Neutrality Act of 1794 - History of Business in the U.S.The Law: Federal legislation that prohibited American nationals frombeing commissioned in a foreign army, hiring people to serve a foreign government, or outfitting ships for the military of a foreign government.
Date: Passed by Congress on June 4, 1794
Significance: Although the Neutrality Act technically reduced business opportunities by making it illegal to build warships for sale to foreign governments, the main effect of the law was to increase Americans’ opportunities for trade with foreign countries that were at war by defining key aspects of American neutrality.
At the beginning of President George Washington’s second administration, tensions between Great Britain and France erupted into open warfare. Within the U.S. government, one faction remembered France’s support of the Americans during the Revolutionary War and took note of the fact that France had become a republic. Another faction recognized that U.S. trade was conducted almost exclusively with Great Britain. In 1793, the newly appointed French minister to the United States started commissioning Americans as privateers to attack British ships. He also established pseudo-French courts within the United States to confiscate captured cargoes from the British. Thus, for adventurous ship owners who could afford to turn their ships into military vessels, the war presented a golden opportunity.
These privateering actions within its borders were unacceptable to the United States, however. President Washington proclaimed that the United States would remain neutral in the conflict, and he sought to expel the French minister. France’s actions and its willing American accomplices motivated the passage of the Neutrality Act of 1794. The law banned such activities by American citizens on behalf of warring nations in conflicts in which the United States was not a participant.Anindirect result of the law was that American ships, as vessels of a formally neutral country, would have free passage into the ports of trade of all nations. American shipping made huge gains. However, there were hindrances as well. For example, when the French sought to open their ports in the West Indies to American ships, the British blocked them. Overall, the law has been useful in restricting economic activities that could be harmful to American foreign policy.
Donald A. Watt
See also: Constitution, United States; Gadsden Purchase; International economics and trade; wars.