Alexander Hamilton, in 1791, proposed to the United States our first true industrial policy. We adopted it over the next few years, Abraham Lincoln reaffirmed it fourscore years later, and it was again affirmed by every President of the United States until Reagan began his now-28-year “Reagan Revolution” which has disassembled America’s industrial base and impoverished our nation. For over 200 years, Hamilton’s policy made America the most powerful industrial nation in the world; now – after just 28 years of Reagonomics and Clinton/Rubinomics – we are the largest importer of other people’s industry, and the most indebted nation in the world.

The entirety of Hamilton’s paper is easily found on the web. The first third of it deals with Jefferson’s objections to it (which Jefferson withdrew later in his life), as Jefferson favored America being an agricultural rather than an industrial power in 1791. Once you cut past that, though, Hamilton gets right to the rationale for, and the details of, his 11-point plan to turn America into an industrial power and build a strong manufacturing-based middle class. Ironically, his policies are exactly – EXACTLY – what Japan, South Korea, and China are doing today. And what we have ceased to do.

Hamilton had it right. We must reject Reagon/Bush/Clinton/Bush-onomics and return to what the Founders knew worked. Here are selected excerpts from Hamilton’s 1791 Report on Manufactures to Congress:

First, Hamilton points out that real wealth doesn’t exist until somebody makes something. A “service economy” is an oxymoron – if I wash your car in exchange for your mowing my lawn, money is moving around, it’s a service economy, but no real and lasting wealth is created. Only through manufacturing, when $5 worth of iron ore is converted into a $2000 car door, or $1 worth of raw wool is converted into a $1000 Calvin Klein suit, is real wealth created. He also notes that people being paid for creating wealth (manufacturing) creates wages, which are the principal engine of demand, which drives an economy. And both come from a foreign trade policy.