the post-revolutionary slump -- 5/1/23
Today's selection -- from Money & Banking in Maryland by Stuart R. Bruchey and Eleanor S. Bruchey. Victory in the American Revolution did not bring favorable economic news for its economy, which saw a typical post-war slump with the drop-off in military spending. This was compounded by the fact that Britain prohibited American merchants from trading directly with its possessions in the Caribbean, which had been the biggest source of their pre-Revolutionary profits. This problem was alleviated, and the American economy was given a boost when England and France went to war after the French Revolution. Baltimore was just one of the key American ports to experience this:
"Despite the optimistic projections … in the early postwar period, Baltimore and its trade [along with other U.S. ports] languished during most of the years between 1783 and 1789. In August 1785, for example, the Maryland Journal complained that ‘Commercial Opposition of Great Britain, against the United States of America still continues; the various accounts from the West-India Islands can leave no Doubt of their Determination rigorously to abide by their Navigation System. Our Trade feels the Effects of these illiberal Measures.' Prices of American exports fell in relation to those of imported goods, the terms of trade declining each year between 1784 and 1789 from an index of 112 to 88.
|Baltimore from Federal Hill / paind. & engd. by W.J. Bennett.|
"Not surprisingly, Baltimore merchants and seamen led the fight in Maryland to ratify the new federal Constitution, which offered promises of stronger U.S. diplomacy, naval power, and currency. World events helped the new government deliver on some of its promises. In 1793 western Europe went to war over republican French expansionism, and the needs of the belligerents were more considerable.
"Foreign conflict opened a new era for American trade. The war made such demands on British shipping that British prohibitions against American vessels entering its West India ports were simply unenforceable. Aware that enemy naval superiority would put an end to its own colonial shipping, France threw open all its ports in the West Indies, East Indies, the Isle of France, and Bourbon to the neutral Americans. To the extent that the French decrees gave privileges not enjoyed before the war, they conflicted with the British ‘Rule of 1756,’ which held that a neutral might not in wartime engage in a trade closed to it in time of peace.
"At first the British interpreted this principle generously, seizing only those neutral vessels that sailed directly to Europe with French West Indian produce. Indirect voyages were allowed, laying the basis for a highly profitable American carrying trade. Baltimore merchants brought French-colonial products home, landed, and then reexported them -- to great advantage. The combined value of domestic and foreign goods in Maryland’s (largely Baltimore’s) shipments increased steadily before the Peace of Amiens in 1803, then resumed its upward swing until the Jefferson administration’s policy of halting or embargoing American shipping in 1807. While figures for foreign goods are unavailable before 1803, the role of the carrying trade appears clearly both in the increased value of exports in 1794 and in the decline of 1802-3, when peace sent commerce into its pre-war channels."