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. ’Tis 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 of prosperity to the Country, if they are confirmed and strengthened by the progress of our affairs. And to secure this advantage, little more is now necessary, than to foster industry, and cultivate order and tranquility, 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 to 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 labour, and a greater portion of 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 out in internal ameliorations, and in industrious establishments of a permanent nature, is a precious acquisition.
DBx: Protectionists love to appeal to Hamilton for support of their restrictive schemes. And, indeed, much can be found in Hamilton’s writings to encourage protectionists. Hamilton rejected Adam Smith’s case for unilateral free trade, at least for countries with little industrial capacity relative to that of other countries (as was true for the U.S. in Hamilton’s day). Nevertheless, Hamilton was a far more able economic thinker than are most protectionists today – and certainly vastly better than are any Trump administration apologists for protectionism.
And in the quotation here, Hamilton reveals that he would reject the Trump administration’s hostility to trade deficits – which is hostility to the net inflow of foreign capital that Hamilton describes as “a precious acquisition.”
