American System ( economic plan ) - wikipedia American System ( economic plan ) This article is part of a series about Henry Clay Early life Legal career Speaker of the House War of 1812 American System Missouri Compromise Second Bank of the United States Bid for the Presidency ( 1824 ) Secretary of State Corrupt Bargain Charlotte Dupuy U.S. Senator from Kentucky Nullification Crisis Bid for the Presidency ( 1832 ) Whig Party Bid for the Presidency ( 1844 ) Compromise of 1850 Death Lying in State 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 a prominent role in American policy during the first half of the 19th century. Rooted in the `` American School '' ideas of Alexander Hamilton, the plan `` consisted of three mutually reinforcing parts : a tariff to protect and promote American industry ; a national bank to foster care ; and federal subsidies for roads, canals, and other ' internal improvements ' to develop profitable markets for farmculture ''. Congressman Henry Clay was the plan 's foremost proponent and the first to refer to it as the `` American System ''. Contents 1 History 2 Main points 3 Annual Message of 1815 ( Seven Points ) 4 See also 5 Further reading 5.1 Modern Books 5.2 Other / older Books 6 Sources and Notes History 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, John C. Calhoun and John Quincy Adams. The System ran counter to federalism and included : 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 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. The American System did not enjoy universal success, however ; in 1830, President Jackson vetoed 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 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. This program 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 reenforcing 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 Annual Message of 1815 ( Seven Points ) 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 American School ( economics ) 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 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 Foner, Eric. Free Soil, Free Labor, Free Men : The Ideology of the Republican Party before the Civil War ( 1970 ) 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 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 Sources and notes ^ Jump up to : Classic Senate Speeches : Henry Clay In Defense of the American System at the US Senate website The American System : Speeches on the Tariff Question and Internal Improvements by Congressman Andrew Stewart John Quincy Adams United States House of Representatives, 1831 -- 1848 6th President of the United States, 1825 -- 1829 8th U.S. Secretary of State, 1817 -- 1825 U.S. Ambassador to the United Kingdom, 1814 -- 1817 1st U.S. Minister to Russia, 1809 -- 1814 Massachusetts State Senate, 1803 -- 1808 U.S. Minister to Prussia, 1797 -- 1801 U.S. Ambassador 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 Abdulrahman Ibrahim Ibn Sori State of the Union Address, 1825 1827 1828 Federal judiciary appointments Other events Monroe Doctrine, author Treaty of Ghent Adams -- Onís Treaty Treaty of 1818 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 Life and homes Early life Abigail Adams Cairn John Quincy Adams and abolitionism Adams National Historical Park Birthplace and family home Peacefield Presidential Library United First Parish Church and gravesite Elections United States presidential election, 1824 Corrupt Bargain United States presidential election, 1828 Legacy Adams Memorial Adams House at Harvard University U.S. Postage stamps Monroe Doctrine Centennial half dollar 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 family Quincy family Louisa Adams ( wife ) George W. Adams ( son ) Charles 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 family Abigail Adams Smith ( sister ) Charles Adams ( brother ) Thomas Boylston Adams ( brother ) John Adams Sr. ( paternal grandfather ) Susanna Boylston ( paternal grandmother ) Elihu Adams ( paternal uncle ) John Quincy ( great - grandfather ) Related National Republican Party Republicanism Quincy Patriot ← James Monroe Andrew Jackson → Alexander Hamilton Senior Officer of the United States Army, 1799 -- 1800 1st Secretary of the Treasury, 1789 -- 1795 Delegate, 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 Initiated, main author, The Federalist Papers written by Hamilton Founding Father Secretary of the Treasury First Bank of the United States Revenue Marine ( United States Coast Guard ) United States Customs Service Hamiltonian economic program Residence Act Compromise of 1790 `` First Report on the Public Credit '', 1790 Funding Act of 1790 `` Operations of the Act Laying Duties on Imports '', 1790 `` Second Report on Public Credit '', a.k.a. `` Report on a National Bank '', 1790 `` Report On Manufactures '', 1791 Tariff of 1790 Tariff of 1792 Coinage Act of 1792 United States Mint Whiskey Rebellion Jay Treaty Military career New York Provincial Company of Artillery In the Revolutionary War Battles : Harlem Heights White Plains Trenton General Washington 's Aide - de-Camp Princeton Brandywine Germantown Monmouth Siege of Yorktown Other events Burr -- Hamilton duel Founder, Federalist Party Federalist Era Founder, Bank of New York Bank of North America Advisor, George Washington 's Farewell Address President - General of the Society of the Cincinnati Founder, New - York Evening Post Hamilton -- Reynolds sex scandal Rutgers v. 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( 1997 documentary series ) Liberty 's Kids ( 2002 animated series ) John Adams ( 2008 miniseries ) Related 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 Schuyler family Philip Hamilton ( oldest 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 ( youngest son ) Schuyler Hamilton ( grandson ) Alexander Hamilton, Jr. ( grandson ) Allan McLane Hamilton ( grandson ) Robert Ray Hamilton ( great - grandson ) Retrieved from `` https://en.wikipedia.org/w/index.php?title=American_System_(economic_plan)&oldid=796974784 '' Categories : Economic history of the United States Great Triumvirate Henry Clay Political history of the United States Presidency of John Quincy Adams Economic nationalism United States economic policy United States public land law Hidden categories : Articles with specifically marked weasel - worded phrases from December 2016 Talk Contents About Wikipedia Español 한국어 Italiano 日本 語 Português Edit links This page was last edited on 24 August 2017, at 05 : 53. Text is available under the Creative Commons Attribution - ShareAlike License ; additional terms may apply. By using this site, you agree to the Terms of Use and Privacy Policy. 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Question: who created the plan that became known as the american system
Answer: Alexander Hamilton