The earliest articulation of the government’s nurturing role with regard to the composition of the economy was Alexander Hamilton’s 1791 Report on Manufacture, in which he urged an activist approach by the federal government. At that time, Hamilton’s emphasis on industrial development was controversial, although subsequent U.S. policy has largely reflected his belief in the need for an active federal role in the development of the U.S. economy.2 In fact, driven by the exigencies of national defense and the requirements of transportation and communication across the North American Continent, the federal government in that same decade played an instrumental role in developing new production techniques and technologies by turning to individual entrepreneurs with innovative ideas. Most notably the federal government in 1798 aided the foundation of the first
See Vernon W. Ruttan, Technology, Growth and Development: An Induced Innovation Perspective. New York: Cambridge University Press, 2001, page 588. See also Audretsch et al., “The Economics of Science and Technology,” op cit. pp. 158-164, for additional historical background of U.S. policy in the area of science and technology.
The rejection of Hamilton’s report, though often portrayed as a reluctance on the part of the new federal government to promote development, reflected the decision of the political leadership of the time to place priority on agricultural rather than industrial development. The exception to this was in the area of military procurement, with the contract to Eli Whitney’s Springfield Arsenal. See William Diebold, Jr., “Past and Future Industrial Policy in the United States,” in J. Pinder, ed., National Industrial Strategies and the World Economy, London: Allanheld, Osmun & Co., 1980.