The Doctrine of Armed Neutrality

The American founding generation still understood that the key moment in the emergence of modern international law was the Grotius-Selden engage­ment. Let me cite one case. In May 1783 Ezra Stiles, president of Yale, gave a sermon on election day to the Connecticut General Assembly.

Scholarship on Stiles has yet to make good use of the hundreds of boxes of his manuscripts kept by Yale, including a box with volumes of notes he wrote for this very sermon. He took months to write it, as the political situation changed on an almost daily basis. What terms will Britain propose? What will the United States accept? Can Congress convince the states to agree to the peace terms? What should the new country look like? Stiles wrote roughly six distinct versions of the sermon. One version shows that he planned to say the following.

The mare liberum & the mare clausum has been a subject discussed the last century by the ablest Civilians [by which he means European law­yers]. It is left to this age to determine that Question. The Atlantic Ocean will be a mare liberum, & so probably will be all the Oceans of the ter­raqueous Globe. We shall no more need a Milton, a Selden or a Grotius to decide this matter.

During revision Stiles scribbled in a phrase before the final, optimistic one: �?The armed neutrality will disarm even Wars of hostilities against Commerce'. Then he cut the whole passage. He wrote it, and cut it, because the best strat­egy to protect American interests kept changing almost overnight. A British government fell in July 1782, and the new administration of Lord Shelburne had tenuous parliamentary support. In early 1783 Richard Oswald, the British negotiator, secretly offered handing Canada over to the United States, while Shelburne, to keep options open, create some useful confusion and save face at home, offered in April to recognise American independence but without per­mitting the US to expand its borders. The French, hitherto staunch allies of America, now demanded that Britain should deal with them separately and on better terms. This opened a rift between the United States and France that never healed. Still in April, John Adams convinced the Dutch to recognise American independence, and offer loans as to a sovereign nation. Stiles did not know who the new allies would be, for how long, and at what cost. After Gro- tius' quashed ιpc, initially Mare clausum, the first version of Selden's Mare liberum, and Graswinckel's response to Selden, here we have another case when political expediency dictated that a text is suppressed. Yet Stiles thought that everyone, the Americans, the Dutch, the French, and the British, would understand what he meant by the mare liberum - mare clausum debate. But what did he mean by �?armed neutrality'?

As mentioned, the mystery edition of Mare liberum was probably published in Cologne, and was most closely read by Hansa towns, even though this aspect of its reception is absent from scholarship.

Texts like Adam Smith's 1776 Wealth of Nations convinced most policy­makers that territorial conquest and hoarding specie, materials and goods, such as gold, silver, or grain, was the wrong approach. War was expensive, hoarding created surpluses that lowered prices, and the best bet for a modern commer­cial state was to accept Selden's point and shape its productive and trading policies to its own advantage. This complex system had several parts. Two that interest us are the navigation acts, and the ban on trading naval stores such as tar, hemp, timber, iron, and other materials needed for military provisions. The principle behind the navigation acts was to help Britain trade with its colonies. The colonies, including those in North America, produced raw materials while acting as a captive and expanding market for British manufactures.

It was also part of the British and French version of international law that supplying a party to a war with goods it needs for the pursuit of the war effec­tively amounts to a declaration of war on the opposing party. Simply put, the idea was that there is no neutral trade in wartime. Recall Grotius on capturing all Iberian resources as paramount to wresting a sword from a madman. When the French and the British are at war, a standard Enlightenment argument ran, the Dutch cannot sell timber, and in some formulations even grain, to the French without justifying a British attack on Dutch ships.

We can extrapolate from these simple rules of the game much of the logic of early modern and Enlightenment international affairs. You want to trade; but you also want ships and armies, to expand and protect your trade. Your colo­nies are your allies, but it is not in your interest to arm them, or to allow their economies to develop to the point where they no longer need your manufac­turing.

The next question is, how do you break the endless cycle of shifting alli­ances? States always play imperial politics with varying degrees of success, therefore those that run ahead need to be restrained by a new alliance. Not only the race against each other, but the constant dynamic of reestablishing a balance of power, is tremendously exhausting. It costs money, it is too risky, and it seems impossible to de-escalate. Instead of the civilising and pacifying effect of commerce that people like Grotius, Adam Smith and Ezra Stiles in his first draft believed in, you end up replacing the old idea of military conquest with a new, similar system, in which commercial does not replace military suc­cess, merely adjoins it.

To break away from the balance of power model, in 1780 the Russian Em­press Catherine ιι declared a League of Armed Neutrality. The idea was that a rising state could extricate itself from the existing complexity of alliances. In­ternational law had to be rewritten. A state, and corporations registered in that state, should be able to trade freely with any state they wish to, regardless of whether that state is at war with another one. One obvious way to do this would have been to incorporate a claim based on something like Adam Smith's point, namely that free trade is good for everyone. If, for instance, Britain be­lieves that its interests are harmed by someone who sells grain to France in wartime, then Britain is mistaken, and ignores all sorts of indirect effects of stimulating grain production in the neutral state, or that state's ability to now buy more things from Britain.

But this was not Catherine's argument. She thought that Britain had no right to search and seize every ship at will, and blockades, embargoes, and other measures for restricting trade in wartime were illegal. Denmark, Sweden, and Spain joined the League straight away, soon followed by Prussia, Austria, Por­tugal, the Ottoman Empire, and others. The British navy outnumbered the combined naval forces of all these states. Nevertheless, the League achieved some success, and the principle was established.

The League was disbanded in 1783, when Britain's recognition of American independence changed the game so much that no one quite knew what the new order would look like. However, Ezra Stiles was not the only one to pick up on the League's long-term importance. Alexander Hamilton wrote in the 1787 Federalist Paper number 11:

A price would be set not only upon our friendship, but upon our neutral­ity. By a steady adherence to the Union we may hope, erelong, to become the arbiter of Europe in America, and to be able to incline the balance of European competitions in this part of the world as our interest may dictate.

The idea was to create, sustain, and benefit from a new imbalance of power. What Smith, Catherine, and later the demise of the French monarchy and its loss of credit helped Hamilton realise was that credible sovereignty creates credit. Sovereign states are not like other economic agents, because sovereign­ty has a unique market value. Territorially defined nation-states, recognised in international law, can disappear through civil war or conquest, but they can­not go so bankrupt that they lose all prospect of recovery. Countries like Argen­tina or Russia can default, as they did in the last 20 years, but their territorial integrity and sovereignty are guaranteed by and embedded in the internation­al order. They are states, and states are too large to fail.

Modern commercial law and discussions concerning the future of the eco­nomic aspect of sovereignty invariably recognise popular sovereignty as a norm, integral to liberalism.^[869] The public argument for a tax, a monopoly, or a trade agreement has to show that when free trade optimises redistribution, it is for everyone’s benefit. Another assumption is that it is not the accumulation of goods and specie that makes a state powerful, but the desirable commercial interdependence with other states, such that, for instance, they buy your prod­ucts, they buy your public debt, they invest in your currency, but you are not vulnerable to your trading partners, because you can replace them with others, or because they, or their competitors, depend on you at least as much as you depend on them.

It is well known that American revolutionaries frequently invoked argu­ments against ship money from the 1620s-1630s in their own opposition to par­liamentary taxes. Yet in addition, the system of thought that coupled popular sovereignty with economic activities where the state may have a role also fol­lowed the form of the Grotius-Selden debate during the American Revolution, which is much less understood^[870] Hamilton and others considered a standing army, permanent navy and strong executive necessary, therefore constitution­al.⁹¹ To counter, James Madison could no longer gesture to republican institu­tions that would serve salus populi despite inconvenient trade-offs. Machiavelli could argue that militias are preferable to mercenaries, and regulated modera­tion to unfettered consumption, because luxury-corrupted states that rely on mercenaries fall sooner than states that embodied a resilient spirit of the na­tion. To prove the same in an era when increasingly professional armies and global trade were well-established parts of reason of state, Madison had to de­velop a failed but important vision for an international political economy order in which well-arranged interdependencies would protect US interests sufficiently to render a standing army, permanent navy, and strong executive unnecessary and thus unjustifiable in a young republic that aimed for aus­tere and robust public morality⁹² We get a very different international law

One such deviation is Rutherforth's elaboration of rights to resist the prince in conditions Grotius explicitly deemed invalid in ibp. That said, while Rutherforth was a major conduit to the colonies, for reasons still unclear the British view of Grotius as an authoritative source on rights of resistance seems to have been established by the 1680s already - although the proto-liberal interpretation of Grotius, which combined an emphasis on Mare liberum with ibp's denial of individuals’ right to resist a properly constituted impe­rialist government, continued alongside Grotian resistance theory. See e.g. the extraordi­nary unpublished 420-plus-page mss Pax et obedientia, c. 1672, Yale, Beinecke, Osborn fb234. Grotius' role in American revolutionary education is another neglected topic. See i.a. the courses taught in Philadelphia, including the 1783 course on ethics that cites Gro- tius as the only authority on natural law. Joseph Clarkson, �?A Compendious System of Moral Philosophy by the Revd. Doctor [Samuel] Magaw Vice Provost Universitatis Phila­delphiae 1783’, University of Pennsylvania Archives, upa 3, Box 24, Folder 1643. Grotius' De veritate was of course his most widely read work in the eighteenth century, used by mis­sionaries among Native Americans, and not without ideas relevant to international law. See e.g. the 1707 English translation at The Kislak Center for Special Collections, Univer­sity of Pennsylvania, NC6 G9168 Eg680pf, an annotated copy used by several missionaries and even lent directly to Native Americans. Alongside armed neutrality, the right to resist and the doctrinal minimalism required for successful imperialism, the conquest of Amer­ican lands continued to be discussed in terms of the Grotius-Selden debate. See e.g. Isaac Bird's 1815-16 student notes on the standard Yale course taught by Timothy Dwight ιv, Yale's President, on justifying white settlers' ownership of Lake Michigan and Mississippi with explicit reference to Grotius' Mare liberum and Selden's Mare clausum. Yale Manu­scripts and Archives, Yale course lectures collection, RU 159, Box 15, No. 79.

91 Mark Somos, �?“A Price Would Be Set Not Only Upon Our Friendship, But Upon Our Neu­trality”: Alexander Hamilton and Early American State-Building', in Koen Stapelbroek (ed.), War and Trade: the Neutrality of Commerce in the Interstate System (Helsinki: COL­LeGIUM, 2011), 184-211.

92 This vision, described in Noah Feldman, The Three Lives of James Madison (New York: Random House, 2017), book iii, is a development from Madison's 1806 Examination, a brilliant, but in many ways less creative position on the history and potentials of the and international political economy after popular sovereignty, limited global resources, and a non-zero-sum understanding of trade became standard assumptions. The best encapsulation of this historical process is the Grotius- Selden debate.

The globalisation of commerce, information, and war leads inevitably to the conclusion that territory is a limited resource, and sovereign states are unique economic players. This is the confirmation and update of Selden's argument in Mare clausum concerning the limited and exhaustible character of natural re­sources against Grotius' free trade principle. Grotius drew on the natural right to self-defence and the impossibility of excluding others from infinite resourc­es to demonstrate the universal right to free trade. By contrast, Selden extend­ed dominion to the high seas, denied that resources were infinite, and ren­dered control over both land and the seas integral to sovereignty. In the doctrine of armed neutrality, Grotian self-defence and economic sovereignty joined hands with Selden's popular sovereignty and limited global resources, while their shared scepticism toward historical models and human reason (both individual and collective) favoured constitutional designs with both considerable discretion and economic powers for the representative offices.^{[871] [872]} When Hamilton advocated free trade and armed neutrality, he did so within a carefully designed framework of state control over strategically sensitive trade; the protection of infant economies at home; and as a means to resist and avoid the globalised war of European powers.

Hamilton understood better than any of his peers that the American found­ing moment was a unique opportunity to acquire and use the credit of a poten­tially long-lasting state. The opportunity brought an accordingly unique set of tasks, including the construction of creditworthiness for the new country, and persuading Americans that the fate of their political project was intrinsi­cally linked to their financial credit abroad. Franklin, Jefferson, Jay, Adams, Francis Dana and others saw at first hand that France and the United Provinces would not lend money to the American Revolution at anything approaching normal interest rates, before the 1777 Saratoga victories made the Revolution plausible.

But Hamilton thought several steps ahead and built a blueprint of institu­tional design in which a strong union, a relatively strong executive, a central bank, a standing army, a navy, a common currency, and an emphatic insistence on armed neutrality were combined to create instant international credit, from which the United States could actually finance the military and industrial infrastucture it desperately needed. His scheme also solved one of the main problems of the Revolution, namely the colonies' war debts, exacerbated by a lack of common currency and common fiscal authority that could stop states from printing their way out of debt. Most states were heavily indebted, and many contemplated default or just printing a great deal of devalued money. One way to convince the colonies to join the union was by assuming their war debts under a central authority, and turning their local debts into the founda­tion of international credit.^{[873] [874] [875] It was Hamilton's genius to consolidate these debts into a federal debt, and convert them into a centripetal force that brought the states together and became a foundation for international credit^5 By as­suming colonial debts and promising to honour them under a unified curren­cy, Hamilton's proposed US government would extend its authority over the American colonies and acquire sovereign credit sufficient to raise loans to fi­nance the war of independence.}

Though Hamilton's design was not implemented immediately or in full, the institutional design of the early United States, from strong executive through standing army and shared currency to a central bank and federal economic policy, followed his plan more than anyone else's. Hamilton figured out this coherent scheme in the Continentalist papers he wrote in 1781-2. He always presented it as a coherent whole in later writings such as his Federalist Papers?⁶ in his 1791 Report on Manufactures, the 1793 Proclamation of Neutrality he draft­ed for Washington, his 1793-4 Pacificus letters in defence of neutrality, and elsewhere. Stiles, in the meantime, reinserted the originally deleted passage on armed neutrality into the second, 1785 edition of his speech.

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