It Used to Be to Promote, Not Tear Down, Other Nations’ Economic Well-being
By Nancy Spannaus
June 28, 2022—It’s official U.S. government policy today to prevent many other nations from having access to the technological advances which our own nation enjoys. According to legal experts, U.S. export controls apply to “virtually every commercial good and technology originating in the U.S.” In addition, the U.S. government has imposed some level of sanctions on exports to at least 23 countries.
While some of these sanctions, like those against Russia and China, are “justified” by designating those countries as enemies of the United States, the broader, though seldom directly stated aim is to maintain U.S. hegemony in economic as well as military matters. As Defense Department official Paul Wolfowitz put it in the immediate aftermath of the fall of the Soviet Union, the United States’ policy must be to prevent any challenge to its predominant superpower status.
Even in the case of those nations considered hostile to the United States, like Syria and Iran, current U.S. government policy has gone to extremes, stopping just short of admitting it wishes to starve these nations into submission to “western values.”
And what about those sanctioned nations not considered threats to the United States, small, under-industrialized nations like Lebanon, the Central African Republic, and Sudan? Why do we seek to deprive those nations of the means to upgrade their standard of living? An even broader number of nations find their imports from the United States restricted by “dual-use” designations and restrictions justified by U.S. insistence on maintaining its commercial advantage.
Back in the 1970s, the Non-Aligned Movement designated this policy technological apartheid. Non-Aligned leaders like India’s Indira Gandhi roundly condemned the major Western powers for refusing to provide developing nations with the latest advanced technologies so that they could build up their economies. The Western excuse that such exports were “dual use,” i.e., could be used militarily, was just that: an excuse. This was particularly the case with peaceful nuclear power, a vital resource for providing the electricity and health care needed to address poverty. These controls by and large continue today.
A New British Empire?
This U.S. policy is a direct replica of the one which Americans fought a revolution to defeat. Up until the Revolution, the British Empire worked vigorously to prevent the export of technological breakthroughs and skilled workers to the American colonies. The Iron Act of 1750, just one example, sought to prevent the erection of new iron mills, and all steel production in the American colonies, stating
Be it further enacted by the authority aforesaid that from and after the 24th day of June 1750, no mill or other engine for slitting or rolling of iron, or any plating-forge to work with a tilt hammer, or any furnace for making steel, shall be erected or continued in any of his Majesty’s colonies in America. And if any person or persons shall erect, or cause to be erected… any such mill, engine, forge, or furnace, every person or persons so offending, they shall for every such mill, engine, forge, or furnace, forfeit the sum of £200 of lawful money of Great Britain.
This policy did not change after U.S. victory. Between 1783 and 1824 the British parliament declared it illegal for any skilled artisan or manufacturer to enter a foreign country to carry on his trade. It was also illegal to export to any place outside Britain or Ireland any “pre-industrial or industrial textile, metal-working, clock-making, leather-working, paper-making, and glass manufacturing equipment.” Penalties for violation included loss of citizenship, confiscation of property, and potential jail time.
It was through this policy that the British Empire thought it could maintain its global dominance. Of course, it never worked to contain scientific knowledge, just as it is not working today. It only served to impose hardship and destruction on weaker nations, and win enemies.
Americans devoted to building up the U.S. economy, from Alexander Hamilton on down, did every in their power to evade and subvert this policy, with great success. And when, following the Union’s victory in the Civil War, the United States itself was in the position of being one of the world’s most advanced industrial powers, it took a different pathway. Would it follow in the footsteps of the British Empire? Emphatically not.
In this short article, I will recount the measures taken by and during the Lincoln and Grant administrations, in particular, to spread not only American technological advances, but the American System of political economy which had facilitated those advances. This is the truly exceptional American policy which needs to be re-adopted today.
The American System
Before elaborating on these examples, a brief explanation of the American System is in order. That system, spawned by First Treasury Secretary Alexander Hamilton, was comprised of three major government policies: 1) a sovereign credit institution (national banking); 2) protection of industry (tariffs and other supports); and 3) government support to build modern infrastructure. The predominant commitment was to creating national unity, independence from foreign control, and ever-increasing national prosperity.
It was understood that the key to creating such prosperity was the process of constant improvement – technological, intellectual, and moral. Feudal forms of organization were antithetical to this commitment, since wealth depended upon the inventiveness and creativity of the population, not riches, armies, and land.
While all the parameters of this system have never been fully realized, the principles of the American System were repeatedly picked up by our leading statemen, especially in the John Quincy Adams administration and that of Abraham Lincoln. They were committed to implementing them for our nation, and to collaborating with other nations for mutual benefit.
The Case of Germany
The penetration of the American System in Germany began very early, through the agency of Friedrich List. List came as a political refugee to America in 1824 and settled in Pennsylvania, where he collaborated closely with Hamiltonian Democrat Mathew Carey, and wrote essays and books promoting the key elements of the American System. When he returned to Germany in the early 1830s, he sought to spread those ideas. Specifically, he organized a tariff union to protect Germany industry against British overlordship, which, under the banner of free trade, aimed to prevent industrial development in that nation. Such a network served to unify what was then just a collection of independent feudal states, setting the groundwork for the creation of a German nation.
List also worked with far-sighted industrialists to sketch out a rail network that would spur commerce within the country, cheapen the cost of production, and also build a sense of nationhood—a process Alexander Hamilton and his followers also promoted in the United States to break down conflict between the states, and which List had participated in when he was in America.
List died in 1846, but his books on National Economy became extremely popular internationally. His influence was supplemented by the active role taken by American System advocate Henry C. Carey (the son of Mathew Carey) in working with German industrialists on how to reorganize their economy for economic prosperity. Carey carried out an active correspondence, and also visited Germany to promote the U.S. approach, which took a great leap forward with the unification of Germany in 1870 under Otto von Bismarck.
The Case of Russia
Perhaps more surprising is the history of U.S. promotion of the American System in czarist Russia. Almost as soon as Hamilton’s Report on Manufactures reached England in 1791, the U.S. consul received a request from the Russian envoy for a copy which he could send to Moscow. That having been provided, the Russians became the first nation, to my knowledge, to translate that document. It was published in Russian in 1807, under the sponsorship of the Ministry of Finance.
Interest in Hamilton’s nation-building principles circulated among the intelligentsia over the ensuing years, augmented by the discussions held by U.S. envoy John Quincy Adams with Czar Alexander I during his tenure as ambassador during the War of 1812. Over subsequent years, American engineers played a significant role in sharing rail and bridge technology with the Russians. But it was under Lincoln, that the U.S. officially promoted American System reforms in Russia.
President Lincoln appointed Kentuckian Cassius Clay, best known as a staunch abolitionist, as ambassador to Russia. Clay took to Russia many copies of one of the primary treatises of the “American System” of political economy, Henry C. Carey’s 1851 book The Harmony of Interests: Agricultural, Manufacturing, and Commercial. He delivered these books to the Emperor himself, his top officials, and a host of other leading politicians and industrialists. Clay toured the major cities, delivering speeches to thunderous applause from captains of industry, regional and national government officials, and merchants, expounding on the need for Russia to industrialize. His speeches were reprinted throughout the Russian press, and the name Henry Carey became a household word in Russia.
In his memoirs, Clay described his reception at a major dinner given in his honor:
“I found that the argument which 1 had made for years in the South, in favor of free labor and manufactures, as cofactors, was well understood in Russia; and since emancipation and education have taken a new projectile force, railroads and manufactures have the same propulsion as is now exhibited in the ‘Solid South. ‘ ” Clay ‘s speech concluded with the Russian industrialists toasting the “great American economist Henry Carey.”
Clay continued as ambassador until 1863, and after a short hiatus forced by pressures on Lincoln for a political reshuffle at home, returned until 1869. He was followed by former Pennsylvania governor Andrew Curtin, who continued the push for modernization, including fostering the growth of railroads. The idea was a quintessentially republican one: technological progress should be shared among nations so that they all grow and prosper.
The Case of Japan
The U.S. government’s campaign to share American System methods of progress in Japan is perhaps the most shocking in its contrast to our attitude today. The interchange began in 1860 with a visit to the United States by Yukichi Fukuzawa, founder of Japan’s first university; this was followed by a second visit in 1867. While here, Fukuzawa became acquainted with Henry Carey and his circles, and took back as many books as he could carry to Japan. His Keio University became a center for educating Japan elite on the methods of the American system. While Fukuzawa was never in the government, nor directly participated in the Meiji Restoration which overthrew the feudal system, he trained many of those who were.
In 1871-73 the new Meiji government sent the Iwakura Mission to the United States and Europe, where the Japanese elite visited factories and leaders of industry, to learn more about how to organize their economy for economic development. Then in 1871, former Secretary of State William Seward convinced the Grant Administration to send an emissary to Japan to aid in their legal affairs. That individual was American System economist, and collaborator of Henry Carey, Erasmus Peshine Smith. Smith served as a U.S. government representative in the inner circles of the Japanese government, advising it on the establishment of a national bank, modernization of industry, and infrastructural development.
Smith’s promotion of the American System was not only at the highest level but was also very public. He produced a series of letters that were published in the Japanese press, expounding on the principles behind the establishment of the National Bank, and support for the growth of crucial industries.
The success of American System in Germany, Russia, and Japan is reflected in their successes against British dominance in heavy industry. Exemplary, as you can see in the accompanying graphic, is the fact that by 1900, the United States and these three nations all outstripped England in production of steel.
The 1876 Exposition
Symbolic of the American system approach to spreading economic inventions and progress was the convening of the 1876 Centennial Exposition in Philadelphia. Explicitly dedicated to celebrating U.S. progress since the Declaration of Independence, the Exposition in fact served as a gathering place for citizens from dozens of nations and more than 10 million American citizens to observe and share the technological innovations which had blossomed in this republic.
The Centennial was officially titled the International Exhibition of Arts, Manufactures, and Products of the Soil and Mine. Congress created a United States Centennial Commission, but did not fund the project, other than providing a last-minute loan. Primary responsibility for construction of the five main buildings, and the more than 200 smaller edifices fell on those in Philadelphia, under the leadership of city officials and the Franklin Institute.
The five main buildings were the Main Exhibition Building, Memorial Hall, Machinery Hall, Agricultural Hall, and Horticultural Hall. Each was stuffed full of the most advanced discoveries and inventions from not only the United States, but also other participating nations. Most striking was the huge Corliss Steam Engine, which powered the approximately 800 other machines on the fair grounds. The Exhibition opened with President Grant flipping the switch. Thirty-seven nations participated, including the Emperor of Brazil. There were significant scientists present as well, including Russia’s Dmitri Mendeleev (the chemist who founded the periodic table). Mendeleev was especially interested in discussing the petroleum industry during his visit.
The Centennial, which is considered to be the first World’s Fair, ran from May to November, and served as a huge educational hub for all who attended. Here, finally, nations could gather to discuss their common interest in technological progress, and share their discoveries with one another. Although it was convened as a celebration of American Independence, it did not convey a message of national chauvinism. The prejudices and deficiencies of American society, of course, were great, but here was the focus on how far we had come. The showcasing of such progress represented hope for all nations.
As we approach the 250th anniversary of the Declaration of Independence, there is a crying need for us to take a page from that great 1876 affair, and the American System approach as a whole. It’s time to reaffirm our commitment to technological progress, not just for Americans, but for mankind globally. No more murderous economic sanctions. No more interdictions of high-tech exports. Science for human betterment is the rightful inheritance of all humanity, and we owe it to our predecessors, ourselves, and our posterity to act accordingly.
 See https://corpgov.law.harvard.edu/2012/11/17/u-s-export-laws-and-related-trade-sanctions/
 See https://orpa.princeton.edu/export-controls/sanctioned-countries
 And then U.S. government officials are surprised when countries like Egypt and Turkey turn to Russia and China for upgrading their industry and infrastructure.
 Gandhi said on July 22, 1974 in response to the West’s cutting off exports of nuclear technology, various software, etc.: “No technology is evil in itself; it is the use that nations make of technology that determines its character. India does not accept the principle of apartheid in any matter, and technology is no exception.” See Selected Thoughts of Indira Gandhi.
 David I Jeremy, “Damming the Flood: British Government Efforts to Check the Outflow of Technicians and Machinery, 1780-1843.” The Business History Review, vol. 51, no.1, Spring 1977.
 See more on the American System at https://americansystemnow.com/what-is-the-american-system/
 Quincy Adams’ collaboration with the Russian elite was described in my previous article in this magazine. See https://covertactionmagazine.com/2022/05/21/the-history-they-dont-teach-you-in-school-u-s-and-russia-have-a-long-history-of-collaboration/
Tags: American System, Germany, Japan, Nancy Spannaus, Russia, sanctions, technological apartheid