1799 John Adams - The British Debt Commission Failure

In 1794 under George Washington, Supreme Court Chief Justice John Jay negotiated a treaty of peace with Great Britain.  Under article VI of the agreement, the U.S. committed to paying the prewar debts to English merchants. Understandably, this was enormously unpopular with the people, especially the Democratic Republicans.  From 1763 to 1775 colonial merchants and planters bought practically all of their manufactured articles from British merchants,  but as the revolution took hold, many merchants and planters withheld payments as a way of undermining the authority of English rule.  In 1783 the initial peace treaty signed in Paris cleared the way for British creditors to collect their prewar debts, but the states circumvented this.   With the adoption of the Constitution in 1789, the federal courts began to facilitate the collection of debts with some success against the wishes of the individual states like North Carolina.   So, you can imagine the uproar when the Jay treaty was signed.  It is no wonder people hung the likeness of John Jay in effigy.     

Article VI of the Jay treaty defined what is know as the British Debt commission.  It defined a five-member commission consisting of three British and two Americans to adjudicate the claims of British merchants.   After receiving more than  $25,000,000 in claims, the commission began it's consideration of them in 1798.    A bitter debate began over several items concerning article VI of the Jay treaty. 

1. Paying Interest.   The British wanted full interest for every claim, while the Americans wanted to allow the commission to award or refuse interest as each case warranted it.
2. Proof of Solvency.  Americans wanted to require a proof of solvency of a debtor before debts can be collected.  British did not.
3. Exhaustion of local remedies.  Americans wanted proof that the British had pursued lawful remedies in an American court before coming to the commission.   British did not.
4. Eligibility.   The British wanted all natural born British subjects to be eligible creditors.  The Americans only wanted only those British who declared themselves to be loyal to Great Britain before the war started. 

The two American commissioners were unable to crack the British three man majority, and walked out.  President John Adams addressed this situation in his third annual address to congress.  President Adams called it a "difference of opinion".   The American commissioner's thought it was their "duty to withdraw".   It was an unavoidable interruption, but Adams was confident that there would be an explanation that was compatible with the "spirit of amity" and  "sense of justice"  that now existed between the two countries. 

"In examining the claims of British subjects by the commissioners at Philadelphia, acting under the 6th article of the treaty of amity, commerce, and navigation with Great Britain, a difference of opinion on points deemed essential in the interpretation of that article has arisen between the commissioners appointed by the United States and the other members of that board, from which the former have thought it their duty to withdraw. It is sincerely to be regretted that the execution of an article produced by a mutual spirit of amity and justice should have been thus unavoidably interrupted. It is, however, confidently expected that the same spirit of amity and the same sense of justice in which it originated will lead to satisfactory explanations."

In similar fashion, article VII of the Jay treaty formed the Maritime Claims commission to review claims by Americans against Great Britain for irregular or illegal capture or condemnation of American vessels.  This 5 man commission made up of 3 Americans and two British was also struggling with questions of it's own regarding jurisdiction, exhaustion of local remedies, and the definition of contraband.    When the Americans walked out of the British Debts Commission, the British retaliated by walking out of the Maritime Claims commission.   President Adams promised to get to the bottom of the matter and  was confident that both boards would resume their proceedings.

"I shall immediately instruct our minister at London to endeavor to obtain the explanation necessary to a just performance of those engagements on the part of the United States. With such dispositions on both sides, I can not entertain a doubt that all difficulties will soon be removed and that the 2 boards will then proceed and bring the business committed to them respectively to a satisfactory conclusion."

The Maritime Claims Board did finally resume it's proceedings at the Convention of 1802, but the British Debts Commission turned out to be a failure.   In 1800, President Adams addressed Congress again to report that the "difficulties which suspended the execution of the 6th article of our treaty of amity, commerce, and navigation with Great Britain have not yet been removed".    Even then, President Adams wrote with confidence that the "endeavors of the Government of the United States to bring it to an amicable termination will not be disappointed."   And in that same year, Rufus King, United States minister at London was instructed to negotiation a new convention to spell out America's obligations under article VI of the Jay treaty.    Mr. King addressed Lord Grenville in 1800, but Lord Grenville refused to negotiate a new convention.   Then in January of 1802, Grenville and British Government agreed to accept a payment of £600,000 from the United States for the full satisfaction of all claim.  This equated to about $2.6 million dollars, just over 10% of the total claims.  This failure of the British Debts commission served as a lesson to the world that international tribunals need to be carefully drafted with very specific substantive and procedural laws.

http://www.presidency.ucsb.edu/ws/index.php?pid=29441
http://www.presidency.ucsb.edu/ws/index.php?pid=29442
http://www.stateoftheunionhistory.com/2016/01/1795-george-washington-jay-treaty.html
http://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=4345&context=lawreview
http://ncpedia.org/british-debts