The fall in the foreign trade after 1807 gave the first great impetus to the home production of manufactures. After peace had been declared and European imports again entered American harbors, the so-called "American system" or protective-tariff doctrine rapidly gained ground and became a vital factor in the commercial policy of the nation.

REASONS FOR GROWTH OF EXPORT TRADE.

There were several reasons for the sudden change from the commercial depression of the years immediately following 1785 to the animated export trade which arose after 1789.

The adoption of the Federal Constitution in 1789 was an event of the highest commercial significance; it meant that the loose confederation was replaced by a real Federal Government. American ministers abroad had repeatedly found that foreign nations were "sensible of the weakness and inefficiency of the American Confederacy" and therefore refused to enter into commercial treaties or even to treat American merchants and ship-owners with the fairness accorded to those of other countries. John Jay, the American agent to England in 1785, referred to the situation as follows:

"This being the state of things, you may depend upon it, the commerce of America will have no relief at present nor, in my opinion, ever, until the United States shall have generally passed navigation acts. If these measures are not adopted, we shall be derided, and the more we suffer, the more will our calamities be laughed at."2

The views of two contemporary writers of note, Timothy Pitkin and Adam Seybert, are especially instructive. Timothy Pitkin stated:

"This unfortunate state of American commerce, it is well known, was one of the principal causes of the adoption of the present Constitution. The acts passed by the first Congress that met, under the new form of government,

'This is an estimate by the U. S. Department of Commerce and Labor. in Exports of Manufactures from the United States and their Distribution, 1800 to 1906, p. 5.

'Letter to American Secretary of Foreign Affairs, October 21, 1785.

imposing the discriminating tonnage, and other duties, did not escape the particular notice of British statesmen. Their injurious effects upon the navigating interest of Great Britain were, at once, perceived by them. They saw that American commerce was no longer at the mercy of thirteen distinct legislative bodies, nor subject to the control of the King and Council."1

Adam Seybert wrote as follows:

"Surrounded by difficulties, it became a paramount duty to cure the palsy which afflicted us at home. It was manifest, that general regulations were essential to the safety and welfare of the Union; it was absolutely necessary, that the power to regulate and control our intercourse with foreign nations, should be confided to Congress alone; and it was that conviction, which, principally, induced the people of the United States to call the Convention to revise the articles of the Confederation."2

By giving to the Federal Government the exclusive control over the commerce with foreign nations, and among the several States, and with the Indian tribes," the Constitution laid the basis for removing the great political and governmental obstacles to prosperity in the foreign trade. Articles of commerce could thereafter move freely from one State to another and reach the ports of export without hindrance. The diverse system of import duties and navigation charges and regulations imposed by the individual States was replaced by a uniform national policy. The first Congress which met under the new form of government enacted a tariff and navigation act designed to promote foreign trade and ocean navigation. For the encouragement and promotion of the American deep-sea carrying trade, the act of July 1789 granted a 10 per cent discount from the duties on all goods imported in American vessels, and the same law reduced the duties on tea imported from India and China in American vessels as compared with the duties on tea imported from Europe or in foreign vessels, so as to build up the direct trade between the United States and the Orient. Though slightly changed from time to time, this act extending aid to Oriental commerce and protection to the American merchant marine was in force throughout the entire quarter century from 1789 to 1815, and, as is more fully pointed out hereafter, its effects upon the foreign trade and the American merchant fleet were highly beneficial. In 1804 Congress further extended the policy of shipping protection by levying a "light money" tonnage duty of 50 cents per ton on foreign vessels.3

After the adoption of the Federal Constitution, moreover, foreign nations could no longer scorn requests for commercial treaties and trade arrangements. The trade with Great Britain had since 1783 been carried on according to the Orders in Council authorized by the Parliamentary act of April 1783, no commercial treaty being concluded Statistical Annals, 1818, p. 58.

'A Statistical View of the Commerce of the United States, 191. 'This was raised to $1.50 in 1812 as a war revenue measure.

until November 1794. The so-called Jay treaty, which was concluded at this time, provided that no higher tariff duties should be paid by either country than were paid by all other countries, with the reservation on the part of England permitting Parliament to levy tonnage duties on American vessels as high as those paid by British ships in American ports, and tariff duties which would be adequate to countervail the discriminating duties payable on goods imported into the United States respectively in American and foreign ships. Although this treaty, which was not enforced until 1797 and the trade sections of which expired in 1804, never proved satisfactory to the United States, because it did not place American and British vessels and merchants in the West India trade on an equal footing and did not prevent the British Government from levying countervailing duties designed to offset the discriminations which existed in the American tariff laws, it was nevertheless a concrete illustration of the difference between the power of the Confederation and that of the Federal Union. In 1795 the Federal Government negotiated with Spain a treaty which granted the right of free navigation of the Mississippi River to the people of the United States. A treaty of commerce and navigation was concluded with France in September 1800, as were also a secret treaty concerning Louisiana in October 1800 and the Louisiana cession treaty, which in April 1803 finally solved the problem of the free navigation of the Mississippi River. A commercial treaty was concluded with Prussia in July 1799; and in 1795, 1796, and 1805, after much negotiation and some naval warfare, treaties of commerce, peace, and amity were entered into with Tripoli and Algiers, the piratical African Barbary States.

The adoption of the Constitution, which enabled Congress to promote American trade and navigation by legislation, was followed by the gradual acquisition of a navy to protect the merchant and ship-owner against foreign enemies. The few armed vessels which were the property of the United States Government at the end of the Revolutionary War had been sold by order of Congress. The depredations on American commerce by the Barbary pirates, which had been made during the period of the Confederation, greatly increased after 1793, when Portugal, under a truce with the regency of Algiers, withdrew the squadron of warships which had occupied the Straits of Gibraltar. The attacks on American merchant ships, which had practically no menof-war to protect them, became so serious that Congress authorized the construction of a small fleet. The unusually violent attacks of the Barbary pirates in 1801 caused the United States to deal swift and vigorous punishment. By 1805 the American naval forces had compelled all of the Barbary powers to agree to cease their depredations on American merchant vessels.

1Act of June 3, 1785.

The building of a war fleet was also hastened by the hostile attitude of France and Great Britain, whose naval vessels at various times during the European wars seized American merchant ships on the pretext that they violated the then indefinite and flexible laws of neutrality. During 1799 and 1800 several American warships were used effectively in a brief naval war with France. The prompt and vigorous measures of the newly established government in defense of its commercial rights soon compelled France to seek peace, and at the same time instilled in other foreign nations an increased respect for the American flag. When later the seizure of American ships, the exercise of the right of search, the indiscriminate imposition of blockades, and other acts of England and of France became unbearable, the War of 1812 ensued and Europe was given more convincing evidence of the intention of the new government to protect American foreign trade and navigation.

The adoption of the Constitution and the inauguration of the policy of aid and protection by the Federal Government were accompanied by other economic influences which were responsible for much of the immediate growth in foreign commerce. Foremost among these were the extended European wars, which began in 1793, shortly after the outbreak of the French Revolution, and were not finally concluded until 1814. At first these wars concerned chiefly Great Britain and France, but gradually nearly all the nations of the Old World were drawn into the controversy. What was all but commercial death to the European merchant and ship-owner meant profit to the American, for the wars cut off the usual channels of European trade so effectively that to obtain many of their customary imports the warring nations were obliged to turn to the United States, a neutral power. When the European wars were at their height American shipping was prosperous; when in 1802 and 1803 there was a brief period of peace, it suffered an immediate decline; when the wars were renewed, prosperity returned for a time, until after 1807, when Napoleon Bonaparte, refusing to recognize that there were any neutrals, inflicted his "continental policy" upon the commercial world, and England enforced her Orders in Council with men-of-war. Under the burdensome restrictions imposed by the commercial policies of France and Great Britain, American vessels and American trade suffered almost as severely as those of European neutral countries. When neutrality was denied exports carried in American ships, the highly profitable business of the ship-owners, merchants, and ship-builders of the United States was interrupted.

The European wars were accompanied by European crop failures and insufficient food. Although the most rapid increase in the foreign trade after 1790 was in the reexportation to Europe of foreign products which American merchants and vessels gathered from the West Indies, South America, the Orient, and other parts of the world, there was

also an increase in the shipments of domestic foodstuffs to Europe, where crop failures occurred at various times and where the effects of shortage were largely enhanced by the necessity of feeding immense armies of soldiers.

Partly as a result of the European wars and the abnormal demand for American foodstuffs abroad, there was an increase in the output of agricultural products in the United States. During the first decade' after 1790 the growth in agriculture was chiefly east of the Alleghenies and the surplus was readily exported. The effect of the heavy export trade upon food prices is illustrated by the prices of flour at Philadelphia, which was then a typical market. The average price from 1785 to 1793 was $5.41 per barrel, while the average price from 1793 to 1807 (excluding the years 1802 and 1803, when Europe was at peace) was $9.12 per barrel, a difference of $3.71. It is noteworthy that during the years 1820 to 1828, after the trade and industry of Europe had returned to its ordinary channels, the average price dropped back to $5.46. After 1800, when the foreign trade received numerous setbacks, westward emigration revived, the volume of foodstuffs produced in the country west of the Alleghenies also increased rapidly, and great quantities of flour, grain, and provisions were sent down the Mississippi River to be exported to Europe from New Orleans. After 1803 the exports from the Michigan territory exceeded those from such States as New Hampshire, Vermont, and Delaware; and in 1807, when the export trade moving down the Mississippi River from the Middle West was at its height, the value of the shipments to foreign markets from New Orleans aggregated $4,321,000.

The banking and credit situation was greatly improved after 1790. In the past the absence of adequate credit in the countries of continental Europe had tended to limit the import trade largely to England, where credit relations had long been established. By restricting the imports from the markets of continental Europe, the insufficiency of credit had also had an unwholesome effect upon American exports to those markets. Inadequate banking facilities had, moreover, exerted an unfavorable influence upon investments in agriculture, shipping, and other industries. When the Constitution was adopted, the only banks in the United States were the Bank of North America, the Bank of New York, and the Bank of Massachusetts. In February 1791, however, Congress created the Bank of the United States. The charter of this institution expired in March 1811, but before its termination many State banks were established. From a total of 3 State banks in 1791, with a capital of $2,000,000, the number grew to 88 in January 1811, and the capital to $42,610,000; and in January 1815 there were 208 State banks, with an aggregate capital of $82,259,000.

'Pitkin. A Statistical View, etc., 373. Coxe, A View of the United States of America, 128.