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1791 - Report on Manufactures

The ideal of the independent producer/citizen figured in a remarkable debate that transpired in the late 18th century, also before greater industrialization. In the 1770s and 1780s, a small cohort of prominent Americans emerged to champion the cause of industry.106 In pamphlets and newspaper articles they presented various arguments on behalf of increased manufacture.

Alexander Hamilton's 1791 “Report on Manufactures” is distinguished not so much by originality of thought as by the cogency and persuasiveness of its arguments, its far-reaching implications, and its ennobling vision of the destiny of the United States. Indeed, it contains few, if any, specific proposals that even the most enthusiastic supporters of Hamilton could maintain were original. In this sense, the Report is as much a product of its times as the creation of its author, for many of the ideas which it contains had been debated for decades on both sides of the Atlantic. During the second half of the eighteenth century western Europe and America provided in varying degrees an economic climate which was conducive to discussions of questions concerning national economic growth and the role of manufacturing in the economy.

Americans would save money by manufacturing their own goods and reducing imports, dependence on Great Britain and the whims of British mercantile practices would be lessened, and the poor and indigent could be employed in industry. In the event that the new nation had to defend itself against military attack, a manufacturing base had to be established to produce the implements of war. Immigration, especially of skilled hands, would be encouraged, and industry and science could help improve agriculture. Two of the above points came to dominate the pro-manufacturing position: the role that industry could play in making the nation strong and independent, and the ability of manufacture to engage the idle, especially women and children who were deemed a population disproportionately poor and slothful. Thus, decades prior to women and children staffing America’s first factories, industrial advocates linked women’s and children’s labor with manufacturing.

The encouragement of manufactures, as the “next great work to be accomplished,” was an integral part of Hamiltonian finance. In the Report Hamilton defends the financial policies already in effect that had been subjected to strong criticism. The Bank of the United States and the funding system had been the targets of mounting opposition in the wake of increased speculation in public funds and bank scrip, and the market break of August, 1791, had given additional support to those who contended that all “paper” produced “bubbles.” In the “Report on Manufactures” Hamilton reiterates his view of the public debt as an acquisition of artificial capital available for the promotion of manufactures, and, as in his “Report on Public Credit,” he attempts to dissociate his views from the opinions of those who regarded every increase in the public debt as an unmitigated public blessing.

The “Report on Manufactures” cannot be divorced from Hamilton’s view of public credit and banking, but an equally close relation exists between this Report and his attitude toward foreign policy. It is possible that Hamilton’s views might have aroused less opposition in Congress if he had suggested that the encouragement of American manufactures could be used as a lever to bring a change in European trade policy—especially that of Great Britain. In a conversation with George Beckwith, unofficial British representative in the United States, he had said that American manufacturing efforts would be proportioned to British conduct.3 But although there is evidence that Hamilton attempted to gain support both from free traders and from those who desired greater accommodation for France, he did not attempt to appeal to anti-British groups in the United States by emphasizing that the growth of manufactures might serve as a device for twisting the lion’s tail.

Advocates of manufacture faced stiff opposition. Prominent figures such as Benjamin Franklin, Thomas Jefferson and James Madison raised notable objections. As men of science and invention, they were not enemies to mechanical innovation; rather they saw the emergence of an industrial sector as a threat to the republic. In their minds, manufacture led to the growth of masses of property-less workers crowded into cities, hired cheaply without any greater obligations as to their welfare and easily appealed to by ambitious politicians. Maintaining a republic meant fostering conditions under which a virtuous, public-minded citizenry would emerge that required an economic system based on independent and dignified work.

The anti-manufacture position must be understood in the context of the American Revolution. For Jefferson and others, manufacture was only part of a greater evil. That evil was the recently overthrown mercantile political economic order marked by royal despotism, court favor and corruption, aristocratic opulence, the privileging of the merchant community, rural depopulation and degeneration, and urban growth, poverty and crisis. Industry meant either the great workshops of the crown that produced luxuries and encouraged venality or the urban manufactories employing the multitudes of displaced and poor of the society.

By 1791 European trade policies helped to create an attitude among Americans which Hamilton had every reason to believe would prove favorable to the encouragement of manufactures in the United States. A commercial treaty with Britain after the Revolution had failed to materialize, and Orders in Council closing the West Indies trade had been a source of irritation for the better part of a decade. A greater cause for surprise and irritation came from French commercial policies. Some Frenchmen in the period between 1783 and 1791 had emphasized the possibilities of Franco-American trade, but the policies of the French government caused almost as much ill feeling in 1791 as the highhanded attitudes of the British government and press.

Even Jefferson, inveterate foe of American manufactures and stanch friend of France, commented in June, 1791: “Very considerable discouragements are recently established by France Spain & England with respect to our commerce: the first as to whale oil, tobacco, & ships, the second as to corn, & the third as to corn & ships. Should these regulations not be permanent, still they add to the proofs that too little reliance is to be had on a steady & certain course of commerce with the countries of Europe to permit us to depend more on that than we cannot avoid. Out best interest would be to employ our principal labour in agriculture, because to the profits of labour, which is dear this adds the profits of our lands which are cheap. But the risk of hanging our prosperity on the fluctuating counsels & caprices of others renders it wise in us to turn seriously to manufactures; and if Europe will not let us carry our provisions to their manufactures we must endeavor to bring their manufacturers to our provisions.”