Overview
Hamilton’s Report on Manufactures was the third major policy proposal of his tenure as Treasury Secretary. It aimed to diversify the U.S. economy by reducing reliance on European imports and fostering domestic industrial growth through federal intervention.
Key Arguments
1. Economic Independence
- Advocated for self-sufficiency in military and essential goods
- Challenged Jefferson’s agrarian-centric view, arguing manufacturing would augment national wealth
2. Productivity of Manufacturing
- Division of Labor: Specialization increases efficiency
- Machinery: Technology lowers costs and boosts output
- Diversified Economy: Creates demand for agricultural surplus
3. Policy Tools
- Tariffs: Moderate duties to protect infant industries
- Subsidies (“Bounties”): Direct support for key industries
- Infrastructure: Federal investment in roads and canals
4. Countering Opposition
- Refuted claims that manufacturing would harm agriculture
- Rejected laissez-faire, advocating government’s economic role
Political Context & Opposition
- Jefferson and Madison opposed subsidies as unconstitutional
- Southern agrarian interests feared favoring Northern industry
“The expediency of encouraging manufactures… appears at this time to be pretty generally admitted… [They] render the United States independent on foreign nations for military and other essential supplies.”
Legacy
- Many tariff recommendations adopted by 1794
- Laid groundwork for the American System and later industrial policies
