Henry Clay’s American System

Definition

The American System was an economic plan proposed by Senator Henry Clay that called for high tariffs to support internal improvements such as road-building, and a national bank to foster commerce.

Analogy

Think of this like a family budget plan where you decide to save money on eating out (tariffs) so you can fix up your house (internal improvements) and open a savings account for future needs (national bank).

Related terms

Tariff of 1816: A protective tariff designed to aid American industries; part of Clay's American System.

Erie Canal: A canal project that exemplified the type of internal improvements supported by Clay's American System.

Second Bank of the United States: The national bank chartered during James Madison's presidency; it embodies the financial aspect of Clay's American System.