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T A B L E
k
k
O F
C O N T E N T S
*
Mr. Hamilton on Public Credit
^Report by
Mr. Hamilton on a National Bank J ^ Report by
J. Report by Mr. Hamilton on Manufactures
^^Report by Mr. Hamilton on Establishing a Mintt
^ w i e p o r t by Mr. Hamilton on Public Credit
^ R e p o r t by Mr. Gallatin on the Finances
'J IT7Report by Mr. Gallatin on the Finances
Report by Mr. Gallatin on the Finances
-}• Report by Mr. Gallatin on the Finances
^Report by Mr. Gallatin on the Finance*
V, Report by Mr. Gallatin on the Finances
Report by Mr. Gallatin on the Finances
*^Report by Mr. Gallatin on the Finances
Report by Mr. Gallatin on the Finances
Report by Mr. Gallatin on the Finances
"^Report by Mr. Gallatin on the Finances
^Report by Mr. Gallatin on the Finance?
FAG<?.
-
-
-
Report by Mr. Gallatin on the Finances
. . R e p o r t by William Jones, (Acting Secretary
P^ Report by William Jones, (Acting Secretary
° R e p o r t by G. W . Campbell on the Finances
<0
VOL. I . — 1
CM
-
the Fiuances
the Finances
-
January,
December,
December,
May,
January,
December,
December,
October,
November,
December,
December,
November,
December,
June,
December,
December,
November,
December,
June,
December,
December,
17.90
1790
1791
1791
1795
1801
1802
1303
1804
1305
1806
1807
1808
1809
1S09
1810
1811
1812
1813
1813
1814
3
54
78
133
157
216
252
262
285
297
331
35G
373
391
398
421
443
468
488
499
523
12(3
REPORT
REPORTS OF THE
ON
[1791.
MANUFACTURES.
DECEMBER,
1791.
T h e Secretary of the Treasury, in obedience to the order of the House
of Representatives, of the loth day of January, 1790, has applied his attention, at as early a period as his other duties would permit, to the subject
of manufactures; and particularly to the means of promoting such as will
tend to render the United States independent on foreign nations for military
and other essential supplies; and he thereupon respectfully submits the
following report:
T h e 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. T h e embarrassments which have obstructed the progress of our external trade, have led to serious reflections on the necessity
of enlarging the sphere of our domestic commerce. T h e restrictive regulations, which, in foreign markets, abridge the vent of the increasing surplus
ot our agricultural produce, serve to beget an earnest desire that a more
extensive demand for that surplus i>ay be created at home; and the complete
success which has rewarded manufacturing enterprise, in some valuable
branches, conspiring with the promising symptoms which attend some less
mature essays m others, justify a hope that the obstacles to the growth of
this species of industry are less formidable than they were apprehended to
be; and that it is not difficult to find, in its further extension, a full indemnification for any external disadvantages which are or may be experienced,
am7s-' f e ' y a n a C C e s s i o n o f r e s o u r c c s > ^vorable to national independence
There still are, nevertheless, respectable patrons of opinions unfriendlv
to the en Hmraorement of manufactures. T h e following are, substantially,
the arguments by which these opinions are defended
« In every country, (say those who entertain them,) agriculture is the
™ ^ r ? f C l n \ a n d p r t , d U ,? t i V e 0 f c j e c t 0 f h n m ™
T h i s position,
V m
l
fl
i
t
V l M ' appUes with
emphasis to the
l
m
m
tracts of
h
a
b
t
e
d
fertile territory uninCa11 a f f o r d 8 0
men t r c ? n Z flPnriet
^ ^
advantageous an employt h e C0nversi011 of
r
X
K
w i t h t h i s c extensive wilderness
m
S
T
^
J
^
^
^
> ™ contribute to the
population, strength, and real riches of the country.
deed, H can hardly ever be wbe
rection to the industry of its citizen " •
of private interest, will, if lef to h
most profitable employment - <and
,
' •
•• l n a 1 1 «
mUSt
^ b<!
7
nTES"!
V ^ / 1
J n ^
V
^ y fi' d " s o w n w a 7 t 0 r®
by such employment that the public
1791.]
SECRETxiRY OF THE TREASURY.
79
prosperity will be most effectually promoted. T o leave industry to itself,
therefore, is, in almost every ease, the soundest as well as the simplest policy.
" T h i s policy is not only recommended to the United States by considerations which affect, all nations; it is. in a manner, dictated to them by the
imperious force of a very peculiar situation. T h e smallness of their population, compared with their territory; the constant allurements to emigration
from the settled to the unsettled parts of the country; the facility with which
the less independent condition of an artisan can be exchanged for the more
independent condition of a farmer: these, and similar causes, conspire to
produce, and for a length of time must continue to occasion, a scarcity of
hands for manufacturing occupation, and dearness of labor generally. T o
these disadvantages for the prosecution of manufactures, a deficiency of pecuniary capital being added, the prospect of a successful competition with
the manufactures of Europe must be regarded as little less than desperate.
Extensive manufactures can only be the offspring of a redundant—at least
of a full population. Till the latter shall characterize the situation of this
country, it is vain to hope for the former.
"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. Besides the misdirection of labor, a virtual monopoly will be given to the persons employed
on such fabrics; and an enhancement of price, the inevitable consequence
of every monopoly, must be defrayed at the expense of the other parts of
the society. It is far preferable that those persons should be engaged in the
cultivation of the earth ; and that we should procure, in exchange for its
productions, the commodities with which foreigners are able to supply us
HI greater perfection, and upon better terms."
This mode of reasoning is founded upon facts and principles, which have
certainly respectable pretensions. If it had governed the conduct of nations
more generally than it has done, there is room to suppose that it might have
carried them faster to prosperity and greatness than they have attained by
the pursuit of maxims too widely opposite. Most general theories, however, admit of numerous exceptions ; and there are few, if any, of the political kind, which do not blend a considerable portion of error with the
truths they inculcate.
In order to an accurate judgment how far that which has been just stated
°ught to be deemed liable to a similar imputation, it is necessary to advert
carefully t 0 t | i e considerations which plead in favor of manufactures, and
which appear to recommend the special and positive encouragement of them
certain cases, and under certain reasonable limitations.
It ought readily to be conceded that the cultivation of the earth, as the
primary and most certain source of national supply, as the immediate and
chief source of subsistence to man, as the principal source of those materials
which constitute the nutriment of other kinds of labor, as including a state
most favorable to the freedom and independence of the human mind—one,
perhaps, most conducive to the multiplication of the human species—has intrinsically a strong claim to pre-eminence over every other kind of industry.
that it has a title to any thing like an exclusive predilection, in any
<-'ountry, ought to be admitted with great caution; that it is even more pr >Jluctive than every other branch of "industry, requires more evidence than
"as yet been given in support of the position. T h a t its real interests, pre*
12(3
REPORTS OF THE
[1791.
cious and important as (without the help of exaggeration) they truly are,
will be advanced, rather than injured, by the due encouragement of manufactures, may, it is believed, be satisfactorily demonstrated. And it is also
believed that the expediency of such encouragement, in a general view,
may be shown to be recommended by the most cogent and persuasive motives of national policv.
It has been maintained that agriculture is not only the most productive,
but the only productive species of industry. T h e reality of this suggestion,
in either respect, has, however, not been verified hy any accurate detail oi .
facts and calculations; and the general arguments which are adduced to
prove it, are rather subtile and paradoxical, than solid or convincing.
Those which maintain its exclusive productiveness are to this effect:
Labor bestowed upon the cultivation of land, produces enough not only
to replace all the necessary expenses incurred in the business, and to maintain the persons who are employed in it, but to afford, together with the
ordinary profit on the stock or capital of the farmer, a nett surplus or rent
for the landlord or proprietor of the soil. But the labor of artificers does
nothing more than replace the stock which employs them, (or which furnishes materials, tools, and wages.) and yield the ordinary profit upon that
stock. It yields nothing equivalent to the rent of the land; neither does it
add any thing to the total value of the whole annual produce of the land
and labor of the country. T h e additional value given to those parts of the
produce of land which are wrought into manufactures, is counterbalanced
by the value of those other parts of that produce which are consumed by
the manufacturers. It can, therefore, only be by saving or parsimony, not
by the positive productiveness of their labor, that the" classes of artificers
can, in any degree, augment the revenue of the society.
T o this it has been answered—
1. " That inasmuch as it is acknowledged that manufacturing labor reproduces a value equal to that which is expended or consumed in carrying
it on, and continues in existence the original stock or capital employed, it
ought, 011 that account alone, to escape being considered as wholly unproductive. That though it should be admitted, as alleged, that the consumption of the produce of the soil, by the classes of artificers or manufacturers,
is exactly equal to the value added by their labor to the materials upon
which it is exerted, yet it would not thence follow that it added nothing
to the revenue of the society, or to the aggregate value of the annual produce of its land and labor. If the consumption for any given period
amounted to a given sum, and the increased value of the produce manufactured, in the same period, to a like sum. the total amount of the consumption and production, during that period, would be equal to the two
sums and consequently double the value of the agricultural produce consumed : and though the increment of value produced by the classes of artificers should, at no time, exceed the value of the produce of the land con |
sumed by them, yet there would be, at every moment, in consequence of
their labor, a greater value of goods in the market than would exist independent ot It.''
2. « T h a t the position, that artificers can augment the revenue of a society only by parsimony, is true in no other sense than in one which is
equally applicable to husbandmen or cultivators. It may be alike affirmed
ot all these classes, that the fund acquired by their labor, and destined for
their support, is not, in an ordinary wav, more than equal to it. And hence
1791.]
SECRETxiRY OF THE TREASURY.
81
it will follow, that augmentation of the wealth or capital of the community,
(except in the instances of some extraordinary dexterity or>skill,) can only
proceed, with respect to any of them, from the savings of the more thrifty
and parsimonious."
3. " T h a t the annual produce of the land and labor of a country can
only be increased in two ways—by some improvement in the productive
powers of the useful labor which actually exists within it, or by some increase
in the quantity of such labor. That, with regard to the first, the labor of
artificers being capable of greater subdivision and simplicity of operation
than that of cultivators, it is susceptible, in a proportionally greater degree,
of improvement in its productive powers, whether to be derived from an
accession of skill or from the application of ingenious machinery: in which
particular, therefore, the labor employed in the culture of land can pretend
to no advantage over that engaged in manufactures. T h a t , with regard to
an augmentation of the quantity of useful labor, this, excluding adventitious
circumstances, must depend essentially upon an increase of capital, which
again must depend upon the savings made out of the revenues of those who
furnish or manage that which is at any time employed, whether in agriculture or in manufactures, or in any other way."
But while the exclusive productiveness of agricultural labor has been
thus denied and refuted, the superiority of its productiveness has been conceded without hesitation. As this concession involves a point of considerable magnitude, in relation to maxims of public administration, the grounds
on which,it rests are worthy of a distinct and particular examination.
One of the arguments made use of in support of the idea, may be pronounced both quaint and superficial: it amounts to this—That in the productions of the soil, nature co-operates with man ; and that the effect of
thfiir joint labor must be greater than that of the labor of man alone.
This, however, is far from being; a necessary inference. It is very conceivable that the labor of man alone, laid out upon a work requiring great
skill and art to bring it to perfection, may be more productive, in value,
than the labor of nature and man combined, when directed towards more
simple operations and objects; and when it is recollected to what an extent
the agency of nature, in the application of the mechanical powers, is made
auxiliary to the prosecution of manufactures, the suggestion which has
been noticed loses even the appearance of plausibility.
It might also be observed, with a contrary view, that the labor employed
in agriculture is, in a great measure, periodical and occasional, depending on
seasons, aud liable to Various and long intermissions; while that occupied in
m
any manufactures is constant and regular, extending through the year,
embracing, in some instances, night as well as day. It is also probable that
^ere are among the cultivators of land more examples of remissness than
among artificers. T h e farmer, from the peculiar fertility of his land, or
some other favorable circumstance, may frequently obtain a livelihood, even
with a considerable degree of carelessness in the mode of cultivation; but
^ e artisan can with difficulty effect the same object, without exerting himself pretty equally with all those who are engaged in the same pursuit.
And if it 1Tia y likewise be assumed as a fact, that manufactures open a
wider field to exertions of ingenuity than agriculture, it would not be a
strained conjecture, that the labor employed in the former, being at once
Biore constant, more uniform, and more ingenious, that that which is employed in the latter, will be found, at the same time, more productive.
YOL.
I.—6
12(3
REPORTS OF THE
[1791.
But it is not meant to lay stress on observations of this nature ; they
ought only to serve as a counterbalance to those of a similar complexion.
Circumstances so vague and general, as well as so abstract, can afford little
instruction in a matter of this kind.
Another, and that which seems to be the principal argument offered for
the superior productiveness of agricultural labor, turns upon the allegation,
that labor employed on manufactures yields nothing equivalent to the rent
of land; or to that nett surplus, as it is called, which accrues to the proprietor of the soil.
But this distinction, important as it has been deemed, appears rather
verbal than substantial.
It is easily discernible, that what in the first instance is divided into two
parts, under the denominations of the ordinary profit of the stock of the
farmer and rent to the landlord, is, in the second instance, united under the
general appellation of the ordinary profit on the stock of the undertaker;
and that this formal or verbal distribution constitutes the whole difference
in the two cases. It seems to have been overlooked, that the land is itself
a stock or capital, advanced or lent by its owner to the occupier or tenant,
and that the rent he receives is only the ordinary profit of a certain stock in
land, not managed by the proprietor himself, but by another, to whom he
lends or lets it, and who, on his part, advances a second capital to stock and
improve the land, upon which he also receives the usual profit. T h e rent of
the landlord and the profit of the farmer are, therefore, nothing more than
the ordinary profits of two capitals belonging to two different persons, and
united in the cultivation of a farm: as, in the other case, the surplus which
arises upon any manufactory, after replacing the expenses of carrying it on,
answers to the ordinary profits of one or more capitals engaged in the prosecution of such manufactory. It is said one or more capitals, because, in
fact, the same thing which is contemplated in the case of the farm, sometimes happens in that of a manufactory. T h e r e is one who furnishes a
part of the capital, or lends a part of the money by which it is carried on.
and another who carries it on with the addition of his own capital. Out of
the surplus which remains after defraying expenses, an interest is paid to
the money-lender, for the portion of the capital furnished by him which
exactly agrees with the rent paid to the landlord ; and the residue' of that
surplus constitutes the profit of the undertaker or manufacturer and agrees
with what is denominated the ordinary profits on the stock of the farmer.
Both together make the ordinary profits of two capitals employed in a
manufactory; as, in the other case, the rent of the landlord and the revenue
0 r d m a r y profits of
t w o ca
P i t a l s ^ P l o y e d in the
T h e rent therefore, accruing to the proprietor of the land, far from being
a criterion of exclusive productiveness, as has been argued/is no criterion
even of superior productiveness. T h e question must still be, whether the
surplus after defraying expenses of a grven capital employed in the purchase and improvement of a piece of land, is greater or less than that of a
like capital employed m the prosecution of a manufactory; or whether the
whole value produced from a given capital and a given quantity of labor
Tano equal
S O Lcapital
? 1 ?
W BG
G R
R
T H A N THE W H O 1
7' an equal
T quantity
°R
e Z in
Z the other
PlucedU
and
of labor employed
waVJ
siness
^
of agriculture or that of manufactures will yield the greatest product, according to a compound ratio of the
1791.]
SECRETxiRY OF THE TREASURY.
83
quantity of the capital, and the quantity of labor, which are employed in the
one or in the other.
T h e solution of either of these questions is not easy; it involves numerous
and complicated details, depending on an accurate knowledge of the objects
to be compared. It is not known that the comparison has ever yet been
made upon sufficient data, properly ascertained and analyzed. T o be able
to make it on the present occasion, with satisfactory precision, would demand
more previous inquiry and investigation than there has been hitherto either
leisure or opportunity to accomplish.
Some essays, however, have been made towards acquiring the requisite
information; which have rather served to throw doubt upon, than to confirm,
the hypothesis under examination. But it ought to be acknowledged, that
they have been too little diversified, and are too imperfect to authorize a definitive conclusion either w a y ; leading rather to probable conjecture than to
certain deduction. T h e y render it probable that there are various branches
of manufactures, in which a given capital will yield a greater total product,
and a considerably greater nett product, than an equal capital in vested in the
purchase and improvement of lands; and that there are also some branches,
in which both the gross and the nett produce will exceed that of agricultural
industry, according to a compound ratio of capital and labor. But it is on
this last point that there appears to be the greatest room for doubt. It is far
less difficult to infer, generally, that the nett produce of capital engaged in
manufacturing enterprises is greater than that of capital engaged in agriculture.
"
"
The foregoing suggestions are not designed to inculcate an opinion that
manufacturing industry is more productive than that of agriculture. T h e y
are intended rather to show that the reverse of this proposition is not ascertained; that the general arguments, which are brought to establish it, are not
satisfactory; and, consequently, that a supposition of the superior productiveness of tillage ought to be no obstacle to listening to any substantial inducements to the encouragement of manufactures, which may be otherwise perceived to exist, through an apprehension that they may have a tendency to
divert labor from a more to a less profitable employment.
It is extremely probable that on a full and accurate development of the
matter, on the ground of fact and calculation, it would be discovered that
there is no material difference between the aggregate productiveness of the
°ne and of the other kind of industry; and that the propriety of the encouragements which may, in any case, be proposed to be given to either, ought
to
be determined upon considerations irrelative to any comparison of that
nature.
II- But without contending for the superior productiveness of manufactur1Q
g industry, it may conduce to a better judgment of the policy which
ought to be pursued respecting its encouragement, to contemplate the subject under some additional aspects, tending not only to confirm the idea that
tiiis kind of industry has been improperly represented as unproductive in
lts
elf, but to evince, in addition, that the establishment and diffusion of manufactures have the effect of rendering the total mass of useful and productive
'abor in a community greater than it would otherwise be. In prosecuting
tnis discussion, it may be necessary briefly to resume and review some of
the topics which have been already touched.
T o affirm that the labor of the manufacturer is unproductive, because he
consumes as much of the produce of land as he adds value to the raw ma
12(3
REPORTS OF THE
[1791.
terinl which he manufactures, is not better founded than it would be to affirm that the labor of the farmer, which furnishes materials to the manufacturer, is unproductive, because he consumes an equal value of manufactured
articles. Each furnishes a certain portion of the produce of his labor to the
other, and each destroys a correspondent portion of the produce of the labor
of the other. In the mean time, the maintenance of two citizens, instead of
one, is going o n ; the State has two members instead of one; and they, together, consume twice the value of what is produced from the land.
If, instead of a farmer and artificer, there were a farmer only, he would be
under the necessity of devoting a part of his labor to the fabrication of clothing, and other articles, which he would procure of the artificer, in the case
of there being such a person; and of course he would be able to devote less
labor to the cultivation of his farm, and would draw from it a proportionably
less product. T h e whole quantity of production in this state of things, in
provisions, raw materials, and manufactures, would certainly not exceed in
value the amount of what would be produced in provisions and raw materials only, if there were an artificer as well as a farmer.
Again :—if there were both an artificer and a farmer, the latter would be
left at liberty to pursue exclusively the cultivation of his farm. A greater
quantity of provisions and raw materials would, of course, be produced,
equal, at least, as has been already observed, to the whole amount of the provisions, raw materials, and manufactures, which would exist cn a contrary
supposition. T h e artificer, at the same time, would be going on in the
production of manufactured commodities, to an amount sufficient not only
to repay the iarmer in those commodities, for the provisions and materials
which were procured from him, but to furnish the artificer himself with a
supply of similar commodities for his own use. Thus, then, there would be
two quantities or values in existence, instead of one; and the revenue and consumption would be double in one case what it would be in the other.
If, in place of both these suppositions, there were supposed to be two farmers and no artificer, each of whom applied a part of his labor to the culture of land, and another part to the fabrication of manufactures; in this
case, the portion ot the labor ofboth bestowed upon land would produce the
same quantity of provisions and raw materials only as would be produced
by the entire sum ot the labor of one applied in the same manner • arid the
portion of the labor of both bestowed upon manufactures would'produce
the same quantity ol manufactures only, as would be produced bv the entire sum ot the labor of one applied in the same manner. Hence, the pro^»—
1J
.,
*
I
nnpo nf tnn Inhn* aI thn
1791.]
SECRETxiRY OF THE TREASURY.
85
other person, for carrying on the business. T h i s is the ordinary profit of
the stock employed in the manufactory, and is, in every sense, as effective
an addition to the income of the society as the rent of land.
T h e produce of the labor of the artificer, consequently, may be regarded
as composed of three parts: one, by which the provisions for his subsistence
and the materials for his work are purchased of the farmer; one, by which
he supplies himself with manufactured necessaries; and a third, which
constitutes the profit on the stock employed. T h e two last portions seem
to have been overlooked in the system which represents manufacturing industry as barren and unproductive.
In the course of the preceding illustrations, the products of equal quantities of the labor of the farmer and artificer have been treated as if equal to
each other; but this is not to be understood as intending to assert any such
precise equality. It is merely a manner of expression, adopted for the sake
of simplicity and perspicuity. Whether the value of the produce of the
labor of the farmer be somewhat more or less than that of the artificer, is
not material to the main scope of the argument, which hitherto has only
aimed at showing that the one, as well as" the other, occasions a positive
augmentation of the total produce and revenue of the society.
It is now proper to proceed a step further, and to enumerate the principal
circumstances, from which it may be inferred 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. T h e division of labor.
2. An extension of the use of machinery.
3. Additional employment to classes of the community not. ordinarily engaged in the business.
4. T h e promoting of emigration from foreign countries.
5. T h e furnishing greater scope for the diversity of talents and dispositions, which discriminate men from each other.
6. T h e affording a more ample and various field for enterprise.
7. T h e creating, in some instances, a new, and securing, in all, a more
certain and steady demand for the surplus produce of the soil.
Each of these circumstances has a considerable influence upon the total
mass of industrious effort in a community: together, they add to it a degree of energy and effect which is not easily conceived. Some comments
upon each of 'them, in the order in which they have been stated, may
serve to explain their importance.
I. J.? to the division of labor.
It has justly been observed, that there is scarcely any thing of greater
moment in the economy of a nation than the proper division of labor. T h e
separation of occupations causes each to be carried to a much greater perfection than it could possibly acquire if they were blended. T h i s arises
principally from three circumstances.
1st. T h e greater skill and dexterity naturally resulting from a constant
and undivided application to a single object. It is evident that these properties must increase in proportion to the separation and simplification of
objects, and the steadiness of the attention devoted to each ; and must be
less in proportion to the complication of objects, and the number among
which
the attention is distracted.
12(3
REPORTS OF THE
[1791.
* 2d. T h e economy of time, by avoiding the loss of it, incident to a frequent transition from one operation to another of a different nature. This
depends on various circumstances: the transition itself; the orderly disposition of the implements, machines, and materials employed in the operation to be relinquished ; the preparatory steps to the commencement of a
new one; the interruption of the impulse which the mind of the workman
.acquires from being engaged in a particular operation ; the distractions,
.hesitations, and reluctances which attend the passage from one kind of
business to another.
3d. An extension of the use of machinery. A man occupied on a single
object will have it more in his power, and* will be more naturally led to
exert his imagination in devising methods to facilitate and abridge labor,
than if lie were perplexed by a variety of independent and dissimilar operations. Resides this, the fabrication of machines, in numerous instances,
becoming itself a distinct trade, the artist who follows it has all the advantages which have been enumerated for improvement in his particular art:
and, in both ways, the invention and application of machinery are extended^
And, from these causes united, the mere separation of the occupation of
the cultivator from that of the artificer, has the effect of augmenting the
productive powers of labor, and, with them, the total mass of the produce
or revenue of a country. In this single view of the subject, therefore, the
utility of artificers or manufacturers, towards promoting an increase of productive industry, is apparent.
II. As to an extension of the use of machinery ; a point which, though
part y anticipated, requires to be placed in one or two additional
lights.
I he employment of machinery forms an item of great importance in the
general mass of national industry. It is an artificial'force brought in aid of
the natural force of man ; and, to all the purposes of labor, is an increase of
hands—an accession of strength, unencumbered, too, by the expense of
maintaining the laborer. May it not, therefore, be fairly inferred that those
occupations which give greatest scope to the use of this auxiliary contribute most o the genera stock of industrious effort, and, in consequence, to
H
;
the general product of industry?
observ^t'il.n . h ^ f ° r f ^ ^ ( a n d l h e t r i l t h o f t h e P o t i o n referred to
observation,) that manufacturing pursuits are susceptible, in a n e a t e r deappl Catl0n of
!
machinery than those of agriculture, " if s o all
t ' e l f p r l Z l ^ k V Z - 1 C r° mUm1 US ,nt ie t yt 0 WU hS i Sc Uh 'p pi lnys tfer«o dm 0 t h manufacturing
for
er
S
E
Sri
f
?
countries. T h e
substitution of foreign for domestic manufactures, is a transfer to foreign
nations of the advantages accruing from the employ ment of machinery m
18
t^thTgt t e s t t ^
h e
0tt 0n ni111
n
°f * * *
*
e n t e d ifl E n
dJ | ;ii , ;
' l y
K
i r ^ * u S P T
forme d ^ y means of
v
^
i
t
r
been so suddenly m
a
^
d
S
i
£
t
lalld w
l
0
m
^
f
f
i
n
^
most utiSty^and
i t b i n the last twenty years is a
Wh ch h a s
V
b e e n jn^t advanced
^
™
^
C
^
J
Z
^
L
^
1791.]
SECRETxiRY OF THE TREASURY.
87
III. As to the additional employment of classes of the community not
originally engaged in the particular
business.
This is not among the least valuable of the means by which manufacturing institutions contribute to augment the general stock of industry and
production. In places where those institutions prevail, besides the persons
regularly engaged in them, they afford occasional and extra employment to
industrious individuals and families, who are willing to devote the leisure
resulting from the intermissions of their ordinary pursuits to collateral
labors, as a resource for multiplying their acquisitions or their enjoyments.
The husbandman himself experiences a new source of profit and support
from the increased industry of his wife and daughters, invited and stimulated by the demands of the neighboring manufactories.
Besides this advantage of occasional employment to classes having different
occupations, there is another, of a nature allied to it, and of a similar tendency. T h i s is the employment of persons who would otherwise be idle,
and, in many cases, a burden 011 the community, either from the bias of
temper, habit, infirmity of body, or some other cause, indisposing or disqualifying them for the toils of the country. It is worthy of particular
remark, that, in general, women and children are rendered more useful,
and the latter more early useful, by manufacturing establishments, than
they would otherwise be. Of the number of persons employed in the cotton
manufactories of Great Britain, it is computed that four-sevenths, nearly,
are women and children; of whom the greatest proportion are children,
and many of them of a tender age.
And thus it appears to be one of the attributes of manufactures, and one
of no small consequence, to give occasion to the exertion of a greater quantity of industry, even by the same number of persons, where they happen
to prevail, than would exist if there were no such establishments.
IV. As to the promoting of emigration from foreign
countries.
Men reluctantly quit one course of occupation and livelihood for another,
unless invited to it by very apparent and proximate advantages. Many who
would go from one country to another, if they had a prospect of continuing
with more benefit the callings to which they have been educated, will otten
not be tempted to change their situation by the hope of doing; better in some
other way. Manufacturers who, listening to the powerful invitations of a
better price for their fabrics or their labor; of greater cheapness of provisions
and raw materials; of an exemption from the chief part of the taxes, burdens,
and restraints which they endure in the old world; of greater personal independence and consequence, under the operation of a more equal government;
and of what is far more precious than mere religious toleration—a pertect
equality of religious privileges, would probably flock from Europe to the
United States, to pursue their own trades or professions, it they were once
made sensible of the advantages they would enjoy, and w e r e mspired with
an assurance of encouragement and employment, will with difficulty be induced to transplant themselves, with a view to becoming cultivators ot land.
If it be true, then, that it is the interest of the United States to open every
possible avenue to emigration from abroad, it affords a weighty argument tor
the encouragement of manufactures; which, for the reasons just assigned,
Will have the strongest tendency to multiply the inducements to it.
Here is perceived an important resource, not only for extending the
population, and, with it, the useful and productive labor of the country, but
I
88
REPORTS OF THE
[1791.
likewise for the prosecution of manufactures, without deducting from the
number of hands which might otherwise be drawn to tillage; and even for
the indemnification of agriculture, for such as might happen to be diverted
from it. Many, whom manufacturing views would induce to emigrate,
would afterwards yield to the temptations which the particular situation of
this country holds out to agricultural pursuits; and while agriculture would,
in other respects, derive many signal and unmingled advantages from the
growth of manufactures, it is a problem whether it would gain or lose, as
to the article of the number of persons employed in carrying it on.
V. /l.s to the furnishing
greater scope for the diversity of talents and
dispositions, which discriminate men from each other.
T h i s is a much more powerful mean of augmenting the fund of national
industry than may at first sight appear. It is a just observation, that minds
of the strongest and most active powers for their proper objects fall below
mediocrity, and labor without effect, if confined to uncongenial pursuits;
and it is thence to be inferred that the results of human exertion may be
immensely increased by diversifying its objects. W h e n all the 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;
and the community is benefited by the services of its respective members,
in the manner in which each can serve it with most effect.
If there be any thing in a remark often to be met with, namely, that there
is. in the genius of the people of this country, a peculiar aptitude for mechanic
improvements, it would operate as a forcible reason for giving opportunities
to the exercise of that species of talent, by the propagation of manufactures.
VI. As to the affording a more ample and various field for enterprise.
This also is of greater consequence in the general scale of national exertion than might perhaps, on a superficial view, be supposed, and has effects
not altogether dissimilar from those of the circumstance last noticed.
To
cherish and stimulate the activity of the human mind, by multiplying the
objects of enterprise, is not among the least considerable of the expedients
by which the wealth of a nation may be promoted. E v e n things in themselves not positively advantageous, sometimes become so by their tendency
to provoke exertion. Every new scene which is opened to'the busy nature
of man to rouse and exert itself, is the addition of a new energy to the
b
general stock of effort.
T h e spirit of enterprise, useful and prolific as it is, must necessarily be
r-ontracted or expanded, in proportion to the simplicity or variety of' the
occupations and productions which are to be found in a society It must
be less in a nation of mere cultivators than in a nation of cultivators and
merchants; less m a nation of cultivators and merchants than in a nation
ot cultivators, artificers, and merchants.
VII. As to the creating in some instances, a new, and securing, in all,
SE! f f ' r " th T f dema»df°:
the surplus produce of the soil.
indicated 7 " * ™ ^ ; m P 0 1 t ^ "f the circumstances which have been
a
?ercnnirih fpVto P
1Clpal
by which lhe
establishment of manufac-
G H1 P
S u S e n S o
W
'
! T r t , 0 n to the s*adiness ^
fluctuation,
adequatencss oi inadequateness, of the markets on which he must depend for
1791.]
SECRETxiRY OF THE TREASURY.
89
the vent of the surplus which may be produced by his labor ; and that such
surplus, m the ordinary course of things, will be greater or less in the same
proportion.
For the purpose of this vent, a domestic market is greatly to be preferred
to a foreign one ; because it is, in the nature of things, far more to be relied
upon.
It is a primary object of the policy of nations, to be able to supply themselves with subsistence from their own soils; and manufacturing nations, as
, a s circumstances permit, endeavor to procure from the same source
, T * w Materials necessary for their own fabrics. T h i s disposition, urged
ay the spirit of monopoly, is sometimes even carried to an injudicious extreme. It seems not always to be recollected, that nations, who have neither
mines nor manufactures, can only obtain the manufactured articles of which
"ley stand in need by an exchange of the products of their soils ; and that,
it tnose who can best furnish them with such articles are unwilling to give
a due course to this exchange, they must, of necessity, make every^possible
ettort to manufacture for themselves; the effect of which is, that the manuwcturino: nations abridge the natural advantages of their situation, through
an unwillingness to permit the agricultural countries to enjoy the advantages
theirs, and sacrifice the interests of a mutually beneficial intercourse to the
v
am project of selling every thing and buying nothing.
But it is also a consequence of "the policy which has" been noted, that the
oreign demands for theproductsof agricultural countries is, in a great decree,
ratuer casual and occasional, than certain or constant. T o what extent injut,le
r s interruptions
demand for some of the staple commodities of the
United States may have been experienced from that cause, must be referred
o the judgment of those who are engaged in carrying on the commerce of
ao C0
«n'ry; but it may be safely affirmed, that such interruptions are, at
troes, very inconveniently felt, and that cases not unfrequently occur,
m
wnich markets are so confined and restricted, as to render the demand
ve
j7 unequal to the supply.
Independently, likewise, of the artificial impediments which are created
^ythe poliey in question, there are natural causes tending to render the exsur
T| !f r 6 t n a n c * f o r
P'us
agricultural nations a precarious reliance,
e differences of seasons in the countries which are the consumers, make
mense differences in the produce of their own soils in different years, and,
j 1 ; " s e c l u e n t jy, in the degrees of their necessity for foreign supply. Plentiful
ar vests with them, especially if similar ones occur at the same time in the
"ntries which are the furnishers, occasion, of course, a glut in the markets
0{
&
the latter.
j ^ o n sidering how fast, and how much the progress of new settlements
ino-16
States, must increase the surplus produce of the soil, and weighSeri0Us
' y ^ e tendency of the system which prevails among most of the
r
^ " l e r c i a l nations of Europe; whatever dependance may be placed on the
llatl1ra
tiler9
* circumstances to counteract the effects of an artificial policy,
^ re appear strong reasons to regard the foreign demand for that surplus as
uncertain a reliance, and to desire a substitute for it. in an extensive dom er
*ic
n market.
^
secure such a market there is no other expedient than to promote
^ 'Uifacturing establishments. Manufacturers, who constitute the most
merous class, after the cultivators of land, are for that reason the princi1'^consumers of the surplus of their labor.
is idea of an extensive domestic market for the surplus produce of the
12(3
REPORTS OF THE
[1791.
soil, is of the first consequence. It is, of all things, that which most effectually conduces to a flourishing state of agriculture. If the effect of manufactories should be to detach a portion of the hands which would otherwise be
engaged in tillage, it might possibly cause a smaller quantity of lands to be
under cultivation ; but by their tendency to procure a more certain demand
for the surplus produce of the soil, they would, at the same time, cause the
lands which were in cultivation to be better improved and more productive.
And while, by their influence, the condition of each individual farmer would
be meliorated, the total mass of agricultural production would probably be
increased ; for this must evidently depend as much upon the degree of improvement, if not more, than upon the number of acres under culture.
It merits particular observation, that the multiplication of manufactories not
only furnishes a market for those articles which have been accustomed to be
produced in abundance in a country, but it likewise creates a demand for
such as were either unknown, or produced in inconsiderable quantities. The
bowels, as well as the surface of the earth, are ransacked for articles which
were before neglected. Animals, plants, and minerals, acquire a utility
and value which were before unexplored.
T h e foregoing considerations seem sufficient to establish, as general propositions, that it is the interest of nations to diversify the industrious pursuits of the individuals who compose t h e m ; that the establishment of manufactures is calculated not only to increase the general stock of useful and
productive labor, but even to improve the state of agriculture in particular;
certainly to advance the interests of those who are engaged in it. There are
other views that will be hereafter taken of the subject, which it is conceived
will serve to confirm these inferences.
III. Previously to a further discussion of the objections to the encouragement of manufactures, which have been stated, it will be of use to see what
can be said in reference to the particular situation of the United States,
against the conclusions appeal ing to resultfrom what has been already offered.
• It may be observed, (and the idea is of no inconsiderable weight,) that however true it might be, that a State which, possessing large tracts of vacant
and fertile territory, was, at the same time, secluded from foreign commerce,
would find its interest and the interest of agriculture in diverting a part of
its population from tillage to manufactures ; yet it will not follow that the
same is true of a State which, having such vacant and fertile territory,
at the same time, ample opportunity of procuring from abroad, on good terms,
all the fabrics of which it stands in need, for the supply of its inhabitants.
T h e power of doing this at least secures the great advantage of a division of
labor, leaving the farmer free to pursue, exclusively, the culture of his land,
and enabling him to procure with its products the manufactured supplies requisite either to his wants or to his enjoyments. And though it should be
true that, in settled countries, the diversification of industry fs conducive to
an increase in the productive powers of labor, and to an augmentation of revenue and capital; yet it is scarcely conceivable that there can be any thing
of so solid and permanent advantage to an uncultivated and unpeopled country, as to convert its wastes into cultivated and inhabited districts. If t h e
revenue, in the mean time, should be less, the capital, in the event, must be
greater.
T o these observations, the following appears to be a satisfactory a n s w e r 1st If the system of perfect liberty to industry and commerce were the
prevailing system of nations, the arguments which dissuade a country in t h e
1791.]
SECRETxiRY OF THE TREASURY.
91
predicament of the United States from the zealous pursuit of manufactures,
would doubtless have great force. It will not be affirmed that they might
not be permitted, with few exceptions, to serve as a rule of national conduct.
In such a state of things, each country would have the full benefit of its
peculiar advantages to compensate for its deficiencies or disadvantages. If
one nation were in a condition to supply manufactured articles on better
terms than another, that other might find an abundant indemnification in
a superior capacity to furnish the produce of the soil. And a free exchange,
mutually beneficial, of the commodities which each was able to supply, on
the best terms, might be carried on between them, supporting, in full vigor,
the industry of each. And though the circumstances which have been mentioned, and others which will be unfolded hereafter, render it probable that
nations, merely agricultural, would not enjoy the same degree of opulence,
in proportion to their numbers, as those which united manufactures with
agriculture; yet the progressive improvement of the lands of the former
might, in the end, atone for an inferior degree of opulence in the mean
time; and in a case in which opposite considerations are pretty equally
balanced, the option ought, perhaps, always to be in favor of leaving industry to its own direction.
But the system which has been mentioned is far from characterizing the
general policy of nations. T h e prevalent one has been regulated by an opposite spirit. T h e consequence of it is, that the United States are, to a certain extent, in the situation of a country precluded from foreign commerce.
They can, indeed, without difficulty, obtain from abroad the manufactured
supplies of which they are in w a n t ; but they experience numerous and very
injurious impediments to the emission and vent of their own commodities.
Nor is this the case in reference to a single foreign nation only. T h e regulations of several countries, with which we have the most extensive intercourse, throw serious obstructions in the way of the principal staples of the
United States.
In such a position of things, the United States cannot exchange with
Europe on equal terms; and the want of reciprocity would render them
the victim of a system which should induce them to confine their views to
agriculture, and refrain from manufactures. A constant and increasing
necessity, on their part, for the commodities of Europe, and only a partial
and occasional demand for their own in return, could not but expose them
tu a state of impoverishment, compared with the opulence to which their
political and natural advantages authorize them to aspire.
Remarks of this kind are not made in the spirit of complaint. It is for
the nations, whose regulations are alluded to, to judge for themselves,
whether, by aiming at too much, they do not lose more than they gain. It is
tor the United States to consider by what means they can render themselves
'east dependant on the combinations, right or wrong, of foreign policy.
It is no small consolation, that already the measures which have embarrassed our trade have accelerated internal improvements, which, upon the
whole, have bettered our affairs. T o diversify and extend these improvements is the surest and safest method of indemnifying ourselves for any inconveniences which those or similar measures have a tendency to beget. If
1
'"°Pe will not take from u s the products of our soil, upon terms consistent
with our interest, the natural remedy is to contract, as fast as possible, our
Wants of her.
-d. T h e conversion of their waste into cultivated lands is certainly a point
12(3
REPORTS OF THE
[1791.
of great moment in the political calculations of the United States. But the
decree in which this may possibly be retarded, by the encouragement ol
manufactories, does not appear to countervail the powerful inducements to
affording that encouragement.
An observation made in another place is of a nature to have great influence upon this question. If it cannot be denied that the interests, even ot
agriculture, may be advanced more by having such of the lands of a State as
are occupied; under good cultivation, than by having a greater quantity
occupied under a much inferior cultivation ; and if manufactories, for the
reasons assigned, must be admitted to have a tendency to promote a more
steady and vigorous cultivation of the lands occupied, than would happen
without them, it will follow that they are capable of indemnifying a country
for a diminution of the progress of new settlements ; and may serve to increase both the capital value and the income of its lands, even though they
should abridge the number of acres under tillage.
But it does by no means follow, that the progress of new settlements
would be retarded by the extension of manufactures. T h e desire of being an
independent proprietor of land is founded on such strong principles in the
human breast, that where the opportunity of becoming so is as great as it is
in the United States, the proportion will be small of those whose situations
would otherwise lead to it, who would be diverted from it towards manufactures. And it is highly probable, as already intimated, that the accessions
of foreigners, who, originally drawn over by manufacturing views, would
afterwards abandon them for agricultural, would be more than an equivalent
for those of our own citizens who might happen to be detached from them.
T h e remaining objections to a particular encouragement of manufactures
in the United States now require to be examined.
One of these turns on the proposition, that industry, if left to itself, will
naturally find its way to the most useful and profitable employment. Whence
it is inferred that manufactures, without the aid of Government, will grow
up as soon and as fast as the natural state of things and the interest of the
community may require.
Against the solidity of this hypothesis, in the full latitude of the terms,
very cogent reasons may be offered. These have relation to the strong influence of habit and the spirit of imitation; the fear of want of success in
untried enterprises; the intrinsic difficulties incident to first essays towards
a competition with those who have previously attained to perfection in the
business to be attempted ; the bounties, premiums, and other artificial encouragements, with which foreign nations second the exertions of their own
citizens, in the branches in which they are to be rivalled.
Experience teaches that men are often so much governed by what they are
accustomed to see and practise, that the simplest and most obvious improvements, in the most ordinary occupations, are adopted with hesitation, reluctance, and by slow gradations. T h e spontaneous transition to new pursuits,
in a community long habituated to different ones, maybe e x p e c t e d t o be attended with proportionably greater difficulty. When former occupations ceased
to yield a profit adequate to the subsistence of their followers or when there
was an absolute deficiency of employment in them, owino- to 'the superabundance ot hands, changes would ensue; but these changes would be likelvt"
be more tardy than might consist with the interest either of individuals or
of the society. In many cases they would not happen, while a bare suppo'1
could be insured by an adherence to ancient courses, though a resort to a
f
1791.]
SECRETxiRY OF THE TREASURY.
93
more profitable employment might be practicable. T o produce the desirable
changes as early as may be expedient, may therefore require the incitement
and patronage of Government.
The apprehension of failing in new attempts is, perhaps, a more serious
impediment. T h e r e are dispositions apt to be attracted by the mere novelty
of an undertaking; but these are not always those best calculated to give
it success. T o this, it is of importance that the confidence of cautious, sagacious capitalists, both citizens and foreigners, should be excited. And to
inspire this description of persons with confidence, it is essential that they
should be made to see, in any project which is new, and for that reason
alone, if for no other, precarious, the prospect of such a degree of countenance and support from Government as may be capable of overcoming the
obstacles inseparable from the first experiments.
Tne superiority antecedently enjoyed by nations who have preoccupied
and parfected a branch of industry, constitutes a more formidable obstacle
than either of those which have been mentioned, to the introduction of the
same branch into a country in which it did not before exist. T o maintain,
between the recent establishments of one country, and the long-matured
establishments of another country, a competition upon equal terms, both as
to quality and price, is, in most cases, impracticable. T h e disparity, in the
one or in the other, or in both, must necessarily be so considerable as to
forbid a successful rivalship, without the extraordinary aid and protection
of Government.
But the greatest obstacle of all to the successful prosecution of a new
branch of industry in a country in which it was before unknown,consists,
as far as the instances apply, in the bounties, premiums, and other aids which
are granted, in a variety of cases, by the nations in which the establishments
to be imitated are previously introduced. It is well known (and particular
examples in the course of this report will be cited) that certain nations
grant bounties on the exportation of particular commodities, to enable their
own workmen to undersell and supplant all competitors in the countries to
which those commodities are sent. Hence, the undertakers of a new manufacture have to contend not only with the uatural disadvantages of a new
undertaking, but with the gratuities and remunerations which other Governments bestow. T o be enabled to contend with success, it is evident that
the interference and aid of their own Governments are indispensable.
Combinations by those engaged in a particular branch of business in one
country, to frustrate the first efforts to introduce it into another, by tempor
ary sacrifices, (recompensed, perhaps, by extraordinary indemnifications of
the Government of such country,) are believed to have existed, and are not to
be regarded as destitute of probability. T h e existence or assurance of aid
*r°in the Government of the country in which the business is to be introduced, may be essential to fortify adventurers against the dread of such
combinations ;* to defeat their effects, if formed; and to prevent their being
formed, by demonstrating that they must, in the end, prove fruitless.
W hatever room there may be for an expectation that the industry of a
People, under the direction of private interest, will, upon equal terms, find
°tit the most beneficial employment for itself, there is none for a reliance
that it will struggle against the force of unequal terms, or will, of itself, surmount all the adventitious barriers to a successful competition which may
have been erected, either by the advantages naturally acquired from practice,
fcnd previous possession of the ground, or by those which may have sprung
12(3 REPORTS OF THE
[1791.
from positive regulations and an artificial policy. T h i s general reflection
might alone suffice as an answer to the objection under examination, exclusively of the weighty considerations which have been particularly urged.
T h e objections to the pursuit of manufactures in the United States, which
next present themselves to discussion, represent an impracticability of success arising from three causes—scarcity of hands, dearness of labor, want
of capital.
T h e iirst two circumstances are, to a certain extent, real; and, within
due limits, ought to be admitted as obstacles to the success of manufacturing enterprise in the United States. But there are various considerations
which lessen their force, and tend to afford an assurance that they are not
sufficient to prevent the advantageous prosecution of many very useful and
extensive manufactories.
With regard to scarcity of hands, the fact itself must be applied with no
small qualification to certain parts of the United States. T h e r e are large
districts which may be considered as pretty fully peopled ; and which, notwithstanding a continual drain for distant settlement, are thickly interspersed with flourishing and increasing towns. If these districts have not
already reached the point at which the complaint of scarcity of hands
ceases, they are not remote from it, and are approaching fast towards it; and
having, perhaps, fewer attractions to agriculture than some other parts of
the Union, they exhibit a proportionably stronger tendency towards other
kinds of industry. In these districts may be discerned no inconsiderable
maturity for manufacturing establishments.
But there are circumstances which have been already noticed, with another view, 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—on which point a very pregnant and instructive fact has
been mentioned; 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 ; the employment of
persons ordinarily engaged in other occupations during the seasons or hours
of leisure, which, besides giving occasion to the exertion of a greater quantity of labor by the same number of persons, and thereby increasing the
general stock of labor, as has been elsewhere remarked, may also be taken
into the calculation, as a resource for obviating the scarcity of hands; lastly, the attraction of foreign emigrants. Whoever inspects, with a careful
eye, the composition of our towns, will be made sensible to what an extent
this resource may be relied upon. T h i s exhibits a large proportion of ingenious and valuable workmen in different arts and trades, who, by expatriating trom Europe, have improved their own condition, and added to the
industry and wealth of the United States. It is a natural inference from
the experience we have already had, that as soon as the United States shall
present the countenance of a serious prosecution of manufactures; 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 insure the
success of the design. How, indeed, can it otherwise happen, considering
the various and powerful inducements which the situation of this countrv
offers; addressing themselves to so many strong passions and f e e l i n g to
so many general and particular interests ?
It may be affirmed, therefore, in respect to hands for carrying on manu
1791.]
SECRETxiRY OF THE TREASURY.
95
Pictures, that we shall, in a great measure, trade upon a foreign stock, reserving our own for the cultivation of our lands and the manning of our
ships, as far as character and circumstances shall incline. It is not unworthy
of remark, that the objection to the success of manufactures deduced from
the scarcity of hands, is alike applicable to trade and navigation; and yet these
are perceived to flourish, without any sensible impediment from that cause.
As to the dearness of labor, (another of the obstacles alleged,) this has relation principally to two circumstances: one, that which has just been discussed, or the scarcity of h a n d s ; the other, the greatness of profits.
As far as it is a consequence of the scarcity of hands, it is mitigated by
all the considerations which have been adduced as lessening that deficiency.
It is certain, too, that the disparity in this respect, between some of the
most manufacturing parts of Europe, and a large proportion of the United
States, is not nearly so great as is commonly imagined. It is also much less
in regard to artificers and manufacturers, than in regard to country laborers;
and while a careful comparison shows that there is, in this particular, much
exaggeration; it is also evident that the effect of the degree of disparity,
which does truly exist, is diminished in proportion to the use which can be
made of machinery.
To illustrate this last idea, let it be supposed that the difference of price,
in two countries, of a given quantity of manual labor requisite to the fabrication of a given article, is as ten; and that some mechanic power is introduced into both countries, which, performing half the necessary labor, leaves
only half to be done by hand: it is evident that the difference in the cost of
the fabrication of the article in question, in the two countries, as far as it is
connected with the price of labor, will be reduced from ten to five, in consequence of the introduction of that power.
This circumstance is worthy of the most particular attention. It diminishes immensely one of the objections most strenuously urged against the
success of manufactures in the United States.
To procure all such machines as are known in any part of Europe, can
0I
% require a proper provision and due pains. T h e knowledge of several
the most important of them is already possessed. T h e preparation of
them here is, in most cases, practicable on nearly equal terms. As far as
l
hey depend on water, some superiority of advantages may be claimed, from
the uncommon variety and greater cheapness of situations adapted to millseats, with which different parts of the United States abound.
So far as the dearness of labor may be a consequence of the greatness
profits iu any branch of business, it is 110 obstacle to its success. T h e
Undertaker can afford to pay the price.
There are grounds to conclude that undertakers of manufactures in this
country can, at this^time, afford to pay higher wages to the workmen they
j^ay employ, than are paid to similar workmen in Europe. T h e prices of
foreign fabrics, in the markets of the United States, which will, for a long
time, regulate the prices of the domestic ones, may be considered as compounded of the following ingredients : the first cost of materials, including
the taxes, if any, which are paid upon them where they are made; the expense of grounds, buildings, machinery, and tools; the wages of the persons
employed in the manufactory; the profits on the capital or stock employed;
the commissions of agents to purchase them where they are made; the expense of transportation to the United States, including insurance and other
t&cidental charges; .the taxes or duties, if any. and fees of office, which are
12(3
REPORTS OF THE
[1791.
paid on their exportation; the taxes or duties, and fees of office, which are
paid on their importation.
As to the first of these items, the cost of materials, the advantage, upon
the whole, is at present on the side of the United States; and the difference
111 their favor must increase, in proportion as a certain and extensive domestic demand shall induce the proprietors of land to devote more of their
attention to the production of those materials. It ought not to escape observation, in a comparison on this point, that some of the principal manufacturing countries of Europe are much more dependant on foreign supply
for the materials of their manufactures, than would be the United States,
who are capable of supplying themselves with a greater abundance, as well
as a greater variety of the requisite materials.
As to the second item, (the expense of grounds, buildings, machinery, and
tools,) an equality, at least, may be assumed; since advantages, in some particulars, will counterbalance temporary disadvantages in others.
As to the third item, or the article of wages, the comparison certainly
turns against the United States; though, as before observed, not in so great
a degree as is commonly supposed.
T h e fourth item is alike applicable to the foreign and to the domestic
manufacture. It is, indeed, more properly a result, than a particular to be
compared.
But with respect to all the remaining items, they are alone applicable to
the foreign manufacture, and, in the strictest sense, ex.raordiiiaiies; constituting a sum of extra charge on the foreign fabric, which cannot be estimated at less than from fifteen to thirty per cent. 011 the cost of it at the
manufactory.
T h i s sum of extra charge may confidently be regarded as more than a
counterpoise for the real difference in the price of labor; and is a satisfactory
proof that manufactures may prosper, in defiance of it, in the United States.
T o the general allegation, connected with the circumstances of scarcity
of hands and clearness of labor, that extensive manufactures can only grow
out of a redundant or full population^ will be sufficient to answer, generally, that the fact has been otherwise; that the situation alleged to be an
essential condition of success, has not been that of several nations, at periods when they had already attained to maturity in a variety of manufactures.
T h e supposed want of capital for the prosecution of manufactures in the
United States, is the most indefinite of the objections which are usuallv
opposed to it.
It is very difficult to pronounce any thing precise concerning the real extent ot the moneyed capital of a country, and still more concerning the pro
portion which it bears to the objects that iuvite the employment of capital.
It is not less difficult to pronounce how far the effect of any given quantity
of money, as capital, or, in other words, as a medium for circulating tbe
industry avid property of a nation, may be increased by the very circumstance of the. additional motion which is given to it by new objects 0/employment
I hat effect, like the momentum of descending bodies, may not
improperly be represented as m a compound ratio to mass and velocityI seems pretty certain that a given sum of money, in a situation in which
the quick impulses of commercial activity were little felt, would appear inadequate to the circulation of as great a quantity of industry and property,
as w one in which their full influence was experienced
"
1791.]
SECRETxiRY OF THE TREASURY.
07
It is not obvious w h y the same objection might not as well be made to
external commerce, as to manufactures; since it is manifest that our immense tracts of land, occupied and unoccupied, are capable of giving employment to more capital than is actually bestowed on them. It is certain that the United States offer a vast field for the advantageous employment of capital; but it does not follow that there will not be found, in one
way or another, a sufficient fund for the successful prosecution of any species of industry which is likely to prove truly beneficial.
The following considerations are of a nature to remove all inquietude cn
the score of want of capital.
The introduction of banks, as has been shown on another occasion, 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.
Not only our funds, but our agriculture, and other internal improvements,
have been animated by it. It has already, in a few instances, extended even
to our manufactures.
It is a well known fact, that there are parts of Europe which have more
capital than profitable domestic objects of employment ; hence, among
other proofs, the large loans continually furnished to foreign States. And
it is equally certain, that the capital of other parts may find more profitable
employment in the United States than at home. And, notwithstanding
there are weighty inducements to prefer the employment of capital at
home, even at less profit, to an investment of it abroad, though with greater
gain, yet these inducements are overruled, either by a deficiency of employment, or by a very material difference in profit. Both these causes
operate to produce a transfer of foreign capital to the United States. It is
certain that various objects in this country hold out advantages, which are
with difficulty to be equalled elsewhere; and under the increasingly favorable
impressions which are entertained of our Government, the attractions will
become more and more strong. These impressions will prove a rich mine
prosperity to the country, tf they are confirmed and strengthened by the
progress of our affairs. And, to secure this advantage, little more is necessary, than to foster industry, and cultivate order and tranquillity at home
and abroad.
. It is not impossible that there may be persons disposed to look with a
jealous eye on the introduction of foreign capital, as if it were an instrument
t0
deprive our own citizens of the profits of our own industry; but, perhaps,
there never could be a more unreasonable jealousy. Instead of being viewed
as a rival, it ought to be considered as a most valuable auxiliary; conducing
to
put in motion a greater quantity of productive labor, and a greater portion
°f useful enterprise, than could exist without it. It is at least evident,
that in a country situated like the United States, with an infinite fund of resources yet to be unfolded, every farthing of foreign capital which is laid
°ut iu internal meliorations, and in industrious establishments of a permanent nature, is a precious acquisition.
And, whatever be the objects which originally attract foreign capital,
VOL. I . — 7
REPORTS OF THE
12(3
[1791.
when once introduced, it may be directed towards any purpose of beneficial
exertion which is desired. And to detain it among us, there can be no expedient so effectual, as to enlarge the sphere within which it may be use,
fully employed: though introduced merely with views to speculations in
the funds, it may afterwards be rendered subservient to the interests of agriculture, commerce, and manufactures.
But the attraction of foreign capital for the direct purpose of manufactures,
ought not to be deemed a chimerical expectation. There are already examples of it, as remarked in another place. And the examples, if the disposition be cultivated, can hardly fail to multiply. There are also instances
of another kind, which serve to strengthen the expectation; enterprises for
improving the public communications, by cutting canals, opening the ofestruc
tions. in rivers, and erecting bridges, have received very material aid from
the same source.
When the manufacturing capitalist of Europe shall advert to the many
important advantages which have been intimated in the course of this report, he cannot but perceive very powerful inducements to a transfer of
himself and his capital to the United States. Among the reflections whicTi
a most interesting peculiarity of situation is calculated to suggest, it cannot escape his observation, as a circumstance of moment in the calculation,
that the progressive population and improvement of the United States insure a continually increasing domestic demand for the fabrics which he shall
produce, not to be affected by any external casualties or vicissitudes.
But, while there are circumstances sufficiently strong to authorize a considerable degree of reliance on the aid of foreign capital towards the attainment of the object in view, it is satisfactory to have good grounds of assurance that there are domestic resources of themselves adequate to it. It
happens that there is a species of capital, actually existing with the United
States, which relieves from all inquietude on the score of want of capital.
This is the funded debt.
T h e effect of a funded debt, as a species of capital, has been noticed upon
a former occasion ; but a more particular elucidation of the point seems to be
required by the stress which is here laid upon it. T h i s shall, accordingly,
be attempted.
Public funds answer the purpose of capital, from the estimation in which
they are usually held by moneyed men; and, consequently, from the ease and
despatch with which they can be turned into money. T h i s capacity of
prompt convertibility into money, causes a transfer of stock to be, in a great
number of cases, equivalent to a payment in coin. And where it does not
happen to suit the party who is to receive, to accept a transfer of stock, the
party who is to pay is never at a loss to find, elsewhere, a purchaser of his
stock, who will furnish him, in lieu of it, with the coin of which he stands
in need.
Hence in a sound and settled state of the public funds, a man possessed of
a sum in them can embrace any scheme of business which offers, with as
much confidence as if he were possessed of an equal sum in coin.
1 his opera ion of public funds as capital is too obvious to be denied: but
it is objected to he idea of their operating as an augmentation of the capital
of the community, hat they serve to occasion the destruction of some other
capital, to an equal amount.
T h e capital which alone they can be supposed to destroy, must consist o f T h e annual revenue, which is applied to the payment of interest on the
1791.]
SECRETxiRY OF THE TREASURY.
99
debt, and to the gradual redemption of the principal—the amount of the
coin, which is employed in circulating the funds, or, in other words, in effecting the different alienations which they undergo.
But the following appears to be the true and accurate view of this matter:
1st. As to the point of the annual revenue requisite for payment of interest and redemption of principal.
As a determinate proportion will tend to perspicuity in the reasoning, let
it be supposed that the annual revenue to be applied, corresponding with
the modification of the six per cent, stock of the United States, is in the ratio
of eight upon the hundred ; that is, in the first instance, six on account of
interest, and two on account of principal.
T h u s far, it is evident that the capital destroyed to the capital created,
would bear no greater proportion than eight to one hundred. T h e r e .would
be withdrawn from the total mass of other capitals a sum of eight dollars,
to be paid to the public creditor: while he would be possessed of a sum of
one hundred dollars, ready to be applied to any purpose, to be embarked in
any enterprise which might appear to him eligible. Here, then, the augmentation of capital, or the excess of that which is produced beyond that
which is destroyed, is equal to ninety-two dollars.
T o this conclusion it may be objected, that the sum of eight dollars is to
be withdrawn annually, until the whole hundred is extinguished; and it
may be inferred that, in process of time, a capital will be destroyed equal to
that which is at first created.
But it is nevertheless true, that, during the whole of the interval between
the creation of the capital of one hundred dollars, and its reduction to a sum
not greater than that of the annual revenue appropriated to its redemption,
there will be a greater active capital in existence than if no debt had been
contracted. T h e sum drawn from other capitals in any one year will not
exceed eight dollars ; but there will be, at every instant of time during the
whole period in question, a sum corresponding with so much of the principal as remains unredeemed, in the hands of some person or other, employed,
or ready to be employed, in some profitable undertaking. T h e r e will,
therefore, constantly be more capital in capacity to be employed, than capi
tal taken from employment. T h e excess, for the first year, has been stated
to be ninety-two dollars; it will diminish yearly; but there always will be an
excess, until the principal of the debt is brought to a level with the redeeming annuity; that is, in the case which has been assumed, by way of example, to eight dollars. T h e reality of this excess becomes palpable, if it be
supposed, as often happens, that the citizen of a foreign country imports
into the United States one hundred dollars for the purchase of an equal sum
of public debt; here is an absolute augmentation of the mass of circulating
coin to the extent of one hundred dollars. At the end of a year, the foreigner is presumed to draw back eight dollars on account of his principal and
interest, but he still leaves ninety-two of his original deposite in circulation;
^ he, in like manner, leaves eighty-four at the end of the second year,
drawing back then also the annuity of eight dollars. And thus the matter
proceeds : the capital left in circulation diminishing each year, and coming
nearer to the level of the annuity drawn back. T h e r e are, however, some
differences in the ultimate operation of the part of the debt which is purchased by foreigners, and that which remains in the hands of citizens; but
the general effect, in each case, though in different degrees, is to add to the
active capital of the country.
12(3
REPORTS OF THE
[1791.
Hitherto, the reasoning has proceeded on a concession of the position, that
there is a destruction of some other capital, to the extent of the annuity appropriated to the payment of the interest, and the redemption of the principal of the debt; but in this too much has been conceded. There is, at most,
a temporary transfer of some other capital, to the amount of the annuity,
from those who pay to the creditor, who receives; which he again restores to
the circulation, to resume the offices of a capital. This lie does, either immediately, by employing the money in some branch of industry, or mediately,
by lending it to some other person, who does so employ it, or by spending
it 011 his own maintenance. In either supposition, there is no destruction
of capital; there is nothing more than a suspension of its motion for a
time ; that is, while it is passing from the hands of those who pay into the
public, coffers, and thence, through the public creditor, into some other channel of circulation. When the payments of interest are periodical and quick,
and made by the instrumentality of banks, the diversion or suspension of
capital may almost be denominated momentary. Hence the deduction, on
this account, is far less than it at first sight appears to be.
There is evidently, as far as regards the annuity, no destruction nor
transfer of any other capital than that portion of the income of each individual which goes to make up the annuity. T h e land which furnishes the
farmer with the sum which he is to contribute, remains the same ; and the
like may be observed of other capitals. Indeed, as far as the tax, which is
the object of contribution, (as frequently happens, when it does not oppress
by its weight,) may have been a motive to greater exertion in any occupation, it may even serve to increase the contributory capital. This idea is
not without importance in the general view of the subject.
It remains to see what further deduction ought to be made from the capital which is created, by the existence of the debt, on account of the coin
which is employed in its circulation. T h i s is susceptible of much less precise calculation than the article which has been just discussed. It is impossible to say what proportion of coin is necessary to carry on the alienations which any species of property usually undergoes; the quantity, indeed,
varies according to circumstances. But it may still, without hesitation, be
pronounced, from the quickness of the rotation, or rather of the transitions,
that the medium of circulation always bears but a small proportion to the
amount of the property circulated. And it is thence satisfactorily deducible, that the com employed in the negotiations of the funds, and which
serves to give them activity, as capital, is incomparably less than the sum
of the debt negotiated for the purpose of business.
It ought not however, to be omitted, that the negotiation of the funds becomes itself a distinct business; which employs, and, by employing, diverts a
portion of the circulating coin from other nursnits. Rnt r ^ h L n - A,^ oil™-
1791.]
SECRETxiRY OF THE TREASURY.
101
the quantity of coin which that kingdom has ever possessed. Accordingly,
it has been, coeval with its funding system, the prevailing opinion of the men
of business, and of the generality of the most sagacious theorists of that country, that the operation of the public funds, as capital, has contributed to the
effect in question. Among ourselves, appearances thus far favor the same
conclusion. Industry, in general, seems to have been reanimated. T h e r e
are symptoms indicating an extension of our commerce. Our navigation
has certainly, of late, had a considerable spring; and there appears to be,
in many parts of the Union, a command of capital, which, till lately, since
the revolution at least, was unknown. But it is at the same time to be
acknowledged, that other circumstances have concurred ^and in a great
degree) in producing the present state of things, and that the appearances
are not yet sufficiently decisive to be entirely relied upon.
In the question under discussion, it is important to distinguish between an
absolute increase of capital, or an accession of real wealth, and an artificial
increase of capital, as an engine of business, or as an instrument of industry
and commerce. In the first sense, a funded debt has no pretensions to being
deemed an increase of capital; in the last, it has pretensions which are not
easy to be controverted. Of a similar nature is bank credit; and, in an
inferior degree, every species of private credit.
But though a funded debt is not, in the first instance, an absolute increase
of capital, or an augmentation of real wealth, yet, by serving as a new power
in the operations of industry, it has, within certain bounds, a tendency to
increase the real wealth of a community; in like, manner, as money borrowed by a thrifty farmer, to be laid out in the improvement of his farm,
may, in the end, add to his stock of real riches.
There are respectable individuals, who, from a just aversion to an accumulation of public debt, are unwilling to concede to it any kind of utility,
who can discern no good to alleviate the ill with which they suppose it
pregnant; who cannot be persuaded that it ought, in any sense, to be viewed
as an increase of capital, lest it should be inferred that the more debt the
more capital, the greater the burdens the greater the blessings of the community.
But it interests the public councils to estimate every object as it truly is;
to appreciate how far the good, in any measure, is compensated by the ill,
or the ill by the good: either of them is seldon\ unmixed.
Neither will it follow that an accumulation of debt is desirable, because a
certain degree of it operates as capital. T h e r e may be a plethora in the
political as"in the natural body; there may be a state of things in which
any such artificial capital is unnecessary. T h e debt, too, may be swelled
to such a size as that the greatest part of it may cease to be useful as a capital, serving only to pamper the dissipation of idle and dissolute individuals;
as that the^sums required to pay the interest upon it may become oppressive, and beyond the means which a Government can employ, consistently
with its tranquillity, to raise them ; as that the resources of taxation to face
the debt may have been strained too far to admit of extensions adequate to
exigencies, which regard the public safety.
Where this critical point is, cannot be pronounced ; but it is impossible
to believe that there is not such a point.
And as the vicissitudes of nations beget a perpetual tendency to the
accumulation of debt, there ought to be, in every Government, a perpetual,
anxious, and unceasing effort to reduce that which at any time exists, as
fast as shall be practicable, consistently with integrity and good faith.
I
102
REPORTS OF THE
[1791.
Reasonings on a subject comprehending ideas so abstract and complex, so
little reducible to a precise calculation, as those which enter into the question
just discussed, are always attended with a danger of running into fallacies.
Due allowance ought, therefore, to be made for this possibility. But, as far
as the nature of the subject admits of it, there appears to be satisfactory
ground for a belief that the public funds operate as a resource of capital to
the citizens of the United States; and, if they are a resource at all, it is an
extensive one.
T o all the arguments which are brought to evince the impracticability of
success in manufacturing establishments in the United States, it might have
been a sufficient answer to have referred to the experience of what has been
already done. It is certain that several important branches have grown up
and flourished with a rapidity which surprises, affording an encouraging
assurance of success in future attempts: of these, it may not be improper
to enumerate the most considerable.
I. Of skins.—Tanned
and tawed leather, dressed skins, shoes, boots,
and slippers, harness, and saddlery of all kinds, portmanteaus and trunks,
leather breeches, gloves, muffs and tippets, parchment and glue.
II. Of iron.—Bar and sheet iron, steel nail rods and nails, implements
of husbandry, stoves, pots, and other household utensils, the steel and iron
work of carriages, and for ship building, anchors, scale-beam^ and weights,
and various tools of artificers, arms of different kinds; though the manufacture of these last has of late diminished for want of demand.
III. Of wood.—Ships, cabinet wares, and turnery, wool and cotton cards,
and other machinery for manufactures and husbandry, mathematical instruments, and coopers' wares of every kind.
Of flax and hemp.—Cables, sail-cloth, cordage, twine, and packthread.
V. Bricks and coarse tiles, and potters' wares.
VI. Ardent spirits and malt liquors.
VII. Writing and printing paper, sheathing and wrapping paper, pasteboards, fullers' or press papers, paper hangings.
VIII. Hats, of fur and wool, and of mixtures of both; women's stuff and
silk shoes.
I X . Refined sugars.
X. Oils of animals and seeds, soap, spermaceti and tallow candles.
X I . Copper and brass wires, particularly utensils for distillers, sugar refiners, and brewers; andirons and other articles for household use • philosophical apparatus.
'
X I I . Tin wares for most purposes of ordinary use.
XIII. Carriages of all kinds.
XIV. Snuff, chewing and smoking tobacco.
XV. Starch and hair-powder.
XVI. Lampblack and other painters' colors.
XVII. Gunpowder.
Besides manufactories of these articles, which are carried on as regular
trades, and have attained to a considerable degree of maturity, there" is a
vast scene of household manufacturing, which contributes more largely to
S V
7 T n i t y t h a n c o u l d b e imagined, without having made
pai tlCU r
hp^ntln
;
H l n T T y \ T h i s o r a t i o n is the pleasing result of
We L Z
7
° ^ I C h t h e S U b - r ° f t h l s r e P ° r t h a s ^ ™d 6 applicable as well to the southern as to the middle and northern States. Great
1791.]
SECRETxiRY OF THE TREASURY.
103
quantities of coarse cloths, coatings, serges, and flannels, linsey woolseys,
hosiery of wool, cotton, and thread, coarse fustians, jeans and muslins, checked
and striped cotton and linen goods, bed ticks, coverlets and counterpanes,
tow linens, coarse shirtings, sheetings, towelling and table linen, and various mixtures of wool and cotton, and of cotton and flax, are made in the
household way, and, in many instances, to an extent not only sufficient for
the supply of the families in which they are made, but for sale, and even, in
some cases, for exportation. It is computed in a number of districts that
two-thirds, three-fourths, and even four-fifths, of all the clothing of the inhabitants are made by themselves. T h e importance of so great a progress
as appears to have been made in family manufactures within a few years,
both in a moral and political view, renders the fact highly interesting.
Neither does the above enumeration comprehend all the articles that are
manufactured as regular trades. Many others occur which are equally well
established, but which, not being of equal importance, have been omitted.
And there are many attempts still in their infancy, which, though attended
with very favorable appearances, could not have been properly comprised in
an enumeration of manufactories already established. There are other articles, also, of great importance, which, though strictly speaking, manufactures. are omitted, as being immediately connected with husbandry: such
are flour, pot and pearl ash, pitch, tar, turpentine, and the like.
There remains to be noticed an objection to the encouragement of manufactures, of a nature different from those which question the probability ot
success. T h i s is derived from its supposed tendency to give a monopoly oi
advantages to particular classes, at the expense of the rest of the community,
who, it is affirmed, would be able to procure the requisite supplies of manufactured articles on better terms from foreigners than from our own citizens;
and who, it is alleged, are reduced to the necessity of paying an enhanced
price for whatever they want, by every measure which obstructs the tree
competition of foreign commodities.
.
It is not an unreasonable supposition, that measures which serve to abridge
the free competition of foreign articles have a tendency to occasion an enhancement of prices; and it is not to be denied that such is the effect in a
number of cases: 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. Whether it be that foreign manufacturers endeavor to supplant by underselling our own, or whatever else
be the cause, the effect has been such as is stated, and the reverse of what
might have been expected.
_ A ,
But, though it. were true that the immediate and certain effect ot regulations controlling the competition of foreign with domestic fabrics was an increase of price, it is universally true that the contrary is the ultimate eftec.
with every successful manufacture. W h e n 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 tne
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 was the foreign article for which it is a substitute. I he
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 on the capital employed. T h i s accords with the reason of the thing, and with experience.
12(3
REPORTS OF THE
[1791.
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,
i n a national view, a temporary enhancement of price must always be well
compensated by a permanent reduction of it.
It is a reflection which may with propriety be indulged here, that tins
eventual diminution of the prices of manufactured articles which is the
result of internal manufacturing establishments, has a direct and very important tendency to benefit agriculture. It enables the farmer to procure,
with a smaller quantity of his labor, the manufactured produce of which
he stands in need, and consequently increases the value of his income and
propertyT h e objections which are commonly made to the expediency of encouraging, and to the probability of succeeding in manufacturing pursuits in
the United States, having now been discussed, the considerations whichhave appeared in the course of the discussion, recommending that species of
industry to the patronage of the Government, will be materially strengthened by a few general, and some particular topics, which have been naturally reserved for subsequent notice.
1. 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 than that of a country which is merely agricultural.
One reason for this is found in that general effort of nations (which has
been already mentioned) to procure from their own soils the articles of
prime necessity requisite to their own consumption and use, and which
serves to render their demand for a foreign supply of such articles, in a great
degree, occasional and contingent. Hence, while the necessities of nations
exclusively devoted to agriculture, for the fabrics of manufacturing States,
are constant and regular; the wants of the latter for the products of the former are liable to very considerable fluctuations and interruptions. T h e
great inequalities resulting from difference of seasons have been elsewhere
remarked. This uniformity of demand on one side, and unsteadiness of it
on the other, must necessarily have a tendency to cause the general course
of the exchange of commodities between the'parties to turn to the disadvantage of the merely agricultural States. Peculiarity of situation, a climate
and soil adapted to the production of peculiar commodities, may sometimes
contradict the rule; but there is every reason to believe that it will be found,
in the main, a just one.
Another circumstance which gives a superiority of commercial advantages to States that manufacture as well as cultivate, consists in the more
numerous attractions which a more diversified market offers to foreign customers, and in the greater scope which it affords to mercantile enterprise. It
is a position of indisputable truth, in commerce, depending too on very obvious reasons that the greatest resort will ever be to those marts where commodities w h i e equally abundant, are most various. Each difference of
S 1 t T n Z T l d l t I O n a l i n d r m ? U t : a n d j t 18 a P ^ 1 0 1 1 *>t less clear,
that the field of enterprise must be enlarged to the merchants of a country,
f V a n e t y M W e U a S t h e S u n d a n c e of commoditieTwhich
P r / J 7 h
they find at home, for exportation to foreign markets
A third circumstance, perhaps not inferior to either of the other two,
t?onsT/
superiority which has been stated, has relation tothe s U n a tions of demand for certain commodities, which, at some time or other! in4
marl et h X ^ ^
^ ^ ^
T h e nation which can bring «o
market but few articles, is likely to be more quickly and sensibly affected
1791.]
SECRETxiRY OF THE TREASURY.
105
by such stagnations, than one which is always possessed of a great variety
of commodities. T h e former frequently finds too great a portion of its stock of
materials for sale or exchange lying on hand, or is obliged to make injurious
sacrifices to supply its wants of foreign articles, which are numerous and
urgent, in proportion to the smallness of the number of its own. T h e latter commonly finds itself indemnified by the high prices of some articles,
for the low prices of others; and the prompt and advantageous sale of those
articles which are in demand enables its merchants the better to wait for a
favorable change in respect to those which are not. There is ground to
believe that a difference of situation in this particular has immensely different effects upon the wealth and prosperity of nations.
From these circumstances, collectively, two important inferences are to be
drawn: one, that there is always a higher probability of a favorable balance
of trade, in regard to countries in which manufactures founded on the basis
of a thriving agriculture flourish, than in regard to those which are confined
wholly, or almost wholly, to agriculture; the other, (which is also a consequence of the first,) that countries of the former description are likely to
possess more pecuniary wealth, or money, than those of the latter.
Facts appear to correspond with this conclusion. T h e importations of
manufactured supplies seem invariably to drain the merely agricultural
people of their wealth. I iet the situation of the manufacturing countries of
Europe be compared, in this particular, with that of countries which only
cultivate, and the disparity will be striking. Other causes, it is true, help
to account for this disparity between some of them, and, among these causes,
the relative state of agriculture; but between others of them, the most prominent circumstance of dissimilitude arises from the comparative state of
manufactures. In corroboration of the same idea, it ought not to escape remark. that the West India islands, the soils of which are the most fertile,
and the nation which, in the greatest degree, supplies the rest of the world
with the precious metals, exchange to a loss with almost every other country.
As far as experience at home may guide, it will lead to the same conclusion. 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 resou rces.
It ought to be admitted, however, in this, as in the preceding case, that
causes irrelative to the state of manufactures account, in a degree, for the
phenomena remarked. T h e continual progress of new settlements has a
natural tendency to occasion an unfavorable balance of trade, though it
indemnifies for the inconvenience, by that increase of the national capital
which flows from the conversion of waste into improved lands; and the different degrees of external commerce which are carried on by the different
States may make material differences in the comparative state of their
wealth. T h e first circumstance has reference to the deficiency of coin and
the increase of debt previous to the revolution; the last, to the advantages
which the most manufacturing States appear to have enjoyed over the
others since the termination of the late war.
But the uniform appearance of an abundance of specie, as the concomitant
°f a flourishing state of manufactures, and of the reverse, where they do not
Prevail, afford a strono" presumption of their favorable operation upon the
wealth of a country.
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Not only the wealth, but the independence and security of a country,
appear to be materially connected with the prosperity of manufactures.
Every nation, with a view to those great objects, ought to endeavor to possess within itself all the essentials of national supply. These comprise the
means of subsistence, habitation, clothing, and defence.
The possession of these is necessary to the perfection of the body politic,
to the safety as well as to the welfare of the society; the want of either is
the want of an important organ of political life and motion; and in the
various crises which await a State, it must severely feel the effects of any
such deficiency. T h e extreme embarrassments of the United States during
the late war, from an incapacity of supplying themselves, are still matter of
keen recollection : a future war might be expected again to exemplify the
mischiefs and dangers of a situation to which that incapacity is still, in too
great a degree, applicable, unless changed by timely and vigorous exertions.
T o effect "this change as fast as shall be prudent, merits all the attention
and all the zeal of our public councils: it is the next great work to be
accomplished.
T h e want of a navy to protect our external commerce, as long as it shall
continue, must render it a peculiarly precarious reliance for the supply of
essential articles, and must serve to strengthen prodigiously the arguments
in favor of manufactures.
T o these general considerations are added some of a more particular
nature.
Our distance from Europe, the great fountain of manufactured supply,
subjects us, in the existing state of things, to inconvenience and loss, in
two ways.
T h e bulkiness of those commodities which are the chief productions of
the soil necessarily imposes very heavy charges on their transportation to
distant markets. These charges, in the cases in which the nations to whom
our products are sent maintain a competition in the supply of their own
markets, principally fall upon us, and form material deductions from the
primitive value of the articles furnished. T h e charges on manufactured
supplies brought from Europe are greatly enhanced" by the same circumstance of distance. These charges again, in the cases in which our own
industry maintains no competition in our own markets, also principally fall
upon us, and are an additional cause of extraordinary deduction from the
primitive value of our own products; these being the materials of exchange
for the foreign fabrics which we consume.
T h e equality and moderation of individual property, and, the growing
settlements of new districts, occasion in this country an unusual demand for
coarse manufactures; the charges of which being greater, in proportion to
their greater bulk, augment the disadvantage which has been just described.
As in most countries domestic supplies maintain a very considerable
competition with such foreign productions of the soil as are imported for
sale, if the extensive establishment of manufactories in the United States
does not create a similar competition in respect to manufactured articles, it
appears to be clearly deducible, from the considerations which have been
mentioned, that they must sustain a double loss in their exchanges with
foreign nations, strongly conducive to an unfavorable balance of trade, and
very prejudicial to their interests.
These disadvantages press, with no small weight, on the landed interest
of the country. In seasons of peace, they cause a serious deduction from
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the intrinsic value of the products of the soil. In the time of a war, which
should either involve ourselves, or another nation possessing a considerable
share of our carrying trade, the charges on the transportation of our commodities, bulky as most of them are, could hardly fail to prove a grievous
burden to the farmer, while obliged to depend, in so great, a degree as he
now does, upon foreign markets, for the vent of the surplus of his labor.
As far as the prosperity of the fisheries of the United States is impeded
by the want of an adequate market, there arises another special reason for
desiring the extension of manufactures. Besides the fish, which in many
places would be likely to make a part of the subsistence of the persons employed, it is known that the oils, bones, and skins of marine animals, are
of extensive use in various manufactures. Hence the prospect of an additional demand for the produce of the fisheries.
One more point of view only remains, in which to consider the expediency
of encouraging manufactures in the United States.
It is not uncommon to meet with an opinion, that, though the promoting
of manufactures may be the interest of a part of the Union, it is contrary
to that of another part. T h e northern and 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.
This idea of an opposition between those two interests is the common
error of the early periods of every country ; but experience gradually dissipates it. Indeed, they are perceived so often to succor and to befriend
each other, that they come at length to be considered as one ; a supposition
which has been frequently abused, and is not universally true. Particular
encouragements of particular manufactures may be of a nature to sacrifice
the interests of landholders to those of manufacturers ; but it is nevertheless a maxim, well established by experience, and generally acknowledged,
where there has been sufficient experience, that the aggregate prosperity of
manufactures, and the aggregate prosperity of agriculture, are intimately
connected. In the course of the discussion which has had place, various
weighty considerations have been adduced, operating in support of that
maxim. Perhaps the superior steadiness of the demand of a domestic market, for the surplus produce of the soil, is, alone, a convincing argument of
its truth.
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,
"he diversity of circumstances on which such contrariety is usually predicated, authorizes a directly contrary conclusion. Mutual wants constitute
of the strongest links of political connexion ; and the extent of these
,ears
a natural proportion to the diversity in the means of mutual supply.
.Suggestions of an opposite complexion are ever to be deplored, as un'fiendlv to the steady pursuit of one great common cause, and to the perlect
harmony of all the parts.
In proportion as the mind is accustomed to trace the intimate connexion
interest which subsists between all the parts of a society united un. the same Government, the infinite variety of channels which serve to
C1
rculate the prosperity of each, to and through the rest; in that proportion
Will it be little apt to be disturbed by solicitudes and apprehensions, which
originate in local discriminations.
It is a truth, as important as it is agreeable, and one to which it is not
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easy to imagine exceptions, that every thing tending to establish substantial
and permanent order in the affairs of a country, to increase the total mass
of industry and opulence, is ultimately beneficial to every part of it. On
the credit of this great truth, an acquiescence may safely be accorded, from
every quarter, to all institutions and arrangements which promise a confirmation of public order and an augmentation of national resource.
But there are more particular considerations, which serve to fortify the
idea that the encouragement of manufactures is the interest of all parts of
the Union. 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, some of which they have
in common with the other States, and others of which are either peculiar to
them, or more abundant, or of better quality, than elsewhere. These productions, principally, are timber, flax, hemp, cotton, wool, raw silk, indigo,
iron, lead, furs, hides, skins, and coals : of these articles, cotton and indigo
are peculiar to the southern States; as are, hitherto, lead and coal: flax and
hemp are, or may be, raised in greater abundance there, than in the more
northern States, and the wool of Virginia is said to be of better quality
than that of any other State ; a circumstance rendered the more probable, by
the reflection that Virginia embraces the same latitudes with the finest wool
countries of Europe. T h e climate of the south is also better adapted to the
production of silk.
T h e extensive cultivation of cotton can, perhaps, hardly be expected, but
from the previous establishment of domestic manufactories of the article;
and the surest encouragement and vent for the others would result from
similar establishments in respect to them.
If, then, it satisfactorily appears that it is the interest of the United
States, generally, to encourage manufactures, it merits particular attention,
that there are circumstances which render the present a critical moment for
entering with zeal upon the important business. T h e effort cannot fail to
be materially seconded by a considerable and increasing influx of money,
in consequence of foreign speculations in the funds, and by the disorders
which exist in different parts of Europe.
T h e first circumstance not only facilitates the execution of manufacturing
enterprises, but it indicates them as a necessary mean to turn the thing itself
to advantage, and to prevent its being eventually an evil. If useful employment be not found for the money of foreigners, brought to the country to
be invested in purchases of the public debt, it will quickly be re-exported
to defray the expense of an extraordinary consumption of foreign luxuries;
and distressing drains of our specie may hereafter be experienced, to pay
the interest and redeem the principal of the purchased debt.
This useful employment, too, ought to be of a nature to produce solid
and permanent improvements. If the money merely serves to give a
temporary spring to foreign commerce, as it cannot procure new and lasting
outlets for the products of the country, there will be no real or durable advantage gained. As far as it shall find its way in agricultural m e l i o r a t i o n s ,
in opening canals, and in similar improvements, it will be productive of substantial utility. But there is reason to doubt whether, in such channels, it
is likely to find sufiicient employment; and still more, whether many of
those who possess it would be as readily attracted to objects of this nature,
as to manufacturing pursuits, which bear greater analogy to those to which
they are accustomed, and to the spirit generated by them
1
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SECRETARY OF THE TREASURY.
109
To open the one field, as well as the other, will at least secure a better
prospect of useful employment for whatever accession of money there has
been or may be.
There is, at the present juncture, a certain fermentation of mind, a certain activity of speculation and enterprise, which, if properly directed, may
be made subservient to useful purposes; but which, if left entirely to itself*
may be attended with pernicious effects.
The disturbed state of Europe inclining 1 its citizens to emigration, the
requisite workmen will be more easily acquired than at another time; and
the effect of multiplying the opportunities of employment to those who
emigrate, may be an increase of the number and extent of valuable acquisitions to the population, arts, and industry of the country.
To find pleasure in the calamities of other nations would be criminal: but
to benefit ourselves, by opening an asylum to those who suffer in consequence of them, is as justifiable as it is politic.
A full view having now been taken of the inducements to the promotion of
manufactures in the United States, accompanied with ati examination of the
principal objections which are commonly urged in opposition, it is proper,
in the next place, to consider the means by which it may be effected, as introductory to a specification of the objects which, in the present state of
things, appear the most fit to be encouraged, and of the particular measures
which it may be .advisable to adopt, in respect to each.
In order to a better judgment of the means proper to be resorted to by the
United States, it will be of use to advert to those which have been employed
with success in other countries. T h e principal of these are:
I. Protecting duties, or duties on those foreign articles which are the
rivals of the domestic ones intended to be encouraged.
Duties of this nature evidently amount to a virtual bounty on the domestic fabrics; since, by enhancing "the charges on foreign articles, they enable
the national manufacturers to undersell all their foreign competitors. T h e
propriety of this species of encouragement need not be dwell upon ; as it is
not only a clear result from the numerous topics which have been suggested,
hut is sanctioned by the laws of the United States, in a variety of instances;
it has the additional recommendation of being a resource of revenue. Indeed. all the duties imposed on imported articles, though with an exclusive
view to revenue, have the effect in contemplation, and, except where they
'all on raw materials, wear a beneficent aspect towards the manufacturers
°f the country.
II- Prohibitions of rival articles, or duties equivalent to prohibitions.
, This is another and an efficacious mean of encouraging national manufactures; but, in general, it is only fit to be employed when a manufacture
has made such a°progress, and is in so many hands, as to insure a due competition, and an adequate supply on reasonable terms. Of duties equivalent
to prohibitions, there are examples in the laws of the United States ; and
there are other cases to which the principle may be advantageously extended, but they are not numerous.
Considering a monopoly of the domestic market to its own manufacturers
as the reigning policy of manufacturing nations, a similar policy on the part
of the United States, in every proper instance, is dictated, it might almost
he said, by the principles of distributive justice; certainly by the duty of
endeavoring to secure to their own citizens a reciprocity of advantages.
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III. Prohibitions of the exportation of the materials of manvfactares.
T h e desire of securing a cheap and plentiful supply for the national
workmen, and where the article is either peculiar to the country, or of peculiar quality there, the jealousy of enabling foreign workmen to rival those
of the nation with its own materials, are the leading motives to this species
of regulation. It ought not to be affirmed that it is in no instance proper;
but it is certainly one which ought to be adopted with great circumspection,
and only in very plain cases. It is seen, at once, that its immediate operation is to abridge the demand, and keep down the price of the produce of
some other branch of industry, (generally speaking, of agriculture,) to the
prejudice of those who carry it on; and though, if it be really essential to the
prosperity of any very important national manufacture, it may happen that
those who are injured in the first instance, may be eventually indemnified
by the superior steadiness of an extensive domestic market, depending on
that prosperity; yet, in a matter in which there is so much room for nice
and difficult combinations, in which such opposite considerations combat
each other, prudence seems to dictate that the expedient in question ought
to be indulged with a sparing hand.
IV. Pecuniary
bounties.
This has been found one of the most efficacious means of encouraging
manufactures, and it is, in some views, the best. T h o u g h it has not yet
been practised upon by the Government of the United States, (unless the
allowance on the exportation of dried and pickled fish and salted meat
could be considered as a bounty,) and though it is less favored by public
opinion than some other modes, its advantages are these :
1. It is a species of encouragement more positive and direct than any
other; and, for that very reason, has a more immediate tendency to stimulate and uphold new enterprises, increasing the chances of profit, and diminishing the risks of loss, in the first attempts.
2. It avoids the inconvenience of a temporary augmentation of price,
which is incident to some other modes; or it produces "it to a less degree;
either by making no addition to the charges on the rival foreign article, as
in the case of protecting duties, or by making a smaller addition. T h e first
happens when the fund for the bounty is derived from a different object,
(which may or may not increase the price of some other article, according
to the nature of that object;) the second, when the fund is derived from the
same, or a similar object of foreign manufacture. One; per cent, duty on
tliG foreign &rticlGj converted into a bounty on the domestic, will have an
equal effect with a duty of two per cent, exclusive of such b o u n t y and the
price of the foreign commodity is liable to be raised, in the one case, in the
proportion of one per cent.; in the other, in that of two per cent
Indeed,
the bounty, when drawn from another source, is calculated to promote a reduction of price; because, without laying any new charge on the foreign
article, it serves to introduce a competition with it, and to increase the total
quantity of the article in the market.
3. Bounties have not like high protecting duties, a tendency to produce
scarcity. An increase of price is not always the immediate, though, where
the progress of a domestic manufacture does not counteract a rise 'it is commonly the ultimate, effect of an additional duty. In the interval between the
laying of the duty and the proportional increase of price, it may discourage
I
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SECRETARY OF THE TREASURY.
Ill
importation, by interfering with the profits to be expected from the sale of
the article.
4. Bounties are sometimes not only the best, but the only proper expedient for uniting the encouragement of a new object of agriculture with that
of a new object of manufacture. It is the interest of the farmer to have the
production of the raw material promoted, by counteracting the interference of
the foreign material of the same kind. It is the interest of the manufacturer
to have the material abundant and cheap. If, prior to the domestic production of the material in sufficient quantity to supply the manufacturer
on good terms, a duty be laid upon the importation of it from abroad, with
a view to promote the raising of it at home, the interest both of the farmer
and manufacturer will be disserved. By either destroying the requisite
supply, or raising the price of the article beyond what can be afforded to be
given for it by the conductor of an infant manufacture, it is abandoned or
fails; and there being no domestic manufactories to create a demand for the
raw material which is raised by the farmer, it is in vain that the competition of the like foreign article may have been destroyed.
It cannot escape notice that a duty upon the importation of ail article
can no otherwise aid the domestic production of it, than by giving the latter
greater advantages in the home market. It can have no influence upon the
advantageous sale of the article produced in foreign markets ; no tendency,
therefore, to promote its exportation.
The true way to conciliate these two interests is to lay a duty on foreign manufactures of the material, the growth of which is desired to be
encouraged, and to apply the produce of that duty, by way of bounty,
either upon the production of the material itself, or upon its manufacture at
home, or upon both. In this disposition of the thing, the manufacturer
commences his enterprise, under every advantage which is attainable, as to
quantity or price of the raw material; and the farmer, if the bounty be immediately to him, is enabled by it to enter into a successful competition with
the foreign material. If the bounty be to the manufacturer on s» much of the
domestic material as he consumes, the operation is nearly the same : he has
a motive of interest to prefer the domestic commodity, if of equal quality,
even at a higher price than the foreign, so long as the difference of price is
any thing short of the bounty which is allowed upon the article.
Except the simple and ordinary kinds of household manufacture, or those
tor which there are very commanding local advantages, pecuniary bounties
are
> in most cases, indispensable to the introduction of a new branch. A
stimulus and a support not less powerful and direct, is, generally speaking,
essential to the overcoming of the obstacles which arise from the competitions
superior skill and maturity elsewhere. Bounties are especially essential
in regard to articles upon which those foreigners, who have been accustomed to supply a country, are in the practice of granting them.
The continuance of bounties on manufactures long established must alttlost
always be of questionable policy, because a presumption wrould arise,
m every such case, that there were natural and inherent impediments to
Recess. But, in new undertakings, they are as justifiable as thev are
ot
tentimes necessary.
. There is a degree of prejudice against bounties, from an appearance of
giving away the public money without an immediate consideration, and
r
pm a supposition that thev serve to enrich particular classes at the expense
01
the community.
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REPORTS OF THE
[1791.
But neither of these sources of dislike will bear a serious examination.
T h e r e is no purpose to which public money can be more beneficially applied \
than to the acquisition of a new and useful branch of industry ; no consideration more valuable than a permanent addition to the general stock of
productive labor.
As to the second source of objection, it equally lies against other modes
of encouragement which are admitted to be eligible. As often as a duty
upon a foreign article makes an addition to its price, it causes an extra
expense to the community for the benefit of the domestic manufacturer. A
bounty does 110 more. But it is the interest of the society, in each case, to
submit to a temporary expense, which is more than compensated by an increase of industry and wealth, by an augmentation of resources and independence, and by the circumstance of eventual cheapness, which has been
noticed in another place.
It would deserve attention, however, in the employment of this species of
encouragemeut in the United States, as a reason for moderating the degree
of it in the instances in which it might be deemed eligible, that the great
distance of this country from Europe imposes very heavy charges on all the
fabrics which are brought from thence, amounting from fifteen to thirty per
cent. 011 their value, according to their bulk.
A question has been made concerning the constitutional right of the Government of the United States to apply this species of encouragement, but
there is certainly no good foundation for such a question. T h e national
legislature has express authority « to lay and collect taxes, duties, imposts,
and excises ; to pay the debts, and provide for the common defence and general welfare," with no other qualifications than that « all duties, imposts,
and excises shall be uniform throughout the United States ; that no capitation
or other direct tax shall be laid, unless in proportion to numbers ascertained
by a census or enumeration taken on the principles prescribed in the constitution ;" and that « no tax or duty shall be laid on articles exported from
any State."
These three qualifications excepted, the power to raise money is plenary
and indefinite ; and the objects to which it may be appropriated are no less
comprehensive than the payment of the public debts, and the providing for
the common defence and general welfare. T h e terms « general weliare"
were doubtless intended to signify more than was expressed or imported in
those which preceded, otherwise numerous exigencies incident to the a flairs
of a nation would have been left without a provision. T h e phrase is as comprehensive as any that could have been used, because it was not fit that the
constitutional authority of the Union to appropriate its revenues should have
been restricted within narrower limits than the " general welfare " and because this necessarily embraces a vast variety of particulars which are
susceptible neither of specification nor of definition.
It is, therefore, of necessity, left to the discretion of the national legislature
to pronounce upon the objects which concern the general welfare and for
which, under that description, an appropriation of money is requisite and
proper. And there seems to be no room for a doubt, that whatever concerns
the general interests of learning, of agriculture, of manufactures and of commerce, are within the sphere of the national councils, as far a!s regards an
3
application of money.
T h e only qualification of the generality of the phrase in question which
seems to be admissible, is this: T h a t the object, to which an appropriation
of money is to be made, be general and not local; its operation extending, in
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SECRETxiRY OF THE TREASURY.
113
foot, or by possibility, throughout the Union, and not being confined to a
particular spot.
No objection ought to arise to this construction, from a supposition that
it would imply a power to do whatever else should appear to Congress conducive to the general warfare. A power to appropriate money with this latitude, which is granted too in express terms, would not carry a power to do
any other thing not authorized in the constitution, either expressly or by fair
implication.
"V. Premiums.
These are of a nature allied to bounties, though distinguishable from
them in some important features.
Bounties are applicable to the whole quantity of an article produced, or
manufactured, or exported, and involve a correspondent expense. Premiums serve to reward some particular excellence or superiority, some extraordinary exertion or skill, and are dispensed only in a small number of cases.
But their effect is to stimulate general effort; contrived so as to be both honorary and lucrative, they address themselves to different passions; touching
the chords as well of emulation as of interest. T h e y are, accordingly, a very
economical mean of exciting the enterprise of a whole community.
There are various societies in different countries, whose object is the dispensation of premiums for the encouragement of agriculture, arts, manufactures, and commerce; and though they are, for the most part, voluntary associations, with comparatively slender funds, their utility has been immense.
Much has been done by this mean in Great Britain. Scotlaud, in particular,
owes materially to it a prodigious melioration of condition. From a similar establishment in the United States, supplied and supported by the Government of the Union, vast benefits might reasonably be expected. Some further ideas on this head shall accordingly be submitted, in the conclusion of
this report.
VI. The exemption of the materials of manufactures from
duty.
The policy of that exemption, as a general rule, particularly in reference
to new establishments, is obvious. It can hardly ever be advisable to add
the obstructions of fiscal burdens to the difficulties which naturally embarrass a new manufacture; and where it is matured, and in condition to become
an object of revenue, it is, generally speaking, better that the fabric than the
material should be the subject of taxation. Ideas of proportion between the
quantum of the tax and the value of the article, can be more easily adjusted
ju the former than in the latter case. An argument for exemptions of this
kind, in the United States, is to be derived from the practice, as far as their
necessities have permitted, of those nations whom we are to meet as competitors in our own and in foreign markets.
There are, however, exceptions to it, of which some examples will be given
under the next head.
The laws of the Union afford instances of the observance of the policy here
recommended, but it will probably be found advisable to extend it to some
other cases. Of a nature bearing some affinity to that policy, is the regulation which exempts from duty the tools and implements, as weil as the
hooks, clothes, and household furniture of foreign artists, who come to reside
'n the United States: an advantage already secured to them by the laws of the
t-nion, and which it is in every view proper to continue.
VOL.
I.—8
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VII. Drawbacks
REPORTS OF THE
of the duties which are imposed
[1791.
on the materials
of
been observed, as a general rule, that duties on those materials ought, with certain exceptions, to be forborne. Of these exceptions,
three cases occur, which may ser-e as examples : one, where the material
is itself an object of general or extensive consumption, and a fit and productive source of revenue ; another, where a manufacture of a simpler kind,
the competition of which with alike domestic article is desired to be restrained, partakes of the nature of a raw material, from being capable, by a farther process, to be converted into a manufacture of a different kind, the introduction or growth of which is desired to be encouraged ; a third, where
the material itself is a production of the country, and in sufficient abundance
to furnish a cheap and plentiful supply to the national manufacturers.
Under the first description comes the article of molasses. It is not only a
fair object of revenue, but, being a sweet, it is just that the consumers of it
should pay a duty as well as the consumers of sugar.
Cottons and linen, in their white state, fall under the second description.
A duty upon such as are imported is proper, to promote the domestic manufacture of similar articles in the same state. A drawback of that duty is
proper, to encourage the printing and staining at home of those which are
brought from abroad. When the first of these manufactures has attained
sufficient maturity in a country to furnish a full supply for the second, the
utility of the drawback ceases.
T h e article of hemp either now does, or may be expected soon, to exemplify the third case in the United States.
Where duties on the materials of manufactures are not laid for the purpose of preventing a competition with some domestic production, the same
reasons which recommend, as a general rule, the exemption of those materials from duties, would recommend, as a like general rule, the allowance of
drawbacks in favor of the manufacturer. Accordingly, such drawbacks are
familiar in countries which systematically pursue the business of manufactures, which furnishes an argument for the observance of a similar policy
in the United States; and the idea has been adopted by the laws of the
Union, in the instances of salt and molasses. It is believed that it will be
found advantageous to extend it to some other articles.
VIII. The encouragement of neio inventions and discoveries at homeand of the introduction into the United States of such as may have
been made in other countries; particidarly
those which relate to machinery.
This is among the most useful and unexceptionable of the aids which can
be given to manufactures. T h e usual means of that encouragement are pecuniary rewards, and, for a time, exclusive privileges. T h e first must be
employed, according to the occasion, and the utility of the invention or
discovery. For the last, so far as respects " authors and inventors, " provision has been made by law. But it is desirable, in regard to improvements, and secrets of extraordinary value, to be able to extend the same benefit to introducers, ns well as authors and inventors; a policy which has
been practised with advantage in other countries. Here, however, as in
some other cases, there is cause to regret that the competency of the authority of the National Government to the good which might be done, is not
without a question. Many aids might be given to industry, many internal
improvements of primary magnitude might be promoted, by an "authority
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SECRETxiRY OF THE TREASURY.
115
operating throughout the Union, which cannot be effected as well, if at all,
by an authority confined within the limits of a single State.
" But if the Legislature of the Union cannot do all the good that might be
wished, it is at "least desirable that all may be done which is practicable.
Means for promoting the introduction of foreign improvements, though less
efficaciously than might be accomplished with more adequate authority,
will form a part of the plan intended to be submitted in the close of this
report.
It is customary with manufacturing nations to prohibit, under severe penalties, the exportation of implements and machines which they have either
invented or improved. 4 T h e r e are already objects for a similar regulation
in the United States: and others may be expected to occur, from time to time.
The adoption of it seems to be dictated by the principle of reciprocity.
Greater liberality, in such respects, might better comport with the general
spirit of the country; but a selfish and exclusive policy, in other quarters,
will not always permit the free indulgence of a spirit which would place us
upon an equal footing. As far as prohibitions tend to prevent foreign competitors from deriving the benefit of the improvements made at home, they
tend to increase the advantages of those by whom they may have been introduced, and operate as an encouragement to exertion.
IX. Judicious regulations for the inspection of manufactured commoThis is not among the least important of the means by which the prosperity of manufactures may be promoted. It is, indeed, in many cases, one
of the most essential. Contributing to prevent frauds upon consumers at
home, and exporters to foreign c o u n t r i e s - t o improve the quality and preserve the character of the national manufactures, ft cannot fail to aid the
expeditious and advantageous sale of them, ana to serve as a
gainst
successful competition from other quarters T i e reputation ot thes flour ;and
lumber of some States, and of the potash o f f e r s , has been established by
an attention to this point. And the like g f o d name might be procured for
those articles, wheresoever produced, by .judicious and unifc>rm system of
inspection throughout the ports of the United States. A like system might
also be extended with advantage to o«er commodities.
trade in general and to manufacfar?
R I E = ' S
and provision* and the payment for manufactured supplies. A general cirX b n of bankTaper which is to be expected from the institution lately
established, will be a ^nosi valuable mean to this end. But much good
would also accrue from some additional provisions respecting inland bills of
exchange If those drawn in one State, payable in another, were made negotiable every where, and interest and damages allowed in case of protest
it would o-reatly promote negotiations between the citizens of different
States, byrendering them more secure; and, with it, the convenience and advantage
of the
merchantsofand
XL The
facilitating
the manufacturers
transportation ofof each.
commodities.
.
Improvements favoring this object intimately c o n c e r n a l l the domestic interests of a c o m m u n i t y ; but they may, without impropriety, be mentioned
as having an important relation t'o manufactures. T h e r e is, perhaps, scarcely any thing which has been better calculated to assist the manufactures ot
12(3
[1791.
REPORTS OF THE
Great Britain, than the meliorations of the public roads of that kingdom, and
the great progress which has been of late made in opening canals. Of the
former,the United States stand much in need; for the latter, they present uncommon facilities.
T h e symptoms of attention to the improvement of inland navigation,
which have lately appeared in some quarters, must fill with pleasure every
breast warmed with a true zeal for the prosperity of the country. These examples, it is to be hoped, will stimulate the exertions of the Government and
citizens of every State. There can certainly be no object more worthy of
the cares of the local administrations; and it were to be wished that there
was no doubt of the power of the National Government to lend its direct aid
on a comprehensive plan. This is one of those improvements which could
be prosecuted with more efficacy by the whole, than by any part or parts of
the Union. There are cases in which the general interest will be in danger to be sacrificed to the collision of some supposed local interests. Jealousies, in matters of this kind, are as apt to exist, as they are apt to be erroneous.
l'he following remarks are sufficiently judicious and pertinent to deserve
a literal quotation : » Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of a country more nearly
upon a level with those in the neighborhood of the town. T h e y are, upon
that account, the greatest of all improvements. T h e y encourage the cultivation ot the remote, which must always be the most extensive circle of the
country. 1 hey are advantageous to the town, by breaking down the monopoly of he country in its neighborhood. T h e v are advantageous even
Tll0U h the
y introduce some rival commodities into the old market, they open many new markets to its produce.
Monopoly, besides is a great enemy to good management, which can never
be universally established, b u t i n consequence of that free and universal
f( rCeS
bod
T/
I
y ^ have recourse to it for the sake of
self-defence. It is not more t b , n fifty y e a r s
t h a t S Q m e o f tfa
ies
Ls thev n S e ^ l
°f V ^
W 5 * ® " * t h e Parliament against the extenf™t7h °
counties. T h o l e remoter coun'I ^ m s e l v e s ; and they
t
^
^
K
would thereby reduce their iems and S
however, hav^ risen, and ^
f
e
s
server,
jvhose
liberty
winch
M
Z
C
"
S
l m
and render it a wish of patriotism t h a ^ h e
Partlalt
councils a localor
p a r t i a l ^ p S a ^ ^ ^ ^ ^ S
to pursue and promote the general interP^ ^ S
'
there might be danger o f t h e ? S « £ f T j ^ S T " "
that the measures of G o v e r n ^ e m which h h o " e v e r > n ° « merely necessary
should be calculated S
K
Z
t
S
t
manufactures,
collaterally affect them in the oet^mTcour^p nfrti V ^ •
? which only
guarded f/om any peculiar ^
S
L
" ™ ^ " 1 6
There are certain species of taxes w k l „ „ ,
,
.
,.,
ferent parts of the community, e ^ ^ a m o n g ^ ^ e r ^ e f f ^ s ^ h a v ^ a very un
r
1791.]
SECRETxiRY OF THE TREASURY.
117
friendly aspect towards manufactures. All poll or capitation taxes are of
this nature. T h e y either proceed according to a fixed rate, which operates
unequally and injuriously to the industrious poor; or they vest a discretion
in certain officers to make estimates and assessments, which are, necessarily,
vague, conjectural, and liable to abuse. T h e y ought, therefore, to be abstained from in all but cases of distressing emergency.
All such taxes (including all taxes on occupations) which proceed according to the amount of capital supposed to be employed in a business, or of
profits supposed to be made in it, are unavoidably hurtful to industry. It
is in vain that the evil may be endeavored to be mitigated, by leaving it. in
the first instance, in the option of the party to be taxed to declare the
amount of his capital or profits.
Men engaged in any trade or business have commonly weighty reasons
to avoid disclosures, which would expose, with any thing like accuracy, the
real state of their affairs. T h e y most frequently find it better to risk oppression, than to avail themselves of so inconvenient a refuse ; and the consequence is, that they often suffer oppression.
When the disclosure, too. if made, is not definitive, but controllable by
the discretion, or, in other words, by the passions and prejudices of the
revenue officers, it is not only an ineffectual protection, but the possibility
of its being so is an additional reason for not resorting to it.
Allowing to the public officers the most equitable dispositions, yet, where
they are to exercise a discretion without certain data, they cannot fail to be
often misled by appearances. T h e quantity of business which seems to be
going on, is, in a vast number of cases, a very deceitful criterion of the
profits which are made ; yet it is, perhaps, the best they can have, and it is
the one on which they will most naturally rely. A business, therefore,
which may rather require aid from the Government, than be in a capacity
to be contributory to it, may find itself crushed by the mistaken conjectures
of the assessors of taxes.
Arbitrary taxes, under which denomination are comprised all those that
leave the quantum of the tax to be raised on each person to the discretion of
certain officers, are as contrary to the genius of liberty as to the maxims ot
industry. In this light they have been viewed by the most judicious observers on government, who have bestowed upon them the severest epithets
reprobation, as constituting one of the worst features usually to be met
with in the practice of despotic Governments.
^ is certain, at least, that such taxes are particularly inimical to the success of manufacturing industry, and ought carefully to be avoided by a
Government which desires to "promote it.
T h e great copiousness of the subject of this report has insensibly led to
a more lengthy preliminary discussion than was originally contemplated or
intended. It appeared proper to investigate principles, to consider objections, and to endeavor to establish the utility of the thing proposed to be
encouraged, previous to a specification of the objects which might occur, as
meriting or requiring encouragement, and of the measures which might be
proper in respect to each. T h e first purpose having been fulfilled, it remains to pursue the second.
In the selection of objects, five circumstances seem entitled to particular
attention: the capacity of the country to furnish the raw material; the
degree in which the nature of the manufacture admits of a substitute for
manual labor in machinery ; the facility of execution ; the extensiveness of
12(3
REPORTS OF THE
[1791.
the uses to which the article can be applied; its subserviency to other interests, particularly the great one of national defence. There are, however,
objects to which these circumstances are little applicable, which, for some
special reasons, may have a claim to encouragement.
A designation of the principal raw material of which each manufacture is
composed, will serve to introduce the remarks upon it; as, in the first place,
IRON.
T h e manufactures of this article are entitled to pre-eminent rank. None
are more essential in their kinds, nor so extensive in their uses. T h e y constitute, in whole or in part, the implements or the materials, or both, of almost every useful occupation. Their instrumentality is every where conspicuous.
It is fortunate for the United States that they have peculiar advantages
for deriving the full benefit of this most valuable material, and they have
every motive to improve it with systematic care. It is to be found in various
parts of the United States, in great abundance, and of almost every quality;
and fuel, the chief instrument in manufacturing it, is both cheap and plenty.
This particularly applies to charcoal; but there are productive coal mines
already in operation, and strong indications that the material is to be found
in abundance in a variety of other places.
T h e inquiries to which the subject of this report has led have been answered with proofs, that manufactories of iron, though generally understood
to be extensive, are far more so than is commonly supposed. T h e kinds in
which the greatest progress has been made have been mentioned in another
place, and need not be repeated ; but there is little doubt that every other
kind, with due cultivation, will rapidly succeed. It is worthy of remark,
that several of the particular trades, of which it is the basis, are capable of
being carried on without the aid of large capitals.
Iron-works have greatly increased in the United States, and are prosecuted with much more advantage than formerly. T h e average price, before the revolution, was about sixty-four dollars per ton ; at present, it is
about eighty; a rise which is chiefly to be attributed to the increase of
manufactures of the material.
T h e still further extension and multiplication of such manufactures will
have the double effect of promoting the extraction of the metal itself, and
of converting it to a greater number of profitable purposes.
Those manufactures, too, unite, in a greater degree than almost any
others, the several requisites which have been mentioned as proper to be
consulted in the selection of objects.
T h e only further encouragement of manufactories of this article, the propriety of which may be considered as unquestionable, seems to be an increase of the duties on foreign rival commodities.
Steel is a branch which has already made a considerable progress, and
it is ascertained that some new enterprises, on a more extensive scale, have
been lately set on foot. T h e facility of carrying it to an extent which will
supply all internal demands, and furnish a considerable surplus for exportation, cannot be doubted. T h e duty upon the importation of this article,
which is at present seventy-five cents per cwt., may, it is conceived, be
safely and advantageously extended to one hundred cents. It is desirable,
by decisive arrangements, to second the efforts which are malcino-in so very
valuable a branch.
°
1791.]
SECRETxiRY OF THE TREASURY.
119
The United States already, in a great measure, supply themselves with
nails and spikes. T h e y are able, and ought certainly to do it entirely. T h e
first and most laborious operation, in this manufacture, is performed by
water-mills; and of the persons afterwards employed, a great proportion
are boys, whose early habits of industry are of importance to the community, to the present support of their families, and to their own future comfort. It is not less curious than true, that in certain parts of the country
the making of nails is an occasional family manufacture.
T h e expediency of an additional duty on these articles is indicated by
an important fact. About 1,800,000 pounds of them were imported into
the United States in the course of a year ending the 30th of September,
1790. A duty of two cents per pound would, it is presumable, speedily put
an end to so considerable an importation ; and it is, in every view, proper
that an end should be put to it.
T h e manufacture of these articles, like that of some others, suffers from
the carelessness and dishonesty of a part of those who carry it on. An inspection in certain cases might tend to correct the evil. It will deserve
consideration, whether a regulation of this sort cannot be applied, without
inconvenience, to the exportation of the articles, either to foreign countries,
or from one State to another.
The implements of husbandry are made in several States in great abundance. In many places, it is done by the common blacksmiths ; and there
is no doubt that an ample supply for the whole country can, with great
ease, be procured amonsf ourselves.
Various kinds of edged tools, for the use of mechanics, are also made ;
and a considerable quantity of hollow wares. T h o u g h the business of castings has not yet attained the perfection which might be wished, it is, however, improving ; and as there are respectable capitals, in good hands, embarked in the prosecution of those branches of iron manufactories which are
yet in their infancy, they may all be contemplated as objects not difficult to
be acquired.
- ;
T o insure the end, it seems equally safe and prudent to extend the duty
acl valorem upon ail manufactures of iron, or of which iron is the article
of chief value, to ten per cent.
Fire-arms and other military weapons may, it is conceived, be placed,
without inconvenience, in the class of articles rated at fifteen per cent.
There exist already manufactories of these articles, which only require the
stimulus of a certain demand to render them adequate to the supply of the
United States.
u
It would also be a material aid to manufactures of this nature, as well as
a mean of public security, if provision should be made for an annual purchase of military weapons of horns manufacture, to a certain determinate
extent, in order to the formation of arsenals ; and to replace, from time to
time, such as should be withdrawn for use, so as always to have in store
the quantity of each kind which should be deemed a competent supply.
But it m a y hereafter deserve legislative consideration, whether manufactories of all the necessary weapons of war ought not to be established on
account of the Government itself. Such establishments are agreeable to the
usual practice of nations, and that practice seems founded on sufficient
reason.
There appears to be an improvidence in leaving these essential instruments of national defence to the casual speculations of individual adventure:
12(3
[1791.
REPORTS OF THE
a resource which can less be relied upon in this case than in most others;
the articles in question not being objects of ordinary and indispensable private consumption or use. As a general rule, manufactories on the immediate account of Government are to be avoided ; but this seems to be one of
the few exceptions which that rule admits, depending on very special reasons.
Manufactures of steel, generally, or of which steel is the article of chief
value, may with advantage be placed in the class of goods rated at seven
and a half per cent. As manufactures of this kind have not yet made any
considerable progress, it is a reason for not rating them as high as those of
iron ; but as this material is the basis of them, and as their extension is not
less practicable than important, it is desirable to promote it by a somewhat
higher duty than the present.
A question arises, how far it might be expedient to permit the importation of iron in pigs and bars free from duty. It would certainly be favorable to manufacturers of the article ; but the doubt is, whether it might not
interfere with its production.
T w o circumstances, however, abate, if they do not remove, apprehension
on this score: one is, the considerable increase of price, which has already
been remarked, and which renders it probable that the free admission of
foreign iron would not be inconsistent with an adequate profit to the proprietors of iron works; the other is, the augmentation of demand which
would be likely to attend the increase of manufactures of the article, in consequence of the additional encouragements proposed to be given. But caution, nevertheless, in a matter of this kind, is most advisable. T h e measure
suggested ought, perhaps, rather to be contemplated, subject to the lights of
further experience, than immediately adopted.
COPPER.
T h e manufactures of which this article is susceptible, are also of great
extent and utility. Under this description, those of brass, of which & it is
the principal ingredient, are intended to be included.
T h e material is a natural production of the country. Mines of copper
have actually been wrought, and with profit to the undertakers, though it
is not known that any are now in this condition; and nothing is efsier
1
great plenty
i n ^
extent.
S
r
011
*
COuntries
^
>
011
moderate terms and m
brassfou
^
Stat
" d e r s > particularly the former, are numerous
^ - s o m q of whom carry on business to a respectable
T o multiply and extend manufactories of the materials in ouestion is
^plentiful r r
tilom •
/
1
;?
effor t
, -°rder
t o
" * " "
s ; :
materials ; and a proper mean to this end is to
in
a readv ii? this ^ f f
^
^ ^
P lates > and brass, are
e
bU
C0
er
i s l a n i s calam n? ^ . r i /
{ PP
pig* and bars is n o t : neither
is lapis caJaminans, which, together with copper and charcoal constitute
the component ingred ents of b r a « t ^
cuarcoai, consilium
Sssought»
T h ^ n ™ «l)
r i m
/i
m
dU
S t e s a
y
! fi
0 n braSS Wares
,
wil1 t e n d
srsg&ffs
to ' h e general e»d in view.
Ahere
.
, ana a
appears to be a proprietv in every
P 1 a c i »g brass wares upon the same level with them*? and itmerit*
1791.]
SECRETxiRY OF THE TREASURY.
121
consideration whether the duty upon all of them ought not to be raised to
ten per cent.
LEAD.
There are numerous proofs that this material abounds in the United
States, and requires little to unfold it to an extent more than equal to every
domestic occasion. A prolific mine of it has long been open in the southwestern parts of Virginia; and under a public administration, during the
late war, yielded a considerable supply for military use. T h i s is now in
the haftds of individuals, who not only carry it on with spirit, but have
established manufactories of it at Richmond, in the same State.
The duties already laid upon the importation of this article, either in its
unmanufactured or manufactured state, insure it a decisive advantage in the
home market, which amounts to considerable encouragement. If the duty
on pewter wares should be raised, it would afford a further encouragement.
Nothing else occurs as proper to be added.
FOSSIL
COAL.
This, as an important instrument of manufactures, may, without impropriety, be mentioned among the subjects of this report.
A copious supply of it would be of great consequence to the iron branch.
As an article of household fuel, also, it is an interesting production; the
utility of which must increase in proportion to the decrease of wood, by
the progress of settlement and cultivation. And its importance to navigation, as an immense article of transportation coastwise, is signally exemplified in Great Britain.
It is known that there are several coal mines in Virginia now worked,
and appearances of their existence are familiar in a number of places.
The expediency of a bounty on all this species of coal of home production,
and of premiums on the opening of new mines, under certain qualifications,
appears to be worthy of particular examination. T h e great importance of
the article will amply justify a reasonable expense in this way, if it shall
appear to be necessary to, and shall be thought likely to answer, the end.
WOOD.
Several manufactures of this article flourish in the United States. Ships
are nowhere built in greater perfection; and cabinet wares, generally, are
made little, if at all, inferior to those of Europe. T h e i r extent is such, as
to have admitted of considerable exportation.
An exemption from duty of the several kinds of wood ordinarily used
m
these manufactures seems to be all that is requisite, by way of encouragement. It is recommended by the consideration of a similar policy being
Pursued in other countries, and by the expediency of giving equal advantages
to our own workmen in wood. T h e abundance of timber proper for ship
building in the United States, does not appear to be any objection to it.
The increasing scarcity, and growing importance of that article in the
European countries, admonish the United States to commence, and systematically to pursue, measures for the preservation of their stock. Whatever may promote the regular establishment of magazines of ship timber,
ls
> in various views, desirable.
SKINS.
T h e r e are scarcely any manufactories of greater importance than of this
article. T h e i r direct and very happy influence upon agriculture, by pro
12(3
REPORTS OF THE
[1791.
moting the raising of cattle of different kinds, is a very material recommendation.
It is pleasing, too, to observe the extensive progress they have made in
their principal branches, which are so far matured as almost to defy foreign
competition. Tanneries, in particular, are not only carried on as a regular
business, in numerous instances, and in various parts of the country, but
they constitute, in some places, a valuable item of incidental family manufactures.
Representations, however, have been made, importing the expediency of
further encouragement to the leather branch, in two ways: one, by increasing
the duty on the manufactures of it, which are imported: the other, by prohibiting the exportation of bark. In support of the latter, it is alleged that
the price of bark, chiefly in consequence of large exportations, has risen,
within a few years, from about three dollars to four and a half per cord.
These suggestions are submitted, rather as intimations which merit consideration, than as matters the propriety of which is manifest. It is not
clear that an increase of duty is necessary; and in regard to the prohibition
desired, there is no evidence of any considerable exportation hitherto; and
it is most probable that, whatever augmentation of price may have taken
place, is to be attributed to an extension of the home demand, from the
increase of manufactures, and to a decrease of the supply, in consequence
of the progress of settlement, rather than to the quantities which have been
exported.
It is mentioned, however, as an additional reason for the prohibition, that
one species of the bark usually exported is, in some sort, peculiar to the
country,-and the material of a very valuable die, of great use in some other
manufactures, in which the United States have begun a competition.
There may also be this argument in favor of an increase of duty. The
object is of importance enough to claim decisive encouragement, and the
progress which has been made leaves no room to apprehend any inconvenience on the score of supply, from such an increase.
It would be of benefit to this branch, if glue,- which is now rated at five
per cent., were made the object of an excluding duty. It is already made
in large quantities at various tanneries, and, like paper, is an entire economy
of materials, which, if not manufactured, would be left to perish. It may
be placed, with advantage, in the class of articles paying fifteen per cent.
GRAIN.
Manufactures of the several species of this article have a title to peculiar
favor; not only because they are, most of them, immediately connected
with the subsistence of the citizens, but because they enlarge the demand
for the most precious products of the soil.
T h o u g h flour may, with propriety, be noticed as a manufacture of grain,
it were useless to do it, but for the purpose of submitting the e x p e d i e n t
a general system of inspection, throughout the ports o f the United States;
which, it established upon proper principles, would be likely to improve
7
U every Where
VI 0 U r
?
' a n d t 0 r a i s e i t s reputation in foreign
markets. T h e r e are, however, considerations which stand in the way of
such an arrangement.
liqi
flour the
f.±lentrSpintS
l°rS a r e ' n e x t t 0
>
principal manufactures ol gram
T h e first has made a very extensive, the last a considerable progress m the United States. In respect to both, an e x c h s h r e posses-
r
1791.]
SECRETxiRY OF THE TREASURY.
123
sion of the home market ought to be secured to the domestic manufacturers
as fast as circumstances will admit. Nothing is more practicable, and nothing more desirable.
The existing laws of the United States have done much towards attaining
this valuable object; but some additions to the present duties on foreign distilled spirits and foreign malt liquors, and perhaps an abatement of those on
home made spirits, would more effectually secure it; and there does not occur any very weighty objection to either.
An augmentation of the duties on imported spirits would favor as well
the distillation of spirits from molasses, as that from grain. And to secure
to the nation the benefit of a manufacture, even of foreign materials, is
always of great, though perhaps of secondary importance.
A strong impression prevails in the minds of those concerned in distilleries, (including, too, the most candid and enlightened,) that greater differences in the rates of duty on foreign and domestic spirits are necessary,
completely to secure the successful manufacture of the latter; and there are
facts which entitle this impression to attention.
It is known that the price of molasses, for some years past, has been successively rising in the West India markets, owing partly to a competition
which did not formerly exist, and partly to an extension of demand in this
country ; and it is evident, that the late disturbances in those islands from
which we draw our principal supply, must so far interfere with the production of the article, as to occasion a material enhancement of price. T h e
destruction and devastation attendant on the insurrection in Hispaniola, in
particular, must not only contribute very much to that effect, but may be
expected to give it some duration. These circumstances, and the duty of
three cents per gallon on molasses, may render it difficult for the distillers
of that material to maintain, with adequate profit, a competition with the
rum brought from the West Indies, the quality of which is so considerably
superior.
.
The consumption of geneva, or gin, in this country, is extensive. It is
not long since distilleries of it have grown u p among us to any importance.
They are now becoming of consequence, but, being still in their infancy,
they require protection.
It is represented that the price of some of the materials is greater here
than in Holland, from which place large quantities are brought; the price
•of labor considerably greater; the capitals engaged in the business there,
much larger than those which are employed here; the rate of profits at
which the undertakers can afford to carry it on, much less ; the prejudices
J
n favor of imported gin, strong. These circumstances are alleged to outweigh the charges which attend the bringing of the article from Europe to
the United States, and the present difference of duty, so as to obstruct the
Prosecution of the manufacture with due advantage.
Experiment could, perhaps, alone decide, with certainty, the justness ot
the suggestions which are made; but, in relation to branches of manufacture so important, it would seem inexpedient to hazard an unfavorable
issue, and better to err on the side of too great, than of too small a difference in the particular in question.
It is therefore submitted, that an addition of two cents per gallon be
made to the duty on imported spirits of the first class of proof, with a proportionable increase 011 those of higher proof; and that a deduction of one
cent per gallon be made from the duty on spirits distilled within the United
12(3
REPORTS OF THE
[1791.
States, beginning with the first class of proof, and a proportionable deduction from the duty on those of higher proof.
It is ascertained that by far the greatest part of the malt liquors consumed
in the United States are the produce of domestic breweries. It is desirable,
and in all likelihood attainable, that the whole consumption should be supplied by ourselves.
T h e malt liquors made at home, though inferior to the best, are equal to
a great part of those which have been usually imported. T h e progress
already made is an earnest of what may be accomplished. T h e growing
competition is an assurance of improvement. T h i s will be accelerated by
measures tending to invite a greater capital into this channel of employment.
J o render the encouragement of domestic breweries decisive, it may be
advisable to substitute to the present rates of duty eight cents per gallon,
generally ; and it will deserve to be considered as a guard against invasions,
whether there ought not to be a prohibition of their importation, except in
casks of considerable capacity. It is to be hoped that such a duty would
. t n t f T l lQ ^
f ? r G i g n m a l t l i c * U o r s o f l i e n o r quality, and that
nhntPH h ^
f J y , W O r l d T V ? ? 6 t 0 b e i m P o r t e d > till it should be supplanted by the efforts of equal skill or care at home
h i s ^ f m ^ ? e n 0 d ; t h V m P ° [ t a t i o n > so qualified, would be a useful stimuth
ce fo T J ' ! ?
f m e a U t i m e ' t h e P a y ^ U t of the increased
Z T t Z ^ l r Z r 6 / ° f a l U X U ; T ' i n ° r d e r t 0 t h e encouragement of a
Sship
^ domestic industry, could not reasonably be deemed a
t h e l ^ ^ J ^ h HianUfaC?rerS
^ r a i n ' t h o u ? h upon a smaller scale,
i r 0 w d e r
and
plce?amLf /hnl ' ^ J
'
^ f e r s , may with great propriety be
a r T l ^ Z l ! Z ^
V f ? a t fifteen P e r c e " t . No manufactures
7
W l t h m t h e r e a c h o f a f J1 S
SomestS s o u s e s I S T ^ T
» "PP ! 7 f r o m
C O m m o n a s 1118
them the X c t s e i Z nf
f
obvious, to make
tile
° b j 6 C t S e i t h e r o f Prohibitory duties or of express prohibit on.
FLAX
AND
HEMP.
Manufactures of these articles have so m n r h
.
j
they are so often blended, that they may, w i h J v S J T ^ * i ^ i n
conjunction. T h e importance o f ' t h „ L
K a T. a g e ' b e considered in
cious effects upon h S o W indus ry the enl"
^ ^ ^ ^ e - i t s prethe
can be produced at home, to a n v ^ ^ r e q S e extern Z
^
^ T t
gIeat advonces w h
have been already made n t h ^ c S r f a h n ^ T ; .
'f
mily way, constitute d a f o . S w ( o r e . t l ^ f ^ ^ in
***
ment.
peculiar force to the patronage of GoverngroTwt
by
^ :
1,ments
competition of rival foreign 2 1 , 1 - " T K
the home manufactures °
' 7
°Ct b o u n t l e s
First. As to promoting the growth of the materials
,0
or
Promot'n?
™ advantageous
premiums upon
S
h e m p m P ' i n h e ' t f c ^
* * » ^ * « " i g h duty
usually great, the policy of the
P r o d u c t i o n were n o t u n highly questionable, a s i n t e r f e r i n g ™ t h t h t
^
would'be
h o f m a n u f a c t l , r e s ot
it. But m a k i n g the proper allowances f t
,
to the future and natural p r o g Z , ™ h e t T J b 2 ? m > a n d J i t h a B ^
pear, upon the whole, exceptionable
° m e a s u r e d o e s not ap'
1791.]
SECRETxiRY OF THE TREASURY.
125
A strong wish naturally suggests itself, that some method could be devised of affording a more direct encouragement to the growth both of flax
and hemp; such as would be effectual, and, at the same time, not attended
with too great inconveniences. T o this end, bounties and premiums offer
themselves to consideration; but no modification of them has yet occurred,
which would not either hazard too much expense, or operate unequally, in
reference to the circumstances of different parts of the Union, and which
would not be attended with very great difficulties in the execution.
Secondly. As to increasing the impediments to an advantageous competition of rival foreign articles.
To this purpose, an augmentation of the duties on importation is the
obvious expedient which, in regard to certain articles, appears to be recommended by sufficient reasons.
The principal of these articles is sail-cloth; one intimately connected
with navigation and defence; and of which a flourishing manufactory is
established at Boston, and very premising ones at several other places.
It is presumed to be both safe and advisable to place this in the class of
articles rated at ten per cent. A strong reason for it results from the consideration that a bounty of two pence sterling per ell is allowed in Great
Britain, upon the exportation of the sail-cloth manufactured in that kingdom.
It would likewise appear to be good policy to raise the duty to
per
cent, on the following articles: Drillings, osnaburgs, ticklenburgs, dowlas,
canvass, brown rolls, bagging, and upon all other linens, the first cost ot
which, at the place of exportation, does not exceed thirty-five cents per
yard. A bounty of twelve and a half per cent., upon an average, on the
exportation of such or similar linens from Great Britain, encourages the
manufacture of them in that country, and increases the obstacles to a successful competition in the countries to which they are sent.
The quantities of tow and other household linens manufactured in different parts of the United States, and the expectations, which are derived
from some late experiments, of being able to extend the use of labor-saving
machines in the coarser fabrics of linen, obviate the danger of inconvenience from an increase of the duty upon such articles, and authorize a
hope of speedy and complete success to the endeavors which may be used
lor
Procuring an internal supply.
Thirdly. As to direct bounties or premiums upon the manufactured articles.
Fo afford more effectual encouragement to the manufacture, and at the
same time to promote the cheapness of the article, for the benefit of navigahon, it will be of great use to allow a bounty of two cents per yard on all
sail-cloth which is"made in the United States from materials of their own
growth. T h i s would also assist the culture of those materials. An encouril
gement of this kind, if adopted, ought to be established for a moderate
term of years, to invite to new undertakings, and to an extension of the old.
f his is an article of importance enough to warrant the employment of
extraordinary means in its favor.
COTTON.
There is something in the texture of this material which adapts it, in a
peculiar degree, to the application of machines. T h e signal utility of the
. for spinning of cotton, not long since invented in England, has been
'oticed in another place; but there are other machines scarcely inferior in
wll
eith
i e h , in the different manufactories of this article, are employed
tner exclusively or with more than ordinary effect. T h i s very important
12(3
REPORTS OF THE
[1791.
circumstance recommends the fabrics of cotton, in a more particular manner, to a country in which a defect of hands constitutes the greatest obstacle
to success.
T h e variety and extent of the uses to which the manufactures of this
article are applicable, is another powerful argument in their favor.
And the faculty of the United States to produce the raw material in abundance, and of a quality which, though alleged to be inferior to some that
is produced in other quarters, is nevertheless capable of being used with
advantage in many fabrics, and is probably susceptible of being carried by a
more experienced culture to much greater perfection, suggests an additional
and a very cogent inducement to the vigorous pursuit of the cotton branch
in its several subdivisions.
How much has been already done, has been stated in a preceding part of
this report.
In addition to this, it may be announced that a society is forming, with
a capital which is expected to be extended to at least half a million of dollars ; on behalf of which, measures are already in train for prosecuting, on
a large scale, the making and printing of cotton goods.
These circumstances conspire to indicate the expediency of removing any
obstructions which may happen to exist to the advantageous prosecution of
the manufactories in question, and of adding such encouragements as may
appear necessary and proper.
T h e present duty of three cents per pound on the foreign raw material
is undoubtedly a very serious impediment to the progress of those manufactories.
T h e injurious tendency of similar duties, either prior to the establishment, or in the infancy of the domestic manufacture of the article, as it
regards the manufacture, and their worse than inutility in relation to the
home production of the material itself, have been anticipated, particularly
in discussing the subject of pecuniary bounties.
Cotton has not the same pretensions with hemp, to form an exception to
the general rule.
Not being, like hemp, a universal production of the countrv, it affords
less assurance of an adequate internal supply; but the chief objection arises
from the doubts which are entertained concerning the quality of the national cotton. It is alleged that the fibre of it is considerably shorter and
weaker than that of some other places; and it has been observed, as a
general rule, that the nearer the place of growth to the equator the better
the quality of the cotton. That which comes from Cayenne Surinam, and
Demarara, is said to be preferable, even at a material difference of price, to
the cotton of the islands.
While a hope may reasonably be indulged that, with due care and attention the national cotton may be made to approach nearer than it now does
to that of regions somewhat more favored by climate; and while facts
authorize an opinion that very great use may be made of it, and that it is a
resource which gives greater security to the cotton fabrics of this c o u n t r y
than can be enjoyed by any which depends wholly on external supplv, »
will certainly be wise i n every view, to let our infant manufactures h a v e
the full benefit of the best materials on the cheapest terms. It is obvious that
the necessity of having such materials is proportioned to the u n s k i l f u l n e s s
and inexperience of the workmen employed, who, if inexpert, will not fail
to commit great waste, where the materials they are to work with are of an
I
1791.]
SECRETARY OF THE TREASURY.
127
T o secure to the national manufacturers so essential an advantage, a repeal of the present duty on imported cotton is indispensable.
A substitute for this, far more encouraging to domestic production, will
be to grant a bounty 011 the national cotton, when wrought at a home manufactory; to which a bounty on the exportation of it may be added. Either,
or both, would do much more towards promoting the growth of the article
than the merely nominal encouragement which it is proposed to abolish.
The first would also have a direct influence in encouraging the manufacture.
T h e bounty which has been mentioned, as existing in Great Britain,
upon the exportation of coarse linens not exceeding a certain value, applies,
also, to certain descriptions of cotton goods of similar value.
This furnishes an additional argument for allowing to the national manufacturers the species of encouragement just suggested, and, indeed, for adding some other aid.
One cent per yard, not less than of a given width, on all goods of cotton,
or of cotton and linen mixed, which are manufactured in the United States,
with the addition of one cent per pound weight of the material, if made of
national cotton, would amount to an aid of considerable importance, both to
the production and to the manufacture of that valuable article. And it is
conceived that the expense would be well justified by the magnitude of the
object.
The printing and staining of cotton goods is known to be a distinct business from the fabrication" of them. It is one easily accomplished ; and
which, as it adds materially to the value of the article in its white state, and
prepares it for a variety of new uses, is of importance to be promoted.
As imported cottons, equally with those which are made at home, may
be the objects of this manufacture, it will merit consideration, whether the
whole, or a part, of the duty 011 the white goods ought not to be allowed to
be drawn back in favor of those who print or stain them. T h i s measure
would certainly operate as a powerful encouragement to the business ; and
though it may, in a degree, counteract the original fabrication of the articles, it would probably more than compensate for this disadvantage in the
rapid growth of a collateral branch, which is of a nature sooner to attain to
maturity. W h e n a sufficient progress shall have been made, the drawback
may be abrogated ; and, by that time, the domestic supply of the articles to
be printed or stained will have been extended.
If the duty of seven and a half per cent, on certain kinds of cotton goods
were extended to all goods of cotton, or of which it is the principal material, it would probably more than counterbalance the effect of the drawbackproposed in relation to the fabrication of the article. And no material objection occurs to such an extension. T h e duty, then, considering all the
circumstances which attend goods of this description, could not be deemed
inconveniently high ; and it'may be inferred, from various causes, that the
prices of them would still continue moderate.
Manufactories of cotton goods, not long since established at Beverly, in
Massachusetts, and at Providence, in the State of Rhode Island, and conducted with a perseverance corresponding with the patriotic motives which
began them, seem to have overcome the first obstacles to success: producing corderoys. velverets, fustians, jeans, and other similar articles, of a quality which will bear a comparison with the like articles brought from Manchester. T h e one at Providence has the merit of being the first in introducing into the United States the celebrated cotton mill, which not only
12(3
REPORTS OF THE
[1791.
furnishes materials for that manufactory itself, but for the supply of private
families for household manufactures.
Other manufactories of the same material, as regular businesses, have also
been begun at diiferent places in the State of Connecticut, but all upon a
smaller scale than those above mentioned. Some essays are also making
in the printing and staining of cotton goods ; there are several small establishments of this kind already on foot.
WOOL.
I n a country, the climate of which partakes of so considerable a proportion of winter as that of a great part of the United States, the woollen branch
cannot be regarded as inferior to any which relates to the clothing of the
inhabitants.
Household manufactures of this material are carried on in diiferent parts
of the United States to a very interesting extent; but there is only one
branch which, as a regular business, can be said to have acquired maturity:
this is the making of hats.
Hats of wool, and of wool mixed with fur, are made in large quantities
in diiferent States ; and nothing seems wanting but an adequate supply of
materials to render the manufacture commensurate with the demand.
A promising essay towards the fabrication of cloths, cassimeres, and other
woollen goods, is likewise going on at Hartford, in Connecticut. Specimens of the different kinds which are made, in the possession of the Secretary, evince that these fabrics have attained a very considerable degree of
perfection. Their quality certainly surpasses any thing that could have
been looked for in so short a time, and under so great disadvantages ; and
conspires, with the scantiness of the means which have been a U h e command of the directors, to form the eulogium of that public spirit, perseverance, and judgment which have been able to accomplish so much.
T o cherish and bring to maturity this precious embryo must engage the
most ardent wishes, and proportionable regret, as far as the means of doing
it may appear difficult or uncertain.
Measures which should tend to promote an abundant supply of wool of
good quality, would probably afford the most efficacious aid that present
circumstances permit.
T o encourage the raising and improving the breed of sheep at home,
would certainly be the most desirable expedient for that purpose • but it may
not be alone sufficient, especially as it is yet a problem, whether our wool be
capable of such a degree of improvement as to render it fit for the finer fabrics.
Premiums would probably be found the best means of promoting the domestic and bounties the foreign supply. T h e first mav be within the compass of the institution hereafter to be submitted ; the "last would require a
specific legislative provision. If any bounties are granted, they outfit, of
course, to be adjusted with an eye to quality as well as quantity
°
A fund for this purpose may be derived from the addition of two and a
half per cent, to the present rate of duty on carpets and carpeting ; an increase to which the nature of the articles suggests no objection, and which
may, at the same time furnish a motive the more to the fabrication of them
at home, towards which some beginnings have been made.
SILK.
T h e production of this article is attended with great facility in most parts
of the United States. Some pleasing essays are making in Connecticut as
1791.]
SECRETxiRY OF THE TREASURY.
129
weli towards that as towards the manufacture of what is produced. Stockings, handkerchiefs, ribands, and buttons are made, though as yet but in
small quantities.
A manufactory of lace, upon a scale not very extensive, has been long
memorable at Ipswich, in the State of Massachusetts.
An exemption of the material from the duty which it now pays on importation, and premiums upon the production, to be dispensed under the
direction of the institution before alluded to, seem to be the only species of
encouragement advisable at so early a stage of the thing.
GLASS.
T h e materials for making glass are found every where. In the United
States there is no deficiency of them. T h e sands and stones called tarso,
which include flinty and crystalline substances generally, and the salts oi
various plants, particularly of the sea-weed kali, or kelp, constitute the essential ingredients. An extraordinary abundance of fuel is a particular
advantage enjoyed by this country for such manufactures. They, however, require large capitals, and involve much manual labor.
Different manufactories of glass are now on foot in the United States.
The present duty of twelve and a half per cent, on all imported articles of
glass, amounts to a considerable encouragement to those manufactories. It
any thing in addition is judged eligible, the most proper would appear to
be a direct bounty on window-glass and black bottles.
T h e first recommends itself as an object of general convenience ; the last
adds to that character the circumstance of being an important item in
breweries. A complaint is made of great deficiency in this respect.
GUNPOWDER.
No small progress has been of late made in the manufacture o( this very
important article. It may, indeed, be considered as already established, but
its high importance renders its further extension very desirahe.
T h e encouragements which it already enjoys are, a d u t r ot ten per cent,
on the foreign rival article, and an exemption of s a l t p e t r e , one oi the principal ingredients of which it is composed, from duty, -i like exemption of
sulphur, another chief ingredient, would appear to be equally propel. INo
quantity of this article has yet been produced from internal sources,
ine
use made of it in finishing the bottoms of ships, is an additional inducement to placing it in the class of free goods. Regulations for the careful
inspection of the article would have a favorable tendency.
PAPER.
Manufactories of paper are among those ivhich are arrived at the greatest
maturity in the United States, and are most adequate to nationa supply.
That of paper-hangings is a branch in tfhich respectable progress has been
made.
Nothing material seems wanting to the further success of this valuable
branch, which is already protected by a competent duty on similar imported
articles.
,
,
In the enumeration of the sereral kinds made subject to that duty, sheathing and cartridge paper have been omitted. These being the most simple
manufactures of the sort, and necessary to military supply, as well as shipbuilding, recommend themselves equally with those of other descriptions,
YOL. I . — 9
12(3
REPORTS OF THE
[1791.
to encouragement, and appear to be as fully within the compass of domestic exertions.
P R I N T E D BOOKS.
T h e great number of presses disseminated throughout the Union, seem to
afford an assurance that there is no need of being indebted to foreign countries for the printing of the books which are used in the United States. A
duty of ten per cent., instead of five, which is now charged upon the article,
would have a tendency to aid the business internally.
It occurs, as an objection to this, that it may have an unfavorable aspect
towards literature, by raising the prices of books in universal use in private
families, schools, and other seminaries of learning; but the difference, it is
conceived, would be without effect.
As to books which usually fill the libraries of the wealthier classes, and
of professional men, such an augmentation of prices as might be occasioned
by an additional duty of five per cent., would be too little felt to be an impediment to the acquisition.
And with regard to books which may be specially imported for the use of
particular seminaries of learning, and of public libraries, a total exemption
from duty would be advisable, which would go towards obviating the objection just mentioned. T h e y are now subject to a duty of five pe'r cent.
As to the books in most general family use, the constancy and universality of the demand would insure exertions to furnish them at home, and
the means are completely adequate. It may also be expected ultimately, in
this, as in other cases, that the extension of the domestic manufacture would
conduce to the cheapness of the article.
It ought not to pass unremarked, that to encourage the printing of books,
is to encourage the manufacture of paper.
R E F I N E D SUGARS AND CHOCOLATE
Are among the number of extensive and prosperous domestic manufactures.
Drawbacks of the duties upon the materials of which they are respectively made, in casts of exportation, would have a beneficial influence upon
the manufacture, ana would conform to a precedent which has been already
furnished in the instance of molasses, on the exportation of distilled spirits.
Cocoa, the raw mateml, now pays a duty of one cent per pound, while
chocolate, which is a prevailing and very" simple manufacture, is comprised m the mass of article, rated at no more than five per cent.
There would appear to be a propriety in encouraging the manufacture by
a somewhat higher duty on m foreign rival than is paid on the raw mateh p J r T w ™ per p
be without inconvenience.
* S p o r t e d chocolate would, it is presumed,
1
'
T h e foregoing heads comprise t h T ^ o s t important of the several kinds of
manufactures which have occurred as requiring, and. at the same time, as
most proper for pubhc encouragement: and such measures forTffordTg it,
as have appeared best calculated to answer the end, have been R e s t e d .
haVe accom an
J P t £ T T U l
P i e d this d X e a t i o n o f objects
supersede the necessity of many supplementary remarks. One or Wo,
however,
may
altogether
superfluous
^ Bounties
are,not
in be
various
instances,
proposed as one species of encourage-
[
•
'
1791.]
SECRETxiRY OF THE TREASURY.
131
It is a familiar objection to them, that they are difficult to be managed, and
liable to f r a u d s ; but neither that difficulty nor this danger seems sufficientlygreat to countervail the advantages of which they are productive, when
rightly applied; and it is presumed to have been shown that they are, in
some cases, particularly in the infancy of n e w enterprises, indispensable.
It will, however, be necessary to guard, with extraordinary circumspection, the m a n n e r of dispensing them. T h e requisite precautions have been
thought of; but to enter into the detail would swell this report, already
voluminous, to a size too inconvenient.
If the principle shall not be deemed inadmissible, the means of avoiding
an abuse of it will not be likely to present insurmountable obstacles. T h e r e
are useful guides from practice in other quarters.
It shall, therefore, only be remarked here, in relation to this point, that
any bounty which m a y be applied to the manufacture of an article, cannot,
with safety, extend beyond those manufactories at which the making of the
article is a regular trade. It would be impossible to a n n e x adequate precautions to a benefit of that nature, if extended to every private family in
which the m a n u f a c t u r e was incidentally carried o n ; and its being a merely
incidental occupation which engages a portion of time that would otherwise be lost, it can be advantageously carried on without so special an aid.
T h e possibility of a diminution of the revenue may also present itself as
an objection to the arrangements w h i c h have been submitted.
But there is no truth which may be more firmly relied upon, than that
the interests of the revenue are promoted by whatever promotes an increase
of national industry a n d wealth.
In proportion to the degree of these, is the capacity of every country to
contribute to the public t r e a s u r y ; and where the capacity to pay is increased, or even is not decreased, the only consequence of measures which
diminish a n y particular resource, is a change of the object, If, by encouraging the manufacture of an article at home, the revenue which has been
wont to accrue from its importation should be lessened, an indemnification
can easily be found, either out of the manufacture itself, or from some other
object which may be deemed more convenient.
T h e measures, however, which have been submitted, taken aggregately,
will, for a long time to come, rather augment than decrease the public
PpiP''' fj|
revenue.
' " ' gad ' -Afarf 1 E e h K
T h e r e is little room to hope that the progress of manufactures will so
equally keep pace with the p r o c e s s of population as to prevent even a
gradual augmentation of the product of the duties on imported articles.
As, nevertheless an abolition, in some instances, and a reduction, in
others, of duties which h a r p been pledged for the public debt, is proposed,
it is essential that it shouM be accompanied with a competent substitute.
In order to this, it is requisite that all the additional duties w h i c h shall be
laid be appropriated, in the first instance, to replace all defalcations which
tnay proceed f r o m any such abolition or diminution. It is evident, at first
g * c e , that they will not only be adequate to this, but will yield a considerable surplus.' T h i s surplus will serve—
First. T o constitute a f u n d for p a y i n g the bounties which have been
decreed.
Secondly. T o constitute a f u n d for the operations of a board to be estab- *
lished for promoting arts, agriculture, manufactures, and commerce. Of
12(3
REPORTS OF THE
[1791.
this institution, different intimations have been given m the course of this
report. An outline of a plan for it shall now be submitted.
Let a certain annual sum be set apart, and placed under the management
of commissioners, not less than three, to consist of certain officers of the
Government, and their successors in office.
Let these commissioners be empowered to apply the fund confided to
them to defray the expenses of the emigration of artists, and manufacturers
in particular branches of extraordinary importance; to induce the prosecution and introduction of useful discoveries, inventions, and improvements,
by proportionate rewards, judiciously held out and applied; to encourage
by premiums, both honorable and lucrative, the exertions of individuals
and of classes, in relation to the several objects they are charged with promoting ; and to afford such other aids to those objects as may be generally
designated by law.
T h e commissioners to render to the Legislature an annual account of
their transactions and disbursements ; and all such sums as shall not have
been applied to the purposes of their trust, at the end of every three years,
to revert to the Treasury. It may also be enjoined upon them not to draw
out the money, but for the purpose of some specific disbursement.
It may, moreover, be of use to authorize them to receive voluntary contributions making it their duty to apply them to the particular objects for
which they may have been made, if any shall have been designated by the
donors.
There is reason to believe that the progress of particular manufactures
has been much retarded by the want of skilful workmen ; and it often
happens that the capitals employed are not equal to the purposes of bringing from abroad workmen of a superior kind. Here, in cases worthy of it,
the auxiliary agency of Government would, in all probability, be useful.
T h e r e are also valuable workmen in every branch who are prevented from
emigrating solely by th& want of means. Occasional aids to such persons,
properly administered, might be a source of valuable acquisitions to the
country.
T h e propriety of stimulating by rewards the invention and introduction
of useful improvements, is admitted without difficulty; but the success of
attempts in this way must evidently depend much on the manner of conducting them. It is probable that the placing of the dispensation of those
rewards under some proper discretionary direction, where they may be
accompanied by collateral expedients, will serve to give them the surest
efficacy. It seems impracticable to apportion, by general rules, specific
compensations for discoveries of unknown and disproportionate utility.
T h e great use which may be made of a fund of this nature, to procure
and import foreign improvements, is particular^ obvious. Amono- these,
the article of machines would form a most important item.
T h e operation and utility of premiums have been adverted to together
with the advantages which have resulted from their dispensation, under
the direction of certain public and private societies. Of this some experience has been had in the instance of the Pennsylvania Society for the Promotion of Manufactures and Useful A r t s ; but the funds of that a s s o c i a t i o n
have been too contracted to produce more than a very small portion of the
good to which the principles of it would have led. It may confidently be
affirmed that there is scarcely any thing which has been devised, better
calculated to excite a general spirit of improvement than the i n s t i t u t i o n s of
this nature. T h e y are truly invaluable.
!
1791.]
SECRETxiRY OF THE TREASURY.
133
In countries where there is great private wealth, m u c h may be effected
by the voluntary contributions of patriotic individuals ; but in a community
situated like that of the United States, the public purse must supply the
deficiency of private resource. In what can it be so useful, as in prompting and improving the efforts of industry ?
All which is humbly submitted.
A L E X A N D E R HAMILTON,
Secretary of the
Treasury.
T R E A S U R Y D E P A R T M E N T , December 5 , 1 7 9 1 .
ON THE ESTABLISHMENT OF A MINT.
J A N U A R Y , 1791.
In the House of Representatives of the United States.
SATURDAY, M A Y 5,
1791.
On motion,
Ordered, T h a t the report of the Secretary of the Treasury, relatively to
the establishment of a mint, which was made to this House on Friday, the
2Sth ultimo, be sent to the Senate for their information.
Extract from the Journal.
J O H N B E C K L E Y , Clerk.
T h e Secretary of the Treasury, having attentively considered the subject
referred to him by the order of the House of Representatives, of the 15th
day of April last, relative to the establishment of a mint, most respectfully
submits the result of his inquiries and reflections.
A plan for an esrablishrpent of this nature involves a great variety of
considerations, intricate, nice, and important. T h e general state of debtor
and creditor ; all the relations and consequences of price ; the essential interests of trade and industry; the value of all property; the whole income,
both of the State and of individuals, are liable to be sensibly influenced,
beneficially or otherwise, by the judicious or injudicious regulation of this
interesting object.
It is one, likewise, not more necessary than difficult to be rightly adjusted; one which has frequently occupied the reflections and researches of
politicians, without having harmonized their opinions on some of the most
important of the principles which enter into its discussion. Accordingly,
different systems continue to be advocated, and the systems of different nations, after much investigation, continue to differ from each other.
But if a riaht adjustment of the matter be truly of such nicety and difficulty, a quesHon naturally arises, whether it may not be most advisable to
leave things, in this respect, in the state in which they are ? Why, might it
be asked, 'since they have so long proceeded in a train which has caused
no general sensation of inconvenience, should alterations be attempted, the
precise effect of which cannot with certainty be calculated ?
12(3
[1791.
REPORTS OF THE
T h e answer to this question is not perplexing. T h e immense disorder
which actually reigns in so delicate and important a concern, and the still
greater disorder which is every moment possible, call loudly for a reform.
T h e dollar originally contemplated in the money transactions of this country, by successive diminutions of its weight and fineness, has sustained a
depreciation of five per cent.; and yet the new dollar has a currency, in all
payments in place of the old, with scarcely any attention to the difference
between them. T h e operation of this in depreciating the value of property
depending upon past contracts, and (as far as inattention to the alteration
in the coin may be supposed to leave prices stationary) of all other property,
is apparent. Nor can it require argument to prove that a nation ought not
to suffer the value of the property of its citizens to fluctuate with the fluctuations of a foreign mint, and to change with the changes in the regulations
of a foreign sovereign. This, nevertheless, is the condition of one which,
having no coins of its own, adopts with implicit confidence those of other
countries.
T h e unequal values allowed, in different parts of the Union, to coins of
the same intrinsic w o r t h ; the defective species of them which embarrass
the circulation of some of the States ; and the dissimilarity in their several
moneys of account, are inconveniences which, if not to be ascribed to the
want of a national coinage, will at least be most effectually remedied by the
establishment of one : a measure that will, at the same time, give additional
security against impositions by counterfeit as well as by base currencies.
It was with great reason, therefore, that the attention of Congress, under
the late confederation, was repeatedly drawn to the establishment of a mint;
and it is with equal reason that the subject has been resumed, now that the
favorable change which has taken place in the situation of public affairs
admits of its being carried into execution.
But, though the difficulty of devising a proper establishment ought not to
deter from undertaking so necessary a work, yet it cannot but inspire diffidence in one, whose duty it is made to propose a plan for the purpose, and
may perhaps be permitted to be relied upon as some excuse for any errors
which may be chargeable upon it, or for any deviations from sounder principles which may have been suggested by others, or even in part acted upon
by the former Government of the United States.
In order to a right judgment of what ought to be done, the folic wing6 particulars require to be discussed:
? l 1 " h t t 0 b e t h e l l a t u r G o f t h e m o n e Y » n i t °f the United States ?
' , U h a 2® proportion between gold and silver, if coins of both metals
are to be established ?
™ a V h e i ; r ° P ° r t i o n a n d composition of alloy in each kind ?
4th. Whether the expense of coinage shall be defrayed
by
the Governy
y
ment, or out of the material itself?
If
coins?
fort,
W h a t SllaU
^
the lmmbeT
^^^^^^
'
denoraina,ions
'
sizes
to
> a » d devices of the
* ™
- - ;
*the
unit o f ' f h ^ U n i ^ ^ f m i n i " g
P r ° P r i e { y what ought to be the money
ateS
e n ^ t n l nr
,'i V ° e t i d e a v o r t 0 forra a s accurate an idea as
the nature of the case will admit of what it actually is. T h e pound, though
10 t h e
of a
it is noTenu t1
™ > » n t o f a 1 1 ^ States. But
it is not equally easy to pronounce what is to be considered as the unit in the
1791.]
SECRETxiRY OF THE TREASURY.
135
coins. T h e r e being no formal regulation on the point, (the resolutions of
Congress of the 6th of July, 1785, and 8th of August, 1786, having never
yet been carried into operation,) it can only be inferred from usage or practice. T h e manner of adjusting foreign exchanges would seem to indicate
the dollar as best entitled to that character. In these, the old piastre of
Spain, or old Seville piece of eight rials, of the value of four shillings and
six-pence sterling, is evidently contemplated. T h e computed par between
Great Britain and Pennsylvania will serve as an example. According to
that, one hundred pounds sterling is equal to one hundred and sixty-six
pounds and two-thirds of a pound, Pennsylvania currency ; which corresponds with the proportion between 4s. 6d. sterling, and 7s. 6d. the current
value of the dollar in that State, by invariable usage. And, as far as the information of the Secretary goes, the same comparison holds in the other States.
But this circumstance in favor of the dollar loses much of its weight from
two considerations. T h a t species of coin has never had any settled or standard value, according to weight or fineness, but has been permitted to circulate by tale, without regard to either, very much as a mere money of convenience ; while gold has had a fixed price by weight, and with an eye to its
fineness. T h i s greater stability of value of the gold coins, is an argument
of force for regarding the money unit as having been hitherto virtually
attached to gold, rather than to silver.
Twenty-four grains and six-eighths of a grain of fine gold have corresponded with the" nominal value of the dollar in the several States, without
regard to the successive diminutions of its intrinsic worth.
But, if the dollar should, notwithstanding, be supposed to have the best
title to being considered as the present unit in the coins, it would remain to
determine what kind of dollar ought to be understood; or, in other words,
what precise quantity of fine silver.
T h e old piastre of Spain, which appears to have regulated our foreign exchanges, weighed 17 dwt. 12 grains, and contained 3S6 grains and 15 nntes
of fine silver. But this piece has been long since out of circulation. T h e
dollars now in common currency are of recent date, and much inferior to
that, both in weight and fineness. T h e average weight of them, upon different trials, in large masses, has been found to be 17 dwt. 8 grains. Their
fineness is less precisely ascertained ; the results of various assays made by
different persons, under the direction of the late Superintendent of the Finances, and of the Secretary, being as various as the assays themselves.
T h e difference between their extremes is not less than 24 grains in a dollar
of the same weight and age; which is too much for any probable differences
in the pieces. It is rather to be presumed, that a degree of inaccuracy has
been occasioned by the want of proper apparatus, and, in general, of practice. T h e experiment which appears to have the best pretensions to exactness, would make the new dollar to contain 370 grains and 933 thousand
parts of a grain of pure silver.
According to an authority on which the Secretary places reliance, the
standard of, Spain for its silver coin, in the year 1761, was 261 parts fine,
and 27 parts alloy; at which proportion, a dollar of 17 dwt. 8 grains would
consist of 377 grains of fine silver, and 39 grains of alloy. But there is no
question that this standard has been since altered considerably for the worse;
to what precise point, is not as well ascertained as could be wished; but,
from a computation of the value of dollars in the markets both of Amsterdam and London, (a criterion which cannot materially mislead,) the new
12(3
REPORTS OF THE
[1791.
dollar appears to contain about 368 grains of fine silver and that which immediately preceded it about 374 grains.
In this state of things, there is some difficulty in defining the dollar, which
is to be understood as constituting the present money unit, on the supposition of its being most applicable to that species of coin. T h e old Seville
piece of 386 grains and 15 mites fine, comports best with the computations
of foreign exchanges, and with the more ancient contracts respecting landed
property; but far the greater number of contracts still in operation concerning that kind of property, and all those of a merely personal nature,
now in force, must be referred to a dollar of a different kind. T h e actual
dollar at the time of contracting, is the only one which can be supposed to
have been intended ; and it has been seen that, as long ago as the year 1761,
there had been a material degradation of the standard! And even in regard
to the more ancient contracts, no person has ever had any idea of a scruple
about receiving the dollar of the day as a full equivalent for the nominal
sum which the dollar originally imported.
A recurrence, tharefore, to the ancient dollar, would be in the greatest
number of cases an innovation in fact, and, in all, an innovation in^respect
to opinion. T h e actual dollar in common circulation has evidently a much
better claim to be regarded as the actual money unit.
T h e mean intrinsic value of the different kinds of known dollars has
been intimated as affording the proper criterion. But, when it is recollected
that the more ancient and more valuable ones are not now to be met with
at all in circulation, and that the mass of those generally current is composed
of the newest and most inferior kinds, it will be perceived that even an
equation of that nature would be a considerable innovation upon the real
present state of things ; which it will certainly be prudent to approach, as
far as may be consistent with the permanent order designed to be introduced.
An additional reason for considering the prevailing "dollar as the standard
of the present money unit, rather than the ancient one, is, that it will not
only be conformable to the true existing proportion between the two metals
in this country, but will be more conformable to that which obtains in the
commercial world generally.
T h e difference established by custom in the United States between coined
gold ^nd coined silver has been stated, upon another occasion, to be nearly
^ a
T H . l f t m l y t h e c a s e ' w o u l d i m P ] y that gold was extremely
overvalued in the United States; for the highest actual proportion, in
any part of Europe, very little, if at all, exceeds 1 to 15 ; and t h e a v e r ge
14°S But »
r
^ r ° P e 18 P r ° b a b l > " 1 1 0 t m o r e t h a n
to
14.8. But that statement has
proceeded
upon
the
idea of the ancient delg ld
f
0
Carats
ta old
°
° T " ^
^ *
and
he old Seville piece of 386 grains and 15 mites of pure d i v e r at 7 J 6cL
f u r n i s h the exact ratio of 1 to 15.6262. But this does no coinc de wUh
he real difference between the metals in our market, o r , w h f c h f e with us
Taking theruAAr , £ 3 < 4
would be as 1 <o 15.11.
P I S F O F R
, T R
1
TO
u
H
a
r
a
a
^
S
W
i
r w t ' l 'the
actnal or market proportion, which i ^ q ^ ' "
proportion
^
1
F ^ o r t i o n in the
m re
°
'han '
1791.]
SECRETxiRY OF THE TREASURY.
137
The preceding view of the subject does not indeed afford a precise or
certain definition of the present unit in the coins, but it furnishes data
which will serve as guides in the progress of the investigation. It ascertains, at least, that the sum in the money of account of each State, corresponding with the nominal value of the dollar in such State, corresponds also
with 24 grains and f of a grain of fine gold; and with something between
368 and 374 grains of fine silver.
The next inquiry towards a right determination of what ought to be the
future money unit of the United States, turns upon these questions: Whether
it ought to be peculiarly attached to either of the metals, in preference to the
other or not? and, if to either, to which of them?
The suggestions and proceedings hitherto have had for their object the
annexing of it emphatically to the silver dollar. A resolution of Congress
of the 6th of July, 1785, declares that the money unit of the United States
shall be a dollar; and another resolution of the 8th of August, 1786, fixes
that dollar at 375 grains and 64 hundredths of a grain of fine silver. T h e
same resolution, however, determines that there shall also be two gold coins:
one of 246 grains and 268 parts of a grain of pure gold, equal to ten dollars;
and the other, of half that quantity of pure gold, equal to five dollars. And
it is not explained whether either of the two species of coins, of gold or
silver, shall have any greater legality in payments than the other. Yet it
would seem that a preference in this particular is necessary to execute the
idea of attaching the unit exclusively to one kind. If each of them be as
?alid as the other, in payments to any amount, it is not obvious in what
effectual sense either of them can be deemed the money unit, rather than
the other.
If the general declaration, that the dollar shall be the money unit of the
United States, could be understood to give it a superior legality in payments,
the institution of coins of gold, and the declaration that each of them shall
jr he equal to a certain number of dollars, would appenr to destroy that inference. And the circumstance of making the dollar the unit in the money
of account, seems to be rather matter of form than of substance.
Contrary to the ideas which have heretofore prevailed, in the suggestions
concerning a coinage for the United States, though not without much hesitation, arising from a deference for those ideas, the Secretary is, upon the
whole, strongly inclined to the opinion, that a preference ought to be given
to neither o f the metals for the money unit. Perhaps, if either were to be
preferred, it ought to be gold rather than silver.
The reasons are these:
The inducement to such a preference is, to render the unit as little variable
as
Possible; because on this depends the steady value of all contracts, and, in
a
certain sense, of all other property. And it is truly observed, that if the
unit belong indiscriminately to both the metals, it is subject to all the fluctuations that happen in the relative value which they bear to each other,
put the same reason would lead to annexing it to that particular one. which
!s
itself the least liable to variation; if there be, in this respect, any discernible difference between the two.
Gold may, perhaps, in certain senses, be said to have greater stability than
S1
'ver; as, being of superior value, less liberties have been taken with it, in
l" e regulations of different countries. Its standard has remained more uniJ
°nn, and it has, in other respects, undergone fewer changes; as, being not so
ln
uch an article of merchandise, owing to the use made of silver in the trade
12(3
REPORTS OF THE
[1791.
with the East Indies and China, it is less liable to be influenced by circumstances of commercial demand. And if, reasoning by analogy, it could be
affirmed that there is a physical probability of greater proportional increase
in the quantity of silver than in that of gold, it would afford an additional
reason for calculating on greater steadiness in the value of the latter.
As long as gold, either from its intrinsic superiority as a metal, from
its greater rarity, or from the prejudices of mankind, retains so considerable
a pre-eminence in value over silver as it has hitherto had, a natural consequence of this seems to be, that its condition will be more stationary. The
revolutions, therefore, which may take place in the comparative value of
gold and silver, will be changes in the state of the latter, rather than in
that of the former.
If there should be an appearance of too much abstraction in any of these
ideas, it may be remarked drat the first and most simple impressions do not
naturally incline to giving a preference to the inferior or least valuable of
the two metals.
It is sometimes observed, that silver ought to be encouraged rather than
gold, as being more conducive to the extension of bank circulation, from the
greater difficulty and inconvenience which its greater bulk, compared with
its value, occasions in the transportation of it. But bank circulation is desirable, rather as an auxiliary to, than as a substitute for, that of the precious metals, and ought to be left to its natural course. Artificial expedients to
extend it, by opposing obstacles to the other, are at least not recommended
by any very obvious advantages. And, in general, it is the safest rule to
regulate every particular institution or object, according to the principles
which, in relation to itself, appear the most sound. In addition to this, it
may be observed, that the inconvenience of transporting either of the metals
is sufficiently great to induce a preference of bank paper, whenever it can
be made to answer the purpose equally well.
But, upon the whole, it seems to be most advisable, as has been observed,
not to attach the unit exclusively to either of the metals; because this cannot
be done effectually, without destroying the office and character of one of
them as money, and reducing it to the situation of a mere merchandise;
which, accordingly, at different times, has been proposed from different and
very respectable quarters; but which would probably be a greater evil than
occasional variations in the unit, from the fluctuations in the relative value
of the metals; especially if care be taken to regulate the proportion between
^ h e m , with an eye to their average commercial value.
T o annul the use of either of the metals as money, is to abridge the quantity of circulating medium, and is liable to all the objections which arise from
a comparison of the benefits of a full, with the evils of a scarty circulation.
It is not a satisfactory answer to say that none but the favored metal
would, m this case, find its way into the country, as in that all balances must
be paid. T h e practicability of this would, in some measure, depend on the
abundance or scarcity of it in the country paying. W h e r e there was but
little, it either would not be procurable at all. or it would cost a premium to
obtain it; which, in every case of a competition with others, in a branch of
trade, would constitute a deduction from the profits of the party receivingPerhaps, too, the embarrassments which such a circumstance mi<dit sometimes create, in the pecuniary liquidation of balances, might lead to Additional
efforts to find a substitute in commodities, and might so far impede the introduction of the metals. Neither could the exclusion of either of them be
1791.]
SECRETxiRY OF THE TREASURY.
139
deemed, in other respects, favorable to commerce. It is often, in the course
of trade, as desirable to possess the kind of money, as the kind of commodities best adapted to a foreign market.
It seems, however, most probable, that the chief, if not the sole, effect of
such a regulation, would be to diminish the utility of one of the metals. It
could hardly prove an obstacle to the introduction of that which was excluded in the natural course of trade, because it would always command a
ready sale for the purpose of exportation to foreign markets. But such an
effect, if the only one, is not to be regarded as a trivial inconvenience.
If, then, the unit ought not to be attached exclusively to either of the metals, the proportion which ought to subsist between them, in the coins, becomes a preliminary inquiry, in order to its proper adjustment. This proportion appears to be, in several views, of no inconsiderable moment.
One consequence of overvaluing either metal, in respect to the other, is
the banishment of that which is undervalued. If two countries are supposed, in one of which the proportion of gold to silver is as 1 to 16, in the
other as 1 to 15, gold being worth more, silver less, in one than in the other,
it is manifest that, in their reciprocal payments, each will select that species
which it values least, to pay to the other where it is valued most. Besides
this, the dealers in money will, from the same cause, often find a profitable
traffic in an exchange of the metals between the two countries. And hence
it would come to pass, if other things were equal, that the greatest part of
the gold would be collected in one, and the greatest part of the silver in the
other. T h e course of trade might in some degree counteract the tendency
of the difference in the lesral proportions by the market value ; but this is so
far and so often influenced by the legal rates, that it does not prevent their
producing the effect which is inferred. Facts, too, verify the inference. In
Spain and England, where gold is rated higher than in other parts of Europe,
there is a scarcity of silver; while it is found to abound in France and Holland, where it is rated higher in proportion to gold than in the neighboring
nations. And it is continually flowing from Europe to China and the East
Indies, owing to the comparative cheapness of it in the former, and dearness
of it in the latter.
This consequence is deemed by some not very material; and there are
even persons who, from a fanciful predilection to gold, are willing to invite
ir
But general utility will best be promoted by a
? even by a higher price.
due proportion of both metals. If gold be most convenient in large payments, silver is best adapted to the more minute and ordinary circulation.
Bat it is to be suspected that there is another consequence, more serious
than the one which has been mentioned. T h i s is the diminution of the
total quantity of specie which a country would naturally possess.
It is evident that as often as a country, which overrates either of the
metals, receives a payment in that metal, it gets a less actual quantity than
11
ought to do, or than it would do if the rate were a just one.
It is also equally evident, that there will be a continual effort to make payment to it in that species to which it has annexed an exaggerated estimation, wherever it is current at a less proportioned value. And it would seem
to be a very natural effect of these two causes, not only that the mass of the
precious metals in the country in question would consist chiefly of that
« n d to which it had given an extraordinary value, but that it would be
absolutely less than if they had been duly proportioned to each other.
A conclusion of this sort, however, is to be drawn with great caution. In
12(3
[1791.
REPORTS OF THE
such matters, there are always some local, and m a n y other particular circumstances, which qualify and vary the operation of general principles,
even where they are j u s t ; and there are endless combinations, very difficult to be analyzed, which often render principles, that have the most plausible pretensions, unsound and delusive.
T h e r e ought, for instance, according to those which have been stated, to
have been formerly a greater quantity of gold in proportion to silver in the
United States than there has been; because the actual value of gold in this
country, compared with silver, was perhaps higher than in a n y other. But
our situation in regard to the West India islands, into some of which there
is a large influx of silver directly from the mines of South America, occasions an extraordinary supply of that metal, and consequently a greater proportion of it in our circulation than might have been expected from its relative value.
What influence the proportion under consideration m a y have upon the
state of prices, and how far this may counteract its tendency to increase or
lessen the quantity of the metals, are points not easy to be developed ; and
yet they are very necessary to an accurate j u d g m e n t of the true operation
of the thing.
But however impossible it may be to pronounce, with certainty, that the
possession of a less quantity of specie is a consequence of overvaluing either
of the metals, there is enough of probability in the considerations which
seem to indicate it. to form an argument of weight against such overvaluation.
A third ill consequence resulting from it is, a greater and more frequent
disturbance of the state of the money unit, by a greater and more frequent
diversity between the legal and market proportions of the metals. T h i s has
not hitherto been experienced in the United States, but it has been experienced elsewhere; and from its not having been felt by us hitherto, it does
not follow that this will not be the case hereafter, w h e n our commerce shall
have attained a maturity, which will place it u n d e r the influence of more
/ixed principles.
In establishing a proportion between the metals, there seems to be an
option of one or two things—
T o approach, as nearly as it can be ascertained, the mean or a v e r a g e proportion, in what may be called the commercial w o r l d ; or.
T o retain that which now exists in the United Stktes.' As far as these
happen to coincide, they will render the course to be pursued more plain
and more certain.
T o ascertain the first, with precision, would require better materials than
are possessed or than could be obtained without an inconvenient delay.
feir Isaac Newton in a representation to the T r e a s u r y of Great Britain,
m the year 1/17, after stating the particular proportions in the different
countries of Europe, concludes t h u s : - " By the course of trade and exa s ' T I T or i5 G to " »
nati
°n'
^
Euro
Pe>
fine
gold is to fine silver
But however accurate and decisive this authority m a y b e d e e m e d , in
relation to the period to which it applies, it cannot be taken, at the distance
o f m o r e h a n seventy years, as a rule for determining the existing proporI Z r ^ l I
" w H b e e n S , ? C e m a d e i n t h e regulations of their coins by
Z l
^
, 1 C h , a S r 1 1 \ s t h e course of trade, have an influence
upon the market values. Nevertheless, there is reason to believe that the
from
teuTS
rePrGSented
^
Slr
^
NeVVt n
° <
rem0te
1791.]
SECRETxiRY OF THE TREASURY.
141
In Holland, the greatest money market of Europe, gold was to silver in
December, 1789, as 1 to 14.88; and in that of London it has been, for some
time past, but little different, approaching perhaps something nearer 1 to 15.
It has been seen that the existing proportion between the two metals in
this country is about as 1 to 15.
It is fortunate, in this respect, that the innovations of the Spanish mint
have imperceptibly introduced a proportion so analogous as this is to that
which prevails among the principal commercial nations, as it greatly facilitates a proper regulation of the matter.
This proportion of 1 to 15 is recommended by the particular situation of
our trade, as being very nearly that which obtains in the market of Great
Britain ; to which nation our specie is principally exported. A lower rate
for either of the metals, in our market, than in hers, might not only afford
a motive the more, in certain cases, to remit in specie rather than in commodities; but it might, in some others, cause us to pay a greater quantity
of it for a given sum than we should otherwise do. If the effect should
rather be to occasion a premium to be given for the metal which was underrated, this would obviate those disadvantages; but it would involve another,
a customary difference between the market and legal proportions, which
would amount to a species of disorder in the national coinage.
Looking forward to the payments of interest hereafter to be made to
Holland, the same proportion does not appear ineligible. T h e present
legal proportion in the coins of Holland is stated a t l to 14 T V T h a t of
the market varies somewhat at different times, but seldom very widely from
this point.
There can hardly be a better rule in any country, for the legal, than the
market proportion, if this can be supposed to have been produced by the
free and steady course of commercial principles. T h e presumption in such
case is, that each metal finds its true level, according to its intrinsic utility,
Hi the general system of money operations.
But it must be admitted that this argument in favor of continuing the
existing proportion is not applicable To the state of the coins with us.
There have been too many artificial and heterogeneous ingredients—too
Kiuch want of order in the pecuniary transactions of this country—to authorize the attributing the effects which have appeared to the regular operations
of commerce. A proof of this is to be drawn from the alterations which
have happened in the proportion between the metals merely by the successive degradations of the dollar, in consequence of the mutability of a foreign
nnnt. T h e value of gold to silver appears to have declined, wholly from this
cause, from 15T6 to about 15 to 1; yet, as this last proportion, however
produced, coincides so nearly with what may be deemed the commercial
average, it may be supposed to furnish as good a rule as can be pursued.
T h e only question seems fo be, whether the value of gold ought not to be
a little lowered, to bring it to a more exact level with the two markets which
have been mentioned; but, as the ratio of 1 to 15 is so nearly conformable
to the state of those markets, and best agrees with that of our own. it will
Probably be found the most eligible. If the market of Spain continues to
give a higher value to gold (as it has done in time past) than that which is
recommended, there may be some advantage in a middle station.
A further preliminary to the adjustment of the future money unit is, to
determine what shall be the proportion and composition of alloy in each
species of the coins.
12(3
REPORTS OF THE
[1791.
T h e first, by the resolution of the 8th of August, 178G, before referred to,
is regulated at one-twelfth, or, in other words, at 1 part alloy to 11 parts fine,
whether gold or silver; which appears to be a convenient rule, unless there
should be some collateral consideration which may dictate a departure from
it. Its correspondency in regard to both metals is a recommendation of it,
because a difference could answer no purpose of pecuniary or commercial
utility; and uniformity is favorable to order.
This ratio, as it regards gold, coincides with the proportion, real or professed, in the coins of Portugal, England, France, and Spain. In those of
the two former, it is real; in those of the two latter, there is a deduction for
what is called remedy of weight and alloy; which is in the nature of an
allowance to the master of the mint for errors and imperfections in the process, rendering the coin either lighter or baser than it ought to be. The
same thing is known in the theory of the English mint, where 1 of a carat
is allowed. Bui the difference seems to be, that there it is merely an occasional indemnity, within a certain limit, for real and unavoidable errors and
imperfections; whereas, in the practice of the mints of France and Spain,
it appears to amount to a stated and regular deviation from the nominal
standard. Accordingly, the real standards of France and Spain are something worse than 22 carats, or 11 parts in 12 fine.
T h e principal gold coins in Germany, Holland, Sweden, Denmark, Poland, and Italy, are finer than those of England and Portugal, in different
degrees, from 1 cafat and \ to 1 carat and f ; which last is within of a
carat of pure gold.
There are similar diversities in the standards of the silver coins of the
different countries of Europe. T h a t of Great Britain is 222 parts fine to
18 alloy; those of the other European nations vary from that of Great
Britain as widely as from about 17 of the same parts better to 75 worse.
T h e principal reasons assigned for the use of alloy, are, the saving of
expense in the refining of the metals, (which, in their natural state, are
usually mixed with a portion of the coarser kinds ;) and the rendering of
them harder, as a security against too great waste by friction or wearing.
T h e first reason, drawn from the original composition of the metals, is
strengthened at present by the practice of alloying their coins, which has
obtained among so many nations. T h e reality of the effect to which the
last reason is applicable has been denied; and experience has been appealed
to as proving that the more alloyed coins wear faster than the purer. The
true state of this matter may be worthy of future investigation, though first
appearances are in favor of alloy. In "the mean time, the saving of trouble
and expense is a sufficient inducement to following those examples which
suppose its expediency: and the same considerations lead to taking as our
models those nations with whom we have most intercourse, and whose coins
are most prevalent in our circulation. These tire Spain, Portugal, England,
and France. T h e relation which the proposed proportion bears to their
gold coins has been explained. In respect to their silver coins, it will not
be very remote from the mean of their several standards.
T h e component ingredients of the alloy in each metal will also require
to be regulated. In silver, copper is the only kind in use, and it is doubtless the only proper one. In gold, there is a mixture of silver and copper:
in the English coins, consisting of equal parts: in the coins of some other
countries, varying from ^ to £ silver.
T h e reason of this union of silver with copper is t h i s : the silver coun
/
|
j
I
1791.]
SECRETxiRY OF THE TREASURY.
143
teracts the tendency of the copper to injure the color or beauty of the coin,
by giving it too much redness, or rather a coppery hue, which a small quantity will produce; and the copper prevents the too great whiteness which
silver alone would confer. It is apprehended that there are considerations
which may render it prudent to establish, by law, that the proportion of silver to copper in the gold coins of the United States shall not be more than
f, nor less than i-; vesting a discretion in some proper place to regulate the
matter within those limits, as experience in the execution may recommend.
A third point remains to be discussed, as a prerequisite to the determination of the money unit, which is, whether the expense of coining shall be
defrayed by the public, or out of the material itself; or, as it is sometimes
stated, whether coinage shall be free, or shall be subject to a duty or imposition 7 T h i s forms, perhaps, one of the nicest questions in the doctrine of
money.
The practice of different nations is dissimilar in this particular. In England, coinage is said to be entirely free; the mint price of the metals in bullion being the same with the value of them in coin. In France, there is a
duty, which has been, if it is not now, eight per cent. In Holland, there is
a difference between the mint price and the value in the coins, which has
been computed at .96, or something less than one per cent, upon gold; at
i-48, or something less than one and a half per cent, upon silver. T h e resolution of the 8th of August, 1786, proceeds upon the idea of a deduction
of half per cent, from gold, and of two per cent, from silver, as an indemnification for the expense of coining. T h i s is inferred from a report of the
late board of treasury, upon which that resolution appears to have been
founded.
Upon the supposition that the expense of coinage ought to be defrayed
out of the metals, there are two ways in which it may be effected : one, by
a
reduction of the quantity of fine gold and silver in the coins; the other,
oy establishing a difference between the value of those metals in the coins,
and the mint price of them in bullion.
The first method appears to the Secretary inadmissible. He is unable to
distinguish an operation of this sort from that of raising the denomination
°f the coin ; a measure which has been disapproved by the wisest men of
the nations in which it has been practised, and condemned by the rest of
the world. T o declare that a less weight of gold or silver shall pass for the
same sum, which before represented a greater w e i g h t ; or to ordain that the
s
anie weight shall pass for a greater sum, are things substantially of one
nature. T h e consequence of either of them, if the chauge can be realized,
to
degrade the money unit; obliging creditors to receive less than their
Just dues, and depreciating property of every k i n d ; for it is manifest that
every thing would, in this case, be represented by a less quantity of gold
a
nd silver than before.
" is sometimes observed, on this head, that though any article of property might, in fact, be represented by a less actual quantity of pure metal,
would nevertheless be represented by something of the same intrinsic
value. Every fabric, it is remarked, is worth intrinsically the price of the
raw
material and the expense of fabrication; a truth not less applicable to
a
P|J*e of coin than to a yard of cloth.
I his position, well founded in itself, is here misapplied. It supposes
* at t t l e coins now in circulation are to be considered as bullion, or, in other
°rds, as a raw material; but the fact is, that the adoption of them as
12(3
REPORTS OF THE
[1791.
money has caused them to become the fabric; it has invested them with
the character and office of coins, and has given them a sanction and efficacy equivalent to that of the stamp of the sovereign. T h e prices of all our
commodities at home and abroad, and of all foreign commodities in our
markets, have found their level in conformity to this principle. T h e foreign
coins may be divested of the privilege they have hitherto been permitted to
enjoy, and may of course be left to find their value in the market as a raw
material; but the quantity of gold and silver in the national coins, corresponding with a given sum, cannot be made less than heretofore, without
disturbing the balance of intrinsic value, and making every acre of land,
as well as every bushel of wheat, of less actual worth than in time past. Jf
the United States were isolated, and cut off from all intercourse with the
rest of mankind, this reasoning would not be equally conclusive ; but it appears decisive when considered with a view to the relations which commerce has created between us and other countries.
It is, however, not improbable that the effect meditated would be defeated by a rise of prices proportioned to the diminution of the intrinsic value
of the coins. T h i s might be looked for in every enlightened commercial
country; but, perhaps, in none with greater certainty than in this, because
in none are men less liable to be the dupes of sounds; in none has authority
so little resource for substituting names for things.
A general revolution in prices, though only nominally, and in appearance, could not fail to distract the ideas of the community; and would be apt
to breed discontents, as well among all those who live on the income of
their money, as among the poorer classes of the people, to whom the necessaries of life would seem to have become dearer. In the confusion of such a
state of things, ideas of value would not improbably adhere to the old coins,
which, from that circumstance, instead of feeling the effect of the loss of
their privilege as money, would perhaps bear a price in the market relatively
to the new ones, in exact proportion to weight. T h e frequency of the demand for the metals, to pay foreign balances, would contribute to this effect.
Among the evils attendant on such an operation, are these: creditors,
both of the public and of individuals, would lose a part of their property;
public and private credit would receive a wound ; the effective revenues of
the Government would be diminished. There is scarcely any point in the
economy of national affairs, of greater moment than the uniform preservation of the intrinsic value of the money u n i t ; on this, the security and
steady value of property essentially depend.
T h e second method, therefore, of defraying the expense of the coinage
out of the metals, is greatly to be preferred to* the other. T h i s is to let the
same sum of money continue to represent in the new coins exactly the
same quantity of gold and silver as it does in those now current; to allow
at the mint such a price only for those metals as will admit of profit just
sufficient to satisfy the expense of coinage; to abolish the leo-al currency of
the foreign coins, both in public and private payments ; and of course to
leave the superior utility of the national coins, for domestic purposes, to
operate the difference of market value which is necessary to induce the
bringing of bullion to the mint. In this case, all property and labor will
still be represented by the same quantity of gold and silver as formerly;
and the only change which will be wrought, will consist in annexing the
office of money exclusively to the national coins ; consequently, withdrawing it from those of foreign countries, and suffering them to become, as
they ought to be, mere articles of merchandise.
1791.]
^
'
.
•
SECRETxiRY OF THE TREASURY.
145
T h e arguments in favor of a regulation of this kind a r e : First. T h a t the
want of it is a cause of extra expense: there being then n o motive of individual
interest to distinguish between the national coins and bullion, they are, it is
alleged, indiscriminately melted down for domestic manufactures, and exported for the purposes of foreign trade; and it is added, that when the coins
become light by wearing, the same quantity of fine gold or silver bears a
higher price in bullion than in the coins; in which state of things, the melting down of the coins to be sold as bullion is attended with profit; and from
both causes, the expense of the mint, or. in other words, the expense of
maintaining the specie capital of the nation, is materially augmented.
Secondly. T h a t the existence of such a regulation promotes a favorable
course of exchange, and benefits trade; not only by that circumstance, but
by obliging foreigners, in certain cases, to pay dearer for domestic commodities, and to sell their own cheaper.
As far as relates to the tendency of a free coinage to produce an increase
of expense in the different ways that have been stated, the argument must
be allowed to have foundation, both in reason and in experience. It describes what has been exemplified in Great Britain.
The effect of giving an artificial value to bullion, is not at first sight obvious; but it actually happened at the period immediately preceding the late
reformation in the gold coin of the country just named. A pound troy in
gold bullion, of standard fineness, was then from 19s. 6 d. to 25s. sterling dearer than an equal weight of guineas, as delivered at the mint. T h e phenomenon is thus accounted for—the old guineas were more than t w o per cent,
hghter than their standard ID eight.
T h i s weight, therefore, in bullion, was
truly worth two per cent, more than those guineas. It consequently had,
in respect to them, a correspondent rise in the market.
c And as guineas were then current by tale, the n e w ones, as they issued
*rom the mint, were confounded in circulation with the old ones; and, by
the association, were depreciated below their intrinsic value, in comparison
with bullion. It became, of course, a profitable traffic to sell bullion for coin,
to select the light pieces, and re-issue them in currency, and to melt down
the heavy ones, and sell them again as bullion. T h i s practice, besides other
^conveniences, cost the Government large sums in the renewal of the coins.
. But the remainder of the argument stands upon ground far more queshonable. It depends upon very numerous and very complex combinations,
which there is infinite latitude for fallacy and error.
T h e most plausible part of it is that which relates to the course of exchange. Experience in F r a n c e has shown that the market price of bullion
has been influenced by the mint difference between that and coin—sometimes
|o the full extent of the difference; and it would seem to be a clear inference,
that whenever that difference materially exceeded the charges of remitting
bullion from the country where it existed, to another in which coinage was
lre
e, exchange would be in favor of the former.
If; for instance, the balance of trade between F r a n c e and E n g l a n d were
at any time equal, their merchants would naturally have reciprocal payments
o make to an equal amount, which, as usual, would be liquidated by means
bills of exchange. If, in this situation, the difference between coin
and bullion should be in the market, as at the mint of France, eight per cent.;
1
! also, the charges of transporting money from F r a n c e to England should
H°t be above two per cent.; and if exchange should be at par, it is evident
nat a profit of six per cent, might be made, by sending bullion f r o m F r a n c e
VOL. I . _ 1 0
12(3
REPORTS OF THE
[1791.
to England, and drawing bills for the amount. One hundred louis d'ors in
coin, would purchase the weight of one hundred and eight in bullion; one
hundred of which, remitted to England, would suffice to pay a debt of an
equal amount; and two being paid for the charges of insurance and transportation, there would remain six for the benefit of the person who should
manage the negotiation. But as so large a profit could not fail to produce
competition, the bills, in consequence of this, would decrease in price, till
the profit was reduced to the minimum of an adequate recompense for the
trouble and risk. And, as the amount of one hundred louis-d'ors in England might be afforded for ninety-six in France, with a profit of more
than one and a half per cent., bills upon England might fall in France to
four per cent, below par; one per cent, being a sufficient profit to the exchanger or broker for the management of the business.
But it is admitted that this advantage is lost, when the balance of trade
is against the nation which imposes the duty in question; because, by increasing the demand for bullion, it brings this to a par with the coins; and it
is to be suspected, that where commercial principles have their free scope,
and are well understood, the market difference between the metals in coin
and bullion will seldom approximate to that of the mint, if the latter be
considerable. It must be not a little difficult to keep the money of the
world, which can be employed to an equal purpose in the commerce of the
world, in a state of degradation, in comparison with the money of a particular country.
This alone would seem sufficient to prevent it: whenever the price of
coin to bullion in the market, materially exceeded the par of the metals, it
would become an object to send the bullion abroad, if not to pay a foreign
balance, to be invested in some other way in foreign countries, where it
bore a superior value ; an operation by which immense fortunes might be
amassed, if it were not that the exportation of the bullion would, ofitself,
restore the intrinsic par. But, as it would naturally have this effect, the
advantage supposed would contain in itself the principle of its own destructlon
- , As , l o "g} however, as the exportation of bullion could be made with
profit, (which is as long as exchange could remain below par,) there would
be a drain of the gold and silver of the country.
It any thing can maintain, for a length of time, a material difference between the value of the metals in coin and in bullion, it must be a constant
and considerable balance of trade in favor of the country in which it is maintained In one situated like the United States, it would in all probability
be a hopeless attempt. T h e frequent demand for gold and silver, to pay
j f i K ^ f o r e i g n e r s , would tend powerfully to preserve the equilibrium of
T h e prospect is that it would occasion foreign coins to circulate bv common consent, nearly at par with the national
circulate, oy
T o say that as far as the effect of lowering exchange is produced though
there
f h e V c a e7 o f n u b S c n™
» a b e n e f * t h e C r e h r i w n into
the scale of public prosperity, is not satisfactory. It has been seen, that
it may be productive of one e v i l - t h e investment of a part of he nat onal
u S a t n of I f S S h ! C h r h a r d 1 ^ b e h e n e ^ i a l ^ i i t i n a situation
a de
crease of i n t e r n a d e ^ ^ t ^ 8 ' W h e r e a n i m m e n s e c a P i t a l >
"
t0
for
ney in the wants
ffi
^
T
j
* * V
™
: perhaps
otlier evils may be descried
'
> o n a c l o s e examination,
1791.]
SECRETxiRY OF THE TREASURY.
147
One allied to that which has been mentioned, is this—taking France, for
the sake of more concise illustration, as the scene. Whenever it happens
that French louis-d'ors are sent abroad, from whatever cause, if there be a
considerable difference between coin and bullion in the market of France,
it will constitute an advantageous traffic to send back these louis-d'ors, and
bring away bullion in lieu of them; upon all which exchanges, France must
sustain an actual loss of a part of its gold and silver.
Again : such a difference between coin and bullion may tend to counteract
a favorable balance of trade. Whenever a foreign merchant is the carrier
of his own commodities to France for sale, he has a strong inducement to
bring back specie, instead of French commodities; because a return in the
latter may afford no profit, may even be attended with loss; in the former,
it will afford a certain profit. T h e same principle must be supposed to operate in the general course of remittances from France to other countries.
The principal question with a merchant naturally is, in what manner can I
realize a given sum, with most advantage, where I wish to place it? And,
in cases in which other commodities are not likely to produce equal profit
with bullion, it may be expected that this will be preferred; to which, the
greater certainty attending the operation must be an additional incitement.
There can hardly be imagined a circumstance less friendly to trade, than the
existence of an extra inducement arising from the possibility of a profitable
speculation upon the articles themselves, to export from a country its gold
and silver, rather than the products of its land and labor.
The other advantages supposed, of obliging foreigners to pay dearer for
domestic commodities, and to sell their own cheaper, are applied to a situation which includes a favorable balance of trade. It is understood in this
sense : the prices of domestic, commodities (such, at least, as are peculiar to
the country) remain attached to the denominations of the coins. When a
favorable balance of trade realizes in the market the mint difference between
coin and bullion, foreigners, who must pay in the latter, are obliged to give
more of it for such commodities than they otherwise would do. Again:
the bullion, which is now obtained at a cheaper rate in the home market,
will procure the same quantity of goods in the foreign market as before,
which is said to render foreign commodities cheaper. In this reasoning,
much fallacy is to be suspected. If it be true that foreigners pay more for
domestic commodities, it must be equally true that they get more for their
own when they bring them themselves to market. If peculiar, or other domestic commodities adhere to the denominations of the coins, no reason
occurs why foreign commodities of a like character should not do the same
thing; and in this case, the foreigner, though he receive only the same
value in coin for his merchandise as formerly, can convert it into a greater
quantity of bullion. Whence the nation is liable to lose more of its gold
and silver than if their intrinsic value in relation to the coins were preserved. And whether the gain or the loss will, on the whole, preponderate, would appear to depend on the comparative proportion of active
commerce of the one country with the other.
It is evident, also, that the nation must pay as much gold and silver as
before, for the commodities which it procures abroad; and whether it obtains
this gold and silver cheaper, or not, turns upon the solution of the question
just intimated, respecting the relative proportion of active commerce between
the two countries.
Besides these considerations, it is admitted in the reasoning, that the ad
12(3
REPORTS OF THE
[1791.
vantages supposed, which depend on a favorable balance of trade, have a
tendency to affect that balance disadvantageously. Foreigners, it is allowed,
will in this case seek some other vent for their commodities, and some other
market where they can supply their wants at an easier rate. A tendency
of this kind, if real, would be a sufficient objection to the regulation. Nothing, which contributes to change a beneficial current of trade, can well
compensate, by particular advantages, for so injurious an effect. It is far
more easy to transfer trade from a less to a more favorable channel, than,
when once transferred, to bring it back to its old one. Every source of artificial interruption to an advantageous current is, therefore, cautiously to
be avoided.
It merits attention, that the able minister who lately and so long presided
over the finances of France does not attribute to the duty of coinage in that
country any particular advantages in relation to exchange and trade.
Though he rather appears an advocate for it, it is on the sole ground of the
revenue it affords, which he represents as in the nature of a very moderate
duty on the general mass of exportation.
And it is not improbable that, to the singular felicity of situation of that
kingdom, is to be attributed its not having been sensible of the evils which
seem incident to the regulation. There is, perhaps, no part of Europe
which has so little need of other countries as France. Comprehending a
variety of soils and climates, an immense population, its agriculture in a
state of mature improvement, it possesses within its own bosom most, if not
all, the productions of the earth, which any of its most favored neighbors
can boast. T h e variety, abundance, and excellence of its wines, constitute
a peculiar advantage in its favor. Arts and manufactures are there also in a
very advanced state; some of them, of considerable importance, in higher
perfection than elsewhere. Its contiguity to Spain; the intimate nature of its
connexion with that country; a country with few fabrics of its own, consequently
wants,
and the principal
receptacle of
- numerous
.,
.
i
ui the
me treasures
ucoauica of
ui the
uiv
new world: these circumstances concur in securing to France so uniform
and so considerable a balance of trade, as in a great measure to counteract
the natural tendency of any errors which mav exist in th« S T O t P m of her
1791.]
SECRETxiRY OF THE TREASURY.
149
duty of coinage, and that, if it should be adopted, it ought not to be in the
form of a deduction from the intrinsic value of the coins, than absolutely to
exclude the idea of any difference whatever between the value of the metals in com and in bullion. It is not clearly discerned that a small difference between the mint price of bullion, and the regulated value of the
coins, would be pernicious, or that it might not even be advisable, in the
nrst instance, by way of experiment, merely as a preventive to the melting
down and exportation of the coins. T h i s will now be somewhat more par1
ticularly considered.
T h e arguments for a coinage entirely free, are, that it preserves the intrinsic value of the metals; that it makes the expense of fabrication a general instead of a partial tax ; and that it tends to promote the abundance of gold and
silver, which, it is alleged, will flow to that place where they finddie best
price, and from that place where they are in any degree undervalued
T h e first consideration has not much weight, as an objection to a' plan
which, without diminishing the quantity of metals in the coins, merely
allows a less price for them in bullion at the national factory or mint. No
rule of intrinsic value is violated, by considering the raw material as worth
*ess than the fabric, in proportion to the expense of fabrication. And by
divesting foreign coins of the privilege of circulating as money, they become the raw material.
T h e second consideration has perhaps greater weight. But it may not
amount to an objection, if it be the best method of preventing disorders in
the coins, which it is in a particular manner the interest of those on whom
the tax would fall to prevent. T h e practice of taking gold by weight,
which has of late years obtained in Great Britian, has be'en found, in some
degree, a remedy; but this is inconvenient, and may on that account fall
into disuse. Another circumstance has had a remedial operation. This is
the delays of the mint. It appears to be the practice there, not to make payment for the bullion which is brought to be exchanged for coin, till it either
"as in fact, or is pretended to have, undergone the process of recoining.
T h e necessity of fulfilling prior engagements is a cause or pretext for
postponing the delivery of the coin in lieu of the bullion. And this delay
creates a difference in the market price of the two things. Accordingly,
for some years past, an ounce of standard gold, which is worth in coin
sterling, has been in the market of London, in bullion, only
£ -J 17 s. Gel., which is within a small fraction of one-half per cent. less.
Whether this be management in the mint, to accommodate the bank in the
purchase of bullion, or to effect indirectly something equivalent to a formal
difference of price, or whether it be the natural course of the business, is
°pen to conjecture.
It at the same time indicates that if the mint were to make prompt payment, at about half per cent, less than it does at present, the state of bullion,
in respect to coin, would be precisely the same as it now is. And it would
be
t " e n certain that the Government would save expense in the coinage of
?°ld; since it is not probable that the time actually lost in the course of the
year^ in converting bullion into coin, can be an equivalent to half per cent,
on the advance, and there will generally be at the command of the Treasnr
y . a considerable sum of money waiting for some periodical disbursement,
which, without hazard, might be applied to that advance.
In what sense a free coinage can be said to promote the abundance of gold
and silver, may be inferred from the instances which have been given of
12(3
REPORTS OF THE
[1791.
the tendency of a contrary system to promote their exportation. It is, however, not probable that a very small difference of value between coin and
bullion can have any effect which ought to enter into calculation. There
can be no inducement of positive profit to export the bullion, as long as the
difference of price is exceeded by the expense of transportation. And the
prospect of smaller loss upon the metals than upon commodities, when the
difference is very minute, will be frequently overbalanced by the possibility
of doing better with the latter, from a rise of markets. It is, at any rate,
certain,"that it can be of no consequence, in this view, whether the superiority
of coin to bullion in the market be produced, as in England, by the delay
of the mint, or by a formal discrimination in the regulated values.
Under an impression that a small difference between the value of the
coin and the mint price of bullion is the least exceptionable expedient for
restraining the melting down or exportation of the former, and not perceiving that, if it be a very moderate one, it can be hurtful in other respects,
the Secretary is inclined to an experiment of one-half' per cent, on each of the
metals. T h e fact which has been mentioned, with regard to the price of
gold bullion in the English market, seems 10 demonstrate that such a difference may safely be made. In this case, there must be immediate payment
for the gold and silver offered to the mint. How far one-half per cent, will go
towards defraying the expense of the coinage, cannot be determined beforehand, with accuracy. It is presumed that, on an economical plan, it wall
suffice in relation to gold. But it is not expected that the same rate on silver
will be sufficient to defray the expense attending that metal. Some additional provision may therefore be found necessary, if this limit be adopted.
It does not seem to be advisable to make any greater difference in regard
to silver than to gold; because it is desirable that the proportion between the
two metals in the market should correspond with that in the coins, which
would not be the case if the mint price of one was comparatively lower
than that of the other; and because, also, silver being proposed to be rated,
in respect to gold, somewhat below its general commercial value, if there
should be a disparity to its disadvantage in the mint prices of the two metals,
it would obstruct too much the bringing of it to be coined, and would add as
inducement to export it. Nor does it appear to the Secretary safe to make
a greater difference between the value of coin and bullion than has been
mentioned. It will be better to have to increase it hereafter, if this shall
be found expedient, than to have to recede from too considerable a difference, in consequence of evils which shall have been experienced.
It is sometimes mentioned, as an expedient which, consistently with a
free coinage, may serve to prevent the evils desired to be avoided,'to incorporate in the coins a greater proportion of alloy than is usual; regulating
their value, nevertheless, according to the quantity of pure metal they contain. This, it is supposed, by adding to the difficulty of refining them,
would cause bullion to be preferred both for manufacture and exportation.
But strong objections lie against this scheme:—an augmentation of expense; an actual depreciation of the coin; a danger of still greater depreciation in the public opinion; the facilitating of counterfeits: while it is
questionable whether it would have the effect expected from it.
1 he alloy being esteemed of no value, an increase of it is evidently an
increase of expense. This, in relation to the gold coins, particularly, is a
matter of moment. It has been noted, that the alloy in them consists partly
ol silver. If, to avoid expense, the addition should be of copper only, this
I
1791.]
SECRETARY OF THE TREASURY.
151
would spoil the appearance of the coin, and give it a base countenance. Its
beauty would, indeed, be injured, though in a less degree, even if the usual
proportions of silver and copper should be maintained in the increased
quantity of alloy.
And however inconsiderable an additional expenditure of copper in the
coinage of a year may be deemed, in a series of years it would become of
consequence, [n regulations which contemplate the lapse and operation of
ages, a very small item of expense acquires importance.
T h e actual depreciation of the coin by an increase of alloy, results from
the very circumstance which is the motive to it—the greater difficulty of
refining. In England, it is customary for those concerned in manufactures
of gold to make a deduction in the price of four pence sterling per ounce,
of fine gold, for every carat which the mass containing it is below the legal
standard. T a k i n g this as a rule, an inferiority of a single carat, or one
twenty-fourth part in the gold coins of the United States, compared with
the English standard, would cause the same quantity of pure gold in them
to be worth nearly four-tenths per cent, less than in the coins of Great Britain. T h i s circumstance would be likely, in process of time, to be felt in
the market of the United States.
A still greater depreciation, in the public opinion, would be to be apprehended from the apparent debasement of the coin. T h e effects of imagination and prejudice cannot safely be disregarded in any thing that relates
to money. If the beauty of the coin be impaired, it may be found difficult
to satisfy the generality of the community that what appears worst is not
really less valuable; and it is not altogether certain that an impression of
its being so may not occasion an unnatural augmentation of prices.
Greater danger of imposition, by counterfeits, is also to be apprehended
from the injury which will be done to the appearance of the coin. It is a
just observation, that " t h e perfection of the coins is a great safeguard
against counterfeits." And it is evident that the color, as well as the excellence of the workmanship, is an ingredient in that perfection. T h e intermixture of too much alloy, particularly of copper, in the gold coins at least,
must materially lessen the facility of distinguishing, by the eye, the purer
from the baser kind, the genuine from the counterfeit.
T h e inefficacy of the arrangement to the purpose intended to be answered by it, is rendered probable by different considerations. If the standard
of plate in the United States should be regulated according to that of the
national coins, it is to be expected that the goldsmith would prefer these to
the foreign coins, because he would find them prepared to his hand, in the
state which he desires; whereas he would have to expend an additional
quantity of alloy to bring the foreign coins to that state. If the standard of
plate, by law or usage, should be superior to that of the national coins, there
would be a possibility of the foreign coins bearing a higher price in the
market; and this would not only obstruct their being brought to the mint,
but might occasion the exportation of the national coin in preference. It
is not understood that the practice of making an abatement of price for the
inferiority of standard is applicable to the English m i n t ; and if it be not,
this would also contribute to frustrating the expected effect from the increase
of alloy. For, in this case, a given quantity of pure metal, in our standard,
would be worth as much there as in bullion of the English or any other
standard.
Considering, therefore, the uncertainty of the success of the expedient,
12(3
[1791.
REPORTS OF THE
and the inconveniences which seem incident to it, it would appear preferable to submit to those of a free coinage. It is observable that additional
expense, which is one of the principal of these, is also applicable to the proposed remedy.
It is now proper to resume and finish the answer to the first question, in
order to which the three succeeding ones have necessarily been anticipated.
T h e conclusion to be drawn from the observations which have been made
on the subject, is this: T h a t the unit, in the coins of the United States, ought
to correspond with 24 grains and f of a grain of pure gold, and with 371
grains and ^ of a grain of pure silver, each answering to a dollar in the
money of account. T h e former is exactly agreeable to the present value of
gold, and the latter is within a small fraction of the mean of the two last
emissions of dollars—the only ones which are now found in common circulation, and of which the newest is in the greatest abundance. T h e alloy in
each case to be one-twelfth of the total weight, which will make the unit 27
grains of standard gold, and 405 grains of standard silver.
Each of these, it has been remarked, will answer to a dollar in the money
of account. It is conceived that nothing better can be done in relation to
this, than to pursue the track marked out by the resolution of the 8th of
August, 1786. This has been approved abroad as well as at home ; and
it is certain that nothing can be more simple or convenient than the decimal
subdivisions. There is every reason to expect that the method will speedily
"row into general use, when it shall be seconded by corresponding coins.
On this plan, the unit in the money of account will continue to be, as established by that resolution, a dollar; and its multiples, dimes, cents, and mills,
or tenths, hundredths, and thousandths.
With regard to the number of different pieces which shall compose the
coins of the United States, two things are to be consulted—convenience of
circulation, and cheapness of the coinage. T h e first ought not to be sacrificed to the last; but as far as they can be reconciled to each other, it is
desirable to do it. Numerous and small (if not too minute) subdivisions
assist circulation ; but the multiplication of the smaller kinds increases expense; the same process being necessary to a small as to a large piece.
As it is easy to add, it will be most advisable to begin with a small number, till experience shall decide whether any other kinds are necessary,
l i i e folfowing, it is conceived, will be sufficient in the commencement:
One go d piece, equal in weight and value to ten units or dollars.
One gold piece, equal to a tenth part of the former, and which shall be a
unit or dollar.
One silver piece, which shall also be a unit or dollar
silver V n i t T r dollar ^ ^
dollar? C ° P P e r
PiGCe
'
^
w d g h t and value a tenth
^
W h i C h Sha11 bG
'
°f
t h e Vallle of a
Part
of the
hundredth part of a
n t ! r ? ! l ' K T ^ v 0 ! 1 Sha11 b e h a l f t h e
°f the former.
a t t h G lgl teSt o f t h e t w o
rJl J t ^ P
?
? o l d c °ins should be numeI Z n ^ t T P ^ r ? ' 8 ' - ^ l a r S e r t h e P i e c e s t h e S o r t e r the process of
1Sk 0 f s t a k e
S 3 f t n
r
' a n d > consequently, the greater the safety
n
menCe; an(
n Smal1
i t r ^
V
m ^ e m s , it is not perceived that any
n
Z Z T a c c / u e from an entire dependance on the silver and copmece is to h i "
to the establishment of the small gold
piece is to have a sensible object m that metal, as well as in silver, to ex
F
1791.]
SECRETxiRY OF THE TREASURY.
153
press the unit. Fifty thousand at a time in circulation may suffice for this
purpose.
The tenth part of a dollar is but a small piece, and, with the aid of the
copper coins, will probably suffice for all the more minute uses of circulalation. It is less than the least of the silver coins now in general currency
iu England.
The largest copper piece will nearly answer to the half-penny sterling,
and the smallest, of course, to the farthing. Pieces of very small value are
a great accommodation, and the means of a beneficial economy to the poor,
by enabling them to purchase, in small portions, and at a more reasonable
rate, the necessaries of which they stand in need. If there are only cents,
the lowest price for any portion of a vendible commodity, however inconsiderable in quantity, will be a cent; if there are half cents, it will be a halfcent ; and, in a great number of cases, exactly the same things will be sold
for a half-cent which, if there were none, would cost a cent. But a halfcent is low enough for the minimum of price. Excessive minuteness would
defeat its object. T o enable the poorer classes to procure necessaries cheap,
is to enable them, with more comfort to themselves, to labor for less ; the
advantages of which need no comment.
The denominations of the silver coins contained in the resolution of the
8th of August, 17S6, are conceived to be significant and proper. T h e dollar is recommended by its correspondency with the present coin of that
name, for which it is designed to be a substitute, which will facilitate its
ready adoption as such in the minds of the citizens. T h e dime, or tenth,
the cent, or hundredth, the mill, or thousandth, are proper, because they
express the proportions which they are intended to designate. It is only to
be regretted that the meaning of these terms will not be familiar to those
who are not acquainted with the language from which they are borrowed.
It were to be wished that the length, and, in some degree, the clumsiness,
some of the corresponding terms in English did not discourage from preferring them. It is useful to have names which signify the things to which
they belong ; and, in respect to objects of general use, in a manner intelligible to all. Perhaps it might be an improvement to let the dollar have the
appellation either of dollar or unit, (which last will be the most significant,) and to substitute " tenth" for dime. In time, the unit may succeed
to the dollar. T h e word " cent," being in use in various transactions and
instruments, will, without much difficulty, be understood as the hundredth;
and the half-cent, of course, as the two hundredth part.
The eagle is not a very expressive or apt appellation for the largest gold
piece; but nothing better occurs. T h e smallest of the two gold coins may
be called the dollar or unit, in common with the silver piece, with which it
coincides.
. The volume or size of each piece is a matter of more consequence than
lts
denomination. It is evident that the more superficies or surface, the
more the piece will be liable to be injured by friction ; or, in other words,
the faster it will wear. For this reason, it is desirable to render the thickness as great, in proportion to the breadth, as may consist with neatness
and good appearance. Hence, the form of the double guinea, or double
Jouis-d'or, is preferable to that of the half johannes for the" large gold piece.
I he small one cannot well be of any other size than the Portuguese piece
eight, of the same metal.
12(3
REPORTS OF THE
[1791.
As it is of consequence to fortify the idea of the identity of the dollar, it
may be best to let the form and size of the new one, as far as the quantity
of matter (the alloy being less) permits, agree with the form and size of the
present; the diameter may be the same.
T h e tenth may be in a mean between the Spanish £ and T ' 7 of a dollar.
T h e copper coins may be formed merely with a view to good appearance, as any difference in the wearing that can result from difference of
form can be of little consequence in reference to that metal.
It is conceived that the weight of the cent may be eleven pennyweights;
which will about correspond with the value of the copper and the expense
of coinage. T h i s will be to conform to the rule of intrinsic value, as far as
regard to the convenient size of the coins will permit; and the deduction of
the expense of coinage in this case will be the more proper, as the copper
coins, which have been current hitherto, have passed till lately for much
more than their intrinsic value. T a k i n g the weight as has been suggested,
the size of the cent may be nearly that of the piece herewith transmitted,
which weighs lOdwt. l l g r s . 10m. Two-thirds of the diameter of the cent
will suffice for the diameter of the half-cent.
It may, perhaps, be thought expedient, according to general practice, to
make the copper coinage an object of profit; but, where this is done to any
considerable extent, it is hardly possible to have effectual security against
counterfeits. T h i s consideration, concurring with the soundness of the
principle of preserving the intrinsic value of the money of a country, seems
to outweigh the consideration of profit.
T h e foregoing suggestions, respecting the sizes of the several coins, are
made on the supposition that the Legislature m a y think fit to regulate this
matter. Perhaps, however, it may be judged not unadvisable toleave it to
executive discretion.
With regard to the proposed size of the cent, it is to be confessed that it
is rather greater than might be wished, if it could, with propriety and safety,
be made less ; and should the value of copper continue to decline, as it has
done for some time past, it is very questionable whether it will lon^ remain
alone a fit metal for money. T h i s has led to a consideration of the expediency of uniting a small proportion of silver with the copper, in order to be
able to lessen the bulk of the inferior coins. F o r this, there are precedents
Parts
i V ^ t
° f E u r o P e - 111 France, the composition which is called
biUon has consisted of one part silver and four parts copper- a c c o r d i n g t o
which proportion, a cent might contain seventeen grains, defraying out of
material the expense of coinage. T h e conveniency of size 'is a recommendation of such a species of coin ; but the Secretary is deterred from proposing it by the apprehension of counterfeits. T h e effect of so small a
quantity of silver, in comparatively so large a quantity of copper, c o u l d easily be imitated by a mixture of other metals of little value, and the tempta! T n g U W 0 U d n o t b e ^considerable.
coil s
i l 7 ' c e s °f
? ? r e far from being matters of indifference, as
they may be made the vehicles of useful impressions. T h e y ouo-ht. therefore, to be emblematical, but without losing sight of simplicity
T h e fewer
l h
t Z l t P r m u - > ¥ e s ther? are' the less
be the loss by bearing. Th;
h e a d t0 COnfine h i m s e l f t0 t h e s e concise
geneTd remarks.
^
**
T h e last point to be discussed respects the currency of foreign coins.
f
1791.]
SECRETxiRY OF THE TREASURY.
155
The abolition of this, in proper season, is a necessary part of the system
contemplated for the national coinage. But this it will be expedient to defer, till some considerable progress has been made in preparing substitutes
for them. A gradation may, therefore, be found most convenient.
The foreign coins may be suffered to circulate, precisely upon their present footing, for one year after the mint shall have commenced its operations.
The privilege may then be continued for another year, to the gold coins of
Portugal, England, and France, and to the silver coins of Spain. And these
may still be permitted to be current for one year more, at the rates allowed
to be given for them at the mint; after the expiration of which, the circulation of all foreign coins to cease.
The moneys which will be paid into the Treasury during the first year,
being re-coined before they are issued anew, will afford a partial substitute,
before any interruption is given to the pre-existing supplies of circulation.
The revenues of the succeeding year, and the coins which will be brought
to the mint, in consequence of the discontinuance of their currency, will
materially extend the substitute in the course of that year; and its extension
will be so far increased, during the third year, by the facility of procuring
the remaining species to be re-coined, which will arise from the diminution
of their current values, as probably to enable the dispensing wholly with the
circulation of the foreign coins after that period. T h e progress which the
currency of bank bills will be likely to have made, during the same time,
will also afford a substitute of another kind.
This arrangement, besides avoiding a sudden stagnation of circulation, will
cause a considerable proportion of whatever loss may be incident to the establishment, in the first instance, to fall, as it ought to* do, upon the Government, and will probably tend to distribute the remainder of it more equally
among the community"
It may, nevertheless, be advisable, in addition to the precautions here
suggested, to repose a discretionary authority in the President of the United States to continue the currency of the Spanish dollar, at a value corresponding with the quantity of fine silver contained in it, beyond the period above mentioned, for the cessation of the circulation of the foreign
c
°ins. It is possible that an exception in favor of this particular species
coin may be found expedient; and it may tend to obviate inconveniences, if there be a power to make the exception, in a capacity to be exerted when the period shall arrive.
The Secretary for the Department of State, in his report to the House of
Representatives, on the subject of establishing a uniformity in the weights,
measures, and coins of the United States, has proposed that the weight of
the dollar should correspond with the unit of weight. T h i s was done on
the supposition that it would require but a very small addition to the quantity
of metal which the dollar, independently of the object he had in view, ought
to contain; in which he was guided by the resolution of the 8th of August,
1786, fixing the dollar at 375 grains and 64 hundredths of a grain.
Taking this as the proper standard of the dollar, a small alteration, for
the sake of incorporating so systematic an idea, would appear desirable.
But, if the principles which have been reasoned from, in this report, are
Just, the execution of that idea becomes more difficult. It would certainly
not be advisable to make, on that account, so considerable a change in the
money unit, as would be produced by the addition of five grains of silver
^ the proper weight of the dollar, without a proportional augmentation of its
12(3
REPORTS OF THE
[1791.
relative value; and to make such an augmentation, would be to abandon the
advantage of preserving the identity of the dollar, or, to speak more accurately, of having the proposed one received and considered as a mere substitute for the present.
T h e end may, however,be obtained, without either of these inconveniences,
by increasing the proportion of alloy in the silver coins. But this would
destroy the uniformity, in that respect, between the gold and silver coins.
It remains, therefore, to elect which of the two systematic ideas shall be
pursued or relinquished; and it may be remarked, that it will be more easy
to convert the present silver coins into the proposed ones, if these last have
the same, or nearly the same, proportion of alloy, than if they have less.
T h e organization of the mint yet remains to be considered.
This relates to the persons to be employed, and to the services which
they are respectively to perform. It is conceived that there ought to be—
A Director of the Mint; to have the general superintendence of the business.
An Assay Master, or Assayer ; to receive the metals brought to the mint,
ascertain their fineness, and deliver them to be coined.
A Master Coiner; to conduct the making of the coins.
A Cashier; to receive and pay them out.
An Auditor; to keep and adjust the accounts of the mint.
Clerks; as many as the director of the mint shall deem necessary, to
assist the different officers.
Workmen ; as many as may be found requisite.
A Porter.
In several of the European mints there are various other officers, but the
foregoing are those only who appear to be indispensable. Persons in the
capacity of clerks will suffice instead of the others, with the advantage of
greater economy.
T h e number of workmen is left indefinite, because, at certain times, it is
requisite to have more than at others. T h e y will, however, never be numerous. T h e expense of the establishment, in an ordinary year, will probably be from fifteen to twenty thousand dollars.
T h e remedy for errors in the weight and alloy of the coins must necessarily form a part in the system of a m i n t ; and the manner of applying it
will require to be regulated. T h e following account is given of the practice in England, in this particular:
A certain number of pieces are taken promiscuously out of every fifteen
pounds of gold coined at the mint, which are deposited, for safe keeping, in
a strong box, called the pix. T h i s box, from time to time, is opened in
the presence of the Lord Chancellor, the officers of the Treasury, and others,
and portions are selected from the pieces of each coinage, which are melted
together, and the mass assayed by a j u r y of the Company of Goldsmiths.
If the imperfection and deficiency, both in fineness and weight, fall short of
a sixth of a carat, or 40 p a i n s of pure gold, upon a pound of standard, the
master of the mint is held excusable; because it is supposed that no workman can reasonably be answerable for greater exactness. T h e expediency
of some similar regulation seems to be manifest.
All which is humbly submitted.
ALEXANDER
Secretary
TREASURY
DEPARTMENT,
http://fraser.stlouisfed.org/ January
Federal Reserve Bank of St. Louis
28,1791.
HAMILTON,
of the
Treasury-
I N D E X .
A.
Agriculture, the effect of funding the public debt on, 6.
productiveness of, contrasted with manufactures, 78.
promoted by manufactures, 88, 92, 104.
Alloy, proportion of, used in gold and silver coinage, 135, 141.
W h y it is used in coinage, 142.
Annuity proposed, as a plan for funding the public debt, 17, 43, 99.
Army expenses of 1802, estimated, 222.
of 1803,
do
253.
of 1804,
do
263.
of 1805,
do
286.
of 1806,
do
298.
from 1st April, 1801, to 31st March, 1805, 326.
of 1807, estimated, 331.
of 1808,
do
358.
paid, 374.
of 1809, estimated, 375, 392.
paid, 399. . (to
J«
from 1802 to 1807,420.
of 1810, estimated, 400.
paid, 421.
of 1811, estimated, 423.
paid, 443, 466.
of 1812, estimated, 444.
paid, 46S, 484.
of 1813. estimated, 470, 489.
paid, 490, 492, 499.
of 1814, estimated, 500.
paid, 523, 532.
of 1815, estimated, 530.
B.
Balances in the Treasury, in 1801,
1802,
1803,
1804,
1805,
1806,
1807,
1808,
1809,
1810,
1811,
1812,
1813,
1814,
223, 224.
255.
263.
287.
298.
332.
357.
374.
391, 399.
422.
443.
468.
488, 499.
525.
554
INDEX.
Bank, plan of a national, proposed, 54, 72.
capital stock, of what amouut, and bow composed, 72.
the United States may be a stockholder, 75.
Bank of the United States, a renewal of the charter of; recommended, 3o9.
Bank shares, dividends on, ill 1901, 221.
sold, 254.
proceeds of, 317.
Banks, benefits resulting from, 55, 97.
number of, in the United States in 1790, 65.
objections to, considered, 57.
stock of, how composed, 59.
favor the increase of the precious metals, 61.
tend to lower the rate of interest, 67.
•
_
Bounties considered as a mean of encouraging manufactures, 110, 1.J0.
C.
Claims of American citizens against Prance, amount of, assumed and paid,
264, 2C6, 288.
Coffee, additional duty on, proposed, 22.
imported and consumed from 1790 to 1798, quantity of, 241.—See
Merchandise
imported
Coins, foreign, comparative value of, 135. 142.
circulation of, to be prohibited, 155.
Coins of the United States, of what to be compow>d,tind how denominated,
152.
Commercial restrictions, effects of, on the revenue in 1807-8, 398, 409.
Commerce, benefited by funding the public debt, 5.
promoted by man u far tu res, 90, 104.
how affected by the French and British decrees, 376.
Compensation of officers ot Government in 1790,45.
Connecticut, claim of, in 1789, 35.
Creditors of the United States, not expedient to discriminate between the
classes of the, 7.
Credit.—See Public
Credit.
Customs, where paid, and the amount, from 1st April, 1801, to 31st Marcn,
1805, 319.
,
-
it
^nvds
Debt, amount of interest on the domestic, from 1776 to 1791, 33.
Debt.—See Public Debt.
Debts due to States, to be assumed by the United States, 10, 28.
suppositious account of the, 30.
statement of the, 35.
provision for liquidating, 164.
Direct taxes, collected in 1801, 221.
arrears of, in 1803, 263.
receipts from, in 1801 to 1805, 317.
receipts from, in 1814, 524, 526.
an increase of the. recommended, 531.—See Revenue, *TC-
555
INDEX.
Drawback of duties, considered in reference to the encouragement of manufactures, 114.
amount of, from 1790 to 1799,239.
system of, proposed to be modified, 378.—See Merchandise imported.
Duties, additional, proposed on wines, spirits, teas, and coffee, 22.
Duties on imports, tariff of, proposed to be modified, 218,227.
cost of collecting the, 218, 227.
an increase of, proposed, 219,242, 378, 401, 424,448.
Duties on imports and tonnage, estimated for 1790, 53.
^
for 1795,170.
Duties.—See Internal Duties, Protecting Duties, Imports, Merchandise.
Dutch debt, created in 1790, 166.
amount of, in 1794, 206.
amount of, in 1802, 225.
instalments payable to 1809, 250.
difficulties in remitting instalments of the, 254, <2b0.
amount of the, in 1803,276.
R
Embargo, its effects upon the revenue considered, 377, 503.
Estimates of receipts and expenditures for 1791, 45, 53.
1795,170,18o,2l4.
1801-2, 222.
1802-3, 253.
180a-4. 263.
1804-5, 286.
1805-6, 298.
1806-7, 331.
1807-8, 357.
1808-9, 375.
1809-10, 399.
1810-11, 422.
1811-12,444,448.
1812-13, 469.
1813-14,488, 500.
1814-15, 526, 530.
Exemption of nujeriajs
materials ^for manmawun»
^
Expenditures.—See Receipts and Expenditures.
Exportation.—Sec Re-exportation.
F
^
<
Finances, the effects of a nationalbank in administering.be, cons.dered, 54.
Finances, state of the. in 1801,
1802,
1803,
1804,
1805,
1806,
1807,
H08,
1809;
21b.
252.
262.
285.
297.
331.
356.
373.
(June,) 391.
556
INDEX.
Finances, state of the, in 1809, (December.) 398.
1810, 421.
1811, 443.
1812,468.
1813, (June,) 48$.
1813, (December,) 499.
1814, 523.
Fisheries, benefited by manufactures, 107.
Florida, imports and exports to and from, for tho years 1799 to ISO2.20a,
281 to 284.
Foreign intercourse, expenses of, from 1801 to 1805, 325 — See Receipts
and Expenditure*.
Foreign officers, provision made in 1792, for paying certain, 166.
France, claims against, assumed by the United Stales, and paid, 264 6,288.
Frauds on the revenue, how prevented, 23.
Funding system established in 1790, 165.
G.
Gold and silver, amount of, increased by establishing hanks, 55.
proportion of, in the United Stales, in 1790, estimated. 141.
I.
Imported articles, and the duty on each.—See Merchandise importedImports from Great Britain in 1810, duties accrued on, 456.
a table of duties chargeahlo on, in 1801, 227.
Imports, value and quantity of, from 1790 to 1800, 229 to 238.
amount of duties accrued oil, from 1790 to 1799, 239.
_
quantity of consumed in the United States from 1790 to 1 7 9 8 ^ 1 duties accrued on, from October 1800, to October 1802, 259,
duties accrued on, in the years 1802 and 1803, 290.
1801 to 1804,297.302,311.
1804 and 1805, 337.
1805 and 1806,362.
1806 and 1807,379.
1807 and 1808,403.
1808 and 1W19, 426.
1809 and 1810, 451.
1810 and 1811, 47S.
1811 and 1812, 505.
1812 and 1 8 1 3 , 5 4 4 . — c h a n
dine imported.
_
Incidental revenues received from 1st April, 1801, to 31st March, lbuo, o
—See Revenue.
Internal duties created in 1794,159.
Internal duties, receipts from in 1800, 218, 243.
cost of collection, 219.
receipts from, in 1801 to 1805,317.
outstanding, amount of in 1803, 263
proposed to be increased, 531.—See R»v*nvr .
Internal improvements, surplus revenue maybe applied to, 359.
Inventions and discoveries promote manufactures, 114.
INDEX.
557
L.
I^ands.—See Public Lands.
Laws creating revenue, and providing for the public debt, reviewed 157
Limitation act, passed in 1793, 167.
Lorui recommended to supply a deficiency in the receipts. 392, 400 423
448, 471, 491.
'
'
'
'
Loans, foreign, amount of on 31st December, 1789, 31.
I^oans preferred to taxes to meet the exigencies of a war, 377, 401.
Loans, amount received from, in 1810, 443.
1812, 468, 486.
1813, 488, 492. 499, 516.
1814, 524, 527.—See Revenue.
I*oans, term3 on which they were obtained, 441, 491, 492 to 498; 519 to
522, 528 ; 535 to 540.
l»uisiann, provision for the purchase of, 264.
imports and exports to and from, for the years 1796 to 1802,
265, 281 to 284.
M.
Manufactures benefited by funding the public debt, 6.
expediency of encouraging, 78.
advantages of, 85.
encourage emigration, 87.
effects of, on commerce and agriculture, 90.
objections to encouraging, considered, 91, 103, 107.
progress of, in the United States, 102.
necessary to the independence of a country, 106.
sectional jealousies on the subject of, considered, 107.
how to be protected, 109.
materials for. exempted from duty, effect of, 113.
articles of, requiring particular encouragement, 118.
Massachusetts, amount due to, in 1789, 35.
Mediterranean fund, created, and estimated product of the, for 1805, 286.
duties constituting the, cease 1st January, 1809, 356.
a continuation of the, recommended, 378,401,424,448.
annual amount of.—See Merchandise imported, and
Revenue.
Merchandise imported and consumed, from 1790 to 1S00, 237, 241.
(paving ad valorem duties) in 1795 to 1800, 234.
(the quantity re-exported deducted) in 1801, 312.
1
1
1802,270.
1803, 291.
1804, 303.
1805, 338.
1806, 368.
1807, 380.
1808, 404.
re-exported in 1807 and 1808, 409.
imported, (the quantity reexported deducted,) in 1809, 427.
1811', 474.
1812, 506.
1813, 545.
55S
INDEX.
Mint, plan for the establishment of a, 133.
expenses of a, how defrayed, 143, 150.
Molasws^np^rted and" consumed from 1790 U> 1793, quantity of, 211.
See Merchandise imjxjrled.
N.
National bank proposed to be established, 54.
Navy expenses of 1802, estimated, 222.
1803,
do
253.
1804.
do
263.
ISOo,
do
2S6.
1806,
do
298.
from 1st April. 1801, to 31st Maxell, 1S05, 327.
of 1807, estimated, 331.
1808,
do
358.
paid, 374.
1S09, estimated, 375, 392.
paid, 399.
from 1802 to 1S07, 420.
of 1810, estimated. 400.
paid, 421.
1811, estimated. 423.
paid, 443, 466.
1812, estimated, 444.
paid, 468, 484.
1813, estimated, 470, 489.
paid, 490, 492, 499.
1814, estimated, 500.
paid, 523, 532.
1815, estimated, 530.
New Jersey, claim of, in 1789, 35.
New York, claim of, in 1789, 35.
Non-importation act, modification of the, proposed. 425.
O.
I
Officers of Government, compensation allowed to the, in 1790, 45.
P.
Paper money, the expediency of emitting, considered, 64.
Passports and clearances, amount of revenue derived from, in 179"
1798, 241—See Merchandise
imported.
Penalties and forfeitures for infractions of the revenue laws, to be districted to informers and custom-house officers, 425.—See Revenue.
Postage of letters, receipts from, in 1801 to 1805, 317.—See Revenue.
Post Office, revenue derived from the, to be applied to the sinking fond,
review of the law establishing the, 159.
Premiums, effect of granting, on agriculture and manufactures, 113.
INDEX.
559
Protecting duties on imports considered as a bounty on domestic fabrics, 109.
the constitutional power to levy considered, 112.
Prohibitions of imports and exports may be resorted to for the encouragement and protection of manufactures, 109.
Public credit, plans for the support of, 3, 157,172.
a national bank necessary to the support of, 54.
essentia! to the prosperity of the nation, 197.
defined, 198.
Public debt, advantages of funding the, 5, 98.
nature of the provisions for funding the, 7,161.
of what it consists, 14, 168, 347.
plans for funding the, 17, 43, 45, 161.
plans for redeeming the, 22, 27, 165.
may constitute a part of the capital of a national bank, 72, 75,
157.
laws relating to the, reviewed, 157.
plan for completing the system for liquidating the, 173.
revenues pledged for the payment of the, 168.
amount of foreigu and domestic, in 1790, 14, 22, 31, 33.
1795, 169, 201 to 210.
1802, 223, 248, 250, 279.
when it may be redeemed, estimated, 172, 225, 251, 354.
amount paid, in 1802, 254.
1803, 264, 276.
1804,288,296.
1805. 299, 310.
from Apr. 1.1801,to March 31,1805,328,329,333.
in 1806, 333, 345.
plan for consolidating the, proposed, 333,347 to 3oo.
amount of the, in 1806, 349.
Q 9 4 0 f ; i OKK
estimated amount that maybe paid, in 1809 to 1824,354,355.
amount paid in 1807, 358, 371.
in 1811, 445,461.
from April 1, 1801, to January 1,1812, 463.
amount on Januan; 1, 1812, 446, 464.
—
paidmli
1814, 534.
pubUc
^
j S ^ f f i f f i S S
1795 and 1801,
1 f i 219 244
p r ^ S f e of'the. pledged for the public debt, 163.
S d T l S O l , 220, 246.
intrusions on the, to be prevented, 221.
sold in 1802, 252, 257.
560
INDEX.
Public lands, sold in 1S03, 262, 274.
1904, 285, 291, 315.
1905, 297, 309.
receipts from, in 1801 to 1905, 31 / .
sold in 1806, 331, 34*.
1907, 356. 368.
1908. 373, 385.
1809.39b, 411.
sold from 1800 to 18(0, 421, 432.
sold in 1811,448.
,
tI .
JJO
may be applied as & bounty to soldiers enlisting, 44b.
sold in 1M2, 478.
1813, 511.
lb 11, 550.
*
m
Public vessels sold, 222.
I ]
3
|
R.
Receipts and expenditures, estimated for 1790, 45, 53.
1795, 170.
comparative view of the, for 1795, 214.
in 1801, 216.
1802, 252.
1803. 262.
1804,285.
^
from April 'l, 1801, to March 31, 1805, 317 to
330.
in 1806, 331.
1807, 356.
1808.373.
1809. 391, 395, 398, 419.
1810, 421, 438.
1811,443. 466.
1812, 468, 482, 486.
1813, 488, 492, 499, 616, 532.
1814, 523, 533.
Re-exportation of foreign merchandise in 1807 and 1908, 409.
Revenue, frauds of the, how to be prevented, 23.
plan for increasing the, 24.
laws relating to, reviewed, 157.
for what purposes pledge, 168.
how to be increased in the event of war, 361, 378.
an increase of, proposed, 219, 242, 378, 401, 424, 448, W4from what sources derived, and the amount in 1795,
*
1801,216„lT
'
s
1901 to 1805,317,
322.
1808,395.
1809, 419.
1810, 438.
1811, 466.
v
561
INDEX.
Revenue, from what sources derived, and the amount in 1812,482,492.
1813, 492, 516, 518.
1814, 532-3.
See Receipts and expenditures.
S.
S a l t imported and exported from 1790 to 1800, 233.
and consumed from 1790 to 1798, quantity of, 241.—See
Merchandise imported.
Salt duty expires 1st January, 1808,356.
a renewal of the, recommended, 449, 490.—See Merchandise
imported.
Sinking fund, plan of a, proposed, 27.
established in 1790, 165, 171.
made permanent in 1792, 166, 169.
operations
January,
proceedingsofofthe,
the,toin1st1802,
260. 1795, 167, 1/1, 211.
state of the, in 1806, 346.
in 1810, 440.
in 1813, 498.
South Carolina, claim of, in 1789, 36.
Specie increased by the operation of banks, 55.
Si>ecie payments suspended by banks, 529.
S & 3 mortal W g S & S f f S V ^ X
"
Merchandise imported.
S t u n t s foreign and domestic, additional duties proposed on, 22.
Stamp dutfesexpire 4th March 1803 218 2 2 1 . - ^ / ^ ,
State debts, ought to be assumed bv the Union, 14, 28, 30.
amount of; estimated, So, f b .
provision for liquidating the, 164.
S ^ i ^ E S SSSrESbTlW
S u r p K ^ y C f t *
quantity of, 2 4 , - S ,
S
'o
'
359
'
T.
J
Ko l^iHpd 449. 490.—See Direct taxes.
Taxes, internal, proposed to be tenea
- S e e Merchandise >mPorlJ r f r o m 1 7 9 0 to 1799, 240.
Tonnage, amount of American and foreign, from 17W to ^
^
Tot, i.—36
in 1803,
1804,
1805,
1806,
1807,
1808,
290.
302.
337.
362.
379.
394, 403.
INDEX.
Tonnage, amount of American and foreign, in 1909, 426.
1811', 473.
1812, 805.
1813, 544.
Tontine, proposed as a plan for funding the public debt, 20, 45.
Treasury
notes, amount authorized in 1812,
469, 492.
treasury u
1813,492.499,518.
1814, 525. 528, 532, 511-2.
in circulation in 1814, 529.
an increase of the rate of interest on, proposed. 530.
y.
Virginia, claims of, in 1789. 36.
W.
Wines, additional duties proposed on, 22.
imported and consumed, quantity of, from 1790 to 1798, 241.Maxhandisc
imported.
END OF THE FIRST VOLVME.
@FedFRASER