In 1783, the United States, having just won independence from Britain in the American Revolution, was the only republican form of government known in the world, a nation run by the people for the people. Britain assumed the new nation would not last long and eventually return to the British Empire. Americans had long relied on Britain for manufactured goods and profitable trade with other British colonies, such as the West Indies. Britain was not eager to set up a trade relationship with the new nation after the war, believing that the United States, left on its own, would soon economically collapse. Britain even kept troops at outposts in the western territories granted to the United States in the Treaty of Paris, knowing that the United States was too weak to enforce the treaty's terms.

Through the 1780s, it looked like Britain might be right. After freeing themselves from...