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Alexander Hamilton's Report on Manufactures and Industrial Policy

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  • Richard Sylla

Abstract

Hamilton's 1791 state paper on manufactures is a forward-looking argument for US industrialization supported by public policies designed to encourage it. Conventional wisdom circa 1790, along with static considerations of comparative advantage indicated that the United States should stick to farming, export its agricultural surpluses, and import European manufactures. Mercantilist trade policies of the major European empires, however, were barriers to US exports. Hamilton therefore contended that US manufacturing using the latest machine technologies would alleviate the effects of European trade restrictions by creating domestic demand for agricultural surpluses. His report specifies industries worthy of support, and policy measures to encourage their development. During the century that followed, US governments adopted nearly all of Hamilton's recommendations. These measures contributed to an average annual rate of growth of industrial output of 5 percent during that century, helping the United States to become the world's leading manufacturing nation.

Suggested Citation

  • Richard Sylla, 2024. "Alexander Hamilton's Report on Manufactures and Industrial Policy," Journal of Economic Perspectives, American Economic Association, vol. 38(4), pages 111-130, Fall.
    • Handle: RePEc:aea:jecper:v:38:y:2024:i:4:p:111-30
    DOI: 10.1257/jep.38.4.111
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    More about this item

    JEL classification:

    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • N61 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: Pre-1913

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