#11: Shipping Power

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This essay continues yet again on the theme of bigger is better, looking now at foreign trade and shipping. And just like elsewhere, the strength of the argument is that a powerful national government could force states to accept policies they wouldn’t if they were free to choose.

Hamilton urges readers to approve the Constitution, because it will give America a chance to poke arrogant Europe in the eye:

The world may politically, as well as geographically, be divided into four (i.e., Europe, Asia, Africa and America) parts, each having a distinct set of interests. Unhappily for the other three, Europe, by her arms and by her negotiations, by force and by fraud, has, in different degrees, extended her dominion over them all. Africa, Asia, and America, have successively felt her domination. The superiority she has long maintained has tempted her to plume herself as the Mistress of the World, and to consider the rest of mankind as created for her benefit. . . . Facts have too long supported these arrogant pretensions of the Europeans. It belongs to us to vindicate the honor of the human race, and to teach that assuming brother, moderation. Union will enable us to do it.

  Today most experts on trade say free markets are always the best policy. But Hamilton justifies the Constitution with an argument that controlled, regulated markets were what American needed. Hamilton writes that the US would benefit from shutting out a trading partner:

Suppose, for instance, we had a government in America, capable of excluding Great Britain (with whom we have at present no treaty of commerce) from all our ports; what would be the probable operation of this step upon her politics? Would it not enable us to negotiate, with the fairest prospect of success, for commercial privileges of the most valuable and extensive kind, in the dominions of that kingdom?

 Hamilton may have been right or wrong about the desirability of closing markets to British ships. (We fought a war with England in 1812 and shipping was part of the cause, so I lean toward wrong.) But he was not wrong about the benefit of union.

But perhaps the main thing to know today is that the US is a complete non-entity in international shipping. The US consumer market is the biggest in the world and much of our stuff comes from overseas.  You would think that US ships would be hauling a a big share of it. But according to the US Bureau of Transportation Statistics, US commercial shipping has declined steadily. As of 2019, there are only 112 ships in the American merchant fleet and they haul less than one percent of world trade.

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It is important to distinguish between merchant shipping and naval power. America’s navy is tremendously power. It is not much of an exaggeration to say that America’s navy is simultaneously dominant everywhere in the world. When you read some alarming article about the rise of Chinese power, look carefully. The article is probably saying that China is growing strong enough to challenge American power in Chinese waters. There’s not suggestion that any nation threatens America’s shores. But America’s merchant shipping, which Hamilton considered key, has dwindled to nearly nothing.

Discuss:

  • How important is it for the US to be #1 in things like commercial shipping?

  • Is it OK that we depend almost totally on other countries to haul goods to our shores?