American System (economic plan)

Protectionist economic policies of the early 19th-century United States

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This article is part of
a series about

Henry Clay

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* * *

Personal

* Early law and political career
* Family
* Law office
* Ashland
* Charlotte Dupuy

* * *

U.S. Speaker of the House

* Great Triumvirate
* War of 1812
* American System
* Second Bank of the United States
* Missouri Compromise

* * *

U.S. Secretary of State

* Corrupt bargain

* * *

U.S. Senator from Kentucky

* Nullification Crisis
* Bank War
* Whig Party
* Compromise of 1850

* * *

Presidential campaigns

* 1824
* election
* 1832
* convention
* election
* 1844
* convention
* election

* * *

Legacy

* Eponyms
* Monument
* Statue
* Henry Clay Oak

* * *

* v
* t
* e

The Monkey System or Every One For Himself: Henry Clay says "Walk in and see the new improved grand original American System!" The cages are labeled: "Home, Consumption, Internal, Improv". This 1831 cartoon ridiculing Clay's American System depicts monkeys, labeled as being different parts of a nation's economy, stealing each other's resources (food) with commentators describing it as either great or a humbug.

The American System was an economic plan that played an important role in American policy during the first half of the 19th century, rooted in the "American School" ideas and of the Hamiltonian economic program of Alexander Hamilton.[1]

A plan to strengthen and unify the nation, the American System was advanced by the Whig Party and a number of leading politicians including Henry Clay and John Quincy Adams. Clay was the first to refer to it as the "American System". Motivated by a growing American economy bolstered with major exports such as cotton, tobacco, native sod, and tar, the politicians sought to create a structure for expanding trade. This System included such policies as:

* Support for a high tariff to protect American industries and generate revenue for the federal government
* Maintenance of high public land prices to generate federal revenue
* Preservation of the Bank of the United States 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.

Clay protested that the West, 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 never strongly supported the American System and had access to plenty of foreign markets for its cotton exports.

Portions of the American System were enacted by the United States Congress. The Second Bank of the United States was rechartered in 1816 for 20 years. High tariffs were first suggested by Alexander Hamilton in his 1791 Report on Manufactures but were not approved by Congress until the Tariff of 1816. Tariffs were subsequently raised until they peaked in 1828 after the so-called Tariff of Abominations. After the Nullification Crisis in 1833, tariffs remained the same rate until the Civil War. 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 squabbles about such expenditures.

In 1830, President Andrew Jackson rejected a bill which would allow the federal government to purchase stock in the Maysville, Washington, Paris, and Lexington Turnpike Road Company, which had been organized to construct a road linking Lexington and the Ohio River, the entirety of which would be in the state of Kentucky. Jackson's Maysville Road veto was due to both his personal conflict with Clay and his ideological objections.

## Main points

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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 cheap American-made goods.

The establishment of a national bank would promote a single currency, making trade easier, and issue what was called sovereign credit, 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.

The improvement of the country's infrastructure, especially transportation systems, made trade easier and faster for everyone. Poor roads made transportation slow and costly.

The American System became the leading tenet of the Whig Party of Henry Clay and Daniel Webster. It was opposed by the Democratic Party of Andrew Jackson, Martin Van Buren, James K. Polk, Franklin Pierce, and James Buchanan prior to the Civil War, often on the grounds that the points of it were unconstitutional.

Among the most important internal improvements created under the American System was the Cumberland Road:

> Henry Clay's "American System," devised in the burst of nationalism that followed the War of 1812, remains one of the most historically significant examples of a government-sponsored program to harmonize and balance the nation's agriculture, commerce, and industry. This "System" consisted of three mutually reinforcing parts: a tariff to protect and promote American industry; a national bank to foster commerce; and federal subsidies for roads, canals, and other "internal improvements" to develop profitable markets for agriculture. Funds for these subsidies would be obtained from tariffs and sales of public lands. Clay argued that a vigorously maintained system of sectional economic interdependence would eliminate the chance of renewed subservience to the free-trade, laissez-faire "British System."

— United States Senate website[1]

## Annual message of 1815 (Six Points)

[edit]

* Funds for national defense
* Frigates for the Navy
* A standing army and federal control of the militia
* Federal aid for building roads and canals
* A protective tariff to encourage manufacturers
* Re-establishing the National Bank
* Federal assumption of some state debt

## See also

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* American School (economics)
* Economic nationalism
* Protectionism
* Tariffs
* Tariffs in United States history
* Protectionism in the United States
* Friedrich List, German-American economist
* Import substitution industrialization, a key feature of the American System adopted in much of the Third World during the twentieth century
* Lincoln's expansion of the federal government's economic role
* National Policy, a similar economic plan used by Canada circa 1867–1920s
* Australian settlement

## Sources and notes

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1. ^ a b Classic Senate Speeches: Henry Clay In Defense of the American System at the U.S. Senate website

## Further reading

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### Modern books

[edit]

* 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
* Foner, Eric. Free Soil, Free Labor, Free Men: The Ideology of the Republican Party before the Civil War (1970)
* Frith, Mathew A. "American Protectionist Thought: The Economic Philosophy and Theory of the 19th Century American Protectionists" (2024)
* Frith, Mathew A. "An Outline of 'American Protectionist Thought: The Economic Philosophy and Theory of the 19th Century American Protectionists'" History of Economics Review (2024)
* 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, 1960)
* 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)

### Other/older books

[edit]

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

## External links

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* The American System: Speeches on the Tariff Question and Internal Improvements by Congressman Andrew Stewart

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Henry Clay

9th US Secretary of State (1841-1843, 1850–1852) •

7th Speaker of the United States House of Representatives (1811-1814, 1815–1820, 1823-1825) •

U.S. Senator from Kentucky (1806-1807, 1810–1811, 1831-1842, 1849-1852)

Political career|

* Great Triumvirate
* Whig Party
* Treaty of Ghent
* American System
* Second Bank of the United States
* Missouri Compromise
* Tariff of 1833
* Compromise of 1850

Electoral history|

| U.S. Senate|

* 1806
* 1831
* 1836
* 1848

|

Speaker|

* 1811
* 1813
* 1815
* 1817
* 1819

Presidential|

* 1824 election
* 1832 election
* convention
* 1844 election
* convention

Legacy|

* Henry Clay Monument
* Statue of Henry Clay (U.S. Capitol)
* Henry Clay Oak
* Mount Clay
* List of things named for Henry Clay

Family|

* Lucretia Hart (wife)
* Thomas Hart Clay (son)
* Henry Clay Jr. (son)
* James Brown Clay (son)
* John Morrison Clay (son)
* Cassius Marcellus Clay (cousin)

Related|

* Ashland
* Charlotte Dupuy
* Nullification crisis
* Salt River

* v
* t
* e

John Quincy Adams

* U.S. Representative for MA–8 (1843–1848)
* U.S. Representative for MA–12 (1833–1843)
* U.S. Representative for MA–11 (1831–1833)
* 6th President of the United States (1825–1829)
* 8th United States Secretary of State (1817–1825)
* U.S. Minister to the United Kingdom (1814–1817)
* U.S. Minister to Russia (1809–1814)
* U.S. Senator from Massachusetts (1803–1808)
* U.S. Minister to Prussia (1797–1801)
* U.S. Minister to the Netherlands (1794–1797)

Presidency|

* Inauguration
* American System
* Internal improvements
* Tariff of 1828
* First Treaty of Prairie du Chien
* Treaty of Fond du Lac
* Treaty of Limits
* United States Naval Observatory
* State of the Union Address, 1825
* 1827
* 1828
* Federal judiciary appointments

Other
events|

* Supreme Court nomination
* Monroe Doctrine, author
* Treaty of Ghent
* Adams–Onís Treaty
* Treaty of 1818
* Tariff of 1832
* Smithsonian Institution
* United States v. The Amistad
* Mendi Bible
* President, American Academy of Arts and Sciences
* President, Columbian Institute for the Promotion of Arts and Sciences

Writings|

* Lifelong diary
* Massachusetts Historical Society holdings
* Adams Papers Editorial Project

Life and
homes|

* Early life
* Abigail Adams Cairn
* John Quincy Adams and abolitionism
* Adams National Historical Park
* Birthplace and family home
* Peacefield
* Stone Library
* United First Parish Church and gravesite

Electoral history|

* Senate
* 1803
* 1808
* Presidential runs
* 1824
* Corrupt Bargain
* 1828

Legacy|

* Bibliography
* Adams Memorial
* Adams House at Harvard University
* U.S. Postage stamps
* Monroe Doctrine Centennial half dollar
* Mount Quincy Adams
* USS President Adams (1941)
* USS John Adams (1963)
* Oyster-Adams Bilingual School

Popular
culture|

* Profiles in Courage (1957 book)
* 1965 television series)
* The Adams Chronicles (1976 miniseries)
* Mutiny on the Amistad (1987 book)
* Amistad (1997 film)
* John Adams (2001 book
* 2008 miniseries)

Adams political family
Quincy family|

* Louisa Adams (wife)
* George Washington Adams (son)
* Charles Francis Adams Sr. (son)
* John Adams II (son)
* Henry Adams (grandson)
* Brooks Adams (grandson)
* John Quincy Adams II (grandson)
* John Adams
* father
* presidency
* Abigail Adams
* mother
* First Lady
* Quincy political family
* Abigail Adams Smith (sister)
* Charles Adams (brother)
* Thomas Boylston Adams (brother)
* John Adams Sr. (grandfather)
* Susanna Boylston (grandmother)
* John Quincy (great-grandfather)

Related|

* National Republican Party
* Republicanism
* Quincy Patriot
* John Quincy Adams (Bingham)

* ← James Monroe
* Andrew Jackson →

* Category

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Alexander Hamilton

* 8th Senior Officer of the United States Army (1799–1800)
* 1st Secretary of the Treasury (1789–1795)
* Delegate to the Congress of the Confederation (1782–1783, 1788–1789)

United States
founding events|

* A Full Vindication of the Measures of Congress (1774)
* The Farmer Refuted (1775)
* Delegate, 1786 Annapolis Convention
* Delegate, 1787 Constitutional Convention
* The Federalist Papers
* New York Circular Letter

Secretary of
the Treasury|

* First Bank of the United States
* Revenue Marine (U.S. Coast Guard)
* U.S. Customs Service
* Hamiltonian economic program
* Residence Act
* Compromise of 1790
* Funding Act of 1790
* Tariff of 1790
* Bank Bill of 1791
* Tariff of 1791
* Tariff of 1792
* Coinage Act of 1792
* U.S. Mint
* Whiskey Rebellion
* Jay Treaty
* Reports
* "First Report on the Public Credit"
* "Second Report on Public Credit"
* "Report On Manufactures"
* "Report on a Plan for the Further Support of Public Credit"
* Society for Establishing Useful Manufactures

Military career|

* New York Provincial Company of Artillery
* Washington's aide-de-camp
* Battles
* Harlem Heights
* White Plains
* Trenton
* Princeton
* Brandywine
* Germantown
* Monmouth
* Siege of Yorktown

Other events|

* Founder, Federalist Party
* Federalist Era
* Founder, Bank of New York
* Bank of North America
* Pacificus-Helvidius Debates
* Advisor, George Washington's Farewell Address
* President General of the Society of the Cincinnati
* Founder, New-York Evening Post
* Hamilton College
* Hamilton–Reynolds affair
* Rutgers v. Waddington
* Relationship with slavery
* Burr–Hamilton duel

Depictions|

* Trumbull portrait
* Ceracchi bust
* Central Park statue
* U.S. Treasury statue
* Columbia University statue
* Boston statue
* Chicago statue
* U.S. postage stamps
* Greenbacks
* U.S. $10 bill

Memorials|

* Boyhood home and museum
* Alexander Hamilton U.S. Custom House
* Alexander Hamilton Bridge
* Alexander Hamilton High School (Los Angeles)
* Fort Hamilton
* Hamilton Grange National Memorial
* Hamilton Hall (Columbia University)
* Hamilton Hall (Salem)
* Hamilton Heights, Manhattan
* Hamilton, Ohio
* Hamilton College
* USS Alexander Hamilton
* PS Alexander Hamilton
* Trinity Church Cemetery

Popular culture|

* Hamilton (1917 play)
* Alexander Hamilton (1931 film)
* Liberty! (1997 documentary series)
* Liberty's Kids (2002 animated series)
* Alexander Hamilton (2004 book)
* John Adams (2008 miniseries)
* Hamilton (2015 musical, 2020 film)
* Washington (2020 miniseries)

Related|

* Founders Online
* Age of Enlightenment
* American Enlightenment
* American Philosophical Society
* Liberty Hall (New Jersey)
* New York Manumission Society
* African Free School
* "American System" economic plan
* American School
* American Revolution
* patriots

Family|

* Elizabeth Schuyler Hamilton (wife)
* Philip Hamilton (son)
* Angelica Hamilton (daughter)
* Alexander Hamilton Jr. (son)
* James Alexander Hamilton (son)
* John Church Hamilton (son)
* William S. Hamilton (son)
* Eliza Hamilton Holly (daughter)
* Philip Hamilton (son)
* Schuyler Hamilton (grandson)
* Alexander Hamilton Jr. (grandson)
* Allan McLane Hamilton (grandson)

* Category

* v
* t
* e

National Republican and Whig Parties

* American System
* American Party
* 1856 American National Convention
* Anti-Masonic Party
* Constitutional Union
* 1860 Constitutional Union Convention
* Opposition Party
* Second Party System
* Union Party
* Presidency of John Quincy Adams
* Presidency of William Henry Harrison
* Presidency of John Tyler
* Presidency of Zachary Taylor
* Presidency of Millard Fillmore

Presidential
tickets|

* 1828 (None): Adams/Rush
* 1831 (Baltimore): Clay/Sergeant
* 1836 (None): Harrison/Granger
* White/Tyler
* Webster/Granger
* Mangum/Tyler
* 1839 (Harrisburg): Harrison/Tyler
* 1844 (Baltimore): Clay/Frelinghuysen
* 1848 (Philadelphia): Z. Taylor/Fillmore
* 1852 (Baltimore): Scott/Graham
* 1856 (Baltimore): Fillmore/Donelson

U.S. House
Speakers|

* J. Taylor (1825–1827)
* Hunter (1839–1841)
* White (1841–1843)
* Winthrop (1847–1849)
* Banks (1856–1857)

U.S. Cabinet|

| State|

* Henry Clay (1825–1829)
* Daniel Webster (1841–1843)
* Abel P. Upshur (1843–1844)
* John M. Clayton (1849–1850)
* Daniel Webster (1850–1852)
* Edward Everett (1852–1853)

|

Treasury|

* Richard Rush (1825–1829)
* Thomas Ewing (1841)
* Walter Forward (1841–1843)
* John C. Spencer (1843–1844)
* George M. Bibb (1844–1845)
* William M. Meredith (1849–1850)
* Thomas Corwin (1850–1853)

War|

* James Barbour (1825–1828)
* Peter B. Porter (1828–1829)
* John Bell (1841)
* John C. Spencer (1841–1843)
* James M. Porter (1843–1844)
* George W. Crawford (1849–1850)
* Charles M. Conrad (1850–1853)

Attorney General|

* William Wirt (1825–1829)
* John J. Crittenden (1841)
* John Nelson (1843–1845)
* Reverdy Johnson (1849–1850)
* John J. Crittenden (1850–1853)

Navy|

* Samuel L. Southard (1825–1829)
* George E. Badger (1841)
* Abel P. Upshur (1841–1843)
* William B. Preston (1849–1850)
* William A. Graham (1850–1852)
* John P. Kennedy (1852–1853)

Interior|

* Thomas Ewing (1849–1850)
* Thomas M. T. McKennan (1850)
* Alexander H. H. Stuart (1850–1853)

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