Smuggler Nation (12 page)

In the national consciousness, the American War of Independence was won through self-sacrifice and patriotism. Yet often overlooked is that it was also won by merchants enriching themselves—as smugglers and privateers—regardless of patriotic sentiment or national loyalties. As we have seen, this sometimes undermined the war effort, much to the frustration of George Washington, who bitterly denounced such profiteering. But as he was well aware, smuggling was also vital to his military success. In short, smuggling helped give birth to America, even if some forms of smuggling at times also risked aborting it.

But as we’ll see in the next chapter, the very smuggling interests and practices that enriched colonial merchants, that fueled calls for independence, and that kept the Continental Army supplied during the War of Independence would prove to be a daunting challenge for the new republic. Smugglers, who had subverted British rule in the American colonies, would now also subvert government authority in the very nation they helped to create. At the same time, smuggling would be at the forefront of America’s growing engagement with the rest of the world and emergence as a dominant commercial power.

PART II
THE EARLY REPUBLIC

4
Contraband and Embargo Busting in the New Nation

THE NEWBORN AMERICAN STATE
faced a basic challenge: How would it regulate trade in a country partly created by evading trade laws? How could it instill a respect for customs enforcement in a nation habituated to detesting it? A functioning government, even a minimalist one, required revenue. And for Alexander Hamilton, the nation’s first treasury secretary, an impost on trade was the most sensible revenue source. Indeed, in a highly fragmented country deeply suspicious of centralized state authority, inhibiting illicit trade and collecting duties on imports through a federal customs service was the main rationale for a uniform system of government in the early years of the republic.
¹

Having defeated the British in 1783, American leaders now faced the laborious task of figuring out how to run an independent nation. At the top of the agenda was regulation of trade. The widely varying state customs rules in the early Confederation period proved woefully inadequate and easy to manipulate.
²
“The need for federal authority to regulate commerce,” historian George Herring reminds us, “was the major reason the [constitutional] convention had been called” in 1787.
³
Customs was not only one of the first federal agencies established—briefly predating and then becoming part of the Treasury Department in 1789—but was by far the largest agency and virtually the only generator of income for the new national government (and would continue to
be the primary source of federal revenue until the income tax amendment to the Constitution in 1913). It is therefore hard to overstate its importance in the context of a virtually nonexistent central state apparatus.
⁴
In 1790, Congress authorized the deployment of ten revenue cutters. Within a few years, customs operated in fourteen states with 146 officers and 332 subordinates.
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Customs personnel in port cities nearly doubled in the first decade and a half of the nineteenth century, from about eleven hundred in 1801 to more than twenty-one hundred by 1816.
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Customs agents were the most visible face of the national state in local communities otherwise far removed from the capital. How they performed their tasks would be a crucial test for the newly created central government.

Hamilton was well aware of the delicate balance between levying duties and ensuring merchants actually paid them: “Exorbitant duties on imported articles,” he noted, “would beget a general spirit of smuggling.”
⁷
Indeed, the “general spirit of smuggling” that was so prominent in the revolutionary era remained alive and well, but in a new political context. What could previously be conveniently rationalized by some as “patriotic smuggling” in a righteous anti-imperial cause now lost any heroic veneer. In other words, earlier ideological justifications for evading British trade laws were now more transparently self-serving. Patriotism, smuggling, and profiteering had all been lumped together during the revolutionary era, but economic interests and motives were now stripped bare.

For some merchants, the popular rallying cry of “no taxation without representation” really meant “no taxation even with representation.” Perhaps no one epitomized this attitude more than John Brown of Providence, who showed little respect for the newly established customs service. When Providence customs collector Jeremiah Olney wrote to Hamilton about smuggling concerns, the secretary advised: “It is fit that you pay more than ordinary attention to the vessels of Messr. Brown & Francis … since a disposition to disregard the revenue law has manifested itself in them on this occasion.”
⁸
Other merchants, perhaps more concerned about their reputations, publicly renounced smuggling. In Philadelphia, merchants even formed an anti-smuggling association, announcing: “We the subscribers, Merchants and Traders of the city of Philadelphia, do hereby pledge ourselves to each other,
and to our fellow citizens at large, that we will not be concerned directly or indirectly in any trade contrary to the revenue laws of the United States; but will, by every effort in our power, discourage such illicit practices.”
⁹

Old smuggling habits and attitudes would nevertheless prove hard to change. As Massachusetts Representative Fisher Ames described the challenge in his address to the first U.S. Congress in May 1789, “The habit of smuggling pervades our country. We were taught it when it was considered rather as meritorious than criminal.”
¹⁰
Perhaps partly due to this smuggling tradition, maritime historian Joshua Smith suggests, the federal government did not classify smuggling as a criminal offense until later in the nineteenth century. It remained a civil offense in the early years of the republic, with penalties primarily in the form of heavy fines, confiscation of goods, and seizure of vessels.
¹¹

The American tradition of smuggling continued in familiar Atlantic ports and in distant new markets. Much of the postindependence smuggling by American traders involved evading the commercial laws of other countries, and was therefore of less concern to U.S. customs collectors (though sometimes greatly complicating U.S. diplomatic relations). This predictably included continued violations of European mercantilist trade restrictions, particularly in the West Indies. In retaliation for the American Revolution, the British Order in Council blocked U.S. trade with their possessions in the West Indies from 1783 to 1796 (when the Jay Treaty reopened the trade). Yet the trade persisted through illicit channels during these years, much to the frustration of Royal Navy officer Horatio Nelson, who became obsessed with suppressing it. Even as the British government sought to curb the illicit trade, British merchants colluded with their American counterparts.
¹²

American independence also had trade repercussions in the U.S.-Canada borderlands. Local cross-border community relationships—including trading relationships—predating the imposition of the borderline set by the 1783 Treaty of Paris often trumped restrictive instructions from faraway authorities.
¹³
U.S.-Canadian relations were thus partly founded on smuggling, especially in the early years of the nineteenth century. Though some level of smuggling was a constant, what varied was the degree of official concern, tolerance, and complicity on both sides of the poorly demarcated boundary line.

American trade also began to expand across the Pacific by the end of the eighteenth century, becoming truly global for the first time. The globalization of American trade included the globalization of its illicit trade. Smuggling was simply part of the repertoire of tools used by American merchants to penetrate new markets in distant lands. For instance, after the authorities in New South Wales (later, Australia) barred several U.S. ships from unloading spirits in 1800, their first diplomatic correspondence with the United States involved a notification that the import of spirits was prohibited and that the penalty would be confiscation of ship and cargo.
¹⁴
U.S. trade relations with Manila began with a violation of trade laws: “The first American who ever traded at Manilla [
sic
] went off without paying his duties.”
¹⁵

Smuggling was also common practice for U.S. merchant ships penetrating the China market for the first time. Carrying a shipment of furs in 1791, a Captain Ingraham was instructed by Thomas H. Perkins in Boston that on arrival in Canton he had “best sell the furs down the River, to avoid charges.”
¹⁶
Similarly, in 1797, the New York firm of Gouverneur & Kremble instructed the supercargo of the ship
Sampson
that part of his cargo “sustains a pretty heavy duty, and on that account it may be necessary to part with it to some of the smugglers.”
¹⁷

In the first decade of the nineteenth century, U.S. merchants would also begin to make inroads into the illicit China opium market, much to the alarm of the British East India Company, which jealously protected its opium-smuggling monopoly. Jacque Downs, the foremost historian of the early U.S.-China opium trade, writes: “The Americans were marvelously ingenious in their exploitation of the commerce. They managed to circumvent both the East India Company’s franchise and the Chinese Government’s prohibition and carried on a very lucrative, if antisocial and ultimately ruinous trade.”
¹⁸
Dominated by a handful of players, opium smuggling by American shippers would become increasingly vital to U.S.-China trade relations, with opium sales generating the revenue to buy Chinese goods such as silks and teas. Many of America’s most elite merchant families made fortunes in the opium trade: “Girard, Astor, Joseph Peabody of Salem, John Donnell of Baltimore, and the Perkins firm (now allied with Bryant and Sturgis) were among the larger shippers of the drug.”
¹⁹

But by far the most important early boost to American trade and to the fortunes of American merchants came from the European wars that engulfed France, England, and their allies for more than two decades starting in 1792. Here the line between licit and illicit trade was fuzzy and changed with the fluctuating conditions of war. What the United States insisted were neutral goods were increasingly treated as contraband goods by Britain and France in their attempts to deprive the other of supplies. Although the expansion of American trade pulled the country out of its post-Revolution commercial slump, it was also an increasingly risky trade that threatened to drag the country into war.
²⁰
U.S. merchant interests in profiting from war increasingly threatened U.S. geopolitical interests in remaining neutral.

As we’ll see, illicit trade in the early years of the republic was double-edged. The very merchant disregard for regulation that subverted the British Empire, aided the War of Independence, and fueled postwar economic recovery and government expansion also became a serious challenge to the newborn American state—so much so that President Thomas Jefferson’s ill-conceived embargo of 1807–1809 on all U.S. trade with the outside world was massively (and sometimes violently) evaded from within.

The French Revolutionary and Napoleonic Wars