Would Hamilton Advocate Protectionism?

Protectionism’s first American theorist was Alexander Hamilton — the man on the $10 bill, the first Treasury Secretary, and America’s first technocrat. – Ian Fletcher, America Was Founded As A Protectionist Nation (2010)

In that way, British protectionism was a significant cause of the Revolution… Having achieved independence,however, many Americans advocated protectionist policies similar to those they had earlier condemned. Alexander Hamilton, the principal advocate of import restrictions, based his proposals on the alleged needs of infant industries.  – Bruce Barlett, The Truth About Trade in History

Initially few Americans were convinced by Hamilton’s argument. After all, Adam Smith, the father of economics, had already advised Americans against artificially developing manufacturing industries. However, over time people saw sense in Hamilton’s argument, and the US shifted to protectionism after the Anglo-American War of 1812. – Ha- Joon Chang, Protectionism… The Truth is on a $10 Bill (2007)

Alexander Hamilton’s famous Report on Manufactures occupies an odd place in the history of economics. He advocated for protectionist tariffs to allow American industry to develop without too much foreign competition, so this put him at odds with the views of the Scottish Enlightenment philosopher Adam Smith. – David Kidder,  Alexander Hamilton’s Economics (2008)

Short answer is no. Many want to claim that Alexander Hamilton was the father of the American protectionist system for his obvious support for tariffs in his Report on Manufactures, but this is such a short sighted view. Just because Hamilton advocated tariffs does not mean that he was a protectionist. I am of the position that Hamilton’s position on tariffs is at least partially influenced by his reading of Adam Smith’s Wealth of Nations, and specifically Book 4. Not many people know this, because they do not bother reading the book, but Smith advocated moderate tariffs, and so did Hamilton. And advocating moderate tariffs does not mean one is protectionist. Actually, it was Hamilton’s rivals that advocated for protectionist tariffs, James Madison was indeed the first person to actually enact a protective tariff in American History.

And it is not like Hamilton was indifferent about protectionism, he was opposed to it and it is quite obvious in some of his writings, the most popular source would be in The Federalist Papers No. 35, in which Hamilton says:

There are persons who imagine that [import duties] can never be carried to too great a length; since the higher they are, the more it is alleged they will tend to discourage an extravagant consumption, to produce a favorable balance of trade, and to promote domestic manufactures. But all extremes are pernicious in various ways. Exorbitant duties on imported articles would beget a general spirit of smuggling; which is always prejudicial to the fair trader, and eventually to the revenue itself: they tend to render other classes of the community tributary, in an improper degree, to the manufacturing classes, to whom they give a premature monopoly of the markets; they sometimes force industry out of its more natural channels into others in which it flows with less advantage; and in the last place, they oppress the merchant, who is often obliged to pay them himself without any retribution from the consumer.

Here, Hamilton is clearly opposing huge tariffs for they “would beget a general spirit of smuggling” and give rise to premature monopolies.

This next source is a less popular work by Hamilton, but it continues this critique on huge tariffs that protectionists like. From Hamilton’s The Continentalist No. 5 (1782) :

Experience has shown that moderate duties are more productive than high ones. When they are low, a nation can trade abroad on better terms, its imports and exports will be larger, the duties will be regularly paid, and arising on a greater quantity of commodities, will yield more in the aggregate than when they are so high as to operate either as a prohibition, or its an inducement to evade them by illicit practices.

As stated above, Hamilton advocated moderate tariffs because he thought “imports and exports would be larger” while a protectionist would never use this reason to support a tariff, nor did Hamilton want to use a tariff as a “prohibition”. It is worth noting that the advocates of the American School of Economics (ASE) see Hamilton as their “patron saint” but fail to realize that Hamilton was very critical of protectionist policy. It also seems to me that the advocates of the ASE like to have this “us -v- them” mentality with the British system and of Smith’s writings, though they fail to see that Hamilton was very much influenced by the British system, and was very much influenced by Adam Smith. At best, the advocates of ASE, and of protectionism, are just paying lip service to a great Founding Father.


3 responses to “Would Hamilton Advocate Protectionism?

  1. I agree with you 100%. Alexander Hamilton was not the father of “American protectionism” as those authors’ above try to indicate. Hamilton actually expressed his preference for bounties over tariffs in his famed ~Report On Manufacturers~ to promote the interests of business. Hamilton’s proposal was modest not protectionist as the sources you cite show. (I wrote a little on this subject for my undergrad thesis/history, but had to cut it out due to length).

    You are also correct on Smith and his influence in Hamilton. I also believe Smith had a larger impact on the founders, other than Hamilton, than most people recognize.

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  3. Pingback: Epstein on the Role of the Constitution | The Radical Subjectivist

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