Protectionism of Alexander Hamilton

Abstract

In response to the Treasury Department Circular by Alexander Hamilton, dated June 22, 1791, the supervisors of revenue of each State reported. Those reports and the " enclosures " revealed that there were three types of manufactures in the United States of America in 1791 : the first type was the "incidental trades" depending wholly on the state of commerce such as boat-building, sailmaking and ropemaking, the second was the household manufactures and the "manufactories" which derived from them. The development of these manufactories was very effective in decreasing the imports from Europe. The third was the "S. U. M." type of manufactory as the Hartford Woolen Manufactory or the Beverly Cotton Manufactory. This type of manufacturing establishments were all failures without exception, in spite of their being granted with various privileges. Hamilton made his "Report on Manufactures" on the basis of the informations above. He considered "S. U. M." manufacture the "particular branch of extraordinary importance" and advocated the necessity of bounties, premiums and the exemption from taxation and military service. Concerning "a vast scene of household manufacturing", he considered it the "pleasing result of the investigation", but he values it less as compared with Tench Coxe or William Barton. The reason why Hamilton preferred the large-scale establishments in the most important branch of manufacture, as the object of the protective policy in competing with the English industry, shows the economic backwardness of the United States as compared with England. And the large-scale establishments were owned by the national capitalists ; they were also the Federalists. Hamilton's protective policy was a failure as he gave too little credit to the future of the household manufactures, and overemphasized the importance of the S. U. M. type of manufacturing establishments.