restricted access 3. Creating the “Commercial Republic”: Neutrality and Law in the American Courts
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85 The Washington administration’s 1793 decision to remain neutral during the French Revolutionary wars, followed by the federal government’s maintenance of this neutrality policy for almost two decades afterward, was the most important event to influence the development of American commercial law in the early republic. Neutrality amid a world at war—a policy endorsed and extensively defended by Alexander Hamilton—had tremendous implications for the American economy, resulting in a flourishing carrying trade into lucrative overseas markets, the growth of an American marine insurance market, and general prosperity at home.1 But within state and federal courtrooms, neutrality had the effect of expanding the federal courts’ jurisdiction over commercial transactions such that, by 1815, the US Supreme Court could preside over the vast majority of maritime commercial disputes. By contrast, in 1789 the federal courts’ most direct claim over maritime commerce arose from its limited, but exclusive, admiralty jurisdiction over commercial litigation involving seamen’s wages, bottomry bonds (maritime liens), and civil salvage suits. The federal admiralty courts did not even have exclusive jurisdiction over cases involving maritime matters.2 Yet over the course of the early national period, federal admiralty jurisdiction expanded to encompass virtually all types of legal disputes arising from maritime commerce . By exploring this extension of federal power, we uncover the story Creating the “Commercial Republic”: Neutrality and Law in the American Courts three x 86 chapter three of how Alexander Hamilton used the law to create a unified commercial republic. From the outset of America’s experiment in self-government, Hamilton envisioned that the United States would thrive as a “commercial republic,” a polity that united Americans through their commercial interests. Hamilton also hoped that under the US Constitution, a national government would emerge strong enough to protect and foster those commercial pursuits .3 Hamilton considered it to be the particular and obvious goal for the new national government to facilitate this commercial republic by establishing some degree of unity and uniformity in commercial interests, policies, and law across the states. Writing as Publius, he warned his fellow New Yorkers, “A unity of commercial, as well as political, interests can only result from a unity of government.”4 For Hamilton, then, achieving commercial unity across the states meant aligning mercantile and state interests with the preservation of the national government (the same objective of his most noteworthy legislative achievements, his funding and assumption schemes) and enforcing a uniform, national commercial policy through the administration of government. Hamilton’s most famous efforts to achieve a unity of commercial interests , his planned assumption of states’ war debts to be funded by a host of federal taxes, created the first political schisms at the national level that eventually produced two separate political factions. While serving as treasury secretary, Hamilton managed to increase the ideological gulf separating the Federalists and Republicans through his treasury-sponsored diplomacy with British envoy George Hammond, his marked preference for an American alliance with England rather than with France, and his sponsorship and support for the unpopular Jay Treaty in 1794. Ever the realist, Hamilton endorsed John Jay’s diplomatic efforts as necessary to maintain American neutrality and to prevent a possibly disastrous war with Great Britain during the republic’s infancy. The treaty was also an opportunity to win a few strategic and commercial concessions from England (the British agreed to finally evacuate western forts, for example, and they opened up Caribbean trade to select American carrying vessels). Secretary Hamilton’s political efforts at maintaining a cordial, preferential , and above all neutral relationship with Great Britain helped to fuel an opposition party to the Federalist policy agenda; it also exposed Federalist leaders to excoriation in Republican-friendly presses as well as to popular condemnation. When publically endorsing the Jay Treaty in New York City, for example, angry citizens pelted Alexander Hamilton with stones; other Creating the “Commercial Republic” 87 critics burned John Jay in effigy. Despite these political setbacks, the young republic managed to reach some of Hamilton’s commercial and diplomatic goals during his lifetime—America stayed out of open Anglo-French hostilities —yet, over time, the state and federal courts became the guardians of Hamilton’s vision for a commercial republic. The political economy of the Hamiltonian commercial republic has been well studied; scores of economic, political, and even legal historians have noted the successes, political fallout, and significance of Hamilton’s economic policies, including his various reports on the nation’s credit, the...