Embargoes and Sanctions - The revolutionary war era

The United States was the first modern nation to make significant use of the embargo as a substitute for, rather than a prelude to, war. Being three thousand miles from the centers of European power, the United States was not in imminent danger of invasion if it resorted to economic warfare, and for most of its early history, the United States had a small army and only a moderate-sized navy. America also had been a colony whose major physical ties to the mother country had been those of trade. Since the American colonies were of value to England primarily as economic entities that provided between a third and a sixth of the entire trade of the empire, it stood to reason that the colonists would think first of commercial measures if they were seeking to coerce the mother country. They were convinced especially that the West Indies were dependent upon imports of American food and lumber for survival. They reasoned, then, that an embargo would be a formidable weapon against any nation with colonies in those islands.

But Americans were reluctant to resort to a complete embargo. They had economic interests and mercantilist ideas of their own that militated against such a measure. In the decade preceding the American Revolution, the colonists wielded economic weapons against many of Britain's unpopular measures, but in each case the chosen weapon was a boycott rather than an embargo. In fact, when George Mason proposed that Virginia embargo certain exports to protest the Townshend Acts of 1767, his fellow members of the Virginia legislature specifically rejected the idea, adopting nonimportation and nonconsumption resolutions instead. Similarly, the Continental Congress, meeting in 1774 to respond to the Coercive Acts, quickly adopted nonimportation. But the Virginia delegation insisted that any embargo be delayed until September 1775, by which time the Virginia planters could sell off their tobacco crop. Congress agreed. Then, when actual warfare broke out in April, the members moved immediately to forbid all exports without congressional permission. The embargo was soon lifted when Congress found that it was hurting America more than Britain. After a lengthy debate, America's ports were thrown open to all nations except Britain, and Congress was soon begging the French for naval help to get American ships out of their home ports.

Despite this failure, most members of Congress were still convinced that the United States could wield economic weapons effectively. They remembered that the British had repealed the Stamp Act and Townshend Acts at least partly in response to boycotts, and they were convinced that, during and after the war, foreign nations would pay a high price to divert American trade from Britain to themselves. When Congress appointed Benjamin Franklin as minister to France, it instructed him and his colleagues to offer only American trade as bait for France to enter the war as an ally of the United States. Although quickly enough disabused of the hope that France would accept so little for so much, Americans continued to believe that once the war was over, European powers would scramble over one another to offer concessions for access to American markets and goods. But when peace was restored, Europeans returned to their mercantilist systems and closed the United States out of most colonial markets. So, once again Americans contemplated commercial retaliation.

Because the Articles of Confederation left trade regulation in the hands of the individual states, it was found impossible to coordinate any retaliatory policy. The Constitutional Convention at Philadelphia met in part to correct the situation. But southerners were fearful that the commercial Northeast, using its greater population for voting advantage in Congress, would wield the weapon of commerce too freely. The South demanded that any navigation law should require a two-thirds vote of each house for passage. Ultimately, the convention reached a compromise. The Constitution would permit the federal government to levy taxes on imports; taxes on exports would be constitutionally prohibited. Exports could be embargoed, but they could not be taxed.

Despite this evidence of southern opposition to export taxes, several southern leaders still believed devoutly that economic sanctions could be America's primary diplomatic weapon. The leaders in this movement were Secretary of State Thomas Jefferson and James Madison. When the first Congress met after ratification of the Constitution in 1789, Madison used his position as a leader of the House of Representatives to begin a campaign for a broad use of commercial weapons that would last for more than twenty years. Angry at Britain for closing American ships out of the British West Indies and for refusing to sign a trade treaty with the United States, Madison told Congress that America could force Britain into a more amenable posture by threatening to divert American trade from Britain to France. He did not propose anything so drastic as an embargo at this point; he merely called for higher duties on imports from unfriendly nations than from friendly nations. The shipping interests and their congressional representatives had been strong supporters of commercial retaliation against Britain during the hard times of the Confederation period, but now, in a time of rising prosperity, they changed their minds. Led by Secretary of the Treasury Alexander Hamilton, they defeated Madison's proposals in session after session. Hamilton and his supporters thought British trade too valuable to the United States to risk using it as a diplomatic weapon, and they feared that British retaliation would hurt America far more than America could hurt Britain.

When war broke out between Great Britain and revolutionary France in 1793, Madison and Jefferson saw a new chance for the use of economic sanctions, and introduced discriminatory duties against England in the House. Hamilton and his followers in Congress rallied against the proposals, with Fisher Ames of Massachusetts complaining that "Madison & Co. now avow … that we will make war, not for our commerce, but with it; not to make our commerce better, but to make it nothing, in order to reach the tender sides of our enemy, which are not to be wounded in any other way." Ames and his fellow Federalists argued for military preparedness and negotiation rather than commercial retaliation. They succeeded until early 1794 in putting off Madison's proposals, but when the British suddenly swooped down on American ships trading in the French West Indies and captured more than 250 of them, Madison and the Republicans introduced even more stringent measures, such as sequestering British debts and stopping all trade with England.

Compelled by the public's outrage to do something, the Federalists agreed on a short-term general embargo as the least harmful alternative. By embargoing all ships, foreign and domestic, in American harbors, the measure would ostensibly affect all nations alike, thus avoiding a direct challenge to Great Britain. It also could be defended as a traditional precautionary step in case of war, and the Federalists could deny that it had anything to do with the Republican campaign for commercial coercion. Thus, with mixed motives, Congress passed a joint resolution in March 1794, laying a hostile embargo for thirty days. This was later extended for another month, and President Washington was empowered to resume the embargo if the public safety required it.

The Federalists then resumed their crusade to strengthen the army and navy and thwart the rest of the Republican program for commercial retaliation against Britain. They sidetracked the bill for sequestering British debts, and Vice President John Adams cast the tie-breaking vote in the Senate against a total prohibition of British trade, imports as well as exports, which had passed the House. Meanwhile, the Federalists persuaded Washington to send John Jay to England as a special envoy to negotiate with the British and head off the war crisis. When Jay returned with a treaty promising not to interfere in any way with Anglo-American trade in exchange for a minimum of British concessions, the Republicans cried that using America's commercial weapons would have been far more effective than exchanging them for so little. After a bitter battle, the Federalists got the treaty ratified by the narrowest of margins in 1796. On the heels of that victory, they then elected John Adams to the presidency over his Republican rival, Thomas Jefferson.

Adams, however, found the French as bitter about Jay's Treaty as the Republicans. The French counted on Americans as carriers of their commerce because the British had swept the seas clear of most French ships. The Americans, by compromising with the British rather than fighting for America's neutral rights, hurt French trade as badly as their own. The French responded by capturing American ships, claiming the right to do to the Americans whatever the Americans allowed the British to do to them. The Federalists and Adams were less reluctant to oppose the French revolutionaries than they had been to resist the British, but they used the same techniques they had used in the Jay's Treaty crisis: military preparations and negotiation. Their only concession to Republican theories of commercial retaliation was an embargo on French trade passed in July 1798, after negotiations had broken down over the XYZ affair. Even this was clearly a precautionary war measure rather than a substitute for a military response. Ultimately, Adams made peace with France, splitting the Federalist Party and enabling Jefferson to defeat him for the presidency in 1800. The embargo would soon receive its supreme test as a substitute for war.