In January 1790, the House of Representatives put a simple question to its new Treasury Secretary: what should America make for itself? Alexander Hamilton took almost two years to answer.
He was 36, an immigrant orphan from the Caribbean island of Nevis who had talked his way into King’s College and then into George Washington’s inner circle. His Report on the Subject of Manufactures, delivered December 5, 1791, was the longest of the four great reports he wrote for Congress… and the one Congress mostly ignored.
Hamilton’s argument was that a country that can’t make the things it needs isn’t fully a country. “The independence and security of a Country,” he wrote, “appear to be materially connected with the prosperity of manufactures.”
The first factory in the U.S., a water-powered cotton mill, had yet to open in Rhode Island, so Hamilton wasn’t being sentimental about factories. Instead, he was thinking about national supply. At the time, the United States had to buy its muskets, wool and gunpowder from the same empire it had just finished fighting. Hamilton wanted the new republic to be, in his words, “independent on foreign nations, for military and other essential supplies.”
Hamilton Is Having a Moment
At Davos this past January, U.S. Trade Representative Jamieson Greer credited Hamilton as the intellectual father of the Trump administration’s trade policy.
Treasury Secretary Scott Bessent, who holds the job Hamilton invented, has said the same, writing in a Wall Street Journal op-ed that national and economic security “begins with the capacity to build, invest, finance and scale the industries that will define the next century, among them semiconductors, artificial intelligence, quantum computing, advanced manufacturing, shipbuilding, critical minerals and pharmaceuticals.”
Both Greer and Bessent, not to mention Trump himself, have invoked Hamilton as a basis for the administration’s tariff policy. Hamilton, though, was only moderately supportive of tariffs, believing (rightfully so) they would raise consumer prices. He was much more supportive of “bounties,” or what we’d call direct subsidies today.
Congress passed Hamilton’s tariffs but ignored the subsidies. I bring this up because the industrial policy we have in 2026 doesn’t resemble what Hamilton proposed.
Commerce Department as Venture Portfolio
Since June 2025, the federal government has taken—or proposed taking—an ownership position in as many as 30 companies, by the Cato Institute’s count.
It began with a en share in , handing Washington veto rights over major corporate decisions. Then $400 million into . Then, in August, $8.9 billion for a nearly 10% share of , converted out of CHIPS Act grant money. Today, the federal government is Intel’s largest single shareholder.
I don’t believe any of this is about whether the U.S. can design a chip. This country has roughly 5,500 data centers, about 10 times the next closest nation. American companies control something like 80% of the world’s AI computing power.
What Washington is buying is everything underneath and everything out ahead—the dirt, the refining, the fabs, the tech that doesn’t work yet. McKinsey figures the U.S. imported $1.3 trillion in critical manufactured goods last year. Building the factories to make everything here at home would run about $500 billion.
What would Hamilton’s solution have been? Instead of buying shares, he might have just written a check.
$1.5 Trillion in Chip Sales
Private data center construction has climbed from about $10 billion a year in early 2021 to nearly $60 billion this past May. In that month alone, it rose 23% from a year earlier, while spending on manufacturing buildings—the largest single category in nonresidential construction—fell 22%.
Meanwhile, the World Semiconductor Trade Statistics (WSTS) organization expects global chip sales to grow 90% this year to $1.51 trillion, with nearly all of it coming from one place. Memory is forecast to expand roughly 250%, to more than $800 billion.
I’d flag WSTS’s findings here, particularly the 250% figure. Memory chips are a commodity, and a surge that size is largely a pricing event driven by shortage. Shortages, as you know, eventually get solved. WSTS still sees another 27% growth in 2027, so nobody is calling a top.
What I’d Do Here
The Philadelphia Semiconductor Index is up about 94% over the past 12 months. It’s also down roughly 20% over the past month.
Longtime readers know I advise holding a 10% weighting in gold—5% in bullion, 5% in gold mining stocks—and rebalancing every year. But the rule isn’t really about gold. It’s about having a discipline that makes you consider buying what everyone else is selling and consider trimming what everyone else is chasing.
Apply the same thinking here. Decide what share of your portfolio belongs in the buildout—the chips, certainly, but also the power, the metals and the equipment that make the chips worth anything—then rebalance on a schedule.
Watch What Washington Buys
Hamilton lost his own argument, by the way. Congress took his tariffs, ignored his bounties and his report sat on a shelf for the better part of a century.
But the question he asked in 1791 hasn’t gone anywhere: can a nation be secure if it doesn’t make the things it depends on? Washington is answering that question right now—not with subsidies, the way Hamilton proposed, but by buying the shares.
That said, I’d watch what the government buys. It might tell you more than what the government says.
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The Philadelphia Semiconductor Index () is a modified market capitalization-weighted stock index that tracks 30 of the largest companies involved in the design, distribution, manufacture, and sale of semiconductors.