*The price was $11,250,000 payable in 15-year 6 per cent. United States bonds, and the assumption by the United States of claims of American citizens against France, amounting to $3,750,000. Napoleon agreed not to negotiate the bonds at a price which would injure the credit of the United States.

During the period just prior to the war of 1812 the prosperity of the young nation was almost phenomenal. Its foreign commerce had grown to large proportions and the American flag was to be found in all the seas and harbors of the world. Home industries were equally prosperous. Raw produce was varied and abundant. Motive power in the shape of rivers and torrents was abundant, and steam power was just making its appearance. Labor being scarce, labor-saving machines naturally suggested themselves to an ingenious people. Sawmills multiplied wherever timber afforded materials for house and ship building, and streams afforded it the means of transportation. Agricultural implements were improved. Cotton began to be raised on an extensive scale and was woven at home as well as exported raw. The products of the loom could not for many years compete in quality with those of England in fineness, but they were stronger and more durable, and on these accounts were often preferred. Woolen and linen manufactures, first begun on a small scale, were afterwards developed into considerable industries. Hemp and flax grew abundantly and furnished the materials for sacking, cordage and sailcloth. Leather became an important article of manufacture, and in some of the forest towns of New England, where hemlock forests abound, extensive tanneries were established. Iron and glass from small beginnings rose to be important industries, while paper making, one of the humble attempts of the young republic, developed into such a flourishing branch of manufacture as to become of immense extent and value. Fisheries were vigorously prosecuted and gave employment to a large population, chief of which were the cod fisheries of New Foundland, the mackerel and the whale fisheries. The latter was carried on in the Arctic, Pacific and Southern Oceans; whale-bone and whale oil, with seal oil and skins, being the valuable products of these enterprises. In the year 1800 American ships amounting to 130,000 tons burden were engaged in whaling.

During this period (1803-1812) France and England were engaged in a gigantic struggle. All Europe was affected, and nation after nation was dragged into the conflict. England ruled the seas and Napoleon's armies were invincible on land. America, under the wise policy of Washington, remained neutral, and was reaping a rich harvest in her foreign commerce. American ships swarmed every sea. They were loaded with the products of every clime, sailed to the United States, broke the voyage, unloaded the cargo, immediately reloaded it again, and proceeded to France and Spain to dispose of it. The English admiralty courts had held in 1800 that while it was illegal for the ships of a neutral to carry the products of a belligerent to or from that belligerent's colony, yet where the goods were carried from a belligerent colony to a neutral port, unloaded, and entered in the custom house, they could then be sent in the same ship to a belligerent, without violating international law. Under this decision England saw in 1805 that France was prospering and her colonies furnishing her with produce the same as in time of peace, and this under the sanction of an English court. The decision was accordingly reversed, and it was held that a voyage from the United States to a belligerent port with goods from a belligerent colony was illegal. Under this decision American ships by the score were captured by the British cruisers.

Parliament followed up the matter by passing in 1806 an Order in Council declaring the whole coast of Europe under blockade, and prohibiting any ship from trading in any of these ports without a British license. In retaliation, Napoleon issued the "Berlin Decree" declaring the coast of the British Isles in a state of blockade. Thus American commerce was placed at the mercy of both the French and English. As a result over 1,600 American ships were captured by France and England and their cargoes, worth millions of dollars, condemned and confiscated. President Jefferson struggled against these outrages as best he could. The people were hot for war, but Jefferson knew that the nation was in no condition for war, and hence he tried "peaceable coercion." Congress passed the "Embargo Act" in December, 1807, declaring an embargo on all American shipping. Our ports were sealed absolutely to foreign trade. Jefferson believed that the loss of our products would bring England to terms. The embargo ruined the commerce of the nation for the time being. The price of wheat fell from $2 to 75 cents a bushel, and general stagnation and business distress prevailed. Prior to the embargo the British had claimed and exercised the right to search American ships for British subjects, thousands of whom were employed in the American merchant marine, owing to the higher wages paid on American vessels. This right of search was exceedingly obnoxious to the Americans. The Embargo Act not having the desired effect on England, war was declared - a war which cost the United States $150,000,000, besides the War of 1812 destruction of a profitable commerce, but it vindicated American rights, taught the young republic the necessity for a navy, and laid the foundation for reciprocity in international trade, a principle which has since exercised an important influence on the commerce of nations.