What is the American System

The American System

Originally known as The American Way, the American System is referred to as a well-structured national and economic policy which came into action during the first half of the 19th century in America. This economic development plan was pioneered by the American congressman from Kentucky, Henry Clay, who believed it to be an excellent way of bettering the country’s economic sector. The American System mainly consisted of three main subdivisions: a protective tariff scheme, internal improvements such as roads and canals and a national bank. All these were seen as means of reinforcing the country’s economy and unifying its nation.

History of the American System

As mentioned above, it was originated during the early decades of the 19th century in America, specifically, it came into practice during the presidency of James Monroe from 1817 to 1825. The reason behind the introduction of the American System was the difficulty Americans faced with competing with prices of the reasonably priced goods which were exported to America by the British after the war of 1812. With this, the American was on the verge of encountering difficulties that were not there after the winning of the war where they once again defeated the British. The American System, which was led by Henry Clay, was advanced by a number of other American congressmen including John C. Calhoun and John Quincy Adams. The plan, after certain disagreements, was finally enacted by the United States Congress, and the high tariff were finally approved in 1816 and reached their peak in 1828. After the Nullification Crisis in 1833, tariffs remained the same until the Civil War.

Components of the American System

As proposed by Henry Clay, the American System comprised of three main components:

a) High tariffs
b) Internal improvements
c) A national bank

High tariffs, extreme taxes placed on imported goods, were apparently recommended to protect the American industries and generate revenue for the central government. It made the goods imported from Britain and other countries exceedingly expensive and thereby encouraged Americans to buy locally produced goods. The protective tariff, as it was called, was from 20% to 25% which was a protective measure to save the country’s business from foreign capitulation.

Next component was the improvement of the country’s infrastructure including roads and canals as they were the main means of transportation. This was done as a way of making trade easier, quicker and trouble-free for everyone. As understood by Henry Clay, poor road and canal network would only make transportation more difficult making it a significant cause for the fall of the economy.
Thirdly, the founding of a national bank was seen as means of improving the economy as it would promote a single currency. Promoting a single currency was acknowledged as beneficial for trade as it would be a credit issued by the national government and not from the private banking system. Thus, the American congress founded the Second Bank of the United States in 1816.

Was the American system a success?

Conclusively, the American System experienced an uneven success,which its creator was proud of. Like any other plan or project, it had its opponents yet was implemented by the American Congress. The Cumberland Road is referred to as the most important road ever created by the System. Being a government-sponsored economic plan, the American System was in the practice for a number of significant years serving its country to become independent in agriculture, commerce, and industry and ultimately improving its economy and unifying the nation of the United States of America.

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