The House again resolved itself into a Committee of the Whole House on the Report of the Secretary of State … when Mr. Madison rose in reply to Mr. Smith. … The propositions immediately before the committee turned on the question whether any thing ought to be done at this time, in the way of commercial regulations, towards vindicating and advancing our national interests. Perhaps it might be made a question with some whether, in any case, legislative regulations of commerce were consistent with its nature and prosperity.

He professed himself to be a friend to the theory which gives to industry a free course, under the impulse of individual interest and the guidance of individual sagacity. He was persuaded that it would be happy for all nations if the barriers erected by prejudice, by avarice, and by despotism were broken down and a free intercourse established among them. Yet to this, as to all other general rules, there might be exceptions. And the rule itself required, what did not exist, that it should be general… .

This subject, as had been remarked on a former occasion, was not a novel one. It was co-eval with our political birth and has at all times exercised the thoughts of reflecting citizens. As early as the year succeeding the peace, the effect of the foreign policy which began to be felt in our trade and navigation excited universal attention and inquietude. The first effort thought of was an application of Congress to the states for a grant of power for a limited time to regulate our foreign commerce, with a view to control the influence of unfavorable regulations in some cases and to conciliate an extension of favorable ones in others. From some circumstances then incident to our situation, and particularly from a radical vice in the then political system of the United States, the experiment did not take effect.

The states next endeavored to effect their purpose by separate but concurrent regulations. Massachusetts opened a correspondence with Virginia and other states in order to bring about the plan. Here again the effort was abortive. Out of this experience grew the measures which terminated in the establishment of a government competent to the regulation of our commercial interests and the vindication of our commercial rights.

As these were the first objects of the people in the steps taken for establishing the present government, they were universally expected to be among the first fruits of its operation. In this expectation the public were disappointed. An attempt was made in different forms and received the repeated sanction of this branch of the legislature, but they expired in the Senate. Not indeed, as was alledged, from a dislike to the attempt altogether, but the modifications given to it. It has not appeared, however, that it was ever renewed in a different form in that house; & for some time it has been allowed to sleep in both.

If the reasons which originally prevailed against measures such as those now proposed had weight in them, they can no longer furnish a pretext for opposition.

When the subject was discussed in the first Congress at New-York, it was said that we ought to try the effect of a generous policy towards Great-Britain; that we ought to give time for negotiating a treaty of commerce; that we ought to await the close of negotiations for explaining and executing the treaty of peace. We have now waited a term of more than four years. The treaty of peace remains unexecuted on her part, tho’ all pretext for delay has been removed by the steps taken on ours. No treaty of commerce is either in train or in prospect. Instead of relaxations in former articles complained of, we suffer new and aggravated violations of our rights.

In the view which he took of the subject, he called the attention of the committee particularly to the subject of navigation, of manufactures, and of the discrimination proposed in the motion between some nations and others.

On the subject of navigation, he observed that we were prohibited by the British laws from carrying to Great-Britain the produce of other countries from their ports, or our own produce from the ports of other countries, or the produce of other countries from our own ports, or to send our own produce from our own or other ports in the vessels of other countries. This last restriction was, he observed, felt by the United States at the present moment. It was indeed the practice of Great-Britain sometimes to relax her navigation act so far in time of war as to permit to neutral vessels a circuitous carriage; but as yet the act was in full force against the use of them for transporting the produce of the United States.

On the other hand, the laws of the United States allowed Great-Britain to bring into their ports any thing she might please, from her own or from other ports, and in her own or in other vessels.

In the trade between the United States and the British West-Indies, the vessels of the former were under an absolute prohibition, whilst British vessels in that trade enjoyed all the privileges granted to other, even the most favored, nations in their trade with us. The inequality in this case was the more striking as it was evident that the West-Indies were dependent on the United States for the supplies essential to them, and that the circumstances which secured to the United States this advantage enabled their vessels to transport the supplies on far better terms than could be done by British vessels.

To illustrate the policy requisite in our commercial intercourse with other nations, he presented a comparative view of the American and foreign tonnage employed in the respective branches of it, from which it appeared that the foreign stood to the American as follows—
Spain 1 to 5
Portugal 1 to 6
The United Netherlands 1 to 15
Denmark 1 to 12
Russia ——
France 1 to 5
Great-Britain 5 to 1

It results from these facts that in proportion as the trade might be diminished with Great-Britain and increased with other nations, would be the probable increase of the American tonnage. It appeared, for example, that as the trade might pass from British channels into those of France it would augment our tonnage at the rate of ten to one… .

Such a disproportion, taking even the reduced one, in the navigation with Great-Britain was the more mortifying when the nature and amount of our exports are considered. Our exports are not only for the most part either immediately necessaries of life or … necessaries of employment and life to manufacturers, and must thence command a sure market wherever they are received at all. But the peculiar bulkiness of them furnishes an advantage over the exports of every other country, and particularly over those of Great-Britain. … The bulk of her exports to us compared with that of ours to her is as nothing. An inconsiderable quantity of shipping would suffice for hers, whilst ours can load about 222,000 tons. Including the articles she exports from the West-Indies to this country, they bear no proportion to ours. Yet in the entire trade between the United States and the British dominions, her tonnage is to that of the United States as 156,000, employing 9,360 seamen, to 66,000, employing 3,690 seamen. Were a rigid exertion of our right to take place, it would extend our tonnage to 222,000, and leave to G.B. employment for much less than the actual share now enjoyed by the United States. It could not be wished to push matters to this extremity. It showed, however, the very unequal and unfavorable footing on which the carrying trade, the great resource of our safety and respectability, was placed by foreign regulations, and the reasonableness of peaceable attempts to meliorate it. We might at least, in availing ourselves of the merit of our exports, contend for such regulations as would reverse the proportion and give the United States the 156,000 tonnage and 9,360 seamen, instead of the 66,000 tonnage and 3,690 seamen… .

It was not the imports but exports that regulated the quantity of tonnage. What was imported in American vessels, which would otherwise return empty, was no doubt a benefit to the American merchant, but could slightly only, if at all, increase the mass of our tonnage. The way to effect this was to secure exportations to American bottoms.

Proceeding to the subject of manufactures, he observed that it presented no compensations for the inequalities in the principles and effects of the navigation system.

We consume British manufactures to double the amount of what Britain takes from us; and quadruple the amount of what she actually consumes.

We take everything after it has undergone all the profitable labor that can be bestowed on it. She receives, in return, raw materials, the food of her industry.

We send necessaries to her. She sends superfluities to us.

We admit every thing she pleases to send us, whether of her own or alien production. She refuses not only our manufactures, but the articles we wish most to send her; our wheat and flour, our fish, and our salted provisions. These constitute our best staples for exportation, as her manufactures constitute hers.

It appeared by an authentic document he had examined that of the manufactured articles imported in 1790, amounting to 15,295,638 dollars 97 cents, we received from and thro’ Great-Britain, 13,965,464 dollars 95 cents.

During the same year, the manufactures imported from France, the next great commercial country, and consuming more of our produce than Great-Britain, amounted to no more than 155,136 dollars and 63 cents.

To give a fuller view of our foreign commerce, he stated the balances with the several nations of Europe and their dominions as follow:
DollarsSpain 1,670,797 in favor of U.S.
Portugal 1,687,699 ditto
U. Netherlands 791,118 ditto
Sweden 32,965 ditto
Denmark 126,949 against the U.S.
France 2,630,387 in favor of U.S.
G. Britain 5,922,012 against the U.S.

This enormous balance to G.B. is on the exports to her. On her consumption the balance is still greater, amounting to nine or ten millions, to which again is to be added her profits on the re-exports in a manufactured and raw state.

It might be said that an unfavorable balance was no proof of an unfavorable trade, that the only important balance was the ultimate one on our aggregate commerce.

That there was much truth in this general doctrine was admitted, at the same time it was equally certain that there were exceptions to it, some of which were conceived to be applicable to the situation of the United States.

But whether the doctrine were just or not, as applied to the United States, it was well known that the reasoning and practice of other countries were governed by a contrary doctrine. In all of them, an unfavorable balance to be paid in specie was considered as an evil. Great-Britain in particular had always studied to prevent it as much as she could. What then may be the effect on the policy of a nation with which we have the most friendly and beneficial relations when it sees the balance of trade with us not only so much against her, but all the specie that pays it flowing immediately into the lap of her greatest rival, if not her most inveterate enemy.

As to the discrimination proposed between nations having and not having commercial treaties with us, the principle was embraced by the laws of most, if not all the states, whilst the regulation of trade was in their hands.

It had the repeated sanction of votes in the House of Representatives during the session of the present government at New-York.

It has been practiced by other nations, and in a late instance against the United States.

It tends to procure beneficial treaties from those who refuse them, by making them the price of enjoying an equality with other nations in our commerce.

It tends, as a conciliatory preference, to procure better treaties from those who have not refused them.

It was a prudent consideration, in dispensing commercial advantages, to favor rather those whose friendship and support may be expected in case of necessity than those whose disposition wore a contrary aspect. He did not wish to enter at present, nor at all, if unnecessary, into a display of the unfriendly features which marked the policy of Great-Britain towards the United States. He should be content to lay aside, at least for the present, the subject of the Indians, the Algerines, the spoliations, &c. but he could not forbear remarking, generally, that if that or any other nation were known to bear us a settled ill-will, nothing could be more impolitic than to foster resources which would be more likely to be turned against us than exerted in our favor.

It had been admitted by the gentleman who spoke yesterday (Mr. Smith of South Carolina) to be a misfortune that our trade should be so far engrossed by any one nation as it is in the hands of Great-Britain. But the gentleman added nothing to alleviate the misfortune when he advised us to make no efforts for putting an end to it. The evils resulting from such a state of things were as serious as they were numerous. To say nothing of sudden derangements from the caprice with which sovereigns might be seized, there were casualties which might not be avoidable. A general bankruptcy, which was a possible event, in a nation with which we were so connected, would reverberate upon us with a most dreadful shock. A partial bankruptcy had actually and lately taken place; and was severely felt in our commerce. War is a common event particularly to G. Britain and involves us in the embarrassments it brings on her commerce whilst ours is so disproportionately interwoven with it. Add the influence that may be conveyed into the public councils by a nation directing the course of our trade by her capital, & holding so great a share in our pecuniary institutions, and the effect that may finally ensue on our taste, our manners, and our form of government itself.

If the question be asked, what might be the consequence of counter-efforts, and whether this attempt to vindicate our public interests would not produce them? His answer was that he did not in the least apprehend such a consequence, as well because the measure afforded no pretext, being short of what was already done by Great-Britain in her commercial system, as because she would be the greatest sufferer from a stagnation of the trade between the two countries if she should force on such a crisis.

Her merchants would feel it. Her navigation would feel it. Her manufacturers would feel it. Her West-Indies would be ruined by it. Her revenue would deeply feel it. And her government would feel it thro’ every nerve of its operations. We too should suffer in some respects but in a less degree, and, if the virtue and temper of our fellow citizens were not mistaken, the experiment would find in them a far greater readiness to bear it. It was clear to him, therefore, that if Great-Britain should, contrary to all the rules of probability, stop the commerce between the two countries, the issue would be a complete triumph to the United States.

He dwelt particularly on the dependence of British manufactures on the market of the United States. He referred to a paper in Anderson’s History of Commerce, which states the amount of British manufactures at £51,310,000 sterling, and the number of souls employed in, and supported by them, at 5,250,000. Supposing the United States to consume two and a half millions of British manufactures, which is a moderate estimate, the loss of their market would deprive of subsistence 250,000 souls. Add 50,000 who depend for employment on our raw materials. Here are 300,000 souls who live by our custom. Let them be driven to poverty and despair by acts of their own government, and what would be the consequence? Most probably an acquisition of so many useful citizens to the United States, which form the natural asylum against the distresses of Europe. But whether they should remain in discontent and wretchedness in their own country or seek their fortunes in another, the evil would be felt by the British government as equally great, and be avoided with equal caution.

It might be regarded, he observed, as a general rule, that where one nation consumed the necessaries of life produced by another, the consuming nation was dependent on the producing one. On the other hand, where the consumption consisted of superfluities, the producing nation was dependent on the consuming one. The United States were in the fortunate situation of enjoying both these advantages over Great-Britain. They supply a part of her dominions with the necessaries of life. They consume superfluities which give bread to her people in another part. Great-Britain, therefore, is under a double dependence on the commerce of the United States. She depends on them for what she herself consumes; she depends on them for what they consume.

In proportion as a nation manufactures luxuries must be its disadvantage in contests of every sort with its customers. The reason is obvious. What is a luxury to the consumer is a necessary to the manufacturer. By changing a fashion, or disappointing a fancy only, bread may be taken from the mouths of thousands whose industry is devoted to the gratification of artificial wants.

He mentioned the case of a petition from a great body of buckle makers presented a few years ago to the Prince of Wales, complaining of the use of strings instead of buckles in the shoes and supplicating his royal highness, as giving the law to fashions, to save them from want and misery by discontinuing the new one. It was not, he observed, the prince who petitioned the manufacturers to continue to make the buckles, but the manufacturers who petitioned their customers to buy them. The relation was similar between the American customers and the British manufacturers. And if a law were to pass for putting a stop to the use of their superfluities, or a stop were otherwise to be put to it, it would quickly be seen from which the distress and supplications would flow.

Suppose that Great-Britain received from us alone the whole of the necessaries she consumes, and that our market alone took off the luxuries with which she paid for them. Here the dependence would be complete, and we might impose whatever terms we pleased on the exchange. This to be sure is not absolutely the case; but in proportion as it is the case, her dependence is on us.

The West-Indies, however, are an example of complete dependence. They cannot subsist without our food. They cannot flourish without our lumber and our use of their rum. On the other hand we depend on them for not a single necessary, and can supply ourselves with their luxuries from other sources. Sugar is the only article about which there was ever a question, and he was authorized to say that there was not at the most one sixth of our consumption supplied from the British islands.

In time of war or famine the dependence of the West-Indies is felt in all its energy. It is sometimes such as to appeal to our humanity as well as our interest for relief. At this moment, the governor of Jamaica is making proclamation of their distresses. If ever, therefore, there was a case where one country could dictate to another the regulations of trade between them, it is the case of the United States and the British West-Indies. And yet the gentleman from South Carolina (Mr. Smith) had considered it as a favor that we were allowed to send our provisions in British bottoms, & in these only, to the West-Indies. The favor reduced to plain language in the mouth of their planters would run thus: We will agree to buy your provisions rather than starve and let you have our rum, which we can sell nowhere else; but we reserve out of this indulgence a monopoly of the carriage to British vessels.

With regard to revenue, the British resources were extremely exhausted in comparison with those of the United States.

The people of Great-Britain were taxed at the rate of 4s a head; the people of the United States at not more than 6d a head, less than one-sixth of the British tax.

As the price of labor which pays the tax is double in the United States to what it is in Great-Britain, the burden on American citizens is less than one-twelfth of the burden on British subjects.

It is true, indeed, that Britain alone does not bear the whole burden. She levies indirect taxes on her West-Indies and on her East-Indies, and derives from an acquiescence in her monopolizing regulations an imperceptible tribute from the whole commercial world.

Still, however, the difference of burden in the two countries is immense.

Britain has moreover great arrears of unfunded debts. She is threatened with defects in her revenue even at this time. She is engaged in an expensive war. And she raises the supplies for it on the most expensive terms.

Add to the whole that her population is stationary if not diminishing, whilst that of the United States is in a course of increase beyond example.

Should it still be asked whether the impost might not be affected, and how a deficiency could be supplied? He thought sufficient answers might be given.

He took for granted that the articles subjected to the additional duties would continue to come according to the demand for them. And believed if the duties were prudently adjusted, the increase of the duties would balance the decrease of importation… .