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Introduces Henry Clay and the three parts of his American System: high tariffs, internal improvements, and support for a national bank. It also explains the early debates over infrastructure funding and constitutional authority.
one of these new Republicans and former warhawks was Henry Clay and Clay will quickly rise to a leadership position within the Democratic Republican party I mean he was already in his second term as Speaker of the House theleader of the majority Party in the House of Representatives by 1816.his ideas were based on a loose construction view of the Constitution allowing the government to do more to protect and grow the economy in the country to do what is necessary and proper the three main points of HenryClay's American system are high tariffs internal improvements and bringing back the national bank or supporting the national bank before and after it went away we'll start at the top high tariffs now remember tariffs are taxes on trade anda high tariff is meant to make foreign Goods more expensive in order to push the sales of domestic or home created or grown products clay thought the US was too reliant on foreign industry and goods so he pushed
for the building up of Industry within the United States one Tariff was passed in 1816 but this will become a major issue in the late 1820s and the early 1830s we'll deal with that in unit 3.so that's high tariffs not a ton to explain on that we've talked about tariffs before he wanted to hire tariffs and he'll get a couple passed two nearly disastrous results for the last two the second Point here isinternal improvements this is government financial support and development of more or better infrastructure infrastructure is basic systems needed for society and economies to function roads and canals then highways airports and Telecommunications today lack of or bad infrastructure sloweddown travel and commerce isolated areas away from traded markets and Clay argued it was the government's job to solve this the bad or lack of infrastructure to keep the nation connected geographically he wanted to pay for these by
sale of lands in the west a system going back to the land ordinance of 1785.therefore the system also encouraged westward expansion it simply meant the building and maintenance of roads and canals paid for by the national government but there were several problems with this one the states wanted control of projects entirely withintheir own borders but not really possible because they're paid for by the national government so if if a canal was being built just within the state of New York New York would want control of that but they didn'tpay for it so clay would argue that the national government would oversee it uh give an example by definition an interstate highway would be one that is in multiple States just like International Trade enter is between multiple countriesnow interestingly Hawaii has three interstates what's the problem with that it's an island how can you have a highway between Hawaii and anywhere else despite the dictionary definition a highway is designated as an interstate if the national government
paid for it there's never was a plan to build a 2 500 plus mile bridge but you see the idea you have an interstate entirely within a single state and the state's going to want control of that butthe national government funded for it now we have we've worked that out now but back then that was something that they hadn't so that's the first problem is that the states want to control projects if they were withintheir own state second is the strict and loose construction debate the Constitution did not specifically state that the government could do this the opposition to this cited strict construction as the main argument against internal improvements even Monroe thepresident didn't think the government had this power so anytime the Congress led by Clay would get projects passed Monroe would be against it and would block those projects either before they became a bill or through the power of
veto
Explains the political and regional problems with the American System, including opposition from strict constructionists and critics outside the Northeast. It then shows why Clay's ideas mattered for nationalism, economic growth, and the strict versus loose construction debate.
um this led to sort of the summary of internal improvements or the the general outcome here that the lack of support from the national government led to States dealing with infrastructure for the next hundred years the national governmentreally doesn't get involved with this with infrastructure until the 1920s and 30s in particular so that's internal improvements the third is the National Bank now as I mentioned the Democratic Republicans had gotten rid of the First Bank in1811.this made paying for the War of 1812 almost impossible on the national level and to fill the vacuum left by the the removal of the National Bank State the states and particularly State Banks will rise in its placea state bank is one approved and regulated by a single state so like the First Bank of Texas for example the number of State Banks jumped in 1811 there were 88.
in 1816 there were 208 there were no Nash there was no national government regulation to keep these banks in check it was very much going back to a system much like the under the Articles where the states controlledFinancial issues because they had the banks and the national government didn't really have a way to do it anymore each rank printed their own money which led to 200 plus forms of paper currency this was a total disasterand dim and to their credit the Democratic Republicans realized that that they needed to bring the bank back uh Madison was the president at that point in 1816 it was before the election that year and Congress proposed abill to bring it or Madison proposed bringing it back Congress supported it which is sort of what ironic because Madison was the leading critic one of the leading critics of the First National Bank when it was proposed and
created by Hamilton now now to these in the state of power realizing oh that actually was a good idea loose construction is fine remember the strict and loose construction Madison was against it way back when in the 1790sbecause he was out of power and therefore strict construction but now that he's in power and it's his decision he's okay with it because he's he's taking the loose construction approach this will lead to massive issues this thisperiod without the National Bank and a Supreme Court case we will talk about here in a little bit but first the significances of uh or sorry the problems of the American system in general so we've moved we're donewith National Bank we're now talking about the American system in general again the problems of the American system first the older Democratic Republicans thought it was unconstitutional right following a strict construction approach and they do not support any
of these ideas or at least the last two in particular second this puts more power in the hands of the national government which again many people and politicians did not support particularly the Old Guard and third it wasbelieved to mostly benefit New England the northern Northeast uh part of the country so there wasn't it lost a lot of support with the South and with the West so there were two big sections of the country thatsaw this as benefiting the Northeast so they didn't really support it themselves the significance of Clay's system four significances of the system in general first nationalism remember when I talked about clay the first time he was a nationalisthe believed in doing what was best for the most number of people based on the government doing good for the whole country so the first significance is that this was definitely a nationalistic approach based on the government doing
good for the whole of the country or the most number of people which itself kind of goes back to the public good part of public good and elitism for Hamilton's ideas second these three ideas Were Meant to bolsterthe entire economy and to get everyone to work together the high tariffs supported industry and Manufacturing by protecting U.S Commerce from foreign trade internal improvements supported agriculture by making the transport and sale of goods easier the National Bankwould provide a system of State a stable system to regulate both economic uh to regulate both remember that to both regulate and support economic growth while western land sales to pay for all of this opened up new settlementand expansion opportunities really this was the first policy of its kind all of these things were to a benefit of a different segment of society and they all fed into each other it's a pretty brilliant little system third
this is another fantastic example of the strict and loose construction debate especially once again how positions change once the position related to the position of power and over time I gave you the example with Madison he was strictconstruction when he was out of power against the bank now that he's in power he's not only for it in loose construction but he's bringing it back himself with Congress fourth and final significance for clay himself oh Iforgot I had different slides I am sorry we were stuck on that there's the internal Improvement slide there's a national bank and Second Bank of the United States that they bring back the State Banks and now we're problemsand significance I am sorry about that I'm not going to re-record 10 minutes of a lecture because I was so into it I forgot to flip slides um fourth and final significance for clay himself he stuck to this
ideology because he believed in it no matter what as I mentioned when I introduced him a couple lectures ago he ran for president three times and he lost each time that's because his plan was nationalist it didn't actuallyfavor not really one part of the country which is generally what you want in government policy but that doesn't win elections remember we talked about Dewitt Clinton and his campaigning in the in the election of 1812 clay didn'tdo or his his supporters didn't do any of that so he campaigned on the American system always no matter what no matter what was going on in the country it was the American system and that didn't change andhe didn't evolve that to fit what was going on at the timeso that's the American system those are the significances the national approach to it the fact that it was you know three ideas working together to benefit every aspect in of society in every region of the country another example
of strict and loose construction and for clay himself he stuck to his guns on it and that caused him to have some setbacks politically but also cost him the the presidency each time he ran
Shifts to the Supreme Court case McCulloch v. Maryland, which arose from Maryland's tax on the Second Bank of the United States. The chapter covers the Court's ruling on constitutional authority, judicial review, compact theory, and the broader significance of the case.
what we're going to finish with this video is to look I mentioned that there was an important Supreme Court case that came out of what happened with the bank so we're going to look at that Supreme Court casethis is McCulloch versus Marylandwhen the Second Bank of the United States returned in 1816 admit that those State Banks would now be regulated and many of them as a result closed however the state of Maryland decided that they liked their own StateBanks better and didn't want to follow the National Bank now here's an explanation to help understand all of this the National Bank had a central location in Philadelphia and they had a branch in every state we understand Bankbranches yes there's one headquarters and then smaller Banks spread around for example Chase Bank uh is headquartered uh uh is everywhere right they're they're everywhere but their headquarters is in one place probably Delaware because that's where a lot
of banks are headquartered because of State rules that favor credit card companies and Banks so there's a branch but the main headquarters was in Philadelphia Maryland had about 20 different State Banks not including branches that's just the differentbanks so the remote there was more than that because of branches they would all be subject to regulation under the Second Bank of the United States and the national government not wanting that Maryland decided to place a taxon money that only affected the second National Bank branch in their state not the whole Bank of the United States just the the branch of the bank in Maryland so it was a tax put on the transactions thatoccurred at the Maryland branch of the National Bank so not the State Banks the branch the branch the branch of the National Bank in Maryland a cashier at the Maryland branch of the bank named James McCulloch I just
have one slide for this James McCulloch hence McCulloch versus Maryland um issued money that had not been taxed by Maryland so the state sued him for breaking the law the case goes through the courts in Maryland which ruledthat the constitution said nothing about Banks and thus the Second Bank was unconstitutional basically the state of Maryland the courts of the state of Maryland or rather sorry sorry let me start this over basically the state of Marylanddeclared the bank unconstitutional and believed they could because of compact theory that the states create and interpret the Constitution this wasn't nullification though because this wasn't about enforcement this is just the compact Theory the reason they thought theycould overrule the National Bank through their courts was because the States created the Constitution the states interpret the Constitution but that wasn't as we know that's not the case it's compact theory is not correct contract theory is about
the people created the Constitution
um the case is appealed up to the Supreme Court and the man pictured here Chief Justice John Marshall the Court ruled that the national government had the so this is the what what Supreme Court ruled what scotus ruledthat the national government had the authority to create the national bank and they cited the precedent of the First Bank of the United States that had been approved and existed for 20 years that's the first rulingthat the the national the national government had the authority to create uh the National Bank therefore it was constitutional second it's specifically the court specifically struck down the arguments for compact Theory and by extension nullification the state didnot create the U.S the court said the people did contract theory uh the interpretation of the Constitution therefore was up to the courts through judicial review as they had previously established in Marbury versus Madison back in 1803.
so the court in the second part of the ruling specifically struck down the arguments for compact Theory third the Court ruled that creating the bank fell under the necessary and proper clause of the Constitution which is a keypart of the loose construction argument so they defended the constitutionality of the bank by saying it falls under necessary and proper fourth and Final it struck down Maryland's tax of the bank as unconstitutional through their power of judicialreview the court used your judicial review to strike down the tax as unconstitutional the significance of this case there are five number one the Supreme Court specifically approved the Second Bank of the United States as constitutional so theSupreme Court approved the second bank and argued that the second bank or any National Bank is constitutional second they specifically struck down compact Theory and by extension nullificationthird they reasserted their power of judicial review the power of the courts to interpret the Constitution they didn't establish it that was a previous case they're now reasserting it saying we have this power and we're using it right
we're using this power to show that it's it's the right idea of how to interpret the Constitution not nullification
uh fourth it reaffirmed National authority over the states in the matter of law partially the supremacy clause we talked about but this is basically the national government saying yes we we have a say over you States the nationalgovernment has authority over the states in the matters of law again ties back to the supremacy clause fourth and final this is a major support for the loose construction argument of the Constitution so McCulloch versus Maryland was incrediblysignificant it's it's bringing together many of the things we've talked about into one Supreme Court case related to the bank we have the bank we have strict and loose construction we have compact Theory uh we have a supremacyclause we have necessary and proper there's a lot of things we talked about that sort of come together and uh in this one case so that is this set of uh uh the ideas of the uh sorry this
is the ideas of the American system under clay and one of the outcomes of it McCullough versus Maryland what we're going to look at next is two other major events of the era