The Rise and Fall of the American System: Nationalism and the Development of the American Economy, 1800-1837

Published by EH.NET (March 2010)

Songho Ha, The Rise and Fall of the American System: Nationalism and the Development of the American Economy, 1800-1837. London: Pickering and Chatto, 2009. xiii + 184 pp. $99 (hardcover), ISBN: 978-1-85196-999-9.

Reviewed for EH.NET by Jenny Wahl, Department of Economics, Carleton College.

This slim volume is part of a series on American financial history edited by Robert Wright. Although little new information or analysis appears in the monograph (a revision of the author?s dissertation), it is a compact summary of the concept and history of the American System that gathers together useful statistics on roll-call votes, obligations of the Second Bank of the United States, white and slave populations, federal expenditures for internal improvements, and land sales during the early Republic and antebellum periods. The thrust of the book is fairly conventional, although Ha does draw attention to one alleged feature of the American System ? its emphasis on cultural improvement ? more than most commentators. But he de-emphasizes what I consider a crucial factor that led away from the American System in the 1830s ? the underlying sectional tensions over slavery.

The book begins by exploring the phrase that gives rise to the title. Conceived by Alexander Hamilton and midwifed by Henry Clay (and, to a lesser extent, John Quincy Adams), the ?American System? began as a vision of a politically united, self-sustaining nation independent of Europe and especially England. The idea expanded over time to include specific programs designed to achieve this vision, such as high tariffs, federal spending on internal improvements, a national bank, and methods to disperse public lands.

The remainder of the book follows a historical timeline, touching upon Jeffersonian policies, the Missouri compromise, various tariff acts, controversies over the First and Second Banks of the United States, the nullification crisis, the Second Great Awakening, the financial panics of 1819 and 1837, and the Maysville Veto. Ha highlights one fascinating historical about-face: John C. Calhoun, father of the nullification doctrine and rabid states?-rights advocate by the 1830s, had earlier staunchly supported a national bank, urged federal spending on transportation to bind the union together more tightly, and aggressively pushed for high protective tariffs.

Arguably, the new spin in the book is its underscoring of the cultural dimension of the American System. Ha claims that John Adams supported education but only had time and energy during his administration to create the Library of Congress. Likewise, Jefferson, Madison, and Monroe apparently advocated establishing a national university but occupied themselves with other endeavors while in office. John Quincy Adams argued strenuously for ?social improvement,? although Henry Clay advised him that a national university was a hopeless proposition. The American System may have given lip service to the nation?s cultural betterment, but Ha?s book does not leave me convinced that this was really a key element of the program.

Ha, currently an assistant professor of American History at the University of Alaska-Anchorage, is clearly a champion of the American System and its supporters. At times, he seems almost starry-eyed: he states that the ?supporters of the American System … tried to push what they believed was good for the union, rather than what was popular with their constituents? (p. 93); they ?were forward-looking and progressive people [whose] main issue … was how to improve the United States? (p. 132). He characterizes the main issue for Jacksonians, on other hand, as ?how to stop the federal government from meddling in their lives and economics? (p. 132). The underlying subtext for the rival factions, however, was slavery. Although Ha acknowledges that slavery and the cotton economy tended to isolate the South, I think he could have gone farther with this theme ? states?-rights advocates, at bottom, worried most about federal ?meddling? with the peculiar institution.

What is more, Ha fails to grapple with the thorny question of whether the American System at its heart was necessarily ?good for the union.? He includes a striking quote from a speech by John Tyler, who argued that protective duties would actually operate as a tax on farmers by increasing the prices of necessities (p. 66). Yet Ha does not explore Tyler?s prescient statement. Tariffs impede free trade, impair the workings of comparative advantage, and indeed raise prices for domestic consumers, ceteris paribus. The main beneficiaries of tariffs are import-competing domestic producers (and, to some extent, the Treasury). Whether this result was truly ?good for the union? is not adequately examined in Ha?s book.

Ha?s epilogue claims that the American System died during Jackson?s reign but rose again, Lazarus-like, during the Civil War. He lists the Morrill Tariff, the National Bank Act, the Pacific Railroad Act, and the Morrill Land Grant Act as evidence, saying that ?George Washington, John Adams, Thomas Jefferson, James Madison, James Monroe, Henry Clay, and John Quincy Adams would have been pleased to know that their dream of national improvement was on its way towards implementation, despite the tumults of the Civil War? (p. 133). This seems a slight mischaracterization ? federalists and anti-federalists, like the poor, were and are always with us. The Whigs picked up the nationalist banner in Jackson?s time and maintained a strong political presence until the formation of the Republican Party. And the recent Tea Party movement and antics by Texas Governor Rick Perry (who fervently believes his state still has the right to secede) suggest that opponents of the American System are certainly alive and kicking as well.

Jenny Wahl?s recent publications include ?Give Lincoln Credit: How Paying for the Civil War Transformed the U.S. Financial System,? Albany Government Law Review (forthcoming June 2010) and ?Blacks, Whites, and Brown: Effects on the Earnings of Men and Their Sons,? Journal of African American Studies (2009) (with Nathan Grawe). She can be reached at jwahl@carleton.edu.