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Enemy Trade With a License
Patrick Callaway, Ph.D. Student
Prior to the declaration of war by the United States against Great Britain in June 1812, the administrations of Thomas Jefferson and James Madison attempted to use economic coercion to influence British policies towards the United States. These policies failed as a result of poor planning, a lack of governmental infrastructure to enforce the law, and popular dissent. The primary victim of American trade policies in the pre-war years was the United States. A logical consequence of the gathering war clouds in the spring of 1812 would be more government restrictions on American trade. A temporary embargo was passed and legislation was created to curtail trade with Great Britain. The wartime trade restriction policies, however, had two important gaps. The primary markets for exported agricultural goods were Spain, Portugal, and the British army operating in Iberia. This trade was not outlawed. In addition, it was legal to trade under British license to neutral ports until the fall of 1813. These two omissions from the law destroyed whatever impact that American trade restrictions would have on Great Britain.
The American declaration of war in did little to end the trade between the United States and the Iberian Peninsula. Prior to leaving Washington, British Ambassador Foster issued explicit licenses for American merchantmen to continue the grain trade with the Spanish Peninsula. Additional trade licenses were issued by Admiral Sawyer of the Halifax squadron, Consul Allen in Boston, and Consul Stewart in New London. By August 1812, over 500 licenses had been issued and they were openly bought and sold in American port cities. All of these licenses were validated by London, and the protection given by the license was expanded to include the return voyage from the Iberian Peninsula to the United States. The licensed trade created a quandary for many Americans as the government attempted to create an official policy regarding the trade.
In an April 1812 letter to President Madison, Thomas Jefferson advised him “that commerce under certain restrictions and licenses may be indulged between enemies, mutually advantageous to the individuals, and not to their injury as belligerents.” In response, to Jefferson, Madison expressed dismay over the use of British licenses to trade with neutral ports such as Lisbon and Cadiz. In Madison’s understanding, the licensed trade was “pregnant with abuses of the worst sort….” His opposition to the use of British licenses did not extend to ending trade with Iberia or the British army however. Madison believed that in the event of war, Spanish and Portuguese “flags and papers real or counterfeit, will afford neutral cover to our produce as far as wanted….” In this case, the temper of Congress was much closer to Jefferson’s opinions than Madison’s. A motion was proposed in Congress in March 1813 to outlaw the use of British licenses; the motion was defeated in the House of Representatives by the single vote of Speaker of the
House and war hawk Henry Clay. In justifying this vote, Clay noted that continued grain exports to the British army in the peninsula would be paid for in specie, thereby weakening the British economy and providing injections of capital into the wartime American economy. It is ironic that one of the primary advocates of war with Britain voted to continue trade with the enemy. It was not until July 1813 that the license trade was outlawed, but this measure did not end trade. An embargo of American shipping was not passed until December 1813; by that time demand from the peninsular market had ended.
Congressman Timothy Pitkin’s statistical analysis paints a rosy picture for the American export trade even through the first 18 months of the war. In his analysis, he estimated that in 1812 that the United States exported to Spain and Portugal 835,179 barrels of flour and 76,232 bushels of wheat to the peninsula. He estimates the value of these exports at approximately $12 million. For 1813, he states that the United States exported some 973,500 barrels of flour and 288,535 bushels of wheat to the peninsula with an estimated sale value of approximately $15 million. American exports to the peninsula actually increased in the year after the declaration of war. Economic necessity combined with an irresolute political leadership allowed for American merchants to legally supply the British war effort against France in the peninsula even as the war between Britain and the United States raged.
Patrick Callaway,”Enemy Trade with a License,” Khronikos: the University of Maine graduate history student blog (blog), March 26, 2013, http://khronikos.com/2013/03/20/a-revolutionary-atlantic-irish-volunteers-and-american-patriots/.
Library of Congress, http://www.loc.gov/pictures/item/2002708982/.
Thomas Jefferson: 1856 copy by Thomas Sully after Sully’s 1821 original life portrait
Image credit: Thomas Jefferson Foundation. Downloaded from http://www.monticello.org/node/1963, March 26, 2013
James Madison: James Madison, 4th president of the United States / G. Stuart pinxt. ; W. Ball on stone. http://www.loc.gov/pictures/item/2003679975/.