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  5. Alexander Hamilton's Report on Manufactures and Industrial Policy

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Alexander Hamilton's Report on Manufactures and Industrial Policy

  • Richard Sylla
Journal of Economic Perspectives
vol. 38, no. 4, Fall 2024
(pp. 111–30)
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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.

Citation

Sylla, Richard. 2024. "Alexander Hamilton's Report on Manufactures and Industrial Policy." Journal of Economic Perspectives, 38 (4): 111–30. DOI: 10.1257/jep.38.4.111

Additional Materials

JEL Classification

  • B31 History of Economic Thought: Individuals
  • F13 Trade Policy; International Trade Organizations
  • H63 National Debt; Debt Management; Sovereign Debt
  • L52 Industrial Policy; Sectoral Planning Methods
  • L60 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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