The Jay Treaty of 1795 between the United States and Britain averted war, solved many issues left over from the American Revolution, and opened ten years of peaceful trade in the midst of the French Revolutionary Wars. It was hotly contested by Jeffersonians but passed the Senate and became a central issue in the formation of the First Party System. Signed in November 1794, ratified and put into effect in 1795, it was also known as Jay's Treaty or the Treaty of London.
The terms were designed primarily by Treasury Secretary Alexander Hamilton, with strong support from President George Washington and chief negotiator John Jay. Both sides achieved some of their objectives (especially averting possible war and increasing trade), but Jeffersonians thought it aligned the new nation too closely with Britain and thus threatened republican values. Jay obtained the primary American requirements, chiefly British withdrawal from the posts they occupied in the Northwest Territory of the United States, which they had promised to abandon in 1783. Wartime debts and the US-Canada boundary were sent to arbitration—one of the first major uses of arbitration in diplomatic history. The British also granted some rights to trade with British possessions in India and the Caribbean in exchange for American limits on the export of cotton.
The treaty averted possible war but immediately became one of the central issues in domestic American politics with Thomas Jefferson and James Madison leading the opposition. They feared that closer economic ties with Britain would strengthen the Federalists and might undercut republican values. The treaty encouraged trade between the two nations for eight years but broke down after 1803. Efforts to agree on a replacement treaty failed and became impossible after the Chesapeake Affair in 1807.
From the British perspective, the war with France made it imperative to improve relations with the U.S. lest that country fall into the French orbit. From the American viewpoint, the most pressing foreign policy issues were normalizing trade relations with Britain, America's leading trading partner, and resolving issues left over from the American Revolution. As one observer explained, the British government was "well disposed to America .... They have made their arrangements upon a plan that comprehends the neutrality of the United States, and are anxious that it should be preserved." Even more serious were the issues arising from the ongoing war between Britain and France. In 1793-1794, the British Navy captured hundreds of American neutral ships and the British in Canada were supporting Indian tribes fighting the U.S. in Ohio (territory the British gave the U.S. in 1783). Congress voted an embargo for two months. Hamilton and the Federalists favored Britain over France, and sought to normalize relations. Hamilton designed the plan and Washington sent Chief Justice John Jay to London to negotiate a comprehensive treaty.
The American government had a number of issues it wanted dealt with:
- Britain was still occupying a number of forts on U.S. territory in the Great Lakes region.
- American merchants wanted compensation for 350 ships confiscated during the 1793-94 conflict.
- Southerners wanted compensation for the slaves the British had taken from them during the Revolution.
- Merchants wanted the British West Indies reopened to American trade.
- The boundary with Canada was too vague and needed delineation.
The British government wanted:
- repayment of debts due British merchants left unpaid since the start of the American Revolution despite a requirement for repayment in the peace treaty.
Both sides achieved many objectives. The British agreed to vacate the six western forts by June 1796 (which was done) and to compensate American ship owners (the British paid $10,345,200 by 1802). In return, the Americans gave "most favored nation" trading status to the British, and acquiesced in British anti-French maritime policies. The United States guaranteed the payment of private prewar debts owed by Americans to British merchants that could not be collected in U.S. courts (the U.S. paid £600,000 in 1802). Two joint boundary commissions were set up to establish the boundary line in the northeast (it agreed on the Saint Croix River) and in the northwest (this one never met). Jay, a strong opponent of slavery, dropped the issue of compensation for slaves, which angered Southern slaveowners. Jay was unsuccessful in negotiating an end to the impressment of American sailors into the Royal Navy, which later became one of the key issues that led to the War of 1812. Article III declared the right of aboriginal peoples (people indigenous to Canada and/or the US) to trade and travel between the United States and Canada. 
Approval and Dissent
Washington submitted the treaty to the Senate for ratification in June 1795. The treaty was unpopular at first and gave the Jeffersonians a platform to rally new supporters. As Paul Varg explains, "The Jay Treaty was a reasonable give-and-take compromise of the issues between the two countries. What rendered it so assailable was not the compromise spelled out between the two nations but the fact that it was not a compromise between the two political parties at home. Embodying the views of the Federalists, the treaty repudiated the foreign policy of the opposing party." The Jeffersonians were opposed to Britain, preferring support for France in the French Revolutionary Wars and arguing that the treaty with France from 1778 was still in effect. They looked at Britain as the center of aristocracy and the main threat to America's republican values. Therefore they denounced Hamilton and Jay (and even Washington) as monarchists who betrayed American values. They organized public protests against Jay and his treaty; one of their rallying cries went: Damn John Jay! Damn everyone that won't damn John Jay! Damn every one that won't put lights in his window and sit up all night damning John Jay!
Jefferson and Madison strongly opposed the treaty—they favored France—thus setting up foreign policy as a major dispute between the new Federalist and Republican parties. Furthermore they had a counter-proposal designed to establish "a direct system of commercial hostility with Great Britain" even at the risk of war. Additionally, the Jeffersonians raised public opinion to fever pitch by accusing the British of promoting Indian atrocities on the frontier. The fierce debates over the treaty in 1794-95, according to historian William Nisbet Chambers, "transformed the Republican movement into a Republican party." To fight the treaty the Jeffersonians "established coordination in activity between leaders at the capital, and leaders, actives and popular followings in the states, counties and towns." Jay's failure to obtain compensation for "lost" slaves galvanized the South into opposition.
The Federalists fought back and the Senate rejected the Jefferson-Madison counter-proposals. Washington threw his enormous prestige behind the treaty, and Federalists rallied public opinion more effectively than the opponents. Hamilton convinced Washington that it was the best treaty that could be expected. Washington, who insisted the U.S. must remain neutral in the European wars then raging, signed it and his prestige carried the day in the Senate. The Federalists made a strong, systematic appeal to public opinion which rallied their own supporters and shifted the debate. Washington and Hamilton outmaneuvered Madison as opposition leader. Hamilton, by this time out of the government, was the dominant figure who helped secure the treaty's approval by the needed 2/3 vote. The Senate passed a resolution in June, advising the president to amend the treaty by suspending the 12th article, which concerned trade between the U.S. and the West Indies. In mid-August, the Senate ratified the treaty 20-10 with the condition that the treaty contain specific language regarding the June 24 resolution. President Washington signed it in late August. The treaty was proclaimed in effect on February 29, 1796 and in a series of close votes after another bitter fight the House funded the Treaty in April 1796.
After defeat in Congress, the Jeffersonian Republicans fought and lost the 1796 presidential election on the issue.
When Jefferson became president in 1801 he did not repudiate the treaty, and instead kept the Federalist minister in London Rufus King to negotiate a successful resolution to outstanding issues regarding cash payments and boundaries. The amity broke down finally in 1805, as relations turned hostile, leading to British attacks in U.S. territorial waters, the Embargo of 1807, and ultimately the War of 1812. In 1815, the Jay Treaty was replaced by the Treaty of Ghent.
Historian Marshall Smelser argues that the treaty effectively postponed war with Britain for ten years or more.
Bradford Perkins argued in 1955 that the treaty was the first establishment of a special relationship between Britain and the U.S., with a second installment under Lord Salisbury. In his view, the treaty worked for ten years to secure peace between Britain and the U.S.: "The decade may he characterized as the period of 'The First Rapprochement'." Perkins concludes that "For about ten years there was peace on the frontier, joint recognition of the value of commercial intercourse, and even, by comparison with both preceding and succeeding epochs, a muting of strife over ship seizures and impressment. Two controversies with France ... pushed the English-speaking powers even more closely together." Starting at swords' point in 1794 the Jay Treaty reversed the tensions, Perkins concludes: "Through a decade of world war and peace, successive governments on both sides of the Atlantic were able to bring about and preserve a cordiality which often approached genuine friendship."
Perkins gives more weight than other historians to valuable concessions regarding trade in India and the concession on the West Indies trade. In addition, reports Perkins, the Royal Navy treated American commerce with "relative leniency" during the wars, and many impressed seamen were returned to America. Furthermore, Spain, seeing an informal British-American alliance shaping up, became more favorable regarding American usage of the Mississippi River and negotiated Pinckney's Treaty reopened trade at New Orleans. When Jefferson took office, he gained renewal of the commercial articles that had greatly benefited American shipping.
Joseph Ellis finds the terms of the treaty "one-sided in Britain's favor," but asserts a consensus of historians that it was
"a shrewd bargain for the United States. It bet, in effect, on England rather than France as the hegemonic European power of the future, which proved prophetic. It recognized the massive dependence of the American economy on trade with England. In a sense it was a precocious preview of the Monroe Doctrine (1823), for it linked American security and economic development to the British fleet, which provided a protective shield of incalculable value throughout the nineteenth century. Mostly, it postponed war with England until America was economically and politically more capable of fighting one."
- Marshall Smelser, The Democratic Republic: 1801-1815 (1968) 139, 145, 155-56.
- Gouverneur Morris quoted in Perkins (1955), 22; the British foreign minister felt that the U.K. was "anxious to keep the Americans in good humour." ibid.
- Wayne S. Cole, An Interpretive History of American Foreign Relations, (1974) P. 55.
- This right was restated in section 289 of the 1952 Immigration and Naturalization Act, currently codified as 8 U.S.C. § 1359: Nothing in this title shall be construed to affect the right of American Indians born in Canada to pass the borders of the United States, but such right shall extend only to persons who possess at least 50 per centum of blood of the American Indian race. 
- Varg (1963), 95.
- William Weeks, Building the Continental Empire, 23.
- Elkins and McKitrick, 405.
- William Nisbet Chambers, Political Parties in a New Nation: The American Experience, 1776-1809 (1963), 80.
- Sean Wilentz, The Rise of American Democracy (2006), 67-68.
- Estes, 2001.
- Estes, 398-99.
- Marshall Smelser, The Democratic Republic, 1801-1815 (1968).
- Perkins, vii.
- Perkins, 1.
- Perkins, Cambridge History of American Foreign Relations I: The Creation of a Republican Empire (1995), 99, 100, 124.
- Joseph Ellis, Founding Brothers: The Revolutionary Generation (2000), 136-7.