American System (economics)
The American System, was an economic regime pioneered by Henry Clay which created a high tariff to support internal improvements such as road-building. This mercantilist system represented the legacy of Alexander Hamilton, who in his Report on Manufactures argued that the U.S. could not become fully independent until it were self-sufficient in all necessary economic products; the opposing view, represented by Thomas Jefferson and later by the Confederacy, maintained that the U.S. were better off as an agrarian nation with a plantation economy -- which, the proponents of the American System argued, would represent a feudal society, as desired by the British.
The high tariff was supported by New England, which had a heavy manufacturing base, because it protected the factories from foreign competition and allowed higher prices. The South, on the other hand, produced cotton for export and feared retaliatory tariffs on its products from other countries.
Among the important improvements created under the American system were the Erie Canal and the Cumberland Road. Perhaps the most important 19th Century proponent of American System economics was Abraham Lincoln's advisor, Henry C. Carey, author of The Harmony of Interests.
