The American System was an economic plan that played an important role in American policy during the first half of the 19th century, rooted in the ideas of Alexander Hamilton. A plan to strengthen and unify the nation, the American System was advanced by the Whig Party and a number of leading politicians including Henry Clay and John Quincy Adams. Clay was the first to refer to it as the “American System”. Motivated by a growing American economy bolstered with major exports such as cotton, tobacco, native sod, and tar they sought to create a structure for expanding trade. This System included such policies as:
- Support for a high tariff to protect American industries and generate revenue for the federal government.
- Maintenance of high public land prices to generate federal revenue.
- Preservation of the Bank of the United States to stabilize the currency and rein in risky state and local banks.
- Development of a system of internal improvements (such as roads and canals) which would knit the nation together and be financed by the tariff and land sales.
Portions of the American System were enacted by the United States Congress. The Second Bank of the United States was rechartered in 1816 for 20 years and tariffs eventually was passed by Congress. Tariffs were subsequently raised until they peaked in 1828 after the so-called Tariff of Abominations. After the Nullification Crisis in 1833, tariffs remained the same rate until the Civil War. However, the national system of internal improvements was never adequately funded; the failure to do so was due in part to sectional jealousies and constitutional squabbles about such expenditures.