The Jay Treaty and Our First Use of Arbitration in an International Dispute

Once the Treaties of Peace (of which the Treaty of Paris that ended the American Revolution is one) were signed in 1783, there was no need for an alliance between France and the fledgling United States. Within the new country, there was a desire to resume trade with its largest trading partner, the U.K.

Once negotiations began between the U.S. and the U.K. to end the war, the British offered very generous terms if the U.S. would sign a separate treaty. France was England’s traditional enemy since 1066 and its government wanted to drive a wedge between the U.S. and France. When John Jay, the first Chief Justice of the Supreme Court of the United States was sent by Washington to London in 1793, the French Revolution had been underway since 1789 and the major European powers were at war.

April 20th,1792 – France declares war on Austria. June 13th, 1792 – Prussia declares war on France. September 21st, 1792 – the French Republic is announced. January 21st, 1793. Louis XVI is executed. February 1st, 1793 – France declares war on Britain and the Netherlands.

Both the British and American governments knew the Treaty of Paris needed clarification and both countries were reneging on key clauses. We wanted the British leave its forts in Michigan, New York, Ohio, and Vermont, normalization of trade, compensation for the 300 odd ships that the British seized in 1793 and 1794. The British wanted to be paid for pre-1775 debts; end the confiscation of property and assets of Loyalists; and to keep us out of another alliance with France.

What is known as the Jay Treaty was signed in 1794. It is the first time that arbitration was used (and accepted) by both sides in an international dispute over land boundaries (the U.S/Canadian border) and debts.

Financially, it was a windfall for the U.S. Britain paid us $11,50,000 (or about $301,716,171.72 in 2020 dollars) and we paid the U.K. £550,000 (~£80,260,749.80 in today’s currency or at the exchange rate of £1 = $1.23, $98,720,722.25 in 2020 dollars) for the 1775 debts.

Both countries granted most-favored nation trade rights although the rights for West Indies were “limited.” The treaty more precisely defined the boundaries granted for what was known as the Northwest Territories (Michigan, Ohio, parts of Minnesota, Indiana and Illinois). We also agreed to remain neutral in any war with France. What Jay could not get was an agreement from the British that they would stop impressing American seaman into the Royal Navy.

Even though the treaty was ratified in the U.S. Senate by a vote of 20 – 10. FYI, by now, there were fifteen states – Vermont joined in 1791 and Kentucky in 1792), it set off a political firestorm.

On one side, there were the Federalists led by George Washington and Alexander Hamilton who favored the treaty. The other political party – the Democratic-Republicans – led by Thomas Jefferson and James Madison opposed it vociferously. Madison, who was a member of the House of Representatives, argued that since the treaty involved trade terms, the House (in which the Democratic Republicans had a clear majority) needed to approve it. They also wanted more concessions from the British.

Jefferson’s and the Democratic-Republicans opposition to the treaty cost them the 1796 presidential election. Jefferson became the V.P. and then became the third U.S. president. It is interesting to note that as president, Jefferson did not cancel the treaty.

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