Master Economics as Hamilton Did!
Study His Report on Manufactures, 231 years old today
By Nancy Spannaus
Dec. 5, 2022—It was on this day in 1791 that First Treasury Secretary Alexander Hamilton produced one of the most important documents of American statecraft. I refer to his Report on Manufactures, an extensive treatise on economic theory and the strategy for nation-building, which he produced in response to the Congressional mandate to outline the means of rendering “the United States, independent on foreign nations for military and other essential supplies.”
It’s long past time that citizens concerned with the sad state of our economy, not to mention those responsible for economic policy making, applied themselves to mastering this report. For in it you can find the principles of economic development which successfully built our nation, and which are still applicable today.
These principles include: 1) National unity and sovereignty, including financial; 2) technological progress, promoted by an “energetic” Federal government; and 3) the cultivation of the creative powers of the human mind as the source of continuous improvement. In policy terms, this meant national banking, protection for industry (including tariffs), and support for national infrastructural development.
If, as is likely, you hesitate to dive into the more than 30,000 word-long document, a good starting point is my 2019 book Hamilton Versus Wall Street: The Core Principles of the American System of Economics. I devote two full chapters to summarizing the report itself, as well as elaborating how the principles embedded in it were taken up and implemented in the most productive periods of our nation’s history.
Foundation of the American System
It is a common error to assume that Congress’s failure to debate, much less pass Hamilton’s Report, meant that it was not taken seriously, or didn’t have a significant influence on future events. Initially Hamilton’s written report went to Congress; then it was presented to the public in full in 1792 by publisher and supporter Mathew Carey in his magazine The American Museum. It also began to circulate internationally almost immediately, in conjunction with Hamilton’s manufacturing “pilot project,” the Society for Useful Manufactures.
Mathew Carey’s efforts to promote manufacturing continued long after his magazine became defunct. He became the focal point of an economic nationalist grouping that fought against the anti-manufacturing policy of the Jefferson administration and its devotees, promoting Federal government support for national banking, tariffs, and internal improvements like canals. After the War of 1812 had demonstrated without a doubt the folly of the Jeffersonian economic policy, Carey launched a new offensive around Hamilton’s report. This included his publishing large excerpts in his widely read pamphlets on how to deal with the American economic crisis of the time.
Later, Mathew Carey’s son Henry took up the fight in his organizing of the Republican Party and collaboration with President Abraham Lincoln on building our nation into an economic powerhouse.
Nor was the propagation of the ideas of the Report on Manufactures confined to America. The document was translated into Russian as early as 1807, and began circulating among the intelligentsia there. It otherwise seems to have circulated only in English, but found significant support among both German and Japan economists. They applied its principles to their own fights for economic independence from the British Empire, including government support for key manufacturing industries, national banking, and unifying infrastructure projects.
Ready for Change?
Hamilton’s core ideas have been trashed from many standpoints over the centuries, and each time his opponents succeeded, our nation has reaped disaster. The first time was Jefferson’s administration, which ended with the near-loss in the War of 1812. The second was Andrew Jackson’s reversal of the industrialization policy of President John Quincy Adams, which led directly into the Civil War.
In the late 19th century, nominally pro-Hamilton financial magnates turned his policies inside out, putting finance above industrial progress, and thus putting us on the path to the Crash of 1929 and the Great Depression. The abandonment of the Hamiltonian policies of FDR (and of his follower President Kennedy) has proceeded apace for the last decades, as we first embraced post-industrialism, and then an increasingly extreme form of anti-industrialism and even depopulation, as advocated by the radical ecology movement.
Over the last few years, the failures of anti-Hamiltonian American policies have finally hit home. We can’t ignore the fact that much of the industrialized world, including China, has put us to shame in such basic areas as transportation and energy, health care and life expectancy. Baby steps have been taken toward industrial policy, but are not only inadequate, but often mixed with xenophobic or war-like hostility to nations which have taken a different path.
Our failures can all be traced to the disregard for principles which were once quintessentially American, and which can be found in their core in Hamilton’s Report on Manufactures. We need a real Hamiltonian revival, and we need it now.
Where to start? Hamilton Versus Wall Street, available from publisher Iuniverse, Amazon, or the author, me.