The issue of trade is the subject of the eleventh Federalist Paper. As America grappled with the question of a federal government, it was England and Europe – the old world – that held trading power. Hamilton describes Europe as the Mistress of the World
which exploits other less powerful regions and [seems] to consider the rest of mankind as created for her benefit.
Hamilton’s paper links a healthy trading culture with a powerful navy, and points out that the trading terms and conditions which a nation negotiates with another nation is determined by the power of its navy. And the power of a navy is dependent upon the resources available to build it and the political unity of the country which seeks to build it.
A disunited America, Hamilton argues, would only benefit England and Europe, since it would prevent the building of a powerful navy and reduce America’s ability to compete in trade.
He uses a hypothetical example to illustrate the importance of the military to a strong trading position. What if, he supposes, America banned England from trading with them, except under conditions dictated by America. This could only be achieved with the backing of a powerful navy. It would not be in England’s interest to use other nations, like the Dutch, as trading proxies, since much of their profit would then be syphoned off to pay those nations. England, he argued, would then have to take America’s terms seriously. America, for instance, would be able to enter markets formerly closed to her.
Hamilton does not seriously envisage that an American navy could stand against the British navy, but he points out that by supporting other navies against British interests, America would gain the power to negotiate and serve her own interest, as well as affect political decisions in Europe more favourable to America.
Without a navy, Hamilton says, our commerce would be a prey to the wanton intermeddlings of all nations at war with each other; who, having nothing to fear from us, would with little scruple or remorse, supply their wants by depredations on our property as often as it fell in their way.
America would have no bargaining power. They would be prevented from underselling their competition and her own resources might be exploited by other nations.
A united America, would baffle all combinations of European jealousy to restrain our growth.
Hamilton points out that a navy requires many resources which may not be available in every State. Therefore, an America under a federal government is more able to call upon disparate resources to build a navy. Not only that, but the products produced by each State would vary. Having a wider variety of goods to trade would create more interest in them as a trading partner and would protect the American economy in periods when some goods were not in demand.
In these way, Hamilton supports the idea of a Federal government over the States. Disunion,
he concludes, will add another victim to his [Europe’s] triumphs. Let Americans disdain to be the instrument of European greatness!
26 February 2018
Revised and updated 15 March 2022