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Henry Clay and the 'American System'

James Monroe

Henry Clay and the 'American System': James Monroe was the 5th American President who served in office from March 4, 1817 to March 4, 1825. The adoption of the American System was an important economic plan during his presidency and contributed to the Era of Good Feelings.

Definition and Summary of the Henry Clay and the 'American System'
Summary and definition:
The American System was a three-pronged economic plan, based on the financial ideas of Alexander Hamilton, that was supported by Henry Clay. The American System emphasized the need for a strong role for federal government in the economy.

The three parts of the plan mutually reinforced each other. The three parts of the American System were based on a new national bank, taxing foreign goods and creating a subsidized transportation infrastructure of new roads and canals. 

Facts about Henry Clay and the 'American System'
The following fact sheet contains interesting facts and information on Henry Clay and the 'American System'.

American System for kids: Background History
America was growing as a new, autonomous nation and realized that they needed to become independent from Britain and the other European countries of Europe, in an economic and commercial sense. Before the
War of 1812 the US had depended on exports for most of their manufactured goods - 84% of American people were farmers. The United States was brimming with natural resources but needed factories to make manufactured goods. The government needed to create an economical environment in which American trade would flourish, money was made available for the industrialists to build factories in the east and people had the transport system to make homes in the new lands in the west. The American system was designed to meet the requirements of the new, expanding and independent nation.

The American System for kids: Henry Clay, the 'Man with a Plan' - The American System
Henry Clay (1777 1852) was a skilled politician and a 'man with a plan'. Henry Clay was a great supporter of the American System, an economic plan based on many of the ideas of Alexander Hamilton.

What was the American System? The Economic Plan
The economic plan called the American System was based on:

  • Taxing all foreign goods, to boost the sales of US products and protect manufacturers from cheap British goods

  • Establishing another Bank of the United States to offer easy credit to Americans

  • Constructing new roads and canals in the West

What were the aims of the American System?
The American system was a three-pronged plan aimed at:

  • Improving the economy of the United States

  • Introducing a protective Tariff to enable the nation to raise money from these taxes and at the same time protect the nation's goods from cheaper priced foreign items

  • Improving the lives of American citizens

  • Creating new transportation systems connecting America

What was the Purpose of the American System?
The purpose of the American System was to make the most of the opportunities provided by the acquisition of the new lands in the west and ensure that US money benefited US Citizens. In 1816 the plan that incorporated the American System was made a reality by passing two laws to meet these objectives. In 1816 Congress created another Bank of the United States and passed the Tariff of 1816, which placed a 20-25% tax on all foreign goods. (The
chartering of the Second Bank of the United States on April 10, 1816 was badly managed at first and the Panic of 1819 occurred when the Second Bank of the United States tightened its loan policy.)

The Significance of the American System:
What was the significance of the American System?

  • New industries were established

  • Factories were built

  • America reduced their dependence on foreign goods

  • Americans prospered and felt confident in making homes in the new lands acquired in the Louisiana Purchase and in Florida

  • Roads and canals were built that enabled Americans to travel and the Cumberland Road, the Erie Canal were constructed

  • General Survey Act of 1824 was passed, authorizing the president to have surveys made of important transportation routes by the Corps of Engineers

  • The American System helped to fuel the belief in the Manifest Destiny of the United States

The American System for kids: Who was Henry Clay?
Who was Henry Clay?

  • Henry Clay was a strong supporter of the American System

  • He was a lawyer, statesman and excellent orator

  • Henry Clay was born on April 12, 1777 in Virginia, married Lucretia Hart Clay and had eleven children

  • He owned a plantation and law firm in Kentucky

  • Henry Clay started his political career as a State Legislator for Kentucky in 1803

  • He was elected to the Senate in 1806 and 1810

  • In 1811 Henry Clay was elected to the House of Representatives and chosen Speaker of the House

  • He was one of the 'War Hawks' who advocated war with the British in the War of 1812

  • Henry Clay was a strong supporter of the economic policies of Alexander Hamilton (who had been killed in 1804 in the Aaron Burr duel)

  • It was Henry Clay who named the national economic plan to build US industry, the 'American System'

  • Henry Clay, together with John. C. Calhoun (a politician, political theorist and proponent of a protective tariffs), helped to push through the Protective Tariff of 1816

  • The 'American System' was implemented during the Era of Good Feelings

  • The Tariff of 1828 aka the "Tariff of Abominations" raised tariffs considerably in an attempt to protect new factories

  • Henry Clay's American System eventually ran out of steam during the administration of President Jackson

Protective Tariffs
For additional facts and a timeline refer to Protectionism and Tariffs.

US American History
1801-1828: Evolution Era

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