Happy 800th Birthday Magna Carta... how little we remember thee!
On this Runnymede Eve I thought it would be helpful to reflect on the quality of thought evidenced by the tract written by Secretary of the Treasury Alexander Hamilton in 1791. When you read this, realize that this was Hamilton's explicit adaptation of the Magna Carta and the Charter of the Forest in which he lays out his view that government should create conditions favorable to, but not interfere with, the commerce of the private sector. These excerpts are a reminder of the quality of thought that framed the experiment of commerce in trade which now is shrouded by present demagoguery in secrecy and opacity.
"To endeavor by extraordinary patronage of Government, to accelerate the growth of manufactures, is in fact, to endeavor, by force and art, to transfer the natural current of industry, from a more to less beneficial channel." As you read this essay, think about substituting "industrial" for "knowledge" economies and ask yourself it we're closer to or further from The Grand (and failed) Experiment. And when you are finished with this blog post, reflect on how much easier my weekly prose lands in contrast with the likes of Hamilton, Jefferson, and those we celebrate as our greatest continental philosophers!
The expediency of encouraging manufactures in the United States, which was not long since deemed very questionable, appears at this time to be pretty generally admitted.
There still are, nevertheless, respectable patrons of opinions, unfriendly to the encouragement of manufactures. The following are, substantially, the arguments, by which these opinions are defended. "In every country (say those who entertain them) Agriculture is the most beneficial and productive object of human industry. This position, generally, if not universally true, applies with peculiar emphasis to the United States, on account of their immense tracts of fertile territory, uninhabited and unimproved.” To endeavor by the extraordinary patronage of Government, to accelerate the growth of manufactures, is in fact, to endeavor, by force and art, to transfer the natural current of industry, from a more to a less beneficial channel. Whatever has such a tendency must necessarily be unwise. Indeed it can hardly ever be wise in a government, to attempt to give a direction to the industry of its citizens. This under the quicksighted guidance of private interest, will, if left to itself, infallibly find its own way to the most profitable employment. If contrary to the natural course of things, an unseasonable and premature spring can be given to certain fabrics, by heavy duties, prohibitions, bounties, or by other forced expedients; this will only be to sacrifice the interests of the community to those of particular classes.”
It ought readily to be conceded, that the cultivation of the earth - as the primary and most certain source of national supply - has intrinsically a strong claim to pre-eminence over every other kind of industry. But, that it has a title to any thing like an exclusive predilection, in any country, ought to be admitted with great caution. It might be observed that the labour employed in Agriculture is in a great measure periodical and occasional, depending on seasons, liable to various and long intermissions; while that occupied in manufactures is constant and regular, extending through the year. Manufacturing establishments not only occasion a positive augmentation of the Produce and Revenue of the Society, but they contribute to rendering them greater than they could possibly be, without such establishments. These circumstances are additional employment to classes of the community not ordinarily engaged in the business. The promoting of emigration from foreign Countries; the furnishing greater scope for the diversity of talents and dispositions which discriminate men from each other; the creating in some instances a new, and securing in all, a more certain and steady demand for the surplus produce of the soil.
The objections to the pursuit of manufactures in the United States, which next present themselves to discussion, represent an impracticality of success, arising from three causes: scarcity of hands, dearness of labor, and want of capital. With regard to scarcity of hands, the fact itself must be applied with no small qualification to certain parts of the United States. There are large districts, which may be considered as pretty fully peopled. But there are circumstances that materially diminish every where the effect of a scarcity of hands. These circumstances are - the great use which can be made of women and children - the vast extension given by late improvements to the employment of machines, which substituting the Agency of fire and water, has prodigiously lessened the necessity for manual labor. As soon as foreign artists shall be made sensible that the state of things here affords a moral certainty of employment and encouragement - competent numbers of European workmen will transplant themselves, effectually to ensure the success of the design. The supposed want of Capital for the prosecution of manufactures in the United States is the most indefinite of the objections which are usually opposed to it. The introduction of Banks has a powerful tendency to extend the active Capital of a Country. experience of the Utility of these Institutions is multiplying them in the United States. It is probable that they will be established wherever they can exist with advantage; and wherever, they can be supported, if administered with prudence, they will add new energies to all pecuniary operations. The aid of foreign Capital may safely, and, with considerable latitude be taken into calculation. Its instrumentality has been long experienced in our external commerce; and it has begun to be felt in various other modes.
There remains to be noticed an objection to the encouragement of manufactures, of a nature different from those which question the probability of success. This is derived from its supposed tendency to give a monopoly of advantages to particular classes at the expense of the rest of the community. It is not an unreasonable supposition, that measures, which serve to abridge the free competition of foreign Articles, have a tendency to occasion the enhancement of prices; but the fact does not uniformly correspond with the theory. A reduction of prices has in several instances immediately succeeded the establishment of a domestic manufacture. But though it were true, that the immediate and certain effect of regulations controlling the competition of foreign with domestic fabrics was an increase of prices, it is universally true, that the contrary is the ultimate effect with every successful manufacture. When a domestic manufacture has attained to perfection, and has engaged in the prosecution of it a competent number of Persons, it invariably becomes cheaper. There seems to be a moral certainty, that the trade of a country which is both manufacturing and Agricultural will be more lucrative and prosperous, that of a Country, which is, merely Agricultural. The importation of manufactured supplies seem invariably to drain the merely Agricultural people of their wealth. Previous to the revolution, the quantity of coin, possessed by the colonies, which now compose the United States, appeared, to be inadequate to their circulation; and their debt to Great Britain was progressive.
Since the revolution, the States, in which manufactures have most increased, have recovered fastest from the injuries of the late War, and abound most in pecuniary resources. It is not uncommon to meet with an opinion that thought the promoting of manufactures may be the interest of a part of the Union, it is contrary to that of another part. The northern & southern regions are sometimes represented as having adverse interests in this respect. Those are called Manufacturing, these Agricultural states; and a species of opposition is imagined to subsist between the Manufacturing and Agricultural interests. The idea of an opposition between these two interests is the common error of the early periods of every country, but experience gradually dissipates it. Ideas of a contrariety of interests between the northern and southern regions of the Union, are in the Main as unfounded as they are mischievous. The diversity of Circumstances on which such contrariety is usually predicated, authorizes a directly contrary conclusion. Mutual wants constitute one of the strongest links of political connection. If the northern and middle states should be the principal scenes of such establishments, they would immediately benefit the more southern, by creating a demand for productions.