He had been perfecting a method of firing shipboard cannons from beneath the waterline, and experimenting with the size of explosive charges needed to penetrate the hull of a man-o'-war. Britain, alarmed that whoever had this technology might threaten their total command of the sea, wanted to buy the results of his research and "bury" it.
But Fulton told them: "... whatever may be your award, I never will consent to let these inventions lie dormant, should my country at any time have need of them. Were you to grant me an annuity of 20,000 pounds a year, I would sacrifice all to the safety and independence of my country."
Fulton's interest in steam-powered boats had begun in France in 1798, and it developed in co-operation with his later partner Robert R Livingston, the U.S. ambassador to France.
In the spring 1803, Fulton and Livingston launched their first steamboat on the River Seine. It was 66 feet long, eight feet in the beam - and the hull was so weak it could not support the weight of the machinery. It broke in two and sank.
As early as 1798, Livingston had been granted a New York State monopoly on steam navigation on the Hudson River, as soon as he could built a suitable steamboat. And the disaster on the Seine did not stop him using his influence to have the offer of that monopoly extended to Fulton.
The monopoly was to last for twenty years from April, 1803, and Fulton was given two years to produce a practicable steamboat. The deadline was later extended to April, 1807.
Time was short when Fulton arrived back in the U.S. in the winter of 1806-07, and he immediately set shipbuilder Charles Brown to construct the hull of his new boat. By spring, the 133-foot long Clermont had been equipped with a steam engine of Fulton's design ordered from the British firm of Boulton and Watt, and she made her maiden voyage in August, sailing faultlessly at five miles an hour between New York and Albany.
In her original form, the Clermont was heavy and unwieldly, and other rivermen, determined not to go down without a fight, frequently took advantage of this by organising "accidents." Fulton's boat often arrived at her destination on the power of one paddle wheel.
But she used dry pine as fuel and spouted huge flames from her funnel - and that put the fear of the devil into many superstitious sailors on the Hudson.
Fulton's biographer Colden says: "This uncommon light first attracted the attention of the crews of other vessels.
THIS replica of Clermont was built a century after the original. Clermont was named after the estate of Fulton's partner, Robert R Livingston, on the Hudson. The partners themselves, however, originally registered it under the name North River.
Notwithstanding the wind and tide were averse to its approach, they saw with astonishment that it was rapidly coming toward them.
"And when it came so near that the noise of the machinery and paddles was heard, the crews (if what was said in the newspapers of the time be true) in some instances shrank beneath their decks from the terrific sight, and left their vessels to go on shore.
"Others prostrated themselves, and besought Providence to protect them from the approach of the horrible monster which was marching on the tides, and lighting its path by the fires which it vomited."
Raritan and the Car of Neptune were ordered and soon joined the fleet.Over the next eight years, a total of fifteen steamers were built by Fulton or to his specification. Although he could not claim to have invented the steamboat, it was he who made the concept viable and led the way to the opening up of the vast North American continent.
At the time of his premature death on February 24th, 1815, Fulton was still working on his beloved submarine boat.
He actually had under construction a sub capable of carrying 100 men, who would have moved it by means of levers attached to a central shaft turning a propellor. But the project died with him, for no-one else had the expertise to proceed.