Regional v National Interests (College Board AP® US History)

Timeline

Summary

In the early 19^th century, the United States was transitioning from its revolutionary roots into a developing nation with growing internal and external pressures. The country faced challenges in balancing its regional interests while fostering national unity. The War of 1812 exposed national economic instability and highlighted disagreements about the federal government’s role in regional economics. The war revealed significant weaknesses in the nation’s infrastructure, financial systems, and capacity to respond to crises.

American economic system

After the War

• Expenses from the War of 1812 meant that the U.S. government required a reliable source of credit when it needed funds

  • By the end of the war:

    • There had been no national bank for four years 

    • The U.S. was heavily in debt

  • This led to economic instability

• The Charter for the First Bank of the United States ended in 1811

  • This left the government struggling to finance the war

  • There was insufficient money to improve infrastructure and roadway systems 

    • This meant they could not support the movement of men and supplies during the war

• To stabilize the economy and regulate currency, Congress approved a charter for the Second Bank of the United States in 1816

American System

• In a speech in January 1816, Henry Clay proposed an economic system to stabilize the nation after the War of 1812

• Clay called it the American System, and it had three distinct parts:

  • Federal funds

  • Tariffs

  • National bank

Federal funds 

• Federal funds were for:

  • internal improvements to connect centers of business to the frontier

  • building roads and canals like the Erie Canal and the National Road

  • repairing existing roads 

Tariffs 

• The Tariff of 1816 was the first protective tariff Congress approved for imported goods

• The Tariff of 1816 covered:

  • goods already produced in the United States (such as glass, carriages, and paper)

  • new industries in the United States (such as the production of axes, nails, and buttons)

  • luxury goods that were not produced in the United States

The national bank

• A national bank, the Second Bank of the United States (1816-1836)

• The bank:

  • stabilized the economy by regulating currency and credit

  • managed federal funds

  • provided loans to businesses to promote economic development

Opposition to the American System

• Opponents of the American System believed that national funds should not be used to pay for regional expenses and development

  • Southern states felt the American System favored Northern industries instead of the South’s more agricultural economy 

  • Historians believe the American System helped deepen the regional and sectional divisions that ultimately led to the Civil War