FREE TRADE THROUGH WAR

After the American Revolutionary War, plunder and mercantilism existed as the western world’s primary economic systems. The fledgling economy of the American nation desired a world that functioned on the principles of free trade where ports would be opened, and protective tariffs were minimal. This would help the new nation compete on a global stage and earn a market share. Europe, however, viewed the world through a different economic theory and followed the principles of mercantilism. This was the belief that the world had a finite amount of wealth and that trade should be kept to one’s own empire in order to weaken foreign powers and maintain wealth. This economic system allowed colonial powers to bring wealth from the colonies directly to the homeland with no foreign competition. The other predominant economic system acting in the western world during this time was an economy founded on plunder. Unfortunately for the Americans, Britain was bitter after losing the war and had closed off the West East Indies trade to the United States. Britain heavily regulated commerce between the nations, and incited the Barbary powers, and Native Americans, against the United States. The following conflict with the Barbary states would usher in an age of diplomacy and war that made the United States a respected naval power and put it in a position to pressure the world towards accepting free trade as the world’s main economic order.

The American Revolution separated the economies of Britain and the United States as trading relationships that had existed with Great Britain no longer applied to the fledgling nation. In effect, “the war with Great Britain has hitherto shut the Mediterranean against American vessels, which it may be presumed will now venture shortly upon it.”1 The founding fathers of the American Revolution had expected a renegotiation of trade with Great Britain, but were too optimistic. They believed commerce to be extremely valuable to Britain and that their former ruler would resume trade after the war. Rather, Great Britain instead instituted protective tariffs and exported to the colonies but kept imports minimal. It also closed off the West East Indies trade to the United States, thereby cutting off their trading power. The British continued to view the United States as a colonial possession; while they no longer had legal power over it, they still attempted to control the nation’s commerce. In a letter to James Madison, Thomas Jefferson noted that the British monarch “sufficiently values our commerce: but they are quite persuaded they shall enjoy it on their own terms. This political speculation fosters the warmest feeling of the king’s heart, that is, his hatred to us.”2 The British did not want to help the United States become a dominant commercial power. Any commerce between the nations would be carried out on British terms with British considerations.

Unfortunately for the United States, neither Spain nor the United States’ French allies wanted to open up their markets. The prevailing economic order of the world used mercantilist practices to keep their economies regulated, with trade providing more gold that entered the nation compared to leaving. The American concept of free trade meant that nations allowed gold to move freely and goods to flow which baffled the mercantilist powers. Additionally, the Articles of Confederation did not allow Congress to regulate commerce between states. European powers found it more lucrative to pit states against one another in an attempt to achieve better deals and viewed trade deals with Congress as negotiations that lacked any real substance. Instead, these outside powers sought trade agreements with the American states directly. With little trade from other European markets, its French allies not opening trade, and continued tension and hostility from Britain, the American dream of free exchange of commerce found itself shattered against the harsh realities of a world full of greater naval powers and pirates.

Though Morocco was the first nation to recognize American independence, its diplomatic delegations and demands were often delayed and ignored. Congress knew that these powers wanted to discuss new tributary treaties. America no longer had the might of the British navy to support their merchant ships. Though initially patient, the Barbary states quickly grew irritated with America’s continued passage through their waters with no answer from their government. Angry with America’s separation, the British government was eager to remind the Barbary powers of America’s diplomatic insult and offered money and assistance to the Barbary powers to help them rectify such a transgression. A Boston newspaper reported that if one “examined into the affairs of the British cabinet, he will find that large sums are given to the Barbary pirates and that the different types of Indians to the west are furnished with supplies to incite acts of perfidy and inhumanity upon us.”3 Morocco had lost patience and had taken an American merchant vessel. Though the state of Morocco released the ship and crew, mainly taking the ship to get an answer from the US Government, their action and demand for a treaty brought the same desire from their fellow Barbary States. Treaties with Tunis, Tripoli, and Algiers would soon follow. At Britain’s incitement, the Barbary Wars had begun.

Morocco was one of the weaker Barbary powers. Thomas Jefferson described the situation to Madison with the summary that, “this was the only American vessel ever taken by the Barbary States. Nevertheless, the Emperor continues to give proofs of his desire to be in friendship with us… Nothing further need be feared from him. I wish the Algerines may be as easily dealt with.”4 From this letter, it is understood that Morocco wanted to concluded a treaty quickly and only took a ship to get Congress’ attention and tribute. However, now that tribute was paid and a ship was taken, American shipping became a valuable prize to the Barbary States. The Barbary powers were well positioned to control access to the Mediterranean and trade. While European powers had naval forces and resources to establish treaties, Americans had neither a navy nor vast resources to squander.

The Barbary powers knew that America’s economy was new and not like the established economies of the European nations with whom they previously dealt. With merchant ships and hostages taken to ransom, Algiers was in talks with the United States to draft a treaty. Letters written from prisoners there describe how:

Vickelhedge said he believed that this regency would make a peace with Americans on easy terms as possible considering the preset times and as Americans had no money to give for a peace, we must give the productions of America, viz tar, pitch, turpentine, masts, yards, spars, plank, scantling, and cruisers American built.5

With peace talks in accordance, and plans for goods to be shipped to the Barbary powers, American merchant ships were no longer seized and were allowed to pass through the waters freely. As the most powerful Barbary state, Algiers felt it was being fair to the United States by allowing it to meet tribute obligations, if not in cash then in kind. Congress did not want to do either and was divided if it should meet the Barbary powers through war or succumb and pay tribute. In a letter from John Quincy Adams to John Adams, the two discussed how “the aversion of our people to War is however constantly strengthening; and has of late upon several occasions appeared in a very decided manner The Event of our town-meeting exhibited very forcibly the public sentiment here; a still later occasion has shown the prevalence of the same sentiments.”6 Under the Articles of Confederation, senators were greatly beholden to their constituents. Some wanted to build a navy and fight but they lacked the governmental power to raise the requisite funds and were obligated to a populace that did not want to fight. Negotiation and paying tribute were the only options.

Struggling to maintain a hold on its commerce and reluctant to pay tribute, American diplomacy shifted back to tactics of drawing out talks. When Congress failed to pay ransom on time for the prisoners Algiers held, the Dey of Algiers became greatly incensed. The Dey noted that, “if Americans did not keep their word on so small an affair as the sum asked for our release, there was no dependence put into them for affairs of more importance.”7 Congress wanted to wait and see if the ransom payments would go down. Tired of waiting, the Dey resumed taking American merchant ships. Acquiescing to the reality they found themselves in, Congress made the payments and renewed treaties with Algiers. American trade was thus, again, briefly allowed in the Mediterranean.

The way that treaties were thought of and followed by the Barbary powers were vastly different than how treaties functioned in Europe. Every regime change or the slightest infraction in the Barbary view would invalidate the treaty and allow merchant ships to be seized once more. The Barbary states relied on the plunder seized from ships and tribute that was paid, allowing their economy to function and for their naval power to increase. They lacked the capability to produce warships like the Europeans or the Americans. Often, their demands for tribute included warships, the materials to maintain warships, ammunition, and weapons, in addition to monetary payments. Due to the predatory nature of their economies, the Barbary Powers frequently invented excuses to break the treaties and resume their plunder in order to negotiate better treaties for themselves and receive more goods. Such an example from a record of a Congress proceeding notes, “that in the month of July, 1812, the Dey of Algiers taking offence, or pretending to take offence, at the quality and quantity of shipment of military stores by the United States, in pursuance of the treaty of 1795, and refusing to receive the stores.”8 Initially, Americans were predisposed against war, and though they disliked making tributary payments, it was deemed more economical to do so than raise a navy to protect their commercial interests. However, as the Barbary powers consistently negotiated new treaties and attempted to acquire greater sums of tribute, they caused a political split in Congress between those who desired war and those who thought it was less costly and wiser to continue payments.

As a result, Congress was divided on whether to build a navy or pay off the Barbary Powers. Letters by Adams and Jefferson contain much of the debate. Adams argued, “perhaps you will say, fight them, though it should cost us a great sum to carry on the war, and although at the end of it we should have more money to pay as presents… At present we are sacrificing a million annually to save one gift of two hundred thousand pounds. This is not good economy.”9 Adams felt that the war would be too costly and that it was cheaper to pay the Barbary powers off and resume trade, where the money made would outweigh the cost of the tribute. He also felt that the southern states were not united on the issue and that if Jefferson could unite them, then a navy could be built. However, during the time of this correspondence, the Constitution had not been written. Without state approval, a navy would not be formed. Jefferson partly agreed with Adams, stating that “if it is decided that we shall buy a peace, I know no reason for delaying the operation, but should rather think it ought to be hastened. But I should prefer the obtaining it by war.”10 Jefferson believed that war against the Barbary powers was justified, honorable and would earn the respect of Europe. He answered that it would be equally expensive and equally effective. Congress compromised and built a few ships while also paying off the Barbary powers. The United States knew that the treaties signed with the Barbary states were giving them money, ships, and armaments to wage war. Each treaty signed with the Barbary Powers increased its ability to harass traders on the sea. Nevertheless, the United States was not in the position to wage war; therefore, like its more powerful European counterparts, they signed a treaty.

Unfortunately for the United States, the Barbary Powers felt that the signing of the Constitution changed the situation; the Barbary states demanded new terms. The Constitution of the United States gave Congress the power to regulate commerce amongst its states as well as the important power to levy taxes. With the ability to raise more funds, the Barbary powers felt that it was time to renegotiate the tribute received. Once again, American merchant vessels were set upon in an attempt to extract more tribute, more ships, and more presents or goods from the United States. Meanwhile the debate over building up naval forces and waging war versus paying the tribute continued in Congress. The cycle of paying tribute only to have the treaties broken and tribute demands raised had caused a shift in United States foreign policy between the years 1785 and 1815. Europe’s interference in the Mediterranean trade and constant inciting of the Barbary Powers against the United States had angered the United States’ population. Congress now argued that in regard to the American people, “in the present war there can be but one mind and one voice. It is only to be feared that the enemy are thought too contemptible to rouse exertion. But it ought to be considered, that we are combatting the commercial policy of all Europe.”11 Every new conflict and treaty signed between the Barbary and United States also caused the United States to produce new warships and convert merchant vessels into gunboats. The United States was preparing for war, but on its own terms. Every conflict and naval action gave them intelligence that they would use in the next conflict. By the time it was determined it was more economical to make peace through war, the United States was well poised with a formidable fleet of ships and gunboats to pressure the Dey of Algiers and bring the Barbary powers to heel.

Unable to match the American fleet in naval power or tactics, and with America’s gunboats preventing shipping by forming a tight blockade, the Dey of Algiers attempted to negotiate with the United States. However, the Dey continued to ask for tribute. Insulted, the United States continued its blockade, sunk the Dey’s fleet, and launched attacks on coastal cities. Realizing that he was outmanned and outgunned, the Dey offered the United States a revolutionary treaty that would come to change the entire western world’s economic order.

The Treaty of Peace, signed by Algiers on June 30 and July 3, 1815, offered the United States everything it desired. While it ended the conflict and declared friendship between the nations, it also stated “if either party shall hereafter grant to any other nation, any particular favor or privilege in navigation or Commerce it shall immediately become common to the other party, freely when freely it is granted to such other nation; but when the grant is conditional, it shall be at the option of the contracting parties to accept, alter, or reject such conditions.”12 This clause granted the United States access to Algiers’ ports in the freest of terms available. It also stated that if any other treaty of commerce was entreated with any other power, then the United States reserved the right modify its own to receive the best terms and agreed to offer Algiers the same trading guarantee. The second article that would change the world economic order detailed that, “It is distinctly understood between the Contracting parties, that no tribute either as biennial presents, or under any other form or name whatever, shall ever be required by the Dey and Regency of Algiers from the United States of America on any pretext whatever.”13 There would be no more tribute paid to the Barbary Powers. With an established naval presence in the Mediterranean, the United States was now free to send its merchant vessels to foreign markets with no fear of harassment. Additionally, tribute would no longer be paid to a foreign nation. The United States’ victory where other European nations had failed gave them much respect overseas. However, the treaty made other European powers envious. They too, no longer wanted to pay tribute, and they also desired the new trading agreement the United States had with Algiers. They were jealous of the low tariffs and though previously scoffed at the idea, desired the same movement of goods for their own nation. European nations quickly made the same treaty that the United States had made with the now weakened Algiers. With new free trade treaties spreading around the globe, and no longer able to extract tribute from foreign nations, the plunder form of economy faded into the annals of time and free trade, achieved through war, began to replace mercantilist practices. This marked the beginning of the end of the mercantilist economy and the start of a world enjoying open markets and the free trade of goods. The free trade system started because the Barbary States pressured the United States into building a navy, securing its presence on the world stage, both commercially and militarily.

1. Algiers. Communicated to Congress, February 23, 1815, and reported on, February 28, 1815. 13th Congress, 3rd Session. Volume, American State Papers 03, Foreign Relations Vol. 3, p. 748-749. Publication No. 272

2. To James Madison from Thomas Jefferson, 25 April 1786,” Founders Online, National Archives, https://founders.archives.gov/documents/Madison/01-09-02-0003

3. New-York Journal (published as The New-York Journal, or the Weekly Register) (New York, New York) June 15, 1786

4. To James Madison from Thomas Jefferson, 1 September 1785,” Founders Online, National Archives, https://founders.archives.gov/documents/Madison/01-08-02-0187

5. Prisoners at Algiers. Letter in relation to the prisoners at Algiers, communicated to the Senate, 21st January, 1791, by the Secretary of State. 1st Congress, 3rd Session. American State Papers 01, Foreign Relations Vol. 1, p. 116-120. Publication No. 48.

6. John Quincy Adams to John Adams, 24 March 1794. Founders Online, National Archives

7. Prisoners at Algiers. Letter in relation to the prisoners at Algiers, communicated to the Senate, 21st January, 1791

8. Algiers. Communicated to Congress, February 23, 1815, and reported on, February 28, 1815

9. To Thomas Jefferson from John Adams, 3 July 1786. Founders Online, National Archives

10. From Thomas Jefferson to John Adams, 11 July 1786. Founders Online, National Archives

11. To James Madison from William Eaton, 23 August 1802. Founders Online, National Archives

12. The Barbary Treaties 1786-1816. Treaty of Peace, Signed Algiers June 30 and July 3, 1815. https://avalon.law.yale.edu/19th_century/bar1815t.asp#art19

13. The Barbary Treaties 1786-1816. Treaty of Peace, Signed Algiers June 30 and July 3, 1815.