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Hamilton Reading for a Happy Fourth!

Happy Fourth of July! We won't be posting for a few days, but thought we would send you off with a classic of American historical literature, Alexander Hamilton's Report on Manufactures (check the bottom).

Reading Hamilton, the author of many of the Federalist Papers that made the case for the U.S. Constitution, you will find a lot of what developing countries and scholars now say when they talk about "kicking away the ladder"... while not very much in common with the latter-day Hamilton Project. (As Kevin Phillips explains here, naming a nominally Democrat-aligned think-tank after the guy who helped give birth to what would become the Republican Party is about as strange as naming a "free trade"-promoting think-tank after the father of American infant industry policy. Robert Kuttner also has a piece worth reading here.)

Here's an excerpt from Hamilton's third report to Congress, which lays out his arguments for the desired economic-industrial basis of American freedom:

From these circumstances, collectively, two important inferences are to be drawn: one, that there is always a higher probability of a favorable balance of trade, in regard to countries in which manufactures, founded on the basis of a thriving agriculture, flourish, than in regard to those which are confined wholly, or almost wholly, to agriculture; the other (which is also a consequence of the first), that countries of the former description are likely to possess more pecuniary wealth, or money, than those of the latter.

Facts appear to correspond with this conclusion. The importations of manufactured supplies seem invariably to drain the merely agricultural people of their wealth. Let the situation of the manufacturing countries of be compared, in this particular, with that of countries which only cultivate, and the disparity will be striking. Other causes, it is true, help to account for this disparity between some of them; and among these causes, the relative state of agriculture; but between others of them, the most prominent circumstance of dissimilitude arises from the comparative state of manufactures. In corrobation of the same idea, it ought not to escape remark, that the West India Islands, the soils of which are the most fertile, and the nation which, in the greatest degree, supplies the rest of the world with the precious metals, exchange to a loss with almost every other country.

As far as experience at home may guide, it will lead to the same conclusion. Previous to the Revolution, the quantity of coin possessed by the colonies which now compose the United States appeared to be inadequate to their circulation; and their debt to Great Britain was progressive. Since the Revolution, the States in which manufactures have most increased have recovered fastest from the injuries of the late war, and abound most in pecuniary resources.

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Comments

K. McOnus

Lets talk about the trade deficit with our enemies. Why should we live in communities run by our enemies, unless there is significant enough chance for change?

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