AMERICAN SYSTEM, a term invoked by Kentucky representative Henry Clay in his 30–31 March 1824 speech to Congress as part of his argument for a higher tariff. Clay, who went on to serve in the Senate and was the Whig Party presidential candidate in 1832 and 1844, believed the tariff would stimulate national manufacturing and agriculture by insulating the domestic market from foreign products. He based this approach at least in part on the economic strategy of the British, whose continued penetration into U.S. markets and protectionist policies against U.S. exports perpetuated a major trade imbalance between the two countries throughout the 1820s. Despite widespread resistance from antiprotectionists, who feared that high tariffs would prompt other countries to tax American exports, Congress in May 1824 narrowly approved a substantial raise in the rate.
The concept of the American System subsequently came to include a broader set of policies that Clay and his supporters propounded as the best means for strengthening the country's economy and restructuring the relationship between government and society. Clay's invocation of the term echoed the earlier economic nationalism of Alexander Hamilton who, in number 11 of the Federalist Papers in 1787, had also referred to an American System characterized by a powerful, activist federal government that would guarantee the sovereignty and prosperity of the United States. Clay's platform reflected a similar conviction that government intervention could stimulate domestic economic development more effectively than a reliance on market forces, and that a stronger economy would in turn make the country more resilient in dealing with foreign trade competition or military threats. By harmonizing the various economic interests within the United States, he maintained, such a policy would render American agricultural and manufacturing production more efficient than those of other nations. In addition to the tariff, Clay supported a strong central bank and federal funding for internal improvements to improve commodity circulation and make American producers more competitive. In particular, he called for increased construction of roads and canals, which he felt would unify the disparate regions of the United States, facilitate the transport of goods, and improve the country's ability to defend itself against invasion or rebellion.
The American System became the most coherent expression of economic nationalism propounded in the first half of the nineteenth century, and it enhanced Clay's already extensive influence in national politics. Yet during his political career, antinationalist forces centered in the Democratic Party managed to defeat many of the policies Clay proposed. Southern plantation owners, who depended on foreign markets to absorb much of their output, objected in particular to the protectionist slant of the American System. It was not until the 1860s and the administration of Abraham Lincoln, a longtime admirer of Clay and his policies, that the federal government began to implement many of the tenets embodied in the American System. In this sense, the American System prefigured the greater willingness of post–Civil War administrations to intervene more directly in the economic development of the United States.
Baxter, Maurice G. Henry Clay and the American System. Lexington: University Press of Kentucky, 1995.
Shankman, Kimberly C. Compromise and the Constitution: The Political Thought of Henry Clay. Lanham, Md.: Lexington Books, 1999.
Watson, Harry L. Andrew Jackson vs. Henry Clay: Democracy and Development in Antebellum America. Boston: Bedford/St. Martin's, 1998.