Was the American System successful

As government tax revenues continued to decline leading up to and following the War of 1812, the United States needed to raise funds to pay off debts and cover the costs of running a federal government. The Tariff of 1816 placed a high tax on English cotton cloth in an effort to protect the New England textile industry.

Tariffs eventually spread to other imported goods like wool, hemp, and iron. However, the use of tariffs became more of a political tool to address sectional differences more than an economic tool to fix the country’s fiscal woes.

The use of tariffs became more of a political tool to address sectional differences more than an economic tool to fix the country’s fiscal woes.

Northern and Western business owners and politicians knew that the Southern citizens relied more heavily on imported finished products then they did, so these tariffs would affect the Southern consumer more than the Northern and Western ones. The passage of the Tariff of 1828 became the culminating event in this sectional fight as this tariff raised taxes 35%-38% on more than 90% of all imported goods. This “Tariff of Abomination” as it was known in the South, led to increased discord at all levels of government.

This “Tariff of Abomination” as it was known in the South, led to increased discord at all levels of government.

An open disagreement occurred between President Andrew Jackson and his Vice-President, John C. Calhoun of South Carolina over this tariff. Seen as a sectional plot to force the slave holding South to either support Northern businesses due to price increases on manufactured goods or pay the expenses of the federal government disproportionately (remember, the South bought more imports so they would pay more taxes).

As a result, South Carolina began to advocate for the possibility of declaring the tariff null and void.  This action which eventually led to the Nullification Crisis and the eventual action of President Jackson to sign the Tariff of 1832 and 1833 that began to ease the burden on South Carolina and other Southern states.  Nonetheless, Calhoun would resign as Jackson’s Vice-President at the end of 1832 in protest over the tariffs.

The economic brainchild of Alexander Hamilton and the center piece of the Hamilton Fiscal plan, the Bank of the United States (BUS), was seen as a tool to stabilize the American economy following the Revolutionary War. However, Southern politicians (including Jefferson) saw it as a power grab by Northern merchants and a weakening of local and state banks.

Yet, much like after the Revolutionary War the American economy needed a central bank to help stabilize the national economic system. So the Bank of the United States was re-chartered in 1816 for an additional 20 years.

Though it was re-chartered, the bank became a lightning rod of conflict once Andrew Jackson was elected to the presidency in 1828.

Though it was re-chartered, the bank became a lightning rod of conflict once Andrew Jackson was elected to the presidency in 1828. Jackson and the Democrats saw the bank as a tool for the rich (much like Jefferson) and wanted to “kill the bank”. Numerous conflicts with the banks president Nicholas Biddle and attempts to revoke the banks charter before the election of 1832 ultimately became known as the Bank War.

Henry Clay and Senator Daniel Webster of Massachusetts fought to re-charter the bank in 1832 and were able to get a bill of re-charter passed through Congress, thinking Jackson would not risk an economic downturn in an election year. Playing to his masses of the “common man” and relying on class warfare rhetoric, Jackson issued his stirring veto message and vetoed the bill. The veto was unable to be overridden by Clay, Webster, and their supporters and the bank was eventually “killed” when the charter expired in 1836. After the death of the 2ndBank of the United States, the country entered a “free banking era” in which short lived state banks over saw the majority of monetary policy and transactions.

After the death of the 2ndBank of the United States, the country entered a “free banking era” in which short lived state banks over saw the majority of monetary policy and transactions.

The third component of Clay’s American System was an effort to combine the economic visions of Hamilton’s industrial society and Jefferson’s agrarian one through a connective system of roads and canals. Connecting the agriculturally driven South with the industrialized North and the expanding West would ensure economic interaction and prosperity for everyone as they became dependent on one another. Clay and others believed that connecting the regions economically with transportation routes could cut down on the sectional conflicts that had been plaguing the country.

Clay and others believed that connecting the regions economically with transportation routes could cut down on the sectional conflicts that had been plaguing the country.

In 1830, congress passed a bill to complete part of the Cumberland Road system known as the Maysville Road. Once again, President Andrew Jackson stepped in and vetoed the bill. He argued that the federal government should not fund construction projects that occurred wholly within a single state.  In this case, the state was Kentucky, the home state of Jackson’s political enemy, Henry Clay.

Even with this setback hundreds of miles of roads were constructed during this time. These projects became a part of the National Road and connected existing cities and river systems while encouraging expansion further west due to easier access to necessary supplies and transportation of goods.

Even with conflicts and arguments over various projects, much headway was in fact made in an effort to link the regions. The Eerie Canal was a major engineering feat and economic boon for the Western and Northern regions. Using the Great Lakes and a series of canals, Western farmers were able to transport their crops to the shipping ports of New York and then on to the rest of the world.

Using the Great Lakes and a series of canals, Western farmers were able to transport their crops to the shipping ports of New York and then on to the rest of the world.

Beginning of construction took place in 1817 and was opened in 1825 at a cost of $7.1 million dollars ($109 million in today’s money).  Massive increases in trade of finished products heading West and cheaper food coming East and then being shipped out to the world solidified New York City as the financial capital of the United States. Revenues collected from tolls along the canal, covered construction costs within several years and contributed heavily to the federal operation budget.

Originally known as The American Way, the American System is referred to as a well-structured national and economic policy which came into action during the first half of the 19th century in America. This economic development plan was pioneered by the American congressman from Kentucky, Henry Clay, who believed it to be an excellent way of bettering the country’s economic sector. The American System mainly consisted of three main subdivisions: a protective tariff scheme, internal improvements such as roads and canals and a national bank. All these were seen as means of reinforcing the country’s economy and unifying its nation.

History of the American System

As mentioned above, it was originated during the early decades of the 19th century in America, specifically, it came into practice during the presidency of James Monroe from 1817 to 1825. The reason behind the introduction of the American System was the difficulty Americans faced with competing with prices of the reasonably priced goods which were exported to America by the British after the war of 1812. With this, the American was on the verge of encountering difficulties that were not there after the winning of the war where they once again defeated the British. The American System, which was led by Henry Clay, was advanced by a number of other American congressmen including John C. Calhoun and John Quincy Adams. The plan, after certain disagreements, was finally enacted by the United States Congress, and the high tariff were finally approved in 1816 and reached their peak in 1828. After the Nullification Crisis in 1833, tariffs remained the same until the Civil War.

Components of the American System

As proposed by Henry Clay, the American System comprised of three main components:

a) High tariffs b) Internal improvements

c) A national bank

High tariffs, extreme taxes placed on imported goods, were apparently recommended to protect the American industries and generate revenue for the central government. It made the goods imported from Britain and other countries exceedingly expensive and thereby encouraged Americans to buy locally produced goods. The protective tariff, as it was called, was from 20% to 25% which was a protective measure to save the country’s business from foreign capitulation.

Next component was the improvement of the country’s infrastructure including roads and canals as they were the main means of transportation. This was done as a way of making trade easier, quicker and trouble-free for everyone. As understood by Henry Clay, poor road and canal network would only make transportation more difficult making it a significant cause for the fall of the economy.
Thirdly, the founding of a national bank was seen as means of improving the economy as it would promote a single currency. Promoting a single currency was acknowledged as beneficial for trade as it would be a credit issued by the national government and not from the private banking system. Thus, the American congress founded the Second Bank of the United States in 1816.

Was the American system a success?

Conclusively, the American System experienced an uneven success,which its creator was proud of. Like any other plan or project, it had its opponents yet was implemented by the American Congress. The Cumberland Road is referred to as the most important road ever created by the System. Being a government-sponsored economic plan, the American System was in the practice for a number of significant years serving its country to become independent in agriculture, commerce, and industry and ultimately improving its economy and unifying the nation of the United States of America.