The American System

American System by Henry Clay

  • economic nationalism
  • protect American interests by using the federal government to help industrialists and their workers

o   Protective Tariff of 1816

o   Build new roads and canals linking Midwest and Atlantic

o   Re-establishment of the National Bank (1816 – 2nd National Bank)

 american system

Economic panics resulted from Boom and Bust cycle

  • common in capitalism
  • Boom – high consumer demand encourages more production
  • Bust – when expanded supply exceeds demand

o   Must cut back


Three great panics

  • 1819, 1837, 1857
  • Usually lasted a few years
  • Ripple effect