Millions for Credit: Peace with Algiers and the Establishment of America’s Commercial Reputation Overseas, 1795–96
Abstract

Abstract:

In September 1795, the United States of America agreed to pay a large sum of money to the independent Ottoman regency of Algiers so that Algiers would not interfere with its trade in and around the Mediterranean. This trade was of great importance for American farmers and merchants, who hoped to meet warring European armies’ increased demand for grain, as well as for the American commercial fleet, which sought to increase its share of the Mediterranean carrying trade. For the next thirteen months, however, the United States struggled to make the payment, and the Dey of Algiers repeatedly threatened to cancel the treaty.

American historians usually describe this series of events as a diplomatic crisis and national disgrace, during which the United States was forced to pay protection money to safeguard its ships from the Algerian corsair fleets mistakenly termed “pirates.” This article argues, however, that the American payment to Algiers benefited the United States by establishing American commercial credit and political credibility overseas. As the treaty payment left the Bank of the United States in Philadelphia, entered the London financial markets, and passed through the hands of merchant houses in Cadiz and Livorno, a diverse group of international creditors became invested in American success. When the payment at last arrived as specie in Algiers, government leaders, diplomats, merchants and insurers around Europe and the Mediterranean had new reason to believe that the credit of the new republic was good.