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Revenue or Reciprocity? Founding Feuds over Early U.S. Trade Policy

In: Founding Choices: American Economic Policy in the 1790s


  • Douglas A. Irwin


The Constitution of 1787 was designed to give Congress powers over trade policy that it lacked under the Articles of Confederation. The Washington administration was split over whether to use these powers to raise revenue or to retaliate against Britain's discriminatory trade policies. Obsessed with funding the national debt, Alexander Hamilton sought to avoid any conflict with Britain that might disrupt imports and diminish the customs revenue flowing into the Treasury coffers. By contrast, Thomas Jefferson and James Madison advocated a policy of "aggressive reciprocity" to force Britain to open its home and colonial markets to American goods and shipping services. This paper examines how the nation's founding policymakers confronted this dilemma and evaluates the merits of different trade policy options. The main conclusion is that the Federalist policy of moderate tariffs, non-discrimination, and conflict avoidance provided much needed stability during the critical first decade of the new government.
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Suggested Citation

  • Douglas A. Irwin, 2010. "Revenue or Reciprocity? Founding Feuds over Early U.S. Trade Policy," NBER Chapters,in: Founding Choices: American Economic Policy in the 1790s, pages 89-120 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11738

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    References listed on IDEAS

    1. Irwin, Douglas A., 2003. "New Estimates of the Average Tariff of the United States, 1790 1820," The Journal of Economic History, Cambridge University Press, vol. 63(02), pages 506-513, June.
    2. Bordo, Michael D. & Vegh, Carlos A., 2002. "What if Alexander Hamilton had been Argentinean? A comparison of the early monetary experiences of Argentina and the United States," Journal of Monetary Economics, Elsevier, vol. 49(3), pages 459-494, April.
    3. Shepherd, James F. & Walton, Gary M., 1976. "Economic change after the American Revolution: Pre- and post-war comparisons of maritime shipping and trade," Explorations in Economic History, Elsevier, vol. 13(4), pages 397-422, November.
    4. Doulgas A. Irwin, 2003. "New Estimates of the Average Tariff of the United States, 1790-1820," NBER Working Papers 9616, National Bureau of Economic Research, Inc.
    5. Goldin, Claudia D. & Lewis, Frank D., 1980. "The role of exports in American economic growth during the napoleonic wars, 1793 to 1807," Explorations in Economic History, Elsevier, vol. 17(1), pages 6-25, January.
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913


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