In Federalist No. 11, Hamilton returns to the helm in addressing the people of the State of New York in the Independent on the utility of the Union in respect to commercial relations and a navy. Starting with this essay, we start to move away from generic advantages of a republic over a democracy and a Union over a confederacy to a specific set of advantages, of relevance to the people, possessed by a republic Union.
Even in 1787, global trade was critical to economic growth. (In fact, in 1817, Congress did away with all internal taxes and relied solely on tariffs on imported goods to provide sufficient funds for running the government. The first income tax was not enacted until 1862 to support the Civil War. Before this, taxes were limited to a few commodities, starting with sugar in 1764 and stamps in 1765.) In the 1600s and 1700s, European countries captured profits of 200% to 300% by way of long-distance trade with the Americas and the east. In fact, at one point in time, the British East India Company was an imperial power in its own right, with its own military! Thus, commercial relations would be critical to the rise, and acceptance, of America.
Hamilton starts off by noting that there are appearances to authorize a supposition that the adventurous spirit, which distinguishes the commercial character of
America, has already excited uneasy sensations in several of the maritime powers of Europe. They seem to be apprehensive
of our too great interference in that carrying trade. There is thus reason to believe that some countries may favour the policy of fostering divisions among us, and of depriving us, as far as possible, of an
ACTIVE COMMERCE as this would prevent our interference in their
navigation, [prevent our interference in their] monopolizing the profits of our trade, and clip the wings by which we might soar to a dangerous greatness.
If we continue united, we may counteract a policy so unfriendly to our prosperity in a variety of ways. By prohibitory
regulations, extending … throughout the States, we may oblige foreign countries to bid against each other, for
the privileges of our markets. In addition, a further resource for influencing the conduct of European nations toward us, in this respect, would arise from the establishment of a federal navy. There can be no doubt that the continuance of the Union … would … create a navy which, if it could not vie with those of the great maritime powers, would at least be of respectable weight. This would create, since just a few ships sent to reinforce either side in a third-party maritime conflict, would be sufficient to decide the fate of a campaign and this creates a situation so favourable would enable us to bargain with great advantage for commercial privileges. Thus, by a steady adherence to the Union we may … become the arbiter of Europe in America. It is arguable that under a vigorous national government, the natural strength and resources of the country, directed to a common interest,
would baffle all the combinations of European jealousy to restrain our growth.
In addition, an unrestrained intercourse between the States themselves will advance the trade of each by an interchange of their
respective productions … and the veins of commerce in every part will be replenished. As a result, the aggregate balance of the commerce of the United States would bid fair to be
much more favourable than that of the thirteen States without union. And, then, the thirteen States, bound together in a strict and indissoluble Union, concurrent in erecting one great
American system will be superior to the control of all transatlantic force or influence, and able to dictate the terms of the connection between the old and the new world!
Want to discuss? Join The Federalists on LinkedIn. The open group has been created specifically to discuss the philosophical underpinnings of the governance of nations and their ramifications on the national and international economics and global trade.