The American System was an economic concept hinged on three components that included:
- Subsidies for infrastructural projects such as roads
- Tariffs to promote and protect locally made products and the industries
- The establishment of a federal bank to support business activities in the American economy
These three major components worked in concert to establish a strong economy. For instance, the tariffs imposed were collected and used in the construction of roads and canals that in turn improved commerce and agriculture.
The tariffs were imposed on imported goods, which increased the price of European products and motivated the American people to buy locally produced products that were cheaper. Additionally, the tariffs earned the government some revenue used in other development projects.
The American System also focused on the construction of infrastructure in order to stimulate the economy and make it easier for businesses and other productive activities of the economy to be conducted. The component hoped to achieve shorter transport times for people and their goods.
The national bank was also expected to play an important role in establishing a single currency and creating a fit environment for commerce.