U.S. Private Trade with Britain, 1812-14

From The Age of Fighting Sail: The Story of the Naval War of 1812, by C. S. Forester (Doubleday, 1952; eNet, 2012), Kindle Loc. 1091-1131:

It became apparent that provisions from America were necessary to maintain the British effort in the Peninsula, despite Wellington’s search for other sources of supply in Canada and Egypt and the Barbary States.

This was [Admiral] Warren’s opportunity to kill two birds, or three birds, with one stone. From Halifax and Bermuda he began to issue licences to American ships, giving them immunity from capture while they were engaged on voyages to and from Lisbon. During the periods of Non-intercourse and Embargo a wide connection had been built up with those merchants who were willing or anxious to evade the regulations of the United States Government; it was easy enough to make the new system known to them. The cargoes could be sold to the Portuguese Government, or to private merchants in Lisbon. They might feed the Portuguese army or the Portuguese civilian population; in either case it was a burden lifted from the shoulders of the British Government, which would have had to undertake the task—and could well have found it impossible—if it had not been performed by American private enterprise.

There was more than a possibility that some of the supplies might find their way into British Government hands and might feed British soldiers; some of the flour might be baked into biscuits to feed British sailors who might fight American ships; that possibility did not check the trade that was carried on. We find Wellington writing as early as September 1812, ‘I am very glad that Mr Forster has given licences to American ships to import corn to Lisbon.’ Wellington was a man of the strongest common sense and of a clear insight into human nature. We find him writing at the same time pressing that Portuguese ships should be licensed in a similar way to trade with American ports. That would render him less dependent on American shipping; also he warned that there was every chance that American ships, crossing the Atlantic protected by their licences, would be tempted to turn aside towards the end of their voyage and run the blockade into French ports. It would be well to assume that a man guilty of one knavery could be capable of another.

By the issue of licences Warren could not only keep Wellington’s army fed; he could retain the goodwill of the American mercantile community. He was sowing the seeds of discord—if any more needed to be planted—between that community and the American Government if the latter could ever nerve itself to cut off this profitable business. American ships sailing from American ports carried with them American newspapers and American news; for Warren they constituted an invaluable source of information regarding American public opinion, regarding the movements of American ships-of-war, and also regarding any attempts to maintain American trade along lines that the British Government did not approve of. The New England states were profiting by this system of licences, while the Southern states were suffering from the interference with their necessary seaboard communications. Later a proclaimed blockade of the Southern seaboard hampered those communications even worse. There was at least the chance that the sectional favour he was conferring would lead to sectional jealousies and from there to sectional strife.

Warren’s astute handling of the situation did not lead to all the advantages that he expected, and it led to some unexpected difficulties, of which the principal one arose from the necessity for payment for the American supplies. Portugal, devastated by war and with much of her manpower conscripted into her army, had little enough to export in return. A little could be done by sending British manufactured goods to Lisbon for sale by Portuguese merchants to Americans, but that did not bridge the gap. All the large balance had to be paid for in cash, in gold and silver. The problem had been exercising Wellington’s mind (Wellington fought a series of successful campaigns while acting as his own paymaster-general and economic adviser as well as his own chief-of-staff and commissary-general) even before the war began during the period of the Embargo: ‘The exporters of specie, to the great distress of the Army and the ruin of the country, are the American merchants . . . these merchants cannot venture to take in payment bills upon England . . . they must continue therefore to export specie from Portugal.’ Again: ‘When the Americans sell their corn in Lisbon they must receive payment in money.’ In the midst of commanding England’s Army in a desperate war he was writing such lines as ‘The merchants of England will, of course, send Colonial goods and merchandise where they can sell it with advantage,’ but even he had to set limits on his activities—‘I cannot enter into the detail of sending Colonial goods or merchandise to pay for corn.’

The final result was a constant drain of gold and silver from England to America at a time when the British Government was at its wits’ end to find any supply of the precious metals. England had to endure the troubles resulting from a paper currency, inflation, and a rising cost of living, while Wellington, who needed hard cash to pay his army’s way during its constant movements in the Peninsula, had to devote many anxious hours as to how to proportion his limited supplies between paying his long-enduring troops and his Spanish muleteers and buying the vital stores from America. It is hardly necessary to add that the American merchants did not suffer. The troops fell into six months’ arrears of pay, the muleteers and the Portuguese middlemen into as much as a year, but the Yankee captains sailed home with the gold and silver which, by the end of the war, gorged the New England banks and was to play an important part in American expansion and in the later development of American industry.