The American System of Economics as opposed to the British born Free Trade System
The American School, also known as the "National System", represents three different yet related constructs in politics, policy and philosophy. It was the American policy from the 1860s to the 1970s, waxing and waning in actual degrees and details of implementation. Historian Michael Lind describes it as a coherent applied economic philosophy with logical and conceptual relationships with other economic ideas.
It is the macroeconomic philosophy that dominated United States national policies from the time of the American Civil War until the mid-twentieth century. Closely related to mercantilism, it can be seen as contrary to classical economics. It consisted of these three core policies:
- protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70)
- government investments in infrastructure creating targeted internal improvements (especially in transportation)
- a national bank with policies that promote the growth of productive enterprises rather than speculation.
It is a capitalist economic school based on the Hamiltonian economic program. The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.
The American School's key elements were promoted by John Q. Adams and his National Republican Party, Henry Clay and the Whig Party, and Abraham Lincoln through the early Republican Party which embraced, implemented, and maintained this economic system.
During its American System period the United States grew into the largest economy in the world with the highest standard of living, surpassing the British Empire by the 1880s.
The Hamiltonian Economic Program was the set of measures that were proposed by American Founding Father and 1st Secretary of the TreasuryAlexander Hamilton in three notable reports and implemented by Congress during George Washington's first administration. These reports outlined a coherent program of national mercantilism- government-assisted economic development.
- First Report on Public Credit - pertaining to the assumption of federal and state debts and finance of the United States government. (1790)
- Second Report on Public Credit - pertaining to the establishment of a National Bank. (1790)
- Report on Manufactures - pertaining to the policies to be followed to encourage manufacturing and industry within the United States. (1791)