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An unsuccessful candidate for the presidency five times, “Harry of the West” served in the cabinets of several presidents. As Speaker of the House and later as a leading senator, the “Great Compromiser” helped to avert southern secession and civil war by promoting the Second Missouri Compromise in 1821 and the Compromise of 1850. Clay began his political career as a Jeffersonian opponent of the Hamiltonian program of national banking and internal improvements. But his economic nationalism was a natural progression from the fear of British power that he manifested as a War Hawk during the War of 1812. Of Britain he wrote: “She sickens at your prosperity, and beholds, in your growth—your sails spread on every ocean, and your numerous seamen—the foundations of a power which, at no very distant day, is to make her tremble for her naval superiority.”
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Like Hamilton and Washington, Clay came to consider domestic manufacturing to be an essential element of US national security: “We should thus have our wants supplied, when foreign resources are cut off, and we should also lay the basis of a system of taxation, to be resorted to when the revenue from imports is stopped by war.”
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“A GENUINE AMERICAN SYSTEM”

In a two-day oration in the House of Representatives on March 30 and 31, 1824, Speaker of the House Clay argued that the United States should have a machine-based economy of its own, in order to meet the challenge posed by the industrial supremacy of Britain: “But Britain is herself the most striking illustration of the immense power of machinery. . . . A statistical writer of that country, several years ago, estimated the total amount of the artificial or machine labor of the [British] nation to be equal to that of one hundred millions of able-bodied laborers. . . . In the creation of wealth, therefore, the power of Great Britain, compared to that of the United States, is as eleven to one.”

Clay continued: “But there is a remedy, and that remedy consists in modifying our foreign policy, and in adopting a genuine
AMERICAN SYSTEM
.” In support of a federal policy of protection and promotion of infant industries, Clay cited the policies “of the Edwards, of Henry the Great, of Elizabeth, of the Colberts, abroad; of our Franklin, Jefferson, Madison, Hamilton, at home.” Then he quoted at length “the master spirit of the age”—Napoleon. “I at first confined myself merely to prohibiting the web,” Clay quoted Napoleon as saying, “then I extended the prohibition to spin cotton; and we now possess, within ourselves, the three branches of the cotton manufacture, to the great benefit of our population, and the injury and regret of the English.”
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During the Napoleonic Wars, Napoleon had promoted the Continental System in France and French-occupied Europe, a program of government sponsorship of industries undertaken in response to Britain’s blockade. Napoleon’s Continental System and Clay’s American System had the same geopolitical purpose: economic independence from Britain, the first industrial superpower.

Clay’s American System had three major elements: infant industry tariffs, internal improvements, and a sound system of national finance.

Under the leadership of Clay, Congress revised the tariff in 1816 to protect American industries. Imports on all manufactured goods averaged 40 percent, while tariffs on imported agricultural products were also increased—in some cases amounting to 60 percent.
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Clay also promoted the use of funds from federal land sales to finance internal improvements like canals and railroads. Clay opposed proposals to allow settlers to buy federal lands at low prices, because that would reduce the funds for infrastructure projects. The federal government owned a vast amount of land, but land sales were never a major source of federal revenue. Tariffs provided 85 percent of the revenue for the federal government before 1860.
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Federal land grants to railroads eventually fulfilled this part of Clay’s program.

The third element of the Hamiltonian triad that made up Clay’s American System was national finance. Although he opposed the renewal of the charter of the first Bank of the United States in 1811, he supported the creation of the second bank in 1816, and from 1822 to 1824, between stints in Congress, he was paid as the bank’s general counsel. Critics pointed out that he profited in other ways from the policies he promoted, including tariffs on imports of hemp, a source of rope fibers, which he grew on his plantation.

OLD HICKORY

By the second decade of the nineteenth century, Jefferson, Madison, and Gallatin had reconciled themselves to aspects of the Hamiltonian system for national economic development such as the second Bank of the United States and some degree of federal support for manufacturing and internal improvements. But a new generation of southerners and their northern allies in the tradition of Jefferson proved to be more radical in their rejection of federal authority than Jefferson himself had been.

None was more influential than “Old Hickory”—Andrew Jackson, the hero of the Battle of New Orleans, who was elected twice to the presidency, in 1828 and 1832. Unlike the genteel and educated Virginians Jefferson, Madison, and James Monroe, Jackson, a Tennessean born in South Carolina, was a product of the Scots-Irish frontier culture with its machismo and suspicion of refinement. He first achieved renown as the hero of the Battle of New Orleans in 1814, a victory over the British won several weeks after peace had been negotiated, something that neither the American nor British combatants at New Orleans knew because of the primitive state of communications at the time. Jackson had won additional fame with his role in the bloody Creek Indian War of 1813. In 1819, Secretary of War John C. Calhoun recommended the censure of then-general Jackson for his actions during the Seminole War of the previous year, which included an unauthorized invasion of Spanish Florida and the execution of two British nationals. Clay’s support for the censure motion, which Congress rejected, earned him Jackson’s lifelong hatred.

Jackson’s campaign for the presidency in 1824 had played on popular anti-intellectualism. The Harvard-educated northeastern patrician John Quincy Adams, the son of the second president of the United States, John Adams, was ridiculed for calling observatories “lighthouses of the skies,” as though there could be such a thing. When the electoral college delivered the presidency to Adams, Jackson was furious and convinced that Clay had engaged in a “corrupt bargain” to deliver electoral votes to Adams in return for a place in Adams’s cabinet as secretary of state. Jackson was finally elected president in 1828, but forgive and forget was not the code of the southern backcountry. Jackson was a man of violent hatreds who had a bullet lodged in his body from one of his many duels, in one of which he had killed his opponent. With Jackson’s defeat of Clay, the Hamiltonian framework for the development of the American economy would be shattered.

THE TARIFF OF ABOMINATIONS AND THE NULLIFICATION CRISIS

In 1828 the tariff, last revised in 1824, was revised again, to protect American industries. Ironically, this measure was supported as a gambit by Jackson’s running mate and vice president Martin Van Buren. Van Buren hoped to appeal to manufacturers in the North. He gambled that southern voters would acquiesce in the tariff.
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Southerners and northern supporters of free trade denounced the 1828 tariff as the “Tariff of Abominations,” and South Carolina threatened to “nullify” the law, by refusing to collect the duties at Charleston. When President Jackson threatened to use force to enforce the law, South Carolina backed down.

The crisis led to the Compromise Bill of 1832, brokered in part by Clay. The average tariff would be diminished from 40 percent to 20 percent over the decade to 1842.
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The influence of the southern Democrats was seen in the Tariff of 1846, which imposed average duties on the major imports to 27 percent. This regime remained in place with few changes until 1861.

The Nullification Crisis divided Jackson from some of his fellow southerners. But on other issues he represented the views of the southern slaveowner elite, who were increasingly hostile to the federal government.

The tariff crisis had been about more than the tariff. At issue was the fear of southern slaveowners that federal power might be used to legislate the abolition of slavery. The conclusion that the protection of slavery in the South meant that federal power of any kind had to be crippled explains the transformation of South Carolina senator John C. Calhoun from a nationalist who shared Clay’s support for federally sponsored internal improvements and the Bank of the United States into the leading philosopher of states’ rights and the “concurrent majority,” by which he meant a regional southern veto on all national action. In a letter of September 11, 1830, Calhoun explained: “I consider the tariff act as the occasion, rather than the real cause of the present unhappy state of things. The truth can no longer be disguised, that the peculiar domestic institution of the Southern States and the consequent direction which that and her soil have given to her industry, has placed them in regard to taxation and appropriations in opposite relation to the majority of the Union, against the danger of which, if there be no protective power in the reserved rights of the states they must in the end be forced to rebel, or, submit to have their paramount interests sacrificed, their domestic institutions subordinated by Colonization and other schemes, and themselves and children reduced to wretchedness.”
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The desire to cripple federal authority in order to protect slavery explains why, after Britain’s abolition of slavery in 1830, the South’s leaders became far more hostile to federal government activism than Jefferson, Madison, and Gallatin, who during and after the War of 1812 had accepted the need for many elements of the Hamiltonian program of national development such as support for internal improvements and domestic manufacturing.

THE MAYSVILLE ROAD VETO

In 1830 the National Road, begun in 1811, was still far from completion. President Jackson relished the chance to veto a bill to authorize federal funding of a turnpike between Maysville and Lexington, Kentucky, the home of his adversary Henry Clay. Jackson’s vice president, Martin Van Buren, told a friend, “I had the most amusing scenes in my endeavors to prevent him from avowing his intentions before the bill passed the two houses.”
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In his veto message of May 27, 1830, Jackson argued that the Maysville Road, even though it was part of an interstate road, was a purely local project and declared that internal improvements, while important, should be left to the states and private enterprise.

In his veto message, Jackson made it clear that he did not object to state-sponsored internal improvements or truly national projects, however defined. But his veto of the Maysville Road had lasting consequences. In succeeding years, Congress would pass appropriations for small-scale road and “rivers and harbors” improvements. But not until the Federal Aid Road Act of 1916 would the federal government commit itself again to the project of building a national road system, a project that would culminate in the 1950s with the creation of the Interstate Highway System.

THE BANK WAR

The most important national economic institution to fall victim to Andrew Jackson was the second Bank of the United States (BUS). The bank, with twenty-nine branches by the 1830s, was the largest corporation in the United States and an inviting target for attacks based on economic interest or Jeffersonian ideology. The bank had been chartered in 1816 and its charter would be up for renewal in 1836. Its president was Nicholas Biddle, who could not have been more unlike Andrew Jackson.

Born into a patrician family in Philadelphia, Biddle was a child prodigy, nicknamed “Grammaticus” by his classmates. Biddle entered the University of Pennsylvania at the age of ten. When he was refused permission to graduate because of his age, he transferred to Princeton, graduating as the valedictorian of his class at the age of fifteen. As an unpaid clerk to an American envoy to France, the young Biddle toured Europe as far as Greece. On his return, he became an attorney, a member of the Pennsylvania state legislature, and man of letters, editing the
Port Folio
, an important national literary journal. In 1819, after he was appointed a director of the second Bank of the United States, Biddle helped Langdon Cheves of South Carolina rescue the bank from insolvency. On becoming president of the bank in 1822, Biddle showed that he understood the functions of a central banker, regulating the money supply and keeping state banks in check. Under Biddle, the local branches of the bank also facilitated the transfer of credit and funds throughout the United States.
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In his first year as a banker, Biddle described his transition from man of letters to banker in verses he penned for a young lady’s album:

I prefer my last letter from Barings or Hope

to the finest epistles of Pliny or Pope;

my “much-esteemed favors” from Paris, to those

which brought on poor Helen an Iliad of woes;

one lot of good bills from Prime, Bell, or the Biddles,

to whole volumes of epics or satires or idyls;

nay, two lines of plain prose with a good name upon it

to the tenderest fourteen ever squeezed in a sonnet.

Why, I would not accept—not for Hebe’s account—

the very best draft from Helicon’s fount,

nor give—this it grieves me to say to their faces—

more than three days of grace to all the three Graces.

Then their music of spheres! can it thrill through the soul

like kegs of new dollars as inward they roll?

and Cecilia herself, though her lyre was divine,

never gave to the world notes equal to mine.
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Although his sympathies lay with the Hamiltonian tradition identified with National Republicans like Adams and Clay, many of whom would move in 1843 into the new Whig Party, Biddle had voted in 1828 for Jackson. Jackson, however, shared the suspicion of government-chartered corporations expressed in 1825 by Thomas Cooper, the dean of the Jeffersonian school of political economy: “These institutions are founded on the right claimed by government, to confer privileges and immunities on one class of citizens, not only not enjoyed by the rest, but at the expense of the rest. . . . Generally in this country, it has glutted itself by incorporating banking companies, insurance companies, canal companies, and manufacturing companies of various descriptions. All these are increasing daily, the list of nuisances.”
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