In order to fully understand the American School, one must go back to its late eighteenth century beginnings. These are manifested in a man, Alexander Hamilton, and his manuscript, the Report of Manufactures. As a Founding Father, philosopher, and inaugural Treasury secretary, he strongly believed that the United States would never gain full socioeconomic autonomy unless comprehensive financial independence were achieved. This could come about through the presence of a strong federal government capable of promoting viable educational opportunities, incentives for domestic capitalism, and sufficient public welfare programs. Hamilton reasoned that all of these, and much more, combined would form an economy so vigorous and inherently self-promoting that the nation would never be forced to rely on another to solve its problems.
After Hamilton's loss in his now infamous duel, the ideas he fostered were further developed by economists Friedrich List and Henry Carey. List coined the phrase "National System" and Carey described this as a "harmony of interests" between not only management and laborers, but the agricultural, manufacturing, and mercantile sectors. He also vociferously denounced class warfare with the observation that when the economy is running at sufficient speed, members of all fiscal strata benefit in one way or another. Henry Clay, the extremely powerful three term speaker of the House, agreed and brought the National System squarely into the realm of politics.
Clay replaced the word "National" with "American" and set off on a spectacular marketing campaign. Giving specifics and modernizing Hamilton's platform to some extent, the American System ultimately consisted of three interconnected planks. The first was a perpetually high tariff rate designed to discourage foreign trade and incentivize purely domestic industrial activity. The second pertained to the establishment of a national bank in order to foster commerce by controlling currency rates. The third entailed large subsidies for an unparalleled transportation infrastructure.
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