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Alexander Hamilton, the Secretary of the U.S. Treasury, produced his Report To Congress On The Subject Of Manufactures in 1791. A lot of politics was involved, and he ended his life being fatally injured duelling with swords. Many of his views fit (or are made to fit) with the recent more isolationist thinking that has stalled what appeared to be relentless progress towards globalisation and western style democracy.
“Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national supply.” From this paper came the ideas that tariffs would help an economy grow and support domestic manufacture without reducing supply or raising prices. Tariffs would also raise money for the government, reducing the need for individual or corporate taxation.
It also established the thinking that for strategy and military supplies, the U.S. should be “independent of foreign nations”, which still underpins much of U.S. military purchasing today.
The underlying battle of thought at the time of Hamilton’s approach was between staying as an agrarian society or following the lead into manufacturing, driven in Europe by the introduction of the steam engine and the new technologies it was stimulating.
Today the World Bank suggests India needs to create at least 8 million jobs a year and Ethiopia 2 million to employ the numbers of young people entering the job market. Some data suggests that those reaching the age of 15 in India are growing by as much as 1.5 million a month. So whatever our politics, we have to accept that agriculture is not going to meet those employment needs. Today, in fact, it is a complex mix of manufacturing and service industries that must support agriculture to keep our world population occupied. Curious economic hurdles like the middle income trap display how difficult this can be, even before we have the unexpected arrival of new tariff and nationalistic policies.
If time has taught us anything, it is that none of these systems can be seen to work satisfactorily in isolation and endless tinkering, or updating, to fit modern technology and societal requirements is needed. Some conclusions can be drawn here, though, and the first is that the leather industry has shown itself to be one of the best providers of large numbers of jobs that can absorb relatively unskilled workers and offer a decent living, new skills and training, future careers and an immediate capability to add to the tax base of an emerging economy.
The other aspect proven by the early days in the U.S. are the importance of innovation and education to get this moving and maintain the momentum. As modern telephony has demonstrated, by working on some of the newest technology, countries that are new entrants can leapfrog into the future by not being weighed down by the mass of older “legacy” installations that encumber the physical and mental environment of others.
Getting this innovation moving is complex, and while there is a lot of current activity in the leather industry, the future centres for breakthrough thinking are not clear. The historic innovation from tanners and national research organisations, and later chemical companies have all changed. Compliance and tight margins have made this a difficult area.
It is timely to remind ourselves that the the key technologies that made the iPhone a success were not Apple inventions but from the U.S. military and space programmes – areas of government control and funding at the time, and in many ways the long-term outcome of Hamilton’s 1791 thinking.
Hamilton was sure that manufacturing would bring added diversity of employment opportunities with increased productivity from using machinery and employment of technical skills. He was right and supported by the massive invention and patent protection set up in his country from where we have so many of the new machines and processes that changed leather making in the 19th century.
Today in leather we need further improvements to education and training; and increased efforts to foster innovations to overcome the new demands of the planet and our younger, clear thinking consumers. Leather no longer sells on the momentum of history or on nostalgia.
November 13, 2019
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