President Obama is responsible for ruining the economy of the United States of America, in collusion with the Democratic Congress, up until the election of 2010 gave the Republicans a majority in the House of Representatives so that the runaway executive had a partial roadblock. One might ask, has this ever happened in America before, wherein a president’s misguided policy has ruined the economy? Well, yes it has.
In 1800, when President Jefferson was elected, the US was providing materials and agricultural products to France and Britain and to countries in the Mediterranean Sea. France and Britain went to war. American merchant shipping had been targeted by pirates from Tripoli and other North African states in Adams’ administration, so the Congress had passed a bill to authorize building of a Navy – six large frigates (equivalent to heavy cruisers today). Jefferson had the ships to suppress the pirates, and sent them to do so, but then laid them up in ordinary (storage) when no longer needed.
As the War between France and Britain heated up, they began attacking each others commerce, through blockade and privateering. In addition, British warships would stop American ships and impress sailors to fill their own shorthanded crews. America, being a long distance from their markets, depended on merchant shipping to keep the commerce cycle operating. It looked like the Navy would be needed again.
However, the time to refit the ships in ordinary would be close to a year, and the idea to build lots of little gunboats with one large gun in each one hadn’t worked worth beans. Jefferson conceived the idea of pressuring both France and Britain to leave our shipping alone by establishing an embargo, prohibiting export of American products from our ports to any European ports, allowing only coastal trade. His thinking was that they needed our goods so much that they would have to change their evil ways and leave our shipping alone. According to J. S Basset, A Short History of the United States, “Congress gave its support, and December 21, 1807, the embargo act was passed. It prohibited the departure for any foreign port of any merchant vessel, except foreign vessels in ballast, and required vessels in the coastal trade to give heavy bonds to land their cargoes in the United States. The president was given discretionary power to modify the operation of the law in specific cases, but the duration was made indefinite. ‘Peaceable coercion’ was an untried experiment of far-reaching effects, yet it passed the two houses in four days and was a law before the people understood its significance.”
How did it work? Disastrously, as I’m sure you could predict. From Ian W. Toll, Six Frigates, a history of the early U. S. Navy: “Smuggling and other evasions were rampant. Vessels slipped out of port without clearances. Coastal traders were “accidentally” blown off course and forced to seek refuge in the West Indies or Canada. Some six hundred vessels were permitted to sail based on the pretext that they were fetching home American property left abroad. Foreign ships brought goods to market and then illegally carried American cargoes out of port. In Vermont, whose economy depended to a great degree on agricultural exports to Canada, the citizens rose up in a general rebellion. Farmers built huge timber rafts on Lake Champlain, to carry enormous quantities of wheat, pork, beef, and potash. One of these rafts was said to be nearly half a mile long, and on it were erected timber fortresses defended by men with small arms and even cannon. They seemed willing to kill any federal agent who was brave or foolish enough to interfere. Jefferson issued a proclamation declaring the Lake Champlain region to be in a state of general insurrection.
“With the longer and warmer days of spring, evasions of the embargo were prevalent all up and down the Atlantic seaboard. Jefferson pushed for increasingly severe enforcement measures. The embargo laws, he said, ‘have bidden agriculture, commerce, navigation to bow before that object, to be nothing when in competition with that.’ Jefferson knew, from the outset, that the American people’s tolerance would not continue indefinitely. The nation had decided to ‘take the chance of one year by the embargo’, he wrote, and if one year was the term fixed in Jefferson’s mind, he was single-minded in his determination to make that year count.
“Much of the enforcement responsibility fell to the Treasury Department, and therefore to Albert Gallatin. Though he had opposed the policy, the loyal Gallatin issued some 584 circulars to customs collectors and revenue officers stationed in the various seaports, generally urging more stringent enforcement and authorizing stronger measures. Most of the larger ships of the Navy were inactive during the embargo, but a few vessels were deployed to patrol the American coast. Under Secretary Robert Smith’s orders, Decatur and the Chesapeake got to sea on July 13, 1808, and patrolled the coastline between New York and Passamaquoddy Bay at the northern boundary of modern-day Maine. In early September, off the Maine coast, Chesapeake was outrun by two smugglers, prompting Decatur’s remark that the frigate was an ‘uncommonly dull’ sailor. Gunboats were deployed to lie to in offing near the most rebellious harbors, with orders to ‘seize the Boats and vessels of American Citizens that may be found violating or attempting to violate the embargo Laws.’
“The American economy was devastated. Exports plunged from $108 million in 1807 to $22 million in 1808. Because the federal government was almost entirely dependent on customs revenues, the fiscal surplus vanished. This, in turn, deprived the nation of the resources needed to mobilize for war, just as Gallatin had warned. Farmers and lumbermen shared in the pain with merchants and seamen, as timber, wheat, tobacco, rice, and cotton piled up to storehouse rafters. Imported and manufactured goods sold at scarcity price. Wages fell, or were not paid. Debtors were unable to manage their debts, and creditors took them to court or threw them into prison. Gangs of idle sailors loafed on the wharves. An Englishman who visited New York during the height of the embargo described the grim scene:
‘The port indeed was full of ships, but they were dismantled and laid up; the decks were cleared, their hatches fastened down, and scarcely a sailor was to be found aboard. Not a box, bale, cask, barrel, or package was to be seen on the wharves. Many of the counting houses were shut up, or advertised to be let; and the few solitary merchants, clerks, porters, and laborers that were to be seen were walking about with hands in their pockets. The coffee houses were almost empty; the streets, near the water side, were almost deserted; the grass had begun to grow upon the wharves.’
“…In August, Gallatin informed Jefferson that the evasions could only be prevented if federal agents were invested with ‘arbitrary powers’ that were ’equally dangerous & odious.’ Enforcement would require a policy forbidding a single vessel in any port of the United States to move except with ‘special permission of the Executive,’ to allow the collectors ‘the general power of seizing property anywhere,’ to remove and confiscate the rudder of any suspicious vessel, and to immunize the collectors against civil suits. The president replied he was willing to authorize whatever measures were necessary to suppress the ‘sudden and rank growth of fraud and open opposition by force.’ Any vessel owned by any merchant suspected of prior violations could be seized. Entire communities were barred from sending a single vessel to sea. Justifying such a measure against Buckstown, in Maine’s Penobscot Bay, Jefferson said that ‘a general disobedience to the laws in any place must have weight toward refusing to give them any facilities to evade.’ As for Nantucket: ‘Our opinion here is that that place has been so deeply concerned in smuggling, that if it [suffers food shortages] it is because it has illegally sent away what it ought to retain for its own consumption.’
“The question of the day was whether the people of England – and France – had suffered enough economic pain to force their governments to the negotiating table. Here the evidence was conflicting. Napoleon’s response was a mingling of disgust and indifference. He remarked that ‘the United States have preferred to renounce commerce and the sea rather than recognize their slavery,’ and ordered the seizure of American ships on the pretext that they must be disguised English vessels. In Britain, the combined effects of non-importation and embargo, conjoined with Napoleon’s Continental System, had severely distorted several important sectors of the economy. Market prices of many imported goods – timber, silk, cotton, flour, rice, flax, linseed – doubled or tripled. The coffee and sugar of the British West Indian colonies, which had once been carried to Continental markets by American vessels, glutted the storehouses of the Channel ports. British manufacturers predicted (cogently) that New England merchants would pour their capital into a domestic American manufacturing industry that would grow to rival England’s.
“But the embargo also benefited an number of powerful European interests, who would not have minded seeing it continued indefinitely. Farmers welcomed the high prices that attended the scarcity of imported foodstuffs. English merchants and shipowners were only too happy to see their American competitors yield the sea lanes, and their voices were strongly represented in Parliament. As one British writer later put it: ‘The late Jeffersonian Embargo was a Rod which produced no other sensation on the rough hide of John Bull, than the pleasurable one which arises from titillation. The poor Animal was delighted, and not suspecting that this philosophical experiment on his Hide was intended to produce pain, he regretted that weariness had ultimately compelled Mr. Jefferson to cease scratching.’ Jefferson’s special emissary to London, William Pinkney, had been instructed to offer an end to the embargo in exchange for a lifting of the offensive Orders in Council. Foreign Minister Canning’s refusal of this offer, dated September 23, was inscribed in terms of heavy sarcasm: ‘[I]f it were possible to make any sacrifice for the repeal of the embargo, ‘ he wrote Pinkney, the British government ‘would gladly have facilitated its removal as a measure of inconvenient restriction upon the American people.’
“When this stinging rebuff arrived in Washington in late October, Jefferson bowed to the inevitable. The embargo had been an abject failure. He admitted as much in his annual message, forwarded to Congress on November 8…As to the question of what should be done next, Jefferson offered no direction: it 'will rest with the wisdom of Congress to decide on the course best adapted to such a state of things... [and to] weigh and compare the painful alternatives out of which a choice is to be made.'”
This ended Jefferson's second term; he declined to seek a third term.
