henry clay and the "american system" -- 7/10/15

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Today's selection -- from What Hath God Wrought by Daniel Walker Howe. Henry Clay was one of America's political giants in the first half of the nineteenth century, and pioneered the "American System" that was later adopted by Abraham Lincoln and the Republican Party. Its main tenents were internal improvements (what we now would call "infrastructure") subsidized by the federal government and an anti-free trade policy characterized by protective tariffs:

"Henry Clay's hometown of Lexington, Kentucky, was a thriving commercial crossroads with a diversified economy. Located in the fertile Bluegrass country, it boasted the first newspaper and the first library west of the Appalachians, as well as Transylvania University, founded in 1798. There the aspiring young Clay had earned fame as a trial lawyer and money as counsel to banks and insurance companies. On his plantation, Ashland, just outside town, Clay grew hemp with a labor force of some fifty slaves. He also invested in the rope factory at Louisville that used his raw material. His wife, Lucretia Hart Clay, the daughter of a prominent local merchant and manufacturer, made the perfect plantation mistress, combining social graces with financial good sense. Henry Clay's political philosophy was his private life writ large. As his own career synthesized commerce, agriculture, and industry with public service, so the Kentuckian aspired to create a harmony of varied economic interests in the United States as a whole. Clay called his program for the nation 'the American System.' 'I am executing here [at Ashland], in epitome, all my principles of Internal improvements, the American System, &c.,' he correctly observed. Clay's American System was a full-blown systemization of the Republican nationalism that had found expression in Madison's message to Congress after the War of 1812.

Ashland

"As Clay envisioned it, the American System constituted the economic basis for social improvement. It would create, not division between haves and have-nots, but a framework within which all could work harmoniously to improve themselves both individually and collectively. To achieve this goal, Harry of the West was more than willing to enlist the power of government. Through sale of its enormous landholdings, the federal government could well afford to subsidize internal improvements. By levying protective tariffs, the government should foster the development of American manufacturing and agricultural enterprises that, in their infancy, might not be able to withstand foreign competition. The promotion of industry would create a home market for agricultural commodities, just as farms provided a market for manufactured products. Farmers and planters would benefit not only from increased sales to the cities and towns that would grow up around industry but also from the increased value of their lands as internal improvements connected them with markets. Clay could see that the policy of cheap land and rapid settlement favored by westerners like Thomas Hart Benton would multiply agricultural producers and production faster than existing markets could absorb, leading to cycles of overproduction and more panics like that of 1819.

"Clay's system was 'American' in a triple sense. Obviously, it purported to promote the welfare of the nation as a whole. But it was also 'American' in its assertion of national independence against the 'British system' of unregulated free trade. The Kentuckian feared that a passive policy of economic laissez-faire would leave America in a neocolonial relationship to Britain, the economic giant of the day. Britain, Clay pointed out, protected her own domestic interests with tariffs like the 'corn laws' while pressuring other countries to practice free trade. In a third sense, Clay also used the term 'American System' to apply to his hemispheric trade policy. He was willing, indeed eager, to include Latin America as part of his home market. Clay wanted to synthesize the Madisonian Platform with the Monroe Doctrine. The American System was directed against European, particularly British, commercial hegemony, not against sister republics of the New World."