The first treaty signed by the infant republic was the Treaty of Amity and Commerce with France in 1778. The preamble to the document stated that equitable and permanent commercial relations between the two countries
could not be better obtained than by taking for the basis of their agreement the most perfect equality and reciprocity, and by carefully avoiding all those burdensome preferences which are usually sources of debate, embarrassment, and discontent;…and by founding the advantage of commerce solely upon reciprocal utility and the just rules of free intercourse, reserving withal to each party the liberty of admitting at its pleasure other nations to a participation of the same advantages.
Writing in 1823, John Quincy Adams declared that this preamble "was to the foundation of our commercial intercourse with the rest of mankind, what the Declaration of Independence was to that of our internal government. The two instruments were parts of one and the same system matured by long and anxious deliberation of the founders of this Union in the ever memorable Congress of 1776." To the younger Adams, "the most perfect equality and reciprocity" constituted the "cornerstone" for the commercial foreign policy of the United States. And, he argued, it was the United States that first proclaimed not only the political ideals of equality and independence but also the "true principles of all fair commercial negotiations between independent states."
Adams may have been indulging in a bit of nationalistic enthusiasm, but he was generally accurate concerning the origins of the American policy of reciprocity and the pioneering role of the United States in promoting a liberal international commercial system. The American concept of reciprocity was shaped by a mixture of the colonial experience and eighteenth-century economic liberalism. During the first three-quarters of the century, the British North American colonies made substantial gains in international shipping. By 1776 they were already a major power engaged in carrying not only domestic goods but also the goods of other nations. In fact, shipping provided a major source of colonial income.
Yankee merchants were not noted for their adherence to mercantilist restrictions on trade. They pushed into the Caribbean and the Mediterranean and to the coasts of Africa, often violating the imperial restrictions of France, Spain, and even Britain. Of course, they enjoyed the privileges of the British Empire even though they did not obey the extra colonial restrictions of the Navigation Acts. In short, the Yankee merchants were breaking down trade barriers by various means prior to 1776, and before Adam Smith put the thoughts on paper, they were firm believers in the liberty to "truck, barter, and exchange." In his Summary View of the Rights of British America (1774), Thomas Jefferson argued that the colonists had a "natural right" to trade freely with all parts of the world. Many of the Founders saw the new nation as a preeminent commercial republic where prosperity and independence would be ensured by the free flow of goods and ships.
The ideas of English liberals and French philosophes reinforced the commercial experience of American colonials and added new dimensions to their concept of international commercial relations. Adam Smith summarized many of these ideas in his book, The Wealth of Nations (1776), but the themes of distribution of labor among nations, comparative advantage, and unrestricted commerce had already been developed by various English and French thinkers. The French Physiocrats argued that the unrestricted flow of goods among the nations would replace power politics and war, since merchants were "citizens of the whole world." Many of the policymakers of the new American republic were quite familiar with these ideas. Economic liberalism in international commerce not only coincided with their concept of the interests of the United States, but also justified the mission of the nation to promote a new system of international relations. Thus, the Founders viewed reciprocity as a bargaining tool and as an integral part of a peaceful, open world order based on equality of treatment and the free flow of goods and ships.
These ideas were first spelled out in the Model Treaty that the Continental Congress adopted in 1776 for purposes of negotiating with France. John Adams drafted the treaty with the assistance of John Dickinson, Benjamin Harrison, Robert Morris, and Benjamin Franklin. He probably was influenced by the writings of Thomas Paine. The latter's Common Sense (1776) had expressed the idea that America's "plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe, because it is the interest of all Europe to have America as a free port." Adams and the other committee members generally agreed with this proposition and believed that the principles of the Model Treaty would ensure the independent existence of the United States. They hoped that the offer of "perfect" commercial reciprocity would repeal the British Navigation Acts as they affected America, and secure French assistance without involving the nation in the European alliance system. Adams's Model Treaty clearly defined "perfect" reciprocity as complete equality of treatment; France and the United States were to make no distinctions between natives and the citizens of the other country (the doctrine of reciprocal national treatment). This was freedom of trade in the eighteenth-century context, which meant equality of treatment rather than elimination of all duties and dues (the definition that developed in the nineteenth century).
The Model Treaty was a fine declaration of American hopes and aspirations, but it was grounded on an exaggerated idea of the value of American trade to France and other nations. The American principles were stated in the preamble to the commercial treaty of 1778. The French, however, were not willing to grant national treatment; the Americans had to settle for most-favored-nation treatment in the "King's European dominions" and admission to established free ports in the French colonies. French Foreign Minister Charles Gravier, Comte de Vergennes, did add a special proviso that created the conditional version of the most-favored-nation clause. Accordingly, if either party to the treaty granted a special commercial favor to a third party, this favor would not be granted automatically to the other signatory; an equivalent compensation would be required if the third party had paid a price. The historian Vernon Setser has argued that Vergennes added the proviso to demonstrate to the world that France was not demanding special privileges from the United States. This interpretation of reciprocity was added to the treaty without much discussion or analysis.
The negotiations of the French commercial treaty clearly revealed the impact of external circumstances on the American concept of "perfect reciprocity." In addition, they also indicated the role of internal political and economic factors in modifying the use of reciprocity. The original draft contained a reciprocal prohibition on certain export duties; the French would drop export duties on molasses shipped from the West Indies to the United States, and the latter would drop such duties on all domestic products sent to the French islands. A majority of Congress opposed this article, and it was suppressed. This incident was a mild foretaste of future domestic battles over the nature and use of reciprocity.
An independent United States faced an international system in which all the major participants followed restrictive, monopolistic policies. The anticipated trade bonanza did not materialize, and the nation was now cut off from almost all of the formerly lucrative West Indian trade. The closing of the British islands was especially painful. In 1782, John Adams negotiated a commercial treaty with the Netherlands, but the Dutch would agree only to a most-favored-nation clause and not to reciprocal national treatment. The conditional clause was omitted, because its utility had not yet been recognized.
The policymakers of the Confederation government began to realize that their nation's economic and political position allowed it almost no bargaining power. As minister to France, Jefferson realized that the most-favored-nation principle worked to the disadvantage of the nation with the most liberal system. In practice, French traders had almost the same rights in the United States as natives, since the United States had very few restrictions on trade. In contrast, the French controlled the entry of goods, even into free ports, by subjecting trade to the monopolistic control of the Farmers General. This group fixed the quantity and price of goods admitted. The most-favored-nation principle only granted the United States equal discrimination. In 1785, Jefferson launched an attack on the French monopolies with the assistance of the Marquis de Lafayette, but the results were very limited. Indeed, as Representative Elbridge Gerry of Massachusetts noted, under existing circumstances the most-favored-nation principle was a system of "cobwebs to catch flies."
Jefferson realized that in a world of monopolies, the United States had few favors to grant because it had a relatively open economic system. In such a world, commercial restrictions obviously meant bargaining power. During the 1780s, Congress devoted considerable attention to this dilemma, and to the lack of congressional power to enact navigation laws and regulate trade. A special committee reported in 1784: "It will certainly be admitted that unless the United States can act as a nation and be regarded as such by foreign powers, and unless Congress for this purpose shall be vested with powers competent to the protection of commerce, they can never command reciprocal advantages in trade; and without such reciprocity, our foreign commerce must decline and eventually be annihilated."
In the spring of 1785 another committee studied these problems, and its recommendations marked a distinct modification in the concept of perfect reciprocity. The committee noted that without authority to impose restrictions, "reciprocity means nothing and foreign powers may follow what policy they please." It also recommended that treaties were not needed with nations that had no colonies, since the United States must consider giving special advantages in return for some trading rights in the West Indies (and the most-favored-nation principle would prohibit such special advantages).
Various proposals were made during the 1780s to amend the Articles of Confederation or to request the states to provide Congress with more power. The states could not agree, however, and nothing happened. Some states did impose commercial restrictions on their own; but the effect was limited because several states, including Connecticut, took advantage of the restrictions of others by acting as a free entrepôt.
During negotiations with the British in October 1782, Congress formally recognized the use of the conditional most-favored-nation principle as a bargaining device. The draft commercial treaty provided for the reciprocal free navigation of all rivers, lakes, and harbors. Congress insisted that a conditional most-favored-nation clause be added so that other nations would have to "pur-chase them [navigation privileges] by a reciprocal grant." The negotiations for a commercial treaty were dropped, however, when the British issued an order in council closing the West Indies to American ships.
By 1787 a number of American leaders generally agreed that the United States could not obtain any effective degree of reciprocity without a national government possessing the power to regulate commerce both externally and internally. This sentiment was part of the movement for a constitutional convention, and the document produced at Philadelphia reflected the congressional debates of the Confederation government. The new Constitution provided much of the power that the advocates of commercial diplomacy had demanded; the international scene had not changed, however, and, internally, sectional and group interests provided a continuing debate over the exact use of the power.
Generally, the debate took place between two groups. One was led by Alexander Hamilton (secretary of the Treasury) and George Washington, the other by James Madison (a U.S. representative) and Thomas Jefferson (secretary of state until 1793). All of these men agreed that perfect reciprocity was not possible in the world of the late eighteenth century, and that as a result some important modifications would have to be made in the practical uses of reciprocity. They also had retreated from the dreams of a world thirsting for American trade. Most of them still retained some hope that eventually the policies of the United States might lead to an open world of unrestricted trade, but in the interim their main concern was what immediate steps could be taken to ensure the prosperity and independence of the nation. The two groups disagreed significantly not over basic principles, but over tactics and the interpretation of primary interests.
Madison and Jefferson believed that a considerable degree of economic independence could be obtained immediately through a modified system of exclusive reciprocity. They wanted to break the British monopoly on American trade by enacting a navigation law that would favor continental nations and encourage bargaining through discriminatory duties and dues that would affect nations discriminating against the United States. Jefferson explained the need for discrimination in his final report as secretary of state in December 1793. He began by extolling the physiocratic ideals of open trade as the best course for human happiness, then added:
But should any nation contrary to our wishes suppose it may better find its advantage by continuing its system of prohibitions, duties, and regulations, it behooves us to protect our citizens, their commerce, and navigation, by counter prohibitions, duties, and regulations, also. Free commerce and navigation are not to be given in exchange for restrictions and vexations, nor are they likely to produce a relaxation of them.
Jefferson hoped that an initial policy of exclusive reciprocity would eventually produce a system of open trade.
Hamilton considered such a retaliation policy to be a declaration of commercial war against Britain. He was convinced that in the short run the United States should accept economic subordination and British restrictions because import duties, largely derived from trade with Britain, were vital to the economic development of the country. His goal was economic independence through the development of domestic industry. Hamilton and Washington opposed any measures designed to force reciprocity and proclaimed a simple policy of equal treatment for all nations. Thus, they hoped to buy time and not be drawn into European controversies.
The first congressional battle over commercial policy continued from 1789 to 1795. In July and August 1789, Congress passed four acts that laid the foundation for a new commercial system. These were the Tariff of 1789, the Tonnage Act, the act to regulate the collection of duties, and the act for registering and clearing vessels. They provided protection for American industry and shipping but did not discriminate against any foreign country in particular. All foreign vessels were required to pay fifty cents per ton, in comparison with six cents for American ships. A 10 percent discount on customs duties was provided on dutiable goods imported in American ships, a provision changed in 1790, after which merchandise imported in American ships paid the normal duty and a 10 percent surcharge was added to all goods imported in foreign ships. Madison had attempted to add further discriminatory tonnage dues for nations that had not negotiated commercial agreements with the United States. He was not successful then, or in his subsequent efforts to enact retaliatory measures, such as closing American ports to vessels that came from ports closed to American ships.
Jay's Treaty (1794) settled several outstanding questions between the United States and Britain and provided for some reciprocity. Trade with the British Isles was opened on a most-favored-nation basis, and provisions were made for reciprocal trade across the Canadian border. The West Indies remained closed, however, because the Senate rejected the clause providing for a very limited access and a prohibition on exports of certain agricultural products from the United States. Opponents of the treaty claimed that a policy of exclusive reciprocity would have done more to break down the restrictive systems. In his Farewell Address, however, Washington defended the noncoercive method of obtaining reciprocity, which he characterized as "consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing."
Between 1796 and 1815, American leaders did very little about reciprocity. The wars in Europe generally stimulated exports and led to the relaxation of restrictions (especially in the West Indies). Questions of neutral rights and impressment took precedence over matters that appeared less urgent. In fact, Congress refused to act on a reciprocity bill, proposed in 1802, that would have allowed, for any nation that would reciprocate by repealing its similar legislation, the abolition of the discriminatory tonnage dues on ships and the customs surcharges on the produce of the country owning the vessel. Rufus King had negotiated such an arrangement with Britain, and a bill providing for repeal had even been rushed through Parliament.
In 1815 the United States government, in a burst of nationalistic vigor, launched an attack on the restrictive systems of the European states. American leaders were determined to open the world to U.S. shipping and to make reciprocity an effective tool in breaking down the "excluding and exclusive" policy of the old colonial order. The first step was the passage of the Reciprocity Act of 1815. This was the proposal that had been rejected in 1802, and it affected only the direct trade between countries. Several months later, the United States and Great Britain signed a convention that reciprocally abolished all discriminatory duties and dues levied on ships and goods in the direct trade. (This convention was still in force in 2001.) In April 1818, Congress passed a special reciprocity act providing that discriminating duties on goods shipped from the Netherlands would be dropped, not only for goods produced by the Dutch but also for "such produce and manufactures as can only be or most usually are first shipped from a port or place" in the Netherlands. According to this broader principle, national treatment would be accorded all goods that a country normally exported even if they were not produced within that country. In January 1824, Congress extended this principle to Prussia, the Hanseatic cities of Bremen and Hamburg, Sardinia, the dukedom of Oldenburg, and Russia.
In his annual message in December 1825, President John Quincy Adams recommended that the rule of complete reciprocity be adopted, and that all discriminatory duties and dues be dropped for those countries that would do the same for the United States. The origin of goods no longer would be a factor. In the same month Secretary of State Henry Clay negotiated a treaty of complete reciprocity with the Central American Federation. He considered this to be a model treaty and later wrote, "All the shackles which the selfishness or contracted policy of nations had contrived, are broken and destroyed by this broad principle of universal liberality."
By the Marine Reciprocity Act of 1828, Congress gave the president power to proclaim complete reciprocity with all reciprocating nations. In the next few years, this principle was embodied in more than thirty commercial treaties negotiated by the United States. In 1830, Congress repealed the tonnage dues on American ships and offered the same concession to the vessels of any nation that would extend such treatment to American ships.
The attempt to apply reciprocity to the West Indian trade proved to be more difficult. Congress utilized retaliation against the British in the Navigation Acts of 1818 and 1820. The first closed all American ports to British ships that came from ports closed to the United States. The second applied the closing to British ships coming from any colonial port in America, and prohibited the importation of goods from British colonial ports, even in American ships, unless the goods came directly from the producing colony. The latter provision was designed to block the circuitous trade through Bermuda, Nova Scotia, and New Brunswick. The British Parliament offered a liberalization of the West Indies trade in 1822, and the United States relaxed its restrictions by presidential proclamation and by an act of Congress in March 1823. President Adams did not respond to subsequent British offers of relaxation, but President Andrew Jackson accepted these in 1830. As a result, reciprocal trade relations between the United States and the British West Indies (with some exceptions) were established. Negotiations with France and Sweden concerning their West Indian colonies led to reciprocal agreements in 1828 and 1837. The Spanish colonies of Cuba and Puerto Rico had been closed officially, but the regulations were not enforced. In 1830, Spain accepted a United States consul for Cuba, and trade between the United States and Cuba increased.
Official U.S. attitudes and policies toward the newly independent nations of Latin America were part of the same ideological structure that produced the reciprocity system. John Quincy Adams stressed this in 1822 when he informed Stratford Canning, the British minister to Washington, that the "liberation of the Spanish colonies would mean the end of exclusive commercial policies everywhere." The Latin American policy of the Monroe and Adams administrations was aimed at establishing reciprocity as a key element in inter-American relations, and preventing the reestablishment of the old colonial order of economic mercantilism and political authoritarianism. In May 1823, Secretary of State Adams stressed the U.S. policy "to counteract the efforts which it cannot be doubted European negotiations will continue to make in the furtherance of their monarchical and monopolizing contemplations." In regard to Latin America he noted, "The only object which we shall have much at heart in the negotiation [on commercial relations] will be the sanction by solemn compact of the broad and liberal principle of independence, equal favors, and reciprocity." In addition, Adams hoped that the principle of complete national treatment of foreigners would be established in the hemisphere, and that all discriminating duties would be abolished.
To Adams and Monroe, the open world was to be established first in the Western Hemisphere. And the Monroe Doctrine was, in part, a general declaration of these aspirations. Commercial freedom was an important part of the American rivalry with the European system, but the authors of the Monroe Doctrine envisioned the "American system" in a broader sense. As Adams pointed out in his policy statement of May 1823: "Civil, political, commercial, and religious liberty, are but the various modifications of one great principle, founded in the unalienable rights of human nature, and before the universal application of which the colonial domination of Europe over the American hemisphere has fallen."
During the 1820s and subsequently, the gap between power and aspirations would limit the efforts of the United States. During the 1820s, treaties embodying commercial reciprocity were negotiated with Colombia and Brazil, but economic liberalism in the hemisphere would not become a widespread reality for more than a century. Adams and Monroe did, however, proclaim the integral nature of reciprocity, the open world, and a Western Hemisphere independent of the European colonial system.