II.

Protectionism

Protection as a foreign-trade policy was defended as a necessity of a strong national government and was opposed by those who, like Thomas Jefferson, were anxious to have a minimum of government and of governmental interference. The foremost American protectionist was Alexander Hamilton; as secretary of the treasury in the cabinet of President George Washington, he submitted a Report on Manufactures to Congress in December 1791. Hamilton's report remains one of the most important documents in the literature of protection. He argued in favor of a moderate protective policy, designed to build up within the country all the industries necessary to ensure national independence and the most rapid development of natural resources. He also emphasized his conviction that industrial independence is indispensable to continuous political independence.

In the years immediately following the submission of Hamilton's report, the situation was so favorable to the development of the U.S. shipping industry that little attention was given to the question of protection. The Napoleonic Wars made shipping under the flag of a European state hazardous and gave the United States the major share of the world's carrying trade because it was the only important neutral country. During the early stages of the war, American shipping and commerce flourished, but the situation changed abruptly when, in 1806 and 1807, France proclaimed a blockade of the British Isles; Britain retaliated by imposing a blockade of all important European ports, thus depriving American merchant vessels of their previous immunity. The United States then retaliated with the Embargo Act of 1807 and the Non-Intercourse Act of 1809, which led finally to the War of 1812. American agriculture, shipping, and related industries suffered disastrous declines in consequence of these difficulties, and the United States was forced to produce for itself nearly all the commodities it required.