DISCLAIMER: I am not a historian nor a political scientist. I do have a fascination and interest in the Constitution and so I started reading the Federalist Papers and posting my interpretation on my own blog. I thought it might be of some interest here. Your interpretations and thoughts are greatly appreciated in the comments!
You can find the Federalist Papers in their entirety at The Library of Congress website.
Federalist No. 11 and links to previous Federalist Papers entries below the fold and previously posted at LiveJournal
Federalist No. 1 here
Federalist No. 2 here
Federalist No. 3 here
Federalist No. 4 here
Federalist No. 5 here
Federalist No. 6 here
Federalist No. 7 here
Federalist No. 8 here
Federalist No. 9 here
Federalist No. 10 here
The Utility of the Union in Respect to Commercial Relations and a Navy
For the Independent Journal.
Federalist No. 11 deals with the subject of commerce, a subject in which Hamilton was an expert. You may be puzzled by the inclusion of the Navy in the subject. Realize however, that trade in those days was primarily carried out by sea and therefore the ability to protect sea routes was vital to the security of trade.
He opens with saying that this is an area in which differences in opinion might be entertained.
Hamilton then states that America's entrepreneurial spirit has already stirred uneasiness with European maritime powers. European nations with colonies in North America were particularly threatened by the United States' growing commerce as a strengthening of American commerce would enable a strong presence on the sea providing a threat to the power of those nations. It would be to the benefit of those nations to stir up trouble in the United States:
Impressions of this kind will naturally indicate the policy of fostering divisions among us, and of depriving us, as far as possible, of an ACTIVE COMMERCE in our own bottoms. This would answer the threefold purpose of preventing our interference in their navigation, of monopolizing the profits of our trade, and of clipping the wings by which we might soar to a dangerous greatness.
Hamilton then proposes that a strong union would give America several opportunities to counteract such dissent from foreign powers.
In the first way, the proposal of tight regulations throughout the states, nations could be forced to bid against each other for the right to the American markets. He states this is possible because of the size of the US market - 3 million people - and the fact that the US was almost exclusively a nation built on agriculture. This made a large and growing market for any nation with a significant manufacturing base. Hamilton says that such manufacturing countries would most benefit from direct commerce with the US as opposed to going through the ports of third countries. He uses the example of excluding Great Britain from US ports and how they could use the Dutch, but it would not be monetarily advantageous to Britain.
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? When these questions have been asked, upon other occasions, they have received a plausible, but not a solid or satisfactory answer. It has been said that prohibitions on our part would produce no change in the system of Britain, because she could prosecute her trade with us through the medium of the Dutch, who would be her immediate customers and paymasters for those articles which were wanted for the supply of our markets. But would not her navigation be materially injured by the loss of the important advantage of being her own carrier in that trade? Would not the principal part of its profits be intercepted by the Dutch, as a compensation for their agency and risk? Would not the mere circumstance of freight occasion a considerable deduction? Would not so circuitous an intercourse facilitate the competitions of other nations, by enhancing the price of British commodities in our markets, and by transferring to other hands the management of this interesting branch of the British commerce?
Hamilton says this would be so unacceptable to England that they would open up their markets and it would impact in a positive manner the US trade with the West Indies - an important trading partner for the US. Such a policy toward Great Britain would also deter other nations from sewing the same dissensions within the United States.
The next way that a strong union could deter foreign powers from stirring trouble in matters of commerce is by the maintenance of a strong navy.
There can be no doubt that the continuance of the Union under an efficient government would put it in our power, at a period not very distant, to create a navy which, if it could not vie with those of the great maritime powers, would at least be of respectable weight if thrown into the scale of either of two contending parties. This would be more peculiarly the case in relation to operations in the West Indies.
Goods from the US would be useful for military operations in the West Indies and would give use leverage in obtaining favorable trade deals in those markets. Such a strong naval position could also be used as an advantage with respect to neutrality and in fact would allow the US to arbitrate the power of Europe in the Americas - a definite position of strength. Hamilton then says that without the powerful union and navy, our neutrality would be useless and would invite European nations to take advantage of our commerce at will.
A nation, despicable by its weakness, forfeits even the privilege of being neutral.
Hamilton then shows his faith in the unity of a nation, directed toward the common good, to rival even the old powers of Europe. Such unity of purpose would demonstrate the futility of trying to control the US. He then essentially says that such strength of the new nation could be used to move mountains.
The remainder of the paper discusses the results of not having a strong union with respect to commerce and a navy. It is essentially the reverse of the above arguments.
Control of the seas and by extension commerce would give control of internal American politics over to the stronger European nations to the extent that US trade would be "PASSIVE COMMERCE" in Hamilton's words (and his emphasis).
We should then be compelled to content ourselves with the first price of our commodities, and to see the profits of our trade snatched from us to enrich our enemies and persecutors. That unequaled spirit of enterprise, which signalizes the genius of the American merchants and navigators, and which is in itself an inexhaustible mine of national wealth, would be stifled and lost, and poverty and disgrace would overspread a country which, with wisdom, might make herself the admiration and envy of the world.
There are inherent commerce rights as a result of the union, namely, fishing of territorial waters, and the navigation of the Great Lakes and the Mississippi River. The bountiful fisheries off the coast were an obvious commercial advantage. The latter two were a matter of commerce and national security. The Mississippi was used to move goods from the interior of the nation to ports in New Orleans. Clearly not having a strong union/navy would give control of this vital trade route to Spain.
Hamilton sees the navy as a unifying factor for the nation in that resources from all the states would be used to build ships, especially raw materials from the southern states.
The last major point of this paper relates to trade between the states and its impact. Here, Hamilton returns to the idea of diversity in that active trading amongst the states will provide strength to the nation because there will be demand for a variety of goods supplied be different states. The likelihood that all of the commodities would suffer in value is highly unlikely and this provides strength to the new nation.
The speculative trader will at once perceive the force of these observations, and will acknowledge that the aggregate balance of the commerce of the United States would bid fair to be much more favorable than that of the thirteen States without union or with partial unions.
Hamilton states that even loosely united there would still be trade between the states. This is true, but he says that in such a situation, this trade would be much more susceptible to manipulation by outside powers.
The paper closes with Hamilton stating that the world is depending upon the US to balance the domination of an arrogant Europe and unity is the only way to make that happen:
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. Disunion will will add another victim to his triumphs. Let Americans disdain to be the instruments of European greatness! Let the thirteen States, bound together in a strict and indissoluble Union, concur in erecting one great American system, superior to the control of all transatlantic force or influence, and able to dictate the terms of the connection between the old and the new world!