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The American System was a mercantilist economic plan based on the "American School
American School

American School can refer to:* American School * American School of Correspondence* American Schools and Hospitals Abroad*...
" ideas of Alexander Hamilton
Alexander Hamilton

Alexander Hamilton was the first Secretary of the Treasury, a Founding Fathers of the United States, economist, and political philosopher. He led calls for the Philadelphia Convention, was one of America's first Constitutional lawyers, and cowrote the Federalist Papers, a primary source for Constitutional interpretation....
, expanded upon later by Friedrich List
Friedrich List

Friedrich List was a leading 19th Century Germany and American economist who developed the "National System" or what some would call today the National System of Innovation....
, consisting of a high tariff
Tariff

A tariff is a tax imposed on goods when they are moved across a political boundary. They are usually associated with protectionism, the economic policy of restraining trade between nations....
 to support internal improvements such as road-building, and a national bank to encourage productive enterprise and form a national currency.






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Henry Clay Project Gutenberg Etext 16960
The American System was a mercantilist economic plan based on the "American School
American School

American School can refer to:* American School * American School of Correspondence* American Schools and Hospitals Abroad*...
" ideas of Alexander Hamilton
Alexander Hamilton

Alexander Hamilton was the first Secretary of the Treasury, a Founding Fathers of the United States, economist, and political philosopher. He led calls for the Philadelphia Convention, was one of America's first Constitutional lawyers, and cowrote the Federalist Papers, a primary source for Constitutional interpretation....
, expanded upon later by Friedrich List
Friedrich List

Friedrich List was a leading 19th Century Germany and American economist who developed the "National System" or what some would call today the National System of Innovation....
, consisting of a high tariff
Tariff

A tariff is a tax imposed on goods when they are moved across a political boundary. They are usually associated with protectionism, the economic policy of restraining trade between nations....
 to support internal improvements such as road-building, and a national bank to encourage productive enterprise and form a national currency. This program was intended to allow the United States to grow and prosper, by providing a defense against the dumping of cheap foreign products, mainly at the time from the British Empire.

History

A plan to strengthen and unify the nation, the American System was advanced by the Whig Party
Whig Party (United States)

The Whig Party was a political party of the United States during the era of Jacksonian democracy. Considered integral to the Second Party System and operating from 1833 to 1856, the party was formed in opposition to the policies of President of the United States Andrew Jackson and the Democratic Party ....
 and a number of leading politicians including Henry Clay
Henry Clay

Henry Clay, Sr. was a nineteenth-century United States statesman and orator who represented Kentucky in both the United States House of Representatives and United States Senate....
, John C. Calhoun
John C. Calhoun

John Caldwell Calhoun was the List of Vice Presidents of the United States Vice President of the United States. He was a leading United States Southern politician from South Carolina during the first half of the 19th century....
 and John Quincy Adams
John Quincy Adams

John Quincy Adams was an Foreign relations of the United States and Politics of the United States who served as the List of Presidents of the United States President of the United States from March 4, 1825 to March 4, 1829....
. The System was a new form of federalism
Federalism

Federalism is a political philosophy in which a group of members are bound together with a governing representative head. The term federalism is also used to describe a system of the government in which sovereignty is constitutionally divided between a central governing authority and constituent political units ....
 that included:

  • Support for a high tariff
    Tariff

    A tariff is a tax imposed on goods when they are moved across a political boundary. They are usually associated with protectionism, the economic policy of restraining trade between nations....
     to protect American industries and generate revenue for the federal government
    Federal government

    A federal government is the common government of a federation.The structure of federal governments vary from institution to institution based on a broad definition of federation....
  • Maintenance of high public land prices to generate federal revenue
    Internal Revenue Service

    The Internal Revenue Service is the Federal government of the United States agency that collects taxes and enforces the tax law. It is an agency within the U.S....
  • Preservation of the Bank of the United States
    Bank of the United States

    There were two organizations known as the Bank of the United States:* First Bank of the United States * Second Bank of the United States It can also refer to:...
     to stabilize the currency and rein in risky state and local banks
  • Development of a system of internal improvements (such as roads and canals) which would knit the nation together and be financed by the tariff and land sales revenues.


Clay argued that the West
Western United States

The Western United States—commonly referred to as the American West or simply The West—traditionally refers to the region comprising the westernmost U.S....
, which opposed the tariff, should support it since urban factory workers would be consumers of western foods. In Clay’s view, the South (which also opposed high tariffs) should support them because of the ready market for cotton in northern mills. This last argument was the weak link. The South
Southern United States

The Southern United States—commonly referred to as the American South, Dixie, or simply the South—constitutes a large distinctive region in the southeastern and south-central United States....
 was never really on board with the American System and had access to plenty of markets for its cotton
Cotton

Cotton is a soft, staple fiber that grows in a form known as a boll around the seeds of the cotton plant a shrub native to tropical and subtropical regions around the world, including the Americas, India and Africa....
 exports.

Clay first used the term “American System” in 1829, although he had been working for its specifics for many years previously.

Portions of the American System were enacted by Congress
Congress

A congress is a formal meeting of representatives from different countries , or independent organizations . The term Congress was chosen for the United States Congress to emphasize the status of each state represented there as a self-governing unit....
. The Second Bank of the United States
Second Bank of the United States

The Second Bank of the United States was opened in January 1817, six years after the First Bank of the United States lost its charter. The Second Bank of the United States was headquartered in Carpenters' Hall, Philadelphia, the same as the First Bank, and had branches throughout the nation....
 was rechartered in 1816 for 20 years. High tariffs were maintained from the days of Hamilton
Hamilton

Hamilton may refer to:...
 until 1832. However, the national system of internal improvements was never adequately funded; the failure to do so was due in part to sectional jealousies and constitutional scruples about such expenditures.

Main points


The establishment of a protective tariff, a 20%-25% tax on imported goods, would protect a nation’s business from foreign competition. Congress passed a tariff in 1816 which made European goods more expensive and encouraged consumers to buy relatively cheaper American-made goods.

The establishment of a national bank
National bank

The term national bank has several meanings:* especially in developing countries, a bank owned by the state* an ordinary private bank which operates nationally ...
 would promote a single currency, making trade easier, and issue what was called sovereign credit
Sovereign credit

Sovereign credit is the Credit of a sovereign country backed by the financial resources of that state. Sovereign credit is the opposite of sovereign debt....
, i.e., credit issued by the national government, rather than borrowed from the private banking system. In 1816, Congress created the Second Bank of the United States
Second Bank of the United States

The Second Bank of the United States was opened in January 1817, six years after the First Bank of the United States lost its charter. The Second Bank of the United States was headquartered in Carpenters' Hall, Philadelphia, the same as the First Bank, and had branches throughout the nation....
.

The improvement of the country’s infrastructure
Infrastructure

Infrastructure can be defined as the basic physical and organizational structures needed for the operation of a society or enterprise , or the services and facilities necessary for an economy to function....
, especially transportation systems, made trade easier and faster for everyone. Poor roads made transportation slow and costly.

This program became the leading tenet of the Whig Party
Whig Party (United States)

The Whig Party was a political party of the United States during the era of Jacksonian democracy. Considered integral to the Second Party System and operating from 1833 to 1856, the party was formed in opposition to the policies of President of the United States Andrew Jackson and the Democratic Party ....
 of Henry Clay and Daniel Webster
Daniel Webster

Daniel Webster was a leading American statesman during the nation's antebellum. He first rose to regional prominence through his defense of New England shipping interests....
. It was opposed by the Democratic Party of Andrew Jackson
Andrew Jackson

Andrew Jackson was the List of Presidents of the United States President of the United States . He was List of governors of Florida of Florida , commander of the American forces at the Battle of New Orleans , and eponym of the era of Jacksonian democracy....
, Martin Van Buren
Martin Van Buren

Martin Van Buren was the List of Presidents of the United States President of the United States from 1837 to 1841. Before his presidency, he served as the List of Vice Presidents of the United States Vice President of the United States and the 10th United States Secretary of State under Andrew Jackson....
, James K. Polk
James K. Polk

James Knox Polk was the List of Presidents of the United States President of the United States, serving from March 4, 1845 to March 4, 1849. He was 49 years old at the time of his inauguration, making him the youngest President up to that time....
, Franklin Pierce
Franklin Pierce

Franklin Pierce was the List of Presidents of the United States President of the United States, serving from 1853 to 1857, an Politics of the United States and lawyer....
, and James Buchanan
James Buchanan

James Buchanan, Jr. was the List of Presidents of the United States President of the United States and the last to be born in the 18th century....
  prior to the Civil War.

Among the most important internal improvements created under the American System were the Erie Canal
Erie Canal

The Erie Canal is a man-made waterway in New York state that runs about 365 miles from Albany on the Hudson River to Buffalo, New York at Lake Erie, completing a navigable water route from the Atlantic Ocean to the Great Lakes....
 and the Cumberland Road.

Annual Message of 1815 (Seven Points)

  • Funds for national defense
  • Frigate
    Frigate

    A frigate is a warship. The term has been used for warships of many sizes and roles over the past few centuries.In the 18th century, the term referred to ships which were as long as a ship-of-the-line and were square rig on all three masts , but were faster and with lighter armament, used for patrolling and escort....
    s for the Navy
    United States Navy

    The United States Navy is the navy of the United States Armed Forces. It is one of the seven uniformed services of the United States. The U.S. Navy currently has approximately 331,682 personnel on active duty as of 31 December 2008 and 124,000 in the United States Navy Reserve....
  • A standing army
    Standing army

    A standing army is an army composed of full-time career soldiers who 'stand over', in other words, who do not disband during times of peace. They differ from army reserves who are activated only during such times as war or natural disasters....
     and federal control of the militia
  • Federal aid for building roads and canal
    Canal

    Canals are artificial channels for water. There are two types of canals: Aqueduct canals, which are used for the conveyance and delivery of water, and waterways, which are navigable transportation canals used for passage of goods and people, often connected to existing lakes, rivers, or oceans....
    s
  • A protective tariff to encourage manufactures
  • Re-establishing the National Bank
    First Bank of the United States

    The First Bank of the United States was a bank chartered by the United States Congress on February 25, 1791. The charter was for 20 years. The Bank was created to handle the financial needs and requirements of the central government of the newly formed United States, which had previously been thirteen individual colonies with their own ban...
  • Federal assumption of some state debt


Further reading


Modern books

  • Michael, Diaz, The Promise of American Life (2005-reprint)
  • Joseph Dorfman. The Economic Mind in American Civilization, 1606-1865 (1947) 2 vol
  • Eckes,Jr. Alfred E. "Opening America's Market-U.S. Foreign Trade Policy Since (1995) University of North Carolina Press
  • Gill, William J. Trade Wars Against America: A History of United States Trade and Monetary Policy (1990)
  • Carter Goodrich, Government Promotion of American Canals and Railroads, 1800-1890 (Greenwood Press, )
    • Goodrich, Carter. "American Development Policy: the Case of Internal Improvements," Journal of Economic History, 16 ( 1956), 449-60. in JSTOR
    • Goodrich, Carter. "National Planning of Internal Improvements," Political Science Quarterly, 63 (1948), 16-44. in JSTOR
  • John Lauritz Larson. Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States (2001)
  • Lively, Robert A. "The American System, a Review Article," Business History Review, XXIX (March, 1955), 81-96. recommended starting point
  • Lind, Michael Hamilton's Republic: Readings in the American Democratic Nationalist Tradition (1997)
  • Lind, Michael What Lincoln Believed: The Values and Convictions of America's Greatest President (2004)
  • Remini, Robert V. Henry Clay: Statesman for the Union. , 1991
  • Edward Stanwood, American Tariff Controversies in the 19th Century (1903; reprint 1974), 2 vols., favors protectionism
  • Charles M. Wiltse, John C. Calhoun: Nationalist, 1782-1828 (1944)


Older books

  1. G. B. Curtiss, Protection and Prosperity: an ; W. H. Dawson, Protection in Germany (London, 1904
  2. Alexander Hamilton, Report on the Subject of Manufactures, communicated to the House of Representatives, 5 December 1791
  3. H. C. Carey, Principles of Social Science (3 vols., Philadelphia, 1858-1859), Harmony of Interests Agricultural, Manufacturing and Commercial (Philadelphia, 1873)
  4. Friedrich List, Outlines of American Political Economy (1980-reprint)
  5. Friedrich List, National System of Political Economy (1994-reprint)
  6. A. M. Low, Protection in the United States (London, 1904); H. 0. Meredith, Protection in France (London, 1904)
  7. Ellis H. Roberts, Government Revenue, especially the American System, an argument for industrial freedom against the fallacies of free trade (Boston, 1884)
  8. J. P. Young, Protection and Progress: a Study of the Economic Bases of the American Protective System (Chicago, 1900)
  9. Clay, Henry. The Papers of Henry Clay, 1797-1852. Edited by James Hopkins


Sources and notes

  • by Congressman Andrew Stewart