John Quincy Adams's Presidency

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What were three major components of the “American System?"

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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...

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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.

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I assume that you are asking about the economic policy that was promoted by people like Henry Clay and, before him, Alexander Hamilton.  This was a policy that was meant to create the sort of national economy based in part on manufacturing that these leaders preferred to have.  There were three main aspects of the American System.  These were a tariff, a national bank, and federal subsidies for “internal improvements.”

Let us look at each of these in turn.  A tariff was something that leaders wanted because they felt it would promote American manufacturing.  It would increase the prices of imported goods, making it easier for domestic goods to sell.  The national bank was meant to create a stable currency.  It would issue money that would not lose its value.  This would make business more predictable in the US.  Finally, “internal improvements” were meant to improve the ability of people to trade within the US.  These improvements were to the country’s transportation system.  The point was to make things like better roads to promote the movement of goods from place to place.

With these three components, Clay and others like him hoped to create a stronger national economy.

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