American System Henry Clay Gave His Famous

American System

Henry Clay gave his famous speech in support of the American System to the House of Representatives in 1824, although Alexander Hamilton had used the same term decades before. It rested "on the idea of harmonizing all the segments of the economy for their mutual benefit and of doing so by active support from an intervening national government" (Baxter 27). Clay's conversion to this policy was surprising since Hamilton had been a member of the Federalist Party while Henry Clay was supposedly a Democratic Republican and a Jeffersonian, opposed to Federal plans for government aid to industry, a national bank, protective tariffs and federal funding for highways, canals, railroads and other internal improvements. After the War of 1812, however, the first political party system had come to an end and the Federalists were discredited by their opposition to the war and threats of secession in New England. During the war, the Jeffersonian party had also come to appreciate the virtues of the Bank of the United States and the system of tariffs that allowed American industry to expand.

By the time of the Era of Good Feeling in 1820s, the party system was in flux, but all political leaders like Clay, John Caldwell Calhoun, John Quincy Adams and Daniel Webster all claimed to be Democratic Republicans. Two new parties would soon emerge by the end of the decade, the Democrats and Whigs (National Republicans) and the old issues of an activist federal government favoring industrialization and a states' rights party representing agrarian and Southern slave holding interests would revive. Slave owners like John Randolph and John Tyler claimed to be the true Jeffersonian Republicans in blocking a system that they regarded as dangerous to their section (Baxter 21). They maintained that the South's exports would be damaged by protectionism and that it was "far better to supply raw materials to Europe and purchase imported manufactures, a natural process" (Baxter 29). This was especially true because of the great cotton boom in the South and the tremendous expansion of slavery that no one had expected in the 1790s, and it drove the two regions further apart than ever. Meanwhile, Northern states like Ohio, New York, Pennsylvania and Illinois were growing rapidly in population and influence in Congress, and demanded protection for their new industries. New England at first opposed tariffs because these might damage its commercial and trading interests, although it also moved into the protectionist camp as industrialization increased there.

Clay was a Border State man from Kentucky, which had both manufacturing and slaveholding interests, as did Clay himself. Therefore, he was in a position to arrange compromises between the two hostile sections, and claim that the American System would benefit commerce, agriculture and industry. He came to embrace the ideas of protectionists like Matthew Carey and Hezekiah Niles, and openly rejected the free trade, limited government, and laissez faire philosophy of Adam Smith (Baxter 28). Clay demanded federal measures to "promote American industry and eliminate foreign competition," and praised the new standardized mass production methods for rifles, revolvers, agricultural equipment and sewing machines (Hounshell 15). His support of government funding for canals, harbors and railroads was also very popular in the West and Mid-Atlantic states, while the South was strongly opposed. Andrew Jackson, who was elected president in 1828, favored a "judicious tariff" in order to attract votes in the North, but on the whole he and his vice president Martin Van Buren were advocates of states' rights, limited government, and hostile to the Bank of the United States or federally-funded public works (Baxter 111). Interestingly, Abraham Lincoln was a lifelong admirer and supporter of Henry Clay, and a member of the Whig Party before it fell apart in the 1850s. At that point, most of the northern Whigs moved into the new Republican Party, and Lincoln put most of the old Federalist-Whig-Hamiltonian policies in place after he was elected president in 1860. Of course, by that time the South had left the Union, although its leaders understood very well that Hamilton, Clay and Lincoln had all believed that slavery would gradually become extinct as the country industrialized.