Chapter 7: Hamilton: Promoting Development of America through a Multitude of Policy Instruments
7.1 INTRODUCTION With the history of the formulation of the mainstream theory of commercial policy portrayed in the previous chapter, the time has arrived for a meticulous re-examination of the works of the so-called 'protectionists'. Were they, as the history of that mainstream theory has represented, simpleminded protectionists who supported solely the use of protective duties to promote infant industries? If not, what exactly did they advocate? This chapter re-examines the developmental ideas of Hamilton. l As is well known, his lineage in the evolution of the infant-industry argument for protection in accordance with the mainstream version of the history has been claimed. Thus, Bastable noted that Hamilton's answer to those who maintained that manufactures would arise 'under the normal action of individual interest' was by 'anticipating the "infant industry" argument familiar to readers of J. S. Mill's Political Economy' (1912, pp. 120-21). Separately, Haberler concluded that, 'The infant-industry argument for tariffs was clearly formulated as early as 1790 by Alexander Hamilton in his Report on Manufactures' (1937, p. 278). To this Robbins added that 'he made out a very powerful case [for protection of industry], a case which was accepted by John Stuart Mill' (1998, p. 240). Similarly, but perhaps attracting greater attention, Baldwin (1969) affirms that lineage in his oft-cited article in the literature of trade and development, 'The case against infant-industry tariff protection' . In his words, The essential point stressed by infant-industry proponents since Hamilton (1791) and List (1856) fIrst wrote on the subject is that production...
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