I have had the honor to transmit to you a sketch, which you appeared to desire of the arrangements necessary for the execution of the plan chalked out in your prospectus.2 I confined myself to class the objects with which you propose to begin the business on each of these heads. I might have entered into more particular details, and given, if not an exact estimation, at least an Idea of the expense of their Establishment, their support, their consumption and produce. I have occupied myself with this business, at least as much as one Could, who has only a general Knowledge, but not the exact information which a Workman only can possess.
Now that I see, Sir, the business ready to begin, I will take the liberty of communicating to you my private opinion on the subject; and my reason for not expressing it in the paper I transmitted to you was, that it differed in some degree from the ideas contained in the prospectus. I had at first with you the idea That an Establishment comprehending a dozen different objects well chosen, conducted by an able direction, enlightened and honest managers and skillful Workmen might have the greatest success, and I think so still; but would not the union of so many qualities, on which the success entirely depends, be an absolute miracle? and would it be prudent to depend upon it? But if one of them is Wanting, you will find bad goods come out of the hands of unskillful workmen; dishonest managers make a fraudulent advantage at the expense of their employers, which in such a multitude of details will escape the eye of the directors; and directors who for want of particular knowledge of each of the different branches conduct well that with which they are best acquainted, and be continually exposed to be decived in all the others. The more I think on This affair, the more I am persuaded that there is a great risk in pursuing it in the manner in which it is proposed, and its advantageous execution must depend on fortune, more than on reason. I have seen in Europe individual manufacturers employ two or three hundred hands, but in the same branch, and the undertakers had occasion only to be acquainted with that branch; besides they were employed for their own profit, and not as hirelings, and after all were often cheated in the details. In the establishment proposed we must in the first place [have] as many faithful and enlightened directors as there are different branches; then a number of managers each capable of following the branch entrusted to him with the eye of a real and intelligent manufacturer, without which it will be necessary to depend absolutely on the head-Workmen, who, even if they should be all honest, can never be stimulated by that interest which animates those who work for themselves. The expense of such an establishment is immense in buildings, machines, looms, the purchase of raw-materials of so many kinds, the Wages of workmen, Salaries of managers, Directors &c. These articles alone, without counting the purchase of lands and unforeseen expenses, will demand an immense capital if they are calculated in a reasonable manner, and present in their details a multitude of means of loss to The Corporation. I repeat it, Sir, unless God should send us saints for Workmen and angels to conduct them, there is the greatest reason to fear for the success of the plan.
I am far from thinking, however, that there are not other means to accomplish the object in your view which, if I understand it right, is 1st. to encourage and protect the establishment of the manufactures necessary for This country. 2dly. To take advantage of The crisis in which affairs now are in several country of Europe, to Engage as many manufacturers in as many different Branches as possible to Emigrate to this country. It seems to me that these objects may be equally accomplished by the corporation undertaking three or four of the principal branches, and Which I Should Chuse connected together that The Details may be more easy to follow. 3dly. by becoming partners in the other branches with undertakers of known abilities and charac⟨ter⟩3 on the terms that may be thought proper.
A General spinning house, and the employment of its prod⟨ucts⟩ are in my opinion Worthy of préférence. The extent to Which th⟨ey⟩ may be carried is sufficiently great while their connection makes The Business easy to be followed. These two articles require ot⟨hers⟩ as accessary, viz. the dying of cotton, Wool &c. before they are manufactured. I am perfectly convinced that it would be much ⟨more⟩ easy to manage well 600 hands in such a manufacture, Th⟨an⟩ 200 divided among different branches which have no depen⟨dence⟩ on each other.
As to the proposal I make of engaging the corporation as pa⟨rtners⟩ with private manufacturers, it is not a new idea. I have seen in France the gouvernement concerned in many private undertakings in Which they appointed a commissary to take care of their interests. This was one of the means of encouraging and protecting manufactures. Here it has another advantage, that of procuring able Workmen from Europe. The corporation might engage in Such undertakings in several ways; either by advancing the necessary capital to individuals; by building and renting to them the necessary works; or by taking upon them selves the expenses of the first establishment, always in proportion to the solidity and talents of The undertakers.
Such are the observations which I take the liberty to lay before you. I know that to you I have no occasion to develope them more particularly, and I hope that you will consider the freedom With Which I venture to discuss your opinion, as a new Tribut of Esteem paid to your private Character, and patriotic Virtues.
I am with respect,
Copy, Hamilton Papers, Library of Congress.
1. Joseph Stancliffe Davis (Essays description begins Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations (“Harvard Economic Studies,” XVI [Cambridge, 1917]). description ends , I, 482) attributes this letter to Thomas Marshall.