Hammurabi, king of Babylon, was the first known ruler to codify the law within his domains during the eighteenth century B.C.E. With previous Sumerian and Semitic laws as the basis of the code, Hammurabi addressed business and family relations as well as labor, property, and injury. Although fairness was the goal of the law, some rules allowed for harsh punishments such as an eye for an eye and a tooth for a tooth. The code allowed merchants to conduct business transactions knowing what their remedies were in cases involving theft or fraud. The following is an excerpt of the code that focuses primarily on business.
When Anu the Sublime, King of the Anunaki, and Bel, the lord of Heaven and earth, who decreed the fate of the land, assigned to Marduk, the over-ruling son of Ea, God of righteousness, dominion over earthly man, and made him great among the Igigi, they called Babylon by his illustrious name, made it great on earth, and founded an everlasting kingdom in it, whose foundations are laid so solidly as those of heaven and earth; then Anu and Bel called by name me, Hammurabi, the exalted prince, who feared God, to bring about the rule of righteousness in the land, to destroy the wicked and the evil-doers; so that the strong should not harm the weak; so that I should rule over the black-headed people like Shamash, and enlighten the land, to further the well-being of mankind.
When Marduk sent me to rule over men, to give the protection of right to the land, I did right and righteousness in … and brought about the well-being of the oppressed.
49
If any one take money from a merchant, and give the merchant a field tillable for corn or sesame and order him to plant corn or sesame in the field, and to harvest the crop; if the cultivator plant corn or sesame in the field, at the harvest the corn or sesame that is in the field shall belong to the owner of the field and he shall pay corn as rent, for the money he received from the merchant, and the livelihood of the cultivator shall he give to the merchant.
50
If he give a cultivated corn-field or a cultivated sesame-field, the corn or sesame in the field shall belong to the owner of the field, and he shall return the money to the merchant as rent.
51
If he have no money to repay, then he shall pay in corn or sesame in place of the money as rent for what he received from the merchant, according to the royal tariff.
52
If the cultivator do not plant corn or sesame in the field, the debtor’s contract is not weakened.
53
If any one be too lazy to keep his dam in proper condition, and does not so keep it; if then the dam break and all the fields be flooded, then shall he in whose dam the break occurred be sold for money, and the money shall replace the corn which he has caused to be ruined.
54
If he be not able to replace the corn, then he and his possessions shall be divided among the farmers whose corn he has flooded.
55
If any one open his ditches to water his crop, but is careless, and the water flood the field of his neighbor, then he shall pay his neighbor corn for his loss.
62
If he do not plant the field that was given over to him as a garden, if it be arable land (for corn or sesame) the gardener shall pay the owner the produce of the field for the years that he let it lie fallow, according to the product of neighboring fields, put the field in arable condition and return it to its owner.
100
… interest for the money, as much as he has received, he shall give a note therefor, and on the day, when they settle, pay to the merchant.
101
If there are no mercantile arrangements in the place whither he went, he shall leave the entire amount of money which he received with the broker to give to the merchant.
If a merchant entrust money to an agent (broker) for some investment, and the broker suffer a loss in the place to which he goes, he shall make good the capital to the merchant.
103
If, while on the journey, an enemy take away from him anything that he had, the broker shall swear by God and be free of obligation.
104
If a merchant give an agent corn, wool, oil, or any other goods to transport, the agent shall give a receipt for the amount, and compensate the merchant therefor. Then he shall obtain a receipt from the merchant for the money that he gives the merchant.
105
If the agent is careless, and does not take a receipt for the money which he gave the merchant, he can not consider the unreceipted money as his own.
106
If the agent accept money from the merchant, but have a quarrel with the merchant (denying the receipt), then shall the merchant swear before God and witnesses that he has given this money to the agent, and the agent shall pay him three times the sum.
107
If the merchant cheat the agent, in that as the latter has returned to him all that had been given him, but the merchant denies the receipt of what had been returned to him, then shall this agent convict the merchant before God and the judges, and if he still deny receiving what the agent had given him shall pay six times the sum to the agent.
196
If a man put out the eye of another man, his eye shall be put out. [An eye for an eye]
197
If he break another man’s bone, his bone shall be broken.
198
If he put out the eye of a freed man, or break the bone of a freed man, he shall pay one gold mina.
199
If he put out the eye of a man’s slave, or break the bone of a man’s slave, he shall pay one-half of its value.
200
If a man knock out the teeth of his equal, his teeth shall be knocked out. [A tooth for a tooth]
201
If he knock out the teeth of a freed man, he shall pay one-third of a gold mina.
202
If any one strike the body of a man higher in rank than he, he shall receive sixty blows with an ox-whip in public.
237
If a man hire a sailor and his boat, and provide it with corn, clothing, oil and dates, and other things of the kind needed for fitting it: if the sailor is careless, the boat is wrecked, and its contents ruined, then the sailor shall compensate for the boat which was wrecked and all in it that he ruined.
238
If a sailor wreck any one’s ship, but saves it, he shall pay the half of its value in money.
239
If a man hire a sailor, he shall pay him six gur of corn per year.
240
If a merchantman run against a ferryboat, and wreck it, the master of the ship that was wrecked shall seek justice before God; the master of the merchantman, which wrecked the ferryboat, must compensate the owner for the boat and all that he ruined.
280
If while in a foreign country a man buy a male or female slave belonging to another of his own country; if when he return home the owner of the male or female slave recognize it: if the male or female slave be a native of the country, he shall give them back without any money.
281
If they are from another country, the buyer shall declare the amount of money paid therefor to the merchant, and keep the male or female slave.
Laws of justice which Hammurabi, the wise king, established. A righteous law, and pious statute did he teach the land. Hammurabi, the protecting king am I. I have not withdrawn myself from the men, whom Bel gave to me, the rule over whom Marduk gave to me, I was not negligent, but I made them a peaceful abiding-place. I expounded all great difficulties, I made the light shine upon them. With the mighty weapons which Zamama and Ishtar entrusted to me, with the keen vision with which Ea endowed me, with the wisdom that Marduk gave me, I have uprooted the enemy above and below (in north and south), subdued the earth, brought prosperity to the land, guaranteed security to the inhabitants in their homes; a disturber was not permitted.
The great gods have called me, I am the salvation-bearing shepherd, whose staff is straight, the good shadow that is spread over my city; on my breast I cherish the inhabitants of the land of Sumer and Akkad; in my shelter I have let them repose in peace; in my deep wisdom have I enclosed them. That the strong might not injure the weak, in order to protect the widows and orphans, I have in Babylon the city where Anu and Bel raise high their head, in E-Sagil, the Temple, whose foundations stand firm as heaven and earth, in order to declare justice in the land, to settle all disputes, and heal all injuries, set up these my precious words, written upon my memorial stone, before the image of me, as king of righteousness.
Source: Claude Hermann Walter Johns, “The Code of Hammurabi,” The Eleventh Edition of the Encyclopaedia Britannica (New York: Encyclopedia Britannica, 1910).
In a speech given at the Council of Clermont in 1095, Pope Urban II called for a crusade to rid the holy sites of Jerusalem from the control of the fierce forces of the Seljuk Turks, which had conquered the region from the Byzantine empire in the eleventh century. The pope was motivated by a desire to rescue the Eastern church and arrange for the reunification of the Christian faith under his authority as well as his desire to halt the constant warfare that plagued Europe. By channeling the martial tendencies of the numerous princes of France toward a common goal of freeing the holy land, the strength of the papacy was increased. Crusaders were granted a remission of their sins as well as the opportunity to gain land and engage in the lucrative trade of the Middle East. For the next two centuries spices, perfumes, and silks flowed into Europe from the Crusader states. After the failure of the Crusades Europeans began looking for alternate routes to the Far East, leading to the Age of Exploration and Discovery. The following version of Pope Urban II’s speech is that of Robert the Monk of Rheims.
In the year of our Lord’s Incarnation one thousand and ninety-five, a great council was convened within the bounds of Gaul, in Auvergne, in the city which is called Clermont. Over this Pope Urban II presided, with the Roman bishops and cardinals. This council was a famous one on account of the concourse of both French and German bishops, and of princes as well. Having arranged the matters relating to the Church, the lord Pope went forth into a certain spacious plain, for no building was large enough to hold all the people. The Pope then, with sweet and persuasive eloquence, addressed those present in words something like the following, saying:
“Oh, race of Franks, race beyond the mountains [the Alps], race beloved and chosen by God (as is clear from many of your works), set apart from all other nations by the situation of your country, as well as by your Catholic faith and the honor you render to the holy Church: to you our discourse is addressed, and for you our exhortations are intended. We wish you to know what a serious matter has led us to your country, for it is the imminent peril threatening you and all the faithful that has brought us hither.
“From the confines of Jerusalem and from the city of Constantinople a grievous report has gone forth and has been brought repeatedly to our ears; namely, that a race from the kingdom of the Persians, an accursed race, a race wholly alienated from God, ‘a generation that set not their heart aright, and whose spirit was not steadfast with God,’ has violently invaded the lands of those Christians and has depopulated them by pillage and fire. They have led away a part of the captives into their own country, and a part they have killed by cruel tortures. They have either destroyed the churches of God or appropriated them for the rites of their own religion. They destroy the altars, after having defiled them with their uncleanness. … The kingdom of the Greeks [the Eastern Empire] is now dismembered by them and has been deprived of territory so vast in extent that it could not be traversed in two months’ time.
“On whom, therefore, rests the labor of avenging these wrongs and of recovering this territory, if not upon you—you, upon whom, above all other nations, God has conferred remarkable glory in arms, great courage, bodily activity, and strength to humble the heads of those who resist you? Let the deeds of your ancestors encourage you and incite your minds to manly achievements— the glory and greatness of King Charlemagne, and of his son Louis [the Pious], and of your other monarchs, who have destroyed the kingdoms of the Turks and have extended the sway of the holy Church over lands previously pagan. Let the holy sepulcher of our Lord and Saviour, which is possessed by the unclean nations, especially arouse you, and the holy places which are now treated with ignominy and irreverently polluted with the filth of the unclean. Oh most valiant soldiers and descendants of invincible ancestors, do not degenerate, but recall the valor of your ancestors.
“But if you are hindered by love of children, parents, or wife, remember what the Lord says in the Gospel, ‘He that loveth father or mother more than me is not worthy of me.’ ‘Every one that hath forsaken houses, or brethren, or sisters, or father, or mother, or wife, or children, or lands, for my name’s sake, shall receive an hundred-fold, and shall inherit everlasting life.’ Let none of your possessions restrain you, nor anxiety for your family affairs. For this land which you inhabit, shut in on all sides by the seas and surrounded by the mountain peaks, is too narrow for your large population; nor does it abound in wealth; and it furnishes scarcely food enough for its cultivators. Hence it is that you murder and devour one another, that you wage war, and that very many among you perish in civil strife.
“Let hatred, therefore, depart from among you; let your quarrels end; let wars cease; and let all dissensions and controversies slumber. Enter upon the road of the Holy Sepulcher; wrest that land from the wicked race, and subject it to yourselves. That land which, as the Scripture says, ‘floweth with milk and honey’ was given by God into the power of the children of Israel. Jerusalem is the center of the earth; the land is fruitful above all others, like another paradise of delights. This spot the Redeemer of mankind has made illustrious by His advent, has beautified by His sojourn, has consecrated by His passion, has redeemed by His death, has glorified by His burial.
“This royal city, however, situated at the center of the earth, is now held captive by the enemies of Christ and is subjected, by those who do not know God, to the worship of the heathen. She seeks, therefore, and desires to be liberated, and ceases not to implore you to come to her aid. From you especially she asks succor, because, as we have already said, God has conferred upon you, above all other nations, great glory in arms. Accordingly, undertake this journey eagerly for the remission of your sins, with the assurance of the reward of imperishable glory in the kingdom of heaven.”
When Pope Urban had skilfully said these and very many similar things, he so centered in one purpose the desires of all who were present that all cried out, “It is the will of God! It is the will of God!” When the venerable Roman pontiff heard that, with eyes uplifted to heaven, he gave thanks to God and, commanding silence with his hand, said:
“Most beloved brethren, to-day is manifest in you what the Lord says in the Gospel. ‘Where two or three are gathered together in my name, there am I in the midst of them.’ For unless God had been present in your spirits, all of you would not have uttered the same cry; since, although the cry issued from numerous mouths, yet the origin of the cry was one. Therefore I say to you that God, who implanted this in your breasts, has drawn it forth from you. Let that, then, be your war cry in battle, because it is given to you by God. When an armed attack is made upon the enemy, let this one cry be raised by all the soldiers of God: ‘It is the will of God! It is the will of God!’
“And we neither command nor advise that the old or feeble, or those incapable of bearing arms, undertake this journey. Nor ought women to set out at all without their husbands, or brothers, or legal guardians. For such are more of a hindrance than aid, more of a burden than an advantage. Let the rich aid the needy; and according to their wealth let them take with them experienced soldiers. The priests and other clergy, whether secular or regular, are not to go without the consent of their bishop; for this journey would profit them nothing if they went without permission. Also, it is not fitting that laymen should enter upon the pilgrimage without the blessing of their priests.
“Whoever, therefore, shall decide upon this holy pilgrimage, and shall make his vow to God to that effect, and shall offer himself to Him for sacrifice, as a living victim, holy and acceptable to God, shall wear the sign of the cross of the Lord on his forehead or on his breast. When he shall return from his journey, having fulfilled his vow, let him place the cross on his back between his shoulders. Thus shall ye, indeed, by this twofold action, fulfill the precept of the Lord, as He commands in the Gospel, ‘He that taketh not his cross, and followeth after me, is not worthy of me.’”
Source: Dana C. Munro, “Urban and the Crusaders,” Translations and Reprints from the Original Sources of European History, Vols. 1 and 2 (Philadelphia: University of Pennsylvania, 1895), 5–8.
Following an end of the division within the Roman Catholic Church over allegiance to Innocent II and Anacletus II, the pope called a synod in 1139. When the church hierarchy met from April 2 through April 17, a number of canons were passed including the thirteenth, which prohibited usury— defined as charging any interest on money. Forty years later, at the Third Lateran Council called by Pope Alexander III, another canon was passed that condemned the practice of charging interest as usury. This canon declared that those who engaged in usury would forfeit communion and a Christian burial.
We condemn that detestable, disgraceful, and insatiable rapacity of usurers which has been outlawed by divine and human laws in the Old and New Testaments, and we deprive them of all ecclesiastical consolation, commanding that no archbishop, no bishop, no abbot of any order, nor anyone in clerical orders, shall, except with the utmost caution, dare receive usurers; but during their whole life let them be stigmatized with the mark of infamy, and unless they repent let them be deprived of Christian burial.
Source: “Medieval Sourcebook: Tenth Ecumenical Council: Lateran II 1139.” www.fordham.edu/halsall/basis/lateran2.html (accessed March 2004).
Since almost everywhere the crime of usury has developed to such an extent that many, heedless of the strict Scriptural prohibition, pass over other professions to devote themselves to the business of usury, as if it were lawful, we decree that notorious usurers be not admitted to the communion of the altar and, if they die in that sin, that they shall not receive Christian burial. Neither shall anyone accept their offering. He who has taken such an offering or given them Christian burial, shall be compelled to return what he has taken, and till he has satisfied the wishes of the bishop, let him remain suspended from this office.
Source: “Third Lateran Council, 1179 A.D.,” www.geocities.com/heartland/valley/8920/churchcouncils/ecum11.htm (accessed December 2003).
During the fourteenth century, a Florentine merchant named Francesco Balducci Pegolotti journeyed across Europe and the Middle East while working for the House of Bardi in Florence. His journeys carried him from Antwerp to London and as far south as Cyprus. He documented the methods of trade, exotic goods such as ostrich feathers and panthers that were exchanged, and the normal cost of goods. His work helped other merchants to determine the correct value of items not traded on a regular basis. Although he never traveled to Constantinople or to areas under Mongol control, he gained information about products and customs from these regions as well. The following is an excerpt from his text the Practica della Mercatura (The Practice of Trade).
This book is called the Book of Descriptions of Countries and of measures employed in business, and of other things needful to be known by merchants of different parts of the world, and by all who have to do with merchandize and exchanges; showing also what relation the merchandize of one country or of one city bears to that of others; and how one kind of goods is better than another kind; and where the various wares come from, and how they may be kept as long as possible.
The book was compiled by Francis Balducci Pegolotti of Florence, who was with the Company of the Bardi of Florence, and during the time that he was in the service of the said Company, for the good and honour and prosperity of the said Company, and for his own, and for that of whosoever shall read or transcribe the said book …
Information regarding the journey to Cathay, for such as will go by Tana and come back with goods.
In the first place, from Tana [Azov, at the mouth of the Don R.] to Gintarchan [Astrakhan, at the mouth of the Volga R.] may be twenty-five days with an oxwaggon, and from ten to twelve days with a horse-waggon. On the road you will find plenty of Moccols [Mongols], that is to say, of gens d’armes. And from Gittarchan to Sara [Sarai, the Mongol capital a ways up the Volga] may be a day by river, and from Sara to Saracanco [Sarachik, on the lower reaches of the Ural R.], also by river, eight days. You can do this either by land or by water; but by water you will be at less charge for your merchandize.
From Saracanco to Organci [Urgench, on the lower Amu Darya R.] may be twenty days journey in camel-waggon. It will be well for anyone travelling with merchandize to go to Organci, for in that city there is a ready sale for goods. From Organci to Oltrarre [Otrar, in today’s Kazakhstan] is thirty-five to forty days in camel-waggons. But if when you leave Saracanco you go direct to Oltrarre, it is a journey of fifty days only, and if you have no merchandize it will be better to go this way than to go by Organci.
From Oltrarre to Armalec [Kuldja, on the Ili R.] is forty-five days’ journey with pack-asses, and every day you find Moccols. And from Armalec to Camexu [Ganchau, in Gansu Province] is seventy days with asses, and from Camexu until you come to a river called … is forty-five days on horseback; and then you can go down the river to Cassai [Qinsai], and there you can dispose of the sommi of silver that you have with you, for that is a most active place of business. After getting to Cassai you carry on with the money which you get for the sommi of silver which you sell there; and this money is made of paper, and is called balishi. And four pieces of this money are worth one sommo of silver in the province of Cathay. And from Cassai to Garnalec [Cambalec, Beijing], which is the capital city of the country of Cathay, is thirty days’ journey.
Things needful for merchants who desire to make the journey to Cathay above described.
In the first place, you must let your beard grow long and not shave. And at Tana you should furnish yourself with a dragoman [translator/guide]. And you must not try to save money in the matter of dragomen by taking a bad one instead of a good one. For the additional wages of the good one will not cost you so much as you will save by having him. And besides the dragoman it will be well to take at least two good men servants, who are acquainted with the Cumanian [Tatar] tongue. And if the merchant likes to take a woman with him from Tana, he can do so; if he does not like to take one there is no obligation, only if he does take one he will be kept much more comfortably than if he does not take one. Howbeit, if he do take one, it will be well that she be acquainted with the Cumanian tongue as well as the men.
And from Tana travelling to Gittarchan you should take with you twenty-five days’ provisions, that is to say, flour and salt fish, for as to meat you will find enough of it at all the places along the road. And so also at all the chief stations noted in going from one country to another in the route, according to the number of days set down above, you should furnish yourself with flour and salt fish; other things you wilt find in sufficiency, and especially meat.
The road you travel from Tana to Cathay is perfectly safe, whether by day or by night, according to what the merchants say who have used it. Only if the merchant, in going or coming, should die upon the road, everything belonging to him will become the perquisite of the lord of the country in which he dies, and the officers of the lord will take possession of all. And in like manner if he die in Cathay. But if his brother be with him, or an intimate friend and comrade calling himself his brother, then to such an one they will surrender the property of the deceased, and so it will be rescued.
And there is another danger: this is when the lord of the country dies, and before the new lord who is to have the lordship is proclaimed; during such intervals there have sometimes been irregularities practised on the Franks, and other foreigners. (They call Franks all the Christians of these parts from Romania westward.) And neither will the roads be safe to travel until the other lord be proclaimed who is to reign in room of him who is deceased.
Cathay is a province which contained a multitude of cities and towns. Among others there is one in par ticular, that is to say the capital city, to which is great resort of merchants, and in which there is a vast amount of trade; and this city is called Cambalec. And the said city hath a circuit of one hundred miles, and is all full of people and houses and of dwellers in the said city.
You may calculate that a merchant with a dragoman, and with two men servants, and with goods to the value of twenty-five thousand golden florins, should spend on his way to Cathay from sixty to eighty sommi of silver, and not more if he manage well; and for all the road back again from Cathay to Tana, including the expenses of living and the pay of servants, and all other charges, the cost will be about five sommi per head of pack animals, or something less. And you may reckon the sommo to be worth five golden florins. You may reckon also that each ox-waggon will require one ox, and will carry ten cantars Genoese weight; and the camel-waggon will require three camels, and will carry thirty cantars Genoese weight; and the horse-waggon will require one horse, and will commonly carry six and half cantars of silk, at 250 Genoese pounds to the cantar [a Genoese pound was apparently about twelve ounces]. And a bale of silk may be reckoned at between 110 and 115 Genoese pounds.
You may reckon also that from Tana to Sara the road is less safe than on any other part of the journey; and yet even when this part of the road is at its worst, if you are some sixty men in the company you will go as safely as if you were in your own house.
Anyone from Genoa or from Venice, wishing to go to the places above-named, and to make the journey to Cathay, should carry linens with him, and if he visit Organci he will dispose of these well. In Organci he should purchase sommi of silver, and with these he should proceed without making any further investment, unless it be some bales of the very finest stuffs which go in small bulk, and cost no more for carriage than coarser stuffs would do.
Merchants who travel this road can ride on horseback or on asses, or mounted in any way that they list to be mounted.
Whatever silver the merchants may carry with them as far as Cathay the lord of Cathay will take from them and put into his treasury. And to merchants who thus bring silver they give that paper money of theirs in exchange. This is of yellow paper, stamped with the seal of the lord aforesaid. And this money is called balishi; and with this money you can readily buy silk and all other merchandize that you have a desire to buy. And all the people of the country are bound to receive it. And yet you shall not pay a higher price for your goods because your money is of paper. And of the said paper money there are three kinds, one being worth more than another, according to the value which has been established for each by that lord.
And you may reckon that you can buy for one sommo of silver nineteen or twenty pounds of Cathay silk, when reduced to Genoese weight, and that the sommo should weigh eight and a half ounces of Genoa, and should be of the alloy of eleven ounces and seventeen deniers to the pound.
You may reckon also that in Cathay you should get three or three and a half pieces of damasked silk for a sommo; and from three and a half to five pieces of nacchetti of silk and gold, likewise for a sommo of silver.
Comparison of the weights and measures of Cathay and of Tana.
… At Tana …
Wax, ladanum, iron, tin, copper, pepper, ginger, all coarser spices, cotton, madder, and suet, cheese, flax, and oil, honey, and the like, sell by the great pound.
Silk, saffron, amber wrought in rosaries and the like, and all small spices sell by the little pound.
Vair-skins by the 1000; and 1020 go to the 1000. Ermines by the 1000; 1000 to the 1000.
Foxes, sables, fitches and martens, wolfskins, deer-skins, and all cloths of silk or gold, by the piece.
Common stuffs, and canvasses of every kind sell by the picco [approx. twenty-eight in.].
Tails are sold by the bundle at twenty to the bundle.
Ox hides by the hundred in tale, giving a hundred and no more.
Horse and pony hides by the piece.
Gold and pearls are sold by the saggio [one-sixth of an ounce]. Wheat and all other corn and pulse is sold at Tana by a measure which they call cascito [one-fifth of a cantaro]. Greek wine and all Latin wines are sold by the cask as they come. Malmsey and wines of Triglia and Candia are sold by the measure.
Caviar is sold by the fusco, and a fusco is the tail-half of the fish’s skin, full of fish’s roe.
Charges on merchandize which are paid at Tana on things entering the city, nothing being paid on going forth thereof.
Gold, silver, and pearls at Tana pay neither comer-chio, nor tamunga, nor any other duties.
On wine, and ox hides, and tails, and horse-hides, the Genoese and Venetians pay four per cent., and all other people five per cent.
[Cost for transit of merchandize at Tana.]
Silk 5 aspers per pound.
All other things, at … aspers for 3 cantars.
At Tana the money current is of sommi and aspers of silver. The sommo weighs 45 saggi of Tana, and is of the alloy of 11 oz. 17 dwt. of fine silver to the pound. …
Detail showing how all goods are sold and bought at Constantinople and in Pera, and of the expenses incurred by traders; but especially as regards Pera, because most of the business is done there, where the merchants are more constantly to be found. For the rest of Constantinople belongs to the Greeks, but Pera to the Franks, i.e. to the Genoese. And from Constantinople to Pera,’tis five miles by land, but half a mile by water.
Goods are sold at Constantinople in various ways. The indigo called Baccaddeo is (sold in packages) of a certain weight, and the weight you must know should be the cantar. And if the buyer chooses to take it from the seller without weighing it, be it more or less than a cantar,’tis to the profit or loss of the buyer. But they do almost always weigh it, and then payment is made according to the exact weight, be it more or less than a cantar. And the skin and wrapper are given with it but no tare is deducted; nor is garbling allowed nor do they allow the indigo to be examined except by a little hole, from which a small sample may be extracted. For such is use and wont in those parts.
Wormwood; madder, and the bag goes as madder without any allowance for tare. Alum of every kind, and even if it be Roch-alum, the sack and cord go as alum.
Ox hides, buffalo hides, Horse hides: In purchasing these they are shown to the provers up the hill, i.e. in Pera; and if the hides smell damp or wet, then a fit allowance is made, and this is the system in Pera and in Constantinople, and they are not put in the sun unless they are exceedingly wet indeed.
Suet in jars; iron of every kind; tin of every kind; lead of every kind. Zibibbo or raisins of every kind, and the mats go as raisins, with no allowance for tare unless they be raisins of Syria. In that case the baskets or hampers are allowed for as tare, and remain with the buyer into the bargain.
Soap of Venice, soap of Ancona, and soap of Apulia in wooden cases. They make tare of the cases, and then these go to the buyer for nothing. But the soap of Cyprus and of Rhodes is in sacks, and the sacks go as soap with no tare allowance.
Broken almonds in bags; the bag goes as almonds; only if there be more than one sack and cord it must be removed, or deducted, so that the buyer shall not have to take more than one sack and cord as almonds, but for any beyond that there shall be tare allowed; and the cord shall go to the buyer gratis.
Honey in kegs or skins; tare is allowed for the keg or skin, but it remains with the buyer gratis.
Cotton wool; and the sack goes as cotton without tare. Cotton yarn; and the sack is allowed as tare, and remains with the buyer for nothing.
Rice; and the bag goes as rice, but if it be tied the cord is allowed as tare and remains with the seller. Turkey galls of every kind; and if they are in bags you weigh bag and all, and do not make tare of the bag. Dried figs of Majorca and Spain in hampers. Orpiment, and the bag goes as orpiment. Safflower, and you make tare of bag and cord, and after that they remain with the buyer gratis.
Henna; and the bag goes as henna, only a tare of four per cent. is allowed by custom of trade. Cummin; and the bag goes as cummin, and if tied with rope the rope is allowed as tare but remains with the buyer gratis.
Pistachios; and the bag goes with them with no allowance for tare, unless there be more bags than one, and if there be, then the excess is weighed and allowed as tare, and the buyer has the one bag gratis.
Sulphur; and the bag or barrel in which it is, is allowed as tare, and goes to the buyer gratis. Senna; and the bag is tare and goes to the buyer. Pitch; and the mat is allowed for as tare, and goes to the buyer. Morda sangue; the bag goes with it and no tare allowed.
Saltmeat; cheese; flax of Alexandria and of Romania; Camlet wool; washed wool of Romania; unwashed ditto; washed or unwashed wool of Turkey; chestnuts.
Round pepper; ginger; barked brazil-wood; lac; zedoary [a drug from Southeast Asia]; incense; sugar, and powdered sugar of all kinds; aloes of all kinds; quicksilver; cassia fistola; sal ammoniac or lisciadro; cinnabar; cinnamon; galbanum [a gum resin from the Middle East]; ladanum of Cyprus; mastic; copper; amber, big, middling, and small, not wrought; stript coral; clean and fine coral, middling and small.
Raw silk; saffron; clove-stalks and cloves; cubebs; lign-aloes; rhubarb; mace; long pepper; galangal [an aromatic root imported from India and China]; broken camphor; nutmegs; spike [spike lavender;?spikenard]; cardamoms; scam-mony; pounding pearls; manna; borax; gum Arabic; dragon’s blood; camel’s bay; turbit [a drug from the East Indies]; silk-gauze; sweet-meats; gold wire; dressed silk; wrought amber in beads, etc.
Buckrams of Erzingan and Cyprus.
Silk velvets; damasks; maramati; gold cloth of every kind; nachetti and nacchi of every kind; and all cloths of silk and gold except gauzes.
Common stuffs and canvasses of all kinds, except those of Champagne; also French and North-country broad cloths.
Undressed vairs, and vair bellies and backs; Slavonian squirrels; martins and fitches; goat skins and ram skins; dates, filberts, walnuts; salted sturgeon tails; salt; oil of Venice; oil of the March; oil of Apulia, of Gaeta, etc.; wheat and barley; wine of Greece, of Turpia in Calabria, of Patti in Sicily, of Patti in Apulia, of Cutrone in Calabria, of the March, of Crete, of Romania; country wine.
(And don’t forget that if you treat the custom-house officers with respect, and make them something of a present in goods or money, as well as their clerks and dragomen, they will behave with great civility, and always be ready to appraise your wares below their real value.) …
Source: Henry Yule and Henri Cordier, trans. and ed., Cathay and the Way Thither, Being a Collection of Medieval Notices of China, Vol. 3 (London: Printed for the Hakluyt Society, 1916), 143–171.
After the pope declared the charging of interest as usury, punishable by prohibition to participate in communion and to have a Christian burial, many merchants, especially in the Italian city-states of Venice, Genoa, and Florence, attempted to circumvent this proscription by charging commission or other fees. The pope countered this by declaring that these fees were also unacceptable. Still the merchants persisted.
Genoa, October 22, 1369
Against those alleging that exchange and insurance contracts (cambia es assecuramenta), no matter for whom they are made, in or without writing, are illegal or usurious.
The magnificent and powerful lord, Lord Gabriele Adorno, by the grace of God Doge of Genoa and Defender of the People and Imperial Vicar, in the presence, with the will, advice, and consent of his Council of the Twelve Aldermen of the city of Genoa, as well as the said Council …
Calling attention to the fact and considering the indebted persons are often unwilling, because of their malice, to satisfy their creditors in making payment of their debts and introduce many obstacles and hindrances, especially by alleging that the contract or loan in regard to which they are being sued and for which they are being prosecuted was illegal and usurious and that according to the Scriptures such a contract may not canonically be sought or demanded of them; and [considering that such debtors] have recourse, and have had recourse on previous occasions, to ecclesiastical courts and magistrates in regard to this in order to interpose delays and dilatory cavils;
Decided and decreed and directed that if there is any person of any condition who has obligated himself or who should obligate himself by an instrument toward any other person, whatever, in or without writing, in regard to any merchandise and in any commercial contract whatever, especially by way of exchange or insurance; and if he alleges that such a contract is usurious or illegal and because of this has recourse to the vicar of the Lord Archbishop or to another magistrate of the city or of the district, ecclesiastic or lay; if he petitions or objects that the said instrument or contract, be it made in or without writing, and in regard to any merchandise, [is illegal]; and if he alleges that the payment, in whole or in part, of the said debt of the said instrument and contract ought not to be made because of the fact that the said debtor or another in the latter’s name says and alleges that the said contract was illegal and usurious or made against the canonical sanctions;
Since they [the doge and the alderman] consider that if instruments of exchange and other trade contracts, in or without writing, could not be enforced because of the impediments of this kind, this would result in great loss and inconvenience to the Genoese citizens and merchants, who ordinarily make such contracts, and that otherwise no trade could be carried on nor ships be sent on their voyages:
Let such a person who brings forward the said exception as mentioned above against the aforesaid instruments and against any contracts made in regard to the aforesaid trade be condemned and be understood to be condemned in true justice [to pay] s.10 Genoese in every pound of the entire amount the payment of which was refused. And let this penalty be applied and be understood to be applied by force of the present decree to the works of the harbor and of the wharf. And the Lord Podesta of Genoa and the sindicatores of the Commune now in charge, or who will be in charge at the time, and the other magistrates who will be requested to use remedies of law in regard to this, are bound to collect this [fine], even through personal detention, admitting no exception or defense. …
The above was drawn from the public acts of the ducal chancery of the Commune of Genoa.
We, the People.
Antonio de Credenza, notary and chancellor
Source: Robert S. Lopez and Irving W. Raymond, trans., Medieval Trade in the Mediterranean World: Illustrative Documents Translated with Introductions and Notes (New York: Columbia University Press, 1909), 276–277.
After the failure of the Crusades and the domination of the Middle East by the Turks, Europeans began exploring alter native routes to the Far East. The most popular theory of exploration was around the tip of South Africa. Christopher Columbus proposed a different route to Marco Polo’s Cathay. He tried unsuccessfully to persuade the leaders of Venice, Genoa, and Portugal to sponsor his idea of sailing west to reach the east, but it was the Spanish monarchs Ferdinand and Isabella who finally provided three ships and their crews for his adventure. Although Columbus did not discover a new route to the Far East, his voyage resulted in an exchange of goods previously unparalleled in human history. Below are excerpts from Columbus’s diary of his first voyage.
Prologue: to the King and Queen of Spain
Because, O most Christian, and very high, very excellent, and puissant Princes, King and Queen of the Spains and of the islands of the Sea, our Lords, in this present year of 1492, after your Highnesses had given an end to the war with the Moors who reigned in Europe, and had finished it in the very great city of Granada, where in this present year, on the second day of the month of January, by force of arms, I saw the royal banners of your Highnesses placed on the towers of Alhambra, which is the fortress of that city, and I saw the Moorish King come forth from the gates of the city and kiss the royal hands of your Highnesses, and of the Prince my Lord, and presently in that same month, acting on the information that I had given to your Highnesses touching the lands of India, and respecting a Prince who is called Gran Can, which means in our language King of Kings, how he and his ancestors had sent to Rome many times to ask for learned men of our holy faith to teach him, and how the Holy Father had never complied, insomuch that many people believing in idolatries were lost by receiving doctrine of perdition: Your Highnesses, as Catholic Christians and Princes who love the holy Christian faith, and the propagation of it and who are enemies to the sect of Mohama and to all idolatries and heresies, resolved to send me, Cristobal Colon [Christopher Columbus], to the said Parts of India to see the said princes, and the cities and lands, and their disposition, with a view that they might be converted to our holy faith; and ordered that I should not go by land to the eastward, as had been customary, but that I should go by way of the west, whither up to this day, we do not know for certain that anyone has gone.
Thus, after having turned out all the Jews from all your kingdoms and lordships, in the same month of January, your Highnesses gave orders to me that with a sufficient fleet I should go to the said parts of India, and for this they made great concessions to me, and ennobled me, so that henceforward I should be called Don, and should be Chief Admiral of the Ocean Sea, perpetual Viceroy and Governor of all the islands and continents that I should discover and gain, and that I might hereafter discover and gain in the Ocean Sea, and that my eldest son should succeed and so on from generation to generation for ever.
I left the city of Granada on the 12th of May, in the same year of 1492, being Saturday, and came to the town of Palos, which is a seaport; where I equipped three vessels well suited for such service; and departed from that port, well supplied with provisions and with many sailors, on the 3d day of August of the same year, being Friday, half an hour before sunrise, taking the route to the islands of Canaria, belonging to your Highnesses, which are in the said Ocean Sea, that I might thence take my departure for navigating until I should arrive at the Indies, and give the letters of your Highnesses to those princes, so as to comply with my orders. As part of my duty I thought it well to write an account of all the voyage very punctually, noting from day to day all that I should do and see, and that should happen, as will be seen further on. Also, Lords Princes, I resolved to describe each night what passed in the day, and to note each day how I navigated at night. I propose to construct a new chart for navigating, on which I shall delineate all the sea and lands of the Ocean in their proper positions under their bearings; and further, I propose to prepare a book, and to put down all as it were in a picture, by latitude from the equator, and western longitude. Above all, I shall have accomplished much, for I shall forget sleep, and shall work at the business of navigation, that so the service may be performed; all of which will entail great labour.
Monday, 12th of November … The Admiral says that, on the previous Sunday, the 11th of November, it seemed good to take some persons from amongst those at Rio de Mares to bring to the Sovereigns, that they might learn our language, so as to be able to tell us what there is in their lands. Returning, they would be the mouthpiece of the Christians, and would adopt our customs and the things of the faith. I saw and knew (says the Admiral) that these people are without any religion, not idolaters, but very gentle, not knowing what is evil, nor the sins of murder and theft, being without arms, and so timid that a hundred would fly before one Spaniard, although they joke with them. They, however, believe and know that there is a God in heaven, and say that we have come from heaven. At any prayer that we say, they repeat, and make the sign of the cross. Thus your Highnesses should resolve to make them Christians, for I believe that, if the work was begun, in a little time a multitude of nations would be converted to our faith, with the acquisition of great lordships, peoples, and riches for Spain. Without doubt, there is in these lands a vast quantity of gold, and the Indians I have on board do not speak without reason when they say that in these islands there are places where they dig out gold, and wear it on their necks, ears, arms, and legs, the rings being very large. There are also precious stones, pearls, and an infinity of spices. …
Here also there is a great quantity of cotton, and I believe it would have a good sale here without sending it to Spain, but to the great cities of the Grand Can, which will be discovered without doubt, and many others ruled over by other lords, who will be pleased to serve your Highnesses, and whither will be brought other commodities of Spain and of the Eastern lands; but these are to the west as regards us. …
Tuesday, 27th of November … The Admiral also says— “How great the benefit that is to be derived from this country would be, I cannot say. It is certain that where there are such lands there must be an infinite number of things that would be profitable. But I did not remain long in one port, because I wished to see as much of the country as possible, in order to make a report upon it to your Highnesses, and besides, I do not know the language, and these people neither understand me nor any other in my company, while the Indians I have on board often misunderstand. Moreover, I have not been able to see much of the natives, because they often take to flight. But now, if our Lord pleases, I will see as much as possible, and will proceed by little and little, learning and comprehending; and I will make some of my followers learn the language. For I have perceived that there is only one language up to this point. After they understand the advantages, I shall labour to make all these people Christians. They will become so readily, because they have no religion or idolatry, and your Highnesses will send orders to build a city and fortress, and to convert the people. I assure your Highnesses that it does not appear to me that there can be a more fertile country nor a better climate under the sun, with abundant supplies of water. … It will please God that your Highnesses should send learned men out here, they will see the truth of all I have said. I have related already how good a place Rio de Mares would be for a town and fortress, and this is perfectly true; but it bears no comparison with this place, nor with the Mar de Nuestra Senora. For here there must be a large population, and very valuable productions, which I hope to discover before I return to Castille. I say that if Christendom will find profit among these people, how much more will Spain, to whom the whole country should be subject. Your Highnesses ought not to consent that any stranger should trade here, or put his foot in the country, except Catholic Christians, for this was the beginning and end of the undertaking; namely, the increase and glory of the Christian religion, and that no other should come to these parts who was not a good Christian.”
Source: Milton Viorst, The Great Documents of Western Civilization (New York: Barnes and Noble, 1965): 160–163.
The Treaty of Tordesillas, signed in 1494, divided the New World into two regions controlled by Spain and Portugal. One year after Christopher Columbus discovered the New World, the Spanish monarchs asked for and received a papal bull by Pope Alexander VI that gave all territory from 100 leagues west of the Cape Verde Islands from the North to the South Pole to Spain and all of Africa and India to Portugal. Portugal objected and the following treaty adjusted the demarcation line to 370 leagues west of the Cape Verde Islands, a shift that allowed Portugal to claim Brazil.
Treaty between Spain and Portugal
concluded at Tordesillas, June 7, 1494
Ratification by Spain, July 2, 1494.
Ratification by Portugal, September 5, 1494.
Don Ferdinand and Dona Isabella, by the grace of God king and queen of Castile, Leon, Aragon, Sicily, Granada, Toledo, Valencia, Galiciaj Majorca Seville, Sardinia, Cordova, Corsica, Murcia, Jaen, Algarve, Algeciras, Gibraltar, and the Canary Islands, count and countess of Barcelona, lord and lady of Biscay and Molina, duke and duchess of Athens and Neopatras, count and countess of Roussillon and Cerdagne, marquis and marchioness of Oristano and Gociano, together with the Prince Don John, our very dear and very beloved first-born son, heir of our aforesaid kingdoms and lordships.
Whereas by Don Enrique Enriques, our chief steward, Don Gutierre deCardenas, chief commissary of Leon, our chief auditor, and Doctor Rodrigo Maldonado, all members of our council, it was treated, adjusted, and agreed for us and in our name and by virtue of our power with the most serene Don John, by the grace of God, king of Portugal and of the Algarves on this side and beyond the sea in Africa, lord of Guinea, our very dear and very beloved brother, and with Ruy de Sousa, lord of Sagres and Berenguel, Dom Joao de Sousa, his son, chief inspector of weights and measures of the said Most Serene King our brother, and Ayres de Almada, magistrate of the civil cases in his court and member of his desembargo, all members of the council of the aforesaid Most Serene King our brother, [and acting] in his name and by virtue of his power, his ambassadors, who came to us in regard to the controversy over what part belongs to us and what part to the said Most Serene King our brother, of that which up to this seventh day of the present month of June, the date of this instrument, is discovered in the ocean sea, in which said agreement our aforesaid representatives promised among other things that within a certain term specified in it we should sanction, confirm, swear to, ratify, and approve the above-mentioned agreement in person: we, wishing to fulfill and fulfilling all that which was thus adjusted, agreed upon, and authorized in our name in regard to the above-mentioned, ordered the said instrument of the aforesaid agreement and treaty to be brought before us that we might see and examine it, the tenor of which, word for word, is as follows:
In the name of God Almighty, Father, Son, and Holy Ghost, three truly separate and distinct persons and only one divine essence. Be it manifest and known to all who shall see this public instrument, that at the village of Tordesillas, on the seventh day of the month of June, in the year of the nativity of our Lord Jesus Christ 1494, in the presence of us, the secretaries, clerks, and notaries public subscribed below, there being present the honorable Don Enrique Enriques, chief steward of the very exalted and very mighty princes, the lord and lady Don Ferdinand and Dona Isabella, by the grace of God king and queen of Castile, Leon, Aragon, Sicily, Granada, etc., Don Gutierre de Cardenas, chief auditor of the said lords, the king and queen, and Doctor Rodrigo Maldonado, all members of the council of the said lords, the king and queen of Castile, Leon, Aragon, Sicily, Granada, etc., their qualified representatives of the one part, and the honorable Ruy de Sousa, lord of Sagres and Berenguel, Dom Juan de Sousa, his son, chief inspector of weights and measures of the very exalted and very excellent lord Dom John, by the grace of God king of Portugal and of the Algarves on this side and beyond the sea in Africa, lord of Guinea, and Ayres de Almada, magistrate of civil cases in his court and member of his desembargo, all of the council of the said lord King of Portugal, and his qualified ambassadors and representatives, as was proved by both the said parties by means of the letters of authorization and procurations from the said lords their constituents, the tenor of which, word for word, is as follows:
[Here follow the full powers granted by Ferdinand and Isabella to Don Enrique Enriques, Don Gutierre de Cardenas, and Dr. Rodrigo Maldonado on June 5, 1494; and the full powers granted by John II to Ruy de Sousa, Joao de Sousa, and Ayres Almada on March 8, 1494.]
Thereupon it was declared by the above-mentioned representatives of the aforesaid King and Queen of Castile, Leon, Aragon, Sicily, Granada, etc., and of the aforesaid King of Portugal and the Algarves, etc.:
[1.] That, whereas a certain controversy exists between the said lords, their constituents, as to what lands, of all those discovered in the ocean sea up to the present day, the date of this treaty, pertain to each one of the said parts respectively; therefore, for the sake of peace and concord, and for the preservation of the relationship and love of the said King of Portugal for the said King and Queen of Castile, Aragon, etc., it being the pleasure of their Highnesses, they, their said representatives, acting in their name and by virtue of their powers herein described, covenanted and agreed that a boundary or straight line be determined and drawn north and south, from pole to pole, on the said ocean sea, from the Arctic to the Antarctic pole.
This boundary or line shall be drawn straight, as aforesaid, at a distance of three hundred and seventy leagues west of the Cape Verde Islands, being calculated by degrees, or by any other manner as may be considered the best and readiest, provided the distance shall be no greater than above said. And all lands, both islands and main lands, found and discovered already, or to be found and discovered hereafter, by the said King of Portugal and by his vessels on this side of the said line and bound determined as above, toward the east, in either north or south latitude, on the eastern side of the said bound provided the said bound is not crossed, shall belong to, and remain in the possession of, and pertain forever to, the said King of Portugal and his successors. And all other lands, both islands and mainlands, found or to be found hereafter, discovered or to be discovered hereafter, which have been discovered or shall be discovered by the said King and Queen of Castile, Aragon, etc., and by their vessels, on the western side of the said bound, determined as above, after having passed the said bound toward the west, in either its north or south latitude, shall belong to, and remain in the possession of, and pertain forever to, the said King and Queen of Castile, Leon, etc., and to their successors.
[2.] Item, the said representatives promise and affirm by virtue of the powers aforesaid, that from this date no ships shall be despatched—namely as follows: the said King and Queen of Castile, Leon, Aragon, etc., for this part of the bound, and its eastern side, on this side the said bound, which pertains to the said King of Portugal and the Algarves, etc.; nor the said King of Portugal to the other part of the said bound which pertains to the said King and Queen of Castile, Aragon, etc. for the purpose of discovering and seeking any mainlands or islands, or for the purpose of trade, barter, or conquest of any kind. But should it come to pass that the said ships of the said King and Queen of Castile, Leon,
Aragon, etc., on sailing thus on this side of the said bound, should discover any mainlands or islands in the region pertaining, as abovesaid, to the said King of Portugal, such mainlands or islands shall pertain to and belong forever to the said King of Portugal and his heirs, and their Highnesses shall order them to be surrendered to him immediately. And if the said ships of the said King of Portugal discover any islands and mainlands in the regions of the said King and Queen of Castile, Leon, Aragon, etc., all such lands shall belong to and remain forever in the possession of the said King and Queen of Castile, Leon, Aragon, etc., and their heirs, and the said King of Portugal shall cause such lands to be surrendered immediately.
[3.] Item, in order that the said line or bound of the said division may be made straight and as nearly as possible the said distance of three hundred and seventy leagues west of the Cape Verde Islands, as here-inbefore stated, the said representatives of both the said parties agree and assent that within the ten months immediately following the date of this treaty their said constituent lords shall despatch two or four caravels, namely, one or two by each one of them, a greater or less number, as they may mutually consider necessary. These vessels shall meet at the Grand Canary Island during this time, and each one of the said parties shall send certain persons in them, to wit, pilots, astrologers, sailors, and any others they may deem desirable. But there must be as many on one side as on the other, and certain of the said pilots, astrologers, sailors, and others of those sent by the said King and Queen of Castile, Aragon, etc., and who are experienced, shall embark in the ships of the said King of Portugal and the Algarves; in like manner certain of the said persons sent by the said King of Portugal shall embark in the ship or ships of the said King and Queen of Castile, Aragon, etc.; a like number in each case, so that they may jointly study and examine to better advantage the sea, courses, winds, and the degrees of the sun or of north latitude, and lay out the leagues aforesaid, in order that, in determining the line and boundary, all sent and empowered by both the said parties in the said vessels, shall jointly concur. These said vessels shall continue their course together to the said Cape Verde Islands, from whence they shall lay a direct course to the west, to the distance of the said three hundred and seventy degrees, measured as the said persons shall agree, and measured without prejudice to the said parties. When this point is reached, such point will constitute the place and mark for measuring degrees of the sun or of north latitude either by daily runs measured in leagues, or in any other manner that shall mutually be deemed better. This said line shall be drawn north and south as aforesaid, from the said Arctic pole to the said Antarctic pole. And when this line has been determined as abovesaid, those sent by each of the aforesaid parties, to whom each one of the said parties must delegate his own authority and power, to determine the said mark and bound, shall draw up a writing concerning it and affix thereto their signatures. And when determined by the mutual consent of all of them, this line shall be considered as a perpetual mark and bound, in such wise that the said parties, or either of them, or their future successors, shall be unable to deny it, or erase or remove it, at any time or in any manner whatsoever. And should, perchance, the said line and bound from pole to pole, as aforesaid, intersect any island or mainland, at the first point of such intersection of such island or mainland by the said line, some kind of mark or tower shall be erected, and a succession of similar marks shall be erected in a straight line from such mark or tower, in a line identical with the above-mentioned bound. These marks shall separate those portions of such land belonging to each one of the said parties; and the subjects of the said parties shall not dare, on either side, to enter the territory of the other, by crossing the said mark or bound in such island or mainland.
[4.] Item, inasmuch as the said ships of the said King and Queen of Castile, Leon, Aragon, etc., sailing as before declared, from their kingdoms and seigniories to their said possessions on the other side of the said line, must cross the seas on this side of the line, pertaining to the said King of Portugal, it is therefore concerted and agreed that the said ships of the said King and Queen of Castile, Leon, Aragon, etc., shall, at any time and without any hindrance, sail in either direction, freely, securely, and peacefully, over the said seas of the said King of Portugal, and within the said line. And whenever their Highnesses and their successors wish to do so, and deem it expedient, their said ships may take their courses and routes direct from their kingdoms to any region within their line and bound to which they desire to despatch expeditions of discovery, conquest, and trade.
They shall take their courses direct to the desired region and for any purpose desired therein, and shall not leave their course, unless compelled to do so by contrary weather. They shall do this provided that, before crossing the said line, they shall not seize or take possession of anything discovered in his said region by the said King of Portugal; and should their said ships find anything before crossing the said line, as aforesaid, it shall belong to the said King of Portugal, and their Highnesses shall order it surrendered immediately. And since it is possible that the ships and subjects of the said King and Queen of Castile, Leon, etc., or those acting in their name, may discover before the twentieth day of this present month of June, following the date of this treaty, some islands and mainlands within the said line, drawn straight from pole to pole, that is to say, inside the said three hundred and seventy leagues west of the Cape Verde Islands, as aforesaid, it is hereby agreed and determined, in order to remove all doubt, that all such islands and mainlands found and discovered in any manner whatsoever up to the said twentieth day of this said month of June, although found by ships and subjects of the said King and Queen of Castile, Aragon, etc., shall pertain to and remain forever in the possession of the said King of Portugal and the Algarves, and of his successors and kingdoms, provided that they lie within the first two hundred and fifty leagues of the said three hundred and seventy leagues reckoned west of the Cape Verde Islands to the above-mentioned line—in whatsoever part, even to the said poles, of the said two hundred and fifty leagues they may be found, determining a boundary or straight line from pole to pole, where the said two hundred and fifty leagues end. Likewise all the islands and mainlands found and discovered up to the said twentieth day of this present month of June by the ships and subjects of the said King and Queen of Castile, Aragon, etc., or in any other manner, within the other one hundred and twenty leagues that still remain of the said three hundred and seventy leagues where the said bound that is to be drawn from pole to pole, as aforesaid, must be determined, and in whatever part of the said one hundred and twenty leagues, even to the said poles,—they that are found up to the said day shall pertain to and remain forever in the possession of the said King and Queen of Castile, Aragon, etc., and of their successors and kingdoms; just as whatever is or shall be found on the other side of the said three hundred and seventy leagues pertaining to their Highnesses, as aforesaid, is and must be theirs, although the said one hundred and twenty leagues are within the said bound of the said three hundred and seventy leagues pertaining to the said King of Portugal, the Algarves, etc., as aforesaid.
And if, up to the said twentieth day of this said month of June, no lands are discovered by the said ships of their Highnesses within the said one hundred and twenty leagues, and are discovered after the expiration of that time, then they shall pertain to the said King of Portugal as is set forth in the above.
The said Don Enrique Enriques, chief steward, Don Gutierre de Cardenas, chief auditor, and Doctor Rodrigo Maldonado, representatives of the said very exalted and very mighty princes, the lord and lady, the king and queen of Castile, Leon, Aragon, Sicily, Granada, etc., by virtue of their said power, which is incorporated above, and the said Ruy de Sousa, Dom Joao de Sousa, his son, and Arias de Almadana, representatives and ambassadors of the said very exalted and very excellent prince, the lord king of Portugal and of the Algarves on this side and beyond the sea in Africa, lord of Guinea, by virtue of their said power, which is incorporated above, promised, and affirmed, in the name of their said constituents, saying that they and their successors and kingdoms and lordships, forever and ever, would keep, observe, and fulfill, really and effectively, renouncing all fraud, evasion, deceit, falsehood, and pretense, everything set forth in this treaty, and each part and parcel of it; and they desired and authorized that everything set forth in this said agreement and every part and parcel of it be observed, fulfilled, and performed as everything which is set forth in the treaty of peace concluded and ratified between the said lord and lady, the king and queen of Castile, Aragon, etc., and the lord Dom Alfonso, king of Portugal (may he rest in glory) and the said king, the present ruler of Portugal, his son, then prince in the former year of 1479, must be observed, fulfilled, and performed, and under those same penalties, bonds, securities, and obligations, in accordance with and in the manner set forth in the said treaty of peace. Also they bound themselves [by the promise] that neither the said parties nor any of them nor their successors forever should violate or oppose that which is abovesaid and specified, nor any part or parcel of it, directly or indirectly, or in any other manner at any time, or in any manner whatsoever, premeditated or not premeditated, or that may or can be, under the penalties set forth in the said agreement of the said peace; and whether the fine be paid or not paid, or graciously remitted, that this obligation, agreement, and treaty shall continue in force and remain firm, stable, and valid forever and ever.
That thus they will keep, observe, perform, and pay everything, the said representatives, acting in the name of their said constituents, pledged the property, movable and real, patrimonial and fiscal, of each of their respective parties, and of their subjects and vassals, possessed and to be possessed. They renounced all laws and rights of which the said parties or either of them might take advantage to violate or oppose the foregoing or any part of it; and for the greater security and stability of the aforesaid, they swore before God and the Blessed Mary and upon the sign of the Cross, on which they placed their right hands, and upon the words of the Holy Gospels, wheresoever they are written at greatest length, and on the consciences of their said constituents, that they, jointly and severally, will keep, observe, and fulfill all the aforesaid and each part and parcel of it, really and effectively, renouncing all fraud, evasion, deceit, falsehood, and pretense, and that they will not contradict it at any time or in any manner. And under the same oath they swore not to seek absolution or release from it from our most Holy Father or from any other legate or prelate who could give it to them. And even though, proprio motu, it should be given to them, they will not make use of it; rather, by this present agreement, they, acting in the said name, entreat our most Holy Father that his Holiness be pleased to confirm and approve this said agreement, according to what is set forth therein; and that he order his bulls in regard to it to be issued to the parties or to whichever of the parties may solicit them, with the tenor of this agreement incorporated therein, and that he lay his censures upon those who shall violate or oppose it at any time whatsoever. Likewise, the said representatives, acting in the said names, bound themselves under the same penalty and oath, that within the one hundred days next following, reckoned from the day of the date of this agreement, the parties would mutually exchange the approbation and ratification of this said agreement, written on parchment, signed with the names of the said lords, their constituents, and sealed with their hanging leaden seals; and that the instrument which the said lords, the king and queen of Castile, Aragon, etc., should have to issue, must be signed, agreed to, and sanctioned by the very noble and most illustrious lord, Prince Don Juan, their son. Of all the foregoing they authorized two copies, both of the same tenor exactly, which they signed with their names and executed before the undersigned secretaries and notaries public, one for each party. And whichever copy is produced, it shall be as valid as if both the copies which were made and executed in the said town of Tordesillas, on the said day, month, and year aforesaid, should be produced. The chief deputy, Don Enrique, Ruy de Sousa, Dom Juan de Sousa, Doctor Rodrigo Maldonado, Licentiate Ayres. Witnesses who were present and who saw the said representatives and ambassadors sign their names here and execute the aforesaid, and take the said oath: The deputy Pedro de Leon and the deputy Fernando de Torres, residents of the town of Valladolid, the deputy Fernando de Gamarra, deputy of Zagra and Cenete, contino of the house of the said king and queen, our lords, and Joao Suares de Sequeira, Ruy Leme, and Duarte Pacheco, continos of the house of the said King of Portugal summoned for that purpose. And I, Fernando Alvarez de Toledo, secretary of the king and queen, our lords, member of their council, and their scrivener of the high court of justice, and notary public in their court and throughout their realms and lordships, witnessed all the aforesaid, together with the said witnesses and with Estevan Vaez, secretary of the said King of Portugal, who by the authority given him by the said king and queen, our lords, to certify to this act in their kingdoms, also witnessed the abovesaid; and at the request and with the authorization of all the said representatives and ambassadors, who in my presence and his here signed their names, I caused this public instrument of agreement to be written. It is written on these six leaves of paper, in entire sheets, written on both sides, together with this leaf, which contains the names of the aforesaid persons and my sign; and the bottom of every page is marked with the notarial mark of my name and that of the said Estevan Vaez. And in witness I here make my sign, which is thus. In testimony of truth: Fernando Alvarez. And I, the said Estevan Vaez (who by the authority given me by the said lords, the king and queen of Castile, and of Leon, to make it public throughout their kingdoms and lordships, together with the said Fernando Alvarez, at the request and summons of the said ambassadors and representatives witnessed everything), in testimony and assurance thereof signed it here with my public sign, which is thus.
The said deed of treaty, agreement, and concord, above incorporated, having been examined and understood by us and by the said Prince Don John, our son, we approve, commend, confirm, execute, and ratify it, and we promise to keep, observe, and fulfill all the abovesaid that is set forth therein, and every part and parcel of it, really and effectively. We renounce all fraud, evasion, falsehood, and pretense, and we shall not violate or oppose it, or any part of it, at any time or in any manner whatsoever. For greater security, we and the said prince Don John, our son, swear before God and Holy Mary, and by the words of the Holy Gospels, wheresoever they are written at greatest length, and upon the sign of the Cross upon which we actually placed our right hands, in the presence of the said Ruy de Sousa, Dom Joao de Sousa, and Licentiate Ayres de Almada, ambassadors and representatives of the said Most Serene King of Portugal, our brother, thus to keep, observe, and fulfill it, and every part and parcel of it, so far as it is incumbent upon us, really and effectively, as is abovesaid, for ourselves and for our heirs and successors, and for our said kingdoms and lordships, and the subjects and natives of them, under the penalties and obligations, bonds and abjurements set forth in the said contract of agreement and concord above written. In attestation and corroboration whereof, we sign our name to this our letter and order it to be sealed with our leaden seal hanging by threads of colored silk. Given in the town of Arevalo, on the second day of the month of July, in the year of the nativity of our Lord Jesus Christ, 1494.
I, The King. I, The Queen. I, The Prince.
I, FERNANDO ALVAREZ de Toledo, secretary of the king and of the queen, our lords, have caused it to be written by their mandate.
Source: Frances Gardiner Davenport, European Treaties Bearing on the History of the United States to 1648 (Washington, DC: Carnegie Institution of Washington, 1967), 84–100.
In 1517 Pope Leo X authorized the sale of indulgences for the remission of sins and avoidance of the pain of purgatory in exchange for money with which to build St. Peter’s Basilica. The Archbishop of Mainz, who owed a large debt to the Fugger banking family for the purchase of his ecclesiastical office, agreed to the scheme although such remissions had formerly been granted on the basis of good works. Individuals could also pay for the remission of sins for dead relatives. The following excerpt contains the instructions given by a Dominican monk named Tetzel, who was charged with the sale of the indulgences, to those men who would be selling them across Europe. Martin Luther reacted to the sale of indulgences by posting his ninety-five theses, an act that sparked the Reformation and eventually the colonization of the New World by various religious groups.
The first grace is the complete remission of all sins; and nothing greater than this can be named, since man, who lives in sin and forfeits the favor of God, obtains complete remission by these means and once more enjoys God’s Favor; moreover, through this remission of sins the punishment which one is obliged to undergo in purgatory on account of the affront to the Divine Majesty is all remitted, and the pains of purgatory completely blotted out. And although nothing is precious enough to be given in exchange for such a grace—in order that Christian believers may be the more easily induced to procure the same, we establish the following rules, to wit: …
Respecting, now, the contribution to the chest, for the building of the said church of the chief of the apostles (St. Peter’s), the penitentiaries and confessors, after they have explained to those making confession the full remission and privileges, shall ask of them for how much money or other temporal goods they would conscientiously pay for the said most complete remission and privileges; and this shall be done in order that hereafter they may be brought the more easily to contribute. And because the conditions and occupations of men are so manifold and diverse that we cannot consider them individually, and impose specific rates accordingly, we have therefore concluded that the rates should be determined according to the recognized classes of persons.
Kings and queens and their offspring, archbishops and bishops, and other great rulers, provided they seek the places where the cross is raised, or otherwise present themselves, shall pay at least five and twenty Rhenish guilders in gold. Abbots and the great prelates of cathedral churches, counts, barons, and others of the higher nobility, together with their consorts, shall pay for each letter of indulgence ten such guilders. Other lesser prelates and nobles, as also the rectors of celebrated places, and all others who, either from permanent incomes or merchandise, or otherwise, enjoy a total yearly revenue of five hundred gold guilders, shall pay six such guilders. Other citizens and tradespeople and artisans, who have individual incomes and families of their own, shall pay one such guilder; those of less means, only a half. …
All other persons are confided to the discretion of the confessors and penitentiaries, who should have ever in view the advancement of this building, and should urge their penitents to a free contribution, but should let no one go away without some portion of grace, because the happiness of Christian believers is here concerned not less than the interests of the building. And those that have no money shall supply their contribution with prayer and fasting; for the kingdom of heaven should be open to the poor not less than to the rich.
It is, furthermore, not necessary that the persons who place their contributions in the chest for the dead should be contrite in heart and have orally confessed, since this grace is based simply on the state of grace in which the dead departed, and on the contribution of the living, as is evident in the text of the bull. Moreover preachers shall exert themselves to give this grace the widest publicity, since through the same, help will surely come to departed souls, and the construction of the church of St. Peter will be abundantly promoted at the same time. …
Source: Milton Viorst, The Great Documents of Western Civilization (New York: Barnes and Noble, 1965): 82–84.
During the reign of Elizabeth I, Sir Walter Raleigh received the first charter to establish an English colony in the New World. Situated at Roanoke, an island among the Outer Banks of North Carolina’s barrier islands, the colony survived the first few years of its existence with few difficulties. The first colonists who arrived in 1585 returned to England the following year. In 1587 a second expedition, led by John White, established the colony of Roanoke. Although later colonies were established for profit or religious purposes, the colony was well provisioned to establish a community in this barren wilderness. When White returned to England for supplies he was detained by the impending war with Spain and upon his return in 1591 the colony had vanished. The next voyage to the New World was in search of gold along the coast of Virginia. Trade and promises of wealth continued to attract many newcomers to the shores of North America from that time on.
ELIZABETH by the Grace of God of England, Fraunce and Ireland Queene, defender of the faith, &c. To all people to whome these presents shall come, greeting.
Knowe yee that of our especial grace, certaine science, and meere motion, we haue given and graunted, and by these presents for us, our heires and successors, we giue and graunt to our trustie and welbeloued seruant Walter Ralegh, Esquire, and to his heires assignee for euer, free libertie and licence from time to time, and at all times for ever hereafter, to discover, search, finde out, and view such remote, heathen and barbarous lands, countries, and territories, not actually possessed of any Christian Prince, nor inhabited by Christian People, as to him, his heires and assignee, and to every or any of them shall seeme good, and the same to haue, horde, occupie and enjoy to him, his heires and assignee for euer, with all prerogatives, commodities, jurisdictions, royalties, privileges, franchises, and preheminences, thereto or thereabouts both by sea and land, whatsoever we by our letters patents may graunt, and as we or any of our noble progenitors haue heretofore graunted to any person or persons, bodies politique or corporate: and the said Walter Ralegh, his heires and assignee, and all such as from time to time, by licence of us, our heires and successors, shall goe or trauaile thither to inhabite or remaine, there to build and fortifie, at the discretion of the said Walter Ralegh, his heires and assignee, the statutes or acte of Parliament made against fugitives, or against such as shall depart, romaine or continue out of our Realme of England without licence, or any other statute, acte, lawe, or any ordinance whatsoever to the contrary in anywise notwithstanding.
And we do likewise by these presents, of our especial grace, meere motion, and certain knowledge, for us, our heires and successors, giue and graunt full authoritie, libertie and power to the said Walter Ralegh, his heires and assignee, and every of them, that he and they, and euery or any of them, shall and may at all and euery time, and times hereafter, haue, take, and leade in the saide voyage, and trauaile thitherward, or to inhabit there with him, or them, and euery or any of them, such and so many of our subjects as shall willingly accompanie him or them, and euery or any of them to whom also we doe by these presents, giue full libertie and authority in that behalfe, and also to hare, take, and employ, and vse suflicient shipping and furniture for the Transportations and Nauigations in that behalfe, so that none of the same persons or any of them, be such as hereafter shall be restrained by us, our heires, or successors.
And further that the said Walter Ralegh, his heires and assignee, and euery of them, shall haue holde, occupie, and enioye to him, his heires and assignee, and euery of them for euer, all the soile of all such lands, territories, and Countreis, so to bee discovered and possessed as aforesaide, and of all such Cities, castles, townes, villages, and places in the same, with the right, royalties, franchises, and iurisdictions, as well marine as other within the saide lances, or Countreis, or the seas thereunto adioyning, to be had, or used, with full power to dispose thereof, and of euery part in fee-simple or otherwise, according to the order of the lawes of England, as neere as the same conveniently may bee, at his, and their will and pleasure, to any persons then being, or that shall romaine within the allegiance of us, our heires, and successors: resewing always to us our heires, and successors, for all services, duties, and demaundes, the lift part of all the oare of golde and siluer, that from time to time, and at all times after such discouerie, subduing and possessing, shal be there gotten and obtained: All which lances, Countreis, and territories, shall for ever be holden of the said Walter Ralegh, his heires and assignee, of us, our heirs and successors, by homage, and by the said paiment of the said fift part, resewed onely for all services.
And moreover, we doe by these presents, for us, our heires and successors, giue and graunt licence to the said Walter Ralegh, his heirs, and assignee, and euery of them, that he, and they, and euery or any of them, shall and may from time to time, and at all times for euer hereafter, for his and their defence, encounter and expulse, repell and resist as well by sea as by lance, and by all other wayes whatsoever, all, and every such person and persons whatsoever, as without the especiall liking and licence of the saide Walter Ralegh, and of his heires and assignee, shall attempt to inhabite within the said Countreis, or any of them, or within the space of two hundreth leagues neere to the place or places within such Countreis as aforesaide (if they shall not bee before planted or inhabited within the limits as aforesaide with the subjects of any Christian Prince being in amitie with us) where the saide Walter Ralegh, his heires, or assignee, or any of them, or his, or their or any of their associates or company, shall within nine yeeres (next ensuing) make their dwellings or abidings, or that shall enterprise or attempt at any time hereafter unlawfully to annoy, either by sea or lance, the saide Walter Ralegh, his heirs or assignee or any of them, or his or their, or any of his or their companies giuing, and graunting by these presents further power and authoritie, to the said Walter Ralegh, his heirs and assignee, and euery of them from time to time, and at all times for euer hereafter, to take and surprise by all maner of meanes whatsoever, all and euery those person or persons, with their shipper, vessels, and other goods and furniture, which without the licence of the saide Walter Ralegh, or his heires, or assignee, as aforesaide, shalbe founde trafiquing into any harbour or harbors, creeke, or creekes, within the limits aforesaide, (the subjects of our Realms and Dominions, and all other persons in amitie with us, trading to the Newfound land for fishing as heretofore they haue commonly used, or being driven by force of a tempest, or shipwracke onely excepted:) and those persons, and euery of them, with their shippes, vessels, goods and furniture to deteine and possesse as of good and lawfull prize, according to the discretion of him the saide Walter Ralegh, his heires, and assignee, and euery, or any of them. And for uniting in more perfect league and amitie, of such Countreis, lances, and territories so to bee possessed and inhabited as aforesaide with our Realmes of Englande, and Ireland, and the better incouragement of men to these enterprises: we do by these presents, graunt and declare that all such Countreis, so hereafter to be possessed and inhabited as is aforesaide, from thencefoorth shall bee of the allegiance of vs. our heires and successours. And wee doe graunt to the saide Walter Ralegh, his heires, and assignee, and to all, and euery of them, and to all and euery other person, and persons being of our allegiance, whose names shall be noted or entred in some of our Courtes of recorde within our Realme of Englande, that with the assent of the saide Walter Ralegh, his heires or assignes, shall in his journeis for discouerie, or in the iourneis for conquest, hereafter trauelle to such lands, countreis and territories, as aforesaide, and to their, and to euery of their heires, that they, and every or any of them, being either borne within our saide Realmes of Englande, or Irelande or in any other place within our allegiance, and which hereafter shall be inhiabiting within any the lands, Countreis, and territories, with such licence (as aforesaide) shall and may haue all the priviledges of free Denizens, and persons native of England, and within our allegiance in such like ample manor and fourme, as if they were borne and personally resident within our saide Realme of England, any lawe, custome, or vsage to the contrary notwithstanding
And for asmuch as upon the finding out, discovering, or inhabiting of such remote lands, countreis, and territories as aforesaid, it shal be necessary for the safetie of al men, that shal aduenture them selues in those murnies or voyages, to determine to live together in Christian peace, and ciuil quietnes ech with other, whereby euery one may with snore pleasure and profit enjoy that whereunto they shall attaine with great Paine and perill, we for vs. our heires and successors, are likewise pleased and contented, and by these presents do giue and graunt to the said Walter Ralegh, his heires and assignee for ever, that he and they, and euery or any of them, shall and may from time to time for euer hereafter, within the said mentioned remote lances and Countreis in the way by the seas thither, and from thence, inane full and meere power and authoritie to correct, punish, pardon, gouerne, and rule by their and euery or any of their good discretions and pollicies, as well in causes capital, or criminal!, as ciuil, both marine and other all such our subjects as shall from time to time aduenture themselves in the said iournies or voyages, or that shall at any time hereafter inhabite any such lances, countreis, or territories as aforesaide, or shall abide within 200. leagues of any of the saide place or places, where the saide Walter Ralegh, his heires or assignee, or any of them, or any of his or their associates or companies, shall inhabits within 6. yeeres next ensuing the date hereof, according to such statutes, lawes and ordinances, as shall bee by him the saide Walter Ralegh his heires and assignee, and euery or any of them deuised, or established, for the better government of the said people as aforesaid. So always as the said statutes, lawes, and ordinances may be as neere as conveniently may be, agreeable to the forme of the lawes, statutes, governement, or pollicie of England, and also so as they be not against the true Christian faith, nowe professed in the Church of England, nor in any wise to withdraws any of the subjects or people of those lances or places from the allegiance of vs. our heires and successours, as their immediate Soueraigne vnder God.
And further, wee doe bv these presents for vs. our heires and successors, giue and graunt full power and authoritie to our trustie and welbeloued counsailer sir William Cicill knight, Lorde Burghley, our high Treasourer of England, and to the Lorde Treasourer of England, for vs, our heires and successors for the time being, and to the priuie Counsell, of vs, our heirs and successours, or any foure or more of them for the time being, that thee, they, or any fours or more of them, shall and may from time to time, and at all times hereafter, under his or their handes or scales by vertue of these presents, authorise and licence the saide Walter Ralegh, his heires and assignee. and euery or any of them by him, and by themselves, or by their, of any of their sufficient Atturnies, deputies, officers, ministers, factors, and servants, to imbarke and transport out of our Realme of England and Ireland, and the Dominions thereof all, or any of his, or their goods, and all or any the goods of his and their associate and companies, and euery or any of them, with such other necessaries and commodities of any our Realmes, as to the saide Lorde Treasourer, or foure or more of the priuie Counsaile, of vs. our heires and successors for the time being (as aforesaide) shal be from time to time by his or their wisdomes, or discretions thought meete and convenient, for the better reliefe and supportation of him the saide Walter Ralegh, his heires, and assignee, and euery or any of them, and of his or their or any of their associate and companies, any acte, statute, lawe, or other thing to the contrary in any wise notwithstanding.
Provided alwayes, and our will and pleasure is, and wee do hereby declare to all Christian kings, princes and states, that if the saide Walter Ralegh, his heires or assignee, or any of them, or any other lay their licence or appointment, shall at any time or times hereafter, robbe or spoile by sea or by lance, or do any acte of unjust or unlawful hostilitie, to any of the subjects of vs. our heires or successors, or to any of the subjects of any the kings, princes, rulers, governors, or estates, being then in perfect league and amitie with vs, our heires and successors, and that upon such injury, or upon lust complaint of any such prince, ruler, governoir, or estate, or their subjects, wee, our heires and successours, shall make open proclamation within any the Fortes of our Realme of England, that the saide Walter Ralegh, his heires and assignee, and adherents, or any to whome these our letters patents may extende, shall within the termes to be Emitted, by such proclamation, make full restitution, and satisfaction of all such injuries done, so as both we and the said princes, or other so complayning, may holde vs and themselves fully contented. And that if the saide Walter Ralegh, his heires and assignee, shall not make or cause to be made satisfaction accordingly, within such time so to be limitted, that then it shall be lawfull to vs our heires and successors, to put the saide Walter Ralegh, his heires and assignee and adherents, and all the inhabitants of the said places to be discovered (as is aforesaide) or any of them out of our allegiance and protection, and that from and after such time of putting out of protection the said Walter Ralegh, his heires, assignee and adherents, and others so to be put out, and the said places within their habitation, possession and rule, shal be out of our allegeance and protection, and free for all princes and others, to pursue with hostilitie, as being not our subjects, nor by vs any way to be avouched, maintained or defended, nor to be holden as any of ours, nor to our protection or dominion, or allegiance any way belonging, for that expresse mention of the cleer yeerely value of tile certaintie of the premisses, or any part thereof, or of any other gift, or grant by vs. or any our progenitors, or predecessors to the said Walter Ralegh, before this time made in these presents be not expressed, or any other grant, ordinance, provision, proclamation, or restraint to the contrarye thereof, before this time giuen, ordained, or provided, or any other thing, cause, or matter whatsoever, in any wise notwithstanding. In witness whereof, we haue caused these our letters to be made patents. Witnesse our selues, at Westminster, the 25 day of March, in the sixe and twentieth yeere of our Raigne.
Source: The Federal and State Constitutions Colonial Charters, and Other Organic Laws of the States, Territories, and Colonies Now or Heretofore Forming the United States of America. Compiled and Edited Under the Act of Congress of June 30, 1906 by Francis Newton Thorpe (Washington, DC: Government Printing Office, 1909).
Queen Elizabeth I granted the following charter to the British East India Company in 1600. The original purpose of the company was to compete against the Dutch in the East Indies, but after the British were defeated by the Dutch in 1623 at Amboina, the English focused on developing trade with India. Throughout the seventeenth century, the primary item exported from India to England was textiles. By 1708, the British East India Company controlled trade in Madras, Bombay, and Calcutta. However, over the next five decades the British had to compete increasingly with the French for Indian goods. During the Seven Years’ War, also known as the French and Indian War, Robert Clive achieved victory over the French forces and in 1765 the British controlled all of Bengal. The British Parliament then decided to consolidate control over India, especially after the onset of the American Revolution. Through the Regulating Act of 1773, Parliament named Warren Hastings the governor-general of India. Then Parliament passed the East India Act of 1784, which transferred control of British political activities to the government. Although the British East India Company continued to exist, its monopoly effectively ended in 1833. After the 1857–1858 Sepoy Mutiny, the government assumed direct control over all of India, both political and commercial affairs, and the company was dissolved.
ELIZABETH, by the Grace of God, Queen of England, France, and Ireland, Defender of the Faith & c. To all our officers, ministers, and subjects, and to all other people, as well within this our realm of England as elsewhere, under our obedience and jurisdiction, or otherwise, unto whom these our Letters Patents shall be seen, showed, or read, greeting. Whereas our most dear and loving Cousin, George, Earl of Cumberland, and our well-beloved subjects, Sir John Hart, of London, and others [here follow 214 other names which are omitted] have of our certain knowledge been petitioners unto us, for our Royal assent and licence to be granted unto them, that they, at their own adventures, costs, and charges, as well for the honour of this our realm of England, as for the increase of our navigation, and advancement of trade of merchandize, within our said realms and the dominions of the same, might adventure and set forth one or more voyages, with convenient number of ships and pinnaces, by way of traffic and merchandize to the East Indies, in the countries and parts of Asia and Africa and to as many of the islands, ports and cities, towns and places, thereabouts, as where trade and traffic may by all likelihood be discovered, established or had; divers of which countries, and. many of the islands, cities and ports, thereof, have long since been discovered by others of our subjects, albeit not frequented in trade of merchandize.
Know ye, therefore, that we, Greatly tendering the honour of our nation, the wealth of our people, and the encouragement of them, and others of our loving subjects in their good enterprizes, for the increase of our navigation, and the advancement of our lawful traffick to the benefit of our Commonwealth, have of our special grace, certain knowledge, and mere motion, given and granted and by these presents, for us, our heirs and successors do give and grant unto our said loving subjects before in these presents expressly named, that they and every of them from henceforth be, and shall be one body corporate and politick, in deed and in name, by the name of the Governor and Company of Merchants of London, trading into the East Indies, and them by the name of the Governor and Company of Merchants of London, trading to the East Indies, one body and corporate and politick, in deed and in name, really and fully for us our heirs and successors we do order, make, ordain, constitute, establish and declare, by these presents, and that by the same name of Governor and company of merchants of London, trading into the East Indies, they shall have succession, and that they and their successors, by the name of the Governor and Company of Merchants of London, trading into the East Indies, be and shall be, at all times hereafter, persons able and capable in law, and a body corporate and politick and capable in law to have, purchase, receive, possess, enjoy and retain lands, rents, privileges, liberties, jurisdictions, franchises and hereditaments of whatsoever kind, nature, and quality so ever they be, to them and their successors.
And also to give, grant, demise, alien, assign and dispose lands, tenements and hereditaments, and to do and execute all and singular other things, by the same name that to them shall or may appertain to do. And that they and their successors, by the name of the Governor and Company Merchants of London, trading into the East Indies, may pleat and be impleaded, answer and be answered, defend and be defended, in whatsoever courts and places, and before whatsoever judges and justices, and other persons and officers, in all and singular actions, pleas, suits, quarrels, causes, an demands whatsoever, of whatsoever kind, nature or sort, in such a manner and form, as any other, our liege people of this realm of England, being persons able and capable in law, may or can have, purchase, receive, possess, enjoy, retain, give, grant, demise, alien, assign, dispose, plead and be impleaded, answer and be answered, defend and be defended, release and be released, do permit and execute. …
And that also it shall and may be lawful, to and for them, or the more part of them, being so assembled, and that shall then and there be present, in any such place or place whereof the Governor or his deputy for the time being, to be one, to make, ordain, and constitute such, and so many reasonable laws, constitutions, orders and ordinances, as to them, or the greater part of them, being then and there present, shall seem necessary and convenient, for the good government of the same Company, and of all factors, masters, mariners and other officers, employed or to be employed in any of their voyages, and for the better advancement and continuance of the said trade and traffick, and the same laws, constitutions, orders and ordinance, so made, to put in use and execute accordingly, ands at their pleasure to revoke or alter the same, or any of them as Octatian shall require; and that the said Governor and Company, so often as they shall make, ordain or establish any such laws, constitutions, orders or ordinances, in form aforesaid, shall and may lawfully impose, ordain, limit and provide such pains, punishments and penalties, by imprisonment of Body, or by Fines and Amerciaments, or by all or any of them upon and against all Offenders, contrary to such laws, constitutions, orders and ordinances, or any of them as to the said Governor and Company for the time being, or the greater part of them, then and there being present, the said Governor, or his deputy, being always one shall seem necessary, requisite and convenient, for the observation of the same laws, constitutions, orders and ordinances; and the same fine and amerciaments shall and may levy, take and have, to the use of the said Governor and Company, and their successors, without the impediment of us, our heirs or successors, or of any the officers or ministers of us, our heirs or successors, and without any account thereof, to us, our heirs or successors, to be rendered or made; all and singular which laws Constitutions, orders and ordinances, so as aforesaid to be made, we will to be duly observed and kept, under the pain and penalties therein to be contained; so always as the said laws, orders, constitutions, ordinances, imprisonments, fines and amerciaments be reasonable, and not contrary or repugnant to the laws, statutes or customs of this our realm.
Source: Panchanandas Mukherji, ed., Indian Constitutional Documents (1600–1918), Vol. 1 (Calcutta: Thacker, Spink, 1918), 1–20.
Sir Edwin Sandys, British statesman and one of the founders of the London (Virginia) Company, was an active member of Parliament and treasurer of the company. He promoted trade and commerce under the reigns of Elizabeth I and James I. In the following excerpt of his report on the committee on free trade, Sandys argues for free trade and the association and protection of groups of merchants engaged in a particular trade.
Die Lunae, 21 Maii 1604
SIR Edwyn Sandys maketh a large report of the travel and proceeding of the committee in the two bills for free trade; viz.
B. For all merchants to have free liberty of trade into all countries, as is used in all other nations.
B. For the enlargement of trade for his Majesty’s subjects into foreign countries.
The effect of this report, together with the further proceeding of the bill, I received afterwards, penned by himself, and entitled, ‘Instructions touching the Bill for Free Trade,’ as followeth:
The most weighty reasons for the enlargement of trade were these:
All free subjects are born inheritable, as to their land, so also to the free Natural right, exercise of their industry, in those trades whereto they apply themselves, and whereby they are to live. Merchandise, being the chief and richest of all other, and of greater extent and importance than all the rest, it is against the natural right and liberty of the subjects of England to restrain it into the hands of some few, as now it is; for although there may be now some five or six thousand persons, counting children and prentices, free of the several companies of the merchants, in the whole; yet apparent it is, that the governors of these companies, by their monopolizing orders, have so handled the matter, as that the mass of the whole trade of all the realm is in the hands of some two hundred persons at the most, the rest serving for a show only, and reaping small benefit.
The example of all other nations generally in the world, who avoid in Examples of themselves and hate in us this monopolizing way of traffic; for it cannot be nations, otherwise counted than a monopoly, when so large a commodity is restrained into the hands of so few, in proportion, to the prejudice of all other, who, by law and natural right, might have interest therein. And whereas some allege, that there are like companies in other countries; as of the East Indies in Lisbon, the House of Contraction there, the Fontego at Venice, the Travesana at Nuremberg; these allegations are either untrue, or unproper. There are places of assembly for merchants, and to consult for good orders in all other countries, but without restraint of trading from any man; and how traffic, by this freedom, doth flourish in other countries, and principally in the Low Countries, far more than in ours, is apparent to all the world.
The increase of the wealth generally of all the land, by the ready vent of Wealth, all the commodities to the merchants at higher rate; for where many buyers are, ware grows dearer; and they that buy dear at home, must sell dear abroad. This also will make our people more industrious.
The more equal distribution of the wealth of the land, which is a great Equal nourishment in a man’s body; the contrary whereof is inconvenient in all estates, and oftentimes breaks out into mischief; when too much fulness doth puff up some by presumption, and too much emptiness leaves the rest in perpetual discontent, the mother of desire of innovations and troubles; and this is the proper fruit of monopolies. Example may be in London, and the rest of the realm: the custom and impost of London come to a hundred and ten thousand pound a year, and of the rest of the whole realm but to seventeen thousand pound.
The increase of shipping, and especially of mariners, in all ports in England. How greatly the mariners of the realm have decayed in all places of latter times, and with how great danger of the state in these late wars, is known to them who have been employed in that kind of service; who do also attribute the cause thereof to this restraint of trade; free traffic being the breeder and maintainer of ships and mariners, as by memorable example in the Low Countries may be seen.
And as there will be greater opportunity abroad, so also much greater necessity at home; for what else shall become of gentlemen’s younger sons, who cannot live by arms, when there is no wars, and learning preferments are common to all, and mean? So that nothing remains fit for them, save only merchandise (and such is the use of other politic nations) unless they turn serving men, which is a poor inheritance.
The general reasons to continue the restraint of trade, and the answer to them, were these:
It is a taint to the king and state that these restrained companies should be called or counted monopolies; and by this Act we insist and strengthen the complaint of the haven towns and other nations against the state, for suffering such companies.
The same reason doth justify all the monopolies that ever were. It is no touch to the state, if abuses creep in; but if reformation, desired by Parliament, be denied. But surely this taint doth no ways attaint his Majesty, who hath declared himself a just enemy to all these unjust monopolies.
These companies are not monopolies; for a monopoly is when liberty of selling, due to all men by right, is restrained to one, with prejudice of all others.
These companies keep up the price of our commodities abroad by avoiding an over Glut of our Commodities in Places whereto they trade: And this experience doth witness; for our cloth is of late years much dearer than in former times; whereas contrariwise, when trade is free, many sellers will make ware cheap, and of less estimation.
This Act is against trading in a joint stock together, which in long and dangerous voyages (as to Musca, and especially the East Indies) is necessary; for in that voyage one alone will not adventure; besides the merchants must keep some port there amongst the infidels.
It is true, that it is fit to trade to the East lndies with a joint stock, and so Answer do the Hollanders; this Act therefore doth not forbid men to trade in a joint stock, if they list, and see it fit; only forbiddeth to constrain men to trade so against their wills; which heretofore in other trades, and, at this day in the Muscovy trade doth turn to the great damage both of the commonwealth and of the particular persons so constrained to trade. The Muscovy Company, consisting of eightscore, or thereabouts, have fifteen directors, who manage the whole trade; these limit to every man the proportion of stock, which he shall trade for, make one purse and stock of all, and consign it into the hands of one agent at Musco, and so again, at their return, to one agent at London, who sell all, and give such account as they please. This is a strong and a shameful monopoly; a monopoly in a monopoly; both abroad and at home; a whole company by this means is become as one man, who alone hath the uttering of all the commodities of so great a country. The inconveniences, which have ensued thereof, are three apparent:
First, by this means they vent less of our commodities; for, by reason of the one agent, they vent all through his hands; by which means the Hollanders have come in between us; who, trading thither in several with our own English commodities (which are most proper for that country) utter much more than our own merchants, and make quicker return; which hath occasioned many Englishmen to join in trade with the Hollanders, to the detriment of the King’s Majesty in his customs. And by this means that trade is like utterly to decay; for the Hollanders have grown in short time from two ships to above twenty. This spring they are gone to Muscovy with near thirty ships, and our men but with seven. The like fell out in the Turkey Company, when they constrained men to a joint stock; since the breaking of which combination, there go four ships for one.
Secondly, in their return with Muscovy commodities, they greatly prejudice the commonwealth and state. Example in cordage, which they bring home in such scarcity, and sell so dearly, as that they have raised it in short time from twenty to thirty shillings; yea, to sell their ware dear, they have contracted with the buyer not to bring any more of that commodity within three years after.
Thirdly, this is hurtful to all the young merchants of their own company, who cannot forbear their stock so long as now they do, and desire to employ their own industry in managing it, and having oftentimes been all damnified by the breaking of that general factor.
In divers places, as namely in Turkey and Muscovy, the merchants are Public charges, at charge of sending presents, maintaining ambassadors, consuls, and agents, which are otherwise also necessary for the service of his Majesty, and of the state; these charges are now defrayed by these companies.
This is true; and the same mischief were likely to ensue again; for it is said that the same policy is now in speech in their company. But the times being well altered from war to peace, this mischief would be but short, and other merchants soon grow to take their places, if they should, as (being rich) they may, forsake them. But it were to be trusted, that this stomachness, being to their own loss, would not long continue; howsoever it doth not stand with the dignity of Parliament, either to fear or favour the forwardness of any subject.
If all men may be merchants, the sons of strangers denized will, in time, eat out the natural merchants of this kingdom.
If the sons of strangers become natural English, why should they not reap a subject’s part? And more they cannot reap. If any further mischief should grow, it might at all times, by a new Act, be easily remedied. All men may If trade be free for all men, then all may become merchants, and under that pretext any man may go out of the realm; which will be good news for the Papists.
This conceit is weak; for so it may be said that all men may become mariners, and so quit the kingdom; and it is provided by express words of the bill that they may not go out of the realm, but for their present traffic.
This Act is against London, and the wealth thereof, which is necessary to be upheld being the head city of the kingdom.
Nay, it is for London, unless we will confine London into some two hundred men’s purses; the rest of the City of London, together with the whole realm, sue mainly for this bill; and they cry, they are undone if it should be crossed.
Answer. Nothing can be more clear, than that if transport and return of merchandise will increase by this Act, also the king’s customs, which depend thereon, must withal increase. And if this bill may pass if the king be pleased to let his customs to farm, to give 5,000£. a year more than, communibus annis, hath been made these last years. The deceiving of the king is now when, for want of this freedom, men are enforced to purchase the vent of their commodities out of creeks, because they cannot be admitted to public trade, whereas otherwise they should have no reason to hazard their whole estate, for the saving of so reasonable a duty. As for faults in officers, they may as well happen in London, as in any other place.
During freedom of trade small ships would be employed to vent our decay of great commodities, and so our great ships, being the guard of the land would ships decay. It is war, more than traffic, that maintaineth great ships; and therefore, if any decay grow, it will be chiefly by peace, which the wisdom of the state will have a regard of; but for as much as depends of traffic, no doubt the number of smaller ships will grow by this freedom, and especially mariners, whereof the want is greatest, and of whom the smallest vessels are the proper nurseries. But that the great ships will decay doth not necessarily follow; for the main trade of all the white cloth, and much of other kind, is shipped from the port of London, and will be still, it being the fittest port of the kingdom for Germany and the Low Countries, where the Merchants Adventurers’ trade only lieth; who shall have little cause to alter their shipping. Then for the Levant sea, Muscovy, and East Indies, whither we trade with great ships, the employing of them will be still requisite in the merchant’s discretion; for otherwise both the commodity of the returned will be less, and the adventure too great in so rich lading, not to provide for more than ordinary assurance against the common hazard at sea.
Other particular reasons there are for restraint of trade in favour of certain company.
The Company of Merchants Adventurers is very ancient, and they have Merchants heretofore been great credit to the kings, for borrowing money in the Low Adventurers, Countries and Germany.
Source: Great Britain. Parliament. House of Commons. Journal, volume 1, 1547–1625.
During the early seventeenth century the Spanish, Portuguese, Dutch, and English competed for control of trade with countries in the Far East from China to Japan. Below are excerpts from the journal of Richard Cocks, a merchant in an English factory in Japan, which describes some of the items traded as well as problems encountered with merchants from other countries.
August 1 [1615] … And I thought good to note down that the China Capt., Andrea Dittis, came and told me how his brother Whaw at Langasaque desired to have it under my handwriting touching procuring trade into China. For, as he sayeth, they have laid out 3,000 taies! already to make way, and make reckoning it will cost them 5,000 taies more, in all 8,000 taies (I say eight thousand taies); which, if in case they procure us free trade into China, we are to pay them the said eight thousand taies back, with what else shall be thought fitting. But if they do not procure us free trade into China, the loss to stand upon themselves.
I forgot to note down how Jorge Durois wrote me how a great Holland ship was cast away on the coast of Lucan in the Phillippinas, out of the which the country people saved 5 great pieces of ordnance, and that most part of the men were cast away in the ship, and those which escaped per swimming were taken prisoners and sent to Manila …
August 6 … Capt. Speck! came late to the English house and Sir Matias with him and desired my company to go and see a piece of ordnance cast; which I did, but marvelled at their workmanship. For they carried the metal in ladles above 20 yards from the place where the mould stood, and so put it in ladleful after ladle; and yet made as formal ordinance as we do in Christendom, both of brass and iron. Captain Speck told me neither workmanship nor stuff did not stand him in half the price it cost them in Christendom.
Captain Speck told me he received a bark’s lading of copper this day from Sackay and that his bark departed from thence three days after Mr. Eaton was departed from thence. God send him hither in safety …
August 18. I went to Cochi to visit Capt. Adams and see our junk work. Went forward and carried him a bottle Spanish wine, two hens, one duck, a piece of pork, eight loaves bread and six millans and returned to Firando to dinner, having invited Albaro Monues who told me the Dutch mariners used him ill yesterday in words, calling him Cornu do, he being a married man. Whereupon grew some quarrel, for which 4 or 5 Dutch mariners were ducked at yard arm and each one 40 strips at capstan.
Also the China Capt. returned in our bark, the wind being still contrary, and, having given order along the coast to send our pilots if our ship came in sight, he went to Langasaque and stayed half a day, and bringeth word that his brother told him that the common report amongst both Spaniards and Portingals was that now they took the English to be their enemies, as well as the Hollanders, and therefore would take all our ships which traded into these parts of the world, etc. But I remember the old proverb, that ‘God sends a cursed cow short horns’.
I find on a sudden that Mr. Wickham grows very sullen humorous and, as I am informed, giveth out that he is not the Company’s servant, but at will, and therefore will rather seek out for his return for England in some shipping from Langasaque to Siam or Pattania. I think the reason is that he hath fingered 5 or 6 cattis of good ambergris in the Liqueas, and thinketh to make an India voyage for himself, and to return Capt. or General for the Company at his pleasure. Once truly I, and I think all the rest of the English in these parts, desire rather his room than company. He is turbulent. August 19.—Taccamon Dono sent me a present of 8 hens. And I wrote a letter to Capt. Adams how the China Capt.’s brother had lent us 325 gantes of shark oil, and therefore wished him to send a man to Andrea, our host, to buy 400 or 500 gantes oil at 10 tais per hundredgantes, as he informed us there was enough to be had, to the intent we may pay what we owe and have to serve our turn. And I delivered fifty taies plate bars to Mr. Nealson to lay out about charge of junk.
And Mr. Nealson paid Yaiemon Dono, our junk carpenter, forty 8 taies in plate of bars, and is in full payment for 170 planks for the junk at 4 mas per piece; the rest, being 20 taies, was paid per him before.
August 20.—I received a letter from Capt. Adams from Cochi, dated this day, how a bark with Spaniards from Langasaque put into that road and came from Mallial in shipping. The[y] say Don Lues de Fashardo did fight with 20 sail of Hollanders bound for the East Indies, and hath sunk or taken 12 of them, and the rest escaped by flight. Also the[y] say the King of Spain hath wars with the Turk, and that this news is come from Madrid in 6 months per way of New Spain.
And, after all, the Spaniards came to the English house, viz., Miguel de Salinas, Captain Medina, and a German called Marcus, with Alferis Tuerto and Lues Martin, and Albaro Monues accompanied them. They used many complementos and told me of Don Lues Fachardos discomfiting the Holland fleet going for the East Indies, but after such a divers sort that I can scarce believe it to be true; as also that 4 sail of English ships were passed the Straits of Magilanus into the South Sea …
August 25.—I delivered one hundred rials of eight to Mr. Nealson to employ in stuffs with Dutch mariners who, as it should seem, have met with some prize per way; otherways they could not afford to sell so good cheap…
August 29.—I wrote a letter to Capt. Adams how his scrivano told me our carpenters said they would not work a stroke on the junk except I gave them a bill of my hand to pay them as they were paid the last year: which I think is a trampo [= trap] of the Dutch to get our carpenters from us to serve their own turns, they now pretending to set out their rotten junk for to carry provision to the Moluccas. So I willed Capt. Adams to content them with a bill or what else so our business may go forward …
Source: Diary of Richard Cocks, Cape Merchant in the English Factory in Japan, 1615–22, ed. E. M. Thompson, Vol. 1, Hakluyt Soc., LXVI, 1883, pp. 29, 33–34, 41–43, 45–46.
The Dutch East India Company formed in 1602 but did not receive its charter from the States-General of the Netherlands until 1621. Under the terms of the charter, the company was given a monopoly over all trade east of the Cape of Good Hope and west of the Strait of Magellan. Any other Dutch traders had to receive permission from the company to sail in these waters or their ships and goods would be confiscated. The Dutch East India Company established its headquarters at Batavia in 1619 and from there it exercised control over the spice trade. Although the British and the Portuguese attempted to gain footholds in the region, the Dutch forced them out of Indonesia, Malaya, and Ceylon (present-day Sri Lanka). Corruption within the company led to its dissolution in the late eighteenth century, at which time all areas under its control became part of the Dutch empire. The British conquered the colony established by the company at the Cape of Good Hope in 1814.
JUNE 3, 1621
The States-General of the United Netherlands, to all who shall see these Presents, or hear them read, Greeting.
Be it known, that we knowing the prosperity of these countries, and the welfare of their inhabitants depends principally on navigation and trade, which in all former times by the said Countries were carried on happily, and with a great blessing to all countries and kingdoms; and desiring that the aforesaid inhabitants should not only be preserved in their former navigation, traffic, and trade, but also that their trade may be encreased as much as possible in special conformity to the treaties, alliances, leagues and covenants for traffic and navigation formerly made with other princes, republics and people, which we give them to understand must be in. all parts punctually kept and adhered to: And we find by experience, that without the common help, assistance, and interposition of a General Company, the people designed from hence for those parts cannot be profitably protected and mantained in their great risque from pirates, extortion and otherwise, which will happen in so very long a voyage. We have, therefore, and for several other important reasons and considerations as thereunto moving, with mature deliberation of counsel, and for highly necessary causes, found it good, that the navigation, trade, and commerce, in the parts of the West-Indies, and Africa, and other places hereafter described, should not henceforth be carried on any otherwise than by the common united strength of the merchants and inhabitants of these countries; and for that end there shall be erected one General Company, which we out of special regard to their common well-being, and to keep and preserve the inhabitants of those places in good trade and welfare, will maintain and strengthen with our Help, Favour and assistance as far as the present state and condition of this Country will admit: and moreover furnish them with a proper Charter, and with the following Priveleges and Exemptions, to wit, That for the Term of four and twenty Years, none of the Natives or Inhabitants of these countries shall be permitted to sail to or from the said lands, or to traffic on the coast and countries of Africa from the Tropic of Cancer to the Cape of Good Hope, nor in the countries of America, or the West-Indies, beginning at the fourth end of Terra Nova, by the streights of Magellan, La Maire, or any other streights and passages situated thereabouts to the straights of Anian, as well on the north sea as the south sea, nor on any islands situated on the one side or the other, or between both; nor in the western or southern countries reaching, lying, and between both the meridians, from the Cape of Good Hope, in the East, to the east end of New Guinea, in the West, inclusive, but in the Name of this United Company of these United Netherlands. And whoever shall presume without the consent of this Company, to sail or to traffic in any of the Places within the aforesaid Limits granted to this Company, he shall forfeit the ships and the goods which shall be found for sale upon the aforesaid coasts and lands; the which being actually seized by the aforesaid Company, shall be by them kept for their own Benefit and Behoof. And in case such ships or goods shall be sold either in other countries or havens they may touch at, the owners and partners must be fined for the value of those ships and goods: Except only, that they who before the date of this charter, shall have sailed or been sent out of these or any other countries, to any of the aforesaid coasts, shall be able to continue their trade for the sale of their goods, and cosine back again, or otherwise, until the expiration of this charter, if they have had any before, and not longer: Provided, that after the first of July sixteen hundred and twenty one, the day and time of this charters commencing, no person shall be able to send any ships or goods to the places comprehended in this charter, although that before the date hereof, this Company was not finally incorporated: But shall provide therein as is becoming, against those who knowingly by fraud endeavour to frustrate our intention herein for the public good: Provided that the salt trade at Ponte del Re may be continued according to the conditions and instructions by us already given, or that may be given respecting it, any thing in this charter to the contrary notwithstanding.
II. That, moreover, the aforesaid Company may, in our name and authority, within the limits herein before prescribed, make contracts, engagements and alliances with the princes and natives of the countries comprehended therein, and also build any forts and fortifications there, to appoint and discharge Governors, people for war, and officers of justice, and other public officers, for the preservation of the places, keeping good order, police and justice, and in like manner for the promoting of trade; and again, others in their place to put, as they from the situation of their affairs shall see fit: Moreover, they must advance the peopling of those fruitful and unsettled parts, and do all that the service of those countries, and the profit and increase of trade shall require: and the Company shall successively communicate and transmit to us such contracts and alliances as they shall have made with the aforesaid princes and nations; and likewise the situation of the fortresses, fortifications, and settlements by them taken.
III. Saving, that they having chosen a governor in chief, and prepared instructions for him, they shall be approved, and a commission given by us, And that further, such governor in chief, as well as other deputy governors, commanders, and officers, shall be held to take an oath of allegiance to us and also to the Company.
IV. And if the aforesaid Company in and of the aforesaid places shall be cheated under the appearance of friendship, or badly treated, or shall suffer loss in trusting their money or Goods, without having restitution, or receiving payment for them, they may use the best methods in their power, according to the situation of their affairs, to obtain satisfaction.
V. And if it should be necessary for the establishment, security and defence of this trade, to take any troops with them, we will, according to the constitution of this country, and the situation of affairs furnish the said Company with such troops, provided they be paid and supported by the Company.
VI. Which troops, besides the oath already taken to us and to his excellency, shall swear to obey the commands of the said Company, and to endeavour to promote their interest to the utmost of their ability.
VII. That the provosts of the Company on shore may apprehend any of the military, that have inlisted in the service of the aforesaid company, and may confine them on board the ships in whatever city, place, or jurisdiction they may be found; provided, the provosts first inform the officers and magistrates of the cities and places where this happens.
VIII. That we will not take any ships, ordnance, or ammunition belonging to the company, for the use of this country, without the consent of the said company.
IX. We have moreover incorporated this company, and favoured them with privileges, and we give them a charter besides this, that they may pass freely with all their ships and goods without paying any toll to the United Provinces; and that they themselves may use their liberty in the same manner as the free inhabitants of the cities of this country enjoy their freedom, notwithstanding any person who is not free may be a member of this company.
X. That all the goods of this company during the eight next ensuing years, be carried out of this country to the parts of the West Indies and Africa, and other places comprehended within the aforesaid limits, and those which they shall bring into this country, shall be from outward and home convoys; provided, that if at the expiration of the aforesaid eight years, the state and situation of these Countries will not admit of this Freedom’s continuing for a longer time, the said goods, and the merchandises coming from the places mentioned in this Charter, and exported again out of these countries, and the outward convoys and licenses, during the whole time of this Charter, shall not be rated higher by us than they have formerly been rated, unless we should be again engaged in a war, in which case, all the aforesaid goods and merchandises will not be rated higher by us than they were in the last list in time of war.
XI. And that this company may be strengthened by a good government, to the greatest profit and satisfaction of all concerned, we have ordained, that the said government shall be vested in five chambers of managers; one at Amsterdam,—this shall have the management of four-ninths parts; one chamber in Zealand, for two-ninth parts; one chamber at the Maeze, for one-ninth part; one chamber in North Holland, for one-ninth-part; and the fifth chamber in Friesland, with the city and country, for one-ninth part; upon the condition entered in the record of our resolutions, and the Act past respecting it. And the Provinces in which there are no chambers shall be accommodated with so many managers, divided among the respective chambers, as their hundred thousand guilders in this company shall entitle them to.
XII. That the chamber of Amsterdam shall consist of twenty managers; the chamber of Zealand of twelve; the chambers of Maeze and of the North Part, each of fourteen, and the chamber of Friesland, with the city and country, also of fourteen managers; if it shall hereafter appear, that this work cannot be carried on without a greater number of persons; in that case, more may be added, with the knowledge of nineteen, and our approbation, but not otherwise.
XIII. And the States of the respective United Provinces are authorized, to lay before their High Mightinesses’ ordinary deputies, or before the magistrates of the cities of these Provinces, any order for registering the members, together with the election of managers, if they find they can do it according to the constitution of their Provinces. Moreover, that no per son m the chamber of Amsterdam shall be chosen a manager who has not of his own in the fields of the company, the sum of five thousand guilders; and the Chamber of Zealand four thousand Builders, and the chamber of Maeze, of the North Part, and of Friesland, with the city and country. the like sum of four thousand guilders.
XIV. That the first managers shall serve for the term of six years, and then one-third part of the number of managers shall be changed by lot; and two years after a like third part, and the two next following years, the last third part; and so on successively the oldest in the service shall be dismissed; and in the place of those who go off, or of any that shall die, or for any other reason be dismissed, three others shall be nominated by the managers, both remaining and going oaf, together with the principal adventures in person, and at their cost, from which the aforesaid Provinces, the deputies, or the magistrates, shall make a new election of a manager, and successively supply the vacant places; and it shall be held before the principal adventurers, who have as great a concern as the respective managers.
XV. That the accounts of the furniture and outfit of the vessels, with their dependencies, shall be made up three months after the departure of the vessels, and one month after, copies shall be sent to us, and to the respective chambers: and the state of the returns, and their sales, shall the chambers (as often as we see good, or they are required thereto by the chambers) send to us and to one another.
XVI. That every six years they shall make a general account of all outfits and returns, together with all the gains and losses of the company; to wit, one of their business, and one of the war, each separate; which accounts shall be made public by an advertisement, to the end that every one who is interested may, upon hearing of it, attend; and if by the expiration of the seventh year, the accounts are not made out in manner aforesaid, the managers shall forfeit their commissions, which shall be appropriated to the use of the poor, and they themselves be held to render their account as before, till such time and under such penalty as shall be fixed by us respecting offenders. And notwithstanding there shall be a dividend made of the profits of the business, so long as we find that term per Cent shall have been gained.
XVII. No one shall, during the continuance of this charter, withdraw his capital, or sum advanced from this company; nor shall any new members be admitted. If at the expiration of four and twenty years it shall be found good to continue this company, or to erect a new one, a final account and estimate shall be made by the nineteen, with our knowledge, of all that belongs to the company, and also of all their expences, and any one, after the aforesaid settlement and estimate, may withdraw his money, or continue it in the new company, in whole or in part, in the same proportion as in this; And the new company shall in such case take the remainder, and pay the members which do not think fit to continue in the company their share, at such times as the nineteen, with our knowledge and approbation, shall think proper.
XVIII. That so often as it shall be necessary to have a general meeting of the aforesaid chambers, it shall be by nineteen persons, of whom eight shall come from the chamber of Amsterdam; from Zealand, four; from the Maeze, two; from North Holland, two; from Friesland, and the city and country, two, provided, that the nineteen persons, or so many more as we shall at any time think fit, shall be deputed by US for the purpose of helping to direct the aforesaid meeting of the company.
XIX. By which general meeting of the aforesaid chambers, all the business of this Company which shall come before them shall be managed and finally settled, provided, that in case of resolving upon a war, our approbation shall be asked.
XX. The aforesaid general meeting being summoned, it shall meet to resolve when they shall fit out, and how many vessels they will send to each place, the company in general observing that no particular chamber shall undertake any thing in opposition to the foregoing resolution, but shall be held to carry the same effectually into execution. And if any chamber shall be found not following the common resolution, or contravening it, we have authorized, and by these presents do authorize, the said meeting, immediately to cause reparation to be made of every defect or contravention, wherein we, being desired, will assist them.
XXI. The said general meeting shall be held the first six years in the city of Amsterdam, and two years thereafter in Zealand. and so on from time to time in the aforesaid two places.
XXII. The managers to whom the affairs of the company shall be committed, who shall go from home to attend the aforesaid meeting or otherwise, shall have for their expences and wages, four guilders a day, besides boat and carriage hire; Provided, that those who go from one city to another, to the chambers as managers and governors, shall receive no wages or travelling charges, at the cost of the company.
XXIII. And if it should happen that in the aforesaid general meeting, any weighty matter should come before them wherein they cannot agree, or in case the vote are equally divided, the same shall be left to our decision; and whatever shall be determined upon shall be carried into execution.
XXIV. And all the inhabitants of these countries, and also of other countries, shall be notified by public advertisements within one month after the date hereof, that they may be admitted into this Company, during five months from the first of July this year, sixteen hundred and twenty one, and that they must pay the money they put into the Stock in three payments; to wit, one third part at the expiration of the aforesaid five months, and the other two-thirds parts within three next succeeding years. In case the aforesaid general meeting shall find it necessary to prolong the time the members shall be notified by an advertisement.
XXV. The ships returning from a voyage shall come to the place they sailed from; and if by stress of weather. the vessels which sailed out from one part shall arrive in another; as those from Amsterdam, or North Holland, in Zealand, or in the Maeze; or from Zealand, in Holland; or those from Friesland, with the city and country, in another part; each chamber shall nevertheless have the direction and management of the vessels and goods it sent out, and shall send and transport the goods to the places from whence the vessels sailed, either in the same or other vessels: Provided, that the managers of that chamber shall be held in person to find the place where the vessels and goods are arrived, and not appoint factors to do this business; but in case they shall not be in a situation for travelling, they shall commit this business to the chamber of the place where the vessels arrived.
XXVI. If any chamber has got any goods or returns from the places included within the Limits of this charter, with which another is not provided, it shall be held to send such goods to the chamber which is unprovided, on its request, according to the situation of the case, and if they have sold them, to send to another chamber for more. And in like manner, if the managers of the respective chambers have need of any persons for fitting out the vessels, or otherwise, from the cities where there are chambers or managers, they shall require and employ the managers, of this company, without making use of a factor.
XXVII. And if any of the Provinces think fit to appoint an agent to collect the money from the inhabitants, and to make a fund in any chamber, and for paying dividends, the chamber shall be obliged to give such agent access, that he may obtain information of the state of the disbursements and receipts, and of the debts; provided, that the money brought in by such agent amount to fifty thousand builders or upwards.
XXVIII. The managers shall have for commissions one per cent. On the outfits and returns, besides the Prince’s; and an half per cent. On gold and silver: which commission shall be divided; to the Chamber of Amsterdam, four-ninth parts; the Chamber of Zealand, two-ninth parts; the Maeze, one-ninth part; North Holland, one-ninth part, and Friesland, with the city and country, a like ninth part.
XXIX. Provided that they shall not receive commissions on the ordnance and the ships more than once. They shall, moreover, have no commissions on the ships, ordnance, and other things with which we shall strengthen the Company; nor on the money which they shall collect for the Company, nor on the profits they receive from the goods, nor shall they charge the Company with any expenses of traveling or provisions for those to whom they shall commits the providing a cargo, and purchasing goods necessary for it.
XXX. The book-keepers and cashiers shall have a salary paid them by the managers out of their commissions.
XXXI. The manager shall not deliver or sell to the Company, in whole or in part, any of their own ships, merchandise or goods; nor buy or cause to be bought, of the said Company, directly or indirectly, any goods or merchandize nor have any portion or part therein on forfeiture of one year’s commissions for the use of the poor, and the loss of Office.
XXXII. The managers shall give notice by advertisement, as often as they have a fresh importation of goods and merchandize, to the end that every one may have seasonable knowledge of it, before they proceed to a final sale.
XXXIII. And if it happens that in either Chamber, an of the managers shall get into such a situation, that he cannot make good what was entrusted to him during his administration, and in consequence thereof any loss shall happen, such Chamber shall be liable for the damage, and shall also be specially bound for their administration, which shall also be the case with all the members, who, on account of goods purchased, or otherwise, shall become debtors to the Company, and so shall be reckoned all cases relating to their stock and what may be due to the Company.
XXXIV. The managers of the respective chambers shall be responsible for their respective cashiers and book-keepers.
XXXV. That all the goods of this Company which shall be sold by weight shall be sold by one weight, to wit, that of Amsterdam; and that all such goods shall be put on board ship, or in store without paving any excise, import or weigh-money; provided that they being sold; shall not be delivered in any other way than by weight; and provided that the impost and weigh-money shall be paid as often as they are alienated, in the same manner as other goods subject to weigh-money.
XXXVI. That the persons or goods of the managers shall not be arrested, attached or encumbered, in order to obtain from them an account of the administration of the Company, nor for the payment of the wages of those who are in the service of the Company, but those who shall pretend to take the same upon them, shall be bound to refer the matter to their ordinary judges.
XXXVII. So when any ship shall return from a voyage, the generals or commanders of the fleets, shall be obliged to come and report to us the success of the voyage of such ship or ships, within ten days after their arrival, and shall deliver and leave with us a report in writing, if the case requires it.
XXXVIII. And if it happens (which we by no means expect) that any person will, in any manner, hurt or hinder the navigation, business, trade, or traffic of this Company, contrary to the common right, and the contents of the aforesaid treaties, leagues, and covenants, they shall defend it against them, and regulate it by the instructions we have given concerning it.
XXXIX. We have moreover promised and do promise, that we will defend this Company against every person in free navigation and traffic, and assist them with a million of Builders, to be paid in five years, whereof the first two hundred thousand guilders shall be paid them when the first payment shall be made by the members; Provided that we, with half the aforesaid million of Builders, shall receive and bear profit and risque in the same manner as the other members of this Company shall.
XL. And if by a violent and continued interruption of the aforesaid navigation and traffic, the business within the limits of their Company shall be brought to an open war, we will, if the situation of this country will in any wise admit of it, give them for their assistance sixteen ships of war, the least one hundred and fifty lasts burthen; with four good well sailing yachts, the least, forty lasts burthen, which shall be properly mounted and provided in all respects, both with brass and other cannon, and a proper quantity of ammunition, together with double suits of running and standing rigging, sails, cables, anchors, and other things thereto belonging, such as are proper to be provided and used in all great expeditions; upon condition, that they shall be manned, victualled, and supported at the expense of the Company, and that the Company shall be obliged to add thereto sixteen like ships of war, and four yachts, mounted and provided as above, to be used in like manner for the defence of trade and all exploits of war: Provided that all the ships of war and merchant-men (that shall be with those provided and manned as aforesaid) shall be under an admiral appointed by us according to the previous advise of the aforesaid General Company, and shall obey our commands, together with the resolutions of the Company, if it shall be necessary, in the same manner as in time of war; so notwithstanding that the merchantmen shall not unnecessarily hazard their lading.
XLI. And if it should happen that this country should be remarkably eased of its burthens, and that this Company should be laid under the grievous burthen of a war, we have further promised, and do promise, to encrease the aforesaid subsidy in such a manner as the situation of these countries will admit, and the affairs of the Company shall require.
XLII. We have moreover ordained, that in case of a war, all the prizes which shall be taken from enemies and pirates within the aforesaid limits, by the Company or their assistants; also the goods which shall be seized by virtue of our proclamation, after deducting all expenses and the damage which the Company shall suffer in taking each prize, together with the just part of his excellency the admiral, agreeable to our resolution of the first of April sixteen hundred and two; and the tenth part for the officers, sailors and soldiers, who have taken the prize, shall await the disposal of the managers of the aforesaid Company; Provided that the account of them shall be kept separate and apart from the account of trade and commerce; and that the nett proceeds of the said prizes shall be employed in fitting our ships, paying the troops, fortifications, garrisons, and like matters of war and defence by sea and land; but there shall be no distribution unless the said nett proceeds shall amount to so much that a notable share may be distributed without weakening the said defence, and after paying the expenses of the war, which shall be done separate and apart from the distributions on account of Trade: And the distribution shall be made one-tenth part for the use of the United Netherlands, and the remainder for the members of this Company, in exact proportion to the capital they have advanced.
XLIII. Provided nevertheless, that all the prizes and goods, taken by virtue of our proclamation, shall be brought in, and the right laid before the judicature of the counsellors of the admirality for the part to which they are brought, that they may take cognizance of them, and determine the legality or illegality of the said prizes: the process of the administration of the goods brought in by the Company remaining nevertheless pending, and that under a proper inventory; and saving a revision of what may be done by the sentence of the admirality, agreeable to the instruction given the admiralty in that behalf. Provided that the vendue-masters and other officers of the Admiralty shall not have or pretend to any right to the prizes taken by this Company, and shall not be employed respecting them.
XLIV. The managers of this Company shall solemnly promise and swear, that they will act well and faithfully in their administration, and make good and just accounts of their trade: That they in all things will consult the greatest profit of the Company, and as much as possible prevent their meeting with losses: That they will not give the principal members any greater ad vantage in the payments or distribution of money than the least: That they, in getting in and receiving outstanding debts, will not favour one more than another: that they for their own account will take, and, during the continuance of their administration, will continue to take such sum of money as by their charter is allotted to them; and moreover, that they will, as far as concerns them, to the utmost of their power, observe and keep, and cause to be observed and kept, all and every the particulars and articles herein contained.
XLV. All which privileges, freedoms and exemptions, together with the assistance herein before mentioned, in all their particulars and articles, we have, with full knowledge of the business, given, granted, promised and agreed to the aforesaid Company; giving, granting, agreeing and promising moreover that they shall enjoy them peaceably and freely; ordaining that the same shall be observed and kept by all the magistrates, officers and subjects of the United Netherlands, without doing anything contrary thereto directly or indirectly, either within or out of these Netherlands, on penalty of being punished both in life and goods as obstacles to the common welfare of this country, and transgressors of our ordinance: promising moreover that we will maintain and establish the Company in the things contained in this charter, in all treaties of peace, alliances and agreements with the neighboring princes, kingdoms and countries, without doing anything, or suffering any thing to be done which will weaken their establishment. Charging and expressly commanding all governors, justices, officers, magistrates and inhabitants of the aforesaid United Netherlands, that they permit the aforesaid Company and managers peaceably and freely to enjoy the full effect of this charter, agreement, and privilege, without any contradiction or impeachment to the-contrary. And that none may pretend ignorance hereof, we command that the contents of this charter shall be notified by publication, or an advertisement, where, and in such manner, as is proper; for we have found it necessary for the service of this country.
Given under our Great Seal, and the Signature and Seal of our Recorder, at the Hague, on the third day of the month of June, in the year sixteen hundred and twenty one.
Was countersigned
J. MAGNUS, Secr.
Underneath was written,
The ordinance of the High and Mighty Lords the States General.
It was subscribed,
C. AERSSEN.
And has a Seal pendant, of red Wax, and a string of white silk.
Source: The Federal and State Constitutions Colonial Charters, and Other Organic Laws of the States, Territories, and Colonies Now or Heretofore Forming the United States of America. Compiled and edited under the Act of Congress of June 30, 1906, by Francis Newton Thorpe (Washington, DC: U.S. Government Printing Office, 1909).
During the early fifteenth century the British and the Dutch competed with each other for trade throughout Europe and the far-flung regions of the world. In this tract, written by Sir Thomas Culpepper, the author argues that the Dutch have an unfair advantage in that the highest interest rate allowed by law was six percent whereas the English financial institutions could charge as high as ten percent. The higher rate of interest inhibited trade and created an opportunity for the Dutch to out-trade the merchants of England.
To LEAVE the proofs of the unlawfulness of usury to divines, wherein a number, as well Protestants as Papists, have learnedly written; here is only set down some arguments to show how great the hurt is it doth to this kingdom which hath no gold nor silver mines, but plenty of commodities, and many and great advantages of trade to which the high rate of usury is a great prejudice and decay.
For proof, how much the high rate of usury decays trade: we see that generally all merchants, when they have gotten any great wealth, leave trading and fall to usury, the gain thereof being so easy, certain, and great; whereas in other countries, where usury is at a lower rate, and thereby lands dearer to purchase, they continue merchants from generation to generation to enrich themselves and the State.
Neither are they rich tradesmen only that give over trading, but a number of beginners are undone or discouraged by the high rate of usury, their industry serving but to enrich others, and beggar themselves.
We also see many trades themselves much decayed, because they will not afford so great a gain as ten in the hundred; whereas if the rate of usury were not higher here than in other countries, they had still subsisted and flourished, and perhaps with as much advantage to the public, as those that do bring more to the private adventurers.
Yet are not those the greatest hindrances the high rate of money brings to trade; our greatest disadvantage is that other nations, especially our industrious neigh-bours the Dutch, are therein wiser than we; for with them, and so in most countries with whom we hold commerce, there is not any use for money tolerated above the rate of six in the hundred. Whereby it must of necessity come to pass, though they have no other advantages of industry and frugality, that they must out-trade us; for if they make return of ten per centum, they almost double the use allowed, and so make a very gainful trade. But with us, where ten in the hundred is so current, it is otherwise; for if we make not above ten, we are losers, and consequently the same trade being with them and us equally good for the public, is to the private adventurers loss-full with us, with them very gainful. And where the good of the public and private men’s go not together, the public is seldom greatly advanced.
And as they out-trade, so they may afford to undersell us in the fruits of the earth, which are equally natural to our and their lands, as to our great shame we see our neighbours the Dutch do, even in our own country; for in most commodities the earth brings forth, the stock employed in planting and managing of them makes a great (in many the greatest) part of their price; and consequently, their stock with them being rated at six in the hundred, they may with great gain undersell us, our stock with us being rated at ten.
And as they may out-trade us and undersell us, so are all contributions to the war, works of piety, and glory of the state, cheaper to them than to us; for the use for money going with us near double the rate it doth in other countries, the giving the same sum must needs be double the charge to us, it is to them. Amongst other things which the King with so much wisdom delivered to the House of Parliament, he committed to their consideration the balancing of trade and commerce, wherein there is nothing of greater consequence than the rate of usury, which holds no proportion with us and other nations, to our disadvantage, as by experience we see and feel.
Neither is the high rate of usury less hurtful to commerce within the land, the gain by usury being so easy, certain, and extreme great, as they are not only merchants and tradesmen, but landed men, farmers, and men of profession that grow lazy in their professions, and become usurers; for the rate of usury is the measure by which all men trade, purchase, build, plant, or any other ways bargain.
It hath been the wisdom and care of former Parliaments to provide for the preservation of wood and timber; for which there is nothing more available than the call-
ing down of the high rate of usury; for as the rate of money now goeth, no man can let his timber stand, nor his wood grow to such year’s growth as is best for the commonwealth, but it will be very loss-full to him, the stock of the woods, after they are worth forty or fifty shillings the acre, growing faster at ten in the hundred than the woods themselves do. And for shipping, which is the strength and safety of this land, I have heard divers merchants of good credit say, that if they would build a ship, and let it to any other to employ, they cannot make of their money that way, counting all charges, tear and wear, above ten or twelve in the hundred, which can be no gainful trade, money itself going at ten in the hundred. But in the Low Countries, where money goeth at six, the building of ships, and hiring them to others is a gainful trade; and so the stock of rich men and the industry of beginners are well joined for the public.
And yet that which is above all the rest the greatest sin against the land is that it makes the land itself of small value, nearer the rate of new-found lands, than of any other country, where laws, government, and peace, have so long flourished. For the high rate of usury makes land sell so cheap; and the cheap sale of land is the cause men seek no more by industry and cost to improve them; and this is plain both by example and demonstration, for we see in other countries, where the use of money is of a low rate, lands are generally sold for 3, 4, in some for 5 years’ purchase. And we know by the rule of bargaining that if the rate of use were not greater here than in other countries, lands were then as good a pennyworth, at twenty years’ purchase, as they are now at sixteen. For lands being the best assurance and securest inheritance will still bear a rate above money. Now if lands were at thirty years’ purchase, or near it, there were no so cheap purchase as the amendment of our own lands, for it would be much cheaper to make one acre of land, now worth five shillings by the year, to be worth ten shillings, or being worth ten to be worth twenty shillings, and so in proportion, than to purchase another acre worth five or ten shillings. And in every acre thus purchased to the owner, by the amendment of his own, there were another purchased to the commonwealth. … Then would all the wet lands in this kingdom soon be drained, the barren lands mended by marl, sleech, lime, chalk, sea-sand, and other means, which for their profit, men’s industry would find out. We see with how great industry and charge our neighbours, the Dutch, do drain and maintain their lands against the sea which floweth higher above them, than it doth above the lowest parts of our drowned lands. I will admit a great deal to their industry, but I should very unwillingly grant that they are so much more ingenious and in dustrious than we, as that all the odds were therein. Certainly, the main cause of it is that with us money is dear, and land cheap, with them lands dear, and money cheap; and consequently the improvement of their lands at so great a charge with them is gainful to the owners, which with us would be loss-full; for usury going at ten in the hundred, if a man borrow five pounds, and bestow it on an acre of ground, the amendment stands him in ten shillings the year; and being amended, the land is not worth above fifteen years’ purchase. But if the use of money went at no more with us than in other places, then five pound bestowed upon an acre of ground would stand a man but in five or six shillings a year, and the acre of land so amended would be worth, as hath been shewed, six and twenty or thirty years’ purchase. Whereby it appeareth that as the rate of use now goeth, no man (but where the land lieth extraordinarily happily for it) can amend his land, but to his own loss; whereas if money were let as it is in other countries, he might bestow more than double so much as now he may, and yet be a great gainer thereby; and consequently, as was before remembered, should to his own benefit purchase land to the commonwealth.
Neither would such purchase of land to the commonwealth be the benefit to the landed men only; the benefit would be as much to the poor labourers of the land. For now when corn and other fruits of the land which grow by labour are cheap, the plough and mattock are cast into the hedge, there is little work for poor men, and that at a low rate, whereas if the mendment of their own lands were the cheapest purchase to the owner, if there were many more people than there are, they should readily set awork, at better rates than they now are, and none that had their health and limbs could be poor, but by their extremest laziness.
And as the high rate of usury doth imbase land, so it is as great a hindrance to discoveries, plantations, and all good undertakings, making it near double as chargeable to the adventurers (money being at ten in the hundred), as it is in other countries, where the use of money is so much lower. …
The objections likely to be made against the calling down of money are first, that general objection of ignorance against all changes, be they never so necessary and apparently good, that it hath been so a long time, and been well enough; what will become of the alteration, we cannot tell, why then should we make any change?
Secondly, that as in bodies natural, so in politic, great and sudden changes are most commonly dangerous.
Thirdly, that money will be suddenly called in, and so all borrowers greatly prejudiced.
Fourthly, that money will be harder to come by, and thereby commerce greatly hindered.
Lastly, that much money of foreigners, by reason of the high rate of usury, is brought over here to be managed at interest, which would be carried away again, if the rate of usury should be called down.
Source: Sir Thomas Culpepper, A Tract against Usurie (presented to the High Court of Parliament, London, 1621).
After having served as the British ambassador to the Mughal empire, during which time he negotiated protection for English merchants in Surat, Sir Thomas Roe became an expert on commerce and trade. In the following excerpt from a speech before Parliament, Roe discusses the impact of the drainage of specie on the British economy as well as remedies to prevent it. He also explores the ramifications of expanding the cloth trade from wool to cotton, a commodity available to the British from India.
Sir Thomas Roe’s Speech in Parliament, wherein he sheweth the cause of the decay of coin and trade in this land, especially of merchants’ trade. And also propoundeth a way to the House, how they may be increased.
Printed in the year, 1641.
IT is a general opinion, that the trade of England was never greater, and it may be true, that if it be so, yet it will not absolutely conclude, that the kingdom doth increase in riches, for the trade may be very abundant, and yet, by consumption and importance [= importing] of more than is expected [= exported], the stock may waste.
The balance would be a true solution of the question, if it could be rightly had; but, by reason it must be made up by a medium of the Books of Rates, it will be very uncertain.
Therefore we must seek another rule that is more sensible, upon which we may all judge, and that may be by the plenty or scarcity of money; for it is a true rule, if money increase, the kingdom doth gain by trade; if it be scarce, it loseth.
Let us therefore consider: first, whether our gold and silver be not decreased, and then by what means it is drained; and lastly, how it may be prevented, and what remedies are applicable to effect it.
It is out of doubt our gold is gone to travel without licence, that is visible beyond seas, and every receiver of sums of money must find it privately; and I fear the same of silver, for observing the species of late coining, many half-crowns were stamped which are no more to be seen, and by this measure, I conclude the kingdom grows poor.
The causes of this decay of money may be many: it may be stolen out for profit, going much higher beyond seas, especially in France and Holland.
Much coin hath been drawn away, without doubt, by the French, who have brought in wares of little bulk, perhaps without custom, but of dear price, and, having turned it into gold, have returned without investing any part thereof; and such petty merchants cannot be reached by the Statute of Employments.
Another cause of scarcity of coin may be the over-strict rule of the uncurrentness of any good coin, and that it must be sold here as bullion; in that case, what stranger will bring in money? Whereas, if every good species be current, according to this assay and weight in proportion to our coin, or rather a little higher, it will draw, namely, money by degrees into England, as lower grounds do water from higher, though they see not the channels; and we see France, Holland, and Germany admit all good coins, though foreign, far and above their intrinsic value.
But I will end this search by proposing some general remedies; for I do now but make essays, and give occasion to more subtle and particular disquisitions:
1. To the first leak of stealing away coin, I would make it felony by an act; for, if a man may justly suffer death for robbing of a private man, I see no injustice nor cruelty to inflict the same punishment upon him that robs a kingdom.
2. That the neighbour princes and states do cry up our money, and so entice it from us. This, in my judgement, ought to be provided for by our treaties, which was the old way, especially of commerce, by agreeing and publishing of placarts, according to a true par; for that prince, that will make a treaty of commerce, doth it for the use of the commodity; which, certainly, I would deny any prince, that would not consent to keep monies even, by their true values; at least, that would set a
higher price upon our money than the King hath done; and if our coin did either keep beyond the seas the English value, or were bullion and uncurrent, the stranger should have as little of our money as we have of theirs.
I shall not doubt to offend any but the Mint, which may be recompensed to his Majesty, in his Customs, if money be plentiful; for all goods will follow money. If I did propose the currentness of all goods, and great species of foreign coins, for their true intrinsic value, according to the par with ours; and if I say a little higher, according to occasions, keeping our own coin pure and constant to be cried down as much under according to occasions, I think it will be a policy both reasonable and profitable, by experience tried in other states.
I said at first, it was a general opinion, that trade never flourished more than now, and it may be so; but we must consider this be not accidental, and changeable and depending more upon the iniquity or misery of the times, than upon our own foundation and industry; and, if that be so, then it is no sure ground for a state to rely upon; for if the causes change, the effects will follow.
Now it is true that our great trade depends upon the troubles of our neighbours, and we enjoy almost the trade of Christendom; but, if a peace happen betwixt France, Spain, and the United Provinces, all these will share what we now possess alone; and therefore we must provide for that day, for nothing stands secure but upon its own foundation.
To make, then, our own trade secure, we must consider our own staple commodities, whereof wool is the chiefest, and seek the way to both, to keep up the price at home, and the estimation of all commodities made of that, and to be vented abroad.
Some other helps we have, as tin, lead, and such like; but I dare confidently affirm that nothing exported, of our own growth, hath balanced our riotous consumption at home, but those foreign commodities, which I call naturalized, that is, that surplus of our East India trade, which being brought home in greater quantities than are spent within the kingdom, are exported again, and become in value and use as natural commodities; and therefore, by the way, I hold it absolutely necessary to maintain that trade by a regulation with the Dutch, of which more reason shall be given when that particular shall be taken into consideration.
We have yet another great help which is our own, and wants only our industry, to gather the harvest; which is our fishing and erecting of busses, both for the enriching of our kingdom, and the breeding of mariners; and this by private industry, though to private loss, is beaten out already, and shall be offered to the Commonwealth, if they please to accept of it; and to give you one only encouragement, I do avow that before the Dutch were lately interrupted by the Dunkirkers, by their industry and our fish, they made as great returns between Danzig and Naples, as the value of all our cloth, which is one million yearly; and this, in a due place, I desire should have its due weight and consideration.
We have one help more, if we knew how to use it, that is, by the new drained lands in the fens, most fit for flax and hemp, to make all sorts of linen for the body, for the house, and sails for ships. That is a Dutch and French trade: but, in Holland, one acre of ground is rented at three pounds, which if the Hollanders may have in the fens for ten or twelve shillings, it will be easy to draw the manufacture into England, which will set infinite people at work, and we may be able to serve other nations with that, which we buy dear from them; and then the state and kingdom will be happy and rich, when the King’s Customs shall depend upon commodities exported, and those able to return all things which we want, and then our money must stay within our kingdom, and all the trade return in money; to encourage you to this, I give you one example:
That if the several sorts of calicoes made of cotton wools, in the Mogul’s and Dan’s dominions, doth clothe from head to foot all Asia, a part of Europe, Egypt, much of Africa, and the Eastern Islands, as far as Sumatra; which makes that prince, without mines, the richest prince in the world; and, by his Majesty’s grace and privileges granted to the Dutch, I am confident we may make and undersell, in all linen cloth, all the nations in Europe.
But I have now wandered far from my theme, which was the decay of trade, and of the woollen commodity.
I must first, therefore, present to your consideration the causes thereof, in my observations, whereof some are internal, and some external.
The internal have proceeded from our own false making, and stretching, and such like practices, whereby, indeed, our cloth is discredited; I speak by experience, from Danzig and Holland, northward to Constantinople, as I will instance in due time.
This false lucre of our own, and the interruption in the dyeing and dressing projected and not overcome, gave the first wound, though, could it have been corn passed, it had doubled the value of our commodity.
This hath caused the Dutch, Silesians, and Venetians to attempt the making of cloth, and now, by experience, as I am informed, the half is not vented, that was in the latter age.
Another internal cause hath risen from such impositions as have made our cloth too dear abroad, and, consequently, taught others to provide for themselves.
Another internal cause hath sprung from pressures upon tender consciences, in that many of our clothiers and others have forsaken the kingdom, and carried their arts with them, to the inexpressible detriment of the Commonwealth.
The external causes have been the want of perfection, and countenance to our merchants, established abroad in factories by the state, and by the treaties; whereby the capitulations have not been kept, nor assured to them, neither in Prussia, nor in the Sound, nor Hamburg, nor Holland, nor in the East; and this I dare say, that Laban never changed Jacob’s wages so often, as the Hollanders have forced our merchants to change their residences, and the very course of this trade, by laws and tricks, for their own advantage, of which the Merchant Adventurers will more fully inform you.
Another external cause is lamentable, a report of the increase of pirates, and the insecurity of the Mediterranean seas; whereby Bristol and the Western ports, that cannot have so great shipping as London, are beaten out of trade and fishing; and, if once those thieves shall find the way to [the] Bank[s] and Newfoundland, they will undo the west parts of England.
I will trouble you with a consideration, very considerable in our government, whether, indeed, London doth not monopolize all trade. In my opinion, it is no good state of a body to have a fat head, thin guts, and lean members.
But, to bring something before you of remedy, I say thus, for my first ground, that, if our cloth be not vented, as in former years, let us embrace some other way, to spend and vent our wools. Cloth is a heavy and hot wearing, and serves but one cold corner of the world. But if we embrace the New Draperies, and encourage the Walloons and others, by privileges and naturalizations, we shall employ all the wool we have, set more people to work, than by cloth, and a pound of wool, in those stuffs, true made, will outsell two pounds in cloth; and thus we may supply France, Italy, Spain, Barbary, and some parts of Asia, by such light and fine stuffs as will fit those warmer regions, and yet have sufficient for the cold climates, to be spent and adventured in true made cloth, by the reputation both of our nation and commodity.
But, in this course, I must observe that these strangers, so fit to be nourished, and being Protestants, may have privileges to use their own rights in religion, so as they be not scandalous, as the Dutch and French had granted to them by Queen Elizabeth; and certainly, the settling of religion secure in England, the fear whereof made many weak minds to waver and abandon this country, is, and will be, a great means to resettle both the great and lesser manufactures of woollen commodities.
Another consideration for a ground of trade ought to be the nature of it, with whom, and for what we trade, and which trade is most principally to be nourished; which, out of doubt, are the northern trades, which are the root of all others, because the materials, brought from those parts, as from Sweden, Muscovy, Norway, Prussia, and Livonia, are fundamental, and of absolute necessity; for, from these trades, get we the materials of shipping, as pitch, tar, cordage, masts, and such like, which enables us to make all the southern trades themselves of less use, being only wine, fruit, oranges, and curiosities for sauces, or effeminacy; but, by these, we sail to the East Indies, and may erect a Company of the West Indies, for the golden fleece which shall be prepared for you, whensoever you are ready for so great a consultation.
The right way to nourish these northern trades is, by his Majesty’s favour, to press the King of Denmark to justice, not to insist on his intolerable taxes, newly imposed upon trade, in the passage of the Sound; in example whereof, the Elector of Brandenburg, joined with the King of Poland, hath likewise more than trebled the ancient and capitulated duties; which, if that they shall continue, I pronounce all the commerce of the Baltic Sea so overburthened, that the Eastland Company cannot subsist, nor, without them, and the Muscovy Company, the navigation; but that the materials for shipping will be doubled, which will eat out all trades. I have given you but essays, and struck little sparks of fire before you; my intention is but to provoke the wit and ability of others; I have drawn you a map, wherein you cannot see things clearly and distinctly; only I introduce matter before you, and now I have done, when I have shewed you the way how to enlarge and bring every particular thing into debate.
Source: Harleian Miscellany, IV, pp. 412–416.
John Marius wrote the following tract on the workings of an exchange. Written in 1655, before the creation of the London Exchange, he describes the use of bills of exchange, how they work, how many people are needed, and the delivery of the bills of exchange. This information was foreign to most Englishmen at the time but helped stimulate the acceptance of such financial instruments.
Exchange excellent and necessary
EXCHANGE is by some held to be the most mysterious part of the art of merchandising and traffic, being grounded upon custom and experience. And the necessity and commodiousness of exchanges is seen in that it hath found a general allowance in all countries time out of mind, and yet is maintained with the general consent of all, for it prevents the danger and adventure of carriage of monies from one city or country to another. And this is done only by two or three lines written on a small piece of paper.
Inland and Outland Bills all alike
And by this it appeareth, that a bill of exchange which shall be made for monies taken up at Edinburgh, York, Bristol, Exon, Plymouth, Dover, or any other part of England or Scotland, and payable at London, is in all things as effectual and binding as any bill of exchange made beyond the seas, and payable here in England, which we use to call an outland bill, and the other an inland bill, both the inland and the outland being made for monies taken up by exchange. And exchange of monies being a thing which may be done as well from one town to another, as from one country, kingdom, or nation to another, it must needs be that the bills of exchange which shall be made as well at one part as at another (I mean inland and outland) ought to be esteemed of equal worth, and the custom of merchants on both equally observed.
Four Persons to make an Exchange, and how called
Ordinarily there are four persons requisite to be employed in the taking up or remitting any parcel of money by exchange, (besides the broker which doth procure the parcel) as namely, two at the place where the money is taken up, and two at the place where the money is payable. 1. The party which doth deliver the money by exchange, whom we use to call the deliverer, or the giver, (and the French le banquier) because there are which do keep a stock of money only to ne gotiate by exchange, (as our usurers do money to deliver at interest) although these bankers will as well take up as deliver monies by exchange, according as they see it most advantageous unto them, by the rise or fall of the price of monies by exchange. 2. The taker or party which doth receive or take up money by exchange, and this party we usually call the drawer, because he may be said to be the chief occasion of the draft of those monies from one place to another by virtue of his bill of exchange. 3. The party which is to repay the money, or he upon whom the bill is drawn, or to whom the bill of exchange is directed. And fourthly, the party to whom the money is made payable, or he to whom the bill is sent to get accepted, and to receive the money when due according to the bill. So that by setting down these four parties and what use there is of them in exchange of monies, it is apparent that there must be a correspondency and familiar acquaintance held between the party which doth deliver monies by exchange, and he to whom the same is made payable, and the party which doth take up monies by exchange, and he on whom the bill is drawn.
Three Persons to make an Exchange
But sometimes there are but three persons needful in the doing a parcel of money by exchange, as first, the taker; secondly, the deliverer; and thirdly, the party on whom the bill is drawn. First, the taker, he makes and subscribes a bill of exchange for so much money by him received of the deliverer; secondly, the deliverer, he orders the bill to be made payable to himself or assigns for the value of himself; and thirdly, the party that is to pay the bill, for the taker he directs the bill to his friend or servant to pay the same. Now this way of exchange is very useful, according as occasion may be: for suppose I were to go from London to Plymouth, there to employ some monies in the buying of some commodity, I deliver my monies here in London to somebody who giveth me his bill of exchange on his friend, factor, or servant at Plymouth payable to myself, so I carry the bill along with me, and receive my money myself by virtue thereof at Plymouth.
Another way wherein only three persons are needful in the negotiation of monies by exchange; namely, 1. the drawer; 2. the party on whom it is drawn; 3. the party to whom it is payable. 1. The drawer, having monies in his hands belonging to the party to whom he orders the bill to be paid, doth make a bill of exchange himself, confessing the value received in his own hands, 2. charging it on his friend or factor, 3. payable to the party to whom he was indebted. There is yet one way more, wherein monies may be remitted by exchange only with the help of three persons. 1. the
taker; 2. the deliverer; 3. the party to whom payable; as thus: if I were at Dartmouth, or Exon, and intended to come to London, I would take up monies by exchange at Dartmouth or Exon, and subscribe bills of exchange for the same, confessing the value received of the deliverer, directed or drawn on myself, payable to whom the deliverer should appoint in London.
Two persons to make an exchange
Likewise a parcel of money may be done by exchange between two persons. First, the drawer, and secondly, the party on whom it is drawn. The drawer he makes a bill of exchange payable to himself, or order for the value in himself, and subscribes the bill, and directs it to the party that oweth him money, and is to pay it by exchange, by which bill (when the party on whom it is drawn hath accepted it) he becometh debtor to the drawer, and he, before the bill falls due, doth negotiate the parcel with another man, and so draws in the money at the place where he liveth, and makes only an assignment on the bill, payable to him of whom he hath received the value. The usefulness of framing bills of exchange after these several forms before mentioned will be found out according as each man’s occasion shall present in his trade and commerce by exchange, which is so necessary, as that there is scarce a merchant but at sometime or other, one way or other, doth either receive or pay monies by bill of exchange.
Upon what the Exchange is valued
Now most countries using several kinds of monies, different in value one from another, the exchange is valued or rated upon some one certain, most considerable species or sort of money for each country or town, as followeth:
The exchange of monies from London to Antwerp, Amsterdam, Middelburg, Lille, and Rotterdam, is usually accounted and valued on the pound sterling of 205. English money, that is to say, to pay after the rate of so many shillings, and so many pence Flemish money for every pound sterling. The exchange from London to Hamburg is on the pound sterling to pay so many shillings, and so many pence Hamburg money per pound sterling, which differeth something from the Flemish money. The exchange from London for Paris and Rouen is valued on the French Crown, that is, to pay so many pence, and so many parts of a penny sterling for every French Crown. The exchange from London to Venice is made on the ducat, so many pence and parts of a penny sterling for every ducat. And the exchange from London to Leghorn is made on the doller or piece of eight, to pay so many pence and parts of a penny ster ling for every doller. And these are the most usual places, for which there is a price current of exchange at London at present. …
Usance for Venice, Hamburg, etc.
Note also, that usance from Venice to London is three months from the date of the bill of exchange, and from Hamburg to London, and so from London to Hamburg bills of exchange are usually made payable at two months after the date of the bills, and accordingly the price current of exchange from London to Hamburg is valued and set down at two months from the date; the price current from London to Venice and Leghorn at three months, and for Antwerp, Amsterdam, Middelburg, Lille, Rotterdam, Paris, and Rouen at one month, or single usance; and so we call one month usance, two months double usance, three months treble usance.
No three days for acceptance
When any bill of exchange is sent unto you from beyond the seas, or from any inland town, to cause to be accepted, I would advise you presently to present the bill, so soon as possibly you can, to the party to whom it is directed, and request him to accept the same. If he refuse to accept it, you may presently cause a protest to be made for non-acceptance, and send it away with the next conveyance; for (according to the custom of merchants in London) there is not any three days respite to be allowed for acceptance before you can protest, but so soon as the bill hath been presented and acceptance refused, presently you may protest the very same day. …
No such man to be found
If your bill of exchange be directed (suppose) to Nathaniel Q, merchant in London, and that you shall have enquired on the Royal Exchange, and other parts of the city for such a merchant, and shall not be able to find him out, or anybody that knoweth him, or that indeed there be not any such man of that name in London, then you must carry your bill to a notary public, and he must protest thereupon in due form.
Nobody at home
If when a bill of exchange is sent you to get accepted, and there be nobody at home at the house or place of abode of the party on whom the bill is drawn. Or if when your bill is due you cannot meet with the party at home, nor anybody else on his behalf to pay the money, you must cause protest to be made, either for
non-acceptance, or for non-payment, at his dwelling house, or lodging, in his absence, which is as effectual, according to the known law of merchants, and the rules of equity, (being made in seasonable time) as if the same had been made speaking to him in person, for you cannot be bound (it being beyond your power) to make the party on whom the bill is drawn to abide at home, but in reason he is bound to attend his own business at seasonable hours, and it concerns him to keep a good correspondency with his own friends, especially in matters of bills of exchange, whereof he cannot be ignorant.
Source: John Marius, Advice Concerning Bills of Exchange, 2nd ed. (London, 1655), pp. I–II, 16–17, 60–61, 136–138.
During the first half of the seventeenth century, the British and the Dutch competed to establish control over international trade, especially from the Far East, the Spice Islands, and India. Monopolies had been granted to both the British and Dutch East India Companies by their respective governments. During the rule of Oliver Cromwell, a period during which a monarch did not rule England, Parliament passed the Navigation Act of 1651, an act which was later recon-firmed under the reign of Charles II in 1661 after the restoration of the monarchy. This navigation act required that all trade be carried in English ships with at least three-fourths of the crew being English. Certain raw materials such as sugar, tobacco, cotton, and indigo from British colonies in the Americas, Africa, and Asia had to be shipped directly to England. This act promoted the development of English shipping and trade and eventually helped establish British domination of the seas.
In 1663, Parliament passed another navigation act that expanded on the previous act and included a provision that required that all goods shipped to the American colonies be shipped through English ports. Certain manufacturing industries, such as iron, felt hats, and wool, were reserved for the inhabitants of England, while others, such as tobacco cultivation for the American colonies or sugar production for the British Caribbean, were reserved for the colonies. This system of preferential treatment may have led to resentment in the North American colonies after the passage of the Molasses Act in 1733, an act that resulted in North American colonists being forced to purchase the more expensive British sugar instead of cheaper French or Dutch molasses. American smuggling increased and the British seized many American ships. Anger among the colonists began to increase just as Parliament began passing a series of acts designed to levy a direct tax for revenue on the colonies. Resistance to these acts led to the American Revolution. The Navigation Acts were formally repealed in 1849, when England abandoned mercantilism and shifted to free trade.
For the increase of shipping and encouragement of the navigation of this nation wherein, under the good providence and protection of God, the wealth, safety, and strength of this kingdom is so much concerned; (2) be it enacted by the king’s most excellent Majesty, and by the Lords and Commons in this present Parliament assembled, and by the authority thereof, that from and after the first day of December, one thousand six hundred and sixty, and from thence forward, no goods or commodities whatsoever shall be imported into or exported out of any lands, islands, plantations, or territories to his Majesty belonging or in his possession, or which may hereafter belong unto or be in the possession of his Majesty, his heirs, and successors, in Asia, Africa, or America, in any other ship or ships, vessel or vessels whatsoever, but in such ships or vessels as do truly and without fraud belong only to the people of England or Ireland, dominion of Wales or town of Berwick upon Tweed, or are of the built of and belonging to any the said lands, islands, plantations, or territories, as the proprietors and right owners thereof, and whereof the master and three fourths of the mariners at least are English; (3) under the penalty of the forfeiture and loss of all the goods and commodities which shall be imported into or exported out of any the aforesaid places in any other ship or vessel, as also of the ship or vessel, with all its guns, furniture, tackle, ammunition, and apparel; one third part thereof to his Majesty, his heirs and successors; one third part to the governor of such land, plantation, island, or territory where such default shall be committed, in case the said ship or goods be there seized, or otherwise that third part also to his Majesty, his heirs and successors; and the other third part to him or them who shall seize, inform, or sue for the same in any court of record, by bill, information, plaint, or other action, wherein no essoin, protection, or wager of law shall be allowed; (4) and all admirals and other commanders at sea of any the ships of war or other ship having commission from his Majesty or from his heirs or successors, are hereby authorized and strictly required to seize and bring in as prize all such ships or vessels as shall have offended contrary hereunto, and deliver them to the court of admiralty, there to be proceeded against; and in case of condemnation, one moiety of such forfeitures shall be to the use of such admirals or commanders and their companies, to be divided and proportioned amongst them according to the rules and orders of the sea in case of ships taken prize; and the other moiety to the use of his Majesty, his heirs and successors.
II. And be it enacted, that no alien or person not born within the allegiance of our sovereign lord the king, his heirs and successors, or naturalized, or made a free denizen, shall from and after the first day of February, which will be in the year of our Lord one thousand six hundred sixty-one, exercise the trade or occupation of a merchant or factor in any the said places; (2) upon pain of the forfeiture and loss of all his goods and chattels, or which are in his possession; one third to his Majesty, his heirs and successors; one third to the governor of the plantation where such person shall so offend; and the other third to him or them that shall inform or sue for the same in any of his Majesty’s courts in the plantation where such offence shall be committed; (3) and all governors of the said lands, islands, plantations, or territories, and every of them, are hereby strictly required and commanded, and all who hereafter shall be made governors of any such islands, plantations, or territories, by his Majesty, his heirs or successors, shall before their entrance into their government take a solemn oath to do their utmost, that every the afore-mentioned clauses, and all the matters and things therein contained, shall be punctually and bona fide observed according to the true intent and meaning thereof; (4) and upon complaint and proof made before his Majesty, his heirs or successors, or such as shall be by him or them thereunto authorized and appointed, that any the said governors have been willingly and wittingly negligent in doing their duty accordingly, that the said governor so offending shall be removed from his government.
III. And it is further enacted by the authority aforesaid, that no goods or commodities whatsoever, of the growth, production or manufacture of Africa, Asia, or America, or of any part thereof, or which are described or laid down in the usual maps or cards of those places, be imported into England, Ireland, or Wales, islands of Guernsey and Jersey, or town of Berwick upon Tweed, in any other ship or ships, vessel or vessels whatsoever, but in such as do truly and without fraud belong only to the people of England or Ireland, dominion of Wales, or town of Berwick upon Tweed, or of the lands, islands, plantations or territories in Asia, Africa, or America, to his Majesty belonging, as the proprietors and right owners thereof, and whereof the master, and three fourths at least of the mariners are English; (2) under the penalty of the forfeiture of all such goods and commodities, and of the ship or vessel in which they were imported, with all her guns, tackle, furni ture, ammunition, and apparel; one moiety to his Majesty, his heirs and successors; and the other moiety to him or them who shall seize, inform or sue for the same in any court of record, by bill, information, plaint or other action wherein no essoin, protection or wager of law shall be allowed.
XVIII. And it is further enacted by the authority aforesaid, that from and after the first day of April, which shall be in the year of our Lord one thousand six hundred sixty-one, no sugars, tobacco, cotton-wool, indigoes, ginger, fustic, or other dyeing wood, of the growth, production, or manufacture of any English plantations in America, Asia, or Africa, shall be shipped, carried, conveyed, or transported from any of the said English plantations to any land, island, territory, dominion, port, or place whatsoever, other than to such other English plantations as do belong to his Majesty, his heirs and successors, or to the kingdom of England or Ireland, or principality of Wales, or town of Berwick upon Tweed, there to be laid on shore; (2) under the penalty of the forfeiture of the said goods, or the full value thereof, as also of the ship, with all her guns, tackle, apparel, ammunition, and furniture; the one moiety to the king’s Majesty, his heirs and successors, and the other to moiety to him or them that shall seize, inform, or sue for the same in any court of record, by bill, plaint, or information, wherein no essoin, protection, or wager of law shall be allowed.
XIX. And be it further enacted by the authority aforesaid, that for every ship or vessel, which from and after the five and twentieth day of December in the year of our Lord one thousand six hundred and sixty shall set sail out of or from England, Ireland, Wales, or town of Berwick upon Tweed, for any English plantation in America, Asia, or Africa, sufficient bond shall be given with one surety to the chief officers of the custom-house and such port of place from whence the said ship shall set sail, to the value of one thousand pounds, if the ship be of less burden that one hundred tons; and of the sum of two thousand pounds, if the ship shall be of greater burden; that in case the said ship or vessel shall load any of the said commodities at any of the said English plantations, that the same commodities shall be by the said ship brought to some port of England, Ireland, Wales, or to the port or town of Berwick upon Tweed, and shall there unload and put on shore the same, the danger of the seas only expected; (2) and for all ships coming from any other port or place to any of the aforesaid plantations, who by this act are permitted to trade there, that the governor of such English plantations shall before the said ship or vessel be permitted to load on board any of the said commodities, take bond in manner and to the value aforesaid, for each respective ship or vessel, that such ship or vessel shall carry all the aforesaid goods that shall be laden on board in the said ship to some other of his Majesty’s English plantations, or to England, Ireland, Wales, or town of Berwick upon Tweed; (3) and that every ship or vessel which shall load or take on board any of the aforesaid goods, until such bond given to the said governor, or certificate produced from the officers of any custom-house of England, Ireland, Wales, or of the town of Berwick, that such bonds have been there duly given, shall be forfeited with all her guns, tackle, apparel, and furniture, to be employed and recovered in manner as aforesaid; and the said governors and every of them shall twice in every year after the first day of January one thousand six hundred and sixty, return true copies of all such bonds by him so taken, to the chief officers of the custom in London.
V. And in regard his Majesty’s plantations beyond the seas are inhabited and peopled by his subjects of this his kingdom of England; for the maintaining a greater correspondence and kindness between them, and keeping them in a firmer dependence upon it, and rendering them yet more beneficial and advantageous unto it in the further employment and increase of English shipping and seamen, vent of English woollen and other manufactures and commodities, rendering the navigation to and from the same more safe and cheap, and making this kingdom a staple, not only of the commodities of those plantations, but also of the commodities of other countries and places, for the supplying of them; and it being the usage of other nations to keep their plantations trade to themselves.
VI. Be it enacted, and it is hereby enacted, that from and after the five and twentieth day of March one thousand six hundred sixty-four, no commodity of the growth, production, or manufacture of Europe shall be imported into any land, island, plantation, colony, territory, or place to his Majesty belonging, or which shall hereafter belong unto or be in the possession of his Majesty, his heirs and successors, in Asia, Africa, or America (Tangier only excepted) but what shall be bona fide, and without fraud, laden and shipped in England, Wales, or the town of Berwick upon Tweed, and in English built shipping …; and whereof the master and three fourths of the mariners at least are English, and which shall be carried directly thence to the said lands, islands, plantations, colonies, territories, or places, and from no other place or places whatsoever; any law, statute, or usage to the contrary notwithstanding; (2) under the penalty of the loss of all such commodities of the growth, production, or manufacture of Europe, as shall be imported into any of them from any other place whatsoever, by land or water; and if by water, of the ship or vessel also in which they were imported, with all her guns, tackle, furniture, ammunition, and apparel; one third part to his Majesty, his heirs and successors; one third part to the governor of such land, island, plantation, colony, territory, or place, into which such goods were imported, if the said ship, vessel, or goods be there seized or informed against and sued for; or otherwise that third part also to his Majesty, his heirs and successors; and the other third part to him or them who shall seize, inform, or sue for the same in any of his Majesty’s courts in such of the said lands, islands, colonies, plantations, territories, or places where the offence was committed, or in any court of record in England, by bill, information, plaint, or other action, wherein no essoin, protection, or wager of law shall be allowed.
VII. Provided always, and be it hereby enacted by the authority aforesaid, that it shall and may be lawful to ship and lade in such ships, and so navigated, as in the foregoing clause is set down and expressed, in any part of Europe, salt for the fisheries of New England and Newfoundland, and to ship and lade in the Madeira’s wines of the growth thereof, and to ship and lade in the Western islands of Azores wines of the growth of the said islands, and to ship and take in servants or horses in Scotland or Ireland, and to ship or lade in Scotland all sorts of victual of the growth or production of Scotland, and to ship or lade in Ireland all sorts of victual of the growth or production of Ireland, and the same to transport into any of the said lands, islands, plantations, colonies, territories, or places; anything in the foregoing clause to the contrary in any wise notwithstanding.
VIII. And for the better prevention of frauds, be it enacted and it is hereby enacted, that from and after the five and twentieth day of March one thousand six hundred sixty and four, every person or persons importing by land any goods or commodities whatsoever into any the said lands, islands, plantations, colonies, territories, or places, shall deliver to the governor of such land, island, plantation, colony, territory, or place, or to such person or officer as shall be by him thereunto authorized and appointed, within four and twenty hours after such importation, his and their names and surnames, and a true inventory and particular of all such goods or commodities, (2) and no ship or vessel coming to any such land, island, plantation, colony, territory, or place, shall lade or unlade any goods or commodities whatso-ever, until the master or commander of such ship or vessel shall first have made known to the governor of such land, island, plantation, colony, territory, or place, or such other person or officer as shall be by him thereunto authorized and appointed, the arrival of the said ship or vessel, with her name, and the name and surname of her master or commander, and have shown to him that she is an English built ship, or made good by producing such certificate, as abovesaid, that she is a ship or vessel bona fide belonging to England, Wales, or the town of Berwick, and navigated with an English master, and three fourth parts of the mariners at least Englishmen, and have delivered to such governor or other person or officer a true and perfect inventory or invoice of her lading, together with the place or places in which the said goods were laden or taken into the said ship or vessel.
Source: “Excerpts from the Navigation Acts,” www.founding.com/library/(accessed June 2003).
During the mid-1600s the theory of mercantilism permeated European economic thinking. England began to impose the Navigation Acts, which would ultimately strengthen the English economy. France, however, under the reign of Louis XIV, ignored the importance of a sound economy for the maintenance of the state. One of the king’s advisers, Colbert, realized the need to adopt a mercantile system and encouraged the development of industry and commerce. The following document is a letter written by Colbert to the people of Marseilles, in which he encouraged their efforts to develop industry. Colbert died before France completely adopted mercantilism, but his legacy lived on throughout the eighteenth century as France engaged England in the Wars for Empire.
Very dear and well beloved:
Considering how advantageous it would be to this realm to reestablish its foreign and domestic commerce, … we have resolved to establish a council particularly devoted to commerce, to be held every fortnight in our presence, in which all the interest of merchants and the means conducive to the revival of commerce shall be considered and determined upon, as well as all that which concerns manufactures.
We also inform you that we are setting apart, in the expenses of our state, a million livres each year for the encouragement of manufactures and the increase of navigation, to say nothing of the considerable sums which we cause to be raised to supply the companies of the East and West Indies;
That we are working constantly to abolish all the tolls which are collected on the navigable rivers;
That there has already been expended more than a million livres for the repair of the public highways, to which we shall also devote our constant attention;
That we will assist by money from our royal treasury all those who wish to reestablish old manufactures or to undertake new ones;
That we are giving orders to all our ambassadors or residents at the courts of the princes, our allies, to make, in our name, all proper efforts to cause justice to be rendered in all cases involving our merchants, and to assure for them entire commercial freedom;
That we will comfortably lodge at our court each and every merchant who has business there during all the time that he shall be obliged to remain there, having given orders to the grand marshal of our palace to indicate a proper place for that purpose, which shall be called the House of Commerce; …
That all the merchants and traders by sea who purchase vessels, or who build new ones, for traffic or commerce shall receive from us subsidies for each ton of merchandise which they export or import on the said voyages.
We desire, in this present letter, not only to inform you concerning all these things, but to require you, as soon as you have received it, to cause to be assembled all the merchants and traders of your town of Marseilles, and explain to them very particularly our intentions in all matters mentioned above, in order that being informed of the favorable treatment which we desire to give them, they may be the more desirous of applying themselves to commerce. Let them understand that for everything that concerns the welfare and advantage of the same they are to address themselves to Sieur Colbert ….
Source: Milton Viorst, The Great Documents of Western Civilization (New York: Barnes and Noble, 1965), 140–143.
The War of Spanish Succession, also known as Queen Anne’s War, ended in 1713. A series of treaties were negotiated between Great Britain, France, and Spain. The British and the Spanish signed a treaty on July 13, 1763, that ceded Gibraltar to Great Britain and authorized the British to conduct the exclusive slave trade in the Spanish colonies in the New World. The following is Article X of the treaty concerning Gibraltar.
The Catholic King does hereby, for himself, his heirs and successors, yield to the Crown of Great Britain the full and entire propriety of the town and castle of Gibraltar, together with the port, fortifications, and forts thereunto belonging; and he gives up the said propriety to be held and enjoyed absolutely with all manner of right for ever, without any exception or impediment whatsoever.
But that abuses and frauds may be avoided by importing any kind of goods, the Catholic King wills, and takes it to be understood, that the above-named propriety be yielded to Great Britain without any territorial jurisdiction and without any open communication by land with the country round about.
Yet whereas the communication by sea with the coast of Spain may not at all times be safe or open, and thereby it may happen that the garrison and other inhabitants of Gibraltar may be brought to great straits; and as it is the intention of the Catholic King, only that fraudulent importations of goods should, as is above said, be hindered by an inland communications. It is therefore provided that in such cases it may be lawful to purchase, for ready money, in the neighbouring territories of Spain, provisions and other things necessary for the use of the garrison, the inhabitants, and the ships which lie in the harbour.
But if any goods be found imported by Gibraltar, either by way of barter for purchasing provisions, or under any other pretence, the same shall be confiscated, and complaint being made thereof, those persons who have acted contrary to the faith of this treaty, shall be severely punished.
And Her Britannic Majesty, at the request of the Catholic King, does consent and agree, that no leave shall be given under any pretence whatsoever, either to Jews or Moors, to reside or have their dwellings in the said town of Gibraltar; and that no refuge or shelter shall be allowed to any Moorish ships of war in the harbour of the said town, whereby the communication between Spain and Ceuta may be obstructed, or the coasts of Spain be infested by the excursions of the Moors.
But whereas treaties of friendship and a liberty and intercourse of commerce are between the British and certain territories situated on the coast of Africa, it is always to be understood, that the British subjects cannot refuse the Moors and their ships entry into the port of Gibraltar purely upon the account of merchandising. Her Majesty the Queen of Great Britain does further promise, that the free exercise of their religion shall be indulged to the Roman Catholic inhabitants of the aforesaid town.
And in case it shall hereafter seem meet to the Crown of Great Britain to grant, sell or by any means to alienate therefrom the propriety of the said town of Gibraltar, it is hereby agreed and concluded that the preference of having the sale shall always be given to the Crown of Spain before any others.
Source: “Article X of the Treaty of Utrecht,” www.gibnet.com/texts/utrect.htm (accessed October 2003).
The following memorandum was issued on January 20, 1715, and discusses the attempts by foreigners as well as individuals throughout England who petitioned parliament to declare free trade with the Netherlands for the woolen industry. Prior to the granting of this request, the Merchant Adventurers, a group of merchants who incorporated in 1407 to compete with the Hanseatic League for the cloth trade of northern Europe, held a monopoly on the trade from the fourteenth century. After several decades the monopoly was reinstated since free trade did not increase the volume of trade between England and the Netherlands. The Merchant Adventurers controlled the trade until 1806.
January 20, 1715/16
MEMORANDUM from the Hamburg Company relating to the state of their trade to the Right Honourable the Lords Commissioners for Trade and Plantations … [relates the history of the Merchant Adventurers in the Middle Ages, under the Tudors and early Stuarts, and up to the Restoration of Charles II when the Merchant Adventurers’ charter was renewed] …
However, soon after several interlopers and clothiers, hoping to obtain some favour from the new restored government, petitioned the Parliament for a free trade upon the specious pretence that great quantities of cloth were lying upon the hands of poor clothiers, which they could dispose of in case such a free exportation were granted. The opinion of his Majesty in Council was that the experiment would not have the promised effect, but rather tend to the prejudice of the trade, and make the cure afterwards more difficult. However, after several deliberations, their importunity prevailed so far upon the desire of the House of Commons, that a proclamation for a free trade for six months was by the king ordered to be published, with the free consent of the Company of Merchants Adventurers of England (as the very words of the proclamation, dated the 14th May, 1662 do express it). This time being expired but having not produced the promised effect of increasing the trade, the Company was again restored to their ancient right of the sole exportation of the woollen manufactures to the parts of their privileges by a proclamation dated the 8th April, 1663, containing among other things in favour of the Company that his Majesty, being certified by the petition of the clothiers themselves, as also the general complaint in all clothing counties, that the late liberty hath not produced the promised and expected effect, had with the advice of his Privy Council thought fit for the restoration and conservation of the trade of the woollen manufactures to restore the Merchants Adventurers to their ancient right of sole exportation, and to the end that this trade may be the better improved, ordered the said Company to receive into the freedom of their fellowship all subjects that shall desire it, paying £13 6s. 8d. at their admittance, all of London to be mere merchants, but of the outports to be bred merchants though shopkeepers.
Upon this as many subjects as desired it were admitted and the trade of the woollen manufacture was carried on under order and regulation to the great benefit and increase of the vent of our woollen manufactures abroad. But the effect and consequences of the forementioned dispensation for a free trade, and another granted in 1666 during the war with Holland very much obstructed their good intention, for the interlopers and chiefly foreigners of Germany as well as Holland, having now found an inlet into the trade of the woollen manufacture, still contrived ways to continue their irregular trade with intention to ruin the Company and to get the trade of our woollen manufactures into their own hands.
In these mischievous practices the said interlopers and foreigners went on until the year 1683 when it was discovered that several persons, principally aliens and foreigners, endeavoured to destroy the Company. And being under no rule and regulation, did take upon them to ship woollen manufactures out of this kingdom, and by several deceitful practices of the said foreigners in counterfeiting the marks, seals, and tillets of persons free of the Company, the said trade will be in great danger of being much impaired if not totally lost to the natives of England. His Majesty by his royal proclamation, dated the 13th June, 1683, confirmed the Merchants Adventurers in their ancient right of solely exporting the woollen manufactures to the parts of their privileges, but withal to admit all subjects to the freedom of the Company that shall desire it within a year for £13 6s. 8d. sterling as a fine, in the same manner as was ordered in 1663 above mentioned.
After this settlement of the Company the trade of the woollen manufactures was very successfully carried on by them, and the vent thereof increased very much in Germany, the Company constantly keeping a great number of large warehouses always filled with our woollen manufactures to a very great value, from £5,000 to £20,000 sterling of all sorts proper for the markets in Germany, and much more than sufficient to supply the same. And the Germans constantly resorted to Hamburg from several parts for the buying of all sorts of English woollen-manufactures, and when they could not come thither to see and buy goods themselves, the English merchants residing in Hamburg furnished them according to their patterns as effectually as they possibly could have been directly from England.
In this manner the trade of the woollen manufactures was successfully managed by English subjects only, to the great advantage of our kingdom until the first year of King William and Queen Mary, when a clause was inserted in a bill prohibiting the exportation of wool, that for three years it shall be lawful for any person or persons whatsoever to buy cloth stuffs, stockings, or any other manufacture of wool made in England, and freely to export the same into any parts beyond the seas, paying the usual custom. The effect of which liberty proved very prejudicial and destructive to the Company, and brings them in the next place to shew what decrease the Company’s trade has since met with, and the causes and occasions thereof.
Since the above mentioned freedom of trade, the Company has from time to time declined, and at present is reduced to such a sinking condition that they must of necessity be soon totally ruined, if not relieved and countenanced by the authority of his Majesty and the Parliament.
The forementioned clause making it lawful for all persons freely to export the woollen manufactures of England into any parts beyond the seas was limited to three years, which time being expired, a bill was again brought into the House contrived chiefly by foreigners for the continuing of it. But the Company and several clothiers being heard against that bill, it was rejected. Yet nothing was done for the Company, but the freedom of exportation by all persons is still continued as much as if the former grant were yet in force, although in the years 1693 and 1694 the Company proved to the satisfaction of the Committee of Parliament that the exportation during the three years of liberty had not been greater than in three years before. And if it could have been proved that it was greater, yet that was not to be attributed to the freedom granted but unto other accidents, viz. a great consumption by our armies abroad; vast quantities sent through Hamburg into Italy and other parts; the supplying of very considerable quantities taken by the French; and other temporary reasons, which subsist still. Nay, since the duty of woollen goods has been taken off, it has been several times found at Hamburg that foreigners have entered a considerable number of packs to be exported both from London and Hull. But when they arrived at Hamburg, it appeared by the contents of the lading that not half the number of packs had been shipped which were entered by the cockets, so that this trick was made use of to make the exportation seem very considerable, and to conceal the decay of trade, which for this and the reasons beforesaid is at present not so apparent to the public as it is to traders themselves.
Before the last liberty of exportation was granted to all persons, the Company had many large warehouses in Hamburg, stocked with all sorts of woollen goods to the value of many thousand pounds. These since the liberty of trade are reduced to a very small number and in a little time will come to none at all, for now most of the foreign merchants in the several parts of Germany, as well as those of Hamburg, who formerly used to buy of the Company, bring their goods from England themselves, nay, even shopkeepers do the same, and for the supply of their occasions employ Dutch factors in England, so that when all persons who used formerly to buy of the Company get the woollen goods from England directly themselves, there will be nobody left to sell to and then the trade of the Company must needs be at an end.
Since the trade of the woollen manufactures was given free and foreigners let into it, they have found means almost totally to exclude the English merchants from the trade to Holland, Zealand, Brabant, and Flanders, for the Company’s trade into those parts is quite lost, the residency which they had at Dordrecht, where they enjoyed great privileges, and carried on a most considerable trade is altogether ruined, and not an English merchant left there. And now these foreigners are endeavouring to beat the Company out of their trade at Hamburg also, which, if this liberty of trade be continued, will unavoidably be accomplished.
As soon as the foreigner by the free liberty of trade became principal in our market in buying, he presently and ever since has endeavoured to beat down the price of goods, which forced the maker to make his goods worse for to secure a profit, and then by extraordinary measure which they have exacted, extraordinary stretching and straining has been occasioned. Whereas before, when this trade was carried on by English merchants only, cloth was kept up to a true and good making. This sinister practice of straining and falsifying goods answers the end of private profit, which is all that foreigners aim at, who care not what the consequences will be.
The foreigners since the liberty of trade employ English factors in England no longer than to bring their own countrymen and relations into credit, who they send into England and recommend to English factors. And when those have got acquaintance and knowledge in the way of buying, the English factors are turned off, and this is practised by them not only in London but all England over, to the great prejudice of his Majesty’s subjects. And experience has shewed that several of them being crept into credit with clothiers and factors and by them largely trusted, have, after they were run deeply into debt for woollen goods bought, taken an opportunity to fly the land, to the ruin of the clothiers and others both in the north and west, which proves destructive to the trade abroad, those goods being often sold there for two-thirds of the first cost.
The many and great privileges which the Company has enjoyed in Hamburg both to the honour and great advantage of our nation, for above one hundred years, are grounded upon bringing trade thither and making that the staple and mart for the trade into the north part of Germany, which, when foreigners supply the market and when the Company has nothing of the trade left, but is quite beat out of it by foreigners, those great and honourable privileges, the like of which no other nation has nor will ever be able to obtain, must needs be lost, and cease of themselves ….
Source: Public Records Office, Records of the Colonial Office, Commonwealth and Foreign Commonwealth Offices, Empire Marketing Board, and Related Bodies, Board of Trade, Document 25, pp. 356, 359–369.
The Treaty of Paris, signed on February 10, 1763, formally ended the Seven Years’ War (also known as the French and Indian War). France relinquished control over Canada and its land east of the Mississippi River and ceded west Louisiana to Spain to compensate for its loss of Florida to the British. France remained in control of the islands of St. Pierre and Miquelon and regained control of Guadeloupe and Martinique in the West Indies from Great Britain, while the French ceded Grenada and the Grenadines to the British. The French were prohibited from fortifying Bengal, and India effectively became the possession of Great Britain. In Africa, Senegal became a British possession. However, Cuba and the Philippines were returned to Spain. The Treaty of Paris marks the dominance of Great Britain over world trade until the mid-twenty-first century.
The definitive Treaty of Peace and Friendship between his Britannick Majesty, the Most Christian King, and the King of Spain. Concluded at Paris the 10th day of February, 1763. To which the King of Portugal acceded on the same day. (Printed from the Copy.)
In the Name of the Most Holy and Undivided Trinity, Father, Son, and Holy Ghost. So be it.
Be it known to all those whom it shall, or may, in any manner, belong,
It has pleased the Most High to diffuse the spirit of union and concord among the Princes, whose divisions had spread troubles in the four parts of the world, and to inspire them with the inclination to cause the comforts of peace to succeed to the misfortunes of a long and bloody war, which having arisen between England and France during the reign of the Most Serene and Most Potent Prince, George the Second, by the grace of God, King of Great Britain, of glorious memory, continued under the reign of the Most Serene and Most Potent Prince, George the Third, his successor, and, in its progress, communicated itself to Spain and Portugal: Consequently, the Most Serene and Most Potent Prince, George the Third, by the grace of God, King of Great Britain, France, and Ireland, Duke of Brunswick and Lunenbourg, Arch Treasurer and Elector of the Holy Roman Empire; the Most Serene and Most Potent Prince, Lewis the Fifteenth, by the grace of God, Most Christian King; and the Most Serene and Most Potent Prince, Charles the Third, by the grace of God, King of Spain and of the Indies, after having laid the foundations of peace in the preliminaries signed at Fontainebleau the third of November last; and the Most Serene and Most Potent Prince, Don Joseph the First, by the grace of God, King of Portugal and of the Algarves, after having acceded thereto, determined to compleat, without delay, this great and important work. For this purpose, the high contracting parties have named and appointed their respective Ambassadors Extraordinary and Ministers Plenipotentiary, viz. his Sacred Majesty the King of Great Britain, the Most Illustrious and Most Excellent Lord, John Duke and Earl of Bedford, Marquis of Tavistock, c. his Minister of State, Lieutenant General of his Armies, Keeper of his Privy Seal, Knight of the Most Noble Order of the Garter, and his Ambassador Extraordinary and Minister Plenipotentiary to his Most Christian Majesty; his Sacred Majesty the Most Christian King, the Most Illustrious and Most Excellent Lord, Csar Gabriel de Choiseul, Duke of Praslin, Peer of France, Knight of his Orders, Lieu tenant General of his Armies and of the province of Britanny, Counsellor of all his Counsils, and Minister and Secretary of State, and of his Commands and Finances: his Sacred Majesty the Catholick King, the Most Illustrious and Most Excellent Lord, Don Jerome Grimaldi, Marquis de Grimaldi, Knight of the Most Christian King’s Orders, Gentleman of his Catholick Majesty’s Bedchamber in Employment, and his Ambassador Extraordinary to his Most Christian Majesty; his Sacred Majesty the Most Faithful King, the Most Illustrious and Most Excellent Lord, Martin de Mello and Castro, Knight professed of the Order of Christ, of his Most Faithful Majesty’s Council, and his Ambassador and Minister Plenipotentiary to his Most Christian Majesty.
Who, after having duly communicated to each other their full powers, in good form, copies whereof are transcribed at the end of the present treaty of peace, have agreed upon the articles, the tenor of which is as follows:
Article I. There shall be a Christian, universal, and perpetual peace, as well by sea as by land, and a sincere and constant friendship shall be re established between their Britannick, Most Christian, Catholick, and Most Faithful Majesties, and between their heirs and successors, kingdoms, dominions, provinces, countries, subjects, and vassals, of what quality or condition soever they be, without exception of places or of persons: …
IV. His Most Christian Majesty renounces all pretensions which he has heretofore formed or might have formed to Nova Scotia or Acadia in all its parts, and guaranties the whole of it, and with all its dependencies, to the King of Great Britain: Moreover, his Most Christian Majesty cedes and guaranties to his said Britannick Majesty, in full right, Canada, with all its dependencies, as well as the island of Cape Breton, and all the other islands and coasts in the gulph and river of St. Lawrence, and in general, every thing that depends on the said countries, lands, islands, and coasts, with the sovereignty, property, possession, and all rights acquired by treaty, or otherwise, which the Most Christian King and the Crown of France have had till now over the said countries, lands, islands, places, coasts, and their inhabitants, so that the Most Christian King cedes and makes over the whole to the said King, and to the Crown of Great Britain, and that in the most ample manner and form, without restriction, and without any liberty to depart from the said cession and guaranty under any pretence, or to disturb Great Britain in the possessions above mentioned. His Britannick Majesty, on his side, agrees to grant the liberty of the Catholick religion to the inhabitants of Canada: he will, in consequence, give the most precise and most effectual orders, that his new Roman Catholic subjects may profess the worship of their religion according to the rites of the Romish church, as far as the laws of Great Britain permit. His Britannick Majesty farther agrees, that the French inhabitants, or others who had been subjects of the Most Christian King in Canada, may retire with all safety and freedom wherever they shall think proper, and may sell their estates, provided it be to the subjects of his Britannick Majesty, and bring away their effects as well as their persons, without being restrained in their emigration, under any pretence whatsoever, except that of debts or of criminal prosecutions: The term limited for this emigration shall be fixed to the space of eighteen months, to be computed from the day of the exchange of the ratification of the present treaty.
V. The subjects of France shall have the liberty of fishing and drying on a part of the coasts of the island of Newfoundland, such as it is specified in the XIIIth article of the treaty of Utrecht; which article is renewed and confirmed by the present treaty, (except what relates to the island of Cape Breton, as well as to the other islands and coasts in the mouth and in the gulph of St. Lawrence:) And his Britannick Majesty consents to leave to the subjects of the Most Christian King the liberty of fishing in the gulph of St. Lawrence, on condition that the subjects of France do not exercise the said fishery but at the distance of three leagues from all the coasts belonging to Great Britain, as well those of the continent as those of the islands situated in the said gulph of St. Lawrence. And as to what relates to the fishery on the coasts of the island of Cape Breton, out of the said gulph, the subjects of the Most Christian King shall not be permitted to exercise the said fishery but at the distance of fifteen leagues from the coasts of the island of Cape Breton; and the fishery on the coasts of Nova Scotia or Acadia, and every where else out of the said gulph, shall remain on the foot of former treaties.
VI. The King of Great Britain cedes the islands of St. Pierre and Macquelon, in full right, to his Most Christian Majesty, to serve as a shelter to the French fishermen; and his said Most Christian Majesty engages not to fortify the said islands; to erect no buildings upon them but merely for the conveniency of the fishery; and to keep upon them a guard of fifty men only for the police.
VII. In order to re-establish peace on solid and durable foundations, and to remove for ever all subject of dispute with regard to the limits of the British and French territories on the continent of America; it is agreed, that, for the future, the confines between the dominions of his Britannick Majesty and those of his Most Christian Majesty, in that part of the world, shall be fixed irrevocably by a line drawn along the middle of the River Mississippi, from its source to the river Iberville, and from thence, by a line drawn along the middle of this river, and the lakes Maurepas and Pontchartrain to the sea; and for this purpose, the Most Christian King cedes in full right, and guaranties to his Britannick Majesty the river and port of the Mobile, and every thing which he possesses, or ought to possess, on the left side of the river Mississippi, except the town of New Orleans and the island in which it is situated, which shall remain to France, provided that the navigation of the river Mississippi shall be equally free, as well to the subjects of Great Britain as to those of France, in its whole breadth and length, from its source to the sea, and expressly that part which is between the said island of New Orleans and the right bank of that river, as well as the passage both in and out of its mouth: It is farther stipulated, that the vessels belonging to the subjects of either nation shall not be stopped, visited, or subjected to the payment of any duty whatsoever. The stipulations inserted in the IVth article, in favour of the inhabitants of Canada shall also take place with regard to the inhabitants of the countries ceded by this article.
VIII. The King of Great Britain shall restore to France the islands of Guadeloupe, of Mariegalante, of Desirade, of Martinico, and of Belleisle; and the fortresses of these islands shall be restored in the same condition they were in when they were conquered by the British arms, provided that his Britannick Majesty’s subjects, who shall have settled in the said islands, or those who shall have any commercial affairs to settle there or in other places restored to France by the present treaty, shall have liberty to sell their lands and their estates, to settle their affairs, to recover their debts, and to bring away their effects as well as their persons, on board vessels, which they shall be permitted to send to the said islands and other places restored as above, and which shall serve for this use only, without being restrained on account of their religion, or under any other pretence whatsoever, except that of debts or of criminal prosecutions: and for this purpose, the term of eighteen months is allowed to his Britannick Majesty’s subjects, to be computed from the day of the exchange of the ratifications of the present treaty; but, as the liberty granted to his Britannick Majesty’s subjects, to bring away their persons and their effects, in vessels of their nation, may be liable to abuses if precautions were not taken to prevent them; it has been expressly agreed between his Britannick Majesty and his Most Christian Majesty, that the number of English vessels which have leave to go to the said islands and places restored to France, shall be limited, as well as the number of tons of each one; that they shall go in ballast; shall set sail at a fixed time; and shall make one voyage only; all the effects belonging to the English being to be embarked at the same time. It has been farther agreed, that his Most Christian Majesty shall cause the necessary passports to be given to the said vessels; that, for the greater security, it shall be allowed to place two French clerks or guards in each of the said vessels, which shall be visited in the landing places and ports of the said islands and places restored to France, and that the merchandize which shall be found t herein shall be confiscated.
IX. The Most Christian King cedes and guaranties to his Britannick Majesty, in full right, the islands of Grenada, and the Grenadines, with the same stipulations in favour of the inhabitants of this colony, inserted in the IVth article for those of Canada: And the partition of the islands called neutral, is agreed and fixed, so that those of St. Vincent, Dominico, and Tobago, shall remain in full right to Great Britain, and that of St. Lucia shall be delivered to France, to enjoy the same likewise in full right, and the high contracting parties guaranty the partition so stipulated.
X. His Britannick Majesty shall restore to France the island of Goree in the condition it was in when conquered: and his Most Christian Majesty cedes, in full right, and guaranties to the King of Great Britain the river Senegal, with the forts and factories of St. Lewis, Podor, and Galam, and with all the rights and dependencies of the said river Senegal.
XI. In the East Indies Great Britain shall restore to France, in the condition they are now in, the different factories which that Crown possessed, as well as on the coast of Coromandel and Orixa as on that of Malabar, as also in Bengal, at the beginning of the year 1749. And his Most Christian Majesty renounces all pretension to the acquisitions which he has made on the coast of Coromandel and Orixa since the said beginning of the year 1749. His Most Christian Majesty shall restore, on his side, all that he may have conquered from Great Britain in the East Indies during the present war; and will expressly cause Nattal and Tapanoully, in the island of Sumatra, to be restored; he engages farther, not to erect fortifications, or to keep troops in any part of the dominions of the Subah of Bengal. And in order to preserve future peace on the coast of Coromandel and Orixa, the English and French shall acknowledge Mahomet Ally Khan for lawful Nabob of the Carnatick, and Salabat Jing for lawful Subah of the Decan; and both parties shall renounce all de mands and pretensions of satisfaction with which they might charge each other, or their Indian allies, for the depredations or pillage committed on the one side or on the other during the war.
XII. The island of Minorca shall be restored to his Britannick Majesty, as well as Fort St. Philip, in the same condition they were in when conquered by the arms of the Most Christian King; and with the artillery which was there when the said island and the said fort were taken.
XIII. The town and port of Dunkirk shall be put into the state fixed by the last treaty of Aix la Chapelle, and by former treaties. The Cunette shall be destroyed immediately after the exchange of the ratifications of the present treaty, as well as the forts and batteries which defend the entrance on the side of the sea; and provision shall be made at the same time for the wholesomeness of the air, and for the health of the inhabitants, by some other means, to the satisfaction of the King of Great Britain ….
XIX. The King of Great Britain shall restore to Spain all the territory which he has conquered in the island of Cuba, with the fortress of the Havannah; and this fortress, as well as all the other fortresses of the said island, shall be restored in the same condition they were in when conquered by his Britannick Majesty’s arms, provided that his Britannick Majesty’s subjects who shall have settled in the said island, restored to Spain by the present treaty, or those who shall have any commercial affairs to settle there, shall have liberty to sell their lands and their estates, to settle their affairs, recover their debts, and to bring away their effects, as well as their persons, on board vessels which they shall be permitted to send to the said island restored as above, and which shall serve for that use only, without being restrained on account of their religion, or under any other pretence whatsoever, except that of debts or of criminal prosecutions: And for this purpose, the term of eighteen months is allowed to his Britannick Majesty’s subjects, to be computed from the day of the exchange of the ratifications of the present treaty: but as the liberty granted to his Britannick Majesty’s subjects, to bring away their persons and their effects, in vessels of their nation, may be liable to abuses if precautions were not taken to prevent them; it has been expressly agreed between his Britannick Majesty and his Catholick Majesty, that the number of English vessels which shall have leave to go to the said island restored to Spain shall be limited, as well as the number of tons of each one; that they shall go in ballast; shall set sail at a fixed time; and shall make one voyage only; all the effects belonging to the English being to be embarked at the same time: it has been further agreed, that his Catholick Majesty shall cause the necessary passports to be given to the said vessels; that for the greater security, it shall be allowed to place two Spanish clerks or guards in each of the said vessels, which shall be visited in the landing places and ports of the said island restored to Spain, and that the merchandize which shall be found therein shall be confiscated.
XX. In consequence of the restitution stipulated in the preceding article, his Catholick Majesty cedes and guaranties, in full right, to his Britannick Majesty, Florida, with Fort St. Augustin, and the Bay of Pensacola, as well as all that Spain possesses on the continent of North America, to the East or to the South East of the river Mississippi. And, in general, every thing that depends on the said countries and lands, with the sovereignty, property, possession, and all rights, acquired by treaties or otherwise, which the Catholick King and the Crown of Spain have had till now over the said countries, lands, places, and their inhabitants; so that the Catholick King cedes and makes over the whole to the said King and to the Crown of Great Britain, and that in the most ample manner and form. His Britannick Majesty agrees, on his side, to grant to the inhabitants of the countries above ceded, the liberty of the Catholick religion; he will, consequently, give the most express and the most effectual orders that his new Roman Catholic subjects may profess the worship of their religion according to the rites of the Romish church, as far as the laws of Great Britain permit. His Britannick Majesty farther agrees, that the Spanish inhabitants, or others who had been subjects of the Catholick King in the said countries, may retire, with all safety and freedom, wherever they think proper; and may sell their estates, provided it be to his Britannick Majesty’s subjects, and bring away their effects, as well as their persons without being restrained in their emigration, under any pretence whatsoever, except that of debts, or of criminal prosecutions: the term limited for this emigration being fixed to the space of eighteen months, to be computed from the day of the exchange of the ratifications of the present treaty. It is moreover stipulated, that his Catholick Majesty shall have power to cause all the effects that may belong to him, to be brought away, whether it be artillery or other things ….
In witness whereof, we the underwritten their Ambassadors Extraordinary, and Ministers Plenipotentiary, have signed with our hand, in their name, and in virtue of our full powers, have signed the present definitive treaty, and have caused the seal of our arms to be put thereto. Done at Paris the tenth day of February, 1763.
Bedford, C.P.S. Choiseul, Duc de Praslin. El Marq. de Grimaldi.
(L.S.) (L.S.) (LS)
Source: “Treaty of Paris, 1763,” www.yale.edu/lawweb/avalon/paris763.htm (accessed November 2003).
One year after the conclusion of the Seven Years’ War (also known as the French and Indian War), the British Parliament passed the Sugar Act to stimulate the British Caribbean trade. Under the act, the duty on French and Dutch molasses was increased and the price of British sugar reduced. The British colonists would have normally ignored the increase, but under this piece of legislation, smuggling cases were removed from the civil courts and transferred to vice admiralty courts. The Sugar Act disrupted the trade between the American colonies and Madeira, the Azores, the Canary Islands, and the French West Indies. Colonial goods such as lumber, flour, and other foodstuffs had been exchanged in these areas for sugar, wines, coffee, and calico. The Americans expressed fear that this act would be the first of many passed by Parliament that would adversely affect the economy of the colonies.
An act for granting certain duties in the British colonies and plantations in America, for continuing, amending, and making perpetual, an act passed in the sixth year of the reign of his late majesty King George the Second, (intituled, An act for the better securing and encouraging the trade of his Majesty’s sugar colonies in America;) for applying the produce of such duties, and of the duties to arise by virtue of the said act, towards defraying the expences of defending, protecting, and securing the said colonies and plantations; for explaining an act made in the twenty fifth year of the reign of King Charles the Second, (intituled, An act for the encouragement of the Greenland and Eastland trades, and for the better securing the plantation trade;) and for altering and disallowing several drawbacks on exports from this kingdom, and more effectually preventing the clandestine conveyance of goods to and from the said colonies and plantation, and improving and securing the trade between the same and Great Britain.
Whereas it is expedient that new provisions and regulations should be established for improving the revenue of this kingdom, and for extending and securing the navigation and commerce between Great Britain and your Majesty’s dominions in America, which, by the peace, have been so happily enlarged: and whereas it is just and necessary, that a revenue be raised, in your Majesty’s said dominions in America, for defraying the expences of defending, protecting, and securing the same; we, your Majesty’s most dutiful and loyal subjects, the commons of Great Britain, in parliament assembled, being desirous to make some provision, in this present session of parliament, towards raising the said revenue in America, have resolved to give and grant unto your Majesty the several rates and duties herein after-mentioned; and do most humbly beseech your Majesty that it may be enacted; and be it enacted by the King’s most excellent majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority of the same, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, there shall be raised, levied, collected, and paid, unto his Majesty, his heirs and successors, for and upon all white or clayed sugars of the produce or manufacture of any colony or plantation in America, not under the dominion of his Majesty, his heirs and successors; for and upon indigo, and coffee of foreign produce or manufacture; for and upon wines (except French wine;) for and upon all wrought silks, bengals, and stuffs, mixed with silk or herbs of the manufacture of Persia, China, or East India, and all callico painted, dyed, printed, or stained there; and for and upon all foreign linen cloth called Cambrick and French Lawns, which shall be imported or brought into any colony or plantation in America, which now is, or hereafter may be, under the dominion of his Majesty, his heirs and successors, the several rates and duties following; that is to say, …
II. And it is hereby further enacted by the authority aforesaid, That from and after the said twenty ninth day of September, one thousand seven hundred and sixty four, there shall also be raised, levied, collected, and paid, unto his Majesty, his heirs and successors, for and upon all coffee and pimento of the growth and produce of any British colony or plantation in America, which shall be there laden on board any British ship or vessel, to be carried out from thence to any other place whatsoever, except Great Britain, the several rates and duties following; that is to say, …
IV. And whereas an act was made in the sixth year of the reign of his late majesty King George the Second, intituled, An act for the better securing and encouraging the trade of his Majesty’s sugar colonies in America, which was to continue in force for five years, to be computed from the twenty fourth day of June, one thousand seven hundred and thirty three, and to the end of the then next session of parliament, and which, by several subsequent acts made in the eleventh, the nineteenth, the twenty sixth, and twenty ninth, and the thirty first years of the reign of his said late Majesty, was, from time to time, continued; and, by an act made in the first year of the reign of his present Majesty, was further continued until the end of this present session of parliament; and although the said act hath been found in some degree useful, yet it is highly expedient that the same should be altered, enforced, and made more effectual; but, in consideration of the great distance of several of the said colonies and plantations from this kingdom, it will be proper further to continue the said act for a short space, before any alterations and amendments shall take effect, in order that all persons concerned may have due and proper notice thereof; be it therefore enacted by the authority aforesaid, That the said act made in the sixth year of the reign of his late majesty King George the Second, intituled, An act for the better securing and encouraging the trade of his Majesty’s sugar colonies in America, shall be, and the same is hereby further continued, until the thirtieth day of September, one thousand seven hundred and sixty four ….
VI. And it be further enacted by the authority aforesaid, That in lieu and instead of the rate and duty imposed by the said act upon molasses and syrups, there shall, from and after the said twenty ninth day of September, one thousand seven hundred and sixty four, be raised, levied, collected, and paid, unto his Majesty, his heirs and successors, for and upon every gallon of molasses or syrups, being the growth, product, or manufacture, of any colony or plantation in America, not under the dominion of his Majesty, his heir or successors, which shall be imported or brought into any colony or plantation in America, which now is, or hereafter may be, under the dominion of his Majesty, his heirs or successors, the sum of three pence ….
XI. And it is hereby further enacted by the authority aforesaid, That all the monies which, from and after the twenty ninth day of September, one thousand seven hundred and sixty four shall arise by the several rates and duties herein before granted; and also by the duties which, from and after the said twenty ninth day of September, one thousand seven hundred and sixty four, shall be raised upon sugars and paneles, by virtue of the said act made in the sixth year of the reign of his said late majesty King George the Second (except the necessary charges of raising, collecting, levying, recovering, answering, paying, and accounting for the same) shall be paid into the receipt of his Majesty’s Exchequer, and shall be entered separate and apart from all other monies paid or payable to his Majesty, his heirs or successors: and shall be there reserved, to be, from time to time, disposed of by parliament, towards defraying the necessary expences of defending, protecting, and securing, the British colonies and plantations in America, …
XVIII. And be it further enacted by the authority aforesaid, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, no rum or spirits of the produce or manufacture of any of the colonies or plantations in America, not in the possession or under the dominion off his Majesty, his heirs or successors, shall be imported or brought into any of the colonies or plantations in America which now are, or hereafter may be, in the possession or under the dominion of his Majesty, his heirs or successors, upon forfeiture of all such rum or spirits, together with the ship or vessel in which the same shall be imported, with the tackle, apparel, and furniture thereof; to be seized by any officer or officers of his Majesty’s customs, and prosecuted in such manner and form as herein after is expressed; any law, custom, or usage, to the contrary notwithstanding ….
XX. And, for the better preventing frauds in the importation of foreign sugars and paneles, rum and spirits, molasses and syrups, into any of his Majesty’s dominions, under pretence that the same are the growth, produce, or manufacture, of the British colonies or plantations, it is further enacted by the authority aforesaid, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, every person or persons loading on board any ship or vessel, in any of the British colonies or plantations in America, any rum or spirits, sugars or paneles, molasses or syrups, as of the growth, product, or manufacture, of any British colony or plantation, shall, before the clearing out of the said ship or vessel, produce and deliver to the collector or other principal officer of the customs at the loading port, an affidavit signed and sworn to before some justice of the peace in the said British colonies or plantation, either by the grower, maker, or shipper, of such goods, or his or their known agent or factor, expressing, in words at length and not in figure, the quality of the goods so shipped, with the number and denomination of the packages, and describing the name or names of the plantation or plantations, and the name of the colony where the same grew or were produced and manufactured; which affidavit shall be attested, under the hand of the said justice of the peace, to have been sworn to in his presence; who is hereby required to do the same without fee or reward: and the collector or other principal officer of the customs to whom such affidavit shall be delivered, shall thereupon grant to the master, or other person having the charge of the ship or vessel, a certificate under his hand and seal of office (without fee or reward) of his having received such affidavit pursuant to the directions of this act; which certificate shall express the quality of the goods shipped on board such ship or vessel, with the number and denomination of the packages: and such collector or other principal officer of the customs shall also (without fee or reward) within thirty days after the sailing of the ship or vessel, transmit an exact copy of the said affidavit to the secretary’s office for the respective colony or plantation where the goods were shipped, on forfeiture of five pounds ….
XXV. And it is hereby further enacted, That if any British ship or vessel laden, as aforesaid, with any goods of the produce or manufacture of any British colony or plantation in America, or having on board any molasses or syrups the produce of any foreign colony or plantation, shall be discovered by any officer of his Majesty’s customs within two leagues of the shore of any British colony or plantation in America, and the master or person taking charge of such ship or vessel shall not produce a certificate that bond has been given, pursuant to the direction of this or any other act of parliament, as the case may require; or if he shall not produce certificate to the collector or other chief officer of the customs where he shall arrive, either in Great Britain or any British American colony or plantation, such ship or vessel, with her tackle, apparel, and furniture, and all the goods therein laden, shall be forfeited, and shall and may be seized and prosecuted as herein after is directed ….
XXVIII. And it is hereby further enacted by the authority aforesaid, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, no iron, nor any sort of wood, commonly called Lumber, as specified in an act passed in the eighth year of the reign of King George the First, intituled, An act for giving further encouragement of the importation of naval stores, and for other purposes therein mentioned, of the growth, production, or manufacture, of any British colony or plantation in America, shall be there loaden on board any ship or vessel to be carried from thence, until sufficient bond shall be given, with one surety besides the master of the vessel, to the collector or other principal officer of the customs at the loading port in a penalty of double the value of the goods, which condition, that the said goods shall not be landed in any part of Europe except Great Britain ….
XXXI. Provided always, That this act shall not extend, nor be construed to extend, to forfeit, for want of such cocket or clearance, any salt laden in Europe for the fisheries in New England, Newfoundland, Pennsylvania, New York, and Nova Scotia, or any other place to which salt is or shall be allowed by law to be carried; wines laden in the Madeiras, of the growth thereof; and wines of the growth of the Western Islands, or Azores, and laden there; nor any horses, victuals, or linen cloth, of and from Ireland, which may be laden on board such ships or vessels ….
XXXVI. And, to prevent the concealing any goods in false packages, or private places, on board any ship or vessel arriving at any of the British colonies or plantations in America, with intent to their being clandestinely landed there, be it further enacted by the authority aforesaid, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, all goods which shall be found concealed in any place whatsoever on board any such ship or vessel, at any time after the master thereof shall have made his report to the collector or other proper officer of the customs, and which shall not be comprized or mentioned in the said report, shall be forfeited and lost, and shall and may be seized and prosecuted by any officer of the customs; and the master or other person having the charge or command of such ship or vessel (in case it can be made appear, that he was any wise consenting or privy to such fraud or concealment) shall forfeit treble the value of the goods so found. …
XL. And be it further enacted by the authority aforesaid, That all penalties and forfeitures herein before mentioned, which shall be incurred in Great Britain, shall and may be prosecuted, sued for, and recovered, in any of his Majesty’s courts of record at Westminster, or in the court of Exchequer in Scotland, respectively; and (all necessary charges for the recovery thereof being first deducted) shall be divided and applied, one moiety to and for the use of his Majesty, his heirs and successors, and the other moiety to the seizor or prosecutor.
XLI. And it is hereby further enacted and declared, That from and after the twenty ninth day of September, one thousand seven hundred and sixty four, all sums of money granted and imposed by this act, and by an act made in the twenty fifth year of the reign of King Charles the Second, intituled, An act for the encouragement of the Greenland and Eastland trades, and for the better securing the plantation trade, as rates or duties; and also all sums of money imposed as penalties or forfeitures, by this or any other act of parliament relating to the customs, which shall be paid, incurred, or recovered, in any of the British colonies or plantations in America; shall be deemed, and are hereby declared to be sterling money of Great Britain, and shall be collected, recovered, and paid, to the amount of the value which such nominal sums bear in Great Britain; and that such monies shall and may be received and taken according to the proportion and value of five shillings and six pence the ounce in silver; and that all the forfeitures and penalties inflicted by this or any other act or acts of parliament relating to the trade and revenues of the said British colonies or plantations where such offence shall be appointed over all America (which court of admiralty or vice admiralty are hereby respectively authorized and required to proceed, hear, and determine the same) at the election of the informer or prosecutor.
XLII. And it is hereby further enacted, That all penalties and forfeitures so recovered there, under this or any former act of parliament, shall be divided, paid, and applied, as follows; that is to say, after deducting the charges of prosecution from the gross produce thereof, one third part of the net produce shall be paid into the hands of the collector of his Majesty’s customs at the port or place where such penalties or forfeitures shall be recovered, for the use of his Majesty, his heirs and successors; one third part to the governor or commander in chief of the said colony or plantation; and the other third part to the person who shall seize, inform, and sue for the same; excepting such seizures as shall be made at sea by the commanders or officers of his Majesty’s ships or vessels of war duly authorized to make seizures; one moiety of which seizures, and of the penalties and forfeitures recovered thereon, first deducting the charges of prosecution from the gross produce thereof, shall be paid as aforesaid to the collector of his Majesty’s customs, to and for the use of his Majesty, his heirs and successors, and the other moiety to him or them who shall seize, inform, and sue for the same; any law, custom, or usage, to the contrary notwithstanding; subject nevertheless to such distribution of the produce of the seizures so made at sea, as well with regard to the moiety herein before granted to his Majesty, his heirs and successors, shall think fit to order and direct or by any order or orders of council, or by any proclamation or proclamations, to be made for that purpose.
XLIII. Provided always, and it is hereby further enacted by the authority aforesaid, That if the produce of any seizure made in America, shall not be sufficient to answer the expences of condemnation and sale; or if, upon the trial of any seizure of any ship or goods, a verdict or sentence shall be given for the claimant, in either of those cases, the charges attending the seizing and prosecuting such ship or goods shall and may, with the consent and approbation of any four of the commissioners of his Majesty’s customs, be paid out of any branch of the revenue of customs arising in any of the British colonies or plantations in America; any thing in this or any other act of parliament to the contrary notwithstanding. …
XLVII. And be it further enacted by the authority aforesaid, That if any action or suit shall be commenced, either in Great Britain or America, against any person or persons for any thing done in pursuance of this or any other act of parliament relating to his Majesty’s customs, the defendant or defendants in such action or suit may plead the general issue, and give the said acts, and the special matter, in evidence at any trial to be had thereupon, and that the same was done in pursuance and by the authority of such act; and if it shall appear so to have been done, the jury shall find for the defendant or defendants; and if the plaintiff shall be non-suited, or discontinue his action after the defendant or defendants shall have appeared, or if judgment shall be given upon verdict or demurrer against the plaintiff, the defendant or defendants shall recover treble costs, and have the like remedy for the same as defendants have in other cases by law.
Source: “The Sugar Act,” www.founding.com/library/(accessed June 2003).
Although the British Parliament had previously passed the Sugar Act and the American colonists reacted negatively to it, a firestorm arose in the British North American colonies with the passage of the Stamp Act. The argument of taxation was articulated as a source of difference between Parliament and colonial legislatures, with the British arguing that members of Parliament virtually represent all British subjects, while the colonists argued for direct (or actual) representation. Colonists began a policy of nonimportation, which eventually hurt British merchants, who pressured Parliament to repeal the act.
An act for granting and applying certain stamp duties, and other duties, in the British colonies and plantations in America, toward further defraying the expences of defending, protecting, and securing the same; and for amending such parts of the several acts of parliament relating to the trade and revenues of the said colonies and plantations, as direct the manner of determining and recovering the penalties and forfeitures therein mentioned.
WHEREAS by an act made in the last session of parliament, several duties were granted, continued, and ap propriated, towards defraying the expences of defending, protecting, and securing, the British colonies and plantations in America: and whereas it is just and necessary, that provision be made for raising a further revenue within your Majesty’s dominions in America, towards defraying the said expences: we, your Majesty’s most dutiful and loyal subjects, the commons of Great Britain in parliament assembled, have therefore resolved to give and grant unto your Majesty the several rates and duties herein after mentioned; and do most humbly beseech your Majesty that it may be enacted, and be it enacted by the King’s most excellent majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority of the same, That from and after the first day of November, one thousand seven hundred and sixty five, there shall be raised, levied, collected, and paid unto his Majesty, his heirs, and successors, throughout the colonies and plantations in America which now are, or hereafter may be, under the dominion of his Majesty, his heirs and successors,
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any declaration, plea, replication, rejoinder, demurrer, or other pleading, or any copy thereof, in any court of law within the British colonies and plantations in America, a stamp duty of three pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any special bail and appearance upon such bail in any such court, a stamp duty of two shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any petition, bill, answer, claim, plea, replication, rejoinder, demurrer, or other pleading in any court of chancery or equity within the said colonies and plantations, a stamp duty of one shilling and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any copy of any petition, bill, answer, claim, plea, replication, rejoinder, demurrer, or other pleading in any such court, a stamp duty of three pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any monition, libel, answer, allegation, inventory, or renunciation in ecclesiastical matters in any court of probate, court of the ordinary, or other court exercising ecclesiastical jurisdiction within the said colonies and plantations, a stamp duty of one shilling.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any copy of any will (other than the probate thereof) monition, libel, answer, allegation, inventory, or renunciation in ecclesiastical matters in any such court, a stamp duty of six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any donation, presentation, collation, or institution of or to any benefice, or any writ or instrument for the like purpose, or any register, entry, testimonial, or certificate of any degree taken in any university, academy, college, or seminary of learning, within the said colonies and plantations, a stamp duty of two pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any monition, libel, claim, answer, allegation, information, letter of request, execution, renunciation, inventory, or other pleading, in any admiralty court within the said colonies and plantations, a stamp duty of one shilling.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which any copy of such monition, libel, claim, answer, allegation, information, letter of request, execution, renunciation, inventory, or other pleading shall be ingrossed, written, or printed, a stamp duty of six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any appeal, writ of error, writ of dower, Ad quod damnum, certiorari, statute merchant, statute staple, attestation, or certificate, by any officer, or exemplification of any record or proceeding in any court whatsoever within the said colonies and plantations (except appeals, writs of error, certiorari, attestations, certificates, and exemplifications, for or relating to the removal of any proceedings from before a single justice of the peace) a stamp duty of ten shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any writ of covenant for levying of fines, writ of entry for suffering a common recovery, or attachment issuing out of, or returnable into, any court within the said colonies and plantations, a stamp duty of five shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any judgment, decree, sentence, or dismission, or any record of Nisi Prius or Postea, in any court within the said colonies and plantations, a stamp duty of four shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any affidavit, common bail or ap pearance, interrogatory deposition, rule, order, or warrant of any court, or any Dedimus Potestatem, Capias, Subpoena, summons, compulsory citation, commission, recognizance, or any other writ, process, or mandate, issuing out of, or returnable into, any court, or any office belonging thereto, or any other proceeding therein whatsoever, or any copy thereof, or of any record not herein before charged, within the said colonies and plantations (except warrants relating to criminal matters, and proceedings thereon or relating thereto) a stamp duty of one shilling.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any licence, appointment, or admission of any counsellor, solicitor, attorney, advocate, or proctor, to practice in any court, or of any notary within the said colonies and plantations, a stamp duty of ten pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any note or bill of lading, which shall be signed for any kind of goods, wares, or merchandize, to be exported from, or any cocket or clearance granted within the said colonies and plantations, a stamp duty of four pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, letters of mart, or commission for private ships of war, within the said colonies and plantations, a stamp duty of twenty shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any grant, appointment, or admission of or to any publick beneficial office or employment, for the space of one year, or any lesser time, of or above the value of twenty pounds per annum sterling money, in salary, fees, and perquisites, within the said colonies and plantations, (except commissions and appointments of officers of the army, navy, ordnance, or militia, of judges, and of justices of the peace) a stamp duty of ten shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which any grant of any liberty, privilege, or franchise, under the seal of any of the said colonies or plantations, or under the seal or sign manual of any governor, proprietor, or publick officer alone, or in conjunction with any other person or persons, or with any council, or any council and assembly, or any exemplification of the same, shall be ingrossed, written, or printed, within the said colonies and plantations, a stamp duty of six pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any licence for retailing of spirituous liquors, to be granted to any person who shall take out the same, within the said colonies and plantations, a stamp duty of twenty shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed any licence for retailing wine, to be granted to any person who shall not take out a licence for retailing of spirituous liquors, within the said colonies and plantations, a stamp duty of four pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any licence for retailing of wine, to be granted to any person who shall take out a licence for retailing of spirituous liquors, within the said colonies and plantations, a stamp duty of three pounds,
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any probate of a will, letters of administration, or of guardianship for any estate above the value of twenty pounds sterling money; within the British colonies and plantations upon the continent of America, the islands belonging thereto, and the Bermuda and Bahama islands, a stamp duty of five shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such probate, letters of administration or of guardianship within all other parts of the British dominions in America, a stamp duty of ten shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any bond for securing the payment of any sum of money, not exceeding the sum of ten pounds sterling money, within the British colonies and plantations upon the continent of America, the islands belonging there to, and the Bermuda and Bahama islands, a stamp duty of six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any bond for securing the payment of any sum of money above ten pounds, and not exceeding the sum of twenty pounds sterling money, within such colonies, plantations, and islands, a stamp duty of one shilling.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any bond for securing the payment of any sum of money above twenty pounds, and not exceeding forty pounds of sterling money, within such colonies, plantations, and islands, a stamp duty of one shilling and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any order or warrant for surveying or setting out any quantity of land, not exceeding one hundred acres, issued by any governor, proprietor, or any publick officer alone, or in conjunction with any other person or persons, or with any council, or any council and assembly, within the British colonies and plantations in America, a stamp duty of six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such order or warrant for surveying or setting out any quantity of land above one hundred, and not exceeding two hundred acres, within the said colonies and plantations, a stamp duty of one shilling.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such order or warrant for surveying or setting out any quantity of land above two hundred, and not exceeding three hundred and twenty acres, and in proportion for every such order or warrant for surveying or setting out every other three hundred and twenty acres, within the said colonies and plantations, a stamp duty of one shilling and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any original grant, or any deed, mesne conveyance, or other instrument whatsoever, by which any quantity of land not exceeding one hundred acres shall be granted, conveyed, or assigned, within the British colonies and plantations upon the continent of America, the islands belonging thereto, and the Bermuda and Bahama islands (except leases for any term not exceeding the term of twenty one years) a stamp duty of one shilling and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such original grant, or any such deed, mesne conveyance, or other instrument whatsoever by which any quantity of land above one hundred, and not exceeding two hundred acres, shall be granted, conveyed, or assigned, within such colonies, plantations, and islands, a stamp duty of two shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such original grant, or any such deed, mesne conveyance, or other instrument whatsoever, by which any quantity of land above two hundred, and not exceeding three hundred and twenty acres, shall be granted, conveying, or assigned and in proportions for every such grant, deed, mesne conveyance, or other instrument, granting, conveying, or assigning, every other three hundred and twenty acres, within such colonies, plantations, and islands, a stamp duty of two shillings and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such original grant, or any such deed, mesne conveyance, or other instrument whatsoever, by which any quantity of land not exceeding one hundred acres shall be granted, conveyed, or assigned, within all other parts of the British dominions in America, a stamp duty of three shillings.
For every skin or piece of vellum or parchment or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such original grant, or any such deed, mesne conveyance, or other instrument whatsoever, by which any quantity of land above one hundred, and not exceeding two hundred acres, shall be granted, conveyed, or assigned, within the same parts of the said dominions, a stamp duty of four shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such original grant, or any such deed, mesne conveyance, or other instrument whatsoever, whereby any quantity of land above two hundred, and not exceeding three hundred and twenty acres, shall be granted, conveyed, or assigned, and in proportion for every such grant, deed, mesne conveyance, or other instrument, granting, conveying, or assigning, every other three hundred and twenty acres, within the same parts of the said dominions, a stamp duty of five shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any grant, appointment, or admission, of or to any publick beneficial office or employment, not herein before charged, above the value of twenty pounds per annum sterling money in salary, fees, and perquisites, or any exemplification of the same, within the British colonies and plantations upon the continent of America, the islands belonging thereto, and the Bermuda and Bahama islands (except commissions of officers of the army, navy, ordnance, or militia, and of justices of the peace) a stamp duty of four pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any such grant, appointment, or admissions, of or to any such publick beneficial office or employment, or any exemplification of the same, within all other parts of the British dominions in America, a stamp duty of six pounds.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any indenture, lease, conveyance, contract, stipulation, bill of sale, charter party, protest, articles of apprenticeship, or covenant (except for the hire of servants not apprentices, and also except such other matters as are herein before charged) within the British colonies and plantations in America, a stamp duty of two shillings and six pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which any warrant or order for auditing any publick accounts, beneficial warrant, order, grant, or certificate, under any publick seal, or under the seal of sign manual of any governor, proprietor, or publick officer alone, or in conjunction with any other person or persons, or with any council, or any council and assembly, not herein before charge, or any passport, or let-pass, surrender of officer, or policy of assurance, shall be ingrossed, written, or printed, within the said colonies and plantations (except warrants or orders for the service of the navy, army, ordnance, or militia, and grants of offices under twenty pounds per annum in salary, fees, and perquisites) a stamp duty of five shillings.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any notarial act, bond, deed, letter, of attorney, procuration, mortgage, release, or other obligatory instrument, not herein before charged, within the said colonies and plantations, a stamp duty of two shillings and three pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any register, entry, or inrollment of any grant, deed, or other instrument whatsoever herein before charged, within the said colonies and plantations, a stamp duty of three pence.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which shall be ingrossed, written, or printed, any register, entry, or inrollement of any grant, deed, or other instrument whatsoever not herein before charged, within the said colonies and plantations, a stamp duty of two shillings.
And for and upon every pack of playing cards, and all dice, which shall be sold or used within the said colonies and plantations, the several stamp duties following (that is to say)
For every pack of such cards, the sum of one shilling.
And for every pair of such dice, the sum of ten shillings.
And for and upon every paper, commonly called a pamphlet, and upon every news paper, containing publick news, intelligence, or occurrences, which shall be printed, dispersed, and made publick, within any of the said colonies and plantations, and for and upon such advertisements as are herein after mentioned, the respective duties following (that is to say)
For every such pamphlet and paper contained in half a sheet, or any lesser piece of paper, which shall be so printed, a stamp duty of one halfpenny, for every printed copy thereof.
For every such pamphlet and paper (being larger than half a sheet, and not exceeding one whole sheet) which shall be so printed, a stamp duty of one penny, for every printed copy thereof.
For every pamphlet and paper being larger than one whole sheet, and not exceeding six sheets in octavo, or in a lesser page, or not exceeding twelve sheets in quarto, or twenty sheets in folio, which shall be so printed, a duty after the rate of one shilling for every sheet of any kind of paper which shall be contained in one printed copy thereof.
For every advertisement to be contained in any gazette, news paper, or other paper, or any pamphlet which shall be so printed, a duty of two shillings.
For every almanack or calendar, for any one particular year, or for any time less than a year, which shall be written or printed on one side only of any one sheet, skin, or piece of paper parchment, or vellum, within the said colonies and plantations, a stamp duty of two pence.
For every other almanack or calendar for any one particular year, which shall be written or printed within the said colonies or plantations, a stamp duty of four pence.
And for every almanack or calendar written or printed within the said colonies and plantations, to serve for several years, duties to the same amount respectively shall be paid for every such year.
For every skin or piece of vellum or parchment, or sheet or piece of paper, on which any instrument, proceeding, or other matter or thing aforesaid, shall be ingrossed, written, or printed, within the said colonies and plantations, in any other than the English language, a stamp duty of double the amount of the respective duties being charged thereon.
And there shall be also paid in the said colonies and plantations, a duty of six pence for every twenty shillings, in any sum not exceeding fifty pounds sterling money, which shall be given, paid, contracted, or agreed for, with or in relation to any clerk or apprentice, which shall be put or placed to or with any master or mistress to learn any profession, trade, or employment.
Source: “The Stamp Act,” www.founding.com/library (accessed May 2003).
Repeated attempts by the British Parliament to levy direct taxes on the British North American colonists resulted in protests. The Townshend Duties, enacted in 1767, led to such widespread unrest that Parliament repealed all except the Tea Act in 1770. Passed by Parliament as a means of resolving the financial problems of the British East India Company, which was in debt but had enough tea in its warehouses to pay the debt, the act provided the company with a monopoly for the sale of tea in the colonies but included a very small tax, to which the colonists objected. Instead of paying the tax, the Bostonians dumped the tea into the harbor and thus began the events that led to the American Revolution.
An act to allow a drawback of the duties of customs on the exportation of tea to any of Britain’s colonies or plantations in America, to increase the deposit on bohea tea to be sold at the British East India Company’s sales, and to empower the commissioners of the treasury to grant licences to the British East India Company to export tea duty-free.
WHEREAS by an act, made in the twelfth year of his present Majesty’s reign, (intituled, An act for granting a drawback of part of the customs upon the exportation of tea to Ireland, and the British dominions in America; for altering the drawback upon foreign sugars exported from Great Britain to Ireland; for continuing the bounty on the exportation of British-made cordage; for allowing the importation of rice from the British plantations into the ports of Bristol, Liverpoole, Lancaster, and Whitehaven, for immediate exportation to foreign parts; and to impower the chief magistrate of any corporation to administer the oath, and grant the certificate required by law, upon the removal of certain goods to London, which have been sent into the country for sale;) it is amongst other things, enacted, That for and during the space of five years, to be computed from and after the fifth day of July, one thousand seven hundred and seventy-two, there shall be drawn back and allowed for all teas which shall be sold after the said fifth day of July, one thousand seven hundred and seventy-two, at the publick sale of the united company of merchants of England trading to the East Indies, or which after that time shall be imported, by licence, in pursuance of the said therein and hereinafter mentioned act, made in the eighteenth year of the reign of his late majesty King George the Second, and which shall be exported from this kingdom, as merchandise, to Ireland, or any of the British colonies or plantations in America, three-fifth parts of the several duties of customs which were paid upon the importation of such teas; which drawback or allowance, with respect to such teas as shall be exported to Ireland, shall be made to the exporter, in such manner, and under such rules, regulations, securities, penalties, and forfeitures, as any drawback or allowance was then payable, out of the duty of customs upon the exportation of foreign goods to Ireland; and with respect to such teas as shall be exported to the British colonies and plantations in America, the said drawback or allowance shall be made in such manner, and under such rules, regulations, penalties, and forfeitures, as any drawback or allowance payable out of the duty of customs upon foreign goods exported to foreign parts, was could, or might be made, before the passing of the said act of the twelfth year of his present Majesty’s reign, (except in such cases as are otherwise therein provided for:) and whereas it may tend to the benefit and advantage of the trade of the said united company of merchants of England trading to the East Indies, if the allowance of the drawback of the duties of customs upon all teas sold at the publick sales of the said united company, after the tenth day of May, one thousand seven hundred and seventy-three, and which shall be exported from this kingdom, as merchandise, to any of the British colonies or plantations in America, were to extend to the whole of the said duties of customs payable upon the importation of such teas; may it therefore please your Majesty that it may be enacted; and be it enacted by the King’s most excellent majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority of the same, That there shall be drawn back and allowed for all teas, which, from and after the tenth day of May, one thousand seven hundred and seventy-three, shall be sold at the publick sales of the said united company, or which shall be imported by licence, in pursuance of the said act made in the eighteenth year of the reign of his late majesty King George the Second, and which shall, at any time hereafter, be exported from this kingdom, as merchandise, to any of the British colonies or plantations in America, the whole of the duties of customs payable upon the importation of such teas; which drawback or allowance shall be made to the exporter in such manner, and under such rules, regulations, and securities, and subject to the like penalties and forfeitures, as the former drawback or allowance granted by the said recited act of the twelfth year of his present Majesty’s reign, upon tea exported to the said British colonies and plantations in America was, might, or could be made, and was subject to by the said recited act, or any other act of parliament now in force, in as full and ample manner, to all intents and purposes, as if the several clauses relative thereto were again repeated and re-enacted in this present act.
II. And whereas by one other act made in the eighteenth year of the reign of his late majesty King George the Second, (intituled, An act for repealing the present inland duty of four shillings per pound weight upon all tea sold in Great Britain; and for granting to his Majesty certain other inland duties in lieu thereof; and for better securing the duty upon tea, and other duties of excise; and for pursuing offenders out of one county into another,) it is, amongst other things, enacted, That every person who shall, at any publick sale of tea made by the united company of merchants of England trading to the East Indies, be declared to be the best bidder for any lot or lots of tea, shall, within three days after being so declared the best bidder or bidders for the same, deposit with the said united company, or such clerk or officer as the said company shall appoint to receive the same, forty shillings for every tub and for every chest of tea; and in case any such person or persons shall refuse or neglect to make such deposit within the time before limited, he, she, or they, shall forfeit and lose six times the value of such deposit directed to be made as aforesaid, to be recovered by action of debt, bill, plaint, or information, in any of his Majesty’s courts of record at Westminster, in which no essoin, protection, or wager of law, or more than one imparlance, shall be allowed; one moiety of which forfeiture shall go to his Majesty, his heirs and successors, and the other moiety to such person as shall sue or prosecute for the same; and the sale of all teas, for which such deposit shall be neglected to be made as aforesaid, is thereby declared to be null and void, and such teas shall be again put up by the said united company to publick sale, within fourteen days after the end of the sale of teas at which such teas were sold; and all and every buyer or buyers, who shall have neglected to make such deposit as aforesaid, shall be, and is and are thereby rendered incapable of bidding for or buying any teas at any future publick sale of the said united company: and whereas it is found to be expedient and necessary to increase the deposit to be made by any bidder or bidders for any lot or lots of bohea teas, at the publick sales of teas to be made by the said united company; be it enacted by the authority aforesaid, That every person who shall, after the tenth day of May, one thousand seven hundred and seventy-three, at any publick sale of tea to be made by the said united company of merchants of England trading to the East Indies, be declared to be the best bidder or bidders for any lot or lots of bohea tea, shall, within three days after being so declared the best bidder or bidders for the same, deposit with the said united company, or such clerk or officer as the said united company shall appoint to receive the same, four pounds of lawful money of Great Britain for every tub and for every chest of bohea tea, under the same terms and conditions, and subject to the same forfeitures, penalties, and regulations, as are mentioned and contained in the said recited act of the eighteenth year of the reign of his said late Majesty.
III. And be it further enacted by the authority aforesaid, That it shall and may be lawful for the commissioners of his Majesty’s treasury, or any three or more of them, or for the high treasurer for the time being, upon application made to them by the said united company of merchants of England trading to the East Indies for that purpose, to grant a licence or licences to the said united company, to take out of their warehouses, without the same having been put up to sale, and to export to any of the British plantations in America, or to any parts beyond the seas, such quantity or quantities of tea as the said commissioners of his Majesty’s treasury, or any three or more of them, or the high treasurer for the time being, shall think proper and expedient, without incurring any penalty or forfeiture for so doing; any thing in the said in part recited act, or any other law, to the contrary notwithstanding.
IV. And whereas by an act made in the ninth and tenth years of the reign of King William the Third, (intituled, An act for raising a sum not exceeding two millions, upon a fund, for payment of annuities, after the rate of eight pounds per centum per annum; and for settling the trade to the East Indies,) and by several other acts of parliament which are now in force, the said united company of merchants of England trading to the East Indies are obliged to give security, under their common seal, for payment of the duties of customs upon all unrated goods imported by them, so soon as the same shall be sold; and for exposing such goods to sale, openly and fairly, by way of auction, or by inch of candle, within the space of three years from the importation thereof: and whereas it is expedient that some provision should be made to permit the said company, in certain cases, to export tea, on their own account, to the British plantations in America, or to foreign parts, without exposing such tea, to sale here, or being charged with the payment of any duty for the same; be it therefore enacted by the authority aforesaid, That from and after the passing of this act, it shall and may be lawful for the commissioners of his Majesty’s treasury, or any three or more of them, or the high treasurer for the time being, to grant a licence or quantity of licences to the said united company, to take out of their warehouses such quantity or quantities of tea as the said commissioners of the treasury, or any three or more of them, or the high treasurer for the time being, shall think proper, without the same having been exposed to sale in this kingdom; and to export such tea to any of the British colonies or plantations in America, or to foreign parts, discharged from the payment of any customs or duties whatsoever; any thing in the said recited act, or any other act to the contrary notwithstanding.
V. Provided always, and it is hereby further enacted by the authority aforesaid, That a due entry shall be made at the custom-house, of all such tea so exported by licence, as aforesaid, expressing the quantities thereof, at what time imported, and by what ship; and such tea shall be shipped for exportation by the proper officer for that purpose, and shall, in all other respects, not altered by this act, be liable to the same rules, regula tions, restrictions, securities, penalties, and forfeitures, as tea penalties, &c. exported to the like places was liable to before the passing this act: and upon the proper officer’s duty, certifying the shipping of such tea to the collector and comptroller of his Majesty’s customs for the port of London, upon the back of the licence, and the exportation thereof, verified by the oath of the husband or agent for the said united company, to be wrote at the bottom of such certificate, and sworn before the said collector and comptroller of the customs, (which oath they are hereby impowered to administer,) it shall and may be lawful for such collector and comptroller to write off and discharge the quantity of tea so exported from the warrant of the respective ship in which such tea was imported.
VI. Provided nevertheless, That no such licence shall be granted, unless it shall first be made to appear to the satisfaction of the commissioners of his Majesty’s treasury, or any three or more of them, or the high treasurer for the time being, that at the time of taking out such teas, for the exportation of which licence or licences shall be granted, there will be left remaining in the warehouses of the said united company, a quantity of tea not less than ten millions of pounds weight; any thing herein, or in any other act of parliament, contained to the contrary thereof notwithstanding.
Source: “The Tea Act of 1773,” www.founding.com/library/ (accessed June 2003).
Scottish economist and philosopher Adam Smith attended university at Glasgow and Oxford before becoming a professor of moral philosophy. From 1764 to 1766, he toured Europe as the tutor of the duke of Buccleuch. While in France, he was introduced to several Physiocrats, a group that promoted free trade and competition among nations as well as several social reforms. After returning to England, he began his work An Inquiry on the Wealth of Nations, which was published in 1776. Smith argued that trade should remain unrestricted except in cases of national defense. Although Great Britain failed to heed his advice, primarily because of the special circumstances that developed during the Industrial Revolution, Smith’s work remains the primary document that argues for a shift from mercantilism to a capitalist society with free trade.
Of Treaties of Commerce
When a nation binds itself by treaty either to permit the entry of certain goods from one foreign country which it prohibits from all others, or to exempt the goods of one country from duties to which it subjects those of all others, the country, or at least the merchants and manufacturers of the country, whose commerce is so favoured, must necessarily derive great advantage from the treaty. Those merchants and manufacturers enjoy a sort of monopoly in the country which is so indulgent to them. That country becomes a market both more extensive and more advantageous for their goods: more extensive, because the goods of other nations being either excluded or subjected to heavier duties, it takes off a greater quantity of theirs: more advantageous, because the merchants of the favoured country, enjoying a sort of monopoly there, will often sell their goods for a better price than if exposed to the free competition of all other nations.
Such treaties, however, though they may be advantageous to the merchants and manufacturers of the favoured, are necessarily disadvantageous to those of the favouring country. A monopoly is thus granted against them to a foreign nation; and they must frequently buy the foreign goods they have occasion for dearer than if the free competition of other nations was admitted. That part of its own produce with which such a nation purchases foreign goods must consequently be sold cheaper, because when two things are exchanged for one another, the cheapness of the one is a necessary consequence, or rather the same thing with the dearness of the other. The exchangeable value of its annual produce, therefore, is likely to be diminished by every such treaty. This diminution, however, can scarce amount to any positive loss, but only to a lessening of the gain which it might otherwise make. Though it sells its goods cheaper than it otherwise might do, it will not probably sell them for less than they cost; nor, as in the case of bounties, for a price which will not replace the capital employed in bringing them to market, together with the ordinary profits of stock. The trade could not go on long if it did. Even the favouring country, therefore, may still gain by the trade, though less than if there was a free competition.
Some treaties of commerce, however, have been supposed advantageous upon principles very different from these; and a commercial country has sometimes granted a monopoly of this kind against itself to certain goods of a foreign nation, because it expected that in the whole commerce between them, it would annually sell more than it would buy, and that a balance in gold and silver would be annually returned to it. It is upon this principle that the treaty of commerce between England and Portugal, concluded in 1703 by Mr. Methuen, has been so much commended. The following is a literal translation of that treaty, which consists of three articles only.
His sacred royal majesty of Portugal promises, both in his own name, and that of his successors, to admit, for ever hereafter, into Portugal, the woollen cloths, and the rest of the woollen manufactures of the British, as was accustomed, till they were prohibited by the law; nevertheless upon this condition:
That is to say, that her sacred royal majesty of Great Britain shall, in her own name, and that of her successors, be obliged, for ever hereafter, to admit the wines of the growth of Portugal into Britain; so that at no time, whether there shall be peace or war between the kingdoms of Britain and France, anything more shall be demanded for these wines by the name of custom or duty, or by whatsoever other title, directly or indirectly, whether they shall be imported into Great Britain in or hogsheads, or other casks, than what shall be demanded for the like quantity or measure of French wine, deducting or abating a third part of the custom or duty. But if at any time this deduction or abatement of customs, which is to be made as aforesaid, shall in any manner be attempted and prejudiced, it shall be just and lawful for his sacred royal majesty of Portugal, again to prohibit the woollen cloths, and the rest of the British woollen manufactures.
The most excellent lords the plenipotentiaries promise and take upon themselves, that their above named masters shall ratify this treaty; and within the space of two months the ratifications shall be exchanged.
By this treaty the crown of Portugal becomes bound to admit the English woollens upon the same footing as before the prohibition; that is, not to raise the duties which had been paid before that time. But it does not become bound to admit them upon any better terms than those of any other nation, of France or Holland for example. The crown of Great Britain, on the contrary, becomes bound to admit the wines of Portugal upon paying only two-thirds of the duty which is paid for those of France, the wines most likely to come into competition with them. So far this treaty, therefore, is evidently advantageous to Portugal, and disadvantageous to Great Britain.
It has been celebrated, however, as a masterpiece of the commercial policy of England. Portugal receives annually from the Brazils a greater quantity of gold than can be employed in its domestic commerce, whether in the shape of coin or of plate. The surplus is too valuable to be allowed to lie idle and locked up in coffers, and as it can find no advantageous market at home, it must, notwithstanding any prohibition, be sent abroad, and exchanged for something for which there is a more advantageous market at home. A large share of it comes annually to England, in return either for English goods, or for those of other European nations that receive their returns through England. Mr. Baretti was informed that the weekly packet-boat from Lisbon brings, one week with another, more than fifty thousand pounds in gold to England. The sum had probably been exaggerated. It would amount to more than two millions six hundred thousand pounds a year, which is more than the Brazils are supposed to afford.
Our merchants were some years ago out of humour with the crown of Portugal. Some privileges which had been granted them, not by treaty, but by the free grace of that crown, at the solicitation indeed, it is probable, and in return for much greater favours, defence and protection, from the crown of Great Britain had been either infringed or revoked. The people, therefore, usually most interested in celebrating the Portugal trade were then rather disposed to represent it as less advantageous than it had commonly been imagined. The far greater part, almost the whole, they pretended, of this annual importation of gold, was not on account of Great Britain, but of other European nations; the fruits and wines of Portugal annually imported into Great Britain nearly compensating the value of the British goods sent thither.
Let us suppose, however, that the whole was on account of Great Britain, and that it amounted to a still greater sum than Mr. Baretti seems to imagine; this trade would not, upon that account, be more advantageous than any other in which, for the same value sent out, we received an equal value of consumable goods in return.
It is but a very small part of this importation which, it can be supposed, is employed as an annual addition either to the plate or to the coin of the kingdom. The rest must all be sent abroad and exchanged for consumable goods of some kind or other. But if those consumable goods were purchased directly with the produce of English industry, it would be more for the advantage of England than first to purchase with that produce the gold of Portugal, and afterwards to purchase with that gold those consumable goods. A direct foreign trade of consumption is always more advantageous than a round-about one; and to bring the same value of foreign goods to the home market, requires a much smaller capital in the one way than in the other. If a smaller share of its industry, therefore, had been employed in producing goods fit for the Portugal market, and a greater in producing those fit for the other markets, where those consumable goods for which there is a demand in Great Britain are to be had, it would have been more for the advantage of England. To procure both the gold, which it wants for its own use, and the consumable goods, would, in this way, employ a much smaller capital than at present. There would be a spare capital, therefore, to be employed for other purposes, in exciting an additional quantity of industry, and in raising a greater annual produce.
Though Britain were entirely excluded from the Portugal trade, it could find very little difficulty in procuring all the annual supplies of gold which it wants, either for the purposes of plate, or of coin, or of foreign trade. Gold, like every other commodity, is always somewhere or another to be got for its value by those who have that value to give for it. The annual surplus of gold in Portugal, besides, would still be sent abroad, and though not carried away by Great Britain, would be carried away by some other nation, which would be glad to sell it again for its price, in the same manner as Great Britain does at present. In buying gold of Portugal, indeed, we buy it at the first hand; whereas, in buying it of any other nation, except Spain, we should buy it at the second, and might pay somewhat dearer. This difference, however, would surely be too insignificant to deserve the public attention.
Almost all our gold, it is said, comes from Portugal. With other nations the balance of trade is either against us, or not much in our favour. But we should remember that the more gold we import from one country, the less we must necessarily import from all others. The effectual demand for gold, like that for every other commodity, is in every country limited to a certain quantity. If nine-tenths of this quantity are imported from one country, there remains a tenth only to be imported from all others. The more gold besides that is annually imported from some particular countries, over and above what is requisite for plate and for coin, the more must necessarily be exported to some others; and the more that most insignificant object of modern policy, the balance of trade, appears to be in our favour with some particular countries, the more it must necessarily appear to be against us with many others.
It was upon this silly notion, however, that England could not subsist without the Portugal trade, that, towards the end of the late war, France and Spain, without pretending either offence or provocation, required the King of Portugal to exclude all British ships from his ports, and for the security of this exclusion, to receive into them French or Spanish garrisons. Had the king of Portugal submitted to those ignominious terms which his brother-in-law the king of Spain proposed to him, Britain would have been freed from a much greater inconveniency than the loss of the Portugal trade, the burden of supporting a very weak ally, so unprovided of everything for his own defence that the whole power of England, had it been directed to that single purpose, could scarce perhaps have defended him for another campaign. The loss of the Portugal trade would, no doubt, have occasioned a considerable embarrassment to the merchants at that time engaged in it, who might not, perhaps, have found out, for a year or two, any other equally advantageous method of employing their capitals; and in this would probably have consisted all the inconveniency which England could have suffered from this notable piece of commercial policy.
The great annual importation of gold and silver is neither for the purpose of plate nor of coin, but of foreign trade. A round-about foreign trade of consumption can be carried on more advantageously by means of these metals than of almost any other goods. As they are the universal instruments of commerce, they are more readily received in return for all commodities than any other goods; and on account of their small bulk and great value, it costs less to transport them backward and forward from one place to another than almost any other sort of merchandise, and they lose less of their value by being so transported. Of all the commodities, therefore, which are bought in one foreign country, for no other purpose but to be sold or exchanged again for some other goods in another, there are none so convenient as gold and silver. In facilitating all the different round-about foreign trades of consumption which are carried on in Great Britain consists the principal advantage of the Portugal trade; and though it is not a capital advantage, it is no doubt a considerable one.
That any annual addition which, it can reasonably be supposed, is made either to the plate or to the coin of the kingdom, could require but a very small annual importation of gold and silver, seems evident enough; and though we had no direct trade with Portugal, this small quantity could always, somewhere or another, be very easily got.
Though the goldsmith’s trade be very considerable in Great Britain, the far greater part of the new plate which they annually sell is made from other old plate melted down; so that the addition annually made to the whole plate of the kingdom cannot be very great, and could require but a very small annual importation.
It is the same case with the coin. Nobody imagines, I believe, that even the greater part of the annual coinage, amounting, for ten years together, before the late reformation of the gold coin, to upwards of eight hundred thousand pounds a year in gold, was an annual addition to the money before current in the kingdom. In a country where the expense of the coinage is defrayed by the government, the value of the coin, even when it contains its full standard weight of gold and silver, can never be much greater than that of an equal quantity of those metals uncoined; because it requires only the trouble of going to the mint, and the delay perhaps of a few weeks, to procure for any quantity of uncoined gold and silver an equal quantity of those metals in coin. But, in every country, the greater part of the current coin is almost always more or less worn, or otherwise degenerated from its standard. In Great Britain it was, before the late reformation, a good deal so, the gold being more than two per cent and the silver more than eight per cent below its standard weight. But if forty-four guineas and a half, containing their full standard weight, a pound weight of gold, could purchase very little more than a pound weight could of uncoined gold, forty-four guineas and a half wanting a part of their weight could not purchase a pound weight, and something was to be added in order to make up the deficiency. The current price of gold bullion at market, therefore, instead of being the same with the mint price, or #46 14s. 6d., was then about #47 14s. and sometimes about #48. When the greater part of the coin, however, was in this degenerate condition, forty-four guineas and a half, fresh from the mint, would purchase no more goods in the market than any other ordinary guineas, because when they came into the coffers of the merchant, being confounded with other money, they could not afterwards be distinguished without more trouble than the difference was worth. Like other guineas they were worth no more than #46 14s. 6d. If thrown into the melting pot, however, they produced, without any sensible loss, a pound weight of standard gold, which could be sold at any time for between #47 14s. and #48 either of gold or silver, as fit for all the purposes of coin as that which had been melted down. There was an evident profit, therefore, in melting down new coined money, and it was done so instantaneously, that no precaution of government could prevent it. The operations of the mint were, upon this account, somewhat like the web of Penelope; the work that was done in the day was undone in the night. The mint was employed, not so much in making daily additions to the coin, as in replacing the very best part of it which was daily melted down.
Were the private people, who carry their gold and silver to the mint, to pay themselves for the coinage, it would add to the value of those metals in the same manner as the fashion does to that of plate. Coined gold and silver would be more valuable than uncoined. The seignorage, if it was not exorbitant, would add to the bullion the whole value of the duty; because, the government having everywhere the exclusive privilege of coining, no coin can come to market cheaper than they think proper to afford it. If the duty was exorbitant indeed, that is, if it was very much above the real value of the labour and expense requisite for coinage, false coiners, both at home and abroad, might be encouraged, by the great difference between the value of bullion and that of coin, to pour in so great a quantity of counterfeit money as might reduce the value of the government money. In France, however, though the seignorage is eight per cent, no sensible inconveniency of this kind is found to arise from it. The dangers to which a false coiner is everywhere exposed, if he lives in the country of which he counterfeits the coin, and to which his agents or correspondents are exposed if he lives in a foreign country, are by far too great to be incurred for the sake of a profit of six or seven per cent.
The seignorage in France raises the value of the coin higher than in proportion to the quantity of pure gold which it contains. Thus by the edict of January 1726, the mint price of fine gold of twenty-four carats was fixed at seven hundred and forty livres nine sous and one denier one-eleventh, the mark of eight Paris ounces. The gold coin of France, making an allowance for the remedy of the mint, contains twenty-one carats and three-fourths of fine gold, and two carats one fourth of alloy. The mark of standard gold, therefore, is worth no more than about six hundred and seventy-one livres ten deniers. But in France this mark of standard gold is coined into thirty Louis d’ors of twenty-four livres each, or into seven hundred and twenty livres. The coinage, therefore, increases the value of a mark of standard gold bullion, by the difference between six hundred and seventy-one livres ten deniers, and seven hundred and twenty livres; or by forty-eight livres nineteen sous and two deniers.
A seignorage will, in many cases, take away altogether, and will, in all cases, diminish the profit of melting down the new coin. This profit always arises from the difference between the quantity of bullion which the common currency ought to contain, and that which it actually does contain. If this difference is less than the seignorage, there will be loss instead of profit. If it is equal to the seignorage, there will neither be profit nor loss. If it is greater than the seignorage, there will indeed be some profit, but less than if there was no seignorage. If, before the late reformation of the gold coin, for example, there had been a seignorage of five per cent upon the coinage, there would have been a loss of three per cent upon the melting down of the gold coin. If the seignorage had been two per cent there would have been neither profit nor loss. If the seignorage had been one per cent there would have been a profit, but of one per cent only instead of two per cent. Wherever money is received by tale, therefore, and not by weight, a seignorage is the most effectual preventative of the melting down of the coin, and, for the same reason, of its exportation. It is the best and heaviest pieces that are commonly either melted down or exported; because it is upon such that the largest profits are made.
The law for encouragement of the coinage, by rendering it duty-free, was first enacted during the reign of Charles II for a limited time; and afterwards contin ued, by different prolongations, till 1769, when it was rendered perpetual. The Bank of England, in order to replenish their coffers with money, are frequently obliged to carry bullion to the mint; and it was more for their interest, they probably imagined, that the coinage should be at the expense of the government than at their own. It was probably out of complaisance to this great company that the government agreed to render this law perpetual. Should the custom of weighing gold, however, come to be disused, as it is very likely to be on account of its inconveniency; should the gold coin of England come to be received by tale, as it was before the late recoinage, this great company may, perhaps, find that they have upon this, as upon some other occasions, mistaken their own interest not a little.
Before the late recoinage, when the gold currency of England was two per cent below its standard weight, as there was no seignorage, it was two per cent below the value of that quantity of standard gold bullion which it ought to have contained. When this great company, therefore, bought gold bullion in order to have it coined, they were obliged to pay for it two per cent more than it was worth after coinage. But if there had been a seignorage of two per cent upon the coinage, the common gold currency, though two per cent below its standard weight, would notwithstanding have been equal in value to the quantity of standard gold which it ought to have contained; the value of the fashion compensating in this case the diminution of the weight. They would indeed have had the seignorage to pay, which being two per cent, their loss upon the whole transaction would have been two per cent exactly the same, but no greater than it actually was.
If the seignorage had been five per cent, and the gold currency only two per cent below its standard weight, the bank would in this case have gained three per cent upon the price of the bullion; but as they would have had a seignorage of five per cent to pay upon the coinage, their loss upon the whole transaction would, in the same manner, have been exactly two per cent.
If the seignorage had been only one per cent and the gold currency two per cent below its standard weight, the bank would in this case have lost only one per cent upon the price of the bullion; but as they would likewise have had a seignorage of one per cent to pay, their loss upon the whole transaction would have been exactly two per cent in the same manner as in all other cases.
If there was a reasonable seignorage, while at the same time the coin contained its full standard weight, as it has done very nearly since the last recoinage, whatever the bank might lose by the seignorage, they would gain upon the price of the bullion; and whatever they might gain upon the price of the bullion, they would lose by the seignorage. They would neither lose nor gain, therefore, upon the whole transaction, and they would in this, as in all the foregoing cases, be exactly in the same situation as if there was no seignorage.
When the tax upon a commodity is so moderate as not to encourage smuggling, the merchant who deals in it, though he advances, does not properly pay the tax, as he gets it back in the price of the commodity. The tax is finally paid by the last purchaser or consumer. But money is a commodity with regard to which every man is a merchant. Nobody buys it but in order to sell it again; and with regard to it there is in ordinary cases no last purchaser or consumer. When the tax upon coinage, therefore, is so moderate as not to encourage false coining, though everybody advances the tax, nobody finally pays it; because everybody gets it back in the advanced value of the coin.
A moderate seignorage, therefore, would not in any case augment the expense of the bank, or of any other private persons who carry their bullion to the mint in order to be coined, and the want of a moderate seignorage does not in any case diminish it. Whether there is or is not a seignorage, if the currency contains its full standard weight, the coinage costs nothing to anybody, and if it is short of that weight, the coinage must always cost the difference between the quantity of bullion which ought to be contained in it, and that which actually is contained in it.
The government, therefore, when it defrays the expense of coinage, not only incurs some small expense, but loses some small revenue which it might get by a proper duty; and neither the bank nor any other private persons are in the smallest degree benefited by this useless piece of public generosity.
The directors of the bank, however, would probably be unwilling to agree to the imposition of a seignorage upon the authority of a speculation which promises them no gain, but only pretends to insure them from any loss. In the present state of the gold coin, and as long as it continues to be received by weight, they certainly would gain nothing by such a change. But if the custom of weighing the gold coin should ever go into misuse, as it is very likely to do, and if the gold coin should ever fall into the same state of degradation in which it was before the late recoinage, the gain, or more properly the savings of the bank, in consequence of the imposition of a seignorage, would probably be very considerable. The Bank of England is the only company which sends any considerable quantity of bullion to the mint, and the burden of the annual coinage falls entirely, or almost entirely, upon it. If this annual coinage had nothing to do but to repair the unavoidable losses and necessary wear and tear of the coin, it could seldom exceed fifty thousand or at most a hundred thousand pounds. But when the coin is degraded below its standard weight, the annual coin age must, besides this, fill up the large vacuities which exportation and the melting pot are continually making in the current coin. It was upon this account that during the ten or twelve years immediately preceding the late reformation of the gold coin, the annual coinage amounted at an average to more than eight hundred and fifty thousand pounds. But if there had been a seignorage of four or five per cent upon the gold coin, it would probably, even in the state in which things then were, have put an effectual stop to the business both of exportation and of the melting pot. The bank, instead of losing every year about two and a half per cent upon the bullion which was to be coined into more than eight hundred and fifty thousand pounds, or incurring an annual loss of more than twenty-one thousand two hundred and fifty pounds, would not probably have incurred the tenth part of that loss.
The revenue allotted by Parliament for defraying the expense of the coinage is but fourteen thousand pounds a year, and the real expense which it costs the government, or the fees of the officers of the mint, do not upon ordinary occasions, I am assured, exceed the half of that sum. The saving of so very small a sum, or even the gaining of another which could not well be much larger, are objects too inconsiderable, it may be thought, to deserve the serious attention of government. But the saving of eighteen or twenty thousand pounds a year in case of an event which is not improbable, which has frequently happened before, and which is very likely to happen again, is surely an object which well deserves the serious attention even of so great a company as the Bank of England.
Some of the foregoing reasonings and observations might perhaps have been more properly placed in those chapters of the first book which treat of the origin and use of money, and of the difference between the real and the nominal price of commodities. But as the law for the encouragement of coinage derives its origin from those vulgar prejudices which have been introduced by the mercantile system, I judged it more proper to reserve them for this chapter. Nothing could be more agreeable to the spirit of that system than a sort of bounty upon the production of money, the very thing which, it supposes, constitutes the wealth of every nation. It is one of its many admirable expedients for enriching the country.
Conclusion of the Mercantile System
Though the encouragement of exportation and the discouragement of importation are the two great engines by which the mercantile system proposes to enrich every country, yet with regard to some particular commodities it seems to follow an opposite plan: to discourage exportation and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by an advantageous balance of trade. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets; and by restraining, in this manner, the exportation of a few commodities, of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities. I do not observe, at least in our Statute Book, any encouragement given to the importation of the instruments of trade. When manufactures have advanced to a certain pitch of greatness, the fabrication of the instruments of trade becomes itself the object of a great number of very important manufactures. To give any particular encouragement to the importation of such instruments would interfere too much with the interest of those manufactures. Such importation, therefore, instead of being encouraged, has frequently been prohibited. Thus the importation of wool cards, except from Ireland, or when brought in as wreck or prize goods, was prohibited by the 3rd of Edward IV; which prohibition was renewed by the 39th of Elizabeth, and has been continued and rendered perpetual by subsequent laws.
The importation of the materials of manufacture has sometimes been encouraged by an exemption from the duties to which other goods are subject, and sometimes by bounties.
The importation of sheep’s wool from several different countries, of cotton wool from all countries, of undressed flax, of the greater part of dyeing drugs, of the greater part of undressed hides from Ireland or the British colonies, of sealskins from the British Greenland fishery, of pig and bar iron from the British colonies, as well as of several other materials of manufacture, has been encouraged by an exemption from all duties, if properly entered at the custom house. The private interest of our merchants and manufacturers may, perhaps, have extorted from the legislature these exemptions as well as the greater part of our other commercial regulations. They are, however, perfectly just and reasonable, and if, consistently with the necessities of the state, they could be extended to all the other materials of manufacture, the public would certainly be a gainer.
The avidity of our great manufacturers, however, has in some cases extended these exemptions a good deal beyond what can justly be considered as the rude materials of their work. By the 24th George III, c. 46, a small duty of only one penny the pound was imposed upon the importation of foreign brown linen yam, instead of much higher duties to which it had been subjected before, viz. of sixpence the pound upon sail yarn, of one shilling the pound upon all French and Dutch yarn, and of two pounds thirteen shillings and four-pence upon the hundredweight of all spruce or Muscovia yarn. But our manufacturers were not long satisfied with this reduction. By the 29th of the same king, c. 15, the same law which gave a bounty upon the exportation of British and Irish linen of which the price did not exceed eighteenpence the yard, even this small duty upon the importation of brown linen yarn was taken away. In the different operations, however, which are necessary for the preparation of linen yarn, a good deal more industry is employed than in the subsequent operation of preparing linen cloth from linen yarn. To say nothing of the industry of the flax-growers and flax-dressers, three or four spinners, at least, are necessary in order to keep one weaver in constant employment; and more than four-fifths of the whole quantity of labour necessary for the preparation of linen cloth is employed in that of linen yarn; but our spinners are poor people, women commonly scattered about in all different parts of the country, without support or protection. It is not by the sale of their work, but by that of the complete work of the weavers, that our great master manufacturers make their profits. As it is their interest to sell the complete manufacture as dear, so is it to buy the materials as cheap as possible. By extorting from the legislature bounties upon the exportation of their own linen, high duties upon the importation of all foreign linen, and a total prohibition of the home consumption of some sorts of French linen, they endeavour to sell their own goods as dear as possible. By encouraging the importation of foreign linen yarn, and thereby bringing it into competition with that which is made by our own people, they endeavour to buy the work of the poor spinners as cheap as possible. They are as intent to keep down the wages of their own weavers as the earnings of the poor spinners, and it is by no means for the benefit of the workman that they endeavour either to raise the price of the complete work or to lower that of the rude materials. It is the industry which is carried on for the benefit of the rich and the powerful that is principally encouraged by our mercantile system. That which is carried on for the benefit of the poor and the indigent is too often either neglected or oppressed.
Both the bounty upon the exportation of linen, and the exemption from duty upon the importation of foreign yarn, which were granted only for fifteen years, but continued by two different prolongations, expire with the end of the session of Parliament which shall immediately follow the 24th of June 1786.
The encouragement given to the importation of the materials of manufacture by bounties has been principally confined to such as were imported from our American plantations.
The first bounties of this kind were those granted about the beginning of the present century upon the importation of naval stores from America. Under this denomination were comprehended timber fit for masts, yards, and bowsprits; hemp; tar, pitch, and turpentine. The bounty, however, of one pound the ton upon masting-timber, and that of six pounds the ton upon hemp, were extended to such as should be imported into England from Scotland. Both these bounties continued without any variation, at the same rate, till they were severally allowed to expire; that upon hemp on the 1st of January 1741, and that upon masting-timber at the end of the session of Parliament immediately following the 24th June 1781.
The bounties upon the importation of tar, pitch, and turpentine underwent, during their continuance, several alterations. Originally that upon tar was four pounds the ton; that upon pitch the same; and that upon turpentine, three pounds the ton. The bounty of four pounds the ton upon tar was afterwards confined to such as had been prepared in a particular manner; that upon other good, clean, and merchantable tar was reduced to two pounds four shillings the ton. The bounty upon pitch was likewise reduced to one pound; and that upon turpentine to one pound ten shillings the ton.
The second bounty upon the importation of any of the materials of manufacture, according to the order of time, was that granted by the 21st George II, c. 30, upon the importation of indigo from the British plantations. When the plantation indigo was worth three-fourths of the price of the best French indigo, it was by this act entitled to a bounty of sixpence the pound. This bounty, which, like most others, was granted only for a limited time, was continued by several prolongations, but was reduced to fourpence the pound. It was allowed to expire with the end of the session of Parliament which followed the 25th March 1781.
The third bounty of this kind was that granted (much about the time that we were beginning sometimes to court and sometimes to quarrel with our American colonies) by the 4th George III, c. 26, upon the importation of hemp, or undressed flax, from the British plantations. This bounty was granted for twenty-one years, from the 24th June 1764 to the 24th June 1785. For the first seven years it was to be at the rate of eight pounds the ton, for the second at six pounds, and for the third at four pounds. It was not extended to Scotland, of which the climate (although hemp is sometimes raised there in small quantities and of an inferior quality) is not very fit for that produce. Such a bounty upon the importation of Scotch flax into England would have been too great a discouragement to the native produce of the southern part of the United Kingdom.
The fourth bounty of this kind was that granted by the 5th George III, c. 45, upon the importation of wood from America. It was granted for nine years, from the 1st January 1766 to the 1st January 1775. During the first three years, it was to be for every hundred and twenty good deals, at the rate of one pound, and for every load containing fifty cubic feet of other squared timber at the rate of twelve shillings. For the second three years, it was for deals to be at the rate of fifteen shillings, and for other squared timber at the rate of eight shillings; and for the third three years, it was for deals to be at the rate of ten shillings, and for other squared timber at the rate of five shillings.
The fifth bounty of this kind was that granted by the 9th George III, c. 38, upon the importation of raw silk from the British plantations. It was granted for twenty-one years, from the 1st January 1770 to the 1st January 1791. For the first seven years it was to be at the rate of twenty-five pounds for every hundred pounds value; for the second at twenty pounds; and for the third at fifteen pounds. The management of the silk worm, and the preparation of silk, requires so much hand labour, and labour is so very dear in America that even this great bounty, I have been informed, was not likely to produce any considerable effect.
The sixth bounty of this kind was that granted by 2nd George III, c. 50, for the importation of pipe, hogs-head, and barrel staves and heading from the British plantations. It was granted for nine years, from 1st January 1772 to the 1st January 1781. For the first three years it was for a certain quantity of each to be at the rate of six pounds; for the second three years at four pounds; and for the third three years at two pounds.
The seventh and last bounty of this kind was that granted by the 19th George III, c. 37, upon the importation of hemp from Ireland. It was granted in the same manner as that for the importation of hemp and undressed flax from America, for twenty-one years, from the 24th June 1779 to the 24th June 1800. This term is divided, likewise, into three periods of seven years each; and in each of those periods the rate of the Irish bounty is the same with that of the American. It does not, however, like the American bounty, extend to the importation of undressed flax. It would have been too great a discouragement to the cultivation of that plant in Great Britain. When this last bounty was granted, the British and Irish legislatures were not in much better humour with one another than the British and American had been before. But this boon to Ireland, it is to be hoped, has been granted under more fortunate auspices than all those to America.
The same commodities upon which we thus gave bounties when imported from America were subjected to considerable duties when imported from any other country. The interest of our American colonies was regarded as the same with that of the mother country. Their wealth was considered as our wealth. Whatever money was sent out to them, it was said, came all back to us by the balance of trade, and we could never become a farthing the poorer by any expense which we could lay out upon them. They were our own in every respect, and it was an expense laid out upon the improvement of our own property and for the profitable employment of our own people. It is unnecessary, I apprehend, at present to say anything further in order to expose the folly of a system which fatal experience has now sufficiently exposed. Had our American colonies really been a part of Great Britain, those bounties might have been considered as bounties upon production, and would still have been liable to all the objections to which such bounties are liable, but to no other.
The exportation of the materials of manufacture is sometimes discouraged by absolute prohibitions, and sometimes by high duties.
Our woollen manufacturers have been more successful than any other class of workmen in persuading the legislature that the prosperity of the nation depended upon the success and extension of their particular business. They have not only obtained a monopoly against the consumers by an absolute prohibition of importing woollen cloths from any foreign country, but they have likewise obtained another monopoly against the sheep farmers and growers of wool by a similar prohibition of the exportation of live sheep and wool. The severity of many of the laws which have been enacted for the security of the revenue is very justly complained of, as imposing heavy penalties upon actions which, antecedent to the statutes that declared them to be crimes, had always been understood to be innocent. But the cruellest of our revenue laws, I will venture to affirm, are mild and gentle in comparison of some of those which the clamour of our merchants and manufacturers has extorted from the legislature for the support of their own absurd and oppressive monopolies. Like the laws of Draco, these laws may be said to be all written in blood.
By the 8th of Elizabeth, c. 3, the exporter of sheep, lambs, or rams was for the first offence to forfeit all his goods for ever, to suffer a year’s imprisonment, and then to have his left hand cut off in a market town upon a market day, to be there nailed up; and for the second offence to be adjudged a felon, and to suffer death accordingly. To prevent the breed of our sheep from being propagated in foreign countries seems to have been the object of this law. By the 13th and 14th of Charles II, c. 18, the exportation of wool was made felony, and the exporter subjected to the same penalties and forfeitures as a felon.
For the honour of the national humanity, it is to be hoped that neither of these statutes were ever executed. The first of them, however; so far as I know, has never been directly repealed, and Serjeant Hawkins seems to consider it as still in force. It may however, perhaps, be considered as virtually repealed by the 12th of Charles II, c. 32, sect. 3, which, without expressly taking away the penalties imposed by former statutes, imposes a new penalty, viz., that of twenty shillings for every sheep exported, or attempted to be exported, together with the forfeiture of the sheep and of the owner’s share of the ship. The second of them was expressly repealed by the 7th and 8th of William III, c. 28, sect. 4. By which it is declared that, “Whereas the statute of the 13th and 14th of King Charles II, made against the exportation of wool, among other things in the said act mentioned, doth enact the same to be deemed felony; by the severity of which penalty the prosecution of offenders hath not been so effectually put in execution: Be it, therefore, enacted by the authority aforesaid, that so much of the said act, which relates to the making the said offence felony, be repealed and made void.”
The penalties, however, which are either imposed by this milder statute, or which, though imposed by former statutes, are not repealed by this one, are still sufficiently severe. Besides the forfeiture of the goods, the exporter incurs the penalty of three shillings for every pound weight of wool either exported or attempted to be exported, that is about four or five times the value. Any merchant or other person convicted of this offence is disabled from requiring any debt or account belonging to him from any factor or other person. Let his fortune be what it will, whether he is or is not able to pay those heavy penalties, the law means to ruin him completely. But as the morals of the great body of the people are not yet so corrupt as those of the contrivers of this statute, I have not heard that any advantage has ever been taken of this clause. If the person convicted of this offence is not able to pay the penalties within three months after judgment, he is to be transported for seven years, and if he returns before the expiration of that term, he is liable to the pains of felony, without benefit of clergy. The owner of the ship, knowing this offence, forfeits all his interest in the ship and furniture. The master and mariners, knowing this offence, forfeit all their goods and chattels, and suffer three months’ imprisonment. By a subsequent statute the master suffers six months’ imprisonment.
In order to prevent exportation, the whole inland commerce of wool is laid under very burdensome and oppressive restrictions. It cannot be packed in any box, barrel, cask, case, chest, or any other package, but only in packs of leather or pack-cloth, on which must be marked on the outside the words wool or yarn, in large letters not less than three inches long, on pain of forfeiting the same and the package, and three shillings for every pound weight, to be paid by the owner or packer. It cannot be loaden on any horse or cart, or carried by land within five miles of the coast, but between sun-rising and sun-setting, on pain of forfeiting the same, the horses and carriages. The hundred next adjoining to the sea-coast, out of or through which the wool is carried or exported, forfeits twenty pounds, if the wool is under the value of ten pounds; and if of greater value, then treble that value, together with treble costs, to be sued for within the year. The execution to be against any two of the inhabitants, whom the sessions must reimburse, by an assessment on the other inhabitants, as in the cases of robbery. And if any person compounds with the hundred for less than this penalty, he is to be imprisoned for five years; and any other person may prosecute. These regulations take place through the whole kingdom.
But in the particular counties of Kent and Sussex, the restrictions are still more troublesome. Every owner of wool within ten miles of the sea-coast must given an account in writing, three days after shearing to the next officer of the customs, of the number of his fleeces, and of the places where they are lodged. And before he removes any part of them he must give the like notice of the number and weight of the fleeces, and of the name and abode of the person to whom they are sold, and of the place to which it is intended they should be carried. No person within fifteen miles of the sea, in the said counties, can buy any wool before he enters into bond to the king that no part of the wool which he shall so buy shall be sold by him to any other person within fifteen miles of the sea. If any wool is found carrying towards the sea-side in the said counties, unless it has been entered and security given as aforesaid, it is forfeited, and the offender also forfeits three shillings for every pound weight. If any person lays any wool not entered as aforesaid within fifteen miles of the sea, it must be seized and forfeited; and if, after such seizure, any person claim the same, he must give security to the Exchequer that if he is cast upon trial he shall pay treble costs, besides all other penalties.
When such restrictions are imposed upon the inland trade, the coasting trade, we may believe, cannot be left very free. Every owner of wool who carries or causes to be carried any wool to any port or place on the seacoast, in order to be from thence transported by sea to any other place or port on the coast, must first cause an entry thereof to be made at the port from whence it is intended to be conveyed, containing the weight, marks, and number of the packages, before he brings the same within five miles of that port, on pain of forfeiting the same, and also the horses, carts, and other carriages; and also of suffering and forfeiting as by the other laws in force against the exportation of wool. This law, however (1st William III, c. 32), is so very indulgent as to declare that, “This shall not hinder any person from carrying his wool home from the place of shearing, though it be within five miles of the sea, provided that in ten days after shearing, and before he remove the wool, he do under his hand certify to the next officer of the customs, the true number of fleeces, and where it is housed; and do not remove the same, without certifying to such officer, under his hand, his intention so to do, three days before.” Bond must be given that the wool to be carried coastways is to be landed at the particular port for which it is entered outwards; and if any part of it is landed without the presence of an officer, not only the forfeiture of the wool is incurred as in other goods, but the usual additional penalty of three shillings for every pound weight is likewise incurred.
Our woollen manufactures, in order to justify their demand of such extraordinary restrictions and regulations, confidently asserted that English wool was of a peculiar quality, superior to that of any other country; that the wool of other countries could not, without some mixture of it, be wrought up into any tolerable manufacture; that fine cloth could not be made without it; that England, therefore, if the exportation of it could be totally prevented, could monopolize to herself almost the whole woollen trade of the world; and thus, having no rivals, could sell at what price she pleased, and in a short time acquire the most incredible degree of wealth by the most advantageous balance of trade. This doctrine, like most other doctrines which are confidently asserted by any considerable number of people, was, and still continues to be, most implicitly believed by a much greater number—by almost all those who are either unacquainted with the woollen trade, or who have not made particular inquiries. It is, however, so perfectly false that English wool is in any respect necessary for the making of fine cloth that it is altogether unfit for it. Fine cloth is made altogether of Spanish wool. English wool cannot be even so mixed with Spanish wool as to enter into the composition without spoiling and degrading, in some degree, the fabric of the cloth.
It has been shown in the foregoing part of this work that the effect of these regulations has been to depress the price of English wool, not only below what it naturally would be in the present times, but very much below what it actually was in the time of Edward III. The price of Scots wool, when in consequence of the union it became subject to the same regulations, is said to have fallen about one half. It is observed by the very accurate and intelligent author of the Memoirs of Wool, the Reverend Mr. John Smith, that the price of the best English wool in England is generally below what wool of a very inferior quality commonly sells for in the market of Amsterdam. To depress the price of this commodity below what may be called its natural and proper price was the avowed purpose of those regulations; and there seems to be no doubt of their having produced the effect that was expected from them.
This reduction of price, it may perhaps be thought, by discouraging the growing of wool, must have reduced very much the annual produce of that commodity, though not below what it formerly was, yet below what, in the present state of things, it probably would have been, had it, in consequence of an open and free market, been allowed to rise to the natural and proper price. I am, however, disposed to believe that the quantity of the annual produce cannot have been much, though it may perhaps have been a little, affected by these regulations. The growing of wool is not the chief purpose for which the sheep farmer employs his industry and stock. He expects his profit not so much from the price of the fleece as from that of the carcass; and the average or ordinary price of the latter must even, in many cases, make up to him whatever deficiency there may be in the average or ordinary price of the former. It has been observed in the foregoing part of this work that, “Whatever regulations tend to sink the price, either of wool or of raw hides, below what it naturally would be, must, in an improved and cultivated country, have some tendency to raise the price of butcher’s meat. The price both of the great and small cattle which are fed on improved and cultivated land must be sufficient to pay the rent which the landlord, and the profit which the farmer has reason to expect from improved and cultivated land. If it is not, they will soon cease to feed them. Whatever part of this price, therefore, is not paid by the wool and the hide must be paid by the carcass. The less there is paid for the one, the more must be paid for the other. In what manner this price is to be divided upon the different parts of the beast is indifferent to the landlords and farmers, provided it is all paid to them. In an improved and cultivated country, therefore, their interest as landlords and farmers cannot be much affected by such regulations, though their interest as consumers may by the rise in the price of provisions.” According to this reasoning, therefore, this degradation in the price of wool is not likely, in an improved and cultivated country, to occasion any diminution in the annual produce of that commodity, except so far as, by raising the price of mutton, it may somewhat diminish the demand for, and consequently the production of, that particular species of butcher’s meat. Its effect, however, even in this way, it is probable, is not very considerable.
But though its effect upon the quantity of the annual produce may not have been very considerable, its effect upon the quality, it may perhaps be thought, must necessarily have been very great. The degradation in the quality of English wool, if not below what it was in former times, yet below what it naturally would have been in the present state of improvement and cultivation, must have been, it may perhaps be supposed, very nearly in proportion to the degradation of price. As the quality depends upon the breed, upon the pasture, and upon the management and cleanliness of the sheep, during the whole progress of the growth of the fleece, the attention to these circumstances, it may naturally enough be imagined, can never be greater than in proportion to the recompense which the price of the fleece is likely to make for the labour and expense which that attention requires. It happens, however, that the goodness of the fleece depends, in a great measure, upon the health, growth, and bulk of the animal; the same attention which is necessary for the improvement of the carcass is, in some respects, sufficient for that of the fleece. Notwithstanding the degradation of price, English wool is said to have been improved considerably during the course even of the present century. The improvement might perhaps have been greater if the price had been better; but the lowness of price, though it may have obstructed, yet certainly it has not altogether prevented that improvement.
The violence of these regulations, therefore, seems to have affected neither the quantity nor the quality of the annual produce of wool so much as it might have been expected to do (though I think it probable that it may have affected the latter a good deal more than the former); and the interest of the growers of wool, though it must have been hurt in some degree, seems, upon the whole, to have been much less hurt than could well have been imagined.
These considerations, however, will not justify the absolute prohibition of the exportation of wool. But they will fully justify the imposition of a considerable tax upon that exportation.
To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects. But the prohibition certainly hurts, in some degree, the interest of the growers of wool, for no other purpose but to promote that of the manufacturers.
Every different order of citizens is bound to contribute to the support of the sovereign or commonwealth. A tax of five, or even of ten shillings upon the exportation of every ton of wool would produce a very considerable revenue to the sovereign. It would hurt the interest of the growers somewhat less than the prohibition, because it would not probably lower the price of wool quite so much. It would afford a sufficient advantage to the manufacturer, because, though he might not buy his wool altogether so cheap as under the prohibition, he would still buy it, at least, five or ten shillings cheaper than any foreign manufacturer could buy it, besides saving the freight and insurance, which the other would be obliged to pay. It is scarce possible to devise a tax which could produce any considerable revenue to the sovereign, and at the same time occasion so little inconveniency to anybody.
The prohibition, notwithstanding all the penalties which guard it, does not prevent the exportation of wool. It is exported, it is well known, in great quantities. The great difference between the price in the home and that in the foreign market presents such a temptation to smuggling that all the rigour of the law cannot prevent it. This illegal exportation is advantageous to nobody but the smuggler. A legal exportation subject to a tax, by affording a revenue to the sovereign, and thereby saving the imposition of some other, perhaps, more burdensome and inconvenient taxes might prove advantageous to all the different subjects of the state.
The exportation of fuller’s earth or fuller’s clay, supposed to be necessary for preparing and cleansing the woolen manufactures, has been subjected to nearly the same penalties as the exportation of wool. Even tobacco-pipe clay, though acknowledged to be different from fuller’s clay, yet, on account of their resemblance, and because fuller’s clay might sometimes be exported as tobacco-pipe clay, has been laid under the same prohibitions and penalties.
By the 13th and 14th of Charles II, c. 7, the exportation, not only of raw hides, but of tanned leather, except in the shape of boots, shoes, or slippers, was prohibited; and the law gave a monopoly to our bootmakers and shoemakers, not only against our graziers, but against our tanners. By subsequent statutes our tanners have got themselves exempted from this monopoly upon paying a small tax of only one shilling on the hundred-weight of tanned leather, weighing one hundred and twelve pounds. They have obtained likewise the drawback of two-thirds of the excise duties imposed upon their commodity even when exported without further manufacture. All manufactures of leather may be exported duty free; and the exporter is besides entitled to the drawback of the whole duties of excise. Our graziers still continue subject to the old monopoly. Graziers separated from one another, and dispersed through all the different corners of the country, cannot, without great difficulty, combine together for the purpose either of imposing monopolies upon their fellow citizens, or of exempting themselves from such as may have been imposed upon them by other people. Manufacturers of all kinds, collected together in numerous bodies in all great cities, easily can. Even the horns of cattle are prohibited to be exported; and the two insignificant trades of the horner and combmaker enjoy, in this respect, a monopoly against the graziers.
Restraints, either by prohibitions or by taxes, upon the exportation of goods which are partially, but not completely manufactured, are not peculiar to the manufacture of leather. As long as anything remains to be done, in order to fit any commodity for immediate use and consumption, our manufacturers think that they themselves ought to have the doing of it. Woolen yarn and worsted are prohibited to be exported under the same penalties as wool. Even white cloths are subject to a duty upon exportation, and our dyers have so far obtained a monopoly against our clothiers. Our clothiers would probably have been able to defend themselves against it, but it happens that the greater part of our principal clothiers are themselves likewise dyers. Watch cases, clockcases, and dial-plates for clocks and watches have been prohibited to be exported. Our clock-makers and watch-makers are, it seems, unwilling that the price of this sort of workmanship should be raised upon them by the competition of foreigners.
By some old statutes of Edward M, Henry VIII, and Edward VI, the exportation of all metals was prohibited. Lead and tin were alone excepted probably on account of the great abundance of those metals, in the exportation of which a considerable part of the trade of the kingdom in those days consisted. For the encouragement of the mining trade, the 5th of William and Mary, c. 17, exempted from the prohibition iron, copper, and mundic metal made from British ore. The exportation of all sorts of copper bars, foreign as well as British, was afterwards permitted by the 9th and 10th of William III, c. 26. The exportation of unmanufactured brass, of what is called gun-metal, bell-metal, and shroff-metal, still continues to be prohibited. Brass manufactures of all sorts may be exported duty free.
The exportation of the materials of manufacture, where it is not altogether prohibited, is in many cases subjected to considerable duties.
By the 8th George I, c. 15, the exportation of all goods, the produce or manufacture of Great Britain, upon which any duties had been imposed by former statutes, was rendered duty free. The following goods, however, were excepted: alum, lead, lead ore, tin, tanned leather, copperas, coals, wool cards, white woolen cloths, lapis calaminaris, skins of all sorts, glue, coney hair or wool, hares’ wool, hair of all sorts, horses, and litharge of lead. If you expect horses, all these are either materials of manufacture, or incomplete manufactures (which may be considered as materials for still further manufacture), or instruments of trade. This statute leaves them subject to all the old duties which had ever been imposed upon them, the old subsidy and one per cent outwards.
By the same statute a great number of foreign drugs for dyers’ use are exempted from all duties upon importation. Each of them, however, is afterwards subjected to a certain duty, not indeed a very heavy one, upon exportation. Our dyers, it seems, while they thought it for their interest to encourage the importation of those drugs, by an exemption from all duties, thought it likewise for their interest to throw some small discouragement upon their exportation. The avidity, however, which suggested this notable piece of mercantile ingenuity, most probably disappointed itself of its object. It necessarily taught the importers to be more careful than they might otherwise have been that their importation should not exceed what was necessary for the supply of the home market. The home market was at all times likely to be more scantily supplied; the commodities were at all times likely to be somewhat dearer there than they would have been had the exportation been rendered as free as the importation.
By the above-mentioned statute, gum senega, or gum arabic, being among the enumerated dyeing drugs, might be imported duty free. They were subjected, indeed, to a small poundage duty, amounting only to threepence in the hundredweight upon their re-exportation. France enjoyed, at that time, an exclusive trade to the country most productive of those drugs, that which lies in the neighbourhood of the Senegal; and the British market could not easily be supplied by the immediate importation of them from the place of growth. By the 25th George II, therefore, gum senega was allowed to be imported (contrary to the general dispositions of the Act of Navigation) from any part of Europe. As the law, however, did not mean to encourage this species of trade, so contrary to the general principles of the mercantile policy of England, it imposed a duty of ten shillings the hundredweight upon such importation, and no part of this duty was to be afterwards drawn back upon its exportation. The successful war which began in 1755 gave Great Britain the same exclusive trade to those countries which France had enjoyed before. Our manufacturers, as soon as the peace was made, endeavoured to avail themselves of this advantage, and to establish a monopoly in their own favour both against the growers and against the importers of this commodity. By the 5th George III, therefore, c. 37, the exportation of gum senega from his Majesty’s dominions in Africa was confined to Great Britain, and was subjected to all the same restrictions, regulations, forfeitures, and penalties as that of the enumerated commodities of the British colonies in America and the West Indies. Its importation, indeed, was subjected to a small duty of sixpence the hundredweight, but its re-exportation was subjected to the enormous duty of one pound ten shillings the hundredweight. It was the intention of our manufacturers that the whole produce of those countries should be imported into Great Britain, and, in order that they themselves might be enabled to buy it at their own price, that no part of it should be exported again but at such an expense as would sufficiently discourage that exportation. Their avidity, however, upon this, as well as upon many other occasions, disappointed itself of its object. This enormous duty presented such a temptation to smuggling that great quantities of this commodity were clandestinely exported, probably to all the manufacturing countries of Europe, put particularly to Holland, not only from Great Britain but from Africa. Upon this account, by the 14th George III, c. 10, this duty upon exportation was reduced to five shillings the hundredweight.
In the book of rates, according to which the Old Subsidy was levied, beaver skins were estimated at six shillings and eightpence a piece, and the different subsidies and imposts, which before the year 1722 had been laid upon their importation, amounted to one-fifth part of the rate, or to sixteenpence upon each skin; all of which, except half the Old Subsidy, amounting only to twopence, was drawn back upon exportation. This duty upon the importation of so important a material of manufacture had been thought too high, and in the year 1722 the rate was reduced to two shillings and sixpence, which reduced the duty upon importation to sixpence, and of this only one half was to be drawn back upon exportation. The same successful war put the country most productive of beaver under the dominion of Great Britain, and beaver skins being among the enumerated commodities, their exportation from America was consequently confined to the market of Great Britain. Our manufacturers soon bethought themselves of the advantage which they might make of this circumstance, and in the year 1764 the duty upon the importation of beaver-skin was reduced to one penny, but the duty upon exportation was raised to sevenpence each skin, without any drawback of the duty upon importation. By the same law, a duty of eighteenpence the pound was imposed upon the exportation of beaverwool or wombs, without making any alteration in the duty upon the importation of that commodity, which, when imported by Britain and in British shipping, amounted at that time to between fourpence and fivepence the piece.
Coals may be considered both as a material of manufacture and as an instrument of trade. Heavy duties, accordingly, have been imposed upon their exportation, amounting at present (1783) to more than five shillings the ton, or to more than fifteen shillings the chaldron, Newcastle measures, which is in most cases more than the original value of the commodity at the coal pit, or even at the shipping port for exportation.
The exportation, however, of the instruments of trade, properly so called, is commonly restrained, not by high duties, but by absolute prohibitions. Thus by the 7th and 8th of William III, c. 20, sect. 8, the exportation of frames or engines for knitting gloves or stockings is prohibited under the penalty, not only of the forfeiture of such frames or engines so exported, or attempted to be exported, but of forty pounds, one half to the king, the other to the person who shall inform or sue for the same. In the same manner, by the 14th George III, c. 71, the exportation to foreign parts of any utensils made use of in the cotton, linen, woollen, and silk manufactures is prohibited under the penalty, not only of the forfeiture of such utensils, but of two hundred pounds, to be paid by the person who shall offend in this manner, and likewise of two hundred pounds to be paid by the master of the ship who shall knowingly suffer such utensils to be loaded on board his ship.
When such heavy penalties were imposed upon the exportation of the dead instruments of trade, it could not well be expected that the living instrument, the artificer, should be allowed to go free. Accordingly, by the 5th George I, c. 27, the person who shall be convicted of enticing any artificer of, or in any of the manufactures of Great Britain, to go into any foreign parts in order to practise or teach his trade, is liable for the first offence to be fined in any sum not exceeding one hundred pounds, and to three months’ imprisonment, and until the fine shall be paid; and for the second offence, to be fined in any sum at the discretion of the court, and to imprisonment for twelve months, and until the fine shall be paid. By the 23rd George II, c. 13, this penalty is increased for the first offence to five hundred pounds for every artificer so enticed, and to twelve months’ imprisonment, and until the fine shall be paid; and for the second offence, to one thousand pounds, and to two years’ imprisonment, and until the fine shall be paid.
By the former of those two statutes, upon proof that any person has been enticing any artificer, or that any artificer has promised or contracted to go into foreign parts for the purposes aforesaid, such artificer may be obliged to give security at the discretion of the court that he shall not go beyond the seas, and may be committed to prison until he give such security.
If any artificer has gone beyond the seas, and is exercising or teaching his trade in any foreign country, upon warning being given to him by any of his Majesty’s ministers or consuls abroad, or by one of his Majesty’s Secretaries of State for the time being, if he does not, within six months after such warning, return into this realm, and from thenceforth abide and inhabit continually within the same, he is from thenceforth declared incapable of taking any legacy devised to him within this kingdom, or of being executor or administrator to any person, or of taking any lands within this kingdom by descent, device, or purchase. He likewise forfeits to the king all his lands, goods, and chattels, is declared an alien in every respect, and is put out of the king’s protection.
It is unnecessary, I imagine, to observe how contrary such regulations are to the boasted liberty of the subject, of which we affect to be so very jealous; but which, in this case, is so plainly sacrificed to the futile interests of our merchants and manufacturers.
The laudable motive of all these regulations is to extend our own manufactures, not by their own improvement, but by the depression of those of all our neighbours, and by putting an end, as much as possible, to the troublesome competition of such odious and disagreeable rivals. Our master manufacturers think it reasonable that they themselves should have the monopoly of the ingenuity of all their countrymen. Though by restraining, in some trades, the number of apprentices which can be employed at one time, and by imposing the necessity of a long apprenticeship in all trades, they endeavour, all of them, to confine the knowledge of their respective employments to as small a number as possible; they are unwilling, however, that any part of this small number should go abroad to instruct foreigners.
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
In the restraints upon the importation of all foreign commodities which can come into competition with those of our own growth or manufacture, the interest of the home consumer is evidently sacrificed to that of the producer. It is altogether for the benefit of the latter that the former is obliged to pay that enhancement of price which this monopoly almost always occasions.
It is altogether for the benefit of the producer that bounties are granted upon the exportation of some of his productions. The home consumer is obliged to pay, first, the tax which is necessary for paying the bounty, and secondly, the still greater tax which necessarily arises from the enhancement of the price of the commodity in the home market.
By the famous treaty of commerce with Portugal, the consumer is prevented by high duties from purchasing of a neighbouring country a commodity which our own climate does not produce, but is obliged to purchase it of a distant country, though it is acknowledged that the commodity of the distant country is of a worse quality than that of the near one. The home consumer is obliged to submit to this inconveniency in order that the producer may import into the distant country some of his productions upon more advantageous terms than he would otherwise have been allowed to do. The consumer, too, is obliged to pay whatever enhancement in the price if those very productions this forced exportation may occasion in the home market.
But in the system of laws which has been established for the management of our American and West Indian colonies, the interest of the home consumer has been sacrificed to that of the producer with a more extravagant profusion than in all our other commercial regulations. A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different producers all the goods with which these could supply them. For the sake of that little enhancement of price which this monopoly might afford our producers, the home consumers have been burdened with the whole expense of maintaining and defending that empire. For this purpose, and for this purpose only, in the two last wars, more than two hundred millions have been spent, and a new debt of more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wars. The interest of this debt alone is not only greater than the whole extraordinary profit which it ever could be pretended was made by the monopoly of the colony trade, but than the whole value of that trade, or than the whole value of the goods which at an average have been annually exported to the colonies.
It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interest has been so carefully attended to; and among this latter class our merchants and manufacturers have been by far the principal architects. In the mercantile regulations, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it.
Source: “On the Wealth of Nations, Book 4, Chapter 6,” www.bibliomania.com/2/1/65/112/frameset.html (accessed December 2002).
Born in England in 1766, Thomas Malthus became an economist and focused his work on the effects of the economy on population levels. In An Essay on the Principle of Population, written in 1798, he argues that poverty is unavoidable because as the population increases by geometrical ratio the means of subsistence only increases by arithmetical ratio. Factors such as famine, war, and disease will all impact the decision of people to reproduce. During bad times the birth rate will decline and the population level will fall until it reaches a point where the food production is greater than the needs of the people, and minus war and disease, the population will once again rise.
Question of the proper definition of the wealth of a state—Reason given by the French economists for considering all manufacturers as unproductive labourers, not the true reason—The labour of artificers and manufacturers sufficiently productive to individuals, though not to the state—A remarkable passage in Dr Price’s two volumes of Observations—Error of Dr Price in attributing the happiness and rapid population of America, chiefly, to its peculiar state of civilization— No advantage can be expected from shutting our eyes to the difficulties in the way to the improvement of society.
A question seems naturally to arise here whether the exchangeable value of the annual produce of the land and labour be the proper definition of the wealth of a country, or whether the gross produce of the land, according to the French economists, may not be a more accurate definition. Certain it is that every increase of wealth, according to the definition of the economists, will be an increase of the funds for the maintenance of labour, and consequently will always tend to ameliorate the condition of the labouring poor, though an increase of wealth, according to Dr Adam Smith’s definition, will by no means invariably have the same tendency. And yet it may not follow from this consideration that Dr Adam Smith’s definition is not just. It seems in many respects improper to exclude the clothing and lodging of a whole people from any part of their revenue. Much of it may, indeed, be of very trivial and unimportant value in comparison with the food of the country, yet still it may be fairly considered as a part of its revenue; and, therefore, the only point in which I should differ from Dr Adam Smith is where he seems to consider every increase of the revenue or stock of a society as an increase of the funds for the maintenance of labour, and consequently as tending always to ameliorate the condition of the poor. The fine silks and cottons, the laces, and other ornamental luxuries of a rich country, may contribute very considerably to augment the exchangeable value of its annual produce; yet they contribute but in a very small degree to augment the mass of happiness in the society, and it appears to me that it is with some view to the real utility of the produce that we ought to estimate the productiveness or unproductiveness of different sorts of labour. The French economists consider all labour employed in manufactures as unproductive. Comparing it with the labour employed upon land, I should be perfectly disposed to agree with them, but not exactly for the reasons which they give. They say that labour employed upon land is productive because the produce, over and above completely paying the labourer and the farmer, affords a clear rent to the landlord, and that the labour employed upon a piece of lace is un-productive because it merely replaces the provisions that the workman had consumed, and the stock of his employer, without affording any clear rent whatever.
But supposing the value of the wrought lace to be such as that, besides paying in the most complete manner the workman and his employer, it could afford a clear rent to a third person, it appears to me that, in comparison with the labour employed upon land, it would be still as unproductive as ever. Though, according to the reasoning used by the French economists, the man employed in the manufacture of lace would, in this case, seem to be a productive labourer. Yet according to their definition of the wealth of a state, he ought not to be considered in that light. He will have added nothing to the gross produce of the land: he has consumed a portion of this gross produce, and has left a bit of lace in return; and though he may sell this bit of lace for three times the quantity of provisions that he consumed whilst he was making it, and thus be a very productive labourer with regard to himself, yet he cannot be considered as having added by his labour to any essential part of the riches of the state. The clear rent, therefore, that a certain produce can afford, after paying the expenses of procuring it, does not appear to be the sole criterion, by which to judge of the productiveness or unproductiveness to a state of any particular species of labour.
Suppose that two hundred thousand men, who are now employed in producing manufactures that only tend to gratify the vanity of a few rich people, were to be employed upon some barren and uncultivated lands, and to produce only half the quantity of food that they themselves consumed; they would be still more productive labourers with regard to the state than they were before, though their labour, so far from affording a rent to a third person, would but half replace the provisions used in obtaining the produce. In their former employment they consumed a certain portion of the food of the country and left in return some silks and laces. In their latter employment they consumed the same quantity of food and left in return provision for a hundred thousand men. There can be little doubt which of the two legacies would be the most really beneficial to the country, and it will, I think, be allowed that the wealth which supported the two hundred thousand men while they were producing silks and laces would have been more usefully employed in supporting them while they were producing the additional quantity of food.
A capital employed upon land may be unproductive to the individual that employs it and yet be highly productive to the society. A capital employed in trade, on the contrary, may be highly productive to the individual, and yet be almost totally unproductive to the society: and this is the reason why I should call manufacturing labour unproductive, in comparison of that which is employed in agriculture, and not for the reason given by the French economists. It is, indeed, almost impossible to see the great fortunes that are made in trade, and the liberality with which so many merchants live, and yet agree in the statement of the economists, that manufacturers can only grow rich by depriving themselves of the funds destined for their support. In many branches of trade the profits are so great as would allow of a clear rent to a third person; but as there is no third person in the case, and as all the profits centre in the master manufacturer, or merchant, he seems to have a fair chance of growing rich, without much privation; and we consequently see large fortunes acquired in trade by persons who have not been remarked for their parsimony.
Daily experience proves that the labour employed in trade and manufactures is sufficiently productive to individuals, but it certainly is not productive in the same degree to the state. Every accession to the food of a country tends to the immediate benefit of the whole society; but the fortunes made in trade tend but in a remote and uncertain manner to the same end, and in some respects have even a contrary tendency. The home trade of consumption is by far the most important trade of every nation. China is the richest country in the world, without any other. Putting then, for a moment, foreign trade out of the question, the man who, by an ingenious manufacture, obtains a double portion out of the old stock of provisions, will certainly not be so useful to the state as the man who, by his labour, adds a single share to the former stock. The consumable commodities of silks, laces, trinkets, and expensive furniture, are undoubtedly a part of the revenue of the society; but they are the revenue only of the rich, and not of the society in general. An increase in this part of the revenue of a state, cannot, therefore, be considered of the same importance as an increase of food, which forms the principal revenue of the great mass of the people. Foreign commerce adds to the wealth of a state, according to Dr Adam Smith’s definition, though not according to the definition of the economists. Its principal use, and the reason, probably, that it has in general been held in such high estimation is that it adds greatly to the external power of a nation or to its power of commanding the labour of other countries; but it will be found, upon a near examination, to contribute but little to the increase of the internal funds for the maintenance of labour, and consequently but little to the happiness of the greatest part of society. In the natural progress of a state towards riches, manufactures, and foreign commerce would follow, in their order, the high cultivation of the soil. In Europe, this natural order of things has been inverted, and the soil has been cultivated from the redundancy of manufacturing capital, instead of manufactures rising from the redundancy of capital employed upon land. The superior encouragement that has been given to the industry of the towns, and the consequent higher price that is paid for the labour of artificers than for the labour of those employed in husbandry, are probably the reasons why so much soil in Europe remains uncultivated. Had a different policy been pursued throughout Europe, it might undoubtedly have been much more populous than at present, and yet not be more incumbered by its population. I cannot quit this curious subject of the difficulty arising from population, a subject that appears to me to deserve a minute investigation and able discussion much beyond my power to give it, without taking notice of an extraordinary passage in Dr Price’s two volumes of Observations. Having given some tables on the probabilities of life, in towns and in the country, he says:
From this comparison, it appears with how much truth great cities have been called the graves of mankind. It must also convince all who consider it, that according to the observation, at the end of the fourth essay, in the former volume, it is by no means strictly proper to consider our diseases as the original intention of nature. They are, without doubt, in general our own creation. Were there a country where the inhabitants led lives entirely natural and virtuous, few of them would die without measuring out the whole period of present existence allotted to them; pain and distemper would be unknown among them, and death would come upon them like a sleep, in consequence of no other cause than gradual and unavoidable decay.
I own that I felt myself obliged to draw a very opposite conclusion from the facts advanced in Dr Price’s two volumes. I had for some time been aware that population and food increased in different ratios, and a vague opinion had been floating in my mind that they could only be kept equal by some species of misery or vice, but the perusal of Dr Price’s two volumes of Observations, after that opinion had been conceived, raised it at once to conviction. With so many facts in his view to prove the extraordinary rapidity with which population increases when unchecked, and with such a body of evidence before him to elucidate even the manner by which the general laws of nature repress a redundant population, it is perfectly inconceivable to me how he could write the passage that I have quoted. He was a strenuous advocate for early marriages, as the best preservative against vicious manners. He had no fanciful conceptions about the extinction of the passion between the sexes, like Mr Godwin, nor did he ever think of eluding the difficulty in the ways hinted at by M. Condorcet. He frequently talks of giving the prolific powers of nature room to exert themselves. Yet with these ideas, that his understanding could escape from the obvious and necessary inference that an unchecked population would increase, beyond comparison, faster than the earth, by the best directed exertions of man, could produce food for its support, appears to me as astonishing as if he had resisted the conclusion of one of the plainest propositions of Euclid.
Dr Price, speaking of the different stages of the civilized state, says, ‘The first, or simple stages of civilization, are those which favour most the increase and the happiness of mankind.’ He then instances the American colonies, as being at that time in the first and happiest of the states that he had described, and as affording a very striking proof of the effects of the different stages of civilization on population. But he does not seem to be aware that the happiness of the Americans depended much less upon their peculiar degree of civilization than upon the peculiarity of their situation, as new colonies, upon their having a great plenty of fertile uncultivated land. In parts of Norway, Denmark, or Sweden, or in this country, two or three hundred years ago, he might have found perhaps nearly the same degree of civilization, but by no means the same happiness or the same increase of population. He quotes himself a statute of Henry the Eighth, complaining of the decay of tillage, and the enhanced price of provisions, ‘whereby a marvellous number of people were rendered incapable of maintaining themselves and families.’ The superior degree of civil liberty which prevailed in America contributed, without doubt, its share to promote the industry, happiness, and population of these states, but even civil liberty, all powerful as it is, will not create fresh land. The Americans may be said, perhaps, to enjoy a greater degree of civil liberty, now they are an independent people, than while they were in subjection in England, but we may be perfectly sure that population will not long continue to increase with the same rapidity as it did then.
Source: “Malthus’ Essay on Population, Chapter 17,” www.ac.wwu.edu/~stephan/malthus/malthus.17.html (accessed May 2003).
On January 18, 1803, President Thomas Jefferson sent a secret message to Congress in which he asked for an appropriate of $2,500 to cover the cost of an expedition to the northwest area of the Louisiana territory. Meriwether Lewis and William Clark departed from St. Louis and journeyed all the way to the Pacific Ocean. In the process, they chronicled the flora and fauna of the area. Much of the focus of the expedition was on new trade routes.
Gentlemen of the Senate, and of the House of Representatives:
As the continuance of the act for establishing trading houses with the Indian tribes will be under the consideration of the Legislature at its present session, I think it my duty to communicate the views which have guided me in the execution of that act, in order that you may decide on the policy of continuing it, in the present or any other form, or discontinue it altogether, if that shall, on the whole, seem most for the public good.
The Indian tribes residing within the limits of the United States, have, for a considerable time, been growing more and more uneasy at the constant diminution of the territory they occupy, although effected by their own voluntary sales: and the policy has long been gaining strength with them, of refusing absolutely all further sale, on any conditions; insomuch that, at this time, it hazards their friendship, and excites dangerous jealousies and perturbations in their minds to make any overture for the purchase of the smallest portions of their land. A very few tribes only are not yet obstinately in these dispositions. In order peaceably to counteract this policy of theirs, and to provide an extension of territory which the rapid increase of our numbers will call for, two measures are deemed expedient. First: to en courage them to abandon hunting, to apply to the raising stock, to agriculture and domestic manufacture, and thereby prove to themselves that less land and labor will maintain them in this, better than in their former mode of living. The extensive forests necessary in the hunting life, will then become useless, and they will see advantage in exchanging them for the means of improving their farms, and of increasing their domestic comforts. Secondly: to multiply trading houses among them, and place within their reach those things which will contribute more to their domestic comfort, than the possession of extensive, but uncultivated wilds. Experience and reflection will develop to them the wisdom of exchanging what they can spare and we want, for what we can spare and they want. In leading them to agriculture, to manufactures, and civilization; in bringing together their and our settlements, and in preparing them ultimately to participate in the benefits of our governments, I trust and believe we are acting for their greatest good. At these trading houses we have pursued the principles of the act of Congress, which directs that the commerce shall be carried on liberally, and requires only that the capital stock shall not be diminished. We consequently undersell private traders, foreign and domestic, drive them from the competition; and thus, with the good will of the Indians, rid ourselves of a description of men who are constantly endeavoring to excite in the Indian mind suspicions, fears, and irritations towards us. A letter now enclosed, shows the effect of our competition on the operations of the traders, while the Indians, perceiving the advantage of purchasing from us, are soliciting generally, our establishment of trading houses among them. In one quarter this is particularly interesting. The Legislature, reflecting on the late occur-rences on the Mississippi, must be sensible how desirable it is to possess a respectable breadth of country on that river, from our Southern limit to the Illinois at least; so that we may present as firm a front on that as on our Eastern border. We possess what is below the Yazoo, and can probably acquire a certain breadth from the Illinois and Wabash to the Ohio; but between the Ohio and Yazoo, the country all belongs to the Chickasaws, the most friendly tribe within our limits, but the most decided against the alienation of lands. The portion of their country most important for us is exactly that which they do not inhabit. Their settlements are not on the Mississippi, but in the interior country. They have lately shown a desire to become agricultural; and this leads to the desire of buying implements and comforts. In the strengthening and gratifying of these wants, I see the only prospect of planting on the Mississippi itself, the means of its own safety. Duty has required me to submit these views to the judgment of the Legislature; but as their disclosure might embarrass and defeat their effect, they are committed to the special confidence of the two Houses.
While the extension of the public commerce among the Indian tribes, may deprive of that source of profit such of our citizens as are engaged in it, it might be worthy the attention of Congress, in their care of individual as well as of the general interest, to point, in another direction, the enterprise of these citizens, as profitably for themselves, and more usefully for the public. The river Missouri, and the Indians inhabiting it, are not as well known as is rendered desirable by their connexion with the Mississippi, and consequently with us. It is, however, understood, that the country on that river is inhabited by numerous tribes, who furnish great supplies of furs and peltry to the trade of another nation, carried on in a high latitude, through an infinite number of portages and lakes, shut up by ice through a long season. The commerce on that line could bear no competition with that of the Missouri, traversing a moderate climate, offering according to the best accounts, a continued navigation from its source, and possibly with a single portage, from the Western Ocean, and finding to the Atlantic a choice of channels through the Illinois or Wabash, the lakes and Hudson, through the Ohio and Susquehanna, or Potomac or James rivers, and through the Tennessee and Savannah, rivers. An intelligent officer, with ten or twelve chosen men, fit for the enterprise, and willing to undertake it, taken from our posts, where they may be spared without inconvenience, might explore the whole line, even to the Western Ocean, have conferences with the natives on the subject of commercial intercourse, get admission among them for our traders, as others are admitted, agree on convenient deposits for an interchange of articles, and return with the information acquired, in the course of two summers. Their arms and accoutrements, some instruments of observation, and light and cheap presents for the Indians, would be all the apparatus they could carry, and with an expectation of a soldier’s portion of land on their return, would constitute the whole expense. Their pay would be going on, whether here or there. While other civilized nations have encountered great expense to enlarge the boundaries of knowledge by undertaking voyages of discovery, and for other literary purposes, in various parts and directions, our nation seems to owe to the same object, as well as to its own interests, to explore this, the only line of easy communication across the continent, and so directly traversing our own part of it.
The interests of commerce place the principal object within the constitutional powers and care of Congress, and that it should incidentally advance the geographical knowledge of our own continent, cannot be but an additional gratification. The nation claiming the territory, regarding this as a literary pursuit, which is in the habit of permitting within its dominions, would not be disposed to view it with jealousy, even if the expiring state of its interests there did not render it a matter of indifference. The appropriation of two thousand five hundred dollars, “for the purpose of extending the external commerce of the United States,” while understood and considered by the Executive as giving the legislative sanction, would cover the undertaking from notice, and prevent the obstructions which interested individuals might otherwise previously prepare in its way.
TH. Jefferson
Jan. 18. 1803.
Source: President Thomas Jefferson’s confidential message to Congress concerning relations with the Indians, January, 18, 1803; Record Group 233, Records of the United States House of Representatives, HR 7A-D1; National Archives.
Signed on April 30, 1803, the treaty between the United States and the French Republic ceded to the United States all of the province of Louisiana, which had just recently reverted back to France under the Treaty of San Ildefonso. Under the Spanish, the United States had negotiated a right of deposit in New Orleans but in 1801 that right was temporarily suspended. Americans living on the western side of the Appalachian Mountains needed to ship their goods via the Mississippi River since overland transport was cost prohibitive. Fearing the permanent loss of the use of the river, President Thomas Jefferson dispatched James Monroe and Robert Livingston to Paris to negotiate the purchase of the isle of Orleans. French emperor Napoléon Bonaparte offered to sell the entire province for $15 million instead. The purchase guaranteed that Americans living in the west would be able to sell their goods to merchants on the eastern seaboard and foreign countries.
The President of the United States of America and the First Consul of the French Republic in the name of the French People desiring to remove all Source of misunderstanding relative to objects of discussion mentioned in the Second and fifth articles of the Convention of the 8th Vendémiaire on 9/30 September 1800 relative to the rights claimed by the United States in virtue of the Treaty concluded at Madrid the 27 of October 1795, between His Catholic Majesty & the Said United States, & willing to Strengthen the union and friendship which at the time of the Said Convention was happily reestablished between the two nations have respectively named their Plenipotentiaries to wit The President of the United States, by and with the advice and consent of the Senate of the Said States; Robert R. Livingston Minister Plenipotentiary of the United States and James Monroe Minister Plenipotentiary and Envoy extraordinary of the Said States near the Government of the French Republic; And the First Consul in the name of the French people, Citizen Francis Barbé Marbois Minister of the public treasury who after having respectively exchanged their full powers have agreed to the following Articles.
Whereas by the Article the third of the Treaty concluded at St Ildefonso the 9th Vendémiaire on 9/1st October 1800 between the First Consul of the French Republic and his Catholic Majesty it was agreed as follows.
“His Catholic Majesty promises and engages on his part to cede to the French Republic six months after the full and entire execution of the conditions and Stipulations herein relative to his Royal Highness the Duke of Parma, the Colony or Province of Louisiana with the Same extent that it now has in the hand of Spain, & that it had when France possessed it; and Such as it Should be after the Treaties subsequently entered into between Spain and other States.”
And whereas in pursuance of the Treaty and particularly of the third article the French Republic has an incontestible title to the domain and to the possession of the said Territory—The First Consul of the French Republic desiring to give to the United States a strong proof of his friendship doth hereby cede to the United States in the name of the French Republic for ever and in full Sovereignty the said territory with all its rights and appurtenances as fully and in the Same manner as they have been acquired by the French Republic in virtue of the above mentioned Treaty concluded with his Catholic Majesty.
In the cession made by the preceding article are included the adjacent Islands belonging to Louisiana all public lots and Squares, vacant lands and all public buildings, fortifications, barracks and other edifices which are not private property.—The Archives, papers & documents relative to the domain and Sovereignty of Louisiana and its dependances will be left in the possession of the Commissaries of the United States, and copies will be afterwards given in due form to the Magistrates and Municipal officers of such of the said papers and documents as may be necessary to them.
The inhabitants of the ceded territory shall be incorporated in the Union of the United States and admit ted as soon as possible according to the principles of the federal Constitution to the enjoyment of all these rights, advantages and immunities of citizens of the United States, and in the mean time they shall be maintained and protected in the free enjoyment of their liberty, property and the Religion which they profess.
There Shall be Sent by the Government of France a Commissary to Louisiana to the end that he do every act necessary as well to receive from the Officers of his Catholic Majesty the Said country and its dependances in the name of the French Republic if it has not been already done as to transmit it in the name of the French Republic to the Commissary or agent of the United States.
Immediately after the ratification of the present Treaty by the President of the United States and in case that of the first Consul’s shall have been previously obtained, the commissary of the French Republic shall remit all military posts of New Orleans and other parts of the ceded territory to the Commissary or Commissaries named by the President to take possession—the troops whether of France or Spain who may be there shall cease to occupy any military post from the time of taking possession and shall be embarked as soon as possible in the course of three months after the ratification of this treaty.
The United States promise to execute Such treaties and articles as may have been agreed between Spain and the tribes and nations of Indians until by mutual consent of the United States and the said tribes or nations other Suitable articles Shall have been agreed upon.
As it is reciprocally advantageous to the commerce of France and the United States to encourage the communication of both nations for a limited time in the country ceded by the present treaty until general arrangements relative to commerce of both nations may be agreed on; it has been agreed between the contracting parties that the French Ships coming directly from France or any of her colonies loaded only with the produce and manufactures of France or her Said Colonies; and the Ships of Spain coming directly from Spain or any of her colonies loaded only with the produce or manufactures of Spain or her Colonies shall be admitted during the Space of twelve years in the Port of New-Orleans and in all other legal ports-of-entry within the ceded territory in the Same manner as the Ships of the United States coming directly from France or Spain or any of their Colonies without being Subject to any other or greater duty on merchandize or other or greater tonnage than that paid by the citizens of the United States.
During that Space of time above mentioned no other nation shall have a right to the Same privileges in the Ports of the ceded territory—the twelve years Shall commence three months after the exchange of ratifications if it Shall take place in France or three months after it Shall have been notified at Paris to the French Government if it Shall take place in the United States; It is however well understood that the object of the above article is to favour the manufactures, Commerce, freight and navigation of France and of Spain So far as relates to the importations that the French and Spanish Shall make into the Said Ports of the United States without in any Sort affecting the regulations that the United States may make concerning the exportation of the produce and merchandize of the United States, or any right they may have to make Such regulations.
In future and forever after the expiration of the twelve years, the Ships of France shall be treated upon the footing of the most favoured nations in the ports above mentioned.
The particular Convention Signed this day by the respective Ministers, having for its object to provide for the payment of debts due to the Citizens of the United States by the French Republic prior to the 30th Sept. 1800 (8th Vendémiaire an 9) is approved and to have its execution in the Same manner as if it had been inserted in this present treaty, and it Shall be ratified in the same form and in the Same time So that the one Shall not be ratified distinct from the other.
Another particular Convention Signed at the Same date as the present treaty relative to a definitive rule between the contracting parties is in the like manner approved and will be ratified in the Same form, and in the Same time and jointly.
The present treaty Shall be ratified in good and due form and the ratifications Shall be exchanged in the Space of Six months after the date of the Signature by the Ministers Plenipotentiary or Sooner if possible.
In faith whereof the respective Plenipotentiaries have Signed these articles in the French and English languages; declaring nevertheless that the present Treaty was originally agreed to in the French language; and have thereunto affixed their Seals.
Done at Paris the tenth day of Floreal in the eleventh year of the French Republic; and the 30th of April 1803.
Barbé Marbois [seal]
Rob. R. Livingston [seal]
Jas. Monroe [seal]
Source: “Treaty between the United States of America and the French Republic,” www.yale.edu/lawweb/avalon/diplomacy/france/louis1.htm (accessed December 2003).
Napoléon Bonaparte issued the Berlin Decree on November 21, 1806, in response to British legislation that called for the blockade of France and its allies during the Napoleonic Wars. Along with the Milan Decree, Napoléon hoped to deny the British access to continental markets. This decree marks the beginning of an escalating economic war between the two rival powers. Maritime issues such as the seizing of ships and goods would eventually draw the United States, a neutral country, into the conflict in the War of 1812. After the war, the United States erected protective tariffs—a shift in policy that lasted more than 100 years.
Berlin, November 21, 1806
Napoleon, emperor of the French and king of Italy, etc., considering:
We have resolved to apply to England the practice which she has consecrated in her maritime legislation.
The provisions of the present decrees shall constantly be considered as the fundamental principle of the Empire until such time as England has recognized that the rights of war are one and the same on land and sea; that they cannot be extended to either private property, no matter what kind, or to the persons of individuals unconnected with the profession of arms, and that the right of blockade shall be restricted to forfeited places actually invested by sufficient forces. We have consequently decreed and do decree the following:
Article 1. The British Isles are declared to be in a state of blockade.
Article 2. All commerce and all correspondence with the British Isles is forbidden.
Consequently, letters or packages directed to England or to an Englishman, or written in the English language, shall not pass through the post and shall be seized.
Article 3. Every individual who is an English subject, of whatever state or condition he may be, found in any country occupied by Our troops or by those of Our allies, shall be made a prisoner of war.
Article 4. All warehouses, merchandise or property of whatever kind belonging to a subject of England shall be regarded as a lawful prize.
Article 5. Trade in English goods is prohibited, and all goods belonging to a subject of England, or coming from her factories or colonies, are declared a lawful prize.
Article 6. Half the product of the confiscation of goods and property declared a lawful prize by the preceding articles shall be used to indemnify the merchants for the losses they have experienced by the capture of merchant vessels taken by English cruisers.
Article 7. No vessel coming directly from England or from the English colonies, or having visited there since the publication of the present decree, shall be received in any port.
Article 8. Any vessel which, by means of a false declaration, contravenes the above provisions shall be seized; and the vessel and cargo shall be confiscated as if it were English property.
Article 9. Our Court of Prizes in Paris is charged with the final judgment in all disputes which may arise in Our Empire or in the countries occupied by the French army relating to the execution of the present decree. Our Court of Prizes in Milan is charged with the final judgment in the said disputes which may arise within the territory of Our Kingdom of Italy.
Article 10. The present decree shall be communicated by Our minister of foreign affairs to the King of Spain, Naples, Holland and Etruria, and to Our other allies whose subjects, like Ours, are the victims of the injustice and the barbarity of English maritime legislation.
Article 11. Our ministers of foreign affairs, war, the navy, finance and the police, and Our directors of the port office are charged, each with that which concerns him, with the execution of the present decree.
Source: University of Washington Faculty Web Server, http://faculty.washington.edu/jonas/Text/RomeProgram/Readings/Bonaparte%20Continental%20System.pdf (accessed April 2004).
Several factors led to the passage of this act of parliament that ended the slave trade. The French Revolution, a time during which slavery was temporarily suspended, spread the idea of equality among all humanity. A few wealthy and devoted Englishmen who became active in Christian evangelism at the end of the eighteenth century, men such as William Wilberforce, Thomas Clarkson, Zachary Macauley, and Lord Henry Peter Brougham, led a movement to end the slave trade. Their efforts resulted in the passage of the following legislation in 1807. These men hoped that such an act would lead to the end of slavery within the empire. When that did not occur, they continued their campaign until slavery was completely abolished in 1833. Some scholars argue that the end of mercantilism and the shift to industrialization made slavery unprofitable and therefore Parliament agreed to end the institution. Whatever the reason, the British ended the slave trade one year before it became illegal in the United States, which had specified 1808 as the end of the slave trade in its Constitution that was ratified in 1789.
[25th March 1807.]
I. ‘Whereas the Two Houses of Parliament did, by their Resolutions of the Tenth and Twenty-fourth days of June One Thousand eight hundred and six, severally resolve, upon certain Grounds therein mentioned, that they would, with all practicable Expedition, take effectual Measures for the Abolition of the African Slave Trade in such Manner, and at such Period as might be deemed advisable, And whereas it is fit upon all and each of the Grounds mentioned in the said Resolutions, that the same should be forthwith abolished and prohibited, and declared to be unlawful’;
From May 1, 1807, the Slave trade shall be abolished.
Penalty for trading in or purchasing Slaves, &c. 100£. for each Slave.
Be it therefore enacted by the King’s most Excellent Majesty, by and with the Advice and Consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the Authority of the same, That from and after the First Day of May One thousand eight hundred and seven, the African Slave Trade, and all and all manner of dealing and trading in the Purchase, Sale, Barter, or Transfer of Slaves, or of Persons intended to be sold, transferred, used, or dealt with as Slaves, practiced or carried on, in, at, to or from any Part of the Coast or Countries of Africa, shall be, and the same is hereby utterly abolished, prohibited, and declared to be unlawful; and also that all and all manner of dealing, either by way of Purchase, Sale, Barter, or Transfer, or by means of any other Contract or Agreement whatever, relating to any Slaves, or to any Persons intended to be used or dealt with as Slaves, for the Purpose of such Slaves or Persons being removed or transported either immediately or by Transshipment at Sea or otherwise, directly or indirectly from Africa, or from any Island, Country, Territory, or Place whatever, in the West Indies, or in any other part of America, not being in the Dominion, Possession, or Occupation of His Majesty, to any other Island, Country, Territory, or Place what ever, is hereby in like Manner utterly abolished, prohibited, and declared to be unlawful; and if any of His Majesty’s Subjects, or any Person or Persons resident within this United Kingdom, or any of the Islands, Colonies, Dominions, or Territories thereto belonging, or in His Majesties Occupation or Possession, shall from and after the Day aforesaid, by him or themselves, or by his or their Factors or Agents or otherwise howsoever, deal or trade in, purchase, sell, barter, or transfer, or contract or agree for the dealing or trading in, purchasing, selling, bartering, or transferring of any Slave or Slaves, or any Person or Persons intended to be sold, transferred, used, or dealt with as a Slave or Slaves contrary to the Prohibitions of this Act, he or they so offending shall forfeit and pay for every such Offence the Sum of One hundred Pounds of lawful Money of Great Britain for each and every Slave so purchased, sold, bartered, or transferred, or contracted or agreed for as aforesaid, the One Moiety thereof to the Use of His Majesty, His Heirs and Successors, and the other Moiety to the Use of any Person who shall inform, sue, and prosecute for the same.
Vessels fitted out in this Kingdom or the Colonies, &c. for carrying on the Slave Trade shall be forfeited.
II. And be it further enacted, that from and after the said First Day of May One thousand eight hundred and seven, it shall be unlawful for any of His Majesty’s Subjects, or any Person or Persons resident within this United Kingdom, or any of the Islands, Colonies, Dominions, or Territories thereto belonging, or in His Majesty’s Possession or Occupation, to fit out, man, or navigate, or to procure to be fitted out, manned, or navigated, or to be concerned in the fitting out, manning, or navigating, or in the procuring to be fitted out, manned, or navigated, any Ship or Vessel for the Purpose of assisting in, or being employed in the carrying on of the African Slave Trade, or in any other the Dealing, Trading, or Concerns hereby prohibited and declared to be unlawful, and every Ship or Vessel which shall, from and after the Day aforesaid, be fitted out, manned, navigated, used, or employed by any such Subject or Subjects, Person or Persons, or on his or their Account, or by his or their Assistance or Procurement for any of the Purposes aforesaid, and by this Act prohibited, together with all her Boats, Guns, Tackle, Apparel, and Furniture, shall become forfeited, and may and shall be seized and prosecuted as herein-after is mentioned and provided.
Persons prohibited from carrying as Slaves Inhabitants of Africa, the West Indies, or America, from one Place to another, or being concerned in receiving them &c.
Vessels employed in such Removal, &c. to be forfeited, as also the Property in the Slaves.
Owners, &c. so employed to forfeit 100£. for each Slave.
III. And be it further enacted, That from and after the said First Day of May, One thousand eight hundred and seven, it shall be unlawful for any of His Majesty’s Subjects, or any Person or persons, resident in this United Kingdom, or in any of the Colonies, Territories, or Dominions thereunto belonging or in His Majesty’s Possession or Occupation, to carry away or remove, or knowingly and willfully to procure, aid, or assist in the carrying away or removing, as Slaves, or for the purpose of being sold, transferred, used, or dealt with as Slaves, any of the Subjects or Inhabitants of Africa, or any Island, Country, Territory, or Place in the West Indies, or any part of America whatsoever, not being in the Dominion, Possession, or Occupation of his Majesty, either immediately or by Transshipment at Sea or otherwise, directly or indirectly from Africa or from any such Island, Country, Territory, or Place as aforesaid, to any other Island, Country, Territory, or Place whatever, and that it shall also be unlawful for any of His Majesty’s Subjects, or any Person or Persons resident in this United Kingdom, or in any of the Colonies, Territories, or Dominions thereunto belonging, or in His Majesty’s Possession or Occupation, knowingly and willfully to receive, detain, or confine on board, or to be aiding, assisting, or concerned in the receiving, detaining, or confining on board of any Ship or Vessel whatever, any such Subject or Inhabitant as aforesaid, for the Purpose of his or her being so carried away or removed as aforesaid, or of his or her being sold, transferred used, or dealt with as a Slave, in any Place or Country whatever; and if any Subject or Inhabitant, Subjects or Inhabitants of Africa, or of any Island, Country, Territory, or Place in the West Indies or America, not being in the Dominion, Possession, or Occupation of His Majesty, shall from and after the Day aforesaid, be so unlawfully carried away or removed, detained, confined, transshipped, or received on board of any Ship or Vessel belonging in the Whole or in Part to, or employed by any Subject of His Majesty, or Person residing in His Majesty’s Dominions or Colonies, or any Territory belonging to or in the Occupation of His Majesty, for any of the unlawful Purposes aforesaid, contrary to the Force and Effect, true Intent and Meaning of the Prohibitions in this Act contained, every such Ship or Vessel in which any such Person or Persons shall be so unlawfully carried away or removed, detained, confined, transshipped, or received on board for any of the said unlawful Purposes, together with all her Boats, Guns, Tackle, Apparel, and Furniture, shall be forfeited, and all Property or pretended Property in any Slaves or Natives of Africa so unlawfully carried away or removed, detained, confined, transshipped or received on board, shall also be forfeited, and the same respectively shall and may be seized and prosecuted as herein-after is mentioned and provided; and every Subject of His Majesty, or Person resident within this United Kingdom, or any of the Islands, Colonies, Do minions, or Territories thereto belonging, or in His Majesty’s Possession or Occupation who shall, as Owner, Part Owner, Freighter or Shipper, Factor or Agent, Captain, Mate, Supercargo, or Surgeon, so unlawfully carry away or remove, detain, confine, trans-ship, or receive on board, or be aiding or assisting in the carrying away, removing, detaining, confining, transshipping, or receiving on board, for any of the unlawful Purposes aforesaid, any such Subject or Inhabitant of Africa, or of any Island, Country, Territory, or Place, not being in the Dominion, Possession, or Occupation of His Majesty, shall forfeit and pay for each and every Slave or Person so unlawful carried away, removed, detained, confined, transshipped, or received on board, the Sum of One hundred Pounds of lawful Money of Great Britain, One Moiety thereof to the Use of His Majesty, and the other Moiety to the Use of any Person who shall inform, sue, and prosecute for the same.
Subjects of Africa, &c. unlawfully carried away and imported into any British Colony, &c. as Slaves, shall be forfeited to His Majesty.
IV. And be it further enacted, That if any Subject or Inhabitant, Subjects or Inhabitants of Africa, or of any Island, Country, Territory, or Place, not being in the Dominion, Possession, or Occupation of His Majesty, who shall, at any Time from and after the Day aforesaid, have been unlawfully carried away or removed from Africa, or from any Island, Country, Territory, or Place, in the West Indies or America, not being in the Dominion, Possession, or Occupation of His Majesty, contrary to any of the Prohibitions or Provisions in this Act contained, shall be imported or brought into any Island, Colony, Plantation, or Territory, in the Dominion, Possession, or Occupation of His Majesty, and there sold or disposed of as a Slave or Slaves, or placed, detained, or kept in a State of Slavery, such Subject or Inhabitant, Subjects or Inhabitants, so unlawfully carried away, or removed and imported, shall and may be seized and prosecuted, as forfeited to His Majesty, by such Person or Persons, in such Courts, and in such Manner and Form, as any Goods or Merchandize unlawfully imported into the same Island, Colony, Plantation, or Territory, may now be seized and prosecuted therein, by virtue of any Act or Acts of Parliament now in force for regulating the Navigation and Trade of his Majesty’s Colonies and Plantations, and shall and may, after his or their Condemnation, be disposed of in Manner herein-after mentioned and provided.
Insurances on Transactions concerning the Slave Trade not lawful. Penalty 100£. and treble the Amount of the Premium.
V. And be it further enacted, That from and after the said First Day of May One Thousand eight hundred and seven, all Insurances whatsoever to be effected upon or in respect to any of the trading, dealing, carrying, removing, transshipping, or other Transactions by this Act prohibited, shall be also prohibited and declared to be unlawful; and if any of His Majesty’s Subject’s, or any Person or Persons resident within this United Kingdom, or within any of the Islands, Colonies, Dominions, or Territories thereunto belonging, or in His Majesty’s Possession or Occupation, shall knowingly and willfully subscribe, effect, or make, or cause or procure to be subscribed, effected, or made, any such unlawful Insurances or Insurance, he or they shall forfeit and pay for every such Offence the Sum of One hundred Pounds for every such Insurance, and also Treble the Amount paid or agreed to be paid as the Premium of any such Insurance, the One Moiety thereof to the Use of His Majesty, His Heirs and Successors, and the other Moiety to the Use of any Person who shall inform, sue, and prosecute for the same.
Act shall not affect the trading in Slaves, exported from Africa in Vessels cleared out from Great Britain on or before May 1, 1807, and landed in the West Indies by March 1, 1808, &c.
VI. Provided always, That nothing herein contained shall extend, or be deemed or construed to extend, to prohibit or render unlawful the dealing or trading in the Purchase, Sale, Barter, or Transfer, or the carrying away or removing for the Purpose of being sold, transferred, used, or dealt with as Slaves, or the detaining or confining for the Purpose of being so carried away or removed, of any Slaves which shall be exported, carried, or removed from Africa, in any Ship or Vessel which, on or before the said First Day of May One thousand eight hundred and seven, shall have been lawfully cleared out from Great Britain according to the Law now in force for regulating the carrying of Slaves from Africa, or to prohibit or render unlawful the manning or navigating any such Ship or Vessel, or to make void any Insurance thereon, so as the Slaves to be carried therein shall be finally landed in the West Indies on or before the First Day of March One thousand eight hundred and eight, unless prevented by Capture, the Loss of the Vessel, by the Appearance of an Enemy upon the Coast, or other unavoidable Necessity, the Proof whereof shall lie upon the Party charged; any Thing herein-before contained to the contrary notwithstanding.
Slaves taken as Prize of War, or seized as Forfeitures, shall be condemned as prize, or forfeited to the King, for the Purpose of putting an End to their Slavery, and may be enlisted &c.
VII. ‘And whereas it may happen, That during the present or future Wars, Ships or Vessels may be seized or detained as Prize, on board whereof Slaves or Natives of Africa, carried and detained as Slaves, being the Property of His Majesty’s Enemies, or otherwise liable to Condemnation as Prize of War, may be taken or found, and it is necessary to direct in what manner such Slaves or Natives of Africa shall be hereafter treated and disposed of: And whereas it is also necessary to direct and provide for the Treatment and Disposal of any Slaves or Natives of Africa carried, removed, treated or dealt with as Slaves, who shall be unlawfully carried away or removed contrary to the Prohibitions aforesaid, or any of them, and shall be afterwards found on board any Ship or Vessel liable to Seizure under this Act, or any other Act of Parliament made for restraining or prohibiting the African Slave Trade, or shall be elsewhere lawfully seized as forfeited under this or any other such Act of Parliament as aforesaid; and it is expedient to encourage the Captors, Seizors, and Prosecutors thereof;’ Be it therefore further enacted, That all Slaves and all Natives of Africa, treated, dealt with, carried, kept, or detained as Slaves which shall at any Time from and after the said First Day of May next be seized or taken as Prize of War, or liable to Forfeiture, under this or any other Act of Parliament made for restraining or prohibiting the African Slave Trade, shall and may, for the Purposes only of Seizure, Prosecution, and Condemnation as Prize or as Forfeitures, be considered, treated, taken, and adjudged as Slaves and Property in the same manner as Negro Slaves have been heretofore considered, treated, taken, and adjudged, when seized as Prize of War, or as forfeited for any Offence against the Laws of Trade and Navigation respectively, but the same shall be condemned as Prize of War, or as forfeited to the sole Use of His Majesty, His Heirs and Successors, for the Purpose only of divesting and bearing all other Property, Right, Title, or Interest whatever, which before existed, or might afterwards be set up or claimed in or to such Slaves or Natives of Africa so seized, prosecuted, and condemned; and the same nevertheless shall in no case be liable to be sold, disposed of, treated or dealt with as Slaves, by or on the Part of His Majesty, His Heirs or Successors, or by or on the Part of any Person or Persons claiming or to claim from, by, or under His Majesty, His Heirs and Successors, or under or by force of any such Sentence or Condemnation: Provided always, that it shall be lawful for His Majesty, His Heirs and Successors, and such Officers, Civil or Military, as shall, by any general or special Order of the King in Council, be from Time to Time appointed and empowered to receive, protect, and provide for such Natives of Africa as shall be so condemned, either to enter and enlist the same, or any of them, into His Majesty’s Land or Sea Service, as Soldiers, Seamen, or Marines, or to bind the same, or any of them, whether of full Age or not, as Apprentices, for any Term not exceeding Fourteen Years, to such Person or Persons, in such Place or Places, and upon such Terms and Conditions, and subject to such Regulations, as to His Majesty shall seem meet, and shall by any general of special Order of His Majesty in Council be in that Behalf directed and appointed; and any Indenture of Apprenticeship duly made and executed, by any Person or Person to be for the Purpose appointed by any such Order in Council, for any Term not exceeding Fourteen Years, shall be of the same Force and Effect as if the party thereby bound as an Apprentice had himself or herself, when of full Age upon good Consideration, duly executed the same; and every such Native of Africa who shall be so enlisted or entered as aforesaid into any of His Majesty’s Land or Sea Forces as a Soldier, Seaman, or Marine, shall be considered, treated, and dealt with in all Respects as if he had voluntarily so enlisted or entered himself.
Certain Bounties shall be paid for such Slaves to the Captors as Head Money is paid under 45 G.3. c.72. § 5.
VIII. Provided also, and be it further enacted, That where any Slaves or Natives of Africa, taken as Prize of War by any of His Majesty’s Ships of War, or Privateers duly commissioned, shall be finally condemned as such to His Majesty’s Use as aforesaid, there shall be paid to the Captors thereof by the Treasurer of His Majesty’s Navy, in like Manner as the Bounty called Head Money is now paid by virtue of an Act of Parliament, made in the Forty-fifth Year of His Majesty’s Reign, intituled, An Act for the Encouragement of Seamen, and for the better and more effectually manning His Majesty’s Navy during the present War, such Bounty as His Majesty, His Heirs and Successors, shall have directed by any Order in Council, so as the same shall not exceed the Sum of Forty Pounds lawful Money of Great Britain for every Man, or Thirty Pounds of like Money for every Woman, or Ten Pounds of like Money for every Child or Person not above Fourteen Years old, that shall be so taken and condemned, and shall be delivered over in good Health to the proper Officer or Officers, Civil or Military, so appointed as aforesaid to receive, protect, and provide for the same; which Bounties shall be divided amongst the Officers, Seamen, Marines, and Soldiers on Board His Majesty’s Ships of War, or hired armed Ships, in Manner, Form, and Proportion, as by His Majesty’s Proclamation for granting the Distribution of Prizes already issued, or to be issued for the Purpose is or shall be directed and appointed, and amongst the Owners, Officers, and Seamen of any private Ship or Vessel of War, in such Manner and Proportion as, by an Agreement in Writing that they shall have entered into for that Purpose, shall be directed.
Certificates to entitle to Bounty.
IX. Provided always, and be it further enacted, That in order to entitle the Captors to receive the said Bounty Money, the Numbers of Men, Women, and Children, so taken, condemned, and delivered over, shall be proved to the Commissioners of His Majesty’s Navy, by producing, instead of the Oaths and Certificates prescribed by the said Act as to Head Money, a Copy, duly certified, of the Sentence or Decree of Condemnation, whereby the Numbers of Men, Women, and Children, so taken and condemned, shall appear to have been distinctly proved; and also, by producing a Certificate under the Hand of the said Officer or Officers, Military or Civil, so appointed as aforesaid, and to whom the same shall have been delivered, acknowledging that he or they hath or have received the same, to be disposed of according to His Majesty’s Instructions and Regulations as aforesaid.
Claim to Bounty shall be determined by the Judge of Admiralty.
X. Provided also, and be it further enacted, That in any Cases in which Doubts shall arise whether the party or parties claiming such Bounty Money is or are entitled thereto, the same shall be summarily determined by the Judge of the High Court of Admiralty, or by the Judge of any Court of Admiralty in which the Prize shall have been adjudged, subject nevertheless to an Appeal to the Lord Commissioners of Appeals in Prize Causes.
On Condemnation of Forfeitures of Slaves for Offences against this Act, these shall be paid to the Prosecutor 13£. for a Man, 10£. for a Woman, and 3£. for a Child &c.
XI. Provided also, and be it further enacted, That on the Condemnation to the Use of his Majesty, His Heirs and Successors, in Manner aforesaid, of any Slaves or Natives of Africa, seized and prosecuted as forfeited for any Offence against this Act, or any other Act of Parliament made for the restraining or prohibiting the African Slave Trade (except in the Case of Seizures made at Sea by the Commanders or Officers of His Majesty’s Ships or Vessels or War) there shall be paid to and to the Use of the Person who shall have sued, informed, and prosecuted the same to Condemnation, the Sums of Thirteen Pounds lawful Money aforesaid for every Man, of Ten Pounds like Money for every Woman, and of Three Pounds like Money for every Child or person under the Age of Fourteen Years, that shall be so condemned and delivered over in good Health to the said Civil or Military Officer so to be appointed to receive, protect, and provide for the same, and also the like Sums to and to the Use of the Governor or Commander in Chief of any Colony or Plantation wherein such Seizure shall have been made; but in Cases of any such Seizures made at Sea by the Commanders or Officers of His Majesty’s Ships or Vessels of War, for Forfeiture under this Act, or any other Act of Parliament made for the restraining or prohibiting the African Slave Trade, there shall be paid to the Commander of Officer who shall so seize, inform, and prosecute for every man so condemned and delivered over, the Sum of Twenty Pounds like Money, for every Woman the Sum of Fifteen Pounds like Money, and for every Child or person under the Age of Fourteen Years the Sum of Five Pounds like Money, subject nevertheless to such Distribution of the said Bounties or Rewards for the said Seizures made at Sea as His Majesty, His Heirs and Successors, shall think fit to order and direct by any other Order of Council made for that Purpose; for all which Payments so to be made as Bounties or Rewards upon Seizures and Prosecutions for Offences against this Act, or any other Act of Parliament made for restraining the African Slave Trade, the Officer or Officers, Civil or Military, so to be appointed as aforesaid to receive, protect, and provide for such Slaves or Natives of Africa so to be condemned and delivered over, shall, after the Condemnation and Receipt thereof as aforesaid, grant Certificates in favour of the Governor and Party seizing, informing, and prosecuting as aforesaid respectively, or the latter alone (as the Case may be) addressed to the Lords Commissioners of his Majesty’s Treasury; who, upon the Production to them of any such Certificate, and of an authentic Copy, duly certified, of the Sentence of Condemnation of the said Slaves or Africans to His Majesty’s Use as aforesaid, and also of a Receipt under the Hand of such Officer or Officers so appointed as aforesaid, specifying that such Slaves or Africans have by him or them been received in good Health as aforesaid, shall direct Payment to be made from and out of the Consolidated Fund of Great Britain of the Amount of the Monies specified in such Certificate, to the lawful Holders of the same, or the Persons entitled to the Benefit thereof respectively.
Counterfeiting Certificates Felony without Clergy.
XII. And be it further enacted, That if any Person shall willfully and fraudulently forge or counterfeit any such Certificate, Copy of Sentence of Condemnation, or Receipt as aforesaid, or any Part thereof, or shall knowingly and willfully utter or publish the same, knowing it to be forged or counterfeited, with Intent to defraud His Majesty, His Heirs and Successors, or any other Person or Persons whatever, the Party so offending shall, on Conviction, suffer Death as in Cases of Felony, without Benefit of Clergy.
Recovery and Application of Penalties and Forfeitures.
4 G.3. C15.
XIII. And be it further enacted, That the several Pecuniary Penalties or Forfeitures imposed and inflicted by this Act, shall and may be sued for, prosecuted, and recovered in any Court of Record in Great Britain, or in any Court of Record or Vice Admiralty in any Part of His Majesty’s Dominions wherein the Offence was committed, or where the Offender may be found after the Commission of such Offence; and that in all Cases of Seizure of any Ships, Vessels, Slaves or pretended Slaves, Goods or Effects, for any Forfeiture under this Act, the same shall and may respectively be sued for; prosecuted and recovered in any Court of Record in Great Britain or in any Court of Record or Vice Admiralty in any Part of His Majesty’s Dominions in or nearest to which such Seizures may be made, or to which such Ships or Vessels, Slaves or pretended Slaves, Goods or Effects (if seized at Sea or without the Limits of any British Jurisdiction) may most conveniently be carried for Trial, and all the said Penalties and Forfeitures, whether pecuniary or specific (unless where it is expressly otherwise provided for by this Act) shall go and belong to such Person and Persons in such Shares and Proportions, and shall and may be sued for and prosecuted, tried, recovered, distributed, and applied in such and the like Manner and by the same Ways and Means, and subject to the same Rules and Directions, as any Penalties or Forfeitures incurred in Great Britain, and in the British Colonies or Plantations in America respectively, by force of any Act of Parliament relating to the Trade and Revenues of the said British Colonies or Plantations in America, now go and belong to, and may now be sued for, prosecuted, tried, recovered, distributed and applied respectively in Great Britain or in the said Colonies or Plantations respectively, under and by virtue of a certain Act of Parliament made in the Fourth Year of His present Majesty, intituled: An Act for granting certain Duties in the British Colonies and Plantations in America, for continuing, amending, and making perpetual an Act passed in the Sixth Year of the Reign of His late Majesty, King George the Second, intituled: ‘an Act for the better securing and encouraging the Trade of His Majesty’s Sugar Colonies in America; for applying the Produce of such Duties to arise by virtue of the said Act towards defraying the Expences of defending, protecting, and securing the said Colonies and Plantations; for explaining an Act made in the Twenty-fifth Year of the Reign of King Charles the Second, intituled: “An Act for the Encouragement of the Greenland and Eastland Trades, and for the better securing the Plantation trade, and for altering and disallowing several Drawbacks on Exports from this Kingdom, and more effectively preventing the clandestine Conveyance of Goods to and from the said Colonies and Plantations, and improving and securing the Trade between the same and Great Britain.”
Seizures may be made by Officers of Customs or Excise, or Navy.
XIV. And be it further enacted, That all Ships and Vessels, Slaves or Natives of Africa, carried, conveyed, or dealt with as Slaves, and all other Goods and Effects that shall or may become forfeited for any Offence committed against this Act, shall and may be seized by any Officer of His Majesty’s Customs or Excise, or by the Commanders or Officers of any of His Majesty’s Ships or Vessels of War, who, in making and prosecuting any such Seizures, shall have the Benefit of all the Provisions made by the said Act of the Fourth Year of His present Majesty, or any other Act of Parliament made for the Protection of Officers seizing and prosecuting for any Offence against the said Act, or any other Act of Parliament relating to the Trade and Revenues of the British Colonies or Plantations in America.
Offences triable as if committed in Middlesex.
XV. And be it further enacted, That all Offences committed against this Act may be inquired of, tried, determined, and dealt with as Misdemeanors, as if the same had been respectively committed within the Body of the County of Middlesex.
His Majesty may make Regulations for Disposal of Negroes after their Apprenticeship.
XVI. Provided also, and be it further enacted, That it shall and may be lawful for his Majesty in Council, from Time to Time to make such Orders and Regulations for the future Disposal and Support of such Negroes as shall have been bound Apprentices under this Act, after the term of their Apprenticeship shall have expired, as to His Majesty shall seem meet, and as may prevent such Negroes from becoming at any Time chargeable upon the Island in which they shall have been so bound Apprentices as aforesaid.
Negroes enlisted as Soldiers not entitled to Pensions, &c.
XVII. Provided always, and be it further enacted, That none of the Provisions of any Act as to enlisting for any limited Period of Service, or as to any Rules or Regulations for the granting any Pensions or Allowances to any Soldiers discharged after certain Periods of Service, shall extend, or be deemed or construed in any Manner to extend, to any Negroes so enlisting and serving in any of His Majesty’s Forces.
General Issue.
Treble Costs.
XVIII. And be it further enacted, That if any Action or Suit shall be commenced either in Great Britain or elsewhere, against any Person or Persons for any Thing done in pursuance of this Act, the Defendant or Defendants in such Action or Suit may plead the General Issue, and give this Act and the Special Matter in Evidence at any Trial to be had thereupon, and that the same was done in pursuance and by the Authority of this Act; and if it shall appear so to have been done, the Jury shall find for the Defendant or Defendants; and if the Plaintiff shall be nonsuited or discontinue his Action after the Defendant or Defendants shall have appeared, or if Judgement shall be given upon any Verdict or Demurrer against the Plaintiff, the Defendant or Defendants shall recover Treble Costs and have the like Remedy for the same, as Defendants have in other Cases by Law.
Source: “An Act for the Abolition of the Slave Trade,” 47 Georgii III, Session 1, cap. 36, March 25, 1807, http://home.planet.nl/~pbdavis/Legis_06.htm (accessed January 2002).
Issued by Napoléon Bonaparte on December 17, 1807, the Milan Decree criticized the British government’s claim that the flag of a neutral country did not extend to the cargo carried on its ships and that England could arbitrarily tax such cargoes. Napoléon declared that any neutral vessel that had paid such taxes to the British government had effectively ended its neutrality and was, therefore, a lawful prize for the French navy or its privateers. The primary nation affected by the act was the United States, which found itself in a nowin situation.
Napoléon, emperor of the French, king of Italy, and protector of the Rhenish confederation.
Observing the measures adopted by the British government, on the 11th November last, by which vessels belonging to powers neutral, friendly, or even allied to England are made liable, not only to be searched by English cruisers, but to be compulsorily detained in England, and to have a tax laid on them of so much percent on the cargo, to be regulated by the British legislature.
Observing that by these acts the British government denationalizes ships of every nation in Europe, that it is not competent for any government to detract from its own independence and rights … and that if, by an unpardonable weakness, which in the eyes of posterity would be an indelible stain, such a tyranny was allowed to be established into principles and consecrated by usage, the English would avail themselves of it to assert it as a right, as they have availed themselves of the tolerance of governments to establish the infamous principle, that the flag of a nation does not cover goods, and to have to their right of blockade an arbitrary extension, and which infringes on the sovereignty of every state, we have decreed and do decree as follows:
ARTICLE 1. Every ship, to whatever nation it may belong, that shall have submitted to be searched by an English ship, or to a voyage to England, or shall have paid any tax whatsoever to the English government, is thereby and for that alone, declared to be denationalized, to have forfeited the protection of its king, and to have become English property.
ARTICLE 2. Whether the ships thus denationalized by the arbitrary measures of the English government, enter into our ports, or those of our allies, or whether they fall into the hands of our ships of war, or of our privateers, they are declared to be good and lawful prize.
ARTICLE 3. The British islands are declared to be in a state of blockade, both by land and sea. Every ship, of whatever nation, or whatsoever the nature of its cargo, that sails from the ports of England; [as well as] those of the English colonies, and of the countries occupied by English troops, and proceeding to England or to the English colonies, or to countries occupied by English troops, is good and lawful prize, as contrary to the present decree, and may be captured by our ships of war, or our privateers, and adjudged to the captor.
ARTICLE 4. These measures, which are resorted to only in just retaliation of the barbarous system adopted by England, which assimilates its legislation to that of Algiers, shall cease to have any effect with respect to all nations who shall have the firmness to compel the English government to respect their flag. They shall continue to be rigourously in force so long as that government does not return to the principle of the law of nations, which regulates the relations of civilized states in a state of war. The provisions of the present decree shall be abrogated and null, in fact, as soon as the English abide again by the principle of the law of nations, which are also the principles of justice and of honour.
All our ministers are charged with the execution of the present decree, which shall be inserted in the bulletin of the laws.
Source: State Papers and Public Documents of the United States, vol. 6, p. 74.
After the ratification of the treaty concerning the Louisiana Purchase, the area west of the Mississippi River was open to American fur traders. Companies were formed to capitalize on the fur trade. Contracts with individuals were negotiated to increase the amount of trade within the region. The following is an example of such a contract.
Articles of Contract and agreement, this Day entered into between Benjn Wilkinson Agent for the St. Louis Missouri fur Company of the one Part and Thomas James of the St. Louis District of the other part, Witnesseth, That the said Thomas James has this day engaged, promised and bound himself, and does by these presents engage, promise and bind himself to do and perform all and singular the services that may be required of him by the said Company in the prosecution of a voyage from St. Louis to the Head Waters of the Missouri, or to other Places on the Waters of said River Missouri, and to obey do and perform all Duties and lawfull Commands required of him the said Thomas James by such Person or Persons as have the management or command of the embarkation or expedition up the said River, among which Duties and Lawful Commands the following are recited, to wit—that the said Thomas James is to present himself in proper Person at the town of St. Louis at such Periods as the Company may deem Proper ready and prepared to commence said Voyage—that he is to labor and assist in the transportation of baggage, loading and unloading of Boats, rowing, towing and all other things connected with or relating to the safe and secure passage of Men, Baggage, Merchandise or other things from the town of St. Louis to the Head Waters of the said River, that on his Arrival there he is to Labor in trapping, hunting and collecting Furs, meats, Peltries, and to the best of his abilities, skill and cunning, and is to remain with said Company or to be removed by the said Company from place to place on the said Waters of the Missouri as may be deemed most to their advantage always in case of a removal to assist in transporting baggage, merchandise &c, and finally is bound to do and perform all those things which men engaged under similar Circumstances and with the same Views, are bound to do and perform, obeying and executing with promptness all Lawful and reasonable orders which may be given him by those Persons who command the expedition, and the said Benjn Wilkinson in the Name and on behalf of the St. Louis Missouri Fur Company does covenant with the said Thomas James as follows to wit—that the said Thomas James shall be furnished with four men and the necessary Equipment for himself and four men for hunting and trapping and to allow him as full compensation one equal fifth part of his and the four men’s hunt, this contract to continue for the term of three years, unless sooner discharged by the Company.
All which the contracting Parties aforesaid promise to do and perform under the penalty of Five Hundred Dollars, if either party shall break this Contract.
St. Louis March 29th 1809.
Thomas James.
Benjamin Wilkinson
Agent for the said Company.
Test
Jno A. Graham.
Source: A transcription of this contract was published in an appendix to Thomas James, James, Thomas, 1782–1847: Three Years among the Indians and Mexicans, ed. Walter B. Douglas (St. Louis: Missouri Historical Society, 1916).
Thomas Robert Malthus published his observations on the effect of the Corn Laws in England in response to the act passed by Parliament in 1814 that restricted the importation of grain into the British Isles. In this document, he argued the pros and cons of the Corn Laws and their effect on the price of food, initially siding with free traders. However, in 1815 he wrote another document, “Grounds of an Opinion,” that shifted his beliefs in favor of protectionism, arguing that Great Britain should be self-sufficient as far as food was concerned.
Observations on the Effects of the Corn Laws, and of a Rise or Fall in the Price of Corn on the Agriculture and General Wealth of the Country by the Rev. T.R. Malthus, Professor of Political Economy at the East India College, Hertfordshire London Printed for J. Johnson and Co., St. Paul’s Church-Yard, 1814
A revision of the corn laws, it is understood, is immediately to come under the consideration of the legislature. That the decision on such a subject, should be founded on a correct and enlightened view of the whole question, will be allowed to be of the utmost importance, both with regard to the stability of the measures to be adopted, and the effects to be expected from them.
For an attempt to contribute to the stock of information necessary to form such a decision, no apology can be necessary. It may seem indeed probable, that but little further light can be thrown on a subject, which, owing to the system adopted in this country, has been so frequently the topic of discussion; but, after the best consideration which I have been able to give it, I own, it appears to me, that some important considerations have been neglected on both sides of the question, and that the effects of the corn laws, and of a rise or fall in the price of corn, on the agriculture and general wealth of the state, have not yet been fully laid before the public.
If this be true, I cannot help attributing it in some degree to the very peculiar argument brought forward by Dr Smith, in his discussion of the bounty upon the exportation of corn. Those who are conversant with the Wealth of nations, will be aware, that its great author has, on this occasion, left entirely in the background the broad, grand, and almost unanswerable arguments, which the general principles of political economy furnish in abundance against all systems of bounties and restrictions, and has only brought forwards, in a prominent manner, one which, it is intended, should apply to corn alone. It is not surprising that so high an authority should have had the effect of attracting the attention of the advocates of each side of the question, in an especial manner, to this particular argument. Those who have maintained the same cause with Dr Smith, have treated it nearly in the same way; and, though they may have alluded to the other more general and legitimate arguments against bounties and restrictions, have almost universally seemed to place their chief reliance on the appropriate and particular argument relating to the nature of corn.
On the other hand, those who have taken the opposite side of the question, if they have imagined that they had combated this particular argument with success, have been too apt to consider the point as determined, without much reference to the more weighty and important arguments, which remained behind.
Among the latter description of persons I must rank myself. I have always thought, and still think, that this peculiar argument of Dr Smith, is fundamentally erroneous, and that it cannot be maintained without violating the great principles of supply and demand, and contradicting the general spirit and scope of the reasonings, which pervade the Wealth of nations.
But I am most ready to confess, that, on a former occasion, when I considered the corn laws, my attention was too much engrossed by this one peculiar view of the subject, to give the other arguments, which belong to it, their due weight.
I am anxious to correct an error, of which I feel conscious. It is not however my intention, on the present occasion, to express an opinion on the general question. I shall only endeavour to state, with the strictest impartiality, what appear to me to be the advantages and disadvantages of each system, in the actual circumstances of our present situation, and what are the specific consequences, which may be expected to result from the adoption of either. My main object is to assist in affording the materials for a just and enlightened decision; and, whatever that decision may be, to prevent disappointment, in the event of the effects of the measure not being such as were previously contemplated. Nothing would tend so powerfully to bring the general principles of political economy into disrepute, and to prevent their spreading, as their being supported upon any occasion by reasoning, which constant and unequivocal experience should afterwards prove to be fallacious.
We must begin, therefore, by an inquiry into the truth of Dr Smith’s argument, as we cannot with propriety proceed to the main question, till this preliminary point is settled.
The substance of his argument is, that corn is of so peculiar a nature, that its real price cannot be raised by an increase of its money price; and that, as it is clearly an increase of real price alone which can encourage its production, the rise of money price, occasioned by a bounty, can have no such effect.
It is by no means intended to deny the powerful influence of the price of corn upon the price of labour, on an average of a considerable number of years; but that this influence is not such as to prevent the movement of capital to, or from the land, which is the precise point in question, will be made sufficiently evident by a short inquiry into the manner in which labour is paid and brought into the market, and by a consider ation of the consequences to which the assumption of Dr Smith’s proposition would inevitably lead.
In the first place, if we inquire into the expenditure of the labouring classes of society, we shall find, that it by no means consists wholly in food, and still less, of course, in mere bread or grain. In looking over that mine of information, for everything relating to prices and labour, Sir Frederick Morton Eden’s work on the poor, I find, that in a labourer’s family of about an average size, the articles of house rent, fuel, soap, candles, tea, sugar, and clothing, are generally equal to the articles of bread or meal. On a very rough estimate, the whole may be divided into five parts, of which two consist of meal or bread, two of the articles above mentioned, and one of meat, milk, butter, cheese, and potatoes. These divisions are, of course, subject to considerable variations, arising from the number of the family, and the amount of the earnings. But if they merely approximate towards the truth, a rise in the price of corn must be both slow and partial in its effects upon labour. Meat, milk, butter, cheese, and potatoes are slowly affected by the price of corn; house rent, bricks, stone, timber, fuel, soap, candles, and clothing, still more slowly; and, as far as some of them depend, in part or in the whole, upon foreign materials (as is the case with leather, linen, cottons, soap, and candles), they may be considered as independent of it; like the two remaining articles of tea and sugar, which are by no means unimportant in their amount.
It is manifest therefore that the whole of the wages of labour can never rise and fall in proportion to the variations in the price of grain. And that the effect produced by these variations, whatever may be its amount, must be very slow in its operation, is proved by the manner in which the supply of labour takes place; a point, which has been by no means sufficiently attended to.
Every change in the prices of commodities, if left to find their natural level, is occasioned by some change, actual or expected, in the state of the demand or supply. The reason why the consumer pays a tax upon any manufactured commodity, or an advance in the price of any of its component parts, is because, if he cannot or will not pay this advance of price, the commodity will not be supplied in the same quantity as before; and the next year there will only be such a proportion in the market, as is accommodated to the number of persons who will consent to pay the tax. But, in the case of labour, the operation of withdrawing the commodity is much slower and more painful. Although the purchasers refuse to pay the advanced price, the same supply will necessarily remain in the market, not only the next year, but for some years to come. Consequently, if no increase take place in the demand, and the advanced price of provisions be not so great, as to make it obvious that the labourer cannot support his family, it is probable, that he will continue to pay this advance, till a relaxation in the rate of the increase of population causes the market to be under-supplied with labour; and then, of course, the competition among the purchasers will raise the price above the proportion of the advance, in order to restore the supply. In the same manner, if an advance in the price of labour has taken place during two or three years of great scarcity, it is probable that, on the return of plenty, the real recompense of labour will continue higher than the usual average, till a too rapid increase of population causes a competition among the labourers, and a consequent diminution of the price of labour below the usual rate.
This account of the manner in which the price of corn may be expected to operate upon the price of labour, according to the laws which regulate the progress of population, evidently shows, that corn and labour rarely keep an even pace together; but must often be separated at a sufficient distance and for a sufficient time, to change the direction of capital.
As a further confirmation of this truth, it may be useful to consider, secondly, the consequences to which the assumption of Dr Smith’s proposition would inevitably lead.
If we suppose, that the real price of corn is unchangeable, or not capable of experiencing a relative increase or decrease of value, compared with labour and other commodities, it will follow, that agriculture is at once excluded from the operation of that principle, so beautifully explained and illustrated by Dr Smith, by which capital flows from one employment to another, according to the various and necessarily fluctuating wants of society. It will follow, that the growth of corn has, at all times, and in all countries, proceeded with a uniform unvarying pace, occasioned only by the equable increase of agricultural capital, and can never have been accelerated, or retarded, by variations of demand. It will follow, that if a country happened to be either overstocked or understocked with corn, no motive of interest could exist for withdrawing capital from agriculture, in the one case, or adding to it in the other, and thus restoring the equilibrium between its different kinds of produce. But these consequences, which would incontestably follow from the doctrine, that the price of corn immediately and entirely regulates the prices of labour and of all other commodities, are so directly contrary to all experience, that the doctrine itself cannot possibly be true; and we may be assured, that, whatever influence the price of corn may have upon other commodities, it is neither so immediate nor so complete, as to make this kind of produce an exception to all others.
That no such exception exists with regard to corn, is implied in all the general reasonings of the Wealth of nations. Dr Smith evidently felt this; and wherever, in consequence, he does not shift the question from the exchangeable value of corn to its physical properties, he speaks with an unusual want of precision, and qualifies his positions by the expressions much, and in any considerable degree. But it should be recollected, that, with these qualifications, the argument is brought forward expressly for the purpose of showing, that the rise of price, acknowledged to be occasioned by a bounty, on its first establishment, is nominal and not real. Now, what is meant to be distinctly asserted here is, that a rise of price occasioned by a bounty upon the exportation or restrictions upon the importation of corn, cannot be less real than a rise of price to the same amount, occasioned by a course of bad seasons, an increase of population, the rapid progress of commercial wealth, or any other natural cause; and that, if Dr Smith’s argument, with its qualifications, be valid for the purpose for which it is advanced, it applies equally to an increased price occasioned by a natural demand.
Let us suppose, for instance, an increase in the demand and the price of corn, occasioned by an unusually prosperous state of our manufactures and foreign commerce; a fact which has frequently come within our own experience. According to the principles of supply and demand, and the general principles of the Wealth of nations, such an increase in the price of corn would give a decided stimulus to agriculture; and a more than usual quantity of capital would be laid out upon the land, as appears obviously to have been the case in this country during the last twenty years. According to the peculiar argument of Dr Smith, however, no such stimulus could have been given to agriculture. The rise in the price of corn would have been immediately followed by a proportionate rise in the price of labour and of all other commodities; and, though the farmer and landlord might have obtained, on an average, seventy five shillings a quarter for their corn, instead of sixty, yet the farmer would not have been enabled to cultivate better, nor the landlord to live better. And thus it would appear, that agriculture is beyond the operation of that principle, which distributes the capital of a nation according to the varying profits of stock in different employments; and that no increase of price can, at any time or in any country, materially accelerate the growth of corn, or determine a greater quantity of capital to agriculture.
The experience of every person, who sees what is going forward on the land, and the feelings and conduct both of farmers and landlords, abundantly contradict this reasoning.
Dr Smith was evidently led into this train of argument, from his habit of considering labour as the standard measure of value, and corn as the measure of labour. But, that corn is a very inaccurate measure of labour, the history of our own country will amply demonstrate; where labour, compared with corn, will be found to have experienced very great and striking variations, not only from year to year, but from century to century; and for ten, twenty, and thirty years together; and that neither labour nor any other commodity can be an accurate measure of real value in exchange, is now considered as one of the most incontrovertible doctrines of political economy, and indeed follows, as a necessary consequence, from the very definition of value in exchange. But to allow that corn regulates the prices of all commodities, is at once to erect it into a standard measure of real value in exchange; and we must either deny the truth of Dr Smith’s argument, or acknowledge, that what seems to be quite impossible is found to exist; and that a given quantity of corn, notwithstanding the fluctuations to which its supply and demand must be subject, and the fluctuations to which the supply and demand of all the other commodities with which it is compared must also be subject, will, on the average of a few years, at all times and in all countries, purchase the same quantity of labour and of the necessaries and conveniences of life.
There are two obvious truths in political economy, which have not infrequently been the sources of error.
It is undoubtedly true, that corn might be just as successfully cultivated, and as much capital might be laid out upon the land, at the price of twenty shillings a quarter, as at the price of one hundred shillings, provided that every commodity, both at home and abroad, were precisely proportioned to the reduced scale. In the same manner as it is strictly true, that the industry and capital of a nation would be exactly the same (with the slight exception at least of plate), if, in every exchange, both at home or abroad, one shilling only were used, where five are used now.
But to infer, from these truths, that any natural or artificial causes, which should raise or lower the values of corn or silver, might be considered as matters of indifference, would be an error of the most serious magnitude. Practically, no material change can take place in the value of either, without producing both lasting and temporary effects, which have a most powerful influence on the distribution of property, and on the demand and supply of particular commodities. The discovery of the mines of America, during the time that it raised the price of corn between three and four times, did not nearly so much as double the price of labour; and, while it permanently diminished the power of all fixed incomes, it gave a prodigious increase of power to all landlords and capitalists. In a similar manner, the fall in the price of corn, from whatever cause it took place, which occurred towards the middle of the last century, accompanied as it was by a rise, rather than a fall in the price of labour, must have given a great relative check to the employment of capital upon the land, and a great relative stimulus to population; a state of things precisely calculated to produce the reaction afterwards experienced, and to convert us from an exporting to an importing nation.
It is by no means sufficient for Dr Smith’s argument, that the price of corn should determine the price of labour under precisely the same circumstances of supply and demand. To make it applicable to his purpose, he must show, in addition, that a natural or artificial rise in the price of corn, or in the value of silver, will make no alteration in the state of property, and in the supply and demand of corn and labour; a position which experience uniformly contradicts.
Nothing then can be more evident both from theory and experience, than that the price of corn does not immediately and generally regulate the prices of labour and all other commodities; and that the real price of corn is capable of varying for periods of sufficient length to give a decided stimulus or discouragement to agriculture. It is, of course, only to a temporary encouragement or discouragement, that any commodity, where the competition is free, can be subjected. We may increase the capital employed either upon the land or in the cotton manufacture, but it is impossible permanently to raise the profits of farmers or particular manufacturers above the level of other profits; and, after the influx of a certain quantity of capital, they will necessarily be equalized. Corn, in this respect, is subjected to the same laws as other commodities, and the difference between them is by no means so great as stated by Dr Smith.
In discussing therefore the present question, we must lay aside the peculiar argument relating to the nature of corn; and allowing that it is possible to encourage cultivation by corn laws, we must direct our chief attention to the question of the policy or impolicy of such a system.
While our great commercial prosperity continues, it is scarcely possible that we should become again an exporting nation with regard to corn. The bounty has long been a dead letter; and will probably remain so. We may at present then confine our inquiry to the restrictions upon the importation of foreign corn with a view to an independent supply.
The determination of the question, respecting the policy or impolicy of continuing the corn laws, seems to depend upon the three following points.
First, whether, upon the supposition of the most perfect freedom of importation and exportation, it is probable that Great Britain and Ireland would grow an independent supply of corn.
Secondly, whether an independent supply, if it do not come naturally is an object really desirable, and one which justifies the interference of the legislature.
And, thirdly, if an independent supply be considered as such an object, how far, and by what sacrifices, are restrictions upon importation adapted to attain the end in view.
Of the first point, it may be observed, that it cannot, in the nature of things, be determined by general principles, but must depend upon the size, soil, facilities of culture, and demand for corn in the country in question. We know that it answers to almost all small well-peopled states, to import their corn; and there is every reason to suppose, that even a large landed nation, abounding in a manufacturing population, and having cultivated all its good soil, might find it cheaper to purchase a considerable part of its corn in other countries, where the supply, compared with the demand, was more abundant. If the intercourse between the different parts of Europe were perfectly easy and perfectly free, it would be by no means natural that one country should be employing a great capital in the cultivation of poor lands, while at no great distance, lands comparatively rich were lying very ill cultivated, from the want of an effectual demand. The progress of agricultural improvement ought naturally to proceed more equably. It is true indeed that the accumulation of capital, skill, and population in particular districts, might give some facilities of culture not possessed by poorer nations; but such facilities could not be expected to make up for great differences in the quality of the soil and the expenses of cultivation. And it is impossible to conceive that under very great inequalities in the demand for corn in different countries, occasioned by a very great difference in the accumulation of mercantile and manufacturing capital and in the number of large towns, an equalization of price could take place, without the transfer of a part of the general supply of Europe, from places where the demand was comparatively deficient, to those where it was comparatively excessive.
According to Oddy’s European commerce, the Poles can afford to bring their corn to Danzig at thirty two shillings a quarter. The Baltic merchants are said to be of opinion that the price is not very different at present; and there can be little doubt, that if the corn growers in the neighbourhood of the Baltic could look forward to a permanently open market in the British ports, they would raise corn expressly for the purpose. The same observation is applicable to America; and under such circumstances it would answer to both countries, for many years to come, to afford us supplies of corn, in much larger quantities than we have ever yet received from them.
During the five years from 1804 to 1808, both inclusive, the bullion price of corn was about seventy five shillings per quarter; yet, at this price, it answered to us better to import some portion of our supplies than to bring our land into such a state of cultivation as to grow our own consumption. We have already shown how slowly and partially the price of corn affects the price of labour and some of the other expenses of cultivation. Is it credible then that if by the freedom of importation the prices of corn were equalized, and reduced to about forty five or fifty shillings a quarter, it could answer to us to go on improving our agriculture with our increasing population, or even to maintain our produce in its actual state?
It is a great mistake to suppose that the effects of a fall in the price of corn on cultivation may be fully compensated by a diminution of rents. Rich land which yields a large net rent, may indeed be kept up in its actual state, notwithstanding a fall in the price of its produce: as a diminution of rent may be made entirely to compensate this fall and all the additional expenses that belong to a rich and highly taxed country. But in poor land, the fund of rent will often be found quite insufficient for this purpose. There is a good deal of land in this country of such a quality that the expenses of its cultivation, together with the outgoings of poor rates, tithes and taxes, will not allow the farmer to pay more than a fifth or sixth of the value of the whole produce in the shape of rent. If we were to suppose the prices of grain to fall from seventy five shillings to fifty shillings the quarter, the whole of such a rent would be absorbed, even if the price of the whole produce of the farm did not fall in proportion to the price of grain, and making some allowance for a fall in the price of labour. The regular cultivation of such land for grain would of course be given up, and any sort of pasture, however scanty, would be more beneficial both to the landlord and farmer.
But a diminution in the real price of corn is still more efficient, in preventing the future improvement of land, than in throwing land, which has been already improved, out of cultivation. In all progressive countries, the average price of corn is never higher than what is necessary to continue the average increase of produce. And though, in much the greater part of the improved lands of most countries, there is what the French economists call a disposable produce, that is, a portion which might be taken away without interfering with future production, yet, in reference to the whole of the actual produce and the rate at which it is increasing, there is no part of the price so disposable. In the employment of fresh capital upon the land to provide for the wants of an increasing population, whether this fresh capital be employed in bringing more land under the plough or in improving land already in cultivation, the main question always depends upon the expected returns of this capital; and no part of the gross profits can be diminished without diminishing the motive to this mode of employing it. Every diminution of price not fully and immediately balanced by a proportionate fall in all the necessary expenses of a farm, every tax on the land, every tax on farming stock, every tax on the necessaries of farmers, will tell in the computation; and if, after all these outgoings are allowed for, the price of the produce will not leave a fair remuneration for the capital employed, according to the general rate of profits and a rent at least equal to the rent of the land in its former state, no sufficient motive can exist to undertake the projected improvement.
It was a fatal mistake in the system of the Economists to consider merely production and reproduction, and not the provision for an increasing population, to which their territorial tax would have raised the most formidable obstacles.
On the whole then considering the present accumulation of manufacturing population in this country, compared with any other in Europe, the expenses attending enclosures, the price of labour and the weight of taxes, few things seem less probable, than that Great Britain should naturally grow an independent supply of corn; and nothing can be more certain, than that if the prices of wheat in Great Britain were reduced by free importation nearly to a level with those of America and the continent, and if our manufacturing prosperity were to continue increasing, it would incontestably answer to us to support a part of our present population on foreign corn, and nearly the whole probably of the increasing population, which we may naturally expect to take place in the course of the next twenty or twenty five years.
Source: “The Avalon Project: The Corn Laws by T.R. Malthus,” www.yale.edu/lawweb/avalon/econ/cornlaws.htm (accessed April 2004).
David Ricardo, an English banker and economist who was born in England in 1772, published several works, including The Principles of Political Economy and Taxation, which was printed in 1817. One of his theories contained in this work was his Iron Law of Wages. Ricardo argued that the wages of labor would always remain at, or near, the subsistence level. When wages improve, the labor population increases to the point where there are more laborers than jobs. At that point, a natural decrease in the birth rate will occur and the wages will fall. The cycle will then start over again.
Money, from its being a commodity obtained from a foreign country, from its being the general medium of exchange between all civilized countries, and from its being also distributed among those countries in proportions which are ever changing with every improvement in commerce and machinery, and with every increasing difficulty of obtaining food and necessaries for an increasing population, is subject to incessant variations. In stating the principles which regulate exchangeable value and price, we should carefully distinguish between those variations which belong to the commodity itself, and those which are occasioned by a variation in the medium in which value is estimated, or price expressed.
A rise in wages, from an alteration in the value of money, produces a general effect on price, and for that reason it produces no real effect whatever on profits. On the contrary, a rise of wages, from the circumstance of the labourer being more liberally rewarded, or from a difficulty of procuring the necessaries on which wages are expended, does not, except in some instances, produce the effect of raising price, but has a great effect in lowering profits. In the one case, no greater proportion of the annual labour of the country is devoted to the support of the labourers; in the other case, a larger portion is so devoted.
Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price. The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution.
The power of the labourer to support himself, and the family which may be necessary to keep up the number of labourers, does not depend on the quantity of money which he may receive for wages, but on the quantity of food, necessaries, and conveniences become essential to him from habit, which that money will purchase. The natural price of labour, therefore, depends on the price of the food, necessaries, and conveniences required for the support of the labourer and his family. With a rise in the price of food and necessaries, the natural price of labour will rise; with the fall in their price, the natural price of labour will fall.
With the progress of society the natural price of labour has always a tendency to rise, because one of the principal commodities by which its natural price is regulated, has a tendency to become dearer, from the greater difficulty of producing it. As, however, the improvements in agriculture, the discovery of new markets, whence provisions may be imported, may for a time counteract the tendency to a rise in the price of necessaries, and may even occasion their natural price to fall, so will the same causes produce the correspondent effects on the natural price of labour.
The natural price of all commodities, excepting raw produce and labour, has a tendency to fall, in the progress of wealth and population; for though, on one hand, they are enhanced in real value, from the rise in the natural price of the raw material of which they are made, this is more than counterbalanced by the improvements in machinery, by the better division and distribution of labour, and by the increasing skill, both in science and art, of the producers.
The market price of labour is the price which is really paid for it, from the natural operation of the proportion of the supply to the demand; labour is dear when it is scarce, and cheap when it is plentiful. However much the market price of labour may deviate from its natural price, it has, like commodities, a tendency to conform to it.
It is when the market price of labour exceeds its natural price, that the condition of the labourer is flourishing and happy, that he has it in his power to command a greater proportion of the necessaries and enjoyments of life, and therefore to rear a healthy and numerous family. When, however, by the encouragement which high wages give to the increase of population, the number of labourers is increased, wages again fall to their natural price, and indeed from a reaction sometimes fall below it.
When the market price of labour is below its natural price, the condition of the labourers is most wretched: then poverty deprives them of those comforts which custom renders absolute necessaries. It is only after their privations have reduced their number, or the demand for labour has increased, that the market price of labour will rise to its natural price, and that the labourer will have the moderate comforts which the natural rate of wages will afford.
Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour, be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people ….
Thus, then, with every improvement of society, with every increase in its capital, the market wages of labour will rise; but the permanence of their rise will depend on the question, whether the natural price of labour has also risen; and this again will depend on the rise in the natural price of those necessaries on which the wages of labour are expended ….
As population increases, these necessaries will be constantly rising in price, because more labour will be necessary to produce them. If, then, the money wages of labour should fall, whilst every commodity on which the wages of labour were expended rose, the labourer would be doubly affected, and would be soon totally deprived of subsistence. Instead, therefore, of the money wages of labour falling, they would rise; but they would not rise sufficiently to enable the labourer to purchase as many comforts and necessaries as he did before the rise in the price of those commodities ….
These, then, are the laws by which wages are regulated, and by which the happiness of far the greatest part of every community is governed. Like all other contracts, wages should be left to the fair and free competition of the market, and should never be controlled by the interference of the legislature.
The clear and direct tendency of the poor laws is in direct opposition to these obvious principles: it is not, as the legislature benevolently intended, to amend the condition of the poor, but to deteriorate the condition of both poor and rich; instead of making the poor rich, they are calculated to make the rich poor; and whilst the present laws are in force, it is quite in the natural order of things that the fund for the maintenance of the poor should progressively increase till it has absorbed all the net revenue of the country, or at least so much of it as the state shall leave to us, after satisfying its own never-failing demands for the public expenditure.
This pernicious tendency of these laws is no longer a mystery, since it has been fully developed by the able hand of Mr. Malthus; and every friend to the poor must ardently wish for their abolition.
Source: J.R. McCulloch, ed. The Works of David Ricardo (London: John Murray, 1881), 31, 50–58.
In May 1839, the Chinese government had ordered the destruction of thousands of British-owned casks of opium in compliance with a ban on the substance. The British, who had been forced to pay for Chinese goods with silver, realized that opium could be used as a cash crop, thereby reducing the trade deficit and the outflow of precious metal from their coffers. British merchants defied the official ban, leading to the First Opium War (1839–1842). British technological and naval superiority resulted in a complete victory with harsh terms imposed on the Chinese. On August 29, 1842, the British and Chinese signed the Treaty of Nanjing, which formally ended the war. The treaty ceded control of Hong Kong to the British, which used the island as a base for the continuation of the opium trade into China. In 1843, the Chinese signed a separate treaty that granted British subjects the right of extraterritoriality—British subjects could henceforth only be tried in British courts under British law.
HER MAJESTY the Queen of the United Kingdom of Great Britain and Ireland, and His Majesty the Emperor of China, being desirous of putting an end to the misunderstandings and consequent hostilities which have arisen between the two countries, have resolved to conclude a Treaty for that purpose ….
Who, after having communicated to each other their respective Full Powers, and found them to be in good and due form, have agreed upon and concluded the following [selected] Articles:
I.
The Government of China having compelled the British merchants trading at Canton to deal exclusively with certain Chinese merchants, called Hong merchants (or Co-Hong), who had been licensed by the Chinese Government for that purpose, the Emperor of China agrees to abolish that practice in future at all ports where British merchants may reside, and to permit them to carry on their mercantile transactions with whatever persons they please; and His Imperial Majesty further agrees to pay to the British Government the sum of 3,000,000 of dollars, on account of debts due to British subjects by some of the said Hong merchants (or Co-Hong), who have become insolvent, and who owe very large sums of money to subjects of Her Britannic Majesty.
There shall henceforward be peace and friendship between Her Majesty the Queen of the United Kingdom of Great Britain and Ireland and His Majesty the Emperor of China, and between their respective subjects, who shall enjoy full security and protection for their persons and property within the dominions of the other.
II.
His Majesty the Emperor of China agrees, that British subjects, with their families and establishments, shall be allowed to reside, for the purposes of carrying on their mercantile pursuits, without molestation or restraint, at the cities and towns of Canton, Amoy, Foochowfoo, Ningpo, and Shanghai; and Her Majesty the Queen of Great Britain, &c., will appoint Superintendents, or Consular officers, to reside at each of the above-named cities or towns, to be the medium of communication between the Chinese authorities and the said merchants, and to see that the just duties and other dues of the Chinese Government, as hereafter provided for, are duly discharged by Her Britannic Majesty’s subjects.
III.
It being obviously necessary and desirable that British subjects should have some port whereat they may [maintain] and refit their ships when required, and keep stores for that purpose, His Majesty the Emperor of China cedes to Her Majesty the Queen of Great Britain, &c., the Island of Hong-Kong, to be possessed in perpetuity by Her Britannic Majesty, her heirs and successors, and to be governed by such laws and regulations as Her Majesty the Queen of Great Britain, &c., shall see fit to direct.
IV.
The Emperor of China agrees to pay the sum of 6,000,000 of dollars, as the value of the opium which was delivered up at Canton in the month of March, 1839, as a ransom for the lives of Her Britannic Majesty’s Superintendent and subjects, who had been imprisoned and threatened with death by the Chinese High Officers.
And it is further stipulated, that interest, at the rate of 5 per cent. per annum, shall be paid by the Government of China on any portion of the above sums that are not punctually discharged at the periods fixed.
V.
The Government of China having compelled the British merchants trading at Canton to deal exclusively with certain Chinese merchants, called Hong merchants (or Co-Hong) … the Emperor of China agrees to abolish that practice in future at all ports where British merchants may reside, and to permit them to carry on their mercantile transactions with whatever persons they please; and His Imperial Majesty further agrees to pay to the British Government the sum of 3,000,000 of dollars, on account of debts due to British subjects by some of the said Hong merchants, who have become insolvent, and who owe very large sums of money to subjects of Her Britannic Majesty.
VI.
The Government of Her Britannic Majesty having been obliged to send out an expedition to demand and obtain redress for the violent and unjust proceedings of the Chinese High Authorities towards Her Britannic Majesty’s officer and subjects, the Emperor of China agrees to pay the sum of 12,000,000 of dollars, on account of the expenses incurred; and Her Britannic Majesty’s Plenipotentiary voluntarily agrees, on behalf of Her Majesty, to deduct from the said amount of 12,000,000 of dollars, any sums which may have been received by Her Majesty’s combined forces, as ransom for cities and towns in China, subsequent to the 1st day of August, 1841.
VII.
It is agreed, that the total amount of 21,000,000 of dollars, described in the 3 preceding Articles, shall be paid as follows:
6,000,000 in 1843; that is, 3,000,000 on or before the 30th of the month of June, and 3,000,000 on or before the 31st of December.
5,000,000 in 1844; that is, 2,500,000 on or before the 30th of June, and 2,500,000 on or before the 31st of December.
4,000,000 in 1845; that is, 2,000,000 on or before the 30th of June, and 2,000,000 on or before the 31st of December.
And it is further stipulated, that interest, at the rate of 5 per cent per annum, shall be paid by the Government of China on any portion of the above sums that are not punctually discharged at the periods fixed.
VIII.
The Emperor of China agrees to release, unconditionally, all subjects of Her Britannic Majesty (whether natives of Europe or India), who may be in confinement at this moment in any part of the Chinese empire.
IX.
The Emperor of China agrees to publish and promulgate, under his Imperial sign manual and seal, a full and entire amnesty and act of indemnity to all subjects of China, on account of their having resided under, or having had dealings and intercourse with, or having entered the service of Her Britannic Majesty, or of Her Majesty’s officers; and His Imperial Majesty further engages to release all Chinese subjects who may be at this moment in confinement for similar reasons.
X.
His Majesty the Emperor of China agrees to establish at all the ports which are, by the 2nd Article of this Treaty, to be thrown open for the resort of British merchants, a fair and regular tariff of export and import customs and other dues, which tariff shall be publicly notified and promulgated for general information; and the Emperor further engages, that when British merchandise shall have once paid at any of the said ports the regulated customs and dues, agreeable to the tariff to be hereafter fixed, such merchandise may be conveyed by Chinese merchants to any province or city in the interior of the Empire of China, on paying a further amount as transit duties, which shall not exceed [see Declaration respecting Transit Duties below] on the tariff value of such goods.
XI.
It is agreed that Her Britannic Majesty’s Chief High Officer in China shall correspond with the Chinese High Officers, both at the capital and in the provinces, … on a footing of perfect equality ….
XII.
On the assent of the Emperor of China to this Treaty being received, and the discharge of the first instalment of money, Her Britannic Majesty’s forces will retire from Nanking and the Grand Canal, and will no longer molest or stop the trade of China. The military post at Chinhai will also be withdrawn, but the Islands of Koolangsoo, and that of Chusan, will continue to be held by Her Majesty’s forces until the money payments, and the arrangements for opening the ports to British merchants, be completed.
XIII.
The ratification of this Treaty by Her Majesty the Queen of Great Britain, &c., and His Majesty the Emperor of China, shall be exchanged as soon as the great distance which separates England from China will admit; but in the meantime, counterpart copies of it, signed and sealed by the Plenipotentiaries on behalf of their respective Sovereigns, shall be mutually delivered, and all its provisions and arrangements shall take effect.
Done at Nanking, and signed and sealed by the Plenipotentiaries on board Her Britannic Majesty’s ship Cornwallis, this 29th day of August, 1842 ….
(L.S.) HENRY POTTINGER.
[SIGNATURES OF THE THREE CHINESE PLENIPOTENTIARIES]
DECLARATION respecting Transit Duties.
Whereas by the Xth Article of the Treaty between Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, and His Majesty the Emperor of China, concluded and signed on board Her Britannic Majesty’s ship Cornwallis, at Nanjing, on the 29th day of August, 1842 … it is stipulated and agreed, that His Majesty the Emperor of China shall establish at all the ports which, by the 2nd Article of the said Treaty, are to be thrown open for the resort of British merchants, a fair and regular tariff of export and import customs and other dues, which tariff shall be publicly notified and promulgated for general information; and further, that when British merchandise shall have once paid, at any of the said ports, the regulated customs and dues, agreeable to the tariff to be hereafter fixed, such merchandise may be conveyed by Chinese merchants to any province or city in the interior of the Empire of China, on paying a further amount of duty as transit duty;
And whereas the rate of transit duty to be so levied was not fixed by the said Treaty; Now, therefore, the undersigned Plenipotentiaries of Her Britannic Majesty, and of His Majesty the Emperor of China, do hereby, on proceeding to the exchange of the Ratifications of the said Treaty, agree and declare, that the further amount of duty to be so levied on British merchandise, as transit duty, shall not exceed the present rates, which are upon a moderate scale; and the Ratifications of the said Treaty are exchanged subject to the express declaration and stipulation herein contained.
In witness whereof the respective Plenipotentiaries have signed the present declaration, and have affixed thereto their respective seals.
Done at Hong-Kong, the 26th day of June, 1843 ….
(L.S.) HENRY POTTINGER.
[SEAL AND SIGNATURE OF THE CHINESE PLENIPOTENTIARY]
Source: “The Treaty of Nanking,” http://web.jjay.cuny.edu/jobrien/reference/ob24.html (accessed December 2003).
Although the slave trade helped to ensure the success of the mercantile system, especially in regions that relied on sugar, tobacco, and cotton crops, the United States and Great Britain legally ended the slave trade in 1808. In 1817 the British and the Spanish signed a treaty that ended the slave trade as well. The British patrolled the Atlantic from the coasts of Africa to the Caribbean and North America, often intercepting slave traders, who threw their captives overboard to escape detection. In 1843 the following act was passed to strengthen the suppression of the slave trade.
5G.4 c.113.
‘WHEREAS an Act was passed in the Fifth Year of the Reign of King George the Fourth, intituled An Act to amend and consolidate the Laws relating to the Abolition of the Slave Trade, whereby it is enacted (among other things), that it shall not be lawful (except in such special Cases as are hereinafter mentioned) for any Persons to deal or trade in, purchase, sell, barter, or transfer, or to contract for the dealing or trading in, Purchase, Sale, Barter, or Transfer of Slaves or Persons intended to be dealt with as Slaves; or to carry away or remove, or to contract for the carrying away or removing of Slaves or other Persons as or in order to their being dealt with as Slaves; or to import or bring, or to contract for the importing or bringing, into any Place whatsoever, Slaves or other Persons as or in order to their being dealt with as Slaves; or to ship, tranship, embark, receive, detain, or confine on board, or to contract for the shipping, transhipping, embarking, receiving, detaining, or confining on board of any Ship, Vessel, or Boat, Slaves or other Persons for the Purpose of their being carried away or removed as or in order to their being dealt with as Slaves; or to ship, tranship, embark, receive, detain, or confine on board, or to contract for the shipping, transhipping, embarking, receiving, detaining, or confining on board, of any Ship, Vessel, or Boat, Slaves or other Persons for the Purpose of their being imported or brought into any Place whatsoever as or in order to their being dealt with as Slaves; or to fit out, man, navigate, equip, despatch, use, employ, let, or take to freight or on hire, or to contract for the fitting out, manning, navigating, equipping, despatching, using, employing, letting, or taking to freight or on hire, any Ship, Vessel, or Boat, in order to accomplish any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful; or to lend or advance, or become Security for the Loan or Advance, or to contract for the lending or advancing, or becoming Security for the Loan or Advance of Money, Goods, or Effects employed or to be employed in accomplishing any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful; or to become Guarantee or Security, or to contract for the becoming Guarantee or Security, for Agents employed or to be employed in accomplishing any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful; or in any other Manner to engage or to contract to engage, directly or indirectly, therein as a Partner, Agent, or otherwise; or to ship, tranship, lade, receive, or put on board, or to contract for the shipping, transhipping, lading, receiving, or putting on board of any Ship, Vessel, or Boat, Money, Goods, or Effects to be employed in accomplishing any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful; or to take the Charge or Command, or to navigate or enter and embark on board, or to contract for the taking the Charge or Command or for the navigating or entering and embarking on board, of any Ship, Vessel, or Boat, as Captain, Master, Mate, petty Officer, Surgeon, Supercargo, Seaman, Marine, or Servant, or in any other Capacity, knowing that such Ship, Vessel, or Boat is actually employed, or is in the same Voyage, or upon the same Occasion, in respect of which they shall so take the Charge or Command, or navigate or enter and embark, or contract so to do as aforesaid, intended to be employed in accomplishing any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful; or to insure or to contract for the insuring of any Slaves, or any Property, or other Subject Matter engaged or employed or intended to be engaged or employed in accomplishing any of the Objects or the Contracts in relation to the Objects which Objects and Contracts have herein-before been declared unlawful: And whereas it is expedient that from and after the Commencement of this Act the Provisions of the said Act hereinbefore recited shall be deemed to apply to, and extend to render unlawful, and to prohibit the several Acts, Matters, and Things therein mentioned when committed by British Subjects in Foreign Countries and Settlements not belonging to the British Crown, in like Manner and to all Intents and Purposes as if the same were done or committed by such Persons within the British Dominions, Colonies, or Settlements; and it is expedient that further Provisions should be made for the more effectual Suppression of the Slave Trade, and of certain Practices tending to promote and encourage it:’ The recited Act and this Act shall apply to all British Subjects wherever residing.
Be it therefore enacted by the Queen’s most Excellent Majesty, by and with the Advice and Consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the Authority of the same, That all the Provisions of the said consolidated Slave Trade Act herein-before recited and of this present Act shall, from and after the coming into operation of this Act, be deemed to extend and apply to British Subjects wheresoever residing or being, and whether within the Dominions of the British Crown or of any Foreign Country; and all the several Matters and Things prohibited by the said consolidated Slave Trade Act or by this present Act, when committed by British Subjects, whether within the Dominions of the British Crown or in any Foreign Country, except only as is herein-after excepted, shall be deemed and taken to be Offences committed against the said several Acts respectively, and shall be dealt with and punished accordingly: Provided nevertheless, that nothing herein contained shall repeal or alter any of the Provisions of the said Act.
3&4W.4. c.73.
II. And be it declared and enacted, That all Persons holden in Servitude as Pledges for Debt, and commonly called “Pawns,” or by whatsoever other Name they may be called or known, shall, for the Purposes of the said consolidated Slave Trade Act, and of an Act passed in the Third and Fourth Years of the Reign of King William the Fourth, intituled An Act for the Abolition of Slavery throughout the British Colonies, for promot ing the Industry of the manumitted Slaves, and for compensating the Persons hitherto entitled to the Services of such Slaves, and of this present Act, be deemed and construed to be Slaves or Persons intended to be dealt with as Slaves.
9G.4. c.31.
III. ‘And whereas it is expedient to make further Provision for the Trial and Punishment of Offenders;’ be it enacted, That all Offences against the consolidated Slave Trade Act or against this present Act, which shall be committed by British Subjects out of this United Kingdom, whether within the Dominions of the British Crown or in any Foreign Country, or by Foreigners within the British Dominions, except in Places where the British Admiral has Jurisdiction, may be taken cognizance of, inquired into, tried, and determined, according to the Provisions of an Act passed in the Ninth Year of King George the Fourth, intituled An Act for consolidating and amending the Statutes in England relative to Offences against the Person.
13G.3. c.63.
IV. ‘And whereas the Provisions heretofore made for the hearing and determining in England of Offences committed against the Acts for the Abolition of the Slave Trade in Places out of this United Kingdom have been found ineffectual, by reason of the Difficulty of proving in this Kingdom Matters and Things done elsewhere;’ be it enacted, That in all Cases of Indictment or Information laid or exhibited in the Court of Queen’s Bench for Misdemeanors or Offences committed against the said Acts or against this present Act in any Places out of the United Kingdom, and within any British Colony, Settlement, Plantation, or Territory, it shall and may be lawful for Her Majesty’s said Court, upon Motion to be made on behalf of the Prosecutor or Defendant, to award a Writ or Writs of Mandamus, requiring the Chief Justice or other chief judicial Officer in such Colony, Settlement, Plantation, or Territory, who are hereby respectively authorized and required accordingly to hold a Court, with all convenient Speed, for the Examination of Witnesses and receiving other Proofs concerning the Matters charged in such Indictments or Informations respectively, and in the meantime to cause public Notice to be given of the holding of such Courts, and Summonses to be issued for the Attendances of Witnesses and of Agents and Counsel of the Parties; and such Examination as aforesaid shall be then and there openly and publicly taken in the said Court vivâ voce, upon the respective Oaths of the Persons examined, and be reduced to Writing, and be sent to Her Majesty in Her Court of Queen’s Bench (in manner set forth and prescribed in an Act passed in the Thirteenth Year of George the Third, Chapter Sixty-three, intituled An Act for establishing certain Regulations for the better Management of the Affairs of the East India Company as well in India as in Europe); and such Depositions, being duly taken and returned according to the true Intent and Meaning of this Act, shall be allowed and read, and shall be deemed as good and competent Evidence as if such Witnesses had been present and sworn, and examined vivâ voce at any Trial for such Misdemeanors and Offences as aforesaid in Her Majesty’s said Court of Queen’s Bench, any Law or Usage to the contrary thereof notwithstanding.
V. Provided always, and be it enacted, That in all the Cases in which the holding or taking of Slaves shall not be prohibited by this or any other Act of Parliament, it shall be lawful to sell or transfer such Slaves, any thing in this or any other Act contained notwithstanding.
VI. Provided always, and be it enacted, That nothing in this Act contained shall be taken to subject to any Forfeiture, Punishment, or Penalty any Person for transferring or receiving any Share in any Joint Stock Company established before the passing of this Act in respect of any Slave or Slaves in the Possession of such Company before such Time, or for selling any Slave or Slaves which were lawfully in his Possession at the Time of passing this Act, or which such Person shall or may have become possessed of or entitled unto bonâ fide prior to such Sale, by Inheritance, Devise, Bequest, Marriage, or otherwise by Operation of Law.
VII. And be it enacted, That this Act shall be deemed and taken to be in force and to have effect from and after the First Day of November in the Year One thousand eight hundred and forty-three, and not before.
Source: 6° & 7° Victoriae, cap. XCVIII.
A German socialist and one of the founders of modern communism along with Karl Marx, Friedrich Engels wrote the following article on free trade and protectionism in the newspaper Deutsche-Brusseler Zeitung on June 10, 1847. He argued that Germany’s decision to adopt a protective tariff through the creation of a customs union helped the bourgeoisie to throw off the rule of feudalism but that it did not benefit the working class since it only replaced one group in power with another. Under the system of free trade and protectionism, the laborers continued to receive only enough wages to barely survive. He claimed that the working class must overthrow the bourgeoisie before their lives would improve.
From the instant that lack of money and credit forced the King of Prussia to issue the Letters Patent of February 3 no reasonable person could doubt any longer that the absolute monarchy in Germany and the “Christian-Germanic” management as it has hitherto existed, also known under the name of “paternal government,” had, in spite of all bristling resistance and sabre-rattling speeches from the throne, abdicated for ever. The day had now dawned from which the bourgeoisie in Germany can date its rule. The Letters Patent themselves are nothing but an acknowledgment, though still wrapped in a great deal of Potsdam mist and fog, of the power of the bourgeoisie. A good deal of this mist and fog has already been blown away by a little weak puffing from the United Diet, and very soon the whole Christian-Germanic misty phantom will be dissolved into its nothingness.
But as soon as the rule of the middle classes began, the first demand to be made was bound to be that the whole trade policy of Germany, or of the Customs Union, should be wrested from the incompetent hands of German princes, their ministers, and arrogant, but in commercial and industrial matters utterly unimaginative and ignorant bureaucrats, and be made dependent upon and decided by those who possess both the necessary insight and the most immediate interest in the matter. In other words: the question of protective and differential tariffs or free trade must fall within the sole decision of the bourgeoisie.
The United Diet in Berlin has shown the Government that the bourgeoisie knows what it needs; in the recent tariff negotiations it was made clear to the Spandau System of Government in pretty plain and bitter words, that it is incapable of grasping, protecting and promoting the material interests concerned. The Cracow affair alone would have been sufficient to brand the foreheads of Holy-Alliance William and his ministers with the stamp of the crudest ignorance of, or the most culpable treachery against, the welfare of the nation. To the horror of his all-highest Majesty and his Excellencies a host of other things came up for discussion, in the course of which royal and ministerial capabilities and discernment—living as well as defunct—could feel anything but flattered.
In the bourgeoisie itself, indeed, two different views dominate with regard to industry and trade. Nonetheless there is no doubt that the party in favour of protective, or, rather, differential tariffs is by far the most powerful, numerous and predominant. The bourgeoisie cannot, in fact, even maintain itself, cannot consolidate its position, cannot attain unbounded power unless it shelters and fosters its industry and trade by artificial means. Without protection against foreign industry it would be crushed and trampled down within a decade. It is quite easily possible that not even protection will help it much or for long. It has waited too long, it has lain too peacefully in the swaddling clothes in which it has been trussed so many years by its precious princes. It has been out-flanked and overtaken on every side, it has had its best positions taken from it, while at home it peacefully let its knuckles be rapped and did not even have enough energy to rid itself of its partly imbecile, partly extremely cunning paternal schoolmasters and disciplinarians.
Now a new page has been turned. The German princes can henceforth only be the servants of the bourgeoisie, only be the dot over the “i” of the bourgeoisie. In so far as there is still time and opportunity for the latter’s rule, protection for German industry and German trade is the only foundation on which it may rest. And what the bourgeoisie wants and must want of the German princes, it will also be able to achieve.
There exists, however, alongside the bourgeoisie, a quite considerable number of people called proletarians—the working and propertyless class.
The question therefore arises: What does this class gain from the introduction of the protective system? Will it thereby receive more wages, be able to feed and clothe itself better, house itself more healthily, afford somewhat more time for recreation and education, and some means for the more sensible and careful upbringing of its children?
The gentlemen of the bourgeoisie who advocate the protective system never fail to push the well-being of the working class into the foreground. To judge by their words, a truly paradisiacal life will commence for the workers with the protection of industry, Germany will then become a Canaan “flowing with milk and honey” for the proletarians. But listen on the other hand to the free trade men speaking, and only under their system would the propertyless be able to live “like God in France,” that is, in the greatest jollity and merriment.
Among both parties there are still plenty of limited minds who more or less believe in the truth of their own words. The intelligent among them know very well that this is all vain delusion, merely calculated, furthermore, to deceive and win the masses.
The intelligent bourgeois does not need to be told that whether the system in force is that of protective tariffs or free trade or a mixture of both, the worker will receive no bigger wage for his labour than will just suffice for his scantiest maintenance. From the one side as from the other, the worker gets precisely what he needs to keep going as a labour-machine.
It might thus appear to be a matter of indifference to the proletarian, to the propertyless, whether the protectionists or the free traders have the last word.
Since, however, as has been said above, the bourgeoisie in Germany requires protection against foreign countries in order to clear away the medieval remnants of a feudal aristocracy and the modern vermin by the Grace of God, and to develop purely and simply its own proper, innermost essence(!)—then the working class also has an interest in what helps the bourgeoisie to unimpeded rule.
Not until only one class—the bourgeoisie—is seen to exploit and oppress, until penury and misery can no longer be blamed now on this estate, now on that, or simply on the absolute monarchy and its bureaucrats—only then will the last decisive battle break out, the battle between the propertied and the propertyless, between the bourgeoisie and the proletariat.
Only then will the field of battle have been swept clean of all unnecessary barriers, of all that is misleading and accessory; the position of the two hostile armies will be clear and visible at a glance.
With the rule of the bourgeoisie, the workers, compelled by circumstances, will also make the infinitely important advance that they will no longer come forward as individuals, as at the most a couple of hundreds or thousands, in rebellion against the established order, but all together, as one class, with its specific interests and principles, with a common plan and united strength, they will launch their attack on the last and the worst of their mortal enemies, the bourgeoisie.
There can be no doubt as to the outcome of this battle. The bourgeoisie will and must fall to the ground before the proletariat, just as the aristocracy and the absolute monarchy have received their coup de grace from the middle class.
With the bourgeoisie, private property will at the same time be overthrown, and the victory of the working class will put an end to all class or caste rule for ever.
Source: “Protective Tariffs or Free Trade System,” www.marxists.org/archive/marx/works/1847/06/01.htm (accessed June 2003).
Karl Marx, a German social philosopher who rejected the traditional economic explanations of eighteenth- and nineteenth-century economists, developed his own philosophy, which became the foundation of socialism and communism. He argued for radical social reforms, especially after the failure of the revolutions in 1848 in Europe. He advocated the foundation of openly revolutionary organizations to awaken the consciousness of the working classes. He gave the following speech to the Democratic Association of Brussels at its first public meeting on January 9, 1848. The topic of the speech was the attempts by British free-traders to persuade the people of the benefit of repealing the Corn Laws, a series of acts that prohibited the importation of cheaper corn from outside England. Marx outlined the arguments of the merchant, the manufacturer, the shopkeeper, and the laborer. He concluded that a shift to free trade would only increase tension between the merchant class and the workers. Capital would no longer be restricted by tariff policies but the worker would continue to receive subsistence-level wages. Since this would hasten class warfare, Marx promoted free trade.
Gentlemen,
The Repeal of the Corn Laws in England is the greatest triumph of free trade in the 19th century. In every country where manufacturers talk of free trade, they have in mind chiefly free trade in corn and raw materials in general. To impose protective duties on foreign corn is infamous, it is to speculate on the famine of peoples.
Cheap food, high wages, this is the sole aim for which English free-traders have spent millions, and their enthusiasm has already spread to their brethren on the Continent. Generally speaking, those who wish for free trade desire it in order to alleviate the condition of the working class.
But, strange to say, the people for whom cheap food is to be procured at all costs are very ungrateful. Cheap food is as ill-esteemed in England as cheap government is in France. The people see in these self-sacrificing gentlemen, in Bowring, Bright and Co., their worst enemies and the most shameless hypocrites.
Everyone knows that in England the struggle between Liberals and Democrats takes the name of the struggle between Free-Traders and Chartists.
Let us now see how the English free-traders have proved to the people the good intentions that animate them.
This is what they said to the factory workers:
“The duty levied on corn is a tax upon wages; this tax you pay to the landlords, those medieval aristocrats; if your position is wretched one, it is on account of the dearness of the immediate necessities of life.”
The workers in turn asked the manufacturers:
“How is it that in the course of the last 30 years, while our industry has undergone the greatest development, our wages have fallen far more rapidly, in proportion, than the price of corn has gone up?
“The tax which you say we pay the landlords is about 3 pence a week per worker. And yet the wages of the hand-loom weaver fell, between 1815 and 1843, from 28s. per week to 5s., and the wages of the power-loom weavers, between 1823 and 1843, from 20s. per week to 8s.
“And during the whole of this period that portion of the tax which we paid to the landlord has never exceeded 3 pence. And, then in the year 1834, when bread was very cheap and business going on very well, what did you tell us? You said, ‘If you are unfortunate, it is because you have too many children, and your marriages are more productive than your labor!’
“These are the very words you spoke to us, and you set about making new Poor Laws, and building work-houses, the Bastilles of the proletariat.”
To this the manufacturer replied:
“You are right, worthy laborers; it is not the price of corn alone, but competition of the hands among themselves as well, which determined wages.
“But ponder well one thing, namely, that our soil consists only of rocks and sandbanks. You surely do not imagine that corn can be grown in flower-pots. So if, instead of lavishing our capital and our labor upon a thoroughly sterile soil, we were to give up agriculture, and devote ourselves exclusively to industry, all Europe would abandon its factories, and England would form one huge factory town, with the whole of the rest of Europe for its countryside.”
While thus haranguing his own workingmen, the manufacturer is interrogated by the small trader, who says to him:
“If we repeal the Corn Laws, we shall indeed ruin agriculture; but for all that, we shall not compel other nations to give up their own factories and buy from ours.
“What will the consequence be? I shall lose the customers that I have at present in the country, and the home trade will lose its market.”
The manufacturer, turning his back upon the workers, replies to the shopkeeper:
“As to that, you leave it to us! Once rid of the duty on corn, we shall import cheaper corn from abroad. Then we shall reduce wages at the very time when they rise in the countries where we get out corn.
“Thus in addition to the advantages which we already enjoy we shall also have that of lower wages and, with all these advantage, we shall easily force the Continent to buy from us.”
But now the farmers and agricultural laborers join in the discussion.
“And what, pray, is to become of us?
“Are we going to pass a sentence of death upon agriculture, from which we get our living? Are we to allow the soil to be torn from beneath our feet?”
As its whole answer, the Anti–Corn Law League has contented itself with offering prizes for the three best essays upon the wholesome influence of the repeal of the Corn Laws on English agriculture.
These prizes were carried off by Messrs. Hope, Morse, and Greg, whose essays were distributed in thousands of copies throughout the countryside.
The first of the prize-winners devotes himself to proving that neither the tenant farmer nor the agricultural laborer will lose by the free importation of foreign corn, but only the landlord.
“The English tenant farmer,” he exclaims, “need not fear the repeal of the Corn Laws, because no other country can produce such good corn so cheaply as England.
“Thus, even if the price of corn fell, it would not hurt you, because this fall would only affect rent, which would go down, and not at all industrial profit and wages, which would remain stationary.”
The second prize-winner, Mr. Morse, maintains, on the contrary, that the price of corn will rise in consequence of repeal. He takes infinite pains to prove that protective duties have never been able to secure a remunerative price for corn.
In support for his assertion, he cites the fact that, whenever foreign corn has been imported, the price of corn in England has gone up considerably, and then when little corn has been imported, the price has fallen extremely. This prize-winner forgets that the importation was not the cause of the high price, but that the high price was the cause of the importation.
And in direct contradiction to his co-prize-winner, he asserts that every rise in the price of corn is profitable to both the tenant farmer and the laborer, but not to the landlord.
The third prize-winner, Mr. Greg, who is a big manufacturer and whose work is addressed to the large tenant farmers, could not hold with such stupidities. His language is more scientific.
He admits that the Corn Laws can raise rent only by raising the price of corn, and that they can raise the price of corn only by compelling capital to apply itself to land of inferior quality, and this is explained quite simply.
In proportion as population increases, if foreign corn cannot be imported, less fertile soil has to be used, the cultivation of which involves more expense and the product of this soil is consequently dearer.
There being a forced sale for corn, the price will of necessity be determined by the price of the product of the most costly soil. The difference between this price and the cost of production upon soil of better quality constitutes the rent.
If, therefore, as a result of the repeal of the Corn Laws, the price of corn, and consequently the rent, falls, it is because inferior soil will no longer be cultivated. Thus, the reduction of rent must inevitably ruin a part of the tenant farmers.
These remarks were necessary in order to make Mr. Greg’s language comprehensible.
“The small farmers,” he says, “who cannot support themselves by agriculture will find a resource in industry. As to the large tenant farmers, they cannot fail to profit. Either the landlords will be obliged to sell them land very cheap, or leases will be made out for very long periods. This will enable tenant farmers to apply large sums of capital to the land, to use agricultural machinery on a larger scale, and to save manual labor, which will, moreover, be cheaper, on account of the general fall in wages, the immediate consequences of the repeal of the Corn Laws.”
Dr. Browning conferred upon all these arguments the consecration of religion, by exclaiming at a public meeting,
“Jesus Christ is Free Trade, and Free Trade is Jesus Christ.”
One can understand that all this hypocrisy was not calculated to make cheap bread attractive to the workers.
Besides, how could the workingman understand the sudden philanthropy of the manufacturers, the very men still busy fighting against the Ten Hours’ Bill, which was to reduce the working day of the mill hands from 12 hours to 10?
To give you an idea of the philanthropy of these manufacturers I would remind you, gentlemen, of the factory regulations in force in all the mills.
Every manufacturer has for his own private use a regular penal code in which fines are laid down for every voluntary or involuntary offence. For instance, the worker pays so much if he has the misfortune to sit down on a chair; if he whispers, or speaks, or laughs; if he arrives a few moments too late; if any part of the machine breaks, or he does not turn out work of the quality desired, etc., etc. The fines are always greater than the damage really done by the worker. And to give the worker every opportunity for incurring fines, the factory clock is set forward, and he is given bad raw material to make into good pieces of stuff. An overseer not sufficiently skillful in multiplying cases of infractions or rules is discharged.
You see, gentlemen, this private legislation is enacted for the especial purpose of creating such infractions, and infractions are manufactured for the purpose of making money. Thus the manufacturer uses every means of reducing the nominal wage, and of profiting even by accidents over which the worker has no control.
These manufacturers are the same philanthropists who have tried to make the workers believe that they were capable of going to immense expense for the sole purpose of ameliorating their lot. Thus, on the one hand, they nibble at the wages of the worker in the pettiest way, by means of factory regulations, and, on the other, they are undertaking the greatest sacrifices to raise those wages again by means of the Anti-Corn Law League.
They build great palaces at immense expense, in which the League takes up, in some respects, its official residence; they send an army of missionaries to all corners of England to preach the gospel of free trade; they have printed and distributed gratis thousands of pamphlets to enlighten the worker upon his own interests, they spend enormous sums to make the press favorable to their cause; they organize a vast administrative system for the conduct of the free trade movement, and they display all their wealth of eloquence at public meetings. It was at one of these meetings that a worker cried out:
“If the landlords were to sell our bones, you manufacturers would be the first to buy them in order to put them through a steam-mill and make flour of them.”
The English workers have very well understood the significance of the struggle between the landlords and the industrial capitalists. They know very well that the price of bread was to be reduced in order to reduce wages, and that industrial profit would rise by as much as rent fell.
Ricardo, the apostle of the English free-traders, the most eminent economist of our century, entirely agrees with the workers upon this point. In his celebrated work on political economy, he says:
“If instead of growing our own corn … we discover a new market from which we can supply ourselves … at a cheaper price, wages will fall and profits rise. The fall in the price of agricultural produce reduces the wages, not only of the laborer employed in cultivating the soil, but also of all those employed in commerce or manufacture.”
And do not believe, gentlemen, that it is a matter of indifference to the worker whether he receives only four francs on account of corn being cheaper, when he had been receiving five francs before.
Have not his wages always fallen in comparison with profit, and is it not clear that his social position has grown worse as compared with that of the capitalist? Besides which he loses more as a matter of fact.
So long as the price of corn was higher and wages were also higher, a small saving in the consumption of bread sufficed to procure him other enjoyments. But as soon as bread is very cheap, and wages are therefore very cheap, he can save almost nothing on bread for the purchase of other articles.
The English workers have made the English free-traders realize that they are not the dupes of their illusions or of their lies; and if, in spite of this, the workers made common cause with them against the landlords, it was for the purpose of destroying the last remnants of feudalism and in order to have only one enemy left to deal with. The workers have not miscalculated, for the landlords, in order to revenge themselves upon the manufacturers, made common cause with the workers to carry the Ten Hours’ Bill, which the latter had been vainly demanding for 30 years, and which was passed immediately after the repeal of the Corn Laws.
When Dr. Bowring, at the Congress of Economists [September 16–18, 1848; the following, among others, were present: Dr. Bowring, M.P., Colonel Thompson, Mr. Ewart, Mr. Brown, and James Wilson, editor of the Economist], drew from his pocket a long list to show how many head of cattle, how much ham, bacon, poultry, etc., was imported into England, to be consumed, as he asserted, by the workers, he unfortunately forgot to tell you that all the time the workers of Manchester and other factory towns were finding themselves thrown into the streets by the crisis which was beginning.
As a matter of principle in political economy, the figures of a single year must never be taken as the basis for formulating general laws. One must always take the average period of from six to seven years—a period of time during which modern industry passes through the various phases of prosperity, overproduction, stagnation, crisis, and completes its inevitable cycle.
Doubtless, if the price of all commodities falls— and this is the necessary consequence of free trade—I can buy far more for a franc than before. And the worker’s franc is as good as any other man’s. Therefore, free trade will be very advantageous to the worker. There is only little difficulty in this, namely, that the worker, before he exchanges his franc for other commodities, has first exchanged his labor with the capitalist. If in this exchange he always received the said franc for the same labor and the price of all other commodities fell, he would always be the gainer by such a bargain. The difficult point does not lie in proving that, if the price of all commodities falls, I will get more commodities for the same money.
Economists always take the price of labor at the moment of its exchange with other commodities. But they altogether ignore the moment at which labor accomplishes its own exchange with capital.
When less expense is required to set in motion the machine which produces commodities, the things necessary for the maintenance of this machine, called a worker, will also cost less. If all commodities are cheaper, labor, which is a commodity too, will also fall in price, and, as we shall see later, this commodity, labor, will fall far lower in proportion than the other commodities. If the worker still pins his faith to the arguments of the economists, he will find that the franc has melted away in his pocket, and that he has only 5 sous left.
Thereupon the economists will tell you:
“Well, we admit that competition among the workers, which will certainly not have diminished under free trade, will very soon bring wages into harm, only with the low price of commodities. But, on the other hand, the low price of commodities will increase consumption, the larger consumption will require increased production, which will be followed by a larger demand for hands, and this larger demand for hands will be followed by a rise in wages.”
The whole line of argument amounts to this: Free trade increases productive forces. If industry keeps growing, if wealth, if the productive power, if, in a word, productive capital increases, the demand for labor, the price of labor, and consequently the rate of wages, rise also.
The most favorable condition for the worker is the growth of capital. This must be admitted. If capital remains stationary, industry will not merely remain stationary but will decline, and in this case the worker will be the first victim. He goes to the wall before the capitalist. And in the case where capital keeps growing, in the circumstance which we have said are the best for the worker, what will be his lot? He will go to the wall just the same. The growth of productive capital implies the accumulation and the concentration of capital. The centralization of capital involves a greater division of labor and a greater use of machinery. The greater division of labor destroys the especial skill of the laborer; and by putting in the place of this skilled work labor which anybody can perform, it increase competition among the workers.
This competition becomes fiercer as the division of labor enables a single worker to do the work of three. Machinery accomplishes the same result on a much larger scale. The growth of productive capital, which forces the industrial capitalists to work with constantly increasing means, ruins the small industrialist and throws them into the proletariat. Then, the rate of interest falling in proportion as capital accumulates, the small rentiers, who can no longer live on their dividends, are forced to go into industry and thus swell the number of proletarians.
Finally, the more productive capital increases, the more it is compelled to produce for a market whose requirements it does not know, the more production precedes consumption, the more supply tries to force demand, and consumption crises increase in frequency and in intensity. But every crisis in turn hastens the centralization of capital and adds to the proletariat.
Thus, as productive capital grows, competition among the workers grows in a far greater proportion. The reward of labor diminishes for all, and the burden of labor increases for some.
In 1829, there were in Manchester 1,088 cotton spinners employed in 36 factories. In 1841, there were no more than 448, and they tended 53,353 more spindles than the 1,088 spinners did in 1829. In manual labor had increased in the same proportion as the productive power, the number of spinners ought to have reaches the figure of 1,848; improved machinery had, therefore, deprived 1,100 workers of employment.
We know beforehand the reply of the economists. The men thus deprived of work, they say, will find other kinds of employment. Dr. Bowring did not fail to reproduce this argument at the Congress of Economists, but neither did he fail to supply his own refutation.
In 1835, Dr. Bowring made a speech in the House of Commons upon the 50,000 hand-loom weavers of London who for a very long time had been starving without being able to find that new kind of employment which the free-traders hold out to them in the distance.
We will give the most striking passages of this speech of Dr. Bowring:
“This distress of the weavers … is an incredible condition of a species of labor easily learned—and constantly intruded on and superseded by cheaper means of production. A very short cessation of demand, where the competition for work is so great … produces a crisis. The hand-loom weavers are on the verge of that state beyond which human existence can hardly be sustained, and a very trifling check hurls them into the regions of starvation …. The improvements of machinery, … by superseding manual labor more and more, infallibly bring with them in the transition much of temporary suffering …. The national good cannot be purchased but at the expense of some individual evil. No advance was ever made in manufactures but at some cost to those who are in the rear; and of all discoveries, the power-loom is that which most directly bears on the condition of the hand-loom weaver. He is already beaten out of the field in many articles; he will infallibly be compelled to surrender many more.”
Further on he says:
“I hold in my hand the correspondence which has taken place between the Governor-General of India and the East-India Company, on the subject of the Dacca hand-loom weavers …. Some years ago the East-India Company annually received of the produce of the looms of India to the amount of from 6,000,000 to 8,000,000 of pieces of cotton goods. The demand gradually fell to somewhat more than 1,000,000, and has now nearly ceased altogether. In 1800, the United States took from India nearly 800,000 pieces of cotton; in 1830, not 4,000. In 1800, 1,000,000 pieces were shipped to Portugal; in 1830, only 20,000. Terrible were the accounts of the wretchedness of the poor Indian weavers, reduced to absolute starvation. And what was the sole cause? The presence of the cheaper English manufacture …. Numbers of them die of hunger, the remainder were, for the most part, transferred to other occupations, principally agricultural. Not to have changed their trade was inevitable starvation. And at this moment that Dacca district is supplied with yarn and cotton cloth from the power-looms of England …. The Dacca muslins, celebrated over the whole world for their beauty and fineness, are also annihilated from the same cause. And the present suffering, to numerous classes in India, is scarcely to be paralleled in the history of commerce.”
Dr. Bowring’s speech is the more remarkable because the facts quoted by him are exact, and the phrases with which he seeks to palliate them are wholly characterized by the hypocrisy common to all free trade sermons. He represents the workers as means of production which must be superseded by less expensive means of production. He pretends to see in the labor of which he speaks a wholly exceptional kind of labor, and in the machine which has crushed out the weavers an equally exceptional machine. He forgets that there is no kind of manual labor which may not any day be subjected to the fate of the hand-loom weavers.
“It is, in fact, the constant aim and tendency of every improvement in machine to supersede human labor altogether, or to diminish its cost by substituting the industry of women and children for that of men; or that of ordinary laborers for trained artisans. In most of the water-twist, or throstle cotton-mills, the spinning is entirely managed by females of 16 years and upwards. The effect of substituting the self-acting mule for the common mule, is to discharge the greater part of the men spinners, and to retain adolescents and children.”
These words of the most enthusiastic free-trader, Dr. Ure, serve to complement the confessions of Dr. Bowring. Dr. Bowring speaks of certain individual evils, and, at the same time, says that these individual evils destroy whole classes; he speaks of the temporary sufferings during the transition period, and at the very time of speaking of them, he does not deny that these temporary evils have implied for the majority the transition from life to death, and for the rest a transition from a better to a worse condition. If he asserts, farther on, that the sufferings of these workers are inseparable from the progress of industry, and are necessary to the prosperity of the nation, he simply says that the prosperity of the bourgeois class presupposed as necessary the suffering of the laboring class.
All the consolation which Dr. Bowring offers the workers who perish, and, indeed, the whole doctrine of compensation which the free-traders propound, amounts to this:
You thousands of workers who are perishing, do not despair! You can die with an easy conscience. Your class will not perish. It will always be numerous enough for the capitalist class to decimate it without fear of annihilating it. Besides, how could capital be usefully applied if it did not take care always to keep up its exploitable material, i.e., the workers, to exploit them over and over again?
But, besides, why propound as a problem still to be solved the question: What influence will the adoption of free trade have upon the condition of the working class? All the laws formulated by the political economists from Quesnay to Ricardo have been based upon the hypothesis that the trammels which still interfere with commercial freedom have disappeared. These laws are confirmed in proportion as free trade is adopted. The first of these laws is that competition reduces the price of every commodity to the minimum cost of production. Thus the minimum of wages is the natural price of labor. And what is the minimum of wages? Just so much as is required for production of the articles indispensable for the maintenance of the worker, for putting him in a position to sustain himself, however badly, and to propagate his race, however slightly.
But do not imagine that the worker receives only this minimum wage, and still less that he always receives it.
No, according to this law, the working class will sometimes be more fortunate. It will sometimes receive something above the minimum, but this surplus will merely make up for the deficit which it will have received below the minimum in times of industrial stagnation. That is to say that, within a given time which recurs periodically, in the cycle which industry passes through while undergoing the vicissitudes of prosperity, overproduction, stagnation and crisis, when reckoning all that the working class will have had above and below necessaries, we shall see that, in all, it will have received neither more nor less than the minimum; i.e., the working class will have maintained itself as a class after enduring any amount of misery and misfortune, and after leaving many corpses upon the industrial battlefield. But what of that? The class will still exist; nay, more, it will have increased.
But this is not all. The progress of industry creates less expensive means of subsistence. Thus spirits have taken the place of beer, cotton that of wool and linen, and potatoes that of bread.
Thus, as means are constantly being found for the maintenance of labor on cheaper and more wretched food, the minimum of wages is constantly sinking. If these wages began by making the man work to live, they end by making him live the life of a machine. His existence has not other value than that of a simple productive force, and the capitalist treats him accordingly.
This law of commodity labor, of the minimum of wages, will be confirmed in proportion as the supposition of the economists, free-trade, becomes an actual fact. Thus, of two things one: either we must reject all political economy based on the assumption of free trade, or we must admit that under this free trade the whole severity of the economic laws will fall upon the workers.
To sum up, what is free trade, what is free trade under the present condition of society? It is freedom of capital. When you have overthrown the few national barriers which still restrict the progress of capital, you will merely have given it complete freedom of action. So long as you let the relation of wage labor to capital exist, it does not matter how favorable the conditions under which the exchange of commodities takes place, there will always be a class which will exploit and a class which will be exploited. It is really difficult to understand the claim of the free-traders who imagine that the more advantageous application of capital will abolish the antagonism between industrial capitalists and wage workers. On the contrary, the only result will be that the antagonism of these two classes will stand out still more clearly.
Let us assume for a moment that there are no more Corn Laws or national or local custom duties; in fact that all the accidental circumstances which today the worker may take to be the cause of his miserable condition have entirely vanished, and you will have removed so many curtains that hide from his eyes his true enemy.
He will see that capital become free will make him no less a slave than capital trammeled by customs duties.
Gentlemen! Do not allow yourselves to be deluded by the abstract word freedom. Whose freedom? It is not the freedom of one individual in relation to another, but the freedom of capital to crush the worker.
Why should you desire to go on sanctioning free competition with this idea of freedom, when this freedom is only the product of a state of things based upon free competition?
We have shown what sort of brotherhood free trade begets between the different classes of one and the same nation. The brotherhood which free trade would establish between the nations of the Earth would hardly be more fraternal. To call cosmopolitan exploitation universal brotherhood is an idea that could only be engendered in the brain of the bourgeoisie. All the destructive phenomena which unlimited competition gives rise to within one country are reproduced in more gigantic proportions on the world market. We need not dwell any longer upon free trade sophisms on this subject, which are worth just as much as the arguments of our prize-winners Messrs. Hope, Morse, and Greg.
For instance, we are told that free trade would create an international division of labor, and thereby give to each country the production which is most in harmony with its natural advantage.
You believe, perhaps, gentlemen, that the production of coffee and sugar is the natural destiny of the West Indies.
Two centuries ago, nature, which does not trouble herself about commerce, had planted neither sugar-cane nor coffee trees there.
And it may be that in less than half a century you will find there neither coffee nor sugar, for the East Indies, by means of cheaper production, have already successfully combatted his alleged natural destiny of the West Indies. And the West Indies, with their natural wealth, are already as heavy a burden for England as the weavers of Dacca, who also were destined from the beginning of time to weave by hand.
One other thing must never be forgotten, namely, that, just as everything has become a monopoly, there are also nowadays some branches of industry which dominate all others, and secure to the nations which most largely cultivate them the command of the world market. Thus in international commerce cotton alone has much greater commercial than all the other raw materials used in the manufacture of clothing put together. It is truly ridiculous to see the free-traders stress the few specialities in each branch of industry, throwing them into the balance against the products used in everyday consumption and produced most cheaply in those countries in which manufacture is most highly developed.
If the free-traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another.
Do not imagine, gentlemen, that in criticizing freedom of trade we have the least intention of defending the system of protection.
One may declare oneself an enemy of the constitutional regime without declaring oneself a friend of the ancient regime.
Moreover, the protectionist system is nothing but a means of establishing large-scale industry in any given country, that is to say, of making it dependent upon the world market, and from the moment that dependence upon the world market is established, there is already more or less dependence upon free trade. Besides this, the protective system helps to develop free trade competition within a country. Hence we see that in countries where the bourgeoisie is beginning to make itself felt as a class, in Germany for example, it makes great efforts to obtain protective duties. They serve the bourgeoisie as weapons against feudalism and absolute government, as a means for the concentration of its own powers and for the realization of free trade within the same country.
But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.
Source: “On the Question of Free Trade,” http://csf.colorado.edu/psn/marx/archive/1848-ft/1848-ft.txt (accessed June 2003).
Karl Marx and Friedrich Engels wrote the Communist Manifesto in 1848 during a period of social movements within Europe that demanded greater rights for the working classes. The document established the foundation of a socioeconomic doctrine that would become known as Marxism. When the capitalist forces suppressed the laborers to a breaking point, a class war would inevitably break out and then the proletariat would overthrow their capitalist masters and form a classless society where all the people owned the means of production. Marxism continued to attract disillusioned workers throughout Europe in the nineteenth century but would do so under the name of socialism. Under this system, the industrialists and merchant classes would be eliminated—a development that would have adversely affected trade in all areas where it existed and possibly international trade as well.
A spectre is haunting Europe—the spectre of communism. All the powers of old Europe have entered into a holy alliance to exorcise this spectre: Pope and Tsar, Metternich and Guizot, French Radicals and German police-spies.
Where is the party in opposition that has not been decried as communistic by its opponents in power? Where is the opposition that has not hurled back the branding reproach of communism, against the more advanced opposition parties, as well as against its reactionary adversaries?
Two things result from this fact:
I. Communism is already acknowledged by all European powers to be itself a power.
II. It is high time that Communists should openly, in the face of the whole world, publish their views, their aims, their tendencies, and meet this nursery tale of the spectre of communism with a manifesto of the party itself.
To this end, Communists of various nationalities have assembled in London and sketched the following manifesto, to be published in the English, French, German, Italian, Flemish and Danish languages.
The history of all hitherto existing society2 is the history of class struggles.
Freeman and slave, patrician and plebian, lord and serf, guild-master3 and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.
In the earlier epochs of history, we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebians, slaves; in the Middle Ages, feudal lords, vassals, guild-masters, journeymen, apprentices, serfs; in almost all of these classes, again, subordinate gradations.
The modern bourgeois society that has sprouted from the ruins of feudal society has not done away with class antagonisms. It has but established new classes, new conditions of oppression, new forms of struggle in place of the old ones.
Our epoch, the epoch of the bourgeoisie, possesses, however, this distinct feature: it has simplified class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other—bourgeoisie and proletariat.
From the serfs of the Middle Ages sprang the chartered burghers of the earliest towns. From these burgesses the first elements of the bourgeoisie were developed.
The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonisation of America, trade with the colonies, the increase in the means of exchange and in commodities generally, gave to commerce, to navigation, to industry, an impulse never before known, and thereby, to the revolutionary element in the tottering feudal society, a rapid development.
The feudal system of industry, in which industrial production was monopolized by closed guilds, now no longer suffices for the growing wants of the new markets. The manufacturing system took its place. The guild-masters were pushed aside by the manufacturing middle class; division of labor between the different corporate guilds vanished in the face of division of labor in each single workshop.
Meantime, the markets kept ever growing, the demand ever rising. Even manufacturers no longer sufficed. Thereupon, steam and machinery revolutionized industrial production. The place of manufacture was taken by the giant, MODERN INDUSTRY; the place of the industrial middle class by industrial millionaires, the leaders of the whole industrial armies, the modern bourgeois.
Modern industry has established the world market, for which the discovery of America paved the way. This market has given an immense development to commerce, to navigation, to communication by land. This development has, in turn, reacted on the extension of industry; and in proportion as industry, commerce, navigation, railways extended, in the same proportion the bourgeoisie developed, increased its capital, and pushed into the background every class handed down from the Middle Ages.
We see, therefore, how the modern bourgeoisie is itself the product of a long course of development, of a series of revolutions in the modes of production and of exchange.
Each step in the development of the bourgeoisie was accompanied by a corresponding political advance in that class. An oppressed class under the sway of the feudal nobility, an armed and self-governing association of medieval commune4: here independent urban republic (as in Italy and Germany); there taxable “third estate” of the monarchy (as in France); afterward, in the period of manufacturing proper, serving either the semi-feudal or the absolute monarchy as a counterpoise against the nobility, and, in fact, cornerstone of the great monarchies in general—the bourgeoisie has at last, since the establishment of Modern Industry and of the world market, conquered for itself, in the modern representative state, exclusive political sway. The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.
The bourgeoisie, historically, has played a most revolutionary part.
The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors,” and has left no other nexus between man and man than naked self-interest, than callous “cash payment.” It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom— Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.
The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.
The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation into a mere money relation.
The bourgeoisie has disclosed how it came to pass that the brutal display of vigor in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former exoduses of nations and crusades.
The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real condition of life and his relations with his kind.
The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
The bourgeoisie has, through its exploitation of the world market, given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.
The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization. The cheap prices of commodities are the heavy artillery with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.
The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. Just as it has made the country dependent on the towns, so it has made barbarian and semi-barbarian countries dependent on the civilized ones, nations of peasants on nations of bourgeois, the East on the West.
The bourgeoisie keeps more and more doing away with the scattered state of the population, of the means of production, and of property. It has agglomerated population, centralized the means of production, and has concentrated property in a few hands. The necessary consequence of this was political centralization. Independent, or but loosely connected provinces, with separate interests, laws, governments, and systems of taxation, became lumped together into one nation, with one government, one code of laws, one national class interest, one frontier, and one customs tariff.
The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization or rivers, whole populations conjured out of the ground—what earlier century had even a pre-sentiment that such productive forces slumbered in the lap of social labor?
We see then: the means of production and of exchange, on whose foundation the bourgeoisie built itself up, were generated in feudal society. At a certain stage in the development of these means of production and of exchange, the conditions under which feudal society produced and exchanged, the feudal organization of agriculture and manufacturing industry, in one word, the feudal relations of property became no longer compatible with the already developed productive forces; they became so many fetters. They had to be burst asunder; they were burst asunder.
Into their place stepped free competition, accompanied by a social and political constitution adapted in it, and the economic and political sway of the bourgeois class.
A similar movement is going on before our own eyes. Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past, the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule. It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity—the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.
The weapons with which the bourgeoisie felled feudalism to the ground are now turned against the bourgeoisie itself.
But not only has the bourgeoisie forged the weapons that bring death to itself; it has also called into existence the men who are to wield those weapons—the modern working class—the proletarians.
In proportion as the bourgeoisie, i.e., capital, is developed, in the same proportion is the proletariat, the modern working class, developed—a class of laborers, who live only so long as they find work, and who find work only so long as their labor increases capital. These laborers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market.
Owing to the extensive use of machinery, and to the division of labor, the work of the proletarians has lost all individual character, and, consequently, all charm for the workman. He becomes an appendage of the machine, and it is only the most simple, most monotonous, and most easily acquired knack, that is required of him. Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for maintenance, and for the propagation of his race. But the price of a commodity, and therefore also of labor, is equal to its cost of production. In proportion, therefore, as the repulsiveness of the work increases, the wage decreases. What is more, in proportion as the use of machinery and division of labor increases, in the same proportion the burden of toil also increases, whether by prolongation of the working hours, by the increase of the work exacted in a given time, or by increased speed of machinery, etc.
Modern Industry has converted the little workshop of the patriarchal master into the great factory of the industrial capitalist. Masses of laborers, crowded into the factory, are organized like soldiers. As privates of the industrial army, they are placed under the command of a perfect hierarchy of officers and sergeants. Not only are they slaves of the bourgeois class, and of the bourgeois state; they are daily and hourly enslaved by the machine, by the overlooker, and, above all, in the individual bourgeois manufacturer himself. The more openly this despotism proclaims gain to be its end and aim, the more petty, the more hateful and the more embittering it is.
The less the skill and exertion of strength implied in manual labor, in other words, the more modern industry becomes developed, the more is the labor of men superseded by that of women. Differences of age and sex have no longer any distinctive social validity for the working class. All are instruments of labor, more or less expensive to use, according to their age and sex.
No sooner is the exploitation of the laborer by the manufacturer, so far at an end, that he receives his wages in cash, than he is set upon by the other portion of the bourgeoisie, the landlord, the shopkeeper, the pawnbroker, etc.
The lower strata of the middle class—the small tradespeople, shopkeepers, and retired tradesmen generally, the handicraftsmen and peasants—all these sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialized skill is rendered worthless by new methods of production. Thus, the proletariat is recruited from all classes of the population.
The proletariat goes through various stages of development. With its birth begins its struggle with the bourgeoisie. At first, the contest is carried on by individual laborers, then by the work of people of a factory, then by the operative of one trade, in one locality, against the individual bourgeois who directly exploits them. They direct their attacks not against the bourgeois condition of production, but against the instruments of production themselves; they destroy imported wares that compete with their labor, they smash to pieces machinery, they set factories ablaze, they seek to restore by force the vanished status of the workman of the Middle Ages.
At this stage, the laborers still form an incoherent mass scattered over the whole country, and broken up by their mutual competition. If anywhere they unite to form more compact bodies, this is not yet the consequence of their own active union, but of the union of the bourgeoisie, which class, in order to attain its own political ends, is compelled to set the whole proletariat in motion, and is moreover yet, for a time, able to do so. At this stage, therefore, the proletarians do not fight their enemies, but the enemies of their enemies, the remnants of absolute monarchy, the landowners, the non-industrial bourgeois, the petty bourgeois. Thus, the whole historical movement is concentrated in the hands of the bourgeoisie; every victory so obtained is a victory for the bourgeoisie.
But with the development of industry, the proletariat not only increases in number; it becomes concentrated in greater masses, its strength grows, and it feels that strength more. The various interests and conditions of life within the ranks of the proletariat are more and more equalized, in proportion as machinery obliterates all distinctions of labor, and nearly everywhere reduces wages to the same low level. The growing competition among the bourgeois, and the resulting commercial crises, make the wages of the workers ever more fluctuating. The increasing improvement of machinery, ever more rapidly developing, makes their livelihood more and more precarious; the collisions between individual workmen and individual bourgeois take more and more the character of collisions between two classes. Thereupon, the workers begin to form combinations (trade unions) against the bourgeois; they club together in order to keep up the rate of wages; they found permanent associations in order to make provision beforehand for these occasional revolts. Here and there, the contest breaks out into riots.
Now and then the workers are victorious, but only for a time. The real fruit of their battles lie not in the immediate result, but in the ever expanding union of the workers. This union is helped on by the improved means of communication that are created by Modern Industry, and that place the workers of different localities in contact with one another. It was just this contact that was needed to centralize the numerous local struggles, all of the same character, into one national struggle between classes. But every class struggle is a political struggle. And that union, to attain which the burghers of the Middle Ages, with their miserable highways, required centuries, the modern proletarian, thanks to railways, achieve in a few years.
This organization of the proletarians into a class, and, consequently, into a political party, is continually being upset again by the competition between the workers themselves. But it ever rises up again, stronger, firmer, mightier. It compels legislative recognition of particular interests of the workers, by taking advantage of the divisions among the bourgeoisie itself. Thus, the Ten-Hours Bill in England was carried.
Altogether, collisions between the classes of the old society further in many ways the course of development of the proletariat. The bourgeoisie finds itself involved in a constant battle. At first with the aristocracy; later on, with those portions of the bourgeoisie itself, whose interests have become antagonistic to the progress of industry; at all times with the bourgeoisie of foreign countries. In all these battles, it sees itself compelled to appeal to the proletariat, to ask for help, and thus to drag it into the political arena. The bourgeoisie itself, therefore, supplies the proletariat with its own elements of political and general education, in other words, it furnishes the proletariat with weapons for fighting the bourgeoisie.
Further, as we have already seen, entire sections of the ruling class are, by the advance of industry, precipitated into the proletariat, or are at least threatened in their conditions of existence. These also supply the proletariat with fresh elements of enlightenment and progress.
Finally, in times when the class struggle nears the decisive hour, the progress of dissolution going on within the ruling class, in fact within the whole range of old society, assumes such a violent, glaring character, that a small section of the ruling class cuts itself adrift, and joins the revolutionary class, the class that holds the future in its hands. Just as, therefore, at an earlier period, a section of the nobility went over to the bourgeoisie, so now a portion of the bourgeoisie goes over to the proletariat, and in particular, a portion of the bourgeois ideologists, who have raised themselves to the level of comprehending theoretically the historical movement as a whole.
Of all the classes that stand face to face with the bourgeoisie today, the proletariat alone is a genuinely revolutionary class. The other classes decay and finally disappear in the face of Modern Industry; the proletariat is its special and essential product.
The lower middle class, the small manufacturer, the shopkeeper, the artisan, the peasant, all these fight against the bourgeoisie, to save from extinction their existence as fractions of the middle class. They are therefore not revolutionary, but conservative. Nay, more, they are reactionary, for they try to roll back the wheel of history. If, by chance, they are revolutionary, they are only so in view of their impending transfer into the proletariat; they thus defend not their present, but their future interests; they desert their own standpoint to place themselves at that of the proletariat.
The “dangerous class,” the social scum, that passively rotting mass thrown off by the lowest layers of the old society, may, here and there, be swept into the movement by a proletarian revolution; its conditions of life, however, prepare it far more for the part of a bribed tool of reactionary intrigue.
In the condition of the proletariat, those of old society at large are already virtually swamped. The proletarian is without property; his relation to his wife and children has no longer anything in common with the bourgeois family relations; modern industry labor, modern subjection to capital, the same in England as in France, in America as in Germany, has stripped him of every trace of national character. Law, morality, religion, are to him so many bourgeois prejudices, behind which lurk in ambush just as many bourgeois interests.
All the preceding classes that got the upper hand sought to fortify their already acquired status by subjecting society at large to their conditions of appropriation. The proletarians cannot become masters of the productive forces of society, except by abolishing their own previous mode of appropriation, and thereby also every other previous mode of appropriation. They have nothing of their own to secure and to fortify; their mission is to destroy all previous securities for, and insurances of, individual property.
All previous historical movements were movements of minorities, or in the interest of minorities. The proletarian movement is the self-conscious, independent movement of the immense majority, in the interest of the immense majority. The proletariat, the lowest stratum of our present society, cannot stir, cannot raise itself up, without the whole superincumbent strata of official society being sprung into the air.
Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle. The proletariat of each country must, of course, first of all settle matters with its own bourgeoisie.
In depicting the most general phases of the development of the proletariat, we traced the more or less veiled civil war, raging within existing society, up to the point where that war breaks out into open revolution, and where the violent overthrow of the bourgeoisie lays the foundation for the sway of the proletariat.
Hitherto, every form of society has been based, as we have already seen, on the antagonism of oppressing and oppressed classes. But in order to oppress a class, certain conditions must be assured to it under which it can, at least, continue its slavish existence. The serf, in the period of serfdom, raised himself to membership in the commune, just as the petty bourgeois, under the yoke of the feudal absolutism, managed to develop into a bourgeois. The modern laborer, on the contrary, instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an overriding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state, that it has to feed him, instead of being fed by him. Society can no longer live under this bourgeoisie, in other words, its existence is no longer compatible with society.
The essential condition for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage labor. Wage labor rests exclusively on competition between the laborers. The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the laborers, due to competition, by the revolutionary combination, due to association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.
1. By bourgeoisie is meant the class of modern capitalists, owners of the means of social production and employers of wage labor. By proletariat, the class of modern wage laborers who, having no means of production of their own, are reduced to selling their labor power in order to live. [Note by Engels, 1888 English edition]
2. That is, all “written” history. In 1847, the pre-history of society, the social organization existing previous to recorded history, all but unknown. Since then, August von Haxthausen (1792–1866) discovered common ownership of land in Russia, Georg Ludwig von Maurer proved it to be the social foundation from which all Teutonic races started in history, and, by and by, village communities were found to be, or to have been, the primitive form of society everywhere from India to Ireland. The inner organization of this primitive communistic society was laid bare, in its typical form, by Lewis Henry Morgan’s (1818–1861) crowning discovery of the true nature of the gens and its relation to the tribe. With the dissolution of the primeaval communities, society begins to be differentiated into separate and finally antagonistic classes. I have attempted to retrace this dissolution in Der Ursprung der Familie, des Privateigenthumus und des Staats, second edition, Stuttgart, 1886. [Engels, 1888 English edition]
3. Guild-master, that is, a full member of a guild, a master within, not a head of a guild. [Engels, 1888 English edition]
4. This was the name given their urban communities by the townsmen of Italy and France, after they had purchased or conquered their initial rights of self-government from their feudal lords. [Engels, 1890 German edition]
“Commune” was the name taken in France by the nascent towns even before they had conquered from their feudal lords and masters local self-government and political rights as the “Third Estate.” Generally speaking, for the economical development of the bourgeoisie, England is here taken as the typical country, for its political development, France. [Engels, 1888 English edition]
Source: “Manifesto of the Communist Party,” http://csf.colorado.edu/psn/marx/archive/1848-cm/cm.html (accessed July 2003).
George Goldie Taubman, a British colonial administrator who engaged in trade along the Niger River beginning in the 1870s, formed the Royal Niger Company. He received a charter for his company in 1886. Under the terms of the charter, he was granted the authority over both political and economic activities throughout Nigeria. The company prevented French and German attempts to establish forts and trading relationships with the Nigerians. His success resulted in the British controlling all trade throughout the region. The following contract was the standard document used when Taubman negotiated a trade agreement with the local chiefs. It prohibits trade with other foreigners and provides the company with power over political decisions such as war as well as the right to mine, farm, or build anywhere. The local chiefs usually did not understand the terms of the contract but any violation gave the company justification for exercising even greater control.
We, the undersigned Chiefs of _____________, with the view to bettering of the condition of our country and people, do this day cede to the Royal Niger Company, for ever, the whole of our territory extending from _____________.
We also give to the said Royal Niger Company full power to settle all native disputes arising from any cause whatever, and we pledge ourselves not to enter into any war with other tribes without the sanction of the said Royal Niger Company.
We understand that the said Royal Niger Company have full power to mine, farm, and build in any portion of our country.
We bind ourselves not to have any intercourse with any strangers or foreigners except through the said Royal Niger Company.
In consideration of the foregoing, the said Royal Niger Company (Chartered and Limited) bind themselves not to interfere with any of the native laws or customs of the country, consistently with the maintenance of order and good government.
The said Royal Niger Company agree to pay native owners of land a reasonable amount for any portion they may require.
The said Royal Niger Company bind themselves to protect the said Chiefs from the attacks of any neighboring aggressive tribes.
The said Royal Niger Company also agree to pay the said Chiefs ________ measures native value.
We, the undersigned witnesses, do hereby solemnly declare that the ________ Chiefs whose names are placed opposite their respective crosses have in our presence affixed their crosses of their own free will and consent, and that the said ________ has in our presence affixed his signature.
Done in triplicate at _____________, this _______ day of _______, 188__.
Declaration by interpreter. I, ______________________, of ________________, do hereby solemnly declare that I am well acquainted with the language of the country, and that on the __________ day of __________, 188__, I truly and faithfully explained the above Agreement to all the Chiefs present, and that they understood its meaning.
Source: “Imperialism: Sample of Native Treaty,” http://web.jjay.cuny.edu/~jobrien/reference/ob43.html (accessed September 2003).
The Convention of Constantinople was signed by all the major European powers on October 29, 1888. The main objective of the convention was to secure unrestricted use of the canal in peacetime as well as during war. No ship, regardless of its origin, was to be denied use even if its country was at war. Great Britain was the guarantor of the neutrality of the canal, and management of the canal became the responsibility of the Suez Canal Company, of which the British owned a majority of the stock. In 1936, the Anglo-Egyptian Treaty was signed and British troops continued to protect the area. But after World War II, the Egyptian government and people pushed for the withdrawal of British forces—a feat accomplished in June 1956. Since then, the canal was closed to ocean traffic from October 1956 to April 1957 as a result of a war between Egypt and Britain, France, and Israel and a second time during the Arab-Israeli War in 1967. The canal remained closed until 1975, when Israel withdrew from the Sinai peninsula. During the late eighteenth and early nineteenth centuries, the Suez Canal was important for trade between the Indian Ocean and Europe, especially after the introduction of steamships, which cut the travel time by 51 percent. Because of the two closures, the canal lost much of its traffic. The newer, larger ships such as super oil tankers were too large to pass through the canal. In 1997, the Egyptian government announced that fees would be reduced and the canal deepened to accommodate all ships, but the work has not been completed.
(Constantinople, October 29, 1888)
Entry into force generally: December 22, 1888
CONVENTION RESPECTING THE FREE NAVIGATION OF THE SUEZ MARITIME CANAL
In the name of Almighty God.
Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, Empress of India; His Majesty the Emperor of Germany, King of Prussia; His Majesty the Emperor of Austria, King of Bohemia, etc, and Apostolic King of Hungary; His Majesty the King of Spain, and in his name the Queen Regent of the Kingdom; the President of the French Republic; His Majesty the King of Italy; His Majesty the King of the Netherlands, Grand Duke of Luxembourg, etc; His Majesty the Emperor of all the Russias; and His Majesty the Emperor of the Ottomans; wishing to establish, by a Conventional Act, a definite system destined to guarantee at all times, and for all the Powers, the free use of the Suez Maritime Canal, and thus to complete the system under which the navigation of this Canal has been placed by the Firman of His Imperial Majesty the Sultan, dated 22 February 1866 (2 Zilkádé, 1281),1 and sanctioning the concessions of His Highness the Khedive, have named as their Plenipotentiaries, that is to say:
[Names of plenipotentiaries not listed here.]
Who, having communicated to each other their respective full powers, found in good and due form, have agreed upon the following Articles:
The Suez Maritime Canal shall always be free and open, in time of war as in time of peace, to every vessel of commerce or of war, without distinction of flag.
Consequently, the High Contracting Parties agree not in any way to interfere with the free use of the Canal, in time of war as in time of peace.
The Canal shall never be subjected to the exercise of the right of blockade.
The High Contracting Parties, recognizing that the Fresh-Water Canal is indispensable to the Maritime Canal, take note of the engagements of His Highness the Khedive towards the Universal Suez Canal Company as regards the Fresh-Water Canal; which engagements are stipulated in a Convention bearing date 18 March 1863,2 containing an exposé and four Articles.
They undertake not to interfere in any way with the security of that Canal and its branches, the working of which shall not be exposed to any attempt at obstruction.
The High Contracting Parties likewise undertake to respect the plant, establishments, buildings and works of the Maritime Canal and of the Fresh-Water Canal.
The Maritime Canal remaining open in time of war as a free passage, even to the ships of war of belligerents, according to the terms of Article I of the present Treaty, the High Contracting Parties agree that no right of war, no act of hostility, nor any act having for its object to obstruct the free navigation of the Canal, shall be committed in the Canal and its ports of access, as well as within a radius of three marine miles from those ports, even though the Ottoman Empire should be one of the belligerent Powers.
Vessels of war of belligerents shall not revictual or take in stores in the Canal and its ports of access, except in so far as may be strictly necessary. The transit of the aforesaid vessels through the Canal shall be effected with the least possible delay, in accordance with the regulations in force, and without any other intermission than that resulting from the necessities of the service.
Their stay at Port Said and in the roadstead of Suez shall not exceed 24 hours, except in case of distress. In such case they shall be bound to leave as soon as possible. An interval of 24 hours shall always elapse between the sailing of a belligerent ship from one of the ports of access and the departure of a ship belonging to the hostile Power.
In time of war belligerent Powers shall not disembark nor embark within the Canal and its ports of access either troops, munitions or materials of war. But in case of an accidental hindrance in the Canal, men may be embarked or disembarked at the ports of access by detachments not exceeding 1,000 men, with a corresponding amount of war material.
Prizes shall be subjected, in all respects, to the same rules as the vessels of war of belligerents.
The Powers shall not keep any vessel of war in the waters of the Canal (including Lake Timsah and the Bitter Lakes).
Nevertheless, they may station vessels of war in the ports of access of Port Said and Suez, the number of which shall not exceed two for each Power.
This right shall not be exercised by belligerents.
The Agents in Egypt of the Signatory Powers of the present Treaty shall be charged to watch over its execution. In case of any event threatening the security or the free passage of the Canal, they shall meet on the summons of three of their number under the presidency of their Doyen, in order to proceed to the necessary verifications. They shall inform the Khedivial Government of the danger which they may have perceived, in order that that Government may take proper steps to insure the protection and the free use of the Canal. Under any circumstances, they shall meet once a year to take note of the due execution of the Treaty.
The last-mentioned meetings shall take place under the presidency of a Special Commissioner nominated for that purpose by the Imperial Ottoman Government. A Commissioner of the Khedive may also take part in the meeting, and may preside over it in case of the absence of the Ottoman Commissioner.
They shall especially demand the suppression of any work or the dispersion of any assemblage on either bank of the Canal, the object or effect of which might be to interfere with the liberty and the entire security of the navigation.
The Egyptian Government shall, within the limits of its powers resulting from the Firmans, and under the conditions provided for in the present Treaty, take the necessary measures for insuring the execution of the said Treaty.
In case the Egyptian Government should not have sufficient means at its disposal, it shall call upon the Imperial Ottoman Government, which shall take the necessary measures to respond to such appeal; shall give notice thereof to the Signatory Powers of the Declaration of London of 17 March 1885;3 and shall, if necessary, concert with them on the subject.
The provisions of Articles IV, V, VII and VIII shall not interfere with the measures which shall be taken in virtue of the present Article.
Similarly, the provisions of Articles IV, V, VII and VIII, shall not interfere with the measures which His Majesty the Sultan and His Highness the Khedive, in the name of His Imperial Majesty, and within the limits of the Firmans granted, might find it necessary to take for securing by their own forces the defence of Egypt and the maintenance of public order.
In case His Imperial Majesty the Sultan, or His Highness the Khedive, should find it necessary to avail themselves of the exceptions for which this Article provides, the Signatory Powers of the Declaration of London shall be notified thereof by the Imperial Ottoman Government.
It is likewise understood that the provisions of the four Articles aforesaid shall in no case occasion any obstacle to the measures which the Imperial Ottoman Government may think it necessary to take in order to insure by its own forces the defence of its other possessions situated on the eastern coast of the Red Sea.
The measures which shall be taken in the cases provided for by Articles IX and X of the present Treaty shall not interfere with the free use of the Canal. In the same cases, the erection of permanent fortifications contrary to the provisions of Article VIII is prohibited.
The High Contracting Parties, by application of the principle of equality as regards the free use of the Ca nal, a principle which forms one of the bases of the present Treaty, agree that none of them shall endeavour to obtain with respect to the Canal territorial or commercial advantages or privileges in any international arrangements which may be concluded. Moreover the rights of Turkey as the territorial Power are reserved.
With the exception of the obligations expressly provided by the clauses of the present Treaty, the sovereign rights of His Imperial Majesty the Sultan, and the rights and immunities of His Highness the Khedive, resulting from the Firmans, are in no way affected.
The High Contracting Parties agree that the engagements resulting from the present Treaty shall not be limited by the duration of the Acts of Concession of the Universal Suez Canal Company.
The stipulations of the present Treaty shall not interfere with the sanitary measures in force in Egypt.
The High Contracting Parties undertake to bring the present Treaty to the knowledge of the States which have not signed it, inviting them to accede to it.
The present Treaty shall be ratified, and the ratifications shall be exchanged at Constantinople within the space of one month, or sooner if possible.4
IN FAITH OF WHICH the respective Plenipotentiaries have signed the present Treaty, and have affixed to it the seal of their arms.
DONE at Constantinople, the 29th day of the month of October, in the year 1888.
[Signatures not reproduced here.]
1. SP 56, p. 293.
2. SP 55, p. 999.
3. Hertslet 17, p. 349.
4. Instrument of ratification deposited for United Kingdom, 22 December 1888. Applies to Australia.
Source: “Convention Respecting the Free Navigation of the Suez Maritime Canal,” www.austlii.edu.au/au/other/dfat/treaties/1901/127.html (accessed September 2003).
After the United States became a power in East Asia with the acquisition of the Philippines at the end of the Spanish-American War in 1898, the administration of William McKinley turned its attention toward China. European powers had already developed spheres of influence in China and had been granted the right of extraterritoriality (the right of their subjects to be tried under their laws for offenses committed in China, instead of under Chinese law). Secretary of State John Hay sent the first open door note to France, Germany, Great Britain, Italy, Japan, and Russia in 1899. Hay proposed that China’s treaty ports be open to all nations and that the country’s territorial and political integrity be respected. All of the recipients evaded answering Hay by stating that the other countries must comply first. In May 1900, Hay announced the acceptance of the policy; only Japan objected. Following Hay’s announcement, the Chinese attempted to eliminate all foreign influence during the Boxer Rebellion. After the European powers suppressed the uprising, Hay sent a second open door note to the major powers that emphasized the importance of free and open trade.
[John Hay to Andrew D. White]
Department of State, Washington, September 6, 1899
At the time when the Government of the United States was informed by that of Germany that it had leased from His Majesty the Emperor of China the port of Kiao-chao and the adjacent territory in the province of Shantung, assurances were given to the ambassador of the United States at Berlin by the Imperial German minister for foreign affairs that the rights and privileges insured by treaties with China to citizens of the United States would not thereby suffer or be in anywise impaired within the area over which Germany had thus obtained control.
More recently, however, the British Government recognized by a formal agreement with Germany the exclusive right of the latter country to enjoy in said leased area and the contiguous “sphere of influence or interest” certain privileges, more especially those relating to railroads and mining enterprises; but as the exact nature and extent of the rights thus recognized have not been clearly defined, it is possible that serious conflicts of interest may at any time arise not only between British and German subjects within said area, but that the interests of our citizens may also be jeopardized thereby.
Earnestly desirous to remove any cause of irritation and to insure at the same time to the commerce of all nations in China the undoubted benefits which should accrue from a formal recognition by the vari ous powers claiming “spheres of interest” that they shall enjoy perfect equality of treatment for their commerce and navigation within such “spheres,” the Government of the United States would be pleased to see His German Majesty’s Government give formal assurances, and lend its cooperation in securing like assurances from the other interested powers, that each, within its respective sphere of whatever influence—
First. Will in no way interfere with any treaty port or any vested interest within any so-called “sphere of interest” or leased territory it may have in China.
Second. That the Chinese treaty tariff of the time being shall apply to all merchandise landed or shipped to all such ports as are within said “sphere of interest” (unless they be “free ports”), no matter to what nationality it may belong, and that duties so leviable shall be collected by the Chinese Government.
Third. That it will levy no higher harbor dues on vessels of another nationality frequenting any port in such “sphere” than shall be levied on vessels of its own nationality, and no higher railroad charges over lines built, controlled, or operated within its “sphere” on merchandise belonging to citizens or subjects of other nationalities transported through such “sphere” than shall be levied on similar merchandise belonging to its own nationals transported over equal distances.
The liberal policy pursued by His Imperial German Majesty in declaring Kiao-chao a free port and in aiding the Chinese Government in the establishment there of a customhouse are so clearly in line with the proposition which this Government is anxious to see recognized that it entertains the strongest hope that Germany will give its acceptance and hearty support. The recent ukase of His Majesty the Emperor of Russia declaring the port of Ta-lien-wan open during the whole of the lease under which it is held from China to the merchant ships of all nations, coupled with the categorical assurances made to this Government by His Imperial Majesty’s representative at this capital at the time and since repeated to me by the present Russian ambassador, seem to insure the support of the Emperor to the proposed measure. Our ambassador at the Court of St. Petersburg has in consequence, been instructed to submit it to the Russian Government and to request their early consideration of it. A copy of my instruction on the subject to Mr. Tower is herewith inclosed for your confidential information.
The commercial interests of Great Britain and Japan will be so clearly observed by the desired declaration of intentions, and the views of the Governments of these countries as to the desirability of the adoption of measures insuring the benefits of equality of treatment of all foreign trade throughout China are so similar to those entertained by the United States, that their acceptance of the propositions herein outlined and their cooperation in advocating their adoption by the other powers can be confidently expected. I inclose herewith copy of the instruction which I have sent to Mr. Choate on the subject.
In view of the present favorable conditions, you are instructed to submit the above considerations to His Imperial German Majesty’s Minister for Foreign Affairs, and to request his early consideration of the subject.
Source: Papers Relating to the Foreign Relations of the United States, 1899 (Washington, DC: U.S. Government Printing Office, 1900), 129–130. Identical notes, with the necessary changes, were sent on the same day to Germany, Russia, and England. Similar notes were sent later to Japan, Italy, and France.
The United States, Great Britain, and France had all expressed interest in building a canal across the isthmus that separated the Atlantic and Pacific Oceans since colonial times. By the mid-1800s, a French company under Ferdinand de Lesseps, who had just finished construction on the Suez Canal, began construction in Panama, a province of Colombia. However, malaria and technological difficulties hampered their efforts, forcing the company to near bankruptcy. The French offered their contract and assets for sale to the United States and Great Britain, two countries that had signed an earlier agreement to undertake such a project only on a joint basis. The British were not interested at the time and the United States was able to negotiate a second treaty to release it from its former obligation. The Hay-Herran Treaty was then signed between the United States and Colombia with an additional payment being made to the French for their assets and contract for the right-of-way. The Colombian government refused to ratify the treaty immediately, hoping instead to stall until the contract of the French company had expired so that Colombia could also get that money. President Theodore Roosevelt was informed that the Panamanian people were on the verge of declaring their independence from Colombia, so he sent a U.S. battleship into the harbor to secure their success. The following second treaty was then signed with the newly founded government of Panama, with one of the directors of the French company as a self-appointed representative who negotiated the treaty. The Panama Canal shortened the travel time between the two oceans and helped link the East and West Coasts of the United States.
Concluded November 18, 1903; ratification advised by the Senate February 23, 1904; ratified by President Feb ruary 25, 1904; ratifications exchanged February 26, 1904; proclaimed February 26, 1904. (U.S. Stats., vol. 33.)
The United States of America and the Republic of Panama being desirous to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans, and the Congress of the United States of America having passed an act approved June 28, 1902, in furtherance of that object, by which the President of the United States is authorized to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia, and the sovereignty of such territory being actually vested in the Republic of Panama, the high contracting parties have resolved for that purpose to conclude a convention and have accordingly appointed as their plenipotentiaries,
The President of the United States of America, John Hay, Secretary of State, and the Government of the Republic of Panama, Philippe Bunau-Varilla, Envoy Extraordinary and Minister Plenipotentiary of the Republic of Panama, thereunto specially empowered by said government, who after communicating with each other their respective full powers, found to be in good and due form, have agreed upon and concluded the following articles:
Article I
The United States guarantees and will maintain the independence of the Republic of Panama.
Article II
The Republic of Panama grants to the United States in perpetuity the use, occupation and control of a zone of land and land under water for the construction, maintenance, operation, sanitation and protection of said Canal of the width of ten miles extending to the distance of five miles on each side of the center line of the route of the Canal to be constructed; the said zone beginning in the Caribbean Sea three marine miles from mean low water mark and extending to and across the Isthmus of Panama into the Pacific ocean to a distance of three marine miles from mean low water mark with the proviso that the cities of Panama and Colon and the harbors adjacent to said cities, which are included within the boundaries of the zone above described, shall not be included within this grant. The Republic of Panama further grants to the United States in perpetuity the use, occupation and control of any other lands and waters outside of the zone above described which may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said enterprise.
The Republic of Panama further grants in like manner to the United States in perpetuity all islands within the limits of the zone above described and in addition thereto the group of small islands in the Bay of Panama, named, Perico, Naos, Culebra and Flamenco.
Article III
The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.
Article IV
As rights subsidiary to the above grants the Republic of Panama grants in perpetuity to the United States the right to use the rivers, streams, lakes and other bodies of water within its limits for navigation, the supply of water or water-power or other purposes, so far as the use of said rivers, streams, lakes and bodies of water and the waters thereof may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal.
Article V
The Republic of Panama grants to the United States in perpetuity a monopoly for the construction, maintenance and operation of any system of communication by means of canal or railroad across its territory between the Caribbean Sea and the Pacific Ocean.
Article VI
The grants herein contained shall in no manner invalidate the titles or rights of private land holders or owners of private property in the said zone or in or to any of the lands or waters granted to the United States by the provisions of any Article of this treaty, nor shall they interfere with the rights of way over the public roads passing through the said zone or over any of the said lands or waters unless said rights of way or private rights shall conflict with rights herein granted to the United States in which case the rights of the United States shall be superior. All damages caused to the owners of private lands or private property of any kind by reason of the grants contained in this treaty or by reason of the operations of the United States, its agents or employees, or by reason of the construction, maintenance, operation, sanitation and protection of the said Canal or of the works of sanitation and protection herein provided for, shall be appraised and settled by a joint Commission appointed by the Governments of the United States and the Republic of Panama, whose decisions as to such damages shall be final and whose awards as to such damages shall be paid solely by the United States. No part of the work on said Canal or the Panama railroad or on any auxiliary works relating thereto and authorized by the terms of this treaty shall be prevented, delayed or impeded by or pending such proceedings to ascertain such damages. The appraisal of said private lands and private property and the assessment of damages to them shall be based upon their value before the date of this convention.
Article VII
The Republic of Panama grants to the United States within the limits of the cities of Panama and Colon and their adjacent harbors and within the territory adjacent thereto the right to acquire by purchase or by the exercise of the right of eminent domain, any lands, buildings, water rights or other properties necessary and convenient for the construction, maintenance, operation and protection of the Canal and of any works of sanitation, such as the collection and disposition of sewage and the distribution of water in the said cities of Panama and Colon, which in the discretion of the United States may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal and railroad. All such works of sanitation, collection and disposition of sewage and distribution of water in the cities of Panama and Colon shall be made at the expense of the United States, and the Government of the United States, its agents or nominees shall be authorized to impose and collect water rates and sewerage rates which shall be sufficient to provide for the payment of interest and the amortization of the principal of the cost of said works within a period of fifty years and upon the expiration of said term of fifty years the system of sewers and water works shall revert to and become the properties of the cities of Panama and Colon respectively, and the use of the water shall be free to the inhabitants of Panama and Colon, except to the extent that water rates may be necessary for the operation and maintenance of said system of sewers and water.
The Republic of Panama agrees that the cities of Panama and Colon shall comply in perpetuity with the sanitary ordinances whether of a preventive or curative character prescribed by the United States and in case the Government of Panama is unable or fails in its duty to enforce this compliance by the cities of Panama and Colon with the sanitary ordinances of the United States the Republic of Panama grants to the United States the right and authority to enforce the same.
The same right and authority are granted to the United States for the maintenance of public order in the cities of Panama and Colon and the territories and harbors adjacent thereto in case the Republic of Panama should not be, in the judgment of the United States, able to maintain such order.
Article VIII
The Republic of Panama grants to the United States all rights which it now has or hereafter may acquire to be property of the New Panama Canal Company and the Panama Railroad Company as a result of the transfer of sovereignty from the Republic of Colombia to the Republic of Panama over the Isthmus of Panama and authorizes the New Panama Canal Company to sell and transfer to the United States its rights, privileges, properties and concessions as well as the Panama Railroad and all the shares or part of the shares of that company; but the public lands situated outside of the zone described in Article II of this treaty now included in the concessions to both said enterprises and not required in the construction or operation of the Canal shall revert to the Republic of Panama except any property now owned by or in the possession of said companies within Panama or Colon or the ports or terminals thereof.
Article IX
The United States agrees that the ports at either entrance of the Canal and the waters thereof, and the Republic of Panama agrees that the towns of Panama and Colon shall be free for all time so that there shall not be imposed or collected custom house tolls, tonnage, anchorage, lighthouse, wharf, pilot, or quarantine dues or any other charges or taxes of any kind upon any vessel using or passing through the Canal or belonging to or employed by the United States, directly or indirectly, in connection with the construction, maintenance, operation, sanitation and protection of the main Canal, or auxiliary works, or upon the cargo, officers, crew, or passengers of any such vessels, except such tolls and charges as may be imposed by the United States for the use of the Canal and other works, and except tolls and charges imposed by the Republic of Panama upon merchandise destined to be introduced for the consumption of the rest of the Republic of Panama, and upon vessels touching at the ports of Colon and Panama and which do not cross the Canal.
The Government of the Republic of Panama shall have the right to establish in such ports and in the towns of Panama and Colon such houses and guards as it may deem necessary to collect duties on importations destined to other portions of Panama and to prevent contraband trade. The United Skates shall have the right to make use of the towns and harbors of Panama and Colon as places of anchorage, and for making repairs, for loading, unloading, depositing, or transshipping cargoes either in transit or destined for the service of the Canal and for other works pertaining to the Canal.
Article X
The Republic of Panama agrees that there shall not be imposed any taxes, national, municipal, departmental, or of any other class, upon the Canal, the railways and auxiliary works, tugs and other vessels employed in bye service of the Canal, store houses, work shops, offices, quarters for laborers, factories of all kinds, warehouses, wharves, machinery and other works, property, and effects appertaining to the Canal or railroad and auxiliary works, or their officers or employees, situated within the cities of Panama and Colon, and that there shall not be imposed contributions or charges of a personal character of any kind upon officers, employees, laborers, and other individuals in the service of the Canal and railroad and auxiliary works.
Article XI
The United States agrees that the official dispatches of the Government of the Republic of Panama shall be transmitted over any telegraph and telephone lines established for canal purposes and used for public and private business at rates not higher than those required from officials in the service of the United States.
Article XII
The Government of the Republic of Panama shall permit the immigration and free access to the lands and workshops of the Canal and its auxiliary works of all employees and workmen of whatever nationality under contract to work upon or seeking employment upon or in any wise connected with the said Canal and its auxiliary works, with their respective families, and all such persons shall be free and exempt from the military service of the Republic of Panama.
Article XIII
The United States may import at any time into the said zone and auxiliary lands, free of custom duties, imposts, taxes, or other charges, and without any restrictions, any and all vessels, dredges, engines, cars, machinery, tools, explosives, materials, supplies, and other articles necessary and convenient in the construction, maintenance, operation, sanitation and protection of the Canal and auxiliary works, and all provisions, medicines, clothing, supplies and other things necessary and convenient for the officers, employees, workmen and laborers in the service and employ of the United States and for their families. If any such articles are disposed of for use outside of the zone and auxiliary lands granted to the United States and within the territory of the Republic, they shall be subject to the same import or other duties as like articles imported under the laws of the Republic of Panama.
Article XIV
As the price or compensation for the rights, powers and privileges granted in this convention by the Republic of Panama to the United States, the Government of the United States agrees to pay to the Republic of Panama the sum of ten million dollars ($10,000,000) in gold coin of the United States on the exchange of the ratification of this convention and also an annual payment during the life of this convention of two hundred and fifty thousand dollars ($250,000) in like gold coin, beginning nine years after the date aforesaid.
The provisions of this Article shall be in addition to all other benefits assured to the Republic of Panama under this convention.
But no delay or difference of opinion under this Article or any other provisions of this treaty shall affect or interrupt the full operation and effect of this convention in all other respects.
Article XV
The joint commission referred to in Article VI shall be established as follows:
The President of the United States shall nominate two persons and the President of the Republic of Panama shall nominate two persons and they shall proceed to a decision; but in case of disagreement of the Commission (by reason of their being equally divided in conclusion) an umpire shall be appointed by the two Governments who shall render the decision. In the event of the death, absence, or incapacity of a Commissioner or Umpire, or of his omitting, declining or ceasing to act, his place shall be filled by the appointment of another person in the manner above indicated. All decisions by a majority of the Commission or by the Umpire shall be final.
Article XVI
The two Governments shall make adequate provision by future agreement for the pursuit, capture, imprisonment, detention and delivery within said zone and auxiliary lands to the authorities of the Republic of Panama of persons charged with the commitment of crimes, felonies or misdemeanors without said zone and for the pursuit, capture, imprisonment, detention and delivery without said zone to the authorities of the United States of persons charged with the commitment of crimes, felonies and misdemeanors within said zone and auxiliary lands.
Article XVII
The Republic of Panama grants to the United States the use of all the ports of the Republic open to com merce as places of refuge for any vessels employed in the Canal enterprise, and for all vessels passing or bound to pass through the Canal which may be in distress and be driven to seek refuge in said ports. Such vessels shall be exempt from anchorage and tonnage dues on the part of the Republic of Panama.
Article XVIII
The Canal, when constructed, and the entrances thereto shall be neutral in perpetuity, and shall be opened upon the terms provided for by Section I of Article three of, and in conformity with all the stipulations of, the treaty entered into by the Governments of the United States and Great Britain on November 18, 1901.
Article XIX
The Government of the Republic of Panama shall have the right to transport over the Canal its vessels and its troops and munitions of war in such vessels at all times without paying charges of any kind. The exemption is to be extended to the auxiliary railway for the transportation of persons in the service of the Republic of Panama, or of the police force charged with the preservation of public order outside of said zone, as well as to their baggage, munitions of war and supplies.
Article XX
If by virtue of any existing treaty in relation to the territory of the Isthmus of Panama, whereof the obligations shall descend or be assumed by the Republic of Panama, there may be any privilege or concession in favor of the Government or the citizens and subjects of a third power relative to an interoceanic means of communication which in any of its terms may be incompatible with the terms of the present convention, the Republic of Panama agrees to cancel or modify such treaty in due form, for which purpose it shall give to the said third power the requisite notification within the term of four months from the date of the present convention, and in case the existing treaty contains no clause permitting its modification or annulment, the Republic of Panama agrees to procure its modification or annulment in such form that there shall not exist any conflict with the stipulations of the present convention.
Article XXI
The rights and privileges granted by the Republic of Panama to the United States in the preceding Articles are understood to be free of all anterior debts, liens, trusts, or liabilities, or concessions or privileges to other Governments, corporations, syndicates or individuals, and consequently, if there should arise any claims on account of the present concessions and privileges or otherwise, the claimants shall resort to the Government of the Republic of Panama and not to the United States for any indemnity or compromise which may be required.
Article XXII
The Republic of Panama renounces and grants to the United States the participation to which it might be entitled in the future earnings of the Canal under Article XV of the concessionary contract with Lucien N. B. Wyse now owned by the New Panama Canal Company and any and all other rights or claims of a pecuniary nature arising under or relating to said concession, or arising under or relating to the concessions to the Panama Railroad Company or any extension or modification thereof; and it likewise renounces, confirms and grants to the United States, now and hereafter, all the rights and property reserved in the said concessions which otherwise would belong to Panama at or before the expiration of the terms of ninety-nine years of the concessions granted to or held by the above mentioned party and companies, and all right, title and interest which it now has or many hereafter have, in and to the lands, canal, works, property and rights held by the said companies under said concessions or otherwise, and acquired or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future either by lapse of time, forfeiture or otherwise, revert to the Republic of Panama, under any contracts or concessions, with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company and the New Panama Canal Company.
The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama and the title of the United States thereto upon consummation of the contemplated purchase by the United States from the New Panama Canal Company, shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this treaty.
Article XXIII
If it should become necessary at any time to employ armed forces for the safety or protection of the Canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.
Article XXIV
No change either in the Government or in the laws and treaties of the Republic of Panama shall, without the consent of the United States, affect any right of the United States under the present convention, or under any treaty stipulation between the two countries that now exists or may hereafter exist touching the subject matter of this convention.
If the Republic of Panama shall hereafter enter as a constituent into any other Government or into any union or confederation of states, so as to merge her sovereignty or independence in such Government, union or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired.
Article XXV
For the better performance of the engagements of this convention and to the end of the efficient protection of the Canal and the preservation of its neutrality, the Government of the Republic of Panama will sell or lease to the United States lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States.
Article XXVI
This convention when signed by the Plenipotentiaries of the Contracting Parties shall be ratified by the respective Governments and the ratifications shall be exchanged at Washington at the earliest date possible.
In faith whereof the respective Plenipotentiaries have signed the present convention in duplicate and have hereunto affixed their respective seals.
Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three.
JOHN HAY
P. BUNAU V ARILLA
Source: “Convention for the Construction of a Ship Canal (Hay–Bunau-Varilla Treaty), November 18, 1903,” www.yale.edu/lawweb/avalon/diplomacy/panama/pan001.htm (accessed March 2004).
Congress established the Federal Reserve System in 1913. The act created the first national banking system since the demise of the Second Bank of the United States in 1836. During the interim, the United States experienced several major panics, in 1837, 1857, 1873, 1893, and 1907. Many of these panics were associated with an inadequate money supply, such as in 1837, when the closure of the Second Bank of the United States meant the reduction of money, and in 1873, when silver was no longer used as legal tender. At other times, such as in 1893, many banks overextended credit and then realized that they did not have enough reserve funds, a position that forced many institutions into bankruptcy. The Federal Reserve System, with its twelve equal branches, was designed to provide elasticity in the money supply through the manipulation of interest rates and to act as a lender of last resort for banks during periods of unusual stringency. Since its inception, except for the Great Depression, when the board of governors raised instead of lowering interest rates, the Federal Reserve System has operated efficiently. By maintaining a stable economy in the United States, the Federal Reserve has also facilitated trade.
An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.
Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled, That the short title of this Act shall be the “Federal Reserve Act.”
Whenever the word “bank” is used in this Act, the word shall be held to include State bank, banking association, and trust company, except where national banks or Federal reserve banks are specifically referred to.
The terms “national bank” and “national banking association” used in this Act shall be held to be synonymous and interchangeable. The term “member bank” shall be held to mean any national bank, State bank, or bank or trust company which has become a member of one of the reserve banks created by this Act. The term “board” shall be held to mean Federal Reserve Boards; the term “district” shall be held to mean Federal Reserve district; the term “reserve bank” shall be held to mean Federal reserve bank.
Federal Reserve Districts.
Sec. 2. As soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture and the Comptroller of the Currency, acting as “The Reserve Bank Organization Committee,” shall designate not less than eight nor more than twelve cities to be known as Federal Reserve cities, and shall divide the continental United States, excluding Alaska, into districts, each district to contain only one of such Federal reserve cities. The determination of said organization committee shall not be subject to review except by the Federal Reserve Board when organized: Provided, That the districts shall be apportioned with due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States. The districts thus create may be readjusted and new dis tricts may from time to time be created by the Federal Reserve Board, not to exceed twelve in all. Such districts shall be known as Federal reserve districts and may be designated by number. A majority of the organization committee shall constitute a quorum with authority to act ….
No individual, copartnership, or corporation other than a member bank of its district shall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be transferred on the books of the Federal reserve bank by the chairman of the board of directors at such bank ….
Stock not held by member banks shall not be entitled to voting power.
The Federal Reserve Board is hereby empowered to adopt and promulgate rules and regulations governing the transfers of said stock.
No Federal reserve bank shall commence business with a subscribed capital less than $4,000,000. The organization of reserve districts and Federal reserve cities shall not be construed as changing the present status of reserve cities and central reserve cities, except in so far as this Act changes the amount of reserves that may be carried with approved reserve agents located therein. The organization committee shall have power to appoint such assistants and incur such expenses in carrying out the provisions of this Act as it shall deem necessary; and such expenses shall be payable by the Treasurer of the United States upon voucher approved by the Secretary of the Treasury, and the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of the moneys in the Treasury not otherwise appropriated, for the payment of such expenses.
Branch Offices.
Sec. 3. Each Federal reserve bank shall establish branch banks within the Federal reserve district in which it is located and may do so in the district of any Federal reserve bank which may have been suspended. Such branches shall be operated by a board of directors under rules and regulations approved by the Federal Reserve Board. Directors of branch banks shall possess the same qualifications as directors of the Federal reserve banks. Four of said directors shall be selected by the reserve bank and three by the Federal Reserve Board, and they shall hold office during the pleasure, respectively, of the parent bank and the Federal Reserve Board. The reserve bank shall designate one of the directors as manager ….
Division of Earnings.
Sec. 7. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of six per centum on the paid-in capital stock, which dividend shall be cumulative. After the aforesaid dividend claims have been fully met, all the net earnings shall be paid to the United States as a franchise tax, except that one-half of such net earnings shall be paid into a surplus fund until it shall amount to forty per centum of the paid-in capital stock of such bank.
The net earnings derived by the United States from Federal reserve banks shall, in the discretion of the Secretary, be used to supplement the gold reserve held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury. Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, and the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied.
Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes in real estate ….
Federal Reserve Board
Sec. 10. A Federal Reserve Board is hereby created which shall consist of seven members, including the Secretary of the Treasury and the Comptroller of the Currency, who shall be members ex officio, and five members appointed by the President of the United States, by and with the advice and consent of the Senate. In selecting the five appointive members of the Federal Reserve Board, not more than one of whom shall be selected from any one Federal reserve district, the President shall have due regard to a fair representation of the different commercial, industrial and geographical divisions of the country. The five members of the Federal Reserve Board appointed by the President and confirmed as aforesaid shall devote their entire time to the business of the Federal Reserve Board and shall each receive an annual salary of $12,000, payable monthly with actual necessary traveling expenses, and the Comptroller of the Currency, as ex officio member of the Federal Reserve Board, shall, in addition to the salary now paid him as Comptroller of the Currency, receive the sum of $7,000 annually for his services as member of said board.
The members of said board, the Secretary of the Treasury, the Assistant Secretaries of the Treasury, and the Comptroller of the Currency shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any member bank. Of the five members thus ap pointed by the President at least two shall be persons experienced in banking or finance. One shall be designated by the President to serve for two, one for four, one for six, one for eight, and one for ten years, and thereafter each member so appointed shall serve for a term of ten years unless sooner removed for cause by the President. Of the five persons thus appointed, one shall be designated by the President as governor and one as vice governor of the Federal Reserve Board. The governor of the Federal Reserve Board, subject to its supervision, shall be the active executive officer. The Secretary of the Treasury may assign offices in the Department of the Treasury for the use of the Federal Reserve Board. Each member of the Federal Reserve Board shall within fifteen days after notice of appointment make and subscribe to the oath of office ….
Sec. 11. The Federal Reserve Board shall be authorized and empowered:
(a) To examine at its discretion the accounts, books and affairs of each Federal reserve bank and of each member bank and to require such statements and reports as it may deem necessary. The said board shall publish once each week a statement showing the condition of each Federal reserve bank and a consolidated statement for all Federal reserve banks. Such statements shall show in detail the assets and liabilities of the Federal reserve banks, single and combined, and shall furnish full information regarding the character of the money held as reserve and the amount, nature and maturities of the paper and other investments owned or held by Federal reserve banks.
(b) To permit, or, on the affirmative vote of at least five members of the Reserve Board to require Federal reserve banks to rediscount the discounted paper of other Federal reserve banks at rates of interest to be fixed by the Federal Reserve Board.
(c) To suspend for a period not exceeding thirty days, and from time to time to renew such suspension for periods not exceeding fifteen days, any reserve requirement specified in this Act: Provided, That it shall establish a graduated tax upon the amounts by which the reserve requirements of this Act may be permitted to fall below the level hereinafter specified: And provided further, That when the gold reserve held against Federal reserve notes falls below forty per centum the Federal Reserve Board shall establish a graduated tax of not more than one per centum per annum upon such deficiency until the reserve falls to thirty-two and one-half per centum, and when said reserve falls below thirty-two and one-half per centum, a tax at the rate increasingly of not less than one and one-half per centum per annum upon each two and one-half per centum or fraction thereof that such reserve falls below thirty-two and one-half per centum. The tax shall be paid by the reserve bank, but the reserve bank shall add an amount equal to said tax to the rates of interest and discount fixed by the Federal Reserve Board ….
Open-Market Operations.
Sec. 14. Any Federal reserve bank may, under rules and regulations prescribed by the Federal Reserve Board, purchase and sell in the open market, at home or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals, cable transfers and bankers’ acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank.
Every Federal reserve bank shall have power:
(a) To deal in gold coin and bullion at home or abroad, to make loans thereof, exchange Federal reserve notes for gold, gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United States bonds or other securities which Federal reserve banks are authorized to hold;
(b) To buy and sell, at home or abroad, bonds and notes of the United States, and bills, notes, revenue bonds, and warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivision, or municipality in the continental United States, including irrigation, drainage and reclamation districts, such purchases to be made in accordance with rules and regulations prescribed by the Federal Reserve Board;
(c) To purchase from member banks and to sell, with or without its indorsement, bills of exchange arising out of commercial transactions, as hereinbefore defined;
(d) To establish from time to time, subject to review and determination of the Federal Reserve Board, rates of discount to be charged by the Federal reserve bank for each class of paper, which shall be fixed with a view of accommodating commerce and business;
(e) To establish accounts with other Federal reserve banks for exchange purposes and, with the consent of the Federal Reserve Board, to open and maintain banking accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purpose of purchasing, selling, and collecting bills of exchange, and to buy and sell with or without its endorsement, through such correspondents or agencies, bills of exchange arising out of actual commercial transactions which have not more than ninety days to run and which bear the signature of two or more reasonable parties.
Government Deposits.
Sec. 15. The moneys held in the general fund of the Treasury except the five per centum fund for the redemp tion of outstanding national-bank notes and the funds provided in this Act for the redemption of Federal reserve notes may, upon the direction of the Secretary of the Treasury, be deposited in Federal reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States; and the revenues of the Government or any part thereof may be deposited in such banks, and disbursements may be made by checks drawn against such deposits.
No public funds of the Philippine Islands, or of the postal savings, or any Government funds, shall be deposited in the continental United States in any bank not belonging to the system established by this Act: Provided, however, That nothing in this Act shall be construed to deny the right of the Secretary of the Treasury to use member banks as depositories.
Note Issues.
Sec. 16. Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are hereby authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in gold on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or in gold or lawful money at any Federal reserve bank.
Any Federal reserve bank may make application to the local Federal reserve agent for such amount of the Federal reserve notes hereinbefore provided for as it may require. Such application shall be accompanied with a tender to the local Federal reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes and bills, accepted for rediscount under the provisions of section thirteen of this Act, and the Federal reserve agent shall each day notify the Federal Reserve Board of all issues and withdrawals of Federal reserve notes to and by the Federal reserve bank to which it is accredited. The said Federal Reserve Board may at any time call upon a Federal reserve bank for additional security to protect the Federal reserve notes issued to it.
Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money deposited with the Federal reserve agent. Notes so paid out shall bear upon their faces a distinctive letter and serial number, which shall be assigned by the Federal Reserve Board to each Federal reserve bank. Whenever Federal reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank they shall be promptly returned for credit or redemption to the Federal reserve bank through which they were originally issued. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten per centum upon the face value of notes so paid out. Notes presented for redemption at the Treasury of the United States shall be paid out of the redemption fund and returned to the Federal reserve banks through which they were originally issued, and thereupon such Federal reserve bank shall, upon demand of the Secretary of the Treasury, reimburse such redemption fund in lawful money or, if such Federal reserve notes have been redeemed by the Treasurer in gold or gold certificates, then such funds shall be reimbursed to the extent deemed necessary by the Secretary of the Treasury in gold or gold certificates, and such Federal reserve bank shall, so long as any of its Federal reserve notes remain outstanding, maintain with the Treasurer in gold an amount sufficient in the judgment of the Secretary to provide for all redemptions to be made by the Treasurer. Federal reserve notes received by the Treasury, otherwise than for redemption, may be exchanged for gold out of the redemption fund hereinafter provided and returned to the reserve bank through which they were originally issued, or they may be returned to such bank for the credit of the United States. Federal reserve notes unfit for circulation shall be returned by the Federal reserve agents to the Comptroller of the Currency for cancellation and destruction.
The Federal Reserve Board shall require each Federal reserve bank to maintain on deposit in the Treasury of the United States a sum in gold sufficient in the judgment of the Secretary of the Treasury for the redemption of the Federal reserve notes issued to such bank, but in no event less than five per centum; but such deposit of gold shall be counted and included as part of the forty per centum reserve hereinbefore required. The board shall have the right, acting through the Federal reserve agent, to grant in whole or in part or to reject entirely the application of any Federal reserve bank for Federal reserve notes; but to the extent that such application may be granted the Federal Reserve Board shall, through its local Federal reserve agent, supply Federal reserve notes to the bank so applying, and such bank shall be charged with the amount of such notes and shall pay such rate of interest on said amount as may be established by the Federal Reserve Board, and the amount of such Federal reserve notes so issued to any such bank shall, upon delivery, together with such notes of such Federal reserve bank as may be issued under section eighteen of this Act upon security of United States two per centum Government bonds, become a first and paramount lien on all the assets of such bank.
Any Federal reserve bank may at any time reduce its liability for outstanding Federal reserve notes by depositing, with the Federal reserve agent, its Federal reserve notes, gold, gold certificates, or lawful money of the United States. Federal reserve notes so deposited shall not be reissued, except upon compliance with the conditions of an original issue.
The Federal reserve agent shall hold such gold, gold certificates, or lawful money available exclusively for exchange for the outstanding Federal reserve notes when offered by the reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the Federal Reserve Board shall require the Federal reserve agent to transmit so much of said gold to the Treasury of the United States as may be required for the exclusive purpose of the redemption of such notes.
Any Federal reserve bank may at its discretion withdraw collateral deposited with the local Federal reserve agent for the protection of its Federal reserve notes deposited with it and shall at the same time substitute therefor other like collateral of equal amount with the approval of the Federal reserve agent under regulations to be prescribed by the Federal Reserve Board.
In order to furnish suitable notes for circulation as Federal reserve notes, the Comptroller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the denominations of $5, $10, $20, $50, $100, as may be required to supply the Federal reserve banks. Such notes shall be in form and tenor as directed by the Secretary of the Treasury under the provisions of this Act and shall bear the distinctive numbers of the several reserve banks through which they are issued.
When such notes have been prepared, they shall be deposited in the Treasury, or in the subtreasury or mint of the United States nearest the place of business of each Federal reserve bank and shall be held for the use of such bank subject to the order of the Comptroller of the Currency for their delivery, as provided for by this Act.
The plates and dies to be procured by the Comptroller of Currency for the printing of such circulating notes shall remain under his control and direction, and the expenses necessarily incurred in executing the laws relating to the procuring of such notes, and all other expenses incidental to their issue and retirement, shall be paid by the Federal reserve banks, and the Federal Reserve Board shall include in its estimate of expenses levied against the Federal reserve banks a sufficient amount to cover the expenses herein provided for.
The examination of plates, dies, bed pieces, and so forth, and regulations relating to such examination of plates, dies, and so forth, of national-bank notes provided for in section fifty-one hundred and seventy-four Revised Statutes, is hereby extended to include notes herein provided for.
Any appropriation heretofore made out of the general funds of the Treasury for engraving plates and dies, the purchase of distinctive paper, or to cover any other expense in connection with the printing of national-bank notes or notes provided for by the Act of May thirtieth, nineteen hundred and eight, and any distinctive paper that may be on hand at the time of the passage of this Act may be used in the discretion of the Secretary for the purposes of this Act, and should the appropriations heretofore made be insufficient to meet the requirements of this Act in addition to circulating notes provided for by existing law, the Secretary is hereby authorized to use so much of any funds in the Treasury not otherwise appropriated for the purpose of furnishing the notes aforesaid: Provided, however, That nothing in this section contained shall be construed as exempting national banks or Federal reserve banks from their liability to reimburse the United States for any expenses incurred in printing and issuing circulating notes.
Every Federal reserve bank shall receive on deposit at par from member banks or from Federal reserve banks checks and drafts drawn upon any of its depositors, and when remitted by a Federal reserve bank, checks and drafts drawn by any depositor in any other Federal reserve bank or member bank upon funds to the credit of said depositor in said reserve bank or member bank. Nothing herein contained shall be construed as prohibiting a member bank from charging its actual expense incurred in collecting and remitting funds, or for the exchange sold to its patrons. The Federal Reserve Board shall, by rule, fix the charges to be collected by the member banks from its patrons whose checks are cleared through the Federal reserve bank and the charge which may be imposed for the service and clearing or collection rendered by the Federal reserve bank. The Federal Reserve Board shall make and promulgate from time to time regulations governing the transfer of funds and charges therefor among Federal reserve banks and their branches, and may at their discretion exercise the functions of a clearing house for such Federal reserve banks, or may designate a Federal reserve bank to exercise such functions, and may also require each such bank to exercise the functions of a clearing house for its member banks.
Sec. 17. So much of the provisions of section fifty-one hundred and fifty-nine of the Revised Statutes of the United States, and section four of the Act of June twentieth, eighteen hundred and seventy-four, and section eight of the Act of July twelfth, eighteen hundred and eighty-two, and of any other provisions of existing statutes as require that before any national banking associations shall be authorized to commence banking business it shall transfer and deliver to the Treasurer of the United States a stated amount of United States registered bonds is hereby repealed ….
Bank Reserves.
Sec. 19. Demand deposits within the meaning of this Act shall comprise all deposits payable within thirty days, and time deposits shall comprise all deposits payable after thirty days, and all savings accounts and certificates of deposit which are subject to not less than thirty days’ notice before payment.
When the Secretary of the Treasury shall have officially announced, in such manner as he may elect, the establishment of a Federal reserve bank in any district, every subscribing member bank shall establish and maintain reserves as follows:
(a) A bank not in a reserve or central reserve city as now or hereafter defined shall hold and maintain reserves equal to twelve per centum of the aggregate amount of its demand deposits and five per centum of its time deposits, as follows:
In its vaults for a period of thirty-six months after said date five-twelfths thereof and permanently thereafter four-twelfths.
In the Federal reserve bank of its district, for a period of twelve months after said date, two-twelfths, and for each succeeding six months an additional one-twelfth, until five-twelfths have been so deposited, which shall be the amount permanently required.
For a period of thirty-six months after said date the balance of the reserves may be held in its own vaults, or in the Federal reserve bank, or in national banks in reserve or central reserve cities as now defined by law.
After said thirty-six months’ period said reserves, other than those hereinbefore required to be held in the vaults of the member bank and in the Federal reserve bank, shall be held in the vaults of the member bank or in the Federal reserve bank, or in both, at the option of the member bank.
(b) A bank in a reserve city, as now or hereafter defined, shall hold and maintain reserves equal to fifteen per centum of the aggregate amount of its demand deposits and five per centum of its time deposits, as follows:
In its vaults for a period of thirty-six months after said date six-fifteenths thereof, and permanently thereafter five-fifteenths.
In the Federal reserve bank of its district for a period of twelve months after the date aforesaid at least three-fifteenths, and for each succeeding six months an additional one-fifteenth, until six-fifteenths have been so deposited, which shall be the amount permanently required.
For a period of thirty-six months after said date the balance of the reserves may be held in its own vaults, or in the Federal reserve bank, or in national banks in reserve or central reserve cities as now defined by law.
After thirty-six months’ period all of said reserves, except those hereinbefore required to be held permanently in the vaults of the member bank and in the Federal reserve bank, shall be held in its vaults or in the Federal reserve bank, or in both, at the option of the member bank.
(c) A bank in a central reserve city, as now or hereafter defined, shall hold and maintain a reserve equal to eighteen per centum of the aggregate amount of its demand deposits and five per centum of its time deposits, as follows:
In its vaults six-eighteenths thereof.
In the Federal reserve bank seven-eighteenths.
The balance of said reserves shall be held in its own vaults or in the Federal reserve bank, at its option.
Any Federal reserve bank may receive from the member banks as reserves, not exceeding one-half of each installment, eligible paper as described in section fourteen properly indorsed and acceptable to the said reserve bank.
If a State bank or trust company is required by law of its State to keep its reserves either in its own vaults or with another State bank or trust company, such reserve deposits so kept in such State bank or trust company shall be construed, within the meaning of this section, as if they were reserve deposits in a national bank in a reserve or central reserve city for a period of three years after the Secretary of the Treasury shall have officially announced the establishment of a Federal reserve bank in the district in which such State bank or trust company is situate. Except as thus provided, no member bank shall keep on deposit with any nonmember bank a sum in excess of ten per centum of its own paid-up capital and surplus. No member bank shall act as the medium or agent of a nonmember bank in applying for or receiving discounts from a Federal reserve bank under the provisions of this Act except by permission of the Federal Reserve Board.
The reserve carried by a member bank with a Federal reserve bank may, under the regulations and subject to such penalties as may be described by the Federal Reserve Board, be checked against and withdrawn by such member bank for the purpose of meeting existing liabilities: Provided, however, that no bank shall at any time make new loans or shall pay any dividends unless and until the total reserve required by law is fully restored.
In estimating the reserves required by this Act, the net balance of amounts due to and from other banks shall be taken as the basis for ascertaining the deposits against which the reserves shall be determined. Balances in reserve banks due to member banks shall, to the extent herein provided, be counted as reserves.
National banks located in Alaska or outside the continental United States may remain nonmember banks, and shall in that event maintain reserves and comply with all the conditions now provided by law regulating them; or said banks, except in the Philippine Islands, may, with the consent of the Reserve Board, become member banks of any one of the reserve districts, and shall, in that event, take stock, maintain reserves, and be subject to all the other provisions of this Act.
Sec. 20. So much of sections two and three of the Act of June twentieth, eighteen hundred and seventy-four, entitled “An Act fixing the amount of United States notes, providing for a redistribution of the national-bank currency, and for other purposes,” as provides that the fund deposited by any national banking association with the Treasurer of the United States for the redemption of its notes shall be counted as a part of its lawful reserve as provided in the Act aforesaid, is hereby repealed. And from and after the passage of this Act such fund of five per centum shall in no case be counted by any national banking association as a part of its lawful reserve ….
Sec. 30. The right to amend, alter, or repeal this Act is hereby expressly reserved.
Approved, December 23, 1913.
Source: Public Statutes at Large, Vol. 38, Pt. 1 (Washington, DC: U.S. Government Printing Office, 1914), 251–275.
Written in 1919 by John Maynard Keynes, a British economist, Economic Consequences of the Peace criticized the harsh terms imposed on Germany and its allies and warned that the provisions included in the Treaty of Versailles, which ended World War I, would ultimately led to the demise of Europe. In chapter 6, Keynes outlined the detrimental effect of the treaty on trade, currencies, and the economic systems of Germany, Italy, Austria, and France, in particular, and of Europe, in general. He also pointed out that economic decline would adversely affect the health of the European people and that an increase in sickness and disease would led to an increase in poverty.
This chapter must be one of pessimism. The treaty includes no provisions for the economic rehabilitation of Europe—nothing to make the defeated Central empires into good neighbours, nothing to stabilise the new states of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.
The Council of Four paid no attention to these issues, being preoccupied with others—Clemenceau to crush the economic life of his enemy, Lloyd George to do a deal and bring home something which would pass muster for a week, the President to do nothing that was not just and right. It is an extraordinary fact that the fundamental economic problem of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse the interest of the Four. Reparation was their main excursion into the economic field, and they settled it as a problem of theology, of politics, of electoral chicane, from every point of view except that of the economic future of the states whose destiny they were handling.
I leave, from this point onwards, Paris, the conference, and the treaty, briefly to consider the present situation of Europe, as the war and the peace have made it; and it will no longer be part of my purpose to distinguish between the inevitable fruits of the war and the avoidable misfortunes of the peace.
The essential facts of the situation, as I see them, are expressed simply. Europe consists of the densest aggregation of population in the history of the world. This population is accustomed to a relatively high standard of life, in which, even now, some sections of it anticipate improvement rather than deterioration. In relation to other continents Europe is not self-sufficient; in particular it cannot feed itself. Internally the population is not evenly distributed, but much of it is crowded into a relatively small number of dense industrial centres. This population secured for itself a livelihood before the war, without much margin of surplus, by means of a delicate and immensely complicated organisation, of which the foundations were supported by coal, iron, transport, and an unbroken supply of imported food and raw materials from other continents. By the destruction of this organisation and the interruption of the stream of supplies, a part of this population is deprived of its means of livelihood. Emigration is not open to the redundant surplus. For it would take years to transport them overseas, even, which is not the case, if countries could be found which were ready to receive them. The danger confronting us, therefore, is the rapid depression of the standard of life of the European populations to a point, which will mean actual starvation for some (a point already reached in Russia and approximately reached in Austria). Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair. And these in their distress may overturn the remnants of organisation, and submerge civilisation itself in their attempts to satisfy desperately the overwhelming needs of the individual.
This is the danger against which all our resources and courage and idealism must now co-operate.
On 13 May 1919 Count Brockdorff-Rantzau addressed to the peace conference of the Allied and Associated Powers the Report of the German economic commission charged with the study of the effect of the conditions of peace on the situation of the German population. ‘In the course of the last two generations,’ they reported, ‘Germany has become transformed from an agricultural state to an industrial state. So long as she was an agricultural state, Germany could feed 40 million inhabitants. As an industrial state she could ensure the means of subsistence for a population of 67 millions; and in 1913 the importation of foodstuffs amounted, in round figures, to 12 million tons. Before the war a total of 15 million persons in Germany provided for their existence by foreign trade, navigation, and the use, directly or indirectly, of foreign raw material.’ After rehearsing the main relevant provisions of the peace treaty the report continues: ‘After this diminution of her products, after the economic depression resulting from the loss of her colonies, her merchant fleet and her foreign investments, Germany will not be in a position to import from abroad an adequate quantity of raw material. An enormous part of German industry will, therefore, be condemned inevitably to destruction. The need of importing foodstuffs will increase considerably at the same time that the possibility of satisfying this demand is as greatly diminished. In a very short time, therefore, Germany will not be in a position to give bread and work to her numerous millions of inhabitants, who are prevented from earning their livelihood by navigation and trade. These persons should emigrate, but this is a material impossibility, all the more because many countries and the most important ones will oppose any German immigration. To put the peace conditions into execution would logically involve, therefore, the loss of several millions of persons in Germany. This catastrophe would not be long in coming about, seeing that the health of the population has been broken down during the war by the blockade, and during the armistice by the aggravation of the blockade of famine. No help, however great, or over however long a period it were continued, could prevent these deaths en masse.’ ‘We do not know, and indeed we doubt,’ the Report concludes, ‘whether the delegates of the Allied and Associated Powers realise the inevitable consequences which will take place if Germany, an industrial state, very thickly populated, closely bound up with the economic system of the world, and under the necessity of importing enormous quantities of raw material and foodstuffs, suddenly finds herself pushed back to the phase of her development which corresponds to her economic condition and the numbers of her population as they were half a century ago. Those who sign this treaty will sign the death sentence of many millions of German men, women and children.’
I know of no adequate answer to these words. The indictment is at least as true of the Austrian, as of the German, settlement. This is the fundamental problem in front of us, before which questions of territorial adjustment and the balance of European power are insignificant. Some of the catastrophes of past history, which have thrown back human progress for centuries, have been due to the reactions following on the sudden termination, whether in the course of Nature or by the act of man, of temporarily favourable conditions which have permitted the growth of population beyond what could be provided for when the favourable conditions were at an end.
The significant features of the immediate situation can be grouped under three heads: first, the absolute falling off, for the time being, in Europe’s internal productivity; second, the breakdown of transport and exchange by means of which its products could be conveyed where they were most wanted; and third, the inability of Europe to purchase its usual supplies from overseas.
The decrease of productivity cannot be easily estimated, and may be the subject of exaggeration. But the prima facie evidence of it is overwhelming, and this factor has been the main burden of Mr Hoover’s well-considered warnings. A variety of causes have produced it: violent and prolonged internal disorder as in Russia and Hungary; the creation of new governments and their inexperience in the readjustment of economic relations, as in Poland and Czechoslovakia; the loss throughout the continent of efficient labour, through the casualties of war or the continuance of mobilisation; the falling off in efficiency through continued under-feeding in the Central empires; the exhaustion of the soil from lack of the usual applications of artificial manures throughout the course of the war; the unsettlement of the minds of the labouring classes on the fundamental economic issues of their lives. But above all (to quote Mr Hoover), ‘there is a great relaxation of effort as the reflex of physical exhaustion of large sections of the population from privation and the mental and physical strain of the war.’ Many persons are for one reason or another out of employment altogether. According to Mr Hoover, a summary of the unemployment bureaux in Europe in July 1919 showed that 15 million families were receiving unemployment allowances in one form or another, and were being paid in the main by a constant inflation of currency. In Germany there is the added deterrent to labour and to capital (in so far as the reparation terms are taken literally), that anything which they may produce beyond the barest level of subsistence will for years to come be taken away from them.
Such definite data as we possess do not add much, perhaps, to the general picture of decay. But I will remind the reader of one or two of them. The coal production of Europe as a whole is estimated to have fallen off by 30 per cent; and upon coal the greater part of the industries of Europe and the whole of her transport system depend. Whereas before the war Germany produced 85 per cent of the total food consumed by her inhabitants, the productivity of the soil is now diminished by 40 per cent and the effective quality of the livestock by 55 per cent.1 Of the European countries which formerly possessed a large exportable surplus, Russia, as much by reason of deficient transport as of diminished output, may herself starve. Hungary, apart from her other troubles, has been pillaged by the Roumanians immediately after harvest. Austria will have consumed the whole of her own harvest for 1919 before the end of the calendar year. The figures are almost too overwhelming to carry conviction to our minds; if they were not quite so bad, our effective belief in them might be stronger.
But even when coal can be got and grain harvested, the breakdown of the European railway system prevents their carriage; and even when goods can be manufactured, the breakdown of the European currency system prevents their sale. I have already described the losses, by war and under the armistice surrenders, to the transport system of Germany. But even so, Germany’s position, taking account of her power of replacement by manufacture, is probably not so serious as that of some of her neighbours. In Russia (about which, however, we have very little exact or accurate information) the condition of the rolling-stock is believed to be altogether desperate, and one of the most fundamental factors in her existing economic disorder. And in Poland, Roumania, and Hungary the position is not much better.
Yet modern industrial life essentially depends on efficient transport facilities, and the population which secured its livelihood by these means cannot continue to live without them. The breakdown of currency, and the distrust in its purchasing value, is an aggravation of these evils which must be discussed in a little more detail in connection with foreign trade.
What then is our picture of Europe? A country population able to support life on the fruits of its own agricultural production but without the accustomed surplus for the towns, and also (as a result of the lack of imported materials and so of variety and amount in the saleable manufactures of the towns) without the usual incentives to market food in return for other wares; an industrial population unable to keep its strength for lack of food, unable to earn a livelihood for lack of materials, and so unable to make good by imports from abroad the failure of productivity at home. Yet, according to Mr Hoover, ‘a rough estimate would indicate that the population of Europe is at least 100 million greater than can be supported without imports, and must live by the production and distribution of exports.’
The problem of the re-inauguration of the perpetual circle of production and exchange in foreign trade leads me to a necessary digression on the currency situation of Europe. Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. In the latter stages of the war all the belligerent governments practised, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices. But further, the governments of Europe, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as ‘profiteers’ the popular indignation against the more obvious consequences of their vicious meth ods. These ‘profiteers’ are, broadly speaking, the entrepreneur class of capitalists, that is to say, the active and constructive element in the whole capitalist society, who in a period of rapidly rising prices cannot but get rich quick whether they wish it or desire it or not. If prices are continually rising, every trader who has purchased for stock or owns property and plant inevitably makes profits. By directing hatred against this class, therefore, the European governments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived. The profiteers are a consequence and not a cause of rising prices. By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract and of the established equilibrium of wealth which is the inevitable result of inflation, these governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century. But they have no plan for replacing it.
We are thus faced in Europe with the spectacle of an extra-ordinary weakness on the part of the great capitalist class, which has emerged from the industrial triumphs of the nineteenth century, and seemed a very few years ago our all-powerful master. The terror and personal timidity of the individuals of this class is now so great, their confidence in their place in society and in their necessity to the social organism so diminished, that they are the easy victims of intimidation. This was not so in England twenty-five years ago, any more than it is now in the United States. Then the capitalists believed in themselves, in their value to society, in the propriety of their continued existence in the full enjoyment of their riches and the unlimited exercise of their power. Now they tremble before every insult— call them pro-Germans, international financiers, or profiteers, and they will give you any ransom you choose to ask not to speak of them so harshly. They allow themselves to be ruined and altogether undone by their own instruments, governments of their own making, and a Press of which they are the proprietors. Perhaps it is historically true that no order of society ever perishes save by its own hand. In the complexer world of Western Europe the Immanent Will may achieve its ends more subtly and bring in the revolution no less inevitably through a Klotz or a George than by the intellectualisms, too ruthless and self-conscious for us, of the bloodthirsty philosophers of Russia.
The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent governments, unable or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance. In Russia and Austria-Hungary this process has reached a point where for the purposes of foreign trade the currency is practically valueless. The Polish mark can be bought for about 1 1/2d and the Austrian crown for less than 1d, but they cannot be sold at all. The German mark is worth less than 2d on the exchanges. In most of the other countries of Eastern and south-eastern Europe the real position is nearly as bad. The currency of Italy has fallen to little more than a half of its nominal value in spite of its being still subject to some degree of regulation; French currency maintains an uncertain market; and even sterling is seriously diminished in present value and impaired in its future prospects.
But while these currencies enjoy a precarious value abroad, they have never entirely lost, not even in Russia, their purchasing power at home. A sentiment of trust in the legal money of the state is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is inherent in money as such, and they do not apprehend that the real wealth which this money might have stood for has been dissipated once and for all. This sentiment is supported by the various legal regulations with which the governments endeavour to control internal prices, and so to preserve some purchasing power for their legal tender. Thus the force of law preserves a measure of immediate purchasing power over some commodities and the force of sentiment and custom maintains, especially amongst peasants, a willingness to hoard paper which is really worthless.
The preservation of a spurious value for the currency, by the force of law expressed in the regulation of prices, contains in itself, however, the seeds of final economic decay, and soon dries up the sources of ultimate supply. If a man is compelled to exchange the fruits of his labours for paper which, as experience soon teaches him, he cannot use to purchase what he requires at a price comparable to that which he has received for his own products, he will keep his produce for himself, dispose of it to his friends and neighbours as a favour, or relax his efforts in producing it. A system of compelling the exchange of commodities at what is not their real relative value not only relaxes production, but leads finally to the waste and inefficiency of barter. If, however, a government refrains from regulation and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer.
The effect on foreign trade of price-regulation and profiteer-hunting as cures for inflation is even worse. Whatever may be the case at home, the currency must soon reach its real level abroad, with the result that prices inside and outside the country lose their nor mal adjustment. The price of imported commodities, when converted at the current rate of exchange, is far in excess of the local price, so that many essential goods will not be imported at all by private agency, and must be provided by the government, which, in re-selling the goods below cost price, plunges thereby a little further into insolvency. The bread subsidies now almost universal throughout Europe are the leading example of this phenomenon.
The countries of Europe fall into two distinct groups at the present time as regards their manifestations of what is really the same evil throughout, according as they have been cut off from international intercourse by the blockade, or have had their imports paid for out of the resources of their allies. I take Germany as typical of the first, and France and Italy of the second.
The note circulation of Germany is about ten times2 what it was before the war. The value of the mark in terms of gold is about one-eighth of its former value. As world prices in terms of gold are more than double what they were, it follows that mark prices inside Germany ought to be from sixteen to twenty times their pre-war level if they are to be in adjustment and proper conformity with prices outside Germany.3 But this is not the case. In spite of a very great rise in German prices, they probably do not yet average much more than five times their former level, so far as staple commodities are concerned; and it is impossible that they should rise further except with a simultaneous and not less violent adjustment of the level of money-wages. The existing maladjustment hinders in two ways (apart from other obstacles) that revival of the import trade which is the essential preliminary of the economic reconstruction of the country. In the first place, imported commodities are beyond the purchasing power of the great mass of the population,4 and the flood of imports which might have been expected to succeed the raising of the blockade was not in fact commercially possible.5 In the second place, it is a hazardous enterprise for a merchant or a manufacturer to purchase with a foreign credit material for which, when he has imported it or manufactured it, he will receive mark currency of a quite uncertain and possibly unrealisable value. This latter obstacle to the revival of trade is one which easily escapes notice and deserves a little attention. It is impossible at the present time to say what the mark will be worth in terms of foreign currency three or six months or a year hence, and the exchange market can quote no reliable figure. It may be the case, therefore, that a German merchant, careful of his future credit and reputation, who is actually offered a short-period credit in terms of sterling or dollars, may be reluctant and doubtful whether to accept it. He will owe sterling or dollars, but he will sell his product for marks, and his power, when the time comes, to turn these marks into the currency in which he has to repay his debt is entirely problematic. Business loses its genuine character and becomes no better than a speculation in the exchanges, the fluctuations in which entirely obliterate the normal profits of commerce.
There are therefore three separate obstacles to the revival of trade: a maladjustment between internal prices and international prices, a lack of individual credit abroad wherewith to buy the raw materials needed to secure the working capital and to re-start the circle of exchange, and a disordered currency system which renders credit operations hazardous or impossible quite apart from the ordinary risks of commerce. The note circulation of France is more than six times its prewar level. The exchange value of the franc in terms of gold is a little less than two-thirds its former value; that is to say, the value of the franc has not fallen in proportion to the increased volume of the currency.6 This apparently superior situation of France is due to the fact that until recently a very great part of her imports have not been paid for, but have been covered by loans from the governments of Great Britain and the United States. This has allowed a want of equilibrium between exports and imports to be established, which is becoming a very serious factor, now that the outside assistance is being gradually discontinued.7 The internal economy of France and its price level in relation to the note circulation and the foreign exchanges is at present based on an excess of imports over exports which cannot possibly continue. Yet it is difficult to see how the position can be readjusted except by a lowering of the standard of consumption in France, which, even if it is only temporary, will provoke a great deal of discontent.
The situation of Italy is not very different. There the note circulation is five or six times its pre-war level, and the exchange value of the lira in terms of gold about half its former value. Thus the adjustment of the exchange to the volume of the note circulation has proceeded further in Italy than in France. On the other hand, Italy’s ‘invisible’ receipts, from emigrant remittances and the expenditure of tourists, have been very injuriously affected; the disruption of Austria has deprived her of an important market; and her peculiar dependence on foreign shipping and on imported raw materials of every kind has laid her open to special injury from the increase of world prices. For all these reasons her position is grave, and her excess of imports as serious a symptom as in the case of France.8
The existing inflation and the maladjustment of international trade are aggravated, both in France and in Italy, by the unfortunate budgetary position of the governments of these countries. In France the failure to impose taxation is notorious. Before the war the ag gregate French and British budgets, and also the average taxation per head, were about equal; but in France no substantial effort has been made to cover the increased expenditure. ‘Taxes increased in Great Britain during the war,’ it has been estimated, ‘from 95 francs per head to 265 francs, whereas the increase in France was only from 90 to 103 francs.’ The taxation voted in France for the financial year ending 30 June 1919 was less than half the estimated normal post bellum expenditure. The normal budget for the future cannot be put below £3880 million (22 milliard francs), and may exceed this figure; but even for the fiscal year 1919–20 the estimated receipts from taxation do not cover much more than half this amount. The French Ministry of Finance have no plan or policy whatever for meeting this prodigious deficit, except the expectation of receipts from Germany on a scale which the French officials themselves know to be baseless. In the meantime they are helped by sales of war material and surplus American stocks and do not scruple, even in the latter half of 1919, to meet the deficit by the yet further expansion of the note issue of the Bank of France.9
The budgetary position of Italy is perhaps a little superior to that of France. Italian finance throughout the war was more enterprising than the French, and far greater efforts were made to impose taxation and pay for the war. Nevertheless, Signor Nitti, the Prime Minister, in a letter addressed to the electorate on the eve of the General Election (October 1919), thought it necessary to make public the following desperate analysis of the situation: (1) The state expenditure amounts to about three times the revenue; (2) all the industrial undertakings of the state, including the railways, telegraphs, and telephones, are being run at a loss. Although the public is buying bread at a high price, that price represents a loss to the government of about a milliard a year; (3) exports now leaving the country are valued at only one-quarter or one-fifth of the imports from abroad; (4) the national debt is increasing by about a milliard lire per month; (5) the military expenditure for one month is still larger than that for the first year of the war.
But if this is the budgetary position of France and Italy, that of the rest of belligerent Europe is yet more desperate. In Germany the total expenditure of the empire, the federal states, and the communes in 1919– 20 is estimated at 25 milliards of marks, of which not above 10 milliards are covered by previously existing taxation. This is without allowing anything for the payment of the indemnity. In Russia, Poland, Hungary, or Austria such a thing as a budget cannot be seriously considered to exist at all.10 Thus the menace of inflationism described above is not merely a product of the war, of which peace begins the cure. It is a continuing phenomenon of which the end is not yet in sight.
All these influences combine not merely to prevent Europe from supplying immediately a sufficient stream of exports to pay for the goods she needs to import, but they impair her credit for securing the working capital required to re-start the circle of exchange and also, by swinging the forces of economic law yet further from equilibrium rather than towards it, they favour a continuance of the present conditions instead of a recovery from them. An inefficient, unemployed, disorganised Europe faces us, torn by internal strife and international hate, fighting, starving, pillaging, and lying. What warrant is there for a picture of less sombre colours?
I have paid little heed in this book to Russia, Hungary, or Austria.11 There the miseries of life and the disintegration of society are too notorious to require analysis; and these countries are already experiencing the actuality of what for the rest of Europe is still in the realm of prediction. Yet they comprehend a vast territory and a great population, and are an extant example of how much man can suffer and how far society can decay. Above all, they are the signal to us of how in the final catastrophe the malady of the body passes over into malady of the mind. Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares little. Physical efficiency and resistance to disease slowly diminish,12 but life proceeds somehow, until the limit of human endurance is reached at last and counsels of despair and madness stir the sufferers from the lethargy which precedes the crisis. Then man shakes himself, and the bonds of custom are loosed. The power of ideas is sovereign, and he listens to whatever instruction of hope, illusion, or revenge is carried to him on the air. As I write, the flames of Russian Bolshevism seem, for the moment at least, to have burnt themselves out, and the peoples of Central and Eastern Europe are held in a dreadful torpor. The lately gathered harvest keeps off the worst privations, and peace has been declared at Paris. But winter approaches. Men will have nothing to look forward to or to nourish hopes on. There will be little fuel to moderate the rigours of the season or to comfort the starved bodies of the town-dwellers.
But who can say how much is endurable, or in what direction men will seek at last to escape from their misfortunes?
1. Professor Starling’s Report on Food Conditions in Germany (Cmd. 280).
2. Including the Darlehenskassenscheine somewhat more.
3. Similarly in Austria prices ought to be between twenty and thirty times their former level.
4. One of the most striking and symptomatic difficulties which faced the Allied authorities in their administration of the occupied areas of Germany during the armistice arose out of the fact that even when they brought food into the country the inhabitants could not afford to pay its cost price.
5. Theoretically an unduly low level of home prices should stimulate exports and so cure itself. But in Germany, and still more in Poland and Austria, there is little or nothing to export. There must be imports before there can be exports.
6. Allowing for the diminished value of gold, the exchange value of the franc should be less than forty per cent of its previous value, instead of the actual figure of about sixty per cent if the fall were proportional to the increase in the volume of the currency.
7. How very far from equilibrium France’s international exchange now is can be seen from the following table:
These figures have been converted at approximately par rates, but this is roughly compensated by the fact that the trade of 1918 and 1919 has been valued at 1917 official rates. French imports cannot possibly continue at anything approaching these figures, and the semblance of prosperity based on such a state of affairs is spurious.
Table 1 1919 Economic Consequences
| Monthly average | Imports (£31,000) | Exports (£31,000) | Excess of imports (£31,000) |
|
|
|||
| 1913 | 28,071 | 22,934 | 5,137 |
| 1914 | 21,341 | 16,229 | 5,112 |
| 1918 | 66,383 | 13,811 | 52,572 |
| Jan.-Mar. 1919 | 77,428 | 13,334 | 64,094 |
| Apr.-June 1919 | 84,282 | 16,779 | 67,503 |
| July 1919 | 93,513 | 24,735 | 68,778 |
8 The figures for Italy are as follows:
Table 2 1919 Economic Consequences
| Monthly average | Imports (£31,000) | Exports (£31,000) | Excess of imports (£31,000) |
|
|
|||
| 1913 | 12,152 | 8,372 | 3,780 |
| 1914 | 9,744 | 7,368 | 2,376 |
| 1918 | 47,005 | 8,278 | 38,727 |
| Jan.-Mar. 1919 | 45,848 | 7,617 | 38,231 |
| Apr.-June 1919 | 66,207 | 13,850 | 52,357 |
| July-Aug. 1919 | 44,707 | 16,903 | 27,804 |
9. In the last two returns of the Bank of France available as I write (2 and 9 October 1919) the increases in the note issue on the week amounted to £318,750,000 and £318,825,000 respectively.
10. On 3 October 1919 M. Bilinski made his financial statement to the Polish Diet. He estimated his expenditure for the next nine months at rather more than double his expenditure for the past nine months, and while during the first period his revenue had amounted to one-fifth of his expenditure, for the coming months he was budgeting for receipts equal to one-eighth of his outgoings. The Times correspondent at Warsaw reported that ‘in general M. Bilinski’s tone was optimistic and appeared to satisfy his audience’!
11. The terms of the peace treaty imposed on the Austrian republic bear no relation to the real facts of that state’s desperate situation. The Arbeiter Zeitung of Vienna on 4 June 1919 commented on them as follows: ‘Never has the substance of a treaty of peace so grossly betrayed the intentions which were said to have guided its construction as is the case with this treaty … in which every provision is permeated with ruthlessness and pitilessness, in which no breath of human sympathy can be detected, which flies in the face of everything which binds man to man, which is a crime against humanity itself, against a suffering and tortured people.’ I am acquainted in detail with the Austrian treaty and I was present when some of its terms were being drafted, but I do not find it easy to rebut the justice of this outburst.
12. For months past the reports of the health conditions in the Central empires have been of such a character that the imagination is dulled, and one almost seems guilty of sentimentality in quoting them. But their general veracity is not disputed, and I quote the three following, that the reader may not be unmindful of them: ‘In the last years of the war, in Austria alone at least 35,000 people died of tuberculosis, in Vienna alone 12,000. To-day we have to reckon with a number of at least 350,000 to 400,000 people who require treatment for tuberculosis … As the result of malnutrition a bloodless generation is growing up with undeveloped muscles, undeveloped joints, and undeveloped brain’ (Neue Freie Presse, 31 May 1919). The commission of doctors appointed by the medical faculties of Holland, Sweden, and Norway to examine the conditions in Germany reported as follows in the Swedish Press in April 1919: ‘Tuberculosis, especially in children, is increasing in an appalling way, and, generally speaking, is malignant. In the same way rickets is more serious and more widely prevalent. It is impossible to do anything for these diseases; there is no milk for the tuberculous, and no cod-liver oil for those suffering from rickets … Tuberculosis is assuming almost unprecedented aspects, such as have hitherto only been known in exceptional cases. The whole body is attacked simultaneously, and the illness in this form is practically incurable … Tuberculosis is nearly always fatal now among adults. It is the cause of ninety per cent of the hospital cases. Nothing can be done against it owing to lack of foodstuffs … It appears in the most terrible forms, such as glandular tuberculosis, which turns into purulent dissolution.’ The following is by a writer in the Vossische Zeitung, 5 June 1919, who accompanied the Hoover mission to the Erzgebirge: ‘I visited large country districts where ninety per cent of all the children were rickety and where children of three years are only beginning to walk … Accompany me to a school in the Erzgebirge. You think it is a kindergarten for the little ones. No, these are children of seven and eight years. Tiny faces, with large dull eyes, overshadowed by huge puffed, rickety foreheads, their small arms just skin and bone, and above the crooked legs with their dislocated joints the swollen, pointed stomachs of the hunger oedema … “You see this child here,” the physician in charge explained; “it consumed an incredible amount of bread, and yet did not get any stronger. I found out that it hid all the bread it received underneath its straw mattress. The fear of hunger was so deeply rooted in the child that it collected stores instead of eating the food: a misguided animal instinct made the dread of hunger worse than the actual pangs.”’ Yet there are many persons apparently in whose opinion justice requires that such beings should pay tribute until they are forty or fifty years of age in relief of the British taxpayer.
Source: “The Economic Consequences of the Peace, Chapter 6,” http://historicaltextarchive.com/books.php?op=viewbook&bookid=12&cid=6 (accessed December 2003).
Signed on December 11, 1931, the Statute of Westminster granted Canada, Ireland, South Africa, Australia, New Zealand, and Newfoundland status as independent dominions. Although the initial act required an oath of loyalty to the British monarch, subsequent removal of that clause after World War II resulted in a shift to an economic alliance that became known as the Commonwealth of Nations, which included preferential trade arrangements between the various nations that formerly had ties to the British empire, primarily its colonies.
An Act to give effect to certain resolutions passed by Imperial Conferences held in the years 1926 and 1930.
WHEREAS the delegates to His Majesty’s Governments in the United Kingdom, the Dominion of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, the Irish Free State and Newfoundland, at Imperial Conferences holden at Westminster in the years of our Lord nineteen hundred and twenty-six and nineteen hundred and thirty did concur in making the declarations and resolutions set forth in the Reports of the said Conferences:
And whereas it is meet and proper to set out by way of preamble to this Act that, inasmuch as the Crown is the symbol of the free association of the members of the British Commonwealth of Nations, and as they are united by a common allegiance to the Crown, it would be in accord with the established constitutional position of all the members of the Commonwealth in relation to one another that any alteration in the law touching the Succession to the Throne or the Royal Style and Titles shall hereafter require the assent as well of the Parliaments of all the Dominions as of the Parliament of the United Kingdom:
And whereas it is in accord with the established constitutional position that no law hereafter made by the Parliament of the United Kingdom shall extend to any of the said Dominions as part of the law of that Dominion otherwise than at the request and with the consent of that Dominion:
And whereas it is necessary for the ratifying, confirming and establishing of certain of the said declarations and resolutions of the said Conferences that a law be made and enacted in due form by authority of the Parliament of the United Kingdom:
And whereas the Dominion of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, the Irish Free State and Newfoundland have severally requested and consented to the submission of a measure to the Parliament of the United Kingdom for making such provision with regard to the matters aforesaid as is hereafter in this Act contained:
NOW, THEREFORE, BE IT ENACTED by the King’s Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
1. In this Act the expression “Dominion” means any of the following Dominions, that is to say, the Dominion of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, the Irish Free State and Newfoundland.
2. (1) The Colonial Laws Validity Act, 1865, shall not apply to any law made after the commencement of this Act by the Parliament of a Dominion.
(2) No law and no provision of any law made after the commencement of this Act by the Parliament of a Dominion shall be void or inoperative on the ground that it is repugnant to the law of England, or to the provisions of any existing or future Act of Parliament of the United Kingdom, or to any order, rule, or regulation made under any such Act, and the powers of the Parliament of a Dominion shall include the power to repeal or amend any such Act, order, rule or regulation in so far as the same is part of the law of the Dominion.
3. It is hereby declared and enacted that the Parliament of a Dominion has full power to make laws having extra-territorial operation.
4. No Act of Parliament of the United Kingdom passed after the commencement of this Act shall extend or be deemed to extend, to a Dominion as part of the law of that Dominion, unless it is expressly declared in that Act that that Dominion has requested, and consented to, the enactment thereof.
[Note: As far as Canada is concerned, section 4 was repealed by the Constitution Act, 1982.]
5. Without prejudice to the generality of the foregoing provisions of this Act, section seven hundred and thirty-five and seven hundred and thirty-six of the Merchant Shipping Act, 1894, shall be construed as though reference therein to the Legislature of a British possession did not include reference to the Parliament of a Dominion.
6. Without prejudice to the generality of the foregoing provisions of this Act, section four of the Colonial Courts of Admiralty Act, 1890 (which requires certain laws to be reserved for the signification of His Majesty’s pleasure or to contain a suspending clause), and so much of section seven of that Act as requires the approval of His Majesty in Council to any rules of Court for regulating the practice and procedure of a Colonial Court of Admiralty, shall cease to have effect in any Dominion as from the commencement of this Act.
7. (1) Nothing in this Act shall be deemed to apply to the repeal, amendment or alteration of the British North America Acts, 1867 to 1930, or any order, rule or regulation made thereunder.
(2) The provisions of section two of this Act shall extend to laws made by any of the Provinces of Canada and to the powers of the legislatures of such Provinces.
(3) The powers conferred by this Act upon the Parliament of Canada or upon the legislatures of the Provinces shall be restricted to the enactment of laws in relation to matters within the competence of the Parliament of Canada or of any of the legislatures of the Provinces respectively.
8. Nothing in this Act shall be deemed to confer any power to repeal or alter the Constitution or the Constitution Act of the Commonwealth of Australia or the Constitution Act of the Dominion of New Zealand otherwise than in accordance with the law existing before the commencement of this Act.
9. (1) Nothing in this Act shall be deemed to authorize the Parliament of the Commonwealth of Australia to make laws on any matter within the authority of the States of Australia, not being a matter within the authority of the Parliament or Government of the Commonwealth of Australia.
(2) Nothing in this Act shall be deemed to require the concurrence of the Parliament or Government of the Commonwealth of Australia, in any law made by the Parliament of the United Kingdom with respect to any matter within the authority of the States of Australia, not being a matter within the authority of the Parliament or Government of the Commonwealth of Australia, in any case where it would have been in accordance with the constitutional practice existing before the commencement of this Act that the Parliament of the United Kingdom should make that law without such concurrence.
(3) In the application of this Act to the Commonwealth of Australia the request and consent referred to in section four shall mean the request and consent of the Parliament and government of the Commonwealth.
10. (1) None of the following sections of this Act, that is to say, sections two, three, four, five, and six, shall extend to a Dominion to which this section applies as part of the law of that Dominion unless that section is adopted by the Parliament of the Dominion, and any Act of that Parliament adopting any section of this Act may provide that the adoption shall have effect either from the commencement of this Act or from such later date as is specified in the adopting Act.
(2) The Parliament of any such Dominion as aforesaid may at any time revoke the adoption of any section referred to in sub-section (1) of this section.
(3) The Dominions to which this section applies are the Commonwealth of Australia, the Dominion of New Zealand, and Newfoundland.
11. Notwithstanding anything in the Interpretation Act, 1889, the expression “Colony” shall not, in any Act of the Parliament of the United Kingdom passed after the commencement of this Act, include a Dominion or any Province or State forming part of a Dominion.
12. This Act may be cited as the Statute of Westminster, 1931.
Source: “The Statute of Westminster, 1931,” www.solon.org/constitutions/canada/english/statuteofwestminster.html (accessed December 2003).
During the U.S. presidential campaign of 1932, Franklin D. Roosevelt, the Democratic presidential candidate, blamed Herbert Hoover, the Republican incumbent president, for the deepening economic crisis. Six months after the onset of the Great Depression, Congress passed, and Hoover signed into law, the Hawley-Smoot Tariff, which raised tariff rates to a record high level. Roosevelt did not mention the increase in interest rates by the Federal Reserve Board that constricted the money supply, the overstimulation of the stock market that led to the crash in October 1929, or the decrease in international trade that had already occurred because of tariff barriers raised by other countries. By focusing on the Hawley-Smoot Tariff as the primary cause of the Great Depression, Roosevelt was able to win the election.
Mr. Chairman, my friends in Sioux City, my friends in this great State, and, indeed, all of you through the country who are listening on the radio tonight, let me tell you first of all that I appreciate this remarkable welcome that you have given me, and I appreciate, too, the performance put on by the mounted patrol of my fellow Shriners.
Two weeks ago, when I was heading toward the Coast, I presented before an audience in the City of Topeka, what I conceived to be the problem of agriculture in these United States, with particular reference to the Middle West and West, and what the Government of the Nation can do to meet that problem of ours.
I have been highly gratified to receive from all parts of the country and particularly from farm leaders themselves, assurances of their hearty support and promises of cooperation, in the efforts that I proposed to improve the deplorable condition into which agriculture has fallen. The meeting of this farm problem of ours is going to be successful only if two factors are present.
The first is a sympathetic Administration in Washington, and the second is the hearty support and patient cooperation of agriculture itself and its leaders.
I cannot avoid a word concerning this plight of agriculture—what it means to all. It means that the product of your labor brings just half of what it brought before the war. It means that no matter how hard you work and how long and how carefully you save, and how much efficiency you apply to your business, you face a steadily diminishing return. As a farm leader said to me, you have been caught like a man in a deep pit, helpless in the grip of forces that are beyond your control. Still, my friends, it has meant that in spite of the maxims that we have learned when we were in school, that we ought to work and save, to be prudent and be temperate, in spite of all of the rest of the homely virtues, the return on these virtues has belied the hopes and the promises on which you and I were raised.
That is one of the tragic consequences of this depression. The things that we were taught have not come true. We were taught to work and we have been denied the opportunity to work. We were taught to increase the products of our labor and we have found that while the products increase the return has decreased. We were taught to bring forth the fruits of the earth, and we have found that the fruits of the earth have found no market.
The results of our labor, my friends, have been lost in the smash of an economic system that was unable to fulfill its purposes.
It is a moral as well as an economic question that we face—moral because we want to reestablish the standards that in times past were our goal. We want the opportunity to live in comfort, reasonable comfort, out of which we may build our spiritual values. The consequences of poverty bring a loss of spiritual and moral values. And even more important is the loss of the opportunity that we hope to give to the younger generation. We want our children to have a chance for an education, for the sound development of American standards to be applied in their daily lives at play and work. Those opportunities can come only if the condition of agriculture is made more prosperous.
Now, the farmer—and when I speak of the farmer I mean not only you who live in the corn belt, but also those in the East and the Northwest who are in the dairy business, those in the South who are raising cotton, and those on the plains who are raising cattle and sheep, and those in the many sections of the country who are raising cattle, all kinds of things, small fruits and big fruits—in other words, the farmer in the broad sense, has been attacked during this past decade simultaneously from two sides. On the one side the farmer’s expenses, chiefly in the form of increased taxes, have been going up rather steadily during the past generation, and on the other side, he has been attacked by a constantly depreciating farm dollar during the past twelve years, and it seems to be nothing less than old-fashioned horse sense to seek means to circumvent both of these attacks at the same time. That means, first, for us to seek relief for him from the burden of his expense account and, second, to try to restore the purchasing power of his dollar by getting for him higher prices for the products of the soil.
Now, those two great purposes are, quite frankly, the basis of my farm policy, and I have definitely connected both of them with the broadest aspects of a new national economy, something that I like to label in simpler words, “A New Deal,” covering every part of the Nation, and covering industry and business as well as farming, because I recognize, first of all, that from the soil itself springs our ability to restore our trade with the other Nations of the world.
First of all, I want to discuss with you one of the angles of the mounting expenses of agriculture in practically every community and in every State—the problem of taxes which we have to pay.
Let us examine the proportion of our expenditures that goes to the various divisions of Government. Half of what you and I pay for the support of the Government—in other words, on the average in this country fifty cents out of every dollar—goes to local government, that is, cities, townships, counties and lots of other small units; and the other half, the other fifty cents, goes to the State and Nation.
This fifty cents that goes to local government, therefore, points to the necessity for attention to local government. As a broad proposition you and I know we are not using our present agencies of local government with real economy and efficiency. That means we must require our public servants to give a fuller measure of service for what they are paid. It means we must eliminate useless office holders. It means every public official, every employee of local government must determine that he owes it to the country to cooperate in the great purpose of saving the taxpayers’ money.
But it means more than that, my friends. I am going to speak very frankly to you. There are offices in most States that are provided for in the Constitution and laws of some of the States, offices that have an honorable history but are no longer necessary for the conduct of Government. We have too many tax layers, and it seems to me relief can come only through resolute, courageous cutting.
Some of you will ask why I, a candidate for the office of president of the United States, am talking to you about changes in local government. Now, it is perfectly clear that the president has no legal or constitutional control over the local government under which you people live. The President has, nevertheless, my friends, the right and even the duty of taking a moral leadership in this national task because it is a national problem, because in its scope it covers every State, and any problem that is national in this broader sense creates a national moral responsibility in the President of the United States himself.
And I propose to use this position of high responsibility to discuss up and down the country, in all seasons and at all times, the duty of reducing taxes, or increasing the efficiency of Government, of cutting out the underbrush around our governmental structure, of getting the most public service for every dollar paid in taxation. That I pledge you, and nothing I have said in the campaign transcends in importance this covenant with the taxpayers of the United States.
Now, of the other half dollar of your taxes, it is true that part goes to the support of State Governments. I am not going to discuss that end. In this field also I believe that substantial reductions can be made. While the President rightly has no authority over State budgets, he has the same moral responsibility of national leadership for generally lowered expenses, and therefore for generally lowered taxes.
It is in the field of the Federal Government that the office of President can, of course, make itself most directly and definitely felt. Over 30 percent of your tax dollar goes to Washington, and in their field also, items such as the interest can be accomplished. There are, of course, items such as the interest on the public debt which must be paid each year, and which can be reduced only through a reduction of the debt itself, by the creation of a surplus in the place of the present deficit in the national treasury, and it is perhaps worth while that I should tell you that I spent nearly eight years in Washington during the Administration of Woodrow Wilson, and that during those eight years I had a fair understanding of the problem of the national expenses, and that I knew first hand many of the details of actual administration of the different departments. Later in this campaign, I proposed to analyze the enormous increase in the growth of what you and I call bureaucracy. We are not getting an adequate return for the money we are spending in Washington, or to put it another way, we are spending altogether too much money for Government services that are neither practical nor necessary. And then, in addition to that, we are attempting too many functions. We need to simplify what the Federal Government is giving to the people.
I accuse the present Administration of being the greatest spending Administration in peace times in all our history. It is an Administration that has piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs and the reduced earning power of the people. Bureaus and bureaucrats, commissions and commissioners have been retained at the expense of the taxpayer.
Now, I read in the past few days in the newspapers that the President is at work on a plan to consolidate and simplify the Federal bureaucracy. My friends, four long years ago, in the campaign of 1928, he, as a candidate, proposed to do this same thing. And today, once more a candidate, he is still proposing, and I leave you to draw your own inferences.
And on my part I ask you very simply to assign to me the task of reducing the annual operating expenses of your national Government.
Now I come to the other half of the farmer’s problem, the increase of the purchasing power of the farm dollar. I have already gone at length into the emergency proposals relating to our major crops, and now I want to discuss in more detail a very importance factor, a thing known as the tariff, and our economic relationship to the rest of this big round world.
From the beginning of our Government, one of the most difficult questions in our economic life has been the tariff. But it is a fact that it is now so interwoven with our whole economic structure, and that structure is such an intricate and delicate pattern of causes and effects, that tariff revision must be undertaken, with scrupulous care and only on the basis of established facts.
I have to go back in history a little way. In the course of his 1928 campaign, the present Republican candidate for President with great boldness laid down the propositions that high tariffs interfere only slightly, if at all, with our export or our import trade, that they are necessary to the success of agriculture and afford essential farm relief; that they do not interfere with the payments of debts by other Nations to us, and that they are absolutely necessary to the economic formula which he proposed at that time as the road to the abolition of poverty. And I must pause here for a moment to observe that the experience of the past four years has unhappily demonstrated the error, the gross, fundamental, basic error of every single one of those propositions—but four years ago!—that every one of them has been one of the effective causes of the present depression; and finally that no substantial progress toward recovery from this depression, either here or abroad, can be had without a forthright recognition of those errors.
And so I am asking effective action to reverse the disastrous policies which were based on them. As I have elsewhere remarked, the 1928 Republican leadership prosperity promise was based on the assertion that although our agriculture was producing a surplus far in excess of our power to consume, and that, due to the mass and automatic machine production of today, our industrial production had also passed far beyond the point of domestic consumption, nevertheless, we should press forward to increase industrial production as the only means of maintaining prosperity and employment. And the candidate of that year insisted that, although we could not consume all those things at home, there was some kind of unlimited market for our rapidly increasing surplus in export trade, and he boldly asserted that on this theory we were on the verge of the greatest commercial expansion in history. I do not have to tell you the later history of that.
And then, in the spring of 1929, ostensibly for the purpose of enacting legislation for the relief of agriculture, a special session of Congress was called, and the disastrous fruit of that session was the notorious and indefensible Grundy-Smoot-Hawley tariff.
As to the much-heralded purpose of that special session for the relief of agriculture, the result, my friends, was a ghastly jest. The principal cash crops of our farms are produced much in excess of our domestic requirements. And we know that no tariff on a surplus crop, no matter how high the wall—1,000 percent, if you like—has the slightest effect on raising the domestic price of that crop. Why, the producers of all those crops are so effectively thrust outside the protection of our tariff walls as if there were no tariff at all. But we still know that the tariff does protect the price of industrial products and raises them above world prices, as the farmer with increasing bitterness has come to realize. He sells on a free trade basis; he buys in a protected market. The higher industrial tariffs go, my friends, the greater is the burden of the farmer.
Now, the first effect of the Grundy tariff was to increase or sustain the cost of all that agriculture buys, but the harm to our whole farm production did not stop there.
The destructive effect of the Grundy tariff on export markets has not been confined to agriculture. It has ruined our export trade in industrial products as well. Industry, with its foreign trade cut off, naturally began to look to the home market—a market supplied for the greater part by the purchasing power of farm families—but for reasons that you and I know, it found that the Grundy tariff had reduced the buying power of the farmer.
So what happened? Deprived of any American market, the other industrial Nations in order to support their own industries, and take care of their own employment problem, had to find new outlets. In that quest they took to trade agreements with other countries than ourselves and also to the preservation of their own domestic markets against importations by trade restrictions of all kinds. An almost frantic movement toward self-contained nationalism began among other Nations of the world, and of course the direct result was a series of retaliatory and defensive measures on their part, in the shape of tariffs and embargoes and import quotas and international arrangements. Almost immediately international commerce began to languish. The export markets for our industrial and agricultural surplus began to disappear altogether.
In the year 1929, a year before the enactment of the Grundy tariff, we exported 54.8 percent of all the cotton produced in the United States—more than one-half. That means, Mr. Cotton Grower, that in 1929 every other row of your cotton was sold abroad. And you, the growers of wheat, exported 17 percent of your wheat, but your great foreign market had been largely sacrificed; and so, with the grower of rye, who was able to dispose of 20 percent of his crop to foreign markets. The grower of leaf-tobacco had a stake of 41 percent of his income overseas, and one-third of the lard production, 33 percent, was exported in the year 1929. Where does that come in? Well, it concerns the corn grower because some of us, even from the East, know that corn is exported in the shape of lard.
How were your interests taken care of? Oh, they gave you a tariff on corn—chicken feed—literally and figuratively, but those figures show how vitally you are interested in the preservation, perhaps I had better say the return, of our export trade.
Now, the ink on the Hawley-Smoot-Grundy tariff bill was hardly dry before foreign Nations commenced their program of retaliation. Brick for brick they built their walls against us. They learned the lesson from us. The villainy we taught them they practiced on us.
And the Administration in Washington had reason to know that would happen. It was warned. While the bill was before Congress, our State Department received 160 protests from 33 other nations, many of whom after the passage of the bill erected their own tariff walls to the detriment or destruction of much of our export trade.
Well, what is the result? In two years, from 1930 to May, 1932, to escape the penalty on the introduction of American-made goods, American manufacturers have established in foreign countries 258 separate factories; 48 of them in Europe; 12 in Latin America; 28 in the Far East, and 71 across the border in Canada. The Prime Minister of Canada said in a recent speech that a factory is moving every day of the year from the United States into Canada, and he assured those at the recent conferences at Ottawa that the arrangements made there with Great Britain and other colonies would take $250,000,000 of Canadian trade that would otherwise go to the United States. So you see, my friends, what that tariff bill did there was to put more men on the street here, and to put more people to work outside our borders.
Now, there was a secondary and perhaps even more disastrous effect of Grundyism. Billions of dollars of debts are due to this country from abroad. If the debtor Nations cannot export goods, they must try to pay in gold. But we started such a drain on the gold reserves of the other Nations as to force practically all of them off the gold standard. What happened? The value of the money of each of these countries relative to the value of our dollar declined alarmingly and steadily. It took more Argentine pesos to buy an American plow. It took more English shillings to buy an American bushel of wheat, or an American bale of cotton.
Why, they just could not buy goods with their money. These goods then were thrown back upon our markets and prices fell still more.
And so, summing up, this Grundy tariff has largely extinguished the export markets for our industrial and our farm surplus; it has prevented the payment of public and private debts to us and the interest thereon, increasing taxation to meet the expense of our Government, and finally it has driven our factories abroad.
The process still goes on, my friends. Indeed, it may be only in its beginning. The Grundy tariff still retains its grip on the throat of international commerce.
There is no relief in sight, and certainly there can be no relief if the men in Washington responsible for this disaster continue in power. And I say to you, in all earnestness and sincerity, that unless and until this process is reversed throughout the world, there is no hope for full economic recovery, or for true prosperity in this beloved country of ours.
The essential trouble is that the Republican leaders thought they had a good patent on the doctrine of unscaleable tariff walls and that no other Nation could use the same idea. Well, either that patent has expired or else never was any good anyway; or else, one other alternative, all the other Nations have infringed on our patent and there is no court to which we can take our case. It was a stupid, blundering idea, and we know it today and we know it has brought disaster.
Do not expect our adroit Republican friends to admit this. They do not. On the contrary, they have adopted the boldest alibi in the history of politics. Having brought this trouble on the world, they now seek to avoid all responsibility by blaming the foreign victims for their own economic blundering. They say that all of our troubles come from abroad and that the Administration is not in the least to be held to answer. This excuse is a classic of impertinence. If ever a condition was more clearly traceable to two specific American-made causes, it is the depression of this country and the world. Those two causes are interrelated. The second one, in point of time, is the Grundy tariff. The first one is the fact that by improvident loans to “backward and crippled countries,” the policy of which was specifically recommended by the President, we financed practically our entire export trade and the payment of interest and principal to us by our debtors, and even in part, the payment of German reparations.
When we began to diminish that financing in 1929 the economic structure of the world began to totter.
If it be fair to ask, What does the Democratic Party propose to do in the premises?
The platform declares in favor of a competitive tariff which means one which will put the American producers on a market equality with their foreign competitors, one that equalizes the difference in the cost of production, not a prohibitory tariff back of which domestic producers may combine to practice extortion of the American public.
I appreciate that the doctrine thus announced is not widely different from that preached by Republican statesmen and politicians, but I do know this, that the theory professed by them is that the tariff should equalize the difference in the cost of production as between this country and competitive countries, and I know that in practice that theory is utterly disregarded. The rates that are imposed are far in excess of any such difference, looking to total exclusion of imports—in other words, prohibitory rates.
Of course the outrageously excessive rates in that bill as it became law, must come down. But we should not lower them beyond a reasonable point, a point indicated by common sense and facts. Such revision of the tariff will injure no legitimate interest. Labor need have no apprehensions concerning such a course, for labor knows by long and bitter experience that the highly protected industries pay not one penny higher wages than the non-protected industries, such as the automobile industry, for example.
But, my friends, how is reduction to be accomplished? In view of present world conditions, international negotiation is the first, the most practical, the most common-sense, and the most desirable method. We must consent to the reduction to some extent of some of our duties in order to secure a lowering of foreign tariff walls over which a larger measure of our surplus may be sent.
I have not the fear that possesses some timorous minds that we should get the worst of it in such reciprocal arrangements. I ask if you have no faith in our Yankee tradition of good old-fashioned trading? Do you believe that our early instincts for successful barter have degenerated or atrophied? I do not think so. I have confidence that the spirit of the stalwart traders still permeates our people, that the red blood of the men who sailed our Yankee clipper ships around the Horn and Cape of Good Hope in the China trade still courses in our veins. I cannot picture Uncle Sam as a supine, white-livered, flabby-muscled old man, cooling his heels in the shade of our tariff walls. We may not have the astuteness in some forms of international diplomacy that our more experienced European friends have, but when it comes to good old-fashioned barter and trade—whether it be goods or tariff—my money is on the American. My friends, there cannot and shall not be any foreign dictation of our tariff policies, but I am willing and ready to sit down around the table with them.
And next, my friends, the Democrats propose to accomplish the necessary reduction through the agency of the Tariff Commission.
I need not say to you that one of the most deplorable features of tariff legislation is the log-rolling process by which it has been effected in Republican and Democratic Congresses. Indefensible rates are introduced through an understanding, usually implied rather than expressed among members, each of whom is interested in one or more individual items. Yet, it is a case of you scratch my back and I will scratch yours. Now, to avoid that as well as other evils in tariff making, a Democratic Congress in 1916 passed, and a Democratic President approved, a bill creating a bipartisan Tariff Commission, charged with the duty of supplying the Congress with accurate and full information upon which to base tariff rates. That Commission functioned as a scientific body until 1922, when by the incorporation of the so-called flexible provisions of the Act it was transformed into a political body. Under those flexible provisions—reenacted in the Grundy tariff of 1930—the Commission reports not to a Congress but to the President, who is then empowered on its recommendation to raise or lower the tariff rates by as much as 50 percent. At the last session of Congress— this brings us down to date—by the practically unanimous action of the Democrats of both houses, aided by liberal-minded Republicans led by Senator Norris, of Nebraska, a bill was passed by the Congress, but vetoed by the President, which, for the purpose of preventing log-rolling provided that if a report were made by the Tariff Commission on a particular item, with a recommendation as to the rates of duty, a bill to make effective that rate would not be subject to amendment in the Congress so as to include any other items not directly affected by the change proposed in the bill. And in that way each particular tariff rate proposed would be judged on its merits alone. If that bill had been signed by the President of the United States, log-rolling would have come to an end.
I am confident in the belief that under such a system rates adopted would generally be so reasonable that there would be very little opportunity for criticism or even caviling as to them. I am sure that it is not that any duties are imposed that complaint is made, for despite the effort, repeated in every campaign, to stigmatize the Democratic Party as a free trade party, there never has been a tariff act passed since the Government came into existence, in which the duties were not levied with a view to giving the American producer an advantage over his foreign competitor. I think you will agree with me that the difference in our day between the two major parties in respect to their leadership on the subject of the tariff is that the Republican leaders, whatever may be their profession, would put the duties so high as to make them practically prohibitive— and on the other hand that the Democratic leaders would put them as low as the preservation of the prosperity of American industry and American agriculture will permit.
Another feature of the bill to which reference has been made, a feature designed to obviate tariff log-rolling, contemplated the appointment of a public counsel who should be heard on all applications for changes in rates whether for increases sought by producers, sometimes greedy producers, or for decreases asked by importers, equally often actuated by purely selfish motives. And I hope some such change may speedily be enacted. It will have my cordial approval because, my friends, it means that the average citizen would have some representation.
Now, just a few words in closing. I want to speak to you of one other factor which enters into the dangerous emergency in which you farmers find yourselves at this moment. For more than a year I have spoken in my State and in other States of the actual calamity that impends on account of farm mortgages. Ever since my nomination on the first day of July, I have advocated immediate attention and immediate action looking to the preservation of the American home to the American farmer. But I recognize that I am not at the head of the National Administration nor shall I be until the March 4th next. Today I read in the papers that for the first time, so far as I know, the Administration of President Hoover has discovered the fact that there is such a thing as a farm mortgage or a home mortgage.
I do not have to tell you that, with the knowledge of conditions in my State which ranks fifth or sixth among the agricultural States of the Union and with the knowledge I have gleaned on this trip from coast to coast, I realize to the full the seriousness of the farm mortgage situation. And at least we can take a crumb of hope from his proposal for just another conference, a conference of some kind at least to discuss the situation. Seriously, my friends, all that I can tell you is that with you I deplore, I regret the inexcusable, the reprehensible delay of Washington, not for months alone, but for years. I have already been specific on this subject, upon mortgages, in my Topeka speech. All that I can promise you between now and the fourth of March is that I will continue to preach the plight of the farmer who is losing his home. All I can do is to promise you that when the authority of administration and recommendation to Congress is placed in my hands I will do everything in my power to bring the relief that is so long overdue. I shall not wait until the end of a campaign, I shall not wait until I have spent four years in the White House.
Source: Franklin D. Roosevelt, The Public Papers and Addresses of Franklin D. Roosevelt, 1928–1932, Vol. 1 (New York: Random House, 1938).
During the U.S. presidential campaign of 1932 between Herbert Hoover and Franklin D. Roosevelt, the Democratic candidate charged that by signing the Hawley-Smoot Tariff into law, Hoover had disrupted international trade and caused the worsening of the Great Depression. In the following speech, given in Cleveland, Ohio, on October 15, 1932, Hoover argued that a number of other factors created the economic crisis, including the cost of World War I, the division of the old European empires, and the erection of tariff barriers by these new nations during the 1920s. According to Hoover, Hawley-Smoot was passed in response to the tariff barriers erected against American trade.
I spoke at Des Moines about agriculture. My remarks this evening will be largely directed to employment and to the wage and salary earners. I propose to review what the Administration has done and the measures and policies it has in action together with the relation of these policies to those of our opponents. As President of the United States, I have the duty to speak to workers, but I also have a certain personal right to speak.
When I talk to you tonight about labor I speak not out of academic imaginings but from sharp personal experience. I have looked at these human problems, not only from the fireside of one who has returned from a day’s work with his own hands but I know the problem that haunts the employer through the night, desperate to find the money with which to meet the week’s pay roll. In public service during years I have had to look at these problems from the point of view of the national welfare as a whole.
The people of a free nation have a right to ask their government, “Why has our employment been interrupted? What measures have been taken in our protection? What has been done to remove the obstacles from the return of our work to us?” They not only have a right to ask these questions but to have an answer. I am here tonight to give that answer.
During the past three years our economic system has received the most terrific shock and dislocation which, had not strong action been taken by your government, would have imperiled the Republic and the whole hope of recovery. It has affected business, industry, employment, and agriculture alike. It is appropriate to report that while many of our measures are directed to the protection and assistance of particular groups, yet all are in the same boat and all must come to shore together. And how are they to get to shore? By listening to those who manifestly display a lack of knowledge of the character of the storm and of the primary problems of navigation? By boring holes in the bottom of the boat? By throwing overboard the measures designed to meet the storm and which are proving their effectiveness?
Our opponents have been going up and down the land repeating the statement that the sole or major origins of this disruption of this world-wide hurricane came from the United States through the wild floatation of securities and the stock market speculation in New York three years ago, together with the passage of the Smoot-Hawley tariff bill, which took place 9 months after the storm broke.
I propose to discuss this assertion.
First. Because it can be proved absolutely untrue.
Second. Because the United States did not bring this calamity upon the world. The United States is not the oppressor of the world.
Third. Because it can be demonstrated to be founded upon a complete misunderstanding of what has happened in the world.
Fourth. Because any party which exhibits such a lack of economic understanding upon which to base national politics should not be trusted with the fate of 25,000,000 American families. They should not be trusted to command the battle against the most gigantic economic emergency with which our people have ever been confronted, and to bring that battle to victorious issue in the reestablishment of the functioning of our economic machine.
This thesis of the opposition as to the origin of our troubles is a wonderful explanation for political purposes. I would be glad, indeed, if all the enormous problems in the world could be simplified in such a fashion. If that were all that has been the matter with us, we could have recovered from this depression two years ago instead of fighting ever since that time against the most destructive force which we have ever met in the whole history of the United States—and I am glad to say fighting victoriously.
Nowhere do I find the slightest reference in all the statements of the opposition party to the part played by the greatest war in history, the inheritances from it, the fears and panics and dreadful economic catastrophes which have developed from these causes in foreign countries, or the idea that they may have had the remotest thing to do with the calamity against which this administration is fighting day and night.
The leaders of the Democratic Party appear to be entirely in ignorance of the effect of the killing or incapacitating of 40,000,000 of the best youth of the earth, or of the stupendous cost of war—a sum of $300,000,000,000, or a sum nearly equal to the value of all the property in the United States, or the stupendous inheritance of debt, with its subsequent burden of taxes on scores of nations, with their stifling effect upon recuperation of industry and commerce or paralyzing effect upon world commerce by the continued instability of currencies and budgets.
Democratic leaders have apparently not yet learned of the political instability that arose all over Europe from the harsh treaties which ended the war from time to time paralyzed confidence. They have apparently never heard of the continuing economic dislocation from the transfer on every frontier of great masses of people from their former economic setting.
They apparently have not heard of the continuing dislocation of the stream of economic life which has been caused by the carving of 12 new nations from 3 old empires. These nations have a rightful aspiration to build their own separate economic systems; they naturally have surrounded themselves with tariffs and other national protections and have thereby diverted the long-established currents of trade. I presume, however, that if our Democrat leaders should hear of these nine new tariff walls introduced into the world some 14 years ago they would lay them at the door of the Smoot-Hawley bill passed 12 years later.
They apparently have not heard of the increase of standing armies of the world from two to five million men, with consequent burdens upon the taxpayer and the constant threat to the peace of the world.
Democratic leaders apparently ignore the effect upon us of the revolution among 300,000,000 people in China or the agitations amongst 160,000,000 people in Russia. They have ignored the effect of Russia’s dumping into the world the commodities taken from its necessitous people in a desperate effort to secure money with which to carry on—shall I call it—a new deal.
The Democratic leaders apparently have never heard that there has been gigantic over-production of rubber in the Indies, of sugar in Cuba, of coffee in Brazil, of cocoa in Ecuador, of copper in the Congo, of lead in Burma, overproduction of zinc in Australia, overproduction of oil from new discoveries in the United States, Russia, Sumatra, and Venezuela; and likewise the effect of the introduction into the world of gigantic areas of new wheatlands in the Argentine and in Canada; new cotton lands in Egypt. In each and every case these enormous overproductions, far beyond consumption even in boom times, have crashed into the immutable law of supply and demand and brought collapse in prices and with it a train of bankruptcies and destruction of buying power for American goods.
They appear not to recognize that these forces finally generated economic strangulations, fears, and panic, the streams of which precipitated another long series of world-wide disasters.
The Democratic leaders apparently never hear that there followed revolutions in Spain and Portugal, Brazil, the Argentine, Chile, Peru, Ecuador, Siam, with attempts at revolution in a dozen other countries, resulting in their partial or practical repudiation of debt and the constant decrease in buying power for our goods.
They seem not to know that the further accumulation of all these causes and dislocations finally placed a strain upon the weakened economic systems of Europe until one by one they collapsed in failure of their gold standards and the partial or total repudiation of debts. They would hold the American people ignorant that every one of these nations in their financial crises imposed direct or indirect restrictions on the import of goods in order to reduce expenditures of their people. They call these “reprisals” against the Smoot-Hawley tariff bill.
They apparently have never heard of the succeeding jeopardy in which our Nation was put through these destructions of world commerce, or the persistent dumping of securities into the American market from these panic-stricken countries; the gigantic drains upon our gold and exchange; or the consequent fear that swept over our people, causing them to draw from our bank resources $1,500,000,000, all of which contracted credit, resulted in demand for payment of debts right and left, and thwarted our every effort for industrial recovery.
Yet in the face of all these tremendous facts, our Democratic friends leave the impression with the American people that the prime cause of this disaster was the boom in flotations and stock prices and a small increase in American tariffs.
Such an impression is unquestionably sought by the Democratic candidate when he says:
“That bubble burst first in the land of its origin— the United States. The major collapse abroad followed. It was not simultaneous with ours.”
I do not underrate the distressing losses to millions of our people or the weakening of our strength from the mania of speculation and flotation of securities, but I may incidentally remark that the state governments have the primary responsibility to protect their citizens in these matters and that the vast majority of such transactions originated or took place in the State of New York.
But as to the accuracy of the statement I have quoted I may call your attention to a recent bulletin of the highly respected National Bureau of Economic Research, in which it is shown that this depression in the world began in 11 countries, having a population of 600,000,000 people, before it even appeared in our country, instead of the bubble having “first burst in the United States.” Their report shows that the depression in eight other countries, with a population of another 600,000,000 people, started at the same time with ours. In fact, the shocks from the continued economic earthquakes in these other countries carried our prices far below the values they would otherwise have sunk to, with all its train of greatly increased losses, perils, and unemployment.
Our opponents demand to know why the governmental leaders of business men over the world did not foresee the approach of these disintegrating forces. That answer is simple. The whole world was striving to overcome them, but finally they accumulated until certain countries could no longer stand the strain, and their people, suddenly overtaken by fear and panic, through hoarding and exporting their capital for safety, brought down their own houses and these disasters spread like a prairie fire through the world. No man can foresee the coming fear or panic, or the extent of this effect. I did not notice any Democratic Jeremiahs.
So much for the beginnings and forces moving in this calamity.
I now come to the amazing statements that the tariff bill of 1930 has borne a major influence in this debacle.
I quote from the Democratic candidate:
“The Hawley-Smoot tariff is one of the most important factors in the present world-wide depressions.”
“The tariff has done so much to destroy foreign trade as to make foreign trade virtually impossible.”
I shall analyze the accuracy of these statements not only because I should like to get before my countrymen a picture of the lack of understanding which the Democratic Party has of world trade, but also for the further reasons that it is of vital importance to labor that, as our opponents have this obsession, it means that if they are intrusted with control of our government they intend to break down the protective tariff which is the very first line of defense of the American standard of living against these new forces.
It requires a collection of dull facts to demonstrate the errors in these bald assertions by Democratic leaders.
At the beginning I may repeat that this tariff bill was not passed until nine months after the economic depression began in the United States and also not until 20 other countries had already gone into the depression.
The Democratic Party seldom mentions that 66 per cent of our imports are free of duty, but that is the fact. From half to two-thirds of the trade of the world is in nondutiable goods—that is, mostly raw materials; another part is in luxuries, upon which all nations collect tariffs for revenue; another part, and probably less than one-third of the whole, is in competitive goods so far as the importing nation is concerned and therefore subject to protective tariffs.
The trade of the world has distressingly diminished under the impact of these successive dislocations abroad. But the decrease is almost exactly the same in the free goods everywhere as in the dutiable goods. That is the case in the United States.
If the Smoot-Hawley tariff reduced our imports of dutiable goods, what was it that reduced the two-thirds of non-dutiable goods?
If we explore a little further, we would find from the Tariff Commission that the total duties collected in a comparable year represent 16 per cent of the total imports, this being an increase from 13.8 per cent of the previous tariffs. In other words, the effect of the new tariff shows an increase of 2.2 per cent. This is the margin with which they say we have pulled down foreign governments, created tyrannies, financial shocks, and revolutions.
I may mention that upon the same basis the McKinley duties were 23 per cent; the Dingley duties were 25.8 per cent; the Payne-Aldrich duties were 19.3 per cent of the whole of our imports—all compared with the 16 per cent of the present tariff—and yet they produced in foreign countries no revolutions, no financial crises, and did not destroy the whole world, nor destroy American foreign trade.
And I may explore the facts further. The 5-year average of the import trade of the United States before the depression was about 12 per cent of the whole world import trade. This they would say that 2.2 per cent increase applied to one-eighth of the world’s imports has produced this catastrophe.
I can explore this in still another direction. I remind you that we levy tariffs upon only one-third of our imports. I also remind you that the actual increases made in the Smoot-Hawley Act covered one-quarter of the dutiable imports. I may also remind you that our import trade is only one-eighth of the import trade of the world. So they would have us believe this world catastrophe and this destruction of foreign trade happened because the United States increased tariffs on one-fourth of one-third of one-eighth of the world’s imports. Thus we pulled down the world, so they tell us, by increased on less than 1 per cent of the goods being imported by the world.
And I may explore the responsibility of the tariffs still further. My opponent has said that it—
“Started such a drain on the gold reserves of the principal countries as to force practically all of them off the gold standard.”
At Des Moines I defended the American people from this guilt. I pointed out that it happens there had been no drain of gold from Europe, which is the center of this disturbance, but on the contrary, that Europe’s gold holdings have increased every year since the Smoot-Hawley tariff was passed.
My fellow citizens, I could continue for hours in an analysis of mistaken statements and misinformation from the opposition. But I assure you that this country is not to blame for the catastrophes that have come on the world. The American people did not originate the age-old controversies of Europe. We did not inaugurate the Great War or the panics in Europe.
No, my friends, the increase of duties collected by the United States by 2.2 per cent calculated on all the goods we import did not bring about the debacle in the world. If every country in the world were to increase the duty upon their imports by 2.2 per cent tomorrow, but if at the same time they would also adopt domestic policies which would bring about release of the energies and progress of their people—if they would support confidence in the world, then the world’s, as well as our own, international commerce would thrive and boom beyond any dimensions that we ever dreamed of.
I dwell on this point, not only because I believe it is important to correct current misstatements of our opponents but because the policies of our opponents are founded upon misconceptions of the utmost gravity for the future of the United States. If it were not a matter of such utter gravity for the future of the United States, I should treat them not in a sense of seriousness but in a sense of humor. There is a vital determination before the American people as to whether there shall be placed in power over the destinies of 120,000,000 of people a party which so lacks a penetration into the forces active in the world and the dangers and responsibilities that arise from them ….
I wish for a moment to return to the tariff. There is no measure in the whole economic gamut more vital to the American workingman and the farmer today than the maintenance of the protective tariff. I stand on that principle of protection. Our opponents are opposed to that principle. They propose “a competitive tariff for revenue.” They propose to do this in the face of the fact that in the last year currencies of competing nations have depreciated by going off the gold standard and consequently wages have been lowered in 30 competing countries. This is a flat issue which every farmer and workman in the United States should consider from the point of view of his home and his living.
That it is the intention of the Democratic candidate to reduce the tariffs—on all commodities—must be clear from these typical expressions in respect to the present tariff used in this campaign—“Wicked and exorbitant tariff,” “its outrageous rates,” “almost prohibitive tariffs,” “the notorious and indefensible Smoot-Hawley tariff,” “the excessive rates of that bill must come down,” “until the tariff is lowered,” “our policy calls for lower tariffs.”
Do you want to compete with laborers whose wages in his own money are only sufficient to buy from one-eighth to one-third of the amount of bread and butter which you can buy at the present rate of wages? That is the plain question. It does not require a great deal of ingenious argument to support its correct answer. It is true we have the most gigantic market in the world today, surrounded by nations clamoring to get in. But it has been my belief—and it is still my belief— that we should protect this market for our own labor; not surrender it to the labor of foreign countries as the Democratic party proposes to do.
Source: Herbert Hoover and Calvin Coolidge, Campaign Speeches of 1932 (Garden City, NY: Doubleday, Herbert, 1933), 80–109.
Congress passed the Neutrality Act of 1935 in response to charges raised by the Nye Committee (named after its chair, Senator Gerald Nye). The committee argued that U.S. businesses had operated as “merchants of death” during World War I and that in future wars the country should not seek to profit from them. Under the terms of the act, the president must declare that two or more nations are at war before U.S. manufacturers are prohibited from selling arms and ammunition to those countries. The act also prohibits Americans from traveling on ships registered to belligerent nations. This act was subsequently modified in 1936 and 1937 with some of the restrictions removed or weakened.
JOINT RESOLUTION
49 stat. 1081; 22 U.S.C. 441 note
Providing for the prohibition of the export of arms, ammunition, and implements of war to belligerent countries; the prohibition of the transportation of arms, ammunition, and implements of war by vessels of the United States for the use of belligerent states; for the registration and licensing of persons engaged in the business of manufacturing, exporting, or importing arms, ammunition, or implements of war; and restricting travel by American citizens on belligerent ships during war.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That upon the outbreak or during the progress of war between, or among, two or more foreign states, the President shall proclaim such fact, and it shall thereafter be unlawful to export arms, ammunition, or implements of war from any place in the United States, or possessions of the United States, to any port of such belligerent states, or to any neutral port for transshipment to, or for the use of, a belligerent country.
The President, by proclamation, shall definitely enumerate the arms, ammunition, or implements of war, the export of which is prohibited by this Act.
The President may, from time to time, by proclamation, extend such embargo upon the export of arms, ammunition, or implements of war to other states as and when they may become involved in such war.
Whoever, in violation of any of the provisions of this section, shall export, or attempt to export, or cause to be exported, arms, ammunition, or implements of war from the United States, or any of its possessions, shall be fined not more than $10,000 or imprisoned not more than five years, or both, and the property, vessel, or vehicle containing the same shall be subject to the provisions of sections 1 to 8, inclusive, title 6, chapter 30, of the Act approved June 15, 1917 (40 Stat. 223–225; U.S.C., title 22, secs. 238–245).
In the case of the forfeiture of any arms, ammunition, or implements of war by reason of a violation of this Act, no public or private sale shall be required; but such arms, ammunition, or implements of war shall be delivered to the Secretary of War for such use or disposal thereof as shall be approved by the President.
When in the judgment of the President the conditions which have caused him to issue his proclamation have ceased to exist he shall revoke the same and the provisions hereof shall thereupon cease to apply.
Except with respect to prosecutions committed or forfeitures incurred prior to March 1, 1936, this section and all proclamations issued thereunder shall not be effective after February 29, 1936.
SEC. 2. That for the purpose of this Act-
(a) The term “Board” means the National Munitions Control Board which is hereby established to carry out the provisions of this Act. The Board shall consist of the Secretary of State, who shall be chairman and executive officer of the Board; the Secretary of the Treasury; the Secretary of War; the Secretary of the Navy; and the Secretary of Commerce. Except as otherwise provided in this Act, or by other law, the administration of this Act is vested in the Department of State;
(b) The term “United States” when used in a geographical sense, includes the several States and Territories, the insular possessions of the United States (including the Philippine Islands), the Canal Zone, and the District of Columbia;
(c) The term “person” includes a partnership, company, association, or corporation, as well as a natural person.
Within ninety days after the effective date of this Act, or upon first engaging in business, every person who engages in the business of manufacturing, exporting, or importing any of the arms, ammunition, and implements of war referred to in this Act, whether as an exporter, importer, manufacturer, or dealer, shall register with the Secretary of State his name, or business name, principal place of business, and places of business in the United States, and a list of the arms, ammunition, and implements of war which he manufactures, imports, or exports.
Every person required to register under this section shall notify the Secretary of State of any change in the arms, ammunition, and implements of war which he exports, imports, or manufactures; and upon such notification the Secretary of State shall issue to such person an amended certificate of registration, free of charge, which shall remain valid until the date of expiration of the original certificate. Every person required to register under the provisions of this section shall pay a registration fee of $500, and upon receipt of such fee the Secretary of State shall issue a registration certificate valid for five years, which shall be renewable for further periods of five years upon the payment of each renewal of a fee of $500.
It shall be unlawful for any person to export, or attempt to export, from the United States any of the arms, ammunition, or implements of war referred to in this Act to any other country or to import, or attempt to import, to the United States from any other country any of the arms, ammunition, or implements of war referred to in this Act without first having obtained a license therefor.
All persons required to register under this section shall maintain, subject to the inspection of the Board, such permanent records of manufacture for export, importation, and exportation of arms, ammunition, and implements of war as the Board shall prescribe.
Licenses shall be issued to persons who have registered as provided for, except in cases of export or import licenses where exportation of arms, ammunition, or implements of war would be in violation of this Act or any other law of the United States, or of a treaty to which the United States is a party, in which cases such licenses shall not be issued.
The Board shall be called by the Chairman and shall hold at least one meeting a year.
No purchase of arms, ammunition, and implements of war shall be made on behalf of the United States by any officer, executive department, or independent establishment of the Government from any person who shall have failed to register under the provisions of this Act.
The Board shall make an annual report to Congress, copies of which shall be distributed as are other reports transmitted to Congress. Such report shall contain such information and data collected by the Board as may be considered of value in the determination of questions connected with the control of trade in arms, ammunition, and implements of war. It shall include a list of all persons required to register under the provisions of this Act, and full information concerning the licenses issued hereunder.
The Secretary of State shall promulgate such rules and regulations with regard to the enforcement of this section as he may deem necessary to carry out its provisions.
The President is hereby authorized to proclaim upon recommendation of the Board from time to time a list of articles which shall be considered arms, ammunition, and implements of war for the purposes of this section.
This section shall take effect on the ninetieth day after the date of its enactment.
SEC. 3. Whenever the President shall issue the proclamation provided for in section 1 of this Act, thereafter it shall be unlawful for any American vessel to carry any arms, ammunition, or implements of war to any port of the belligerent countries named in such proclamation as being at war, or to any neutral port for trans-shipment to, or for the use of, a belligerent country.
Whoever, in violation of the provisions of this section, shall take, attempt to take, or shall authorize, hire, or solicit another to take any such vessel carrying such cargo out of port or from the jurisdiction of the United States shall be fined not more than $10,000 or imprisoned not more than five years, or both; and, in addition, such vessel, her tackle, apparel, furniture, equipment, and the arms, ammunition, and implements of war on board shall be forfeited to the United States.
When the President finds the conditions which have caused him to issue his proclamation have ceased to exist, he shall revoke his proclamation, and the provisions of this section shall thereupon cease to apply.
SEC. 4. Whenever, during any war in which the United States is neutral, the President, or any person “hereunto authorized by him, shall have cause to believe that any vessel, domestic or foreign, whether requiring clearance or not, is about to carry out of a port of the United States, or its possession, men or fuel, arms, ammunition, implements of war, or other supplies to any warship, tender, or supply ship of a foreign belligerent nation, but the evidence is not deemed sufficient to justify forbidding the departure of the vessel as provided for by section 1, title V, chapter 30, of the Act approved June 15, 1917 (40 Stat. [221[22]]; U.S.C. title 18, sec. 31), and if, in the President’s judgment, such action will serve to maintain peace between the United States and foreign nations, or to protect the commercial interests of the United States and its citizens, or to promote the security of the United States, he shall have the power and it shall be his duty to require the owner, master, or person in command thereof, before departing from a port of the United States, or any of its possessions, for a foreign port, to give a bond to the United States, with sufficient sureties, in such amount as he shall deem proper, conditioned that the vessel will not deliver the men, or the cargo, or any part thereof, to any warship, tender, or supply ship of a belligerent nation; and, if the President, or any person thereunto authorized by him, shall find that a vessel, domestic or foreign, in a port of the United States, or one of its possessions, has previously cleared from such port during such war and delivered its cargo or any part thereof to a warship, tender, or supply ship of a belligerent nation, he may prohibit the departure of such vessel during the duration of the war.
SEC. 5. Whenever, during any war in which the United States is neutral, the President shall find that special restrictions placed on the use of the ports and territorial waters of the United States, or of its possessions, by the submarines of a foreign nation will serve to maintain peace between the United States and foreign nations, or to protect the commercial interests of the United States and its citizens, or to promote the security of the United States, and shall make proclamation thereof, it shall thereafter be unlawful for any such submarine to enter a port or the territorial waters of the United States or any of its possessions, or to depart therefrom, except under such conditions and subject to such limitations as the President may prescribe. When, in his judgment, the conditions which have caused him to issue his proclamation have ceased to exist, he shall revoke his proclamation and the provisions of this section shall thereupon cease to apply.
SEC. 6. Whenever, during any war in which the United States is neutral, the President shall find that the maintenance of peace between the United States and foreign nations, or the protection of the lives of citizens of the United States, or the protection of the commercial interests of the United States and its citizens, or the security of the United States requires that the American citizens should refrain from traveling as passengers on the vessels of any belligerent nation, he shall so proclaim, and thereafter no citizen of the United States shall travel on any vessel of any belligerent nation except at his own risk, unless in accordance with such rules and regulations as the President shall prescribe: Provided, however, That the provisions of this section shall not apply to a citizen travelling on the vessel of a belligerent whose voyage was begun in advance of the date of the President’s proclamation, and who had no opportunity to discontinue his voyage after that date: And provided further, That they shall not apply under ninety days after the date of the President’s proclamation to a citizen returning from a foreign country to the United States or to any of its possessions. When, in the President’s judgment, the conditions which have cause him to issue his proclamation have ceased to exist, he shall revoke his proclamation and the provisions of this section shall thereupon cease to apply.
SEC. 7. In every case of the violation of any of the provisions of this Act where a specific penalty is not herein provided, such violator or violators, upon conviction, shall be fined not more than $10,000 or imprisoned not more than five years, or both.
SEC. 8. If any of the provisions of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.
SEC. 9. The sum of $25,000 is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, to be expended by the Secretary of State in administering this Act.
Approved, August 31, 1935.
Source: U.S. Department of State. Peace and War: United States Foreign Policy, 1931–1941, Publication 1983. (Washington, DC: U.S. Government Printing Office, 1943), 265–271.
Between 1934 and 1936, the Nye Committee, named after its chair, Senator Gerald Nye, investigated the causes for U.S. involvement in World War I. Nye, a staunch isolationist, argued that businessmen had pushed for U.S. involvement to increase their profits and were therefore “merchants of death.” The committee also charged the business community with bribery of foreign officials and a host of other unethical business practices. Although the findings were inconclusive, Nye was able to push through Congress the Neutrality Act of 1935, as well as its modifications in 1936 and 1937.
I Nature of the Munitions Companies
The committee finds, under the head of “the nature of the industrial and commercial organizations engaged in the manufacture of or traffic in arms, ammunitions, or other implements of war” that almost none of the munitions companies in this country confine themselves exclusively to the manufacture of military materials. Great numbers of the largest suppliers to the Army and Navy (Westinghouse, General Electric, du Pont, General Motors, Babcock and Wilcox, etc.) are predominantly manufacturers of materials for civilian life. Others, such as the aviation companies and Colt’s Patent Firearms Co., supply the greatest portion of their output to the military services. In addition to the manufacturers there are several sales companies which act as agents for various manufacturers. There are also brokers dealing largely in old and second-hand supplies. In case of war, other companies, not at present producing any munitions, would be called upon to furnish them.
The Army manufactures its own rifles, cartridges, and field artillery. The Navy manufactures most of its own propellant powder, its own guns, and half of the battleships.
II The Sales Methods of the Munitions Companies
The Committee finds, under the head of sales methods of the munitions companies, that almost without exception, the American munitions companies investigated have at times resorted to such unusual approaches, questionable favors and commissions, and methods of “doing the needful” as to constitute, in effect, a form of bribery of foreign governmental officials or of their close friends in order to secure business.
The committee realizes that these were field practices by the agents of the companies, and were apparently in many cases part of a level of competition set by for eign companies, and that the heads of the American companies were, in cases, apparently unaware of their continued existence and shared the committee’s distaste and disapprobation of such practices.
The committee accepts the evidence that the same practices are resorted to by European munitions companies, and that the whole process of selling arms abroad thus, in the words of a Colt agent, has “brought into play the most despicable side of human nature; lies, deceit, hypocrisy, greed, and graft occupying a most prominent part in the transactions.”
The committee finds such practices on the part of any munitions company, domestic or foreign, to be highly unethical, a discredit to American business, and an unavoidable reflection upon those American governmental agencies which have unwittingly aided in the transactions so contaminated.
The committee finds, further, that not only are such transactions highly unethical, but that they carry within themselves the seeds of disturbance to the peace and stability of those nations in which they take place. In some nations, violent changes of administration might take place immediately upon the revelation of all details of such transactions. Mr. Lammot du Pont stated that the publication of certain du Pont telegrams (not entered in the record) might cause a political repercussion in a certain South American country. At its February 1936 hearings, the committee also suppressed a number of names of agents and the country in which they were operating, in order to avoid such repercussions.
The committee finds, further, that the intense competition among European and American munitions companies with the attendant bribery of governmental officials tends to create a corrupt officialdom, and thereby weaken the remaining democracies of the world at their head.
The committee finds, further, that the constant availability of munitions companies with competitive bribes ready in outstretched hands does not create a situation where the officials involved can, in the nature of things, be as much interested in peace and measures to secure peace as they are in increased armaments.
The committee finds also that there is a very considerable threat to the peace and civic progress of other nations in the success of the munitions makers and of their agents in corrupting the officials of any one nation and thereby selling to that one nation an armament out of proportion to its previous armaments. Whether such extraordinary sales are procured through bribery or through other forms of salesmanship, the effect of such sales is to produce fear, hostility, and greater munitions orders on the part of neighboring countries, culminating in economic strain and collapse or war.
The committee elsewhere takes note of the contempt of some of the munitions companies for those governmental departments and officials interested in securing peace, and finds here that continual or even occasional corruption of other governments naturally leads to a belief that all governments, including our own, must be controlled by economic forces entirely.
III Their Activities Concerning Peace Efforts
The committee finds, under this head, that there is no record of any munitions company aiding any proposals for limitation of armaments, but that, on the contrary, there is a record of their active opposition by some to almost all such proposals, of resentment toward them, of contempt for those responsible for them, and of violation of such controls whenever established, and of rich profiting whenever such proposals failed.
Following the peaceful settlement of the Tacna-Arica dispute between Peru and Chile, L.Y. Spear, vice president of Electric Boat Co. (which supplied submarines to Peru) wrote to Commander C.W. Craven, of Vickers-Armstrong (which supplied material to Chile):
It is too bad that the pernicious activities of our State Department have put the brake on armament orders from Peru by forcing resumption of formal diplomatic relations with Chile.
When the proposal to control the international traffic in arms was made in 1924 the Colt licensee in Belgium wrote:
It is, of course, understood that our general interest is to prevent the hatching up of a new agreement plan “under such a form” (as Sir Eric Drummond says) “that it may be accepted by the governments of all the countries who manufacture arms and munitions of war.”
It then proposed methods of “lengthening the controversies” and to “wear out the bodies occupied with this question.”
The first great peace effort after the war was incorporated in the Treaty of Versailles and in the treaty of peace between the United States and Germany in the form of a prohibition on the manufacture, import, and export of arms by Germany. The manufacture and export of military powder by German companies, in violation of these treaty provisions first took place in 1924 and was known to the Nobel Co. (predecessors of Imperial Chemical Industries) of England and to the du Pont Co., but was not brought to the attention of the Department of State. The du Pont officials explained that the violation was allowed because of the close commercial relations between the British and German chemical companies. Later, United Aircraft licensed a German company for the manufacture of its airplane engines. Sperry Gyroscope also licensed a German company for the manufacture of its equipment. Both the engines and the equipment were of military availability. (See part V, B, secs. II and III.)
The second peace effort was made in 1922, when the Washington Disarmament Conference took place, not long after the American shipbuilding companies had received post-war awards of destroyers at a cost of $149,000,000, and while battleships whose construction was left pending in 1917 were being completed. The naval part of that conference succeeded in stopping a naval race. There was however, no effective action taken in regard to checking the use of poison gas, which was the other main subject for consideration. The committee’s record is incomplete on the activities of the munitions companies in this connection, but does show their opposition to proposals for control of the chemical industry and their interest in the choice of chemical advisers to the American delegation. The conference had been preceded by the sale of all the German chemical patents to the American companies for a small sum, extensive propaganda and expenditures for high-tariff protection on grounds of national defense, and the instigation and writing of news stories from London and Paris designed to give the American public the impression that France and England were engaged in the construction of great poison-gas factories of their own to offset the German ones. Some of these were written by a du Pont agent under an assumed name. The Washington Conference operated in this atmosphere, and contented itself with repeating the declarations of The Hague conventions respecting the use of poisonous gases in warfare which had been violated during the war. Several delegations pointed out that this was no progress at all, but simply a reaffirmation of supposedly existing international law.
The embargo placed at the request of the Central (Nanking) Chinese Government on exports of arms to China was, according to the evidence, violated by American and European munitions companies. Shipments via Europe and Panama were frequently considered as a means of evading the embargo.
The Geneva Arms Control Conference of 1925 was watched carefully by the American and European munitions makers. They knew the American military delegates to the conference several weeks before the public was informed of their names, and one of them told the munitions makers that he believed a licensing system (the sine qua non of any control) to be undesirable. Du Pont representatives made known their objections to publicity. At a conference at the Department of Commerce (prior to the convening of the Geneva Conference) the objections of the munitions manufacturers were considered carefully and reservations to the draft convention to be discussed at Geneva were made. State Department documents not entered into the record, give credit to the American delegation to the Geneva Conference for weakening the proposed draft convention in two important respects. The du Pont representatives (who attended the meeting at the Department of Commerce) later remarked of the final draft of the convention regarding the arms traffic signed at Geneva in 1925:
There will be some few inconveniences to the manufacture of munitions in their export trade, but in the main they will not he hampered materially.
The draft convention was widely advertised as a large step forward in the direction of control of the traffic in arms. It has, in 1936, not yet been ratified by sufficient States to put it into effect.
The influence of American naval shipbuilding companies on the Geneva Disarmament Conference of 1927 has been described in the committee’s report on Naval Shipbuilding (74th Cong., Rept. 944). Their agent at Geneva claimed credit for the failure of that conference, which came at a time when the Big Three shipyards had been given orders by the Navy for $53,744,000 in cruisers, which would have been cut materially in case the conference had been a success. He was paid by the shipbuilders into 1929. The Navy has not denied to the committee that this agent of the shipbuilders was in possession of confidential Navy Department documents during the time of his activity at Geneva.
Following the Geneva conference an arms embargo resolution was introduced in 1928 by the chairman of the American delegation to that conference, Representative Burton of Ohio. The munitions manufacturers, cocky with their success at Geneva, consulted with such allied interests as the Sporting Arms and Ammunition Manufacturers Institute, and found it unnecessary to appear in the front ranks of opposition to this resolution. In 1932 Representative Fish introduced a resolution for a multilateral agreement renouncing the sale and export of arms. Du Pont representatives were active in lining up War and Navy opposition to it. In 1932–33 President Hoover supported an arms embargo which drew the comment from a du Pont representative:
Regarding the attempts of Mr. Hoover and the “cooky pushers” in the State Department to effect embargoes on munitions sent out of the country, I do not believe there is the least occasion for alarm at present.
The munitions people were active in opposition to the arms embargo proposal which was adopted in the Senate without opposition. Senator Bingham of Connecticut succeeded in killing the bill on reconsideration and received the thanks of the munitions people and of their organization, the Army Ordnance Association. The War Department also opposed the embargo.
In 1932, another disarmament conference was held at Geneva. By this time the failure to prevent the re-armament of Germany, described above, had resulted in great profits to the French steel industry which had received large orders for the building of the continuous line of fortifications across the north of France, to the French munition companies, and profits were beginning to flow into the American and English pockets from German orders for aviation matériel. This in turn resulted in a French and English aviation race, and with Germany openly rearming the much-heralded disarmament conference which convened in 1932 has failed completely. It was pointed out by a committee member that du Pont representatives were aware that—
the effect of the failure to check the [Versailles] treaty violation even goes to the extent of making a subsequent disarmament convention, if not improbable in its success, at least calculated to produce only an unworkable document.
In 1934, Congress adopted a joint resolution prohibiting, in effect, sales of munitions to Bolivia and Paraguay, then engaged in the Chaco War, for a period of almost 6 years. During these 6 years, the munitions companies had profited largely from the defeat of the Burton embargo proposal, offered in 1928.
The Chaco embargo, according to indictments issued by a Federal grand jury, was violated by the Curtiss-Wright Export Corporation and the Curtiss Aeroplane Motor Co. The lower court has held the embargo unconstitutional on the ground of delegation of power to the President.
Mayrink-Veiga, agents for many munitions companies in Brazil suggested that the embargo could be evaded by the shipment of planes to Europe first, stating that to be the Curtiss and Bellanca procedure.
In 1935, after a year of hearings by the special committee, a neutrality bill was passed including an embargo on arms, ammunition, and implements of war in the event of a state of war between two or more foreign states, and including a munitions-control board with power to issue export licenses. The Secretary of State has announced that not all the companies supposed to register under this law have done so. In 1936 an attempt was made to amend the neutrality law by holding the exports of necessary war materials (oil, copper, steel, etc.) to belligerents to normal quotas. This was defeated. Considerable quantities of those materials were already being exported to Italy, one of the belligerents in the Italo-Ethiopian War, and some of the exporting companies had connections and investments in Italy.
IV The Effect of Armaments on Peace
The committee finds, under the head of the effect of armament, on peace, that some of the munitions companies have occasionally had opportunities to intensify the fears of people for their neighbors and have used them to their own profit.
The committee finds, further, that the very quality which in civilian life tends to lead toward progressive civilization, namely the improvements of machinery, has been used by the munitions makers to scare nations into a continued frantic expenditure for the latest improvements in devices of warfare. The constant message of the traveling salesman of the munitions companies to the rest of the world has been that they now had available for sale something new, more dangerous and more deadly than ever before and that the potential enemy was or would be buying it.
While the evidence before this committee does not show that wars have been started solely because of the activities of munitions makers and their agents, it is also true that wars rarely have one single cause, and the committee finds it to be against the peace of the world for selfishly interested organizations to be left free to goad and frighten nations into military activity.
The committee finds, further, that munitions companies engaged in bribery find themselves involved in the civil and military politics of other nations, and that this is an unwarranted form of intrusion into the affairs of other nations and undesirable representation of the character and methods of the people of the United States.
The export field of our munitions companies has been South America and China, with occasional excursions into Poland, Turkey, Siam, Italy, Japan, and other nations. There was less important dynamite loose in either South America or China than in Western Europe. The activities of the munitions makers in Europe were of greater importance to the peace of the western world than their activities in either South America or China.
It will remain for commissions with full powers in the large European nations to report on the provocative activities of their companies, particularly to investigate the statements made in the French Chamber of Deputies, that Skoda in Czechoslovakia, a subsidiary of Schneider-Creusot, financed the Hitler movement to power, which, more than any one other event, can be credited with causing the present huge rearmament race in Europe, so profitable to the European steel, airplane, and munitions companies.
In South America there have, in the post-war years, been moments of severe tension, occasionally breaking out into war. One of these moments apparently came directly after the World War, when Chile bought from Vickers a considerable battle fleet. This caused agitation in Brazil, Argentina, and Peru, with Vickers taking the lead in Chile and Argentina, and Electric Boat Co. in Peru and Brazil. The situation was apparently so delicate that an administration countermanded an offer from the United States Navy to sell destroyers to Peru inasmuch as the sale might encourage an outbreak of war between Chile and Peru (exhibits 54, 57).
Later tension developed between Peru and Chile over the Tacna-Arica matter and Aubry, the Electric Boat Co. agent, felt that if he brought the contracts for submarines for Peru—
it would be a great blunder going to Argentina, for instance, via Chile (In this business we have to be tactful and a little diplomatist) and so in regard to Brazil as well as to the Argentine now that affairs are going to take place at the same time (exhibit 69).
Mr. Carse, president of Electric Boat, recognized the danger of armament when he pointed out in regard to financing Peruvian purchases “the armament which this money could purchase would not insure victory, as the other nation has much stronger armament and would tend more to bring conflict to a point than if they did not purchase the armament” (exhibit 61). It was sold, nevertheless.
The spreading effects of such fears were reported by Vice President Sutphen of Electric Boat:
It appears that there has been quite an agitation in Bolivia, as you know, and a revolution has occurred there recently, and in the opinion of the bankers it has been instigated largely by Peru to have Bolivia join with her in opposition to Chile (ex. 60).
Chile was the country which bought the original increased armaments. It was in this connection that Spear wrote Craven of the “pernicious activities” of the United States Department of State in helping the resumption of diplomatic relations between Chile and Peru.
The naval armament had its military side. Evidence read into the record during the Colt Co. hearing in 1936 indicated an arms race with intense activity on the part of all machine-gun manufacturers. The country which was credited with starting military armament “out of all proportion with that of other countries in South America” was identified as a country whose officials were the most susceptible to bribes.
The Department of Commerce obligingly furnished Colts the information that the arms race was bringing about a cabinet crisis in one of the countries reluctant to participate in it.
The statement of a Federal Laboratories salesman that “the unsettled condition in South America has been a great thing for me” is the key, and also, “We are certainly in one hell of a business where a fellow has to wish for trouble to make a living.”
Colombia and Peru, at the time of the Leticia incident, were each kept well informed by the munitions companies of the proposed purchases of the other nation. The evidence of the Colt agent in Peru was that the Vickers agent, after unloading a huge armament order on Peru, had boasted to the Peruvians that he would sell “double the amount, and more modern, to the Chilean Government.” When a limited amount of matériel, such as machine guns, was available, Bolivia could be forced into ordering them on the threat that unless she acted quickly, Paraguay would get them. Killing the back-country Indians of South America with airplanes, bombs, and machine guns boiled down to an order to get busy because “these opera bouffe revolutions are usually short-lived, and we must make the most of the opportunity.”
In China the munitions companies report that there was a certain amount of feeling between the Central (Nanking) Government and the Canton Government. The Boeing agent was able to sell 10 planes to the Canton Government. Referring to the Nanking (recognized) Government he wrote:
Their anger at us in selling airplanes to the Cantonese is more than offset by the fact that the Cantonese have gotten ahead of them and will have better equipment than they will have. In other words, the Canton sale is quite a stimulant to the sale up here.
The company, interested in making sales also to the recognized Nanking Government, replied:
If the present deal with the Cantonese can be put through, without unreasonable demands being made upon us, it is to our advantage to successfully conclude the business if for no other reason but for the effect it would have on the Nanking Government.
All this may be little more to the munitions people than a highly profitable game of bridge with special attention on all sides to the technique of the “squeeze” play, but to a considerable part of the world’s inhabitants there is still something frightful in death by machinery, and the knowledge that neighboring governments have acquired the latest and fastest engines of destruction leads to suspicion that those engines are meant to be used, and are not simply for play and show.
At the time a naval bill for $617,000,000 was before Congress, the president of the Bath Iron Works in Maine asked the publisher of a string of newspapers to reprint a Japanese war-scare story, although the Chinese source of that story had been thoroughly discredited editorially by the newspaper originally publishing it, the New York Herald Tribune. He thanked the publisher for playing up the scare story (Report on Naval Shipbuilding).
Attempts to sell munitions frequently involve bribery, which, to be effective, must go to those high in authority. This is apt to involve the companies in the politics of foreign nations. Federal Laboratories, by putting itself at the disposal of the administration of Cuba and two opposing factions, all at the same time, is a case in point. The Colt agent in Peru reported on his helping overthrow the general in charge of ordnance orders. American airplane companies reported on the political influence of French and English airplane companies, in a certain European country. Sperry Gyroscope’s representative reported on Vickers’ (English) political influence in Spain, as did also Electric Boat Co. officials.
The political power of the companies is best indicated, however, by a letter from Mr. John Ball, director of the Soley Armament Co Ltd., of England, in which he pointed out that “the stocks we control are of such magnitude that the sale of a big block of them could alter the political balance of power of the smaller States.”
V Their Relations with the United States Government
The committee first, under this head, repeats its report on naval shipbuilding, in which “the committee finds, under the head of influence and lobbying of shipbuilders, that the Navy contractors, subcontractors, and suppliers constitute a very large and influential financial group,” and “the committee finds that the matter of national defense should be above and separated from lobbying and the use of political influence by self-interested groups and that it has not been above or separated from either of them.”
The committee finds, further, that the munitions companies have secured the active support of the War, Navy, Commerce, and even State Departments in their sales abroad, even when the material was to be produced in England or Italy.
The committee finds that by their aid and assistance to munitions companies the War, Navy, and Commerce Departments condone, in effect, in the eyes of those foreign officials cognizant of the details of the transactions the unethical practices of the companies which characterize their foreign sales efforts.
The committee finds that the munitions companies have constantly exerted pressure on the War Department to allow the exportation of the most recent American improvements in warfare, and have usually been successful in securing it, and have also furnished plans of important new machines of war to their foreign agents in advance of any release by the War Department.
The committee finds that the War Department encourages the sale of modern equipment abroad in order that the munitions companies may stay in business and be available in the event of another war, and that this consideration outranks the protection of secrets. (General Ruggles was quoted: “It was vastly more important to encourage the du Pont Co. to continue in the manufacture of propellants for military use, than to endeavor to protect secrets relating to the manufacture.”)
The committee finds that as improvements are developed here, often with the cooperation of the military services, and these improvements presumably give the United States a military advantage, we are in the anomalous position of being forced to let the other nations have the advantages which we have obtained for ourselves, in order to keep the munitions manufacturers going, so that the United States can take advantage of the same improvements which its companies have sold abroad.
The committee finds, from official documents it has not entered into the record, that the United States naval missions to Brazil and Peru have been given considerable help to American munitions makers, and that their participation and leadership in war games directed at “a potential enemy” have not advanced the cause of peace in South America, and that their activity can be misinterpreted by neighboring countries as support of any military plans of the nations to which they are attached.
The committee finds, from official documents which it has not entered into the record, that the sales of muni tions to certain South American nations in excess of their normal capacity to pay, was one of the causes for the defaults on certain South American bonds; and that the sales of the munitions was, in effect, financed by the American bond purchasers, and the loss on the bonds was borne by the same people.
The committee finds that the Army Ordnance Association, consisting of personnel from the munitions companies, constitutes a self-interested organization and has been active in War Department politics and promotions.
The committee finds that the Navy League of the United States has solicited and accepted contributions from steamship companies, the recipients of subsidy benefits, and that it has solicited contributions from companies with large foreign investments on the ground that these would profit from a large navy and that its contributors have at times been persons connected with Navy supplies. The committee also finds that the Navy League together with various Navy officials have engaged in political activity looking toward the defeat of Congressmen unfavorable to Navy League and Navy views.
The committee finds, further, that any close associations between munitions and supply companies on the one hand and the service departments on the other hand, of the kind which existed in Germany before the World War, constitutes an unhealthy alliance in that it brings into being a self-interested political power which operates in the name of patriotism and satisfies interests which are, in large part, purely selfish, and that such associations are an inevitable part of militarism, and are to be avoided in peacetime at all costs.
The committee finds, finally, that the neutrality bill of 1936, to which all its members gave their support and which provides for an embargo on the export of arms, ammunitions, and implements of war to belligerents, was a much needed forward step, and that the establishment of a Munitions Control Board, under the Department of State, should satisfactorily prevent the shipment of arms to other than recognized governments.
VI International Agreements of Munitions Companies
The committee finds, under this head, that, among the companies investigated, the following have the most extensive foreign arrangements: F. I. du Pont de Nemours Co., Colt’s Patent Firearms Co., Electric Boat Co., Sperry Gyroscope Co., Pratt and Whitney Aircraft Co.
The committee finds that the usual form of arrangement is a license to a foreign ally involving rights to manufacture and sell in certain parts of the world, together with more or less definite price-fixing agreements and occasionally profit-sharing arrangements, and that in effect the world is partitioned by parties at interest.
The committee finds that the granting of licenses to manufacture and sell to nations against which there were embargoes, such as Germany, was in practice a violation of the interest of such embargoes and nullified them.
The committee finds that the international commercial interests of such large organizations as du Pont and Imperial Chemical Industries may precede in the minds of those companies the importance of national policy as described publicly by the foreign office or State Department, and that such considerations of commercial interest were apparently foremost in the rearming of Germany beginning in 1924 and in the sale of a process which could be used to manufacture cheaper munitions in Japan in 1932, shortly after Secretary of State Stimson had taken steps to express the disapproval of this Nation for Japan’s military activities in Manchuokuo. Several aviation companies also licensed Japan for the use of their material in Manchuokuo at a time when the United States Government refused recognition to it. Recognition by munitions companies may be far more important than diplomatic recognition.
The committee finds that the licensing of American inventions to allied companies in foreign nations is bound to involve in some form the recurrence of experiences similar to those in the last war in which Electric Boat Co. patents were used in German submarines and aided them in the destruction of American lives, and ships, and that in peacetime the licensing involves the manufacture abroad, at lower costs, of American material.
VII The Chemical Industry and Munitions
The committee finds a general acknowledgment of the importance of the commercial chemical industry to the manufacture of such instruments of warfare as high explosives and gasses, that most of the large industrial nations have granted their chemical companies considerable measures of protection in the interests of national defense, and that no effective control has to date been established over these large military resources.
These findings were concurred in by all members of the committee.
Source: Report of the Special Committee on Investigation of the Munitions Industry (The Nye Report), U.S. Congress, Senate, 74th Congress, 2d sess., February 24, 1936, 3–13.
In the post–World War II period, the industrialized nations of the world, led by the United States, moved toward free trade as a means of securing world peace. The signatories of the General Agreement on Tariffs and Trade (GATT) sought to reduce tariff barriers. Between 1947 and 1967, members participated in five rounds of negotiations and decreased rates by 73 percent. Since 1967, members have engaged in two additional rounds in which the range of topics has expanded to include such issues as the environment. The more structured World Trade Organization, formed in 1995, formally replaced the voluntary association of GATT.
Preamble
The Governments of the COMMONWEALTH OF AUSTRALIA, the KINGDOM OF BELGIUM, the UNITED STATES of BRAZIL, BURMA, CANADA, CEYLON, the REPUBLIC OF CHILE, the REPUBLIC of CHINA, the REPUBLIC OF CUBA, the CZECHOSLOVAK REPUBLIC, the FRENCH REPUBLIC, INDIA, LEBANON, the GRAND-DUCHY OF LUXEMBURG, the KINGDOM OF THE NETHERLANDS, NEW ZEALAND, the KINGDOM OF NORWAY, PAKISTAN, SOUTHERN RHODESIA, SYRIA, the UNION OF SOUTH AFRICA, the UNITED KINGDOM of GREAT BRITAIN AND NORTHERN IRELAND, and the UNITED STATES of AMERICA:
Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods,
Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce,
Have through their Representatives agreed as follows:
Article I
General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III, any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties ….
Article V
Freedom of Transit
1. Goods (including baggage), and also vessels and other means of transport, shall be deemed to be in transit across the territory of a contracting party when the passage across such territory, with or without trans-shipment, warehousing, breaking bulk, or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes. Traffic of this nature is termed in this Article “traffic in transit.”
2. There shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit, for traffic in transit to or from the territory of other contracting parties. No distinction shall be made which is based on the flag of vessels, the place of origin, departure, entry, exit or destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport.
3. Any contracting party may require that traffic in transit through its territory be entered at the proper custom house, but, except in cases of failure to comply with applicable customs laws and regulations, such traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with the cost of services rendered.
4. All charges and regulations imposed by contracting parties on traffic in transit to or from the territories of other contracting parties shall be reasonable, having regard to the conditions of the traffic.
5. With respect to all charges, regulations and formalities in connection with transit, each contracting party shall accord to traffic in transit to or from the territory of any other contracting party treatment no less favourable than the treatment accorded to traffic in transit to or from any third country.
6. Each contracting party shall accord to products which have been in transit through the territory of any other contracting party treatment no less favourable than that which would have been accorded to such products had they been transported from their place of origin to their destination without going through the territory of such other contracting party. Any contracting party shall, however, be free to maintain its requirements of direct consignment existing on the date of this Agreement, in respect of any goods in regard to which such direct consignment is a requisite condition of eligibility for entry of the goods at preferential rates of duty or has relation to the contracting party’s prescribed method of valuation for duty purposes.
7. The provisions of this Article shall not apply to the operation of aircraft in transit, but shall apply to air transit of goods (including baggage).
Article VI
Anti-dumping and Countervailing Duties
1. The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another
Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability.
2. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1.
3. No countervailing duty shall be levied on any product of the territory of any contracting party imported into the territory of another contracting party in excess of an amount equal to the estimated bounty or subsidy determined to have been granted, directly or indirectly, on the manufacture, production or export of such product in the country of origin or exportation, including any special subsidy to the transportation of a particular product. The term “countervailing duty” shall be understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed, directly or indirectly, upon the manufacture, production or export of any merchandise.
4. No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to anti-dumping or countervailing duty by reason of the exemption of such product from duties or taxes borne by the like product when destined for consumption in the country of origin or exportation, or by reason of the refund of such duties or taxes.
5. No product of the territory of any contracting party imported into the territory of any other contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization.
6.
7. A system for the stabilization of the domestic price or of the return to domestic producers of a primary commodity, independently of the movements of export prices, which results at times in the sale of the commodity for export at a price lower than the comparable price charged for the like commodity to buyers in the domestic market, shall be presumed not to result in material injury within the meaning of paragraph 6 if it is determined by consultation among the contracting parties substantially interested in the commodity concerned that:
Article XII
Restrictions to Safeguard the Balance of Payments
1. Notwithstanding the provisions of paragraph 1 of Article XI, any contracting party, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of the following paragraphs of this Article ….
Article XIV
Exceptions to the Rule of Non-discrimination
1. A contracting party which applies restrictions under Article XII or under Section B of Article XVIII may, in the application of such restrictions, deviate from the provisions of Article XIII in a manner having equivalent effect to restrictions on payments and transfers for current international transactions which that contracting party may at that time apply under Article VIII or XIV of the Articles of Agreement of the International Monetary Fund, or under analogous provisions of a special exchange agreement entered into pursuant to paragraph 6 of Article XV ….
Exchange Arrangements
1. The CONTRACTING PARTIES shall seek cooperation with the International Monetary Fund to the end that the CONTRACTING PARTIES and the Fund may pursue a co-ordinated policy with regard to exchange questions within the jurisdiction of the Fund and questions of quantitative restrictions and other trade measures within the jurisdiction of the CONTRACTING PARTIES ….
Article XVI
Subsidies
Section A—Subsidies in General
1. If any contracting party grants or maintains any subsidy, including any form of income or price support, which operates directly or indirectly to increase exports of any product from, or to reduce imports of any product into, its territory, it shall notify the CONTRACTING PARTIES in writing of the extent and nature of the subsidization, of the estimated effect of the subsidization on the quantity of the affected product or products imported into or exported from its territory and of the circumstances making the subsidization necessary. In any case in which it is determined that serious prejudice to the interests of any other contracting party is caused or threatened by any such subsidization, the contracting party granting the subsidy shall, upon request, discuss with the other contracting party or parties concerned, or with the CONTRACTING PARTIES, the possibility of limiting the subsidization.
Section B—Additional Provisions on Export Subsidies
2. The contracting parties recognize that the granting by a contracting party of a subsidy on the export of any product may have harmful effects for other contracting parties, both importing and exporting, may cause undue disturbance to their normal commercial interests, and may hinder the achievement of the objectives of this Agreement ….
Article XIX
Emergency Action on Imports of Particular Products
1.
2. Before any contracting party shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the CONTRACTING PARTIES as far in advance as may be practicable and shall afford the CONTRACTING PARTIES and those contracting parties having a substantial interest as exporters of the product concerned an opportunity to consult with it in respect of the proposed action. When such notice is given in relation to a concession with respect to a preference, the notice shall name the contracting party which has requested the action. In critical circumstances, where delay would cause damage which it would be difficult to repair, action under paragraph 1 of this Article may be taken provisionally without prior consultation, on the condition that consultation shall be effected immediately after taking such action ….
Article XX
General Exceptions
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:
Article XXI
Security Exceptions
Nothing in this Agreement shall be construed
Article XXII
Consultation
1. Each contracting party shall accord sympathetic consideration to, and shall afford adequate opportunity for consultation regarding, such representations as may be made by another contracting party with respect to any matter affecting the operation of this Agreement.
2. The CONTRACTING PARTIES may, at the request of a contracting party, consult with any contracting party or parties in respect of any matter for which it has not been possible to find a satisfactory solution through consultation under paragraph 1 ….
Article XXIV
Territorial Application
Frontier Traffic
Customs Unions and Free-trade Areas
1. The provisions of this Agreement shalt apply to the metropolitan customs territories of the contracting parties and to any other customs territories in respect of which this Agreement has been accepted under Article XXVI or is being applied under Article XXXIII or pursuant to the Protocol of Provisional Application. Each such customs territory shall, exclusively for the purposes of the territorial application of this Agreement, be treated as though it were a contracting party; Provided that the provisions of this paragraph shall not be construed to create any rights or obligations as between two or more customs territories in respect of which this Agreement has been accepted under Article XXVI or is being applied under Article XXXIII or pursuant to the Protocol of Provisional Application by a single contracting party.
2. For the purposes of this Agreement a customs territory shall be understood to mean any territory with respect to which separate tariffs or other regulations of commerce are maintained for a substantial part of the trade of such territory with other territories.
3. The provisions of this Agreement shalt not be construed to prevent:
4. The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements. They also recognize that the purpose of a customs union or of a free-trade area should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories.
5. Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area; Provided that:
6. If, in fulfilling the requirements of sub-paragraph 5 (a), a contracting party proposes to increase any rate of duty inconsistently with the provisions of Article II, the procedure set forth in Article XXVIII shall apply. In providing for compensatory adjustment, due account shall be taken of the compensation already afforded by the reductions brought about in the corresponding duty of the other constituents of the union.
7.
Article XXVI
Acceptance, Entry into Force and Registration
1. The date of this Agreement shall be 30 October 1947.
2. This Agreement shall be open for acceptance by any contracting party which, on 1 March 1955, was a contracting party or was negotiating with a view to accession to this Agreement.
3. This Agreement, done in a single English original and in a single French original, both texts authentic, shall be deposited with the Secretary-General of the United Nations, who shall furnish certified copies thereof to all interested governments.
4. Each government accepting this Agreement shall deposit an instrument of acceptance with the Executive Secretary to the CONTRACTING PARTIES, who will inform all interested governments of the date of deposit of each instrument of acceptance and of the day on which this Agreement enters into force under paragraph 6 of this Article.
5.
6. This Agreement shall enter into force, as among the governments which have accepted it, on the thirtieth day following the day on which instruments of acceptance have been deposited with the Executive Secretary to the CONTRACTING PARTIES on behalf of governments named in Annex H, the territories of which account for 85 per centum of the total external trade of the territories of such governments, computed in accordance with the applicable column of percentages set forth therein. The instrument of acceptance of each other government shall take effect on the thirtieth day following the day on which such instrument has been deposited.
7. The United Nations is authorized to effect registration of this Agreement as soon as it enters into force ….
Article XXVIII
Tariff Negotiations
1. The contracting parties recognize that customs duties often constitute serious obstacles to trade; thus negotiations on a reciprocal and mutually advantageous basis, directed to the substantial reduction of the general level of tariffs and other charges on imports and exports and in particular to the reduction of such high tariffs as discourage the importation even of minimum quantities, and conducted with due regard to the objectives of this Agreement and the varying needs of individual contracting parties, are of great importance to the expansion of international trade. The CONTRACTING PARTES may therefore sponsor such negotiations from time to time.
2.
Article XXXI
Withdrawal
Without prejudice to the provisions of paragraph 12 of Article XVIII, of Article XXIII or of paragraph 2 of Article XXX, any contracting party may withdraw from this Agreement, or may separately withdraw on behalf of any of the separate customs territories for which it has international responsibility and which at the time possesses full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement. The withdrawal shall take effect upon the expiration of six months from the day on which written notice of withdrawal is received by the Secretary-General of the United Nations ….
Article XXXIII
Accession
A government not party to this Agreement, or a government acting on behalf of a separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement, may accede to this Agreement, on its own behalf or on behalf of that territory, on terms to be agreed between such government and the CONTRACTING PARTIES. Decisions of the CONTRACTING PARTIES under this paragraph shall be taken by a two-thirds majority ….
Article XXXVI
Principles and Objectives
1. The contracting parties,
2. There is need for a rapid and sustained expansion of the export earnings of the less-developed contracting parties.
3. There is need for positive efforts designed to ensure that less-developed contracting parties secure a share in the growth in international trade commensurate with the needs of their economic development.
4. Given the continued dependence of many less-developed contracting parties on the exportation of a limited range of primary products, there is need to provide in the largest possible measure more favourable and acceptable conditions of access to world markets for these products, and wherever appropriate to de vise measures designed to stabilize and improve conditions of world markets in these products, including in particular measures designed to attain stable, equitable and remunerative prices, thus permitting an expansion of world trade and demand and a dynamic and steady growth of the real export earnings of these countries so as to provide them with expanding resources for their economic development.
5. The rapid expansion of the economies of the less-developed contracting parties will be facilitated by a diversification of the structure of their economies and the avoidance of an excessive dependence on the export of primary products. There is, therefore, need for increased access in the largest possible measure to markets under favourable conditions for processed and manufactured products currently or potentially of particular export interest to less-developed contracting parties.
6. Because of the chronic deficiency in the export proceeds and other foreign exchange earnings of less-developed contracting parties, there are important inter-relationships between trade and financial assistance to development. There is, therefore, need for close and continuing collaboration between the CONTRACTING PARTIES and the international lending agencies so that they can contribute most effectively to alleviating the burdens these less-developed contracting parties assume in the interest of their economic development.
7. There is need for appropriate collaboration between the CONTRACTING PARTIES, other intergovernmental bodies and the organs and agencies of the United Nations system, whose activities relate to the trade and economic development of less-developed countries.
8. The developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed contracting parties.
9. The adoption of measures to give effect to these principles and objectives shall be a matter of conscious and purposeful effort on the part of the contracting parties both individually and jointly.
1. The Governments of the COMMONWEALTH OF AUSTRALIA, the KINGDOM OF BELGIUM (in respect of its metropolitan territory), CANADA, the FRENCH REPUBLIC (in respect of its metropolitan territory), the GRAND-DUCHY OF LUXEMBURG, the KINGDOM OF THE NETHERLANDS (in respect of its metropolitan territory), the UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND (in respect of its metropolitan territory), and the UNITED STATES OF AMERICA, undertake, provided that this Protocol shall have been signed on behalf of all the foregoing Governments not later than 15 November 1947, to apply provisionally on and after 1 January 1948:
2. The foregoing Governments shall make effective such provisional application of the General Agreement, in respect of any of their territories other than their metropolitan territories, on or after 1 January 1948, upon the expiration of thirty days from the day on which notice of such application is received by the Secretary-General of the United Nations.
3. Any other government signatory to this Protocol shall make effective such provisional application of the General Agreement, on or after 1 January 1948, upon the expiration of thirty days from the day of signature of this Protocol on behalf of such Government.
4. This Protocol shall remain open for signature at the Headquarters of the United Nations (a) until 15 November 1947, on behalf of any government named in paragraph 1 of this Protocol which has not signed it on this day, and (b) until 30 June 1948, on behalf of any other Government signatory to the Final Act adopted at the conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment which has not signed it on this day.
5. Any government applying this Protocol shall be free to withdraw such application, and such withdrawal shall take effect upon the expiration of sixty days from the day on which written notice of such withdrawal is received by the Secretary-General of the United Nations.
6. The original of this Protocol shall be deposited with the Secretary-General of the United Nations, who will furnish certified copies thereof to all interested Governments.
IN WITNESS WHEREOF the respective Representatives, after having communicated their full powers, found to be in good and due form, have signed the Protocol.
DONE at Geneva, in a single copy, in the English and French languages, both texts authentic, this thirtieth day of October one thousand nine hundred and forty-seven.
Source: “The General Agreement on Tariffs and Trade,” http://pacific.commerce.ubc.ca/trade/GATT.html (accessed March 2004).
In the aftermath of World War II, the French government established the French Union to coordinate political, military, and economic matters within its empire. The subsequent independence movements of the late 1940s and early 1950s required a modification of the French Union. On October 4, 1958, the organization became known as the French Community. The independent member countries were linked through its institutions, where matters of defense and economic trade preferences were coordinated. As the former French colonial nations evolved their own political structures and developed economic ties with other nations outside the community, the organization became less consequential, but it has never been formally abolished.
The French people solemnly proclaim their attachment to the Rights of Man and the principles of national sovereignty as defined by the Declaration of 1789, confirmed and complemented by the Preamble to the Constitution of 1946.
By virtue of these principles and that of the self-determination of peoples, the Republic offers to the overseas territories that express the will to adhere to them new institutions founded on the common ideal of liberty, equality and fraternity and conceived with a view to their democratic development.
Article 1
France shall be an indivisible, secular, democratic and social Republic. It shall ensure the equality of all citizens before the law, without distinction of origin, race or religion. It shall respect all beliefs. It shall be organised on a decentralised basis.
Article 2
The language of the Republic shall be French.
The national emblem shall be the blue, white and red tricolour flag.
The national anthem shall be La Marseillaise.
The motto of the Republic shall be “Liberty, Equality, Fraternity.”
Its principle shall be: government of the people, by the people and for the people.
Article 3
National sovereignty shall belong to the people, who shall exercise it through their representatives and by means of referendum.
No section of the people nor any individual may arrogate to itself, or to himself, the exercise thereof.
Suffrage may be direct or indirect as provided by the Constitution. It shall always be universal, equal and secret.
All French citizens of either sex who have reached their majority and are in possession of their civil and political rights may vote as provided by statute.
Statutes shall promote equal access by women and men to elective offices and positions.
Article 4
Political parties and groups shall contribute to the exercise of suffrage. They shall be formed and carry on their activities freely. They must respect the principles of national sovereignty and democracy.
They shall contribute to the implementation of the principle set out in the last paragraph of article 3 as provided by statute.
Article 34
Statutes shall be passed by Parliament. Statutes shall determine the rules concerning:
Statutes shall likewise determine the rules concerning:
Statutes shall determine the fundamental principles of:
Finance Acts shall determine the resources and obligations of the State in the manner and with the reservations specified in an institutional Act.
Social security finance Acts shall determine the general conditions for the financial balance of social security and, in the light of their revenue forecasts, shall determine expenditure targets in the manner and with the reservations specified in an institutional Act.
Programme Acts shall determine the objectives of the economic and social action of the State.
The provisions of this article may be enlarged upon and complemented by an institutional Act.
Article 52
The President of the Republic shall negotiate and ratify treaties.
He shall be informed of any negotiations for the conclusion of an international agreement not subject to ratification.
Article 53
Peace treaties, commercial treaties, treaties or agreements relating to international organization, those that commit the finances of the State, those that modify provisions which are matters for statute, those relating to the status of persons, and those that involve the cession, exchange or addition of territory, may be ratified or approved only by virtue of an Act of Parliament.
They shall not take effect until they have been ratified or approved.
No cession, exchange or addition of territory shall be valid without the consent of the population concerned.
Article 53 - 1
The Republic may conclude, with European States that are bound by commitments identical with its own in the matter of asylum and the protection of human rights and fundamental freedoms, agreements determining their respective jurisdiction in regard to the consideration of requests for asylum submitted to them.
However, even if the request does not fall within their jurisdiction under the terms of these agreements, the authorities of the Republic shall remain empowered to grant asylum to any foreigner who is persecuted for his action in pursuit of freedom or who seeks the protection of France for some other reason.
Article 53 - 2
The Republic may recognize the jurisdiction of the International Criminal Court as provided by the treaty signed on 18 July 1998.
Article 54
If the Constitutional Council, on a reference from the President of the Republic, from the Prime Minister, from the President of one or the other assembly, or from sixty deputies or sixty senators, has declared that an international commitment contains a clause contrary to the Constitution, authorization to ratify or approve the international commitment in question may be given only after amendment of the Constitution.
Article 55
Treaties or agreements duly ratified or approved shall, upon publication, prevail over Acts of Parliament, subject, in regard to each agreement or treaty, to its application by the other party.
Article 69
The Economic and Social Council, on a reference from the Government, shall give its opinion on such government bills, draft ordinances or decrees, and Members’ bills as have been submitted to it.
A member of the Economic and Social Council may be designated by the Council to present, to the parliamentary assemblies, the opinion of the Council on such bills or drafts as have been submitted to it.
Article 70
The Economic and Social Council may likewise be consulted by the Government on any economic or social issue. Any plan or programme bill of an economic or social character shall be submitted to it for its opinion.
Article 71
The composition of the Economic and Social Council and its rules of procedure shall be determined by an institutional Act.
Article 72
The territorial units of the Republic shall be the communes, the departments, the regions, the special-status areas and the overseas territories to which article 74 applies. Any other territorial unit shall be established by statute, in appropriate cases in place of one or more units provided for by this paragraph.
Territorial units may take decisions in all matters that are within powers that can best be exercised at their level.
In the manner provided by statute, these units shall be self-governing through elected councils and have power to make regulations.
In the manner provided by institutional act, where the essential conditions for the exercise of public liberties or of a right secured by the Constitution are not affected, territorial units or associations thereof may, where provision is made by statute or regulation, as the case may be, derogate on an experimental basis for limited purposes and duration from provisions laid down by statute or regulation governing the exercise of their powers.
No territorial unit may exercise authority over another. However, where the exercise of a power requires the combined action of several territorial units, one of those units or one of their associations may be authorised by statute to organise their joint action.
In the territorial units of the Republic, the State representative, representing each of the Members of the Government, shall be responsible for national interests, administrative supervision and the observance of the law.
Article 72 - 1
The conditions in which voters in each territorial unit may use their right of petition to ask for a matter within the powers of the unit to be entered on the agenda of its decision-making assembly shall be determined by statute.
In the conditions determined by institutional act, draft decisions or acts within the powers of a territorial unit may, on its initiative, be presented for a decision to be taken by the voters in that unit by referendum.
Where there is a proposal to establish a special-status territorial unit or to modify its organisation, a decision may be taken by statute to consult the voters registered in the relevant units. Voters may also be consulted on changes to the boundaries of territorial units in the conditions determined by statute.
Article 72 - 2
Territorial units shall enjoy resources of which they may dispose freely on the conditions determined by statute.
They may receive all or part of the proceeds of taxes of all kinds. They may be authorised by statute to determine the basis of assessment and the rates, within the limits set by such statutes.
The tax revenue and other own resources of territorial units shall, for each category of territorial unit, represent a decisive share of their resources. The conditions for the implementation of this rule shall be determined by institutional act.
Whenever powers are transferred between central government and the territorial units, resources equivalent to those which were devoted to the exercise of those powers shall be transferred also. Wherever the effect of powers newly created or extended is to increase the expenditure to be borne by territorial units, resources determined by statute shall be allocated.
Equalisation mechanisms to promote equality between territorial units shall be provided for by statute.
Article 72 - 3
The Republic shall recognise the overseas populations within the French people in a common ideal of freedom, equality and fraternity.
Guadeloupe, Guyane, Martinique, Réunion, Mayotte, Saint-Pierre-et-Miquelon, the Wallis and Futuna Islands and French Polynesia shall be governed by article 73 for the overseas departments and regions and for the territorial units established by virtue of the final paragraph of article 73, and by article 74 for the other units.
The status of New Caledonia shall be governed by title XIII.
The legislative system and special organisation of the French Southern and Antarctic Territories shall be determined by statute.
Article 72 - 4
There may be no change for all or part of one of the units to which the second paragraph of article 72-3 applies, from one to another of the statuses provided for by articles 73 and 74, without the prior consent of voters in the relevant unit or part of a unit being sought in the manner provided for by the paragraph below. Such change of status shall be made by institutional act.
The President of the Republic may, on a proposal from the Government when Parliament is in session or on a joint motion of the two assemblies, published in either case in the Journal officiel, decide to consult voters in an overseas territorial unit on a question relating to its organisation, its powers or its legislative system. Where the referendum concerns a change as provided for by the foregoing paragraph and is held in response to a proposal by the Government, the Government shall make a statement before each assembly which shall be followed by a debate.
Article 73
In the overseas departments and regions, statutes and regulations shall be automatically applicable. They may be adapted in the light of the specific characteristics and constraints of those units.
Those adaptations may be decided on by the units in areas in which their powers are exercised if the relevant units have been empowered to that end by statute.
By way of derogation from the first paragraph and in order to take account of their specific features, units to which this article applies may be empowered by statute to determine themselves the rules applicable in their territory in a limited number of matters that fall to be determined by statute.
These rules may not concern nationality, civic rights, the guarantees of public liberties, the status and capacity of persons, the organisation of justice, criminal law, criminal procedure, foreign policy, defence, public security and public order, currency, credit and exchange, or electoral law. This enumeration may be clarified and amplified by an institutional act.
The two foregoing paragraphs shall not apply in the department and region of Réunion.
The powers to be conferred pursuant to the second and third paragraphs shall be decided on at the request of the relevant territorial unit in the conditions and subject to the reservations provided for by an institutional act. They may not be conferred where the essential conditions for the exercise of public liberties or of a right secured by the Constitution are affected.
A territorial unit taking the place of an overseas department and region or a single decision-making assembly for the two units may not be established by statutes unless the consent of the voters registered there has first been sought as provided by the second paragraph of article 72-4.
Article 74
The overseas territorial units to which this article applies shall have a status reflecting their respective local interests within the Republic.
This status shall be determined by an institutional act adopted after the opinion of the decision-making assembly has been received and specifying:
The institutional act may also, for such territorial units as enjoy autonomy, determine the conditions in which:
The other rules governing the specific organisation of the territorial units to which this article applies shall be determined and amended by statute after consultation with their decision-making assembly.
Article 74 - 1
In the territorial units to which article 74 applies and in New Caledonia, the Government may, in matters which remains within its power, extend by ordinance, with the requisite adaptations, the legislative provisions applying in metropolitan France, provided the statute has not expressly excluded the use of this procedure in the specific matters.
Such ordinances shall be issued in the Council of Ministers after receiving the opinion of the relevant decision-making assemblies and the Council of State. They shall enter into force upon publication. They shall lapse if they are not ratified by Parliament within eighteen months following their publication.
Article 75
Citizens of the Republic who do not have ordinary civil status, the only one referred to in Article 34, shall retain their personal status so long as they have not renounced it.
Source: “Constitution of October 4, 1958,” www.assembleenat.fr/english/8ab.asp (accessed December 2003).
Signed in Bangkok on August 8, 1967, the declaration established the Association of Southeast Asian Nations. The goal of the organization is to promote socioeconomic progress in the region. Initial members were Indonesia, Malaysia, Philippines, Singapore, and Thailand, while Brunei, Vietnam, Laos, Myanmar, and Cambodia joined in subsequent years. Since its inception, members have also agreed to maintain the region as a nuclear-free zone and have worked to create the ASEAN Free Trade Area, which operates as a common market area.
The Presidium Minister for Political Affairs/Minister for Foreign Affairs of Indonesia, the Deputy Prime Minister of Malaysia, the Secretary of Foreign Affairs of the Philippines, the Minister for Foreign Affairs of Singapore and the Minister of Foreign Affairs of Thailand:
MINDFUL of the existence of mutual interests and common problems among countries of South-East Asia and convinced of the need to strengthen further the existing bonds of regional solidarity and cooperation;
DESIRING to establish a firm foundation for common action to promote regional cooperation in South-East Asia in the spirit of equality and partnership and thereby contribute towards peace, progress and prosperity in the region;
CONSCIOUS that in an increasingly interdependent world, the cherished ideals of peace, freedom, social justice and economic well-being are best attained by fostering good understanding, good neighbourliness and meaningful cooperation among the countries of the region already bound together by ties of history and culture;
CONSIDERING that the countries of South-East Asia share a primary responsibility for strengthening the economic and social stability of the region and ensuring their peaceful and progressive national development, and that they are determined to ensure their stability and security from external interference in any form or manifestation in order to preserve their national identities in accordance with the ideals and aspirations of their peoples;
AFFIRMING that all foreign bases are temporary and remain only with the expressed concurrence of the countries concerned and are not intended to be used directly or indirectly to subvert the national independence and freedom of States in the area or prejudice the orderly processes of their national development;
DO HEREBY DECLARE:
FIRST, the establishment of an Association for Regional Cooperation among the countries of South-East Asia to be known as the Association of South-East Asian Nations (ASEAN).
SECOND, that the aims and purposes of the Association shall be:
1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of South-East Asian Nations;
2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter;
3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields;
4. To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres;
5. To collaborate more effectively for the greater utilization of their agriculture and industries, the expansion of their trade, including the study of the problems of international commodity trade, the improvement of their transportation and communications facilities and the raising of the living standards of their peoples;
6. To promote South-East Asian studies;
7. To maintain close and beneficial cooperation with existing international and regional organizations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves.
THIRD, that to carry out these aims and purposes, the following machinery shall be established:
FOURTH, that the Association is open for participation to all States in the South-East Asian Region subscribing to the aforementioned aims, principles and purposes.
FIFTH, that the Association represents the collective will of the nations of South-East Asia to bind themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity.
DONE in Bangkok on the Eighth Day of August in the Year One Thousand Nine Hundred and Sixty-Seven.
For the Republic of Indonesia: Adam Malik
For the republic of Singapore: S. Rajaratham
For Malaysia: Tom Abdul Razak
For the Republic of the Philippines: Marciso Ramos
For the Kingdom of Thailand: Thamat Khoman
Source: Association of Southeast Asian Nations, “Bangkok Declaration,” www.aseansec.org/1212.htm (accessed April 2004).
During the 1960s, the people of Panama became restless over U.S. control of the Panama Canal Zone. Negotiations between the two governments took place, but it was not until 1977 that the Panama Canal Treaty was signed. The agreement provided for an interim period of joint U.S.-Panamanian control over the zone until December 31, 1999, when the United States would relinquish control. An additional treaty was signed in 1979 that guaranteed the neutrality of the canal in times of peace and war.
The United States of America and the Republic of Panama, Acting in the spirit of the Joint Declaration of April 3, 1964, by the Representatives of the Governments of the United States of America and the Republic of Panama, and of the Joint Statement of Principles of February 7, 1974, initialed by the Secretary of State of the United States of America and the Foreign Minister of the Republic of Panama, and Acknowledging the Republic of Panama’s sovereignty over its territory, Have decided to terminate the prior Treaties pertaining to the Panama Canal and to conclude a new Treaty to serve as the basis for a new relationship between them and, accordingly, have agreed upon the following:
1. Upon its entry into force, this Treaty terminates and supersedes:
2. In accordance with the terms of this Treaty and related agreements, the Republic of Panama, as territorial sovereign, grants to the United States of America, for the duration of this Treaty, the rights necessary to regulate the transit of ships through the Panama Canal, and to manage, operate, maintain, improve, protect and defend the Canal. The Republic of Panama guarantees to the United States of America the peaceful use of the land and water areas which it has been granted the rights to use for such purposes pursuant to this Treaty and related agreements.
3. The Republic of Panama shall participate increasingly in the management and protection and defense of the Canal, as provided in this Treaty.
4. In view of the special relationship established by this Treaty, the United States of America and the Republic of Panama shall cooperate to assure the uninterrupted and efficient operation of the Panama Canal.
1. The United States of America and the Republic of Panama commit themselves to protect and defend the Panama Canal. Each Party shall act, in accordance with its constitutional processes, to meet the danger resulting from an armed attack or other actions which threaten the security of the Panama Canal or of ships transiting it.
2. For the duration of this Treaty, the United States of America shall have primary responsibility to protect and defend the Canal. The rights of the United States of America to station, train, and move military forces within the Republic of Panama are described in the Agreement in Implementation of this Article, signed this date. The use of areas and installations and the legal status of the armed forces of the United States of America in the Republic of Panama shall be governed by the aforesaid Agreement.
3. In order to facilitate the participation and cooperation of the armed forces of both Parties in the protection and defense of the Canal, the United States of America and the Republic of Panama shall establish a Combined Board comprised of an equal number of senior military representatives of each Party. These representatives shall be charged by their respective governments with consulting and cooperating on all matters pertaining to the protection and defense of the Canal, and with planning for actions to be taken in concert for that purpose. Such combined protection and defense arrangements shall not inhibit the identity or lines of authority of the armed forces of the United States of America or the Republic of Panama. The Combined Board shall provide for coordination and cooperation concerning such matters as:
4. The Combined Board shall, at five-year intervals throughout the duration of this Treaty, review the resources being made available by the two Parties for the protection and defense of the Canal. Also, the Combined Board shall make appropriate recommendations to the two Governments respecting projected requirements, the efficient utilization of available resources of the two Parties, and other matters of mutual interest with respect to the protection and defense of the Canal.
5. To the extent possible consistent with its primary responsibility for the protection and defense of the Panama Canal, the United States of America will endeavor to maintain its armed forces in the Republic of Panama in normal times at a level not in excess of that of the armed forces of the United States of America in the territory of the former Canal Zone immediately prior to the entry into force of this Treaty. …
1. The Republic of Panama shall reassume plenary jurisdiction over the former Canal Zone upon entry into force of this Treaty and in accordance with its terms. In order to provide for an orderly transition to the full application of the jurisdictional arrangements established by this Treaty and related agreements, the provisions of this Article shall become applicable upon the date this Treaty enters into force, and shall remain in effect for thirty calendar months. The authority granted in this Article to the United States of America for this transition period shall supplement, and is not intended to limit, the full application and effect of the rights and authority granted to the United States of America elsewhere in this Treaty and in related agreements.
2. During this transition period, the criminal and civil laws of the United States of America shall apply concurrently with those of the Republic of Panama in certain of the areas and installations made available for the use of the United States of America pursuant to this Treaty, in accordance with the following provisions:
3. The United States of America shall retain the right to exercise jurisdiction in criminal cases relating to offenses committed prior to the entry into force of this Treaty in violation of the laws applicable in the former Canal Zone.
4. For the transition period, the United States of America shall retain police authority and maintain a police force in the aforementioned areas and installations. In such areas, the police authorities of the United States of America may take into custody any person not subject to their primary jurisdiction if such person is believed to have committed or to be committing an offense against applicable laws or regulations, and shall promptly transfer custody to the police authorities of the Republic of Panama. The United States of America and the Republic of Panama shall establish joint police patrols in agreed areas. Any arrests conducted by a joint patrol shall be the responsibility of the patrol member or members representing the Party having primary jurisdiction over the person or persons arrested.
5. The courts of the United States of America and related personnel, functioning in the former Canal Zone immediately prior to the entry into force of this Treaty, may continue to function during the transition period for the judicial enforcement of the jurisdiction to be exercised by the United States of America in accordance with this Article.
6. In civil cases, the civilian courts of the United States of America in the Republic of Panama shall have no jurisdiction over new cases of a private civil nature, but shall retain full jurisdiction during the transition period to dispose of any civil cases, including admiralty cases, already instituted and pending before the courts prior to the entry into force of this Treaty.
7. The laws, regulations, and administrative authority of the United States of America applicable in the former Canal Zone immediately prior to the entry into force of this Treaty shall, to the extent not inconsistent with this Treaty and related agreements, continue in force for the purpose of the exercise by the United States of America of law enforcement and judicial jurisdiction only during the transition period. The United States of America may amend, repeal or otherwise change such laws, regulations and administrative authority. The two Parties shall consult concerning procedural and substantive matters relative to the implementation of this Article, including the disposition of cases pending at the end of the transition period and, in this respect, may enter into appropriate agreements by an exchange of notes or other instrument.
8. During this transition period, the United States of America may continue to incarcerate individuals in the areas and installations made available for the use of the United States of America by the Republic of Panama pursuant to this Treaty and related agreements, or to transfer them to penal facilities in the United States of America to serve their sentences.
1. The United States of America and the Republic of Panama recognize that a sea-level canal may be important for international navigation in the future. Consequently, during the duration of this Treaty, both Parties commit themselves to study jointly the feasibility of a sea-level canal in the Republic of Panama, and in the event they determine that such a waterway is necessary, they shall negotiate terms, agreeable to both Parties, for its construction.
2. The United States of America and the Republic of Panama agree on the following:
3. The Republic of Panama grants to the United States of America the right to add a third lane of locks to the existing Panama Canal. This right may be exercised at any time during the duration of this Treaty, provided that the United States of America has delivered to the Republic of Panama copies of the plans for such construction.
4. In the event the United States of America exercises the right granted in paragraph 3 above, it may use for that purpose, in addition to the areas otherwise made available to the United States of America pursuant to this Treaty, such other areas as the two Parties may agree upon. The terms and conditions applicable to Canal operating areas made available by the Republic of Panama for the use of the United States of America pursuant to Article III of this Treaty shall apply in a similar manner to such additional areas.
5. In the construction of the aforesaid works, the United States of America shall not use nuclear excavation techniques without the previous consent of the Republic of Panama.
1. Upon termination of this Treaty, the Republic of Panama shall assume total responsibility for the management, operation, and maintenance of the Panama Canal, which shall be turned over in operating condition and free of liens and debts, except as the two Parties may otherwise agree.
2. The United States of America transfers, without charge, to the Republic of Panama all right, title and interest the United States of America may have with respect to all real property, including non-removable improvements thereon, as set forth below:
3. The Republic of Panama agrees to hold the United States of America harmless with respect to any claims which may be made by third parties relating to rights, title and interest in such property.
4. The Republic of Panama shall receive, in addition, from the Panama Canal Commission a just and equitable return on the national resources which it has dedicated to the efficient management, operation, maintenance, protection and defense of the Panama Canal, in accordance with the following:
In the event that any question should arise between the Parties concerning the interpretation of this Treaty or related agreements, they shall make every effort to resolve the matter through consultation in the appropriate committees established pursuant to this Treaty and related agreements, or, if appropriate, through diplomatic channels. In the event the Parties are unable to resolve a particular matter through such means, they may, in appropriate cases, agree to submit the matter to conciliation, mediation, arbitration, or such other procedure for the peaceful settlement of the dispute as they may mutually deem appropriate. DONE at Washington, this 7th day of September, 1977 in duplicate, in the English and Spanish languages, both texts being equally authentic. …
Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal
The Republic of Panama declares the neutrality of the Canal in order that both in time of peace and in time of war it shall remain secure and open to peaceful transit by the vessels of all nations on terms of entire equality, so that there will be no discrimination against any nation, or its citizens or subjects, concerning the conditions or charges of transit, or for any other reason, and so that the Canal, and therefore the Isthmus of Panama, shall not be the target of reprisals in any armed conflict between other nations of the world. The foregoing shall be subject to the following requirements:
1. For purposes of the security, efficiency and proper maintenance of the Canal the following rules shall apply:
2. For the purposes of this Treaty, the terms “Canal,” “vessel of war,” “auxiliary vessel,” “internal operation,” “armament” and “inspection” shall have the meanings assigned them in Annex A to this Treaty.
The United States of America and the Republic of Panama agree to maintain the regime of neutrality established in this Treaty, which shall be maintained in order that the Canal shall remain permanently neutral, notwithstanding the termination of any other treaties entered into by the two Contracting Parties.
Source: “Panama Canal Treaty of 1977,” www.state.gov/p/wha/rlnks/11936.htm (accessed March 2004).
President Ronald Reagan gave the following speech before the British House of Commons on June 8, 1982. Reagan referred to the Soviet Union as the “Evil Empire” that the United States was pitted against. The real battle was between the capitalistic and communistic forces of the post–World War II forces. Reagan’s determination to defeat the Soviet Union and communism was achieved first with the signing of the INF Treaty in 1987 and then with the fall of the Berlin Wall in 1989. Since then communism has failed in its attempt to control the economies of the world.
We’re approaching the end of a bloody century plagued by a terrible political invention—totalitarianism. Optimism comes less easily today, not because democracy is less vigorous, but because democracy’s enemies have refined their instruments of repression. Yet optimism is in order because day by day democracy is proving itself to be a not at all fragile flower. From Stettin on the Baltic to Varna on the Black Sea, the regimes planted by totalitarianism have had more than thirty years to establish their legitimacy. But none—not one regime— has yet been able to risk free elections. Regimes planted by bayonets do not take root.
The strength of the Solidarity movement in Poland demonstrates the truth told in an underground joke in the Soviet Union. It is that the Soviet Union would remain a one-party nation even if an opposition party were permitted because everyone would join the opposition party. …
Historians looking back at our time will note the consistent restraint and peaceful intentions of the West. They will note that it was the democracies who refused to use the threat of their nuclear monopoly in the forties and early fifties for territorial or imperial gain. Had that nuclear monopoly been in the hands of the Com munist world, the map of Europe—indeed, the world— would look very different today. And certainly they will note it was not the democracies that invaded Afghanistan or suppressed Polish Solidarity or used chemical and toxin warfare in Afghanistan and Southeast Asia.
If history teaches anything, it teaches self-delusion in the face of unpleasant facts is folly. We see around us today the marks of our terrible dilemma—predictions of doomsday, antinuclear demonstrations, an arms race in which the West must, for its own protection, be an unwilling participant. At the same time we see totalitarian forces in the world who seek subversion and conflict around the globe to further their barbarous assault on the human spirit. What, then, is our course? Must civilization perish in a hail of fiery atoms? Must freedom wither in a quiet, deadening accommodation with totalitarian evil?
Sir Winston Churchill refused to accept the inevitability of war or even that it was imminent. He said, “I do not believe that Soviet Russia desires war. What they desire is the fruits of war and the indefinite expansion of their power and doctrines. But what we have to consider here today while time remains is the permanent prevention of war and the establishment of conditions of freedom and democracy as rapidly as possible in all countries.”
Well, this is precisely our mission today: to preserve freedom as well as peace. It may not be easy to see; but I believe we live now at a turning point.
In an ironic sense Karl Marx was right. We are witnessing today a great revolutionary crisis, a crisis where the demands of the economic order are conflicting directly with those of the political order. But the crisis is happening not in the free, non-Marxist West but in the home of Marxism-Leninism, the Soviet Union. It is the Soviet Union that runs against the tide of history by denying human freedom and human dignity to its citizens. It also is in deep economic difficulty. The rate of growth in the national product has been steadily declining since the fifties and is less than half of what it was then.
The dimensions of this failure are astounding: a country which employs one-fifth of its population in agriculture is unable to feed its own people. Were it not for the private sector, the tiny private sector tolerated in Soviet agriculture, the country might be on the brink of famine. These private plots occupy a bare 3 percent of the arable land but account for nearly one-quarter of Soviet farm output and nearly one-third of meat products and vegetables. Overcentralized, with little or no incentives, year after year the Soviet system pours its best resources into the making of instruments of destruction. The constant shrinkage of economic growth combined with the growth of military production is putting a heavy strain on the Soviet people. What we see here is a political structure that no longer corresponds to its economic base, a society where productive forces are hampered by political ones.
The decay of the Soviet experiment should come as no surprise to us. Wherever the comparisons have been made between free and closed societies—West Germany and East Germany, Austria and Czechoslovakia, Malaysia and Vietnam—it is the democratic countries that are prosperous and responsive to the needs of their people. And one of the simple but overwhelming facts of our time is this: of all the millions of refugees we’ve seen in the modern world, their flight is always away from, not toward the Communist world. Today on the NATO line, our military forces face east to prevent a possible invasion. On the other side of the line, the Soviet forces also face east to prevent their people from leaving.
The hard evidence of totalitarian rule has caused in mankind an uprising of the intellect and will. Whether it is the growth of the new schools of economics in America or England or the appearance of the so-called new philosophers in France, there is one unifying thread running through the intellectual work of these groups—rejection of the arbitrary power of the state, the refusal to subordinate the rights of the individual to the superstate, the realization that collectivism stifles all the best human impulses. …
Chairman Brezhnev repeatedly has stressed that the competition of ideas and systems must continue and that this is entirely consistent with relaxation of tensions and peace.
Well, we ask only that these systems begin by living up to their own constitutions, abiding by their own laws, and complying with the international obligations they have undertaken. We ask only for a process, a direction, a basic code of decency, not for an instant transformation.
We cannot ignore the fact that even without our encouragement there has been and will continue to be repeated explosion against repression and dictatorships. The Soviet Union itself is not immune to this reality. Any system is inherently unstable that has no peaceful means to legitimize its leaders. In such cases, the very repressiveness of the state ultimately drives people to resist it, if necessary, by force.
While we must be cautious about forcing the pace of change, we must not hesitate to declare our ultimate objectives and to take concrete actions to move toward them. We must be staunch in our conviction that freedom is not the sole prerogative of a lucky few but the inalienable and universal right of all human beings. So states the United Nations Universal Declaration of Human Rights, which, among other things, guarantees free elections.
The objective I propose is quite simple to state: to foster the infrastructure of democracy, the system of a free press, unions, political parties, universities, which allows a people to choose their own way to develop their own culture, to reconcile their own differences through peaceful means.
This is not cultural imperialism; it is providing the means for genuine self-determination and protection for diversity. Democracy already flourishes in countries with very different cultures and historical experiences. It would be cultural condescension, or worse, to say that any people prefer dictatorship to democracy. Who would voluntarily choose not to have the right to vote, decide to purchase government propaganda handouts instead of independent newspapers, prefer government to worker-controlled unions, opt for land to be owned by the state instead of those who till it, want government repression of religious liberty, a single political party instead of a free choice, a rigid cultural orthodoxy instead of democratic tolerance and diversity.
Since 1917 the Soviet Union has given covert political training and assistance to Marxist-Leninists in many countries. Of course, it also has promoted the use of violence and subversion by these same forces. Over the past several decades, West European and other social democrats, Christian democrats, and leaders have offered open assistance to fraternal, political, and social institutions to bring about peaceful and democratic progress. Appropriately, for a vigorous new democracy, the Federal Republic of Germany’s political foundations have become a major force in this effort.
We in America now intend to take additional steps, as many of our allies have already done, toward realizing this same goal. The chairmen and other leaders of the national Republican and Democratic party organizations are initiating a study with the bipartisan American Political Foundation to determine how the United States can best contribute as a nation to the global campaign for democracy now gathering force. They will have the cooperation of congressional leaders of both parties, along with representatives of business, labor, and other major institutions in our society. I look forward to receiving their recommendations and to working with these institutions and the Congress in the common task of strengthening democracy throughout the world.
It is time that we committed ourselves as a nation—in both the public and private sectors—to assisting democratic development. …
What I am describing now is a plan and a hope for the long term—the march of freedom and democracy which will leave Marxism-Leninism on the ash heap of history as it has left other tyrannies which stifle the freedom and muzzle the self-expression of the people. And that’s why we must continue our efforts to strengthen NATO even as we move forward with our zero-option initiative in the negotiations on intermediate-range forces and our proposal for a one-third reduction in strategic ballistic missile warheads.
Our military strength is a prerequisite to peace, but let it be clear we maintain this strength in the hope it will never be used, for the ultimate determinant in the struggle that’s now going on in the world will not be bombs and rockets but a test of wills and ideas, a trial of spiritual resolve, the values we hold, the beliefs we cherish, the ideals to which we are dedicated.
The British people know that, given strong leadership, time, and a little bit of hope, the forces of good ultimately rally and triumph over evil. Here among you is the cradle of self-government, the Mother of Parliaments. Here is the enduring greatness of the British contribution to mankind, the great civilized ideas: individual liberty, representative government, and the rule of law under God.
I’ve often wondered about the shyness of some of us in the West about standing for these ideals that have done so much to ease the plight of man and the hardships of our imperfect world. This reluctance to use those vast resources at our command reminds me of the elderly lady whose home was bombed in the blitz. As the rescuers moved about, they found a bottle of brandy she’d stored behind the staircase, which was all that was left standing. And since she was barely conscious, one of the workers pulled the cork to give her a taste of it. She came around immediately and said, “Here now—there now, put it back. That’s for emergencies.”
Well, the emergency is upon us. Let us be shy no longer. Let us go to our strength. Let us offer hope. Let us tell the world that a new age is not only possible but probable.
During the dark days of the Second World War, when this island was incandescent with courage, Winston
Churchill exclaimed about Britain’s adversaries, “What kind of people do they think we are?” Well, Britain’s adversaries found out what extraordinary people the British are. But all the democracies paid a terrible price for allowing the dictators to underestimate us. We dare not make that mistake again. So, let us ask ourselves, “What kind of people do we think we are?” And let us answer, “Free people, worthy of freedom and determined not only to remain so but to help others gain their freedom as well.”
Sir Winston led his people to great victory in war and then lost an election just as the fruits of victory were about to be enjoyed. But he left office honorably and, as it turned out, temporarily, knowing that the liberty of his people was more important than the fate of any single leader. History recalls his greatness in ways no dictator will ever know. And he left us a message of hope for the future, as timely now as when he first uttered it, as opposition leader in the Commons nearly twenty-seven years ago, when he said, “When we look back on all the perils through which we have passed and at the mighty foes that we have laid low and all the dark and deadly designs that we have frustrated, why should we fear for our future? We have,” he said, “come safely through the worst.”
Well, the task I’ve set forth will long outlive our own generation. But together, we too have come through the worst. Let us now begin a major effort to secure the best—a crusade for freedom that will engage the faith and fortitude of the next generation. For the sake of peace and justice, let us move toward a world in which all people are at last free to determine their own destiny.
Source: Ronald Reagan, Address to Members of the British Parliament, June 8, 1982. Reagan Presidential Library electronic archives.
President Gorge H.W. Bush proposed the Enterprise for the Americas Initiative in the East Room of the White House on June 27, 1990. The goal of the initiative was to strengthen the economic ties between the United States and Latin America in response to the development of the European Economic Community. Negotiations led ultimately to the signing of the North American Free Trade Agreement between the United States, Canada, and Mexico in 1992.
Thank you all very much for coming to the White House, and it is my pleasure to welcome so many distinguished guests with such strong interests in the vital Latin American and Caribbean region. Let me recognize the many members of the diplomatic corps that are here and extend to you a warm welcome—from Latin America, particularly, and the Caribbean, Europe, Japan. Members of our Cabinet—Nick Brady and Secretary Baker, Carla Hills, Secretary Mosbacher—delighted you’re here. Chairman of the Council of Economic Advisers, Mike Boskin, is here. Bill Webster, welcome. And of course, we’re delighted to see Alan Greenspan, Chairman of the Federal Reserve Board, here and then an old friend, Barber Conable, of the World Bank, and Richard Erb, from the IMF. And Ricky Iglesias, an old friend of the Bushes, and we welcome him, of the IDB, and so many leading lights in the business and financial communities. To all of you, then, a welcome.
In the past 12 months, every one of us, from the man in the White House to the man on the street, has been fascinated by the tremendous changes, the positive changes, taking place around the world. Freedom has made great gains not just in Eastern Europe but right here in the Americas; and we’ve seen a resurgence of democratic rule, a rising tide of democracy, never before witnessed in the history of this beloved hemisphere. And with one exception, Cuba, the transition to democracy is moving towards completion, and we can all sense the excitement that the day is not far off when Cuba joins the ranks of world democracies and makes the Americas fully free.
With one exception, that’s the case. But the political transformation sweeping the rest of Latin America and the Caribbean has its parallel in the economic sphere. Throughout the region, nations are turning away from the statist economic policies that stifle growth and are now looking to the power of the free market to help this hemisphere realize its untapped potential for progress. A new leadership has emerged, backed by the strength of the people’s mandate, leadership that understands that the future of Latin America lies with free government and free markets. In the words of Colombia’s courageous leader, Virgilio Barco—President Barco: “The long-running match between Karl Marx and Adam Smith is finally coming to an end” with the “recognition that open economies with access to markets can lead to social progress.”
For the United States, these are welcome developments, developments that we’re eager to support. But we recognize that each nation in the region must make its own choices. There is no blueprint, no one-size-fits-all approach, to reform. The primary responsibility for achieving economic growth lies with each individual country. Our challenge in this country is to respond in ways that support the positive changes now taking place in the hemisphere. We must forge a genuine partnership for free-market reform.
Back in February, I met in Cartagena [Colombia] with heads of the three Andean nations, and I came away from that meeting convinced that the U.S. must review its approach not only to that region but to Latin America and the Caribbean as a whole. And I asked Treasury Secretary Brady to lead a review of U.S. economic policy towards this vital region, to make a fresh assessment, if you will, of the problems and opportunities we’ll encounter in the decade ahead. And that review is now complete, and the results are in, and the need for new economic initiatives is clear and compelling.
All signs point to the fact that we must shift the focus of our economic interaction towards a new economic partnership because prosperity in our hemisphere depends on trade, not aid. And I’ve asked you here today to share with you some of the ideas, some of the ways we can build a broad-based partnership for the nineties—to announce the new Enterprise for the Americas Initiative that creates incentives to reinforce Latin America’s growing recognition that free-market reform is the key to sustained growth and political stability.
The three pillars of our new initiative are trade, investment, and debt. To expand trade, I propose that we begin the process of creating a hemispherewide free trade zone; to increase investment, that we adopt measures to create a new flow of capital into the region; and to further ease the burden of debt, a new approach to debt in the region with important benefits for our environment.
Let’s begin with trade. In the 1980’s, trade within our hemisphere trailed the overall pace of growth in world trade. One principal reason for that: overrestrictive trade barriers that wall off the economies of our region from each other and from the United States at great cost to us all. These barriers are the legacy of the misguided notion that a nation’s economy needs protection in order to thrive. The great economic lesson of this century is that protectionism still stifles progress and free markets breed prosperity. To this end, we’ve formulated a three-point trade plan to encourage the emerging trends toward free-market reform that are now gathering forces in the Americas.
First, as we enter the final months of the current Uruguay round of the world trade talks, I pledge close cooperation with the nations of this hemisphere. The successful completion of the Uruguay round remains the most effective way of promoting long-term trade growth in Latin America and the increased integration of Latin nations into the overall global trading system. Our aim in the Uruguay round is free and fair trade, and through these talks we are seeking to strengthen existing trade rules and to expand them to areas that do not now have agreed rules of fair play. And to show our commitment to our neighbors in Latin America and the Caribbean, we will seek deeper tariff reductions in this round on products of special interest to them.
Second, we must build on the trend we see toward free markets and make our ultimate aim a free trade system that links all of the Americas: North, Central, and South. And we look forward to the day when not only are the Americas the first fully free, democratic hemisphere but when all are equal partners in a free trade zone stretching from the port of Anchorage to the Tierra del Fuego.
I’m announcing today that the U.S. stands ready to enter into free trade agreements with other markets in Latin America and the Caribbean, particularly with groups of countries that have associated for purposes of trade liberalization. And the first step in this process is the now-announced free trade agreement with Mexico. We must all recognize that we won’t bring down barriers to free trade overnight; changes so far-reaching may take years of preparation and tough negotiations. But the payoff in terms of prosperity is worth every effort, and now is the time to make a comprehensive free trade zone for the Americas our long-term goal.
And third, I understand that some countries aren’t yet ready to take that dramatic step to a full free trade agreement. And that’s why we’re prepared to negotiate with any interested nation in the region bilateral framework agreements to open markets and develop closer trade ties. Such agreements already exist with Mexico and Bolivia. Framework agreements will enable us to move forward on a step-by-step basis to eliminate counterproductive barriers to trade and towards our ultimate goal of free trade. And that’s a prescription for greater growth and a higher standard of living in Latin America and, right here at home, new markets for American products and more jobs for American workers.
Promoting free trade is just one of three key elements in our new Enterprise for the Americas Initiative. And our second pillar is increased investment.
The competition for capital today is fierce, and the key to increased investment is to be competitive, to turn around the conditions that have discouraged both foreign and domestic investment—reduce the regulatory burden, clear away the thicket of bureaucratic barriers that choke off Latin America’s aspiring entrepreneurs.
In one large Latin city, for instance, it takes almost 300 days to cut through the red tape to open a small garment shop. In another country, the average overseas caller has to make five phone calls to get through, and the wait for a new telephone line can be as long as 5 years. And that’s got to change.
Investment reform is essential to make it easier to start new business ventures and make it possible for international investors to participate and profit in Latin
American markets. In order to create incentives for investment reform, the United States is prepared to take the following steps:
First, the United States will work with the Inter-American Development Bank to create a new lending program for nations that take significant steps to remove impediments to international investment. The World Bank could also contribute to this effort.
And second, we propose the creation of a new investment fund for the Americas. This fund, administered by the IDB, could provide up to $300 million a year in grants in response to market-oriented investment reforms in progress in privatization. The U.S. intends to contribute $100 million to the fund, and we will seek matching contributions from Europe and Japan.
But in order to create an attractive climate for new investment, we must build on our successful efforts to ease the debt burden. That’s the third pillar of this new Enterprise for the Americas Initiative.
Many nations have already undertaken painful economic reforms for the sake of future growth, but the investment climate remains clouded, weighted down by the heavy debt burden. Under the Brady plan, we are making significant progress. The agreements reached with Mexico and Costa Rica and Venezuela are already having a positive impact on investment in those countries. Mexico, to take just one example, has already seen a reversal of the destructive capital flight that drained so many Latin American nations of precious investment resources. That’s critical. If we restore confidence, capital will follow.
As one means of expanding our debt strategy, we propose that the IDB add its efforts and resources to those of the International Monetary Fund and the World Bank to support commercial bank debt reduction in Latin America and the Caribbean, and as in the case of World Bank and IMF, IDB funds should be directly linked to economic reform.
While the Brady plan has helped nations reduce commercial bank debt, for nations with high levels of official debt—debt owed to governments rather than private financial institutions—the burden remains heavy. And today, across Latin America, official debt owed to the U.S. Government amounts to nearly $12 billion, with $7 billion of that amount in concessional loans. And in many cases, the heaviest official debt burdens fall on some of the region’s smallest nations, countries like Honduras and El Salvador and Jamaica.
That’s a problem we must address today. As the key component in addressing the region’s debt problem, I am proposing a major new initiative to reduce Latin America and the Caribbean’s official debt to the United States for countries that adopt strong economic and investment reform programs with the support of international institutions. Our debt reduction program will deal separately with concessional and commercial types of loans. On the concessional debt, loans made from AID or Food for Peace accounts, we will propose substantial debt reductions for the most heavily burdened countries. And we will also sell a portion of outstanding commercial loans to facilitate these debt-for-equity and debt-for-nature swaps in countries that have set up such programs. These actions will be taken on a case-by-case basis.
One measure of prosperity and the most important long-term investment any nation can make is environmental well-being. As part of our Enterprise for the Americas Initiative, we will take action to strengthen environmental policies in this hemisphere. Debt-for-nature swaps are one example, patterned after the innovative agreements reached by some Latin American nations and their commercial creditors. We will also call for the creation of environmental trusts, where interest payments owed on restructured U.S. debt will be paid in local currency and set aside to fund environmental projects in the debtor countries.
These innovative agreements offer a powerful new tool for preserving the natural wonders of this hemisphere that we share. From the vistas of the un-spoiled Arctic to the beauties of the barrier reef off Belize to the rich rain forests of the Amazon, we must protect this living legacy that we hold in trust. For an increasing number of our neighbors, the need for free-market reform is clear. These nations need economic breathing room to enact bold reforms, and this official debt initiative is one answer, a way out from under the crushing burden of debt that slows the process of reform.
I know there is some concern that the revolutionary changes we’ve witnessed this past year in Eastern Europe will shift our attention away from Latin America; but I want to assure all of you here today, as I’ve assured many democratic leaders in Central and South America and the Caribbean and Mexico, the United States will not lose sight of the tremendous challenges and opportunities right here in our own hemisphere. And indeed, as we talk with the leaders of the G-24 about the emerging democracies in Europe—I’ve been talking to them also about their supporting democracy and economic freedom in Central America. Our aim is a closer partnership between the Americas and our friends in Europe and in Asia.
Two years from now, our hemisphere will celebrate the 500th anniversary of an epic event: Columbus’ discovery of America, our New World. And we trace our origins, our shared history, to the time of Columbus’ voyage and the courageous quest for the advancement of man. Today the bonds of our common heritage are strengthened by the love of freedom and a common commitment to democracy. Our challenge, the challenge in this new era of the Americas, is to secure this shared dream and all its fruits for all the people of the Americas—North, Central, and South.
The comprehensive plan that I’ve just outlined is proof positive the United States is serious about forging a new partnership with our Latin American and Caribbean neighbors. We’re ready to play a constructive role at this critical time to make ours the first fully free hemisphere in all of history. Thank you all for coming, and God bless the peoples of the Americas. Thank you very, very much, indeed.
Source: “Remarks Announcing the Enterprise for the Americas Initiative June 27, 1990,” http://bushlibrary.tamu.edu/papers/1990/90062702.html (accessed September 2002).
Established in 1995, the World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade (GATT). The 145 members of the WTO, which is headquartered in Geneva, negotiate to reduce tariffs and nontariff issues such as subsidies with the final outcome applying to all members. The organization mediates trade disputes that arise between its members and has the authority to assess penalties for violations of the agreements. The organization, unlike GATT, is a permanent body.
The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development,
Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development,
Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations,
Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalization efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the objectives underlying this multilateral trading system,
Agree as follows:
Article I Establishment of the Organization
The World Trade Organization (hereinafter referred to as “the WTO”) is hereby established.
Article II Scope of the WTO
1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters related to the agreements and associated legal instruments included in the Annexes to this Agreement.
2. The agreements and associated legal instruments included in Annexes 1, 2 and 3 (hereinafter referred to as “Multilateral Trade Agreements”) are integral parts of this Agreement, binding on all Members.
3. The agreements and associated legal instruments included in Annex 4 (hereinafter referred to as “Plurilateral Trade Agreements”) are also part of this Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create either obligations or rights for Members that have not accepted them.
4. The General Agreement on Tariffs and Trade 1994 as specified in Annex 1A (hereinafter referred to as “GATT 1994”) is legally distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act Adopted at the Conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified (hereinafter referred to as “GATT 1947”).
Article III Functions of the WTO
1. The WTO shall facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration and operation of the Plurilateral Trade Agreements.
2. The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement. The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Minis-terial Conference.
3. The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereinafter referred to as the “Dispute Settlement Understanding” or “DSU”) in Annex 2 to this Agreement.
4. The WTO shall administer the Trade Policy Review Mechanism (hereinafter referred to as the “TPRM”) provided for in Annex 3 to this Agreement.
5. With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies.
Article IV Structure of the WTO
1. There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement.
2. There shall be a General Council composed of representatives of all the Members, which shall meet as appropriate. In the intervals between meetings of the Ministerial Conference, its functions shall be conducted by the General Council. The General Council shall also carry out the functions assigned to it by this Agreement. The General Council shall establish its rules of procedure and approve the rules of procedure for the Committees provided for in paragraph 7.
3. The General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding. The Dispute Settlement Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities.
4. The General Council shall convene as appropriate to discharge the responsibilities of the Trade Policy Review Body provided for in the TPRM. The Trade Policy Review Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfilment of those responsibilities.
5. There shall be a Council for Trade in Goods, a Council for Trade in Services and a Council for Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the “Council for TRIPS”), which shall operate under the general guidance of the General Council. The Council for Trade in Goods shall oversee the functioning of the Multilateral Trade Agreements in Annex 1A. The Council for Trade in Services shall oversee the functioning of the General Agreement on Trade in Services (hereinafter referred to as “GATS”). The Council for TRIPS shall oversee the functioning of the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the “Agreement on TRIPS”). These Councils shall carry out the functions assigned to them by their respective agreements and by the General Council. They shall establish their respective rules of procedure subject to the approval of the General Council. Membership in these Councils shall be open to representatives of all Members. These Councils shall meet as necessary to carry out their functions.
6. The Council for Trade in Goods, the Council for Trade in Services and the Council for TRIPS shall establish subsidiary bodies as required. These subsidiary bodies shall establish their respective rules of procedure subject to the approval of their respective Councils.
7. The Ministerial Conference shall establish a Committee on Trade and Development, a Committee on Balance-of-Payments Restrictions and a Committee on Budget, Finance and Administration, which shall carry out the functions assigned to them by this Agreement and by the Multilateral Trade Agreements, and any additional functions assigned to them by the General Council, and may establish such additional Committees with such functions as it may deem appropriate. As part of its functions, the Committee on Trade and Development shall periodically review the special provisions in the Multilateral Trade Agreements in favour of the least-developed country Members and report to the General Council for appropriate action. Membership in these Committees shall be open to representatives of all Members.
8. The bodies provided for under the Plurilateral Trade Agreements shall carry out the functions assigned to them under those Agreements and shall operate within the institutional framework of the WTO. These bodies shall keep the General Council informed of their activities on a regular basis.
Article V Relations with Other Organizations
1. The General Council shall make appropriate arrangements for effective cooperation with other intergovernmental organizations that have responsibilities related to those of the WTO.
2. The General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO.
Article VI The Secretariat
1. There shall be a Secretariat of the WTO (hereinafter referred to as “the Secretariat”) headed by a Director-General.
2. The Ministerial Conference shall appoint the Director-General and adopt regulations setting out the powers, duties, conditions of service and term of office of the Director-General.
3. The Director-General shall appoint the members of the staff of the Secretariat and determine their duties and conditions of service in accordance with regulations adopted by the Ministerial Conference.
4. The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.
Article VII Budget and Contributions
1. The Director-General shall present to the Committee on Budget, Finance and Administration the annual budget estimate and financial statement of the WTO. The Committee on Budget, Finance and Administration shall review the annual budget estimate and the financial statement presented by the Director-General and make recommendations thereon to the General Council. The annual budget estimate shall be subject to approval by the General Council.
2. The Committee on Budget, Finance and Administration shall propose to the General Council financial regulations which shall include provisions setting out:
The financial regulations shall be based, as far as practicable, on the regulations and practices of GATT 1947.
3. The General Council shall adopt the financial regulations and the annual budget estimate by a two-thirds majority comprising more than half of the Members of the WTO.
4. Each Member shall promptly contribute to the WTO its share in the expenses of the WTO in accordance with the financial regulations adopted by the General Council.
Article VIII Status of the WTO
1. The WTO shall have legal personality, and shall be accorded by each of its Members such legal capacity as may be necessary for the exercise of its functions. 2. The WTO shall be accorded by each of its Members such privileges and immunities as are necessary for the exercise of its functions.
3. The officials of the WTO and the representatives of the Members shall similarly be accorded by each of its Members such privileges and immunities as are necessary for the independent exercise of their functions in connection with the WTO.
4. The privileges and immunities to be accorded by a Member to the WTO, its officials, and the representa tives of its Members shall be similar to the privileges and immunities stipulated in the Convention on the Privileges and Immunities of the Specialized Agencies, approved by the General Assembly of the United Nations on 21 November 1947.
5. The WTO may conclude a headquarters agreement.
Article IX Decision-Making
1. The WTO shall continue the practice of decision-making by consensus followed under GATT 1947.
1
Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial Conference and the General Council, each Member of the WTO shall have one vote. Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States
2
which are Members of the WTO. Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement.
3
2. The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of the Multilateral Trade Agreements. In the case of an interpretation of a Multilateral Trade Agreement in Annex 1, they shall exercise their authority on the basis of a recommendation by the Council overseeing the functioning of that Agreement. The decision to adopt an interpretation shall be taken by a three-fourths majority of the Members. This paragraph shall not be used in a manner that would undermine the amendment provisions in Article X.
3. In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for in this paragraph.
4. A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver.
5. Decisions under a Plurilateral Trade Agreement, including any decisions on interpretations and waivers, shall be governed by the provisions of that Agreement.
Article X Amendments
1. Any Member of the WTO may initiate a proposal to amend the provisions of this Agreement or the Multilateral Trade Agreements in Annex 1 by submitting such proposal to the Ministerial Conference. The Councils listed in paragraph 5 of Article IV may also submit to the Ministerial Conference proposals to amend the provisions of the corresponding Multilateral Trade Agreements in Annex 1 the functioning of which they oversee. Unless the Ministerial Conference decides on a longer period, for a period of 90 days after the proposal has been tabled formally at the Ministerial Conference any decision by the Ministerial Conference to submit the proposed amendment to the Members for acceptance shall be taken by consensus. Unless the provisions of paragraphs 2, 5 or 6 apply, that decision shall specify whether the provisions of paragraphs 3 or 4 shall apply. If consensus is reached, the Ministerial Conference shall forthwith submit the proposed amendment to the Members for acceptance. If consensus is not reached at a meeting of the Ministerial Conference within the established period, the Ministerial Conference shall decide by a two-thirds majority of the Members whether to submit the proposed amendment to the Members for acceptance. Except as provided in paragraphs 2, 5 and 6, the provisions of paragraph 3 shall apply to the proposed amendment, unless the Ministerial Conference decides by a three-fourths majority of the Members that the provisions of paragraph 4 shall apply.
2. Amendments to the provisions of this Article and to the provisions of the following Articles shall take effect only upon acceptance by all Members:
Article IX of this Agreement;
Articles I and II of GATT 1994;
Article II:1 of GATS;
Article 4 of the Agreement on TRIPS.
3. Amendments to provisions of this Agreement, or of the Multilateral Trade Agreements in Annexes 1A and 1C, other than those listed in paragraphs 2 and 6, of a nature that would alter the rights and obligations of the Members, shall take effect for the Members that have accepted them upon acceptance by two thirds of the Members and thereafter for each other Member upon acceptance by it. The Ministerial Conference may decide by a three-fourths majority of the Members that any amendment made effective under this paragraph is of such a nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference.
4. Amendments to provisions of this Agreement or of the Multilateral Trade Agreements in Annexes 1A and 1C, other than those listed in paragraphs 2 and 6, of a nature that would not alter the rights and obligations of the Members, shall take effect for all Members upon acceptance by two thirds of the Members.
5. Except as provided in paragraph 2 above, amendments to Parts I, II and III of GATS and the respective annexes shall take effect for the Members that have accepted them upon acceptance by two thirds of the Members and thereafter for each Member upon acceptance by it. The Ministerial Conference may decide by a three-fourths majority of the Members that any amendment made effective under the preceding provision is of such a nature that any Member which has not accepted it within a period specified by the Minis-terial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference. Amendments to Parts IV, V and VI of GATS and the respective annexes shall take effect for all Members upon acceptance by two thirds of the Members.
6. Notwithstanding the other provisions of this Article, amendments to the Agreement on TRIPS meeting the requirements of paragraph 2 of Article 71 thereof may be adopted by the Ministerial Conference without further formal acceptance process.
7. Any Member accepting an amendment to this Agreement or to a Multilateral Trade Agreement in Annex 1 shall deposit an instrument of acceptance with the Director-General of the WTO within the period of acceptance specified by the Ministerial Conference.
8. Any Member of the WTO may initiate a proposal to amend the provisions of the Multilateral Trade Agreements in Annexes 2 and 3 by submitting such proposal to the Ministerial Conference. The decision to approve amendments to the Multilateral Trade Agreement in Annex 2 shall be made by consensus and these amendments shall take effect for all Members upon approval by the Ministerial Conference. Decisions to approve amendments to the Multilateral Trade Agreement in Annex 3 shall take effect for all Members upon approval by the Ministerial Conference.
9. The Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide exclusively by consensus to add that agreement to Annex 4. The Ministerial Conference, upon the request of the Members parties to a Plurilateral Trade Agreement, may decide to delete that Agreement from Annex 4.
10. Amendments to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.
Article XI Original Membership
1. The contracting parties to GATT 1947 as of the date of entry into force of this Agreement, and the European Communities, which accept this Agreement and the Multilateral Trade Agreements and for which Schedules of Concessions and Commitments are annexed to GATT 1994 and for which Schedules of Specific Commitments are annexed to GATS shall become original Members of the WTO.
2. The least-developed countries recognized as such by the United Nations will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.
Article XII Accession
1. Any State or separate customs territory possessing full autonomy in the conduct of its external commer cial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the Multilateral Trade Agreements annexed thereto.
2. Decisions on accession shall be taken by the Ministerial Conference. The Ministerial Conference shall approve the agreement on the terms of accession by a two-thirds majority of the Members of the WTO.
3. Accession to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.
Article XIII Non-Application of Multilateral Trade Agreements between Particular Members
1. This Agreement and the Multilateral Trade Agreements in Annexes 1 and 2 shall not apply as between any Member and any other Member if either of the Members, at the time either becomes a Member, does not consent to such application.
2. Paragraph 1 may be invoked between original Members of the WTO which were contracting parties to GATT 1947 only where Article XXXV of that Agreement had been invoked earlier and was effective as between those contracting parties at the time of entry into force for them of this Agreement.
3. Paragraph 1 shall apply between a Member and another Member which has acceded under Article XII only if the Member not consenting to the application has so notified the Ministerial Conference before the approval of the agreement on the terms of accession by the Ministerial Conference.
4. The Ministerial Conference may review the operation of this Article in particular cases at the request of any Member and make appropriate recommendations.
5. Non-application of a Plurilateral Trade Agreement between parties to that Agreement shall be governed by the provisions of that Agreement.
Article XIV Acceptance, Entry into Force and Deposit
1. This Agreement shall be open for acceptance, by signature or otherwise, by contracting parties to GATT 1947, and the European Communities, which are eligible to become original Members of the WTO in accordance with Article XI of this Agreement. Such acceptance shall apply to this Agreement and the Multilateral Trade Agreements annexed hereto. This Agreement and the Multilateral Trade Agreements annexed hereto shall enter into force on the date determined by Ministers in accordance with paragraph 3 of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations and shall remain open for acceptance for a period of two years following that date unless the Ministers decide otherwise. An acceptance following the entry into force of this Agreement shall enter into force on the 30th day following the date of such acceptance.
2. A Member which accepts this Agreement after its entry into force shall implement those concessions and obligations in the Multilateral Trade Agreements that are to be implemented over a period of time starting with the entry into force of this Agreement as if it had accepted this Agreement on the date of its entry into force.
3. Until the entry into force of this Agreement, the text of this Agreement and the Multilateral Trade Agreements shall be deposited with the Director-General to the CONTRACTING PARTIES to GATT 1947. The Director-General shall promptly furnish a certified true copy of this Agreement and the Multilateral Trade Agreements, and a notification of each acceptance thereof, to each government and the European Communities having accepted this Agreement. This Agreement and the Multilateral Trade Agreements, and any amendments thereto, shall, upon the entry into force of this Agreement, be deposited with the Director-General of the WTO.
4. The acceptance and entry into force of a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement. Such Agreements shall be deposited with the Director-General to the CONTRACTING PARTIES to GATT 1947. Upon the entry into force of this Agreement, such Agreements shall be deposited with the Director-General of the WTO.
Article XV Withdrawal
1. Any Member may withdraw from this Agreement. Such withdrawal shall apply both to this Agreement and the Multilateral Trade Agreements and shall take effect upon the expiration of six months from the date on which written notice of withdrawal is received by the Director-General of the WTO.
2. Withdrawal from a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.
Article XVI Miscellaneous Provisions
1. Except as otherwise provided under this Agreement or the Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947.
2. To the extent practicable, the Secretariat of GATT 1947 shall become the Secretariat of the WTO, and the Director-General to the CONTRACTING PARTIES to GATT 1947, until such time as the Ministerial Conference has appointed a Director-General in accordance with paragraph 2 of Article VI of this Agreement, shall serve as Director-General of the WTO.
3. In the event of a conflict between a provision of this Agreement and a provision of any of the Multilateral Trade Agreements, the provision of this Agreement shall prevail to the extent of the conflict.
4. Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.
5. No reservations may be made in respect of any provision of this Agreement. Reservations in respect of any of the provisions of the Multilateral Trade Agreements may only be made to the extent provided for in those Agreements. Reservations in respect of a provision of a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.
6. This Agreement shall be registered in accordance with the provisions of Article 102 of the Charter of the United Nations.
DONE at Marrakesh this fifteenth day of April one thousand nine hundred and ninety-four, in a single copy, in the English, French and Spanish languages, each text being authentic.
1 The body concerned shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member, present at the meeting when the decision is taken, formally objects to the proposed decision.
2 The number of votes of the European Communities and their member States shall in no case exceed the number of the member States of the European Communities.
3 Decisions by the General Council when convened as the Dispute Settlement Body shall be taken only in accordance with the provisions of paragraph 4 of Article 2 of the Dispute Settlement Understanding.
4 A decision to grant a waiver in respect of any obligation subject to a transition period or a period for staged implementation that the requesting Member has not performed by the end of the relevant period shall be taken only by consensus.
The terms “country” or “countries” as used in this Agreement and the Multilateral Trade Agreements are to be understood to include any separate customs territory Member of the WTO.
In the case of a separate customs territory Member of the WTO, where an expression in this Agreement and the Multilateral Trade Agreements is qualified by the term “national,” such expression shall be read as pertaining to that customs territory, unless otherwise specified.
ANNEX 1
ANNEX 1A: Multilateral Agreements on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994
Agreement on Preshipment Inspection
Agreement on Rules of Origin
Agreement on Import Licensing Procedures
Agreement on Subsidies and Countervailing Measures
Agreement on Safeguards
ANNEX 1B: General Agreement on Trade in Services and Annexes
ANNEX 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights
ANNEX 2 Understanding on Rules and Procedures Governing the Settlement of Disputes
ANNEX 3 Trade Policy Review Mechanism
ANNEX 4 Plurilateral Trade Agreements
Agreement on Trade in Civil Aircraft
Agreement on Government Procurement
International Dairy Agreement
International Bovine Meat Agreement
Source: “Agreement Establishing the World Trade Organization,” World Trade Organization, www.wto.org/english/docs_e/legal_e/04-wto.doc (accessed May 2004).