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The Monkey System or Every One For Himself Henry Clay says "Walk in and see the new improved grand original American System!"
The cages are labeled: "Home, Consumption, Internal, Improv".
This 1831 cartoon ridiculing Clay's American System depicts monkeys, labeled as being different parts of a nation's economy, stealing each other's resources (food) with commentators describing it as either great or a humbug.
The American System was a mercantilist economic plan based on the "American School" ideas of Alexander Hamilton, expanded upon later by Friedrich List, consisting of a high tariff to support internal improvements such as road-building, and a national bank to encourage productive enterprise and form a national currency. This program was intended to allow the United States to grow and prosper, by providing a defense against the dumping of cheap foreign products, mainly at the time from the British Empire.


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 1829, although he had been working for its specifics for many years previously.

Portions of the American System were enacted by the United States Congress. The Second Bank of the United Statesmarker was rechartered in 1816 for 20 years. High tariffs were maintained from the days of Alexander 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.

The American System did not enjoy universal success, however. In 1830, President Jackson vetoed a bill which would allow the Federal government to purchase stock in the Maysville, Washington, Paris, and Lexington Turnpike Road Company, which had been organized to construct a road linking Lexington and the Ohio River, the entirety of which would be in the state of Kentucky. Jackson's Maysville Road veto was primarily due to his personal conflict with Clay, rather than ideological objections.

Main Points

The establishment of a protective tariff, a 20%-25% tax on imported goods, would protect a nation’s business from foreign competition. Congress passed a tariff in 1816 which made European goods more expensive and encouraged consumers to buy relatively cheaper American-made goods.

The establishment of a national bank would promote a single currency, making trade easier, and issue what was called sovereign credit, i.e., credit issued by the national government, rather than borrowed from the private banking system. In 1816, Congress created the Second Bank of the United Statesmarker.

The improvement of the country’s infrastructure, especially transportation systems, made trade easier and faster for everyone. Poor roads made transportation slow and costly.

This program became the leading tenet of the Whig Party of Henry Clay and Daniel Webster. It was opposed by the Democratic Party of Andrew Jackson, Martin Van Buren, James K. Polk, Franklin Pierce, and James Buchanan prior to the Civil War.

Among the most important internal improvements created under the American System were the Erie Canal and the Cumberland Road.

Annual Message of 1815 (Seven Points)

Further Reading

Modern Books

  • Michael, Diaz, The Promise of American Life (2005-reprint)
  • Joseph Dorfman. The Economic Mind in American Civilization, 1606-1865 (1947) 2 vol
  • Eckes,Jr. Alfred E. "Opening America's Market-U.S. Foreign Trade Policy Since (1995) University of North Carolina Press
  • Foner, Eric. Free Soil, Free Labor, Free Men: The Ideology of the Republican Party before the Civil War (1970)
  • Gill, William J. Trade Wars Against America: A History of United States Trade and Monetary Policy (1990)
  • Carter Goodrich, Government Promotion of American Canals and Railroads, 1800-1890 (Greenwood Press, 1960)
    • Goodrich, Carter. "American Development Policy: the Case of Internal Improvements," Journal of Economic History, 16 ( 1956), 449-60. in JSTOR
    • Goodrich, Carter. "National Planning of Internal Improvements," Political Science Quarterly, 63 (1948), 16-44. in JSTOR
  • John Lauritz Larson. Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States (2001)
  • Lively, Robert A. "The American System, a Review Article," Business History Review, XXIX (March, 1955), 81-96. recommended starting point
  • Lind, Michael Hamilton's Republic: Readings in the American Democratic Nationalist Tradition (1997)
  • Lind, Michael What Lincoln Believed: The Values and Convictions of America's Greatest President (2004)
  • Remini, Robert V. Henry Clay: Statesman for the Union. , 1991
  • Edward Stanwood, American Tariff Controversies in the 19th Century (1903; reprint 1974), 2 vols., favors protectionism
  • Charles M. Wiltse, John C. Calhoun: Nationalist, 1782-1828 (1944)

Other/older Books

  1. G. B. Curtiss, Protection and Prosperity: an ; W. H. Dawson, Protection in Germany (London, 1904
  2. Alexander Hamilton, Report on the Subject of Manufactures, communicated to the House of Representatives, 5 December 1791
  3. H. C. Carey, Principles of Social Science (3 vols., Philadelphia, 1858-1859), Harmony of Interests Agricultural, Manufacturing and Commercial (Philadelphia, 1873)
  4. Friedrich List, Outlines of American Political Economy (1980-reprint)
  5. Friedrich List, National System of Political Economy (1994-reprint)
  6. A. M. Low, Protection in the United States (London, 1904); H. 0. Meredith, Protection in France (London, 1904)
  7. Ellis H. Roberts, Government Revenue, especially the American System, an argument for industrial freedom against the fallacies of free trade (Boston, 1884)
  8. J. P. Young, Protection and Progress: a Study of the Economic Bases of the American Protective System (Chicago, 1900)
  9. Clay, Henry. The Papers of Henry Clay, 1797-1852. Edited by James Hopkins

Sources and Notes

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