American System

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The American System was a system of economic policies that Henry Clay invented. It was based off of Alexander Hamilton's American School and was largely promoted by the Whig Party. It also became the basis of the Republican Party's economic policies in its early days. The American System was finally implemented during the Lincoln Administration and set the stage for the Gilded Age and the second wave of the Industrial Revolution. The American System mainly consisted of three components:

1. Pass high tariffs (taxes) on imports to protect American businesses and to increase revenues.

2. Re-establish a Bank of the United States (original charter had expired in 1811) in order to stabilize US currency and state banks.

3. Develop and support internal capital improvements, primarily consisting of designing and constructing roads and canals.[1]



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