Prospectus of the Society for Establishing
[Philadelphia, August, 1791]
The establishment of Manufactures in the United States when maturely considered will be fo⟨und⟩2 to be of the highest importance to their prosperity. It ⟨is⟩ an almost self evident proposition that that com⟨muni⟩ty which can most completely supply its own w⟨ants⟩ is in a state of the highest political perfection. ⟨And⟩ both theory and experience conspire to prove that a nation (unless from a very peculiar coincidence of circumstances) cannot possess much active wealth but as the result of extensive manufactures.
While also it is manifest that the interest of the community is deeply concerned in the progress of this species of Industry, there is ⟨as⟩ little room to doubt that the interest of individuals may equally be promoted by the pursuit of it. What ⟨is⟩ there to hinder the profitable prosecution of manufact⟨ures⟩ in this Country, when it is notorious, that, independent of impositions for the benefit of the revenue and for the encouragement of domestic enterprise—the natural commercial charges of the greater part of th⟨ose⟩ which are brought from Europe amount to from fiftee⟨n to⟩ thirty per Cent—and when it is equally notorious that provisions and various kinds of raw materials are ev⟨en⟩ cheaper here than in the Country from which our principal supplies come?
The dearness of labour and the want of Capital are the two great objections to the success of manufactures in the United States.
The first objection ceases to be formidable when it is recollected how prodigiously the proportion of manual labour in a variety of manufactures has been decreased by the late improvements in the construction and application of Machines—and when it is also considered to what an extent women and even children in the populous parts of the Country may be rendered auxiliary to undertakings of this nature. It is also to be taken into calculation that emigrants may be engaged on reasonable terms in countries where labour is cheap, and brought over to the United States.
The last objection disappears in the eye of those who are aware how much may be done by a proper application of the public Debt. Here is the resource which has been hitherto wanted. And while a direction of it to this object may be made a mean of public prosperity and an instrument of profit to adventurers in the enterprise, it, at the same time, affords a prospect of an enhancement of the value of the debt; by giving it a new and additional employment and utility.
It is evident that various fabrics, under every supposed disadvantage, are in a very promising train. And that the success has not been still more considerable may be traced to very obvious causes.
Scarcely any has been undertaken upon a scale sufficiently extensive or with a due degree of system. To insure success it is desireable to be able to enter into competition with foreign fabrics in three particulars—quality, price, term of credit. To the first, workmen of equal skill is an essential ingredient. The means employed have not generally been adequate to the purpose of procuring them from abroad and those who have been procureable at home have for the most part been of an inferior class. To cheapness of price, a capital equal to the purpose of making all necessary advances, and procuring materials on the best te⟨rms⟩ is an indispensible requisite—and to the giving of ⟨Credit⟩ a Capital capable of affording a surplus beyond wh⟨at⟩ is required for carrying on the business is not less indispensible. But most undertakings hitherto have been bottomed on very slender resources.
To remedy this defect an association of the Capitals of a number of Individuals is an obvious expedient—and the species of Capital which cons⟨ists of⟩ the public Stock is susceptible of dispositions which will render it adequate to the end. There is good reason to expect that as far as shall be found necessary money on reasonable terms may be procured abroad upon an hypothecation of the Stock. It is presumeable that public Banks would not refuse their aid in the same way to a solid institution of so great public utility. The pecuniary aid even of Government though not to be counted upon, ought not wholly to be despaired of. And when the Stock shall have attained its due value so that no loss will attend the sale all such aids may be dispensed with. The Stock may then be turned into specie without disadvantage whenever specie is called for.
But it is easy to see that upon a good Capital in Stock an effective Credit may be raised in various ways which will answer every purpose in specie, independent of the direct expedient of borrowing.
To effect the desired association an incorporation of the adventurers must be contemplated as a mean necessary to their security. This can doubtless be obtained. There is scarcely a state which could be insensible to the advantage of being the scene of such an undertaking. But there are reasons which strongly recommend the state of New Jersey for the purpose. It is thickly populated—provisions are there abundant and cheap. The state having scarcely any external commerce and no waste lands to be peopled can feel the impulse of no supposed interest hostile to the advancement of manufactures. Its situation seems to insure a constant friendly disposition.
The great and preliminary desideratum then is to form a sufficient capital. This it is conceived, ought not to be less than Five hundred thousand Dollars. Towards forming this capital subscriptions ought immediately to be set on foot; upon this condition that no subscriber shall be bound to pay until an Act of Incorporation shall have been obtained—for which application may be made as soon as the sums subscribed shall amount to One hundred thousand Dollars.
As soon as it is evident that a proper Capital can be formed means ought to be taken to procure from Europe skilful workmen and such machines and implements as cannot be had here in sufficient perfection. To this the existing crisis of the affairs of certain parts of Europe appears to be particularly favourable. It will not be necessary that all the requisite workmen should be brought from thence. One in the nature of a foreman for each branch may in some branches suffice. In others it may be requisite to go further and have one for each subdivision. But numbers of workmen of secondary merit may be found in the United States; and others may be quickly formed.
It is conceived that there would be a moral certainty of success in manufactories of the following articles—
|1st||Paper and Pasteboard|
|3rd||Sail cloth and other coarse linen cloths, such as sheetings, shirtings, diaper, oznaburgs &ca.|
|4th||The printing of Cottons and linens; and as incident to this but on a smaller scale the manufacturing of the article to be printed.|
|5th||Womens shoes of all kinds.|
|6th||Thread, Cotton and Worsted Stockings.|
|7th||Pottery and Earthen Ware.|
|9th||Ribbands & Tapes|
|12th||Brass and Iron wire.|
|13th||Thread and Fringes.|
It will be unnecessary to enter into the det⟨ails⟩ of the execution further than to observe that the employment of the labor-saving mills and machines is particularly contemplated.
In addition to the foregoing a brewery for the supply of the manufacturers, as a primary object, may be thought of.
When application shall be made for an act of Incorporation it ought to include a request that provision may be made for incorporating the Inhabitants of the district within a certain defined limit which shall be chosen by the Company as the principal seat of their factories and a further request that the Company may have permission to institute a lottery or lotteries in each year for the term of five years for a sum or sums not exceeding in one year One hundred thousand dollars. The State of Jersey if duly sensible of its interest in the measure will not refuse encouragements of this nature.
An incorporation of this sort will be of great importance to the police of the establishment. It may also be found eligible to vest a part of the funds of the Company in the purchase of ground on which to erect necessary buildings &c. A part of this ground divided into town lots may be afterwards a source of profit to the Company.
The lottery will answer two purposes. It will give a temporary command of Money and the profit arising from it will go towards indemnifying for first unproductive efforts.
The following scheme for the organisation of the Company will probably be an eligible one—
1. The Capital of the Company as before remarked to consist of Five hundred thousand dollars, to be divided into Five thousand Shares, each share being One hundred Dollars, [The Company nevertheless to be at liberty to extend their capital to one Million of Dollars.]3
2. Any person Copartnership or body politic may subscribe for as many shares as he she or they may think fit. The sums subscribed to be payable—One half in the funded six per Cent Stock, or in three per Cent Stock at two dollars for one, and the other half in deferred Stock. The payments to be in four equal parts. The first at the time of subscription,4 the second in six months after, the third in six months after the second, and the fourth in six months after the third. Those who prefer paying in Specie to be permitted to do so, computing the funded six per Centum at par, and the deferred according to its present value at the time of payment discounting the interest thereupon during the suspension of payment at the rate of Six per Centum per annum.
3rd. The affairs of the Company to be under the management of thirteen Directors to be chosen annually on the first Monday of October in each year by plurality of suffrages of the Stockholders. The Directors by plurality of voices to choose from among themselves a Governor and Deputy Governor.
4th. The number of votes to which each Stockholder shall be intitled, shall be in proportion to the number of shares he shall hold that is to say one vote for each share. But neither the United States nor any State which may beco⟨me⟩ a Subscriber shall be entitled to more than One hundred votes. The United States or any State nevertheless, which may subscribe for not less than One hundred Shares may appoint a Commissioner who shall have a right at all times to inspect the proceedings of the Company and the state of its affairs but without any authority to controul. Every Subscriber may vote by Attorney duly constituted.
5th. There shall be a statea meeting of the Directors on every first monday of January, April, July and October at the place which is the principal seat of the Manufactory. But the Governor for the time being or any three Directors may by writing under his or their hands, directed to the other Directors and left at their respective places of abode at least fourteen days prior to the day for Meeting, or by advertisement in one public Gazette printed in the State where the Corporation shall be established and in another public Gazette printed in the City of Philadelphia, and in another public Gazette printed in the City of New York for the space of thirty days prior to the time of Meeting convene a special meeting of Directors, for the purpose of transacting business of the company.
6th No Director shall receive any emolument unless the same shall have been allowed by the Stockholders at a General meeting. But the Directors may appoint such Officers and with such compensations as they shall think fit.
7th Not less than seven Directors, if the Governor or Deputy Governor be not one shall constitute a Board for the transaction of business. But if the Governor or Deputy Governor be one four shall suffice. In case it should at any time happen that there are two separate meetings of five or more Directors each, but both less than a majority of the whole, one having the Governor, and the other the Deputy Governor, that at which the Governor shall be present shall be the legal one.
8th. The Directors to have power to make all Bye-laws, rules and regulations requisite for conducting the affairs of the Company.
9th At every annual Meeting of the Stockholders for the purpose of choosing Directors the Directors shall lay before them a general state of the affairs of the Company exhibiting the amount of its Stock, Debts and Credits, the different kinds of Manufactures carried on, the number of persons employed in each and their respective compensations together with an account of profit and loss.
10th. [The persons not exceeding five in number who at any general meeting shall have next after the Directors chosen the highest number of votes for Directors shall by force thereof be a committee of Inspection and shall have a right of access to all the books of the Company and of examination into all its affairs, and shall at each succeeding meeting report all such authentic facts as shall come to their knowlege to the Stockholders for their information.] The Stockholders may [also]5 if they think fit at any general meeting appoint by plurality of suffrages any five of their number for the purpose of making such inquiries and investigations as they may think necessary.
11th. The Stockholders at a General meeting may annul or alter any of the Regulations established by the Directors and make such others as they may think necessary.
12th. Any Board of Directors or either of the Committees above-mentioned may at any time call a general meeting of Stockholders; giving thirty days previous notice thereof in three Gazettes, one published in the state in which the Factory shall be established another in the City of Philadelphia and another in the City of New York.
13th. Every Cashier or Treasurer of the Corporation shall before he enters upon the duties of his Office give Bond with one or more sureties to the satisfaction of the Directors for the faithful execution of his duty in a sum not less than Twenty thousand Dollars.
14th. So much of the Capital Stock of the Company as may consist of public Debts shall be placed on the Books of the Treasury of the United States in the name of the Corporation; and every Stockholder shall be entitled to a license under the Seal of the Corporation to inspect the account of the said Stock at his pleasure as far as may comport with the rules of the Treasury. This however shall not prevent the investment of the said Debt in Stock of the Bank of the United States, reserving to each Stockholder the like right of Inspection in relation to the Stock of the Company so invested.
15th There shall be a yearly dividend of [so much of]6 the profits of the Company [as the Directors shall think proper] for the first five years, and after that period a half yearly dividend.
16th The Stock of the Corporation shall be assignable and transferable according to such rules as shall be instituted in that behalf by its laws & Ordinances.
17th. The Corporation shall be at liberty to make and vend all such Articles as shall not be prohibited by law: Provided that it shall only trade in such articles as itself shall manufacture in whole or part or in such as shall be received in payment or exchange therefor. Provided nevertheless that this shall not prevent the investment of any sums paid in specie in Stock of the United States or in Bank Stock.7
18. It shall be understood that a Majority of the Stockholders may at any time dissolve the Corporation; but this shall only be done at a general meeting which shall have been specially summoned for the purpose with public notice of the intent. And upon such dissolution the Directors for the time being shall be ipso facto trustees for settling all the affairs of the Corporation disposing of its effects paying its debts and dividing the surplus among the Stockholders in proportion to their respective interests in the Stock; [unless the Stockholders at a General Meeting previous to such dissolution shall have nominated other persons as trustees; in which case those persons shall be trustees for the purposes aforesaid.]8
19. The Stock and other property of the Corporation to be exempt from Taxes.
The management of the Affairs of this Company will require that an Agent should be appointe⟨d⟩ to Superintend all the different works and the disposition of the Articles manufactured in conformity to the general regulations of the Directors. This Agent ought to have such a compensation as will command the services of a man every way competent and trustworthy. Such a man may doubtless be found. It is not necessary that he should be a technical man in any of the branches of manufacture; but a man of information, thoroughly a man of business, of probity, and diligence and energy.
We9 the Subscribers for ourselves respectively and not one for the other and for our respective heirs, executors and administrators do severally covenant promise and agree to and with each other and with the heirs Executors and Administrators of each other that we will respectively contribute and pay in the manner and at the times specified in the plan hereunto annexed the respective sums against our respective names hereunder set for the purpose of establishing a company for carrying on the business of manufactures in one of the States of New York New Jersey and Pennsylvania (giving a preference to New Jersey if an incorporation can be obtained from the said State on advantageous terms) according to the general principles of the plan aforesaid, but subject to such alterations as shall be agreed upon at any time previous to the obtaining an Act of Incorporation either in the principles or details thereof by the major part of us whose names are hereunto subscribed, or in the details thereof only, as shall be thought fit by the major part of the persons hereinafter named. And we do hereby jointly and severally constitute and appoint 10 one and each of our Attornies who or the major part of them or the major part of the survivors of them are hereby empowered as soon as the sum of One hundred thousand Dollars shall be subscribed hereto to make application on our behalf to either of the States aforesaid (giving such preference as aforesaid to the State of New Jersey) for an Act or Acts of Incorporation according to the principles of the plan aforesaid with such alterations in the details thereof as shall appear to them eligible, or with such alterations whatsoever, as shall be previously agreed upon by us; And further to take such measures at our joint expense as shall appear to them necessary and proper for engaging workmen in the several branches of manufacture mentioned in the said plan.
In testimony whereof We have hereunto subscribed and set our hands and seals, the day of 11 in the year of our Lord One thousand seven hundred and ninety One.
D, with insertions in writing of H, The Passaic County Historical Society, Lambert Castle, Paterson, New Jersey; copy, Hamilton Papers, Library of Congress; [Philadelphia] Gazette of the United States, September 10, 1791. The prospectus was also printed in a number of newspapers; for example, see the Federal Gazette and Philadelphia Daily Advertiser, September 5, 1791; [Philadelphia] Dunlap’s American Daily Advertiser, September 7, 1791; The [Philadelphia] General Advertiser, September 7, 1791; The [Boston] Argus, September 23, 27, 1791.
1. Although no MS of this document in H’s handwriting has been found, this prospectus has generally been attributed to him (Davis, Essays description begins Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations (“Harvard Economic Studies,” XVI [Cambridge, 1917]). description ends , I, 356; Cole, Industrial and Commercial Correspondence description begins Arthur H. Cole, ed., Industrial and Commercial Correspondence of Alexander Hamilton, Anticipating His Report on Manufactures (Chicago, 1928). description ends , 191). For an estimate of the view that Tench Coxe wrote all or part of this prospectus, see Davis, Essays description begins Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations (“Harvard Economic Studies,” XVI [Cambridge, 1917]). description ends , I, 349–57.
2. All the material within broken brackets in this document has been taken from the copy in the Hamilton Papers, Library of Congress.
3. The bracketed words in this sentence are in H’s handwriting.
4. In the Library of Congress copy and in the Gazette of the United States “subscription” has been changed to “incorporation.”
5. The brackets around “also” and the preceding sentence were inserted by H. In the margin opposite this section H wrote “omitted.”
6. The bracketed words in this sentence are in H’s handwriting and are not included in the Library of Congress copy or in the Gazette of the United States.
7. This sentence is in H’s handwriting. It is not included in the Library of Congress copy or in the Gazette of the United States.
8. The bracketed words in this sentence are in H’s handwriting and are not included in the Library of Congress copy. The wording varies in the Gazette of the United States.
9. The remainder of this document has been taken from the copy in the Hamilton Papers, Library of Congress.
10. Space left blank in MS. In the Gazette of the United States the following names have been inserted at this point: Elias Boudinot, Nicholas Low, William Constable, William Duer, Philip Livingston, Blair McClenachan, Matthew McConnell, and Herman Le Roy.
11. These two spaces were left blank in MS.