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Henry Clay’s American System Unit 2: The Growth of Nationalism. Ms. Muraca US History I. Post-War Issues. Stimulated growth of manufacturing Need to protect new industries Textiles Brits. unload cargo in American ports at low cost Banking fall into chaos

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Henry Clay’s American System Unit 2: The Growth of Nationalism

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Henry Clay’s American SystemUnit 2: The Growth of Nationalism

Ms. Muraca

US History I

Post-War Issues

  • Stimulated growth of manufacturing

    • Need to protect new industries

      • Textiles

    • Brits. unload cargo in American ports at low cost

  • Banking fall into chaos

    • Need to re-establish the Bank of the United States

    • State banks issue bank notes

      • Passed between people as money

      • Banks not retain enough specie to back the notes

        • Rhode Island bank issued $580,000 in bank notes backed-up by only y $86.48 in gold & silver

  • Inadequate transportation & financial systems

    • Need a nationwide network of roads & canals

American System: Introduction

  • In 1815, President James Madison presented a plan to Congress

    • Help unite the different regions of the United States.

    • Wanted to create a self-sufficient country that would maintain a stable economy

  • Three major points of the American System:

    • Developing transportation systems

    • Establishing a protective tariff

    • Resurrecting the national bank

American System: Definition

  • What is Henry Clay’s American System?

    • House Speaker, Henry Clay coined the term “American System” in 1815, after President Madison created a plan to unite the Northern and Southern economies.

    • The President’s plan was welcomed by the Senate and the House, and quickly a plan was set in place to employ this new American System.

Northern Economy: +/-

  • Strengths

    • Experienced an Industrial Revolutionand was producing manufactured goods.

    • New methods of transportation that brought goods to and from the manufacturing north.

    • A new, national currency that enabled the north to trade with the south and west.

  • Weaknesses

    • Poor soil, low crop production, few livestock.

Southern/Western Economy: +/-

  • Strengths

    • Good and rich soil for plantation farming.

    • Increased slavery, increased productivity.

    • Use of the Mississippi River for transportation of goods between the north and south economies.

  • Weaknesses

    • No factories for manufacturing goods.

    • Heavy, intense labor needed to run the plantations smoothly in the south.

Transportation Developments

  • 1807- Robert Fulton’s Clermont makes its maiden voyage, 150 miles from New York City to Albany.

  • 1811- Construction of the National Road begins between Cumberland, MD and Vandalia, Il.

  • 1825- Erie Canal opens a 363-mile waterway that connects the Hudson River to Lake Erie.

  • 1825- First steam locomotive was used to transport goods across different regions of the country.

  • 1838- National Road opens to the public, tolls are required to help offset construction costs.

Protective Tariffs: Tariff of 1816

  • 1816- President James Madison proposes a tariff, 20-25% tax on all imported goods.

    • Would help the American manufacturing economy become more competitive with the foreign markets,

    • Tariff would offset the prices of foreign/domestic goods.

    • North encouraged the tariff

      • Improve the their economy & increase total profits.

  • South and West discouraged the tariff

    • Would have to pay more for the same products.

National Bank

  • 1816- The Second Bank of the United States (BUS) was approved for a 20-year term by the Congress.

    • Establish a national, guaranteed currency

      • improve national and regional trading of goods and services.

    • Force state banks to issues only sound bank notes

      • Could force non-compliant banks out of business

    • Issue sovereign credit

      • Credit issued by the national government

      • Not have to borrow from private banking system

Thought Question

  • To what extent was Henry Clay’s “American System” a continuation of Hamilton’s philosophy?

    • In your groups, discuss the answer to this question.

      • First, you will need to review Hamilton’s philosophy.

      • Then, you will need to determine whether or not elements of Clay’s plan are a continuation of the philosophy.

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