What Is Manufacturing? Why Does the Definition Matter?
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[Excerpt] Since 1790, when President George Washington told the first session of Congress that the “safety and interest” of a free people “require that they should promote such manufactures as tend to render them independent of others for essential, particularly military supplies, Congress has taken a special interest in the health of the manufacturing sector. In his Report on the Subject of Manufactures, submitted to the House of Representatives the following year, Secretary of the Treasury Alexander Hamilton suggested a variety of measures, including import duties, bounties (subsidies), and patents, intended to strengthen manufacturing in what was then an overwhelmingly agricultural economy. Congress resisted bounties, but it largely accepted Hamilton’s recommendations for high import tariffs and strong patent protection. Defining “manufacturing” and measuring its scope have been challenges from the country’s earliest days. When he prepared the first nationwide statistics about manufacturing at the request of the Secretary of the Treasury, Tench Coxe reported the value of manufactured goods produced in 1810 as $127.7 million, but he estimated that including goods “entirely omitted or imperfectly returned” by state and territorial officials would raise the value to $172.8 million—35% more. Additionally, Coxe identified $25.9 million of goods produced in the United States “which are of a doubtful nature in relation to their character as Manufactures.” One example was pot ashes. At the time, farmers clearing hardwood forests to plant crops often burned unneeded trees, soaked the ashes in iron pots, and then evaporated the mixture to obtain potash salts to make soap, glass, and textiles. Coxe apparently was unconvinced that this production process was “manufacturing.” The scope and scale of manufacturing have changed considerably in the intervening centuries, but the challenge of defining “manufacturing” has not gone away. If anything, changes in the ways manufactured goods are developed, produced, and sold have made manufacturing more difficult to define and to link to a particular location, and have made it more difficult to identify workers whose jobs are related to manufacturing. Because Congress has written into law a number of preferences for goods deemed to be manufactured in the United States, the economic consequences of these definitional challenges are becoming more significant.
manufacturing; employment; technology; United States