Treasury Secretary Alexander Hamilton’s report on congressional aid to manufacturing.
On January 8,1790, President George Washington spoke to Congress about the relationship between manufacturing and the national defense. He argued that manufacturing essential items like military supplies was necessary for the nation’s safety. One week later, Congress ordered Secretary of the Treasury Alexander Hamilton to prepare a report on how the government could promote manufacturing in the United States. Hamilton worked on the report for nearly two years. He studied the economic ideas of Adam Smith and David Hume. The works of French Finance Minister Jacques Necker also greatly influenced him. After writing four drafts, Hamilton finally presented his Report on the Subject of Manufactures to Congress on December 5,1791. (See Volume 2 for the full text of this document.)
In his opening remarks, Hamilton argued against those who believed America must remain a nation of farmers. He countered that manufacturing would bring more wealth to the nation than farming ever could. It would make use of the natural talent that most Americans had for invention. As Americans created new machines and other products, more and more people could find work. Women, children, and newly arrived immigrants would gladly work to make more money for themselves and their families. These new opportunities would allow all Americans to develop their individual talents.
Hamilton next argued against those who said that America must use all of its economic resources to expand westward and so must import its manufactured goods from Europe. He urged Americans to look at the political realities of the day; with each year it was becoming harder and harder to import goods from Europe. Constant war, along with the economic policies of most European nations, disrupted the free flow of trade across the Atlantic. Hamilton believed the United States must develop manufacturing simultaneously with its westward advance.
Hamilton concluded that manufacturing would not develop on its own in America. Only the national government could raise the massive amounts of capital necessary for manufacturing to take hold in the country. He advocated protective tariffs on rival foreign goods and establishment of a national board that would grant premiums or awards for excellence in manufacturing. Congress would grant bounties or cash payments to manufacturers that produced the most necessary items. Lastly, Hamilton said that Congress should take every measure to improve transportation in the country. Knowing that some might argue that these actions were unconstitutional (because the Constitution did not specifically state that Congress had such authority), Hamilton concluded that Congress had the power to promote manufacturing under the “necessary and proper” clause of Article 1 of the Constitution.
