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at the close of the revolutionary war, it was extremely natural for Americans to feel prejudiced not only against the English government, but also against the English system of trade, which had long oppressed us with a view to the benefit of the mother country; while, on the other hand, the countenance and support of France induced a prepossession in favor of her opinions and policy. While England was strenuously pursuing her complicated schemes of bounties and monopolies, France, under Turgot, had adopted the equally erroneous theory of the Economists, viz. that agriculture is the only possible road to national wealth. Dr. Franklin became infected with this doctrine while Minister at the Court of Versailles, and his influence also tended to spread it rapidly among the statesmen of America. No other theory at that period seems to have possessed any advocates whatever, and Adam Smith, if he was known at all, was regarded as a visionary theorist, whom no one noticed but to ridicule. We mention this fact the more particularly, as it appears to have escaped general observation that the main scope of General Hamilton's argument, while it deserves all the credit of originality, is in fact identically the same that Smith, Say, Ricardo, and others of that school have demonstrated to be correct. We are fully aware that in making this statement we are contradicting the general impression; but we think we shall be able to show presently, that this impression owes its origin to those who were more anxious to make it appear that Hamilton's opinions coincided with theirs, than that theirs were governed by Hamilton's.

We have already said that the most generally received theory in America was that of the French economists, and General Hamilton accordingly felt himself called upon to confute this system before he offered any other in its stead. Accordingly to this end he had devoted one fourth part of his whole report.

After demonstrating that capital employed in manufactures is in nature equally productive with that employed in agriculture, which the French economists deny, he concludes that it is politic to submit to a temporary advance in the price of commodities in order to secure a permanent reduction in their value; just as individuals frequently invest capital in a concern, which, although it yields no immediate profits, holds out a reasonable prospect of large and satisfactory returns at some future period. The substance of the whole report is found compressed into the following paragraph:

"But though it were ture, that the immediate and certain effect of regulations, controlling the competition of foreign with domestic fabrics, was an increase of price, 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. Being free from the heavy charges which attend the importation of foreign commodities, it can be afforded, and accordingly seldom or never fails to be sold cheaper, in process of time, than the foreign articles, for which it is a substitute. The internal competition which takes place soon does away every thing like monopoly, and by degrees reduces the price of the article to the minimum of a reasonable profit of the capital employed. This accords with the reason of the thing and with experience. Whence it follows, that it is the interest of a community, with a view to eventual and permanent economy, to encourage the growth of manufactures. In a national view, a temporary enhancement of price must always be well compensated by a permanent reduction of it."*

Now it is evident that Mr. Hamilton contemplates and anticipates throughout, a reduction of prices the moment the manufacture is brought to perfection, and a competent number of hands and proper machinery employed; for which purpose he proposed a rate of duties averaging seven per cent. ad valorem. If he had been asked at the time of framing his report, whether after an experiment of thirty-three years with duties averaging thirty instead of seven per cent. he would still advocate a continuance and a farther increase of duties, he would probably refer the inquirer, for an answer, to that part of his report which treats of this point, (which, by the bye, the Philadelphia board have forgotten to print in italics.)

After observing that duties on foreign, and bounties on domestic manufactures amount virtually to the same thing, he

says,

"The continuance of bounties on manufactures long established must almost always be of questionable policy; because a presumption would arise in every such case that there were natural and inherent impediments to success. But in new undertakings they are justifiable, as they are oftentimes necessary."

"This is" (to use their own words) "an eternal, an irrefutable answer" to the Board of Managers of the Pennsylvania Society for the encouragement of American Manufactures, and to the whole host of other societies, instituted for the same disinterested purposes; for unless they can show that manufactures of thirty-three years standing are to be considered as new undertakings, or else that these same manufactures could long since have been afforded cheaper than imported fabrics not subject to a duty-unless they can demonstrate one of these two things, they must give up General Hamilton, who says expressly, that the presumption of any inherent impedi

We cannot omit to express our gratitude to the Philadelphia publishers in printing this paragraph in italics, with a prefixed. We might not have noticed it, but for this gratuitous kindness.

Mr.

ment to success, renders a continuance of encouragement of questionable policy. Of course, when this presumption is reduced to a certainty, the policy of encouragement is much less than questionable. Now we apprehend that nothing is easier than a demonstration that there has existed, even since Mr. Hamilton framed his Report, and that there must exist for centuries to come a natural and inherent impediment to the success of manufactures in this country; an impediment which Mr. Hamilton does not advert to, and perhaps could not foresee, because nothing but experience can enable us to estimate its force and extent. This obstacle is the high wages of labor. Deeply and heartily do we deprecate, in common with every true philanthropist, the day when this impediment shall cease to exist. Happily, it is yet far distant; for until the valley of the Mississippi and the eastern shores of the Pacific are reclaimed and populated, that day cannot come. When wages fall to the English prices, and the poor man's children are perishing with cold and hunger; when our streets are filled with beggars and our prisons with convicts, then, and not till then, will the finer manufactures flourish in this country. Hamilton regards this fall of wages not as desirable, but as inevitable. He could not possibly foresee, without the attribute of extraordinary prescience, at what degree on the scale of wages, laborers would prefer turning their industry to account by migrating to the western part of the continent. But at this day, every body knows that a vast flood of population is pouring into the interior from the Atlantic States, which would not happen if those who change their residence were satisfied with the profits of labor here. The rate of wages is regulated by the supply of laborers in the market compared with the demand for their agency, as we have explained, supra, pp. 34, 35. The laborers determine for themselves whether they will continue to receive the wages they can get here, or try their fortune elsewhere; and the rate of wages being thus once fixed, the surplus supply, which in England must work for less or starve, here overflows into another, and to the eye of the philosopher, a more salutary channel. It is a source of satisfaction, at any rate, to know that the rate of wages does not depend upon the will of the manufacturer, and that all their struggles against the nature of things, are ineffectual in this country, as long as the resource of emigration is open to the lower classes; so that at every rise in prices caused by farther duties, a corresponding emigration takes place until the rate of wages rises higher than before, in consequence, not only of the increased price of the

necessaries of life, but also of the emigration, of which it is the cause.

This, then, is a natural and inherent impediment to the success of manufactures in this country; and not being presumptive, but demonstrable, must render abortive all attempts to manufacture those commodities in which the cost of transportation does not amount to more than the difference of

wages.

II. We have now shown that the general views of Mr. Hamilton by no means correspond with those which have been attributed to him. Having thus disposed of this part of the subject, we now descend to a more particular analysis of some of the minor points of his argument. It will be recollected that we undertook to conjecture in this part of our article, what opinions Hamilton would have entertained had he lived at the present day. It cannot but be believed, that his clear and unprejudiced understanding would have perceived and justly estimated the many discoveries in political science which the collision of powerful minds has struck out during the present century. The knowledge of the nature of values, of wealth, and of the practical policy necessary to their production and augmentation, is not intuitive in the mind of man, but requires much study, and continued, close and philosophical investigation. With these means, and by the assistance of the many lights which now exist on the subject, it is believed, that General Hamilton, although he would still justly adhere to the main scope and conclusions of his elaborate report, yet would modify his opinion as to some of the subordinate divisions of his argument. For example: he found it necessary to devote one fourth part of the report to prove that agricultural and manufacturing industry are equally productive. His arguments are sound, logical and conclusive, and yet if the report had been framed at the present day, he might have found, in the writings of any of the modern political economists, an equally conclusive demonstration in a single paragraph, of which the following would probably be the substance. If at any time one branch of trade is more productive than another, that is, if the persons engaged in it make larger profits than those engaged in other branches, it is certain that the quicksighted principle of self-interest will carry into such profitable concern, undertakers and capital without legislative assistance, until the competition reduces the profits to an equality with the other branches.-Hence it must always happen that agriculture and manufactures will be equally productive to those employed. Even if a bounty is granted to

one

one particular branch of trade, it makes no difference in this
point of view. Suppose every trade realized a profit of five
cent. and that government with a view to encourage
per
in particular, should grant a bounty of three per cent. in ad-
dition; unless a monopoly were likewise granted, the inevitable
consequence would be, that those who were engaged in making
a profit of five per cent. would leave their own business to en-
gage in that which made eight per cent.-The three per cent.
bounty would be regarded as a part of the production by the
capitalist, and the competition would quickly reduce the pro-
fits again to the old standard.

We now proceed to a respectful examination of those enumerated circumstances from which Mr. Hamilton infers "that manufacturing establishments not only occasion a positive augmentation of the produce and revenue of the society, but that they contribute essentially to rendering them greater than they could possibly be without such establishments." These

circumstances are,

1. Division of labor.

2. Extension of the use of machinery.

3. Additional employment to classes not ordinarily engaged in the business.

4. The promotion of emigration from foreign countries. 5. The furnishing greater scope for the diversity of talents and dispositions which discriminate men from each other. 6. The affording a more ample and various field for enterprise.

7. The creating in some instances a new, and securing in all a more certain and steady demand for the surplus produce of the soil.

In order to a more full and explicit analysis of the question how far these circumstances are likely to be conducive to the promotion of national wealth, we must first define what national wealth consists in, (a point, about which there has existed a great variety of unsettled opinions ;) and in order to define wealth, we must analyze its component, value.

It has been usual to divide values into two kinds; namely, value in use, and value in exchange. But we shall venture to suggest another division in the scale of values which ought to Value in use means that capability be taken into account. which most things possess of affording gratification to our desires. Thus air, water, corn, and cloth, possess a value arising from their useful qualities, which may properly be termed their natural value. Then follows the intermediate species of value which has usually been classified with exchangeable Vol. II. No. IX.

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