The three components of Henry Clay’s American System were directed at strengthening of domestic businesses, national commerce and national currency, and infrastructure.


After the war in 1812, the US was not in the best position because it had substantial debts and a weak economy. At this point, Henry Clay, the son of Kentucky state and the member of the Senate came with a proposition of the American System. The politician has proposed three essential steps that, in his belief, were supposed to help the country establish a strong economic position and flourish.

The first stage of the system involved imposing high tariffs on import goods. The initial purpose of the increase in taxes for foreign products was to generate revenues that can start covering the existing national debts. Besides, this measure was believed to help stabilize domestic businesses. The first product that received high import tariffs was cotton, followed by such goods as wool, and iron. At that time, southern regions of the country were significantly dependent on the products from abroad, which created the discontent in that area.

In comparison, this component of the American System would benefit the north of the country, positively influencing domestic businesses. Consequently, the imposition of high tariffs created controversial opinions and served more as a political tool, rather than a measure of raising funds. It is crucial to mention that, at that period, Clay was extremely dissatisfied with the administration of President Jackson. In 1832, Clay came out with a speech that emphasized the importance of the tariffs for the country’s full recovery.

The second component of Clay’s system was the establishment of the national bank because, at the beginning of the 19th century, the charter of the First Bank of the US had expired. The American System suggested creating, or, in other words, re-establishing the bank that will strengthen the national currency, regulate the risks imposed by small local banks, and advocate the commerce. Thus, the 2nd attempt of founding the Bank of the US happened in 1816, when the charter was extended for twenty years.

This stage also caused numerous disputes, increasing the tension between the southern and the northern regions. Many businesses opposed this process, claiming that the bank was for the rich and limited the opportunities for others and the local banks. After the 2nd charter for the national bank expired, despite all Henry Clay’s efforts, the country stepped in “a free banking” period.

The third proposition of the American System was active infrastructure development. The aim was to create a system that would connect the roads and canals around the country. The influence that such connectivity could create lied in the minimization of the regional conflicts within the US. More substantial ways of transportation were believed to enhance the economy, trade, and create advantages for different distant areas.

When the bill for Maysville road was passed, President Jackson prohibited it under the explanation that the government should not finance the construction establishments in single states. During that period, besides the conflicts, many roads were built, which later created the National Road that connected many cities and rivers.

Because of the discords among different regions in the US, the public met Henry Clay’s system with different views. Some were supporting his ideas, when it benefited a particular area, while others were opposing specific suggestions. Still, the significance of the American System lies in the fact that the components proposed by Henry Clay helped the country to grow and strengthen the country’s economy during the first half of the 19th century.

Clay‘s American System Explained
Source: https://apprend.io