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Henry Clays American System Essay

Henry Clay's American System

After the War of 1812, Americans felt good about themselves. That had beaten the British once again, and they were feeling strong. One of the areas of American life that began to expand was business. British companies had begun to send huge amounts of inexpensive goods to America after the war. American mill owners wanted to sell their goods to Americans rather than have them buy them from Britain, but they were having a hard time competing with the British prices. Henry Clay, a member of the United States House of Representatives, had a plan to aid American businesses. He called it the American System. It included the following:

1.) A tariff – A tariff is a tax on imported goods. It made European goods more expensive and encouraged Americans to buy cheaper products made in America. The tariff also made the country money, which would be used to improve things.

2.) A National Bank - The establishment of a national bank that would promote a single currency (money), making trade easier.

3.) Roads and Canals – Improve the transportation system in the country. Henry Clay though that many more roads and canals should be built. These roads and canals would make trade easier and faster for everyone, helping farmers and merchants get their goods to market.

Henry Clay hoped the American System would help the United States be able to become independent from Europe.

The American System

Step 1: A Tariff - Tax on Imported Goods


Step 2: A National Bank


Step 3: Improvements in roads and canals, which is paid for by the money made from the tariff.

With the improvement in the roads and canals, the United States can grow even more, becoming a powerful, wealthy, and self-sufficient nation.


Clay’s personal magnetism made him one of America’s best-loved politicians; his elaborate scheming made him one of the most cordially hated. Through it all he displayed remarkable consistency of purpose: he was a nationalist, devoted to the economic development and political integration of the United States.

As Speaker of the House in 1812, Clay was one of the ‘War Hawks,’ men who believed that war with Great Britain was necessary to preserve the overseas markets of American staple producers. But Clay also served as a negotiator at the Ghent peace conference, and for the rest of his life pursued conciliation at home and abroad. Although a slaveholder, Clay disapproved of slavery as a system; he advocated gradual emancipation and the resettlement of the freed people in Africa. He defended, unsuccessfully, the right of the so-called Five Civilized Tribes of Indians to their lands. He warned that annexation of Texas would provoke war with Mexico and exacerbate tensions between North and South, and he opposed the war when it came. He consistently fostered good relations with Latin America.

The centerpiece of Clay’s statecraft was an integrated economic program called ‘the American System.’ This envisioned a protective tariff, a national bank jointly owned by private stockholders and the federal government, and federal subsidies for transportation projects (‘internal improvements’). Public lands in the West were to be sold rather than given away to homesteaders so the proceeds could be used for education and internal improvements. The program was intended to promote economic development and diversification, reduce dependence on imports, and tie together the different sections of the country.

The American System became the chief plank in the platform of Clay’s Whig party, which was formed in opposition to the Democratic party of Andrew Jackson, creating ‘the second party system.’ Whigs were found in all parts of the country, but especially among the prosperous classes, in areas wanting government economic aid, and among Protestant religious bodies that hoped a strong government would further their agenda of moral reform.

Clay was called ‘the Great Compromiser’ because he played a major role in formulating the three landmark sectional compromises of his day: the Missouri Compromise of 1820, the Tariff Compromise of 1833, and the Compromise of 1850. Coming from the border state of Kentucky, he was predisposed toward moderation when sectional conflicts were involved. His main objective was to avoid a civil war. But in this, as in so many of his more immediate goals, he was defeated.

Clay never became president, and his Whig party disappeared shortly after his death. But its successor, the Republican party, put many features of the American System into operation. In the long run, his economic and political vision of America was largely fulfilled.

The Reader’s Companion to American History. Eric Foner and John A. Garraty, Editors. Copyright © 1991 by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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