CHAPTER IV.

DRIFTING TOWARD ANARCHY.

AT the close of the eighteenth century the barbarous superstitions of the Middle Ages concerning trade between nations still flourished with scarcely diminished vitality. The epoch-making work of Adam Smith had been published in the same year in which the United States declared their independence. The one was the great scientific event, as the other was the great political event of the age; but of neither the one nor the other were the scope and purport fathomed at the time. Among the foremost statesmen, those who, like Shelburne and Gallatin, understood the principles of the "Wealth of Nations" were few indeed. The simple principle that when two parties trade both must be gainers, or one

Barbarous superstitions about trade.

would soon stop trading, was generally lost sight of; and most commercial legislation proceeded upon the theory that in trade, as in gambling or betting, what the one party gains the other must lose. Hence towns, districts, and nations surrounded themselves with walls of legislative restrictions intended to keep out the monster Trade, ››r to admit him only on strictest proof that he could do no harm. On this barbarous theory, the use of a colony consisted in its being a customer

which you could compel to trade with yourself, while you could prevent it from trading with anybody else; and having secured this point, you could cunningly arrange things by legislation so as to throw all the loss upon this enforced customer, and keep all the gain to yourself. In the seventeenth and eighteenth centuries all the commercial legislation of the great colonizing states was based upon this theory of the use of a colony. For effectiveness, it shared to some extent the characteristic features of legislation for making water run up hill. It retarded commercial development all over the world, fostered monopolies, made the rich richer and the poor poorer, hindered the interchange of ideas and the refinement of manners, and sacrificed millions of human lives in misdirected warfare; but what it was intended to do it did not do. The sturdy race of smugglers — those despised pioneers of a higher civilization thrived in defiance of kings and parliaments; and as it was impossible to carry out such legislation thoroughly without stopping trade altogether, colonies and mother countries contrived to increase their wealth in spite of it. The colonies, however, understood the animus of the theory in so far as it was directed against them, and the revolutionary sentiment in America had gained much of its strength from the protest against this one-sided justice. In one of its most important aspects, the Revolution was a deadly blow aimed at the old system of trade restrictions. It was to a certain extent a step in realization of the noble doctrines of Adam Smith. But where the scientific thinker

grasped the whole principle involved in the matter, the practical statesmen saw only the special application which seemed to concern them for the moment. They all understood that the Revolution had set them free to trade with other countries than England, but very few of them understood that, whatever countries trade together, the one cannot hope to benefit by impoverishing the other.

This point is much better understood in England to-day than in the United States; but a century ago there was little to choose between the two countries in ignorance of political economy. England had gained great wealth and power through trade with her rapidly growing American colonies. One of her chief fears, in the event of American independence, had been the possible loss of that trade. English merchants feared that American commerce, when no longer confined to its old paths by legislation, would somehow find its way to France and Holland and Spain and other countries, until nothing would be left for England. The Revolution worked no such change, however. The principal trade of the United States was with England, as before, because England could best supply the goods that Americans wanted; and it is such considerations, and not acts of Parliament, that determine trade in its natural and proper channels. In 1783 Pitt introduced into Parliament a bill which would have secured mutual unconditional free trade between the two countries; and this was what such men as Franklin, Jefferson, and Madison desired. Could this bill have passed, the hard feelings occasioned by the war would soon have

died out, the commercial progress of both countries would have been promoted, and the stupid measures which led to a second war within thirty years might have been prevented. But the wisdom of Pitt found less favour in Parliament than the dense stupidity of Lord Sheffield, who thought that to admit Americans to the carrying trade would undermine the naval power of Great Britain. Pitt's measure was defeated, and the regulation of commerce with America was left to the king in council. Orders were forthwith passed as if upon the theory that America poor would be a better customer than America rich.

land.

The carrying trade to the West Indies had been one of the most important branches of American industry. The men of New England Shipbuilding were famous for seamanship, and bet- in New Eng ter and cheaper ships could be built in the seaports of Massachusetts than anywhere in Great Britain. An oak vessel could be built at Gloucester or Salem for twenty-four dollars per ton; a ship of live-oak or American cedar cost not more than thirty-eight dollars per ton. On the other hand, fir vessels built on the Baltic cost thirty-five dollars per ton, and nowhere in England, France, or Holland could a ship be made of oak for less than fifty dollars per ton. Often the cost was as high as sixty dollars. It was not strange, therefore, that before the war more than one third of the tonnage afloat. under the British flag was launched from American dock-yards. The war had violently deprived England of this enor mous advantage, and now she sought to make the

privation perpetual, in the delusive hope of confining British trade to British keels, and in the belief that it was the height of wisdom to impoverish the nation which she regarded as her best customer. In July, 1783, an order in council proclaimed that henceforth all trade between the United States and the British West Indies must be carried on in British-built ships, owned and navigated by British subjects. A serious blow was thus dealt not only at American shipping, but also at the interchange of commodities between the states and the islands, which was greatly hampered by this restriction. During the whole of the eighteenth century the West India sugar trade with the North American colonies and with Great Britain had been of immense value to all

British naviga

tion acts and orders in council directed against Ameri

can commerce.

Now

parties, and all had been seriously damaged by the curtailment of it due to the war. that the artificial state of things created by the war was to be perpetuated by legislation, the prospect of repairing the loss seemed indefinitely postponed. Moreover, even in trading directly with Great Britain, American ships were only allowed to bring in articles produced in the particular states of which their owners were citizens, an enactment which seemed to add insult to injury, inasmuch as it directed especial attention to the want of union among the thirteen states. Great indignation was aroused in America, and reprisals were talked of, but efforts were first made to obtain a commercial treaty.

In 1785 Franklin returned from France, and Jefferson was sent as minister in his stead, while