Hamilton encourages domestic manufacturing

Report on the Subject of Manufactures

In December of 1791, Alexander Hamilton submitted his Report on the Subject of Manufactures to Congress. At that time, American manufacturing was in its infancy and limited by lack of capital and labor. Most Americans were farmers, and merchants worked out of coastal cities. Hamilton’s Report presciently recommended that the United States encourage domestic manufacturing, thereby fostering self-sufficiency and promoting a “spirit of enterprise” through economic diversity. Hamilton eloquently argued, “when all different kinds of industry obtain in a community, each individual can find his proper element, and can call into activity the whole vigor of his nature.” In his Report, Hamilton proposed that government provide subsidies and modify tariffs to support fledgling industries. Subsidies were unpopular, and Congress did not formally consider Hamilton’s recommendation. Despite this setback, Hamilton cleverly managed to get all of his tariff proposals enacted by attaching them to legislation funding protection of the western frontier.

Image: Title page from Alexander Hamilton's Report on the Subject of Manufactures, GoogleBooks

Society for Establishing Useful Manufactures

While preparing his Report on the Subject of Manufactures, Hamilton was also working on founding the Society for Establishing Useful Manufactures (SEUM), a manufacturing corporation that raised private capital to build factories, buy materials and hire workers to develop an industrial site on the Passaic River in Paterson, New Jersey. In this letter (below) of August 17, 1792 to Archibald Mercer, one of the directors of SEUM, Hamilton recommends Francis Douthat for a loan from the Society. Douthat had recently arrived from Europe, with knowledge of the wool industry that he hoped to put to use. After the Panic of 1792, America’s first financial credit crisis, many of SEUM’s investors declared bankruptcy and the Society suffered. The Society was abandoned in 1796, and the factories shut down shortly thereafter. Although SEUM was short-lived, Hamilton had been ahead of his time when he anticipated the importance of American industry to reduce national dependence on European imports. The Passaic River site was back in operation by the time European imports were cut off during the War of 1812, and Paterson became a booming industrial city in the 19th century.

Read the full letter from Hamilton to Mercer below:

Image: Letter from Alexander Hamilton to Archibald Mercer, August 17, 1792, Newport Historical Society. Click on the image to view the object record in Newportal.

Newport Connection

In November of 1791 a group of Newport artisans gathered to form the Newport Association for Mechanics and Manufacturers (NAMM). Like Hamilton’s SEUM and other manufacturing efforts of the time, NAMM aimed to promote domestic industry. Formally chartered on May 14, 1792, the Association’s founding document asserts that its members are “sensible of the real Utility, in the Infancy of our Country as an independent Nation, of establishing its Credit, by the Goodness of its Manufactures (as well those used at Home, as those made for Exportation)--being also anxious to prevent, as far as in their Power, the Drain of Specie consequent on the Importation of the Manufactures of foreign Countries.”

Despite NAMM’s efforts to support local manufacturers, industry never took off to any significant degree in Newport. In part, this was due to lasting repercussions from the Revolutionary War. Around half of the city’s residents had fled during British occupation, including many of its successful merchant families, and the city never fully recovered economically. Some former Newporters moved north and took up residence along the Blackstone Valley where they became involved in early industrial developments, following Samuel Slater’s establishment of America’s first cotton mill in Pawtucket in 1790.

View the Newport Association for Mechanics and Manufacturers' charter, below:

Image: Charter of the Newport Association for Mechanics and Manufacturers, May 14, 1792, Newport Association for Mechanics and Manufacturers records, Newport Historical Society. Click on the image to view the object record in Newportal.