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 was a new form of federalism that 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 revenues.
Clay argued 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 was never really on board with the American System and had access to plenty of markets for its cotton exports.Clay first used the term “American System" in 1824, although he had been working for its specifics for many years previously.
Portions of the American System were enacted by Congress. The Second Bank of the United States was rechartered in 1816 for 20 years. High tariffs were maintained from the days of Hamilton 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.
Despite his uneven success in gaining passage of all aspects of the American System, Henry Clay was proud of the plan. In a speech in Cincinnati in 1830, he declared:
That system has had a wonderful success. It has more than realized all the hopes of its founders. It has completely falsified all the predictions of its opponents. It has increased the wealth, and power, and population of the nation. It has diminished the price of articles of consumption and has placed them within the reach of a far greater number of our people than could have found means to command them if they had been manufactured abroad instead of at home.
Clay’s personal magnetism made him one of America’s best-loved politicians; his elaborate scheming made him one of the most cordially hated. Through it all he displayed remarkable consistency of purpose: he was a nationalist, devoted to the economic development and political integration of the United States.
As Speaker of the House in 1812, Clay was one of the ‘War Hawks,’ men who believed that war with Great Britain was necessary to preserve the overseas markets of American staple producers. But Clay also served as a negotiator at the Ghent peace conference, and for the rest of his life pursued conciliation at home and abroad. Although a slaveholder, Clay disapproved of slavery as a system; he advocated gradual emancipation and the resettlement of the freed people in Africa. He defended, unsuccessfully, the right of the so-called Five Civilized Tribes of Indians to their lands. He warned that annexation of Texas would provoke war with Mexico and exacerbate tensions between North and South, and he opposed the war when it came. He consistently fostered good relations with Latin America.
The centerpiece of Clay’s statecraft was an integrated economic program called ‘the American System.’ This envisioned a protective tariff, a national bank jointly owned by private stockholders and the federal government, and federal subsidies for transportation projects (‘internal improvements’). Public lands in the West were to be sold rather than given away to homesteaders so the proceeds could be used for education and internal improvements. The program was intended to promote economic development and diversification, reduce dependence on imports, and tie together the different sections of the country.
The American System became the chief plank in the platform of Clay’s Whig party, which was formed in opposition to the Democratic party of Andrew Jackson, creating ‘the second party system.’ Whigs were found in all parts of the country, but especially among the prosperous classes, in areas wanting government economic aid, and among Protestant religious bodies that hoped a strong government would further their agenda of moral reform.
Clay was called ‘the Great Compromiser’ because he played a major role in formulating the three landmark sectional compromises of his day: the Missouri Compromise of 1820, the Tariff Compromise of 1833, and the Compromise of 1850. Coming from the border state of Kentucky, he was predisposed toward moderation when sectional conflicts were involved. His main objective was to avoid a civil war. But in this, as in so many of his more immediate goals, he was defeated.
Clay never became president, and his Whig party disappeared shortly after his death. But its successor, the Republican party, put many features of the American System into operation. In the long run, his economic and political vision of America was largely fulfilled.
The Reader’s Companion to American History. Eric Foner and John A. Garraty, Editors. Copyright © 1991 by Houghton Mifflin Harcourt Publishing Company. All rights reserved.