The American System

By Claire Hahn, Charlotte Raiford, Sara Brown, and Nicholas Dunlap

The American System was an idea created by Henry Clay that had three main parts. The country would need at strong banking system, a protective tariff, and a network of roads and canals for transportation. When the British threatened Yankee factories, the Tariff of 1816 was passed for protection, not revenue. Although the tariff was not strong enough to completely protect them at that time, it introduced the idea of a protective tariff which was an innovative idea for the future. Going along with the first part of the American system, a second national bank was created. James Madison encouraged Hamilton's original ideas of a national bank to create a second one. This bank would provide "easy and abundant credit." The third part of the American system included a network of roads and canals which would promote trade within the country. This would tie the country together politically and economically. The money to create these roads and canals would come from the revenue from the tariff. Overall, these aspects of the American System promoted economic activity within the country making them less reliant on foreign powers such as the British.

Primary Source:

"Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, That from and after the thirtieth day of June, one thousand eight hundred and sixteen, the duties heretofore laid by law, on goods, wares and merchandise, imported into the United States, shall cease and determine, and there shall be levied, and collected, and paid, the several duties hereinafter mentioned..."

-U.S. Congress April 27th, 1816

The primary source is relative to the Tariff of 1816. This excerpt from the U.S. Congress session explains that the duties on imports and tonnage would be regulated after their session and certain materials would be imported free of duties as well as certain materials from countries would cost more or less than the same item from a different country. The tariff was included for protection of local materials and not just revenue. While well received, the rates were too low to offer total protection but instead started a trend to increase protection of the American system of manufacturing.

Additional Information:

American system
Ideas of Alexander Hamilton
Had 3 parts, a tariff to protect American industry, a national bank to increase commerce, and federal subsidies for roads canals etc

Tariff of 1816
First tariff that had a purpose besides raising money, purpose was to protect US industry
Received strong support from southbound states
Authorized for 3 years

Second national bank
Handled all fiscal transactions for the US government
20% of the banks capital was owned by the government
Four thousand investors held 80%
Was the largest corporation in the world at the time
Main function was to regulate public credit


The political cartoon below shows the American System in the form of the monkeys. Each cage is supposed to represent a different part of the economy and it's showing that every man is for himself. The economic parts are stealing resources from each other.

The picture below is a picture of the second national bank.

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