What Is the American System?
U.S. citizens, and even economists and historians in this country, have often never heard of the “American System” of economics which made our nation great. Worse yet, many confuse it with the British System of free trade and looting.
In the nineteenth century, however, our leading statesmen not only understood the American System, but promoted it, and campaigned for it, in their political speeches. They understood that our nation, even the world, was in a life or death battle against the British System of economics.
Americans must understand that their noble identity lies in fighting the British system of economics. That is the only pathway out of the current crisis.
Here, we begin a series of articles explaining the American System in the words of national leaders who implemented it, such as Alexander Hamilton, John Quincy Adams, and Abraham Lincoln. We begin with from the writings and speeches of President Lincoln’s economics adviser, Henry C. Carey, and President William McKinley, both before and after he entered the White House in 1896. The ferocity of the political battle between America and our historical adversary Great Britain, an implacable adversary of American System economics, is attested to by the fact that McKinley, America’s 25th President, was assassinated by British-linked anarchist Leon Czolgosz, six months after his election to a second term in 1900. The Anglophile Teddy Roosevelt, who reversed all of the Lincoln-McKinley economic policies, took office.
From Henry Carey’s Harmony of Interests, 1851
Henry C. Carey, adviser to Abraham Lincoln, and perhaps the leading American System economist, wrote extensively exposing the failure of the British free trade approach and demonstrating the success of the American System. The following comes from Henry Carey’s book, The Harmony of Interests, written in 1851.
“Much is said of `the mission’ of the people of these United States, and most of it is said by persons who appear to limit themselves to the consideration of the powers of the nation, and rarely to think of its duties.
“Two systems are before the world; the one looks to increasing the proportion of persons and of capital engaged in trade and transportation, and therefore to diminishing the proportion engaged in producing commodities with which to trade, with necessarily diminished return to the labour of all; while the other looks to increasing the proportion engaged in the work of production, and diminishing that engaged in trade and transportation, with increased return to all, giving to the labourer good wages, and to the owner of capital good profits. One looks to increasing the quantity of raw materials to be exported, and diminishing the inducements to the import of men, thus impoverishing both farmer and planter by throwing on them the burden of freight; while the other looks to increasing the import of men, and diminishing the export of raw materials, thereby enriching both planter and farmer by relieving them from the payment of freight. One looks to compelling the farmers and planters of the Union to continue their contributions for the support of the fleets and armies, the paupers, the nobles and the sovereigns of Europe; the other to enabling ourselves to apply the same means to the moral and intellectual improvement of the sovereigns of America. One looks to the continuance of that bastard freedom of trade which denies the principle of protection, yet doles it out as revenue duties; the other to extending the area of legitimate free trade by the establishment of perfect protection, followed by the annexation of individuals and communities, and ultimately by the abolition of custom-houses. One looks to exporting men to occupy desert tracts, the sovereignty of which is obtained by aid of diplomacy or war; the other to increasing the value of an immense extent of vacant land by importing men by millions for their occupation. One looks to increasing the necessity for commerce; the other to increasing the power to maintain it. One looks to underworking the Hindoo, and sinking the rest of the world to his level; the other to raising the standard of man throughout the world to our level. One looks to pauperism, ignorance, depopulation, and barbarism; the other in increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.
“Such is the true mission of the people of these United States…. To raise the value of labour throughout the world, we need only to raise the value of our own…. To improve the political condition of man throughout the world, it is that we ourselves should remain at peace, avoid taxation for maintenance of fleets and armies, and become rich and prosperous…. To diffuse intelligence and to promote the cause of morality throughout the world, we are required only to pursue the course that shall diffuse education throughout our own land, and shall enable every man more readily to acquire property, and with it respect for the rights of property. To substitute true Christianity for the detestable system known as the Malthusian, it is needed that we prove to the world that it is population that makes the food come from the rich soils, and food tends to increase more rapidly than population, thus vindicating the policy of God to man.”
Carey attacked British Free Trade economics as a system that destroys national agro-industrial productivity, reduces consumption, destroys freedom, and causes war:
“Two systems are before the world: on the one hand, that which is denominated protection, and on the other that which is denominated free-trade.
“A great error exists in the impression now very commonly entertained in regard to national division of labour, and which owes its origin to the English school of political economists, whose system is throughout based upon the idea of making England `the workshop of the world,’ than which nothing could be less natural. By that school it is taught that some nations are fitted for manufacturers and others for the labours of agriculture, and that the latter are largely benefitted by being compelled to employ themselves in the one pursuit, making all their exchanges at a distance, thus contributing their share to the maintenance of the system of `ships, colonies, and commerce.’ The whole basis of their system is conversion and exchange, and not production, yet neither makes any addition to the amount of things to be exchanged. It is the great boast of their system that the exchangers are so numerous and the producers so few, and the proportion which the former bear to the latter, the more rapid is supposed to be the advance towards perfect prosperity. Converters and exchangers, however, must live, and they must live out of the labour of others: and if three, five, or ten persons are to live on the product of one, it must follow that all will obtain but a small allowance of the necessaries or comforts of life, as is seen to be the case.
“The object of free-trade is proclaimed to be the increase of commerce, but commerce withers under it.
“We thus have here, first, a system that is unsound and unnatural, and second, a theory invented for the purpose of accounting for the poverty and wretchedness which are its necessary results.
“The object of what is now called free-trade is that of securing to the people of England the further existence of the monopoly of machinery, by aid of which Ireland and India have been ruined, and commerce prostrated. Protection seeks to break down this monopoly, and to cause the loom and the anvil to take their natural places by the side of the food and the cotton, and that production may be increased, and that commerce may revive….
“The object of protection has been, and is, to restore the natural tendency by which industrial manufacturing takes its place by the side of the producer of food (national self-sufficiency), thus reducing substantially transportation fees and middle men sales costs and bringing about the stabler self-sufficient communities and nations.”
McKinley vs. Free Trade
William McKinley was a U.S. Congressman in 1882 when he spoke on the tariff policy, and on the social conditions won for the people by nationalists associated with Abraham Lincoln. McKinley distinguished between a low tariff for purposes of collecting tax revenue only, and a higher tariff which deliberately protects native industries against trade war by foreign powers.
McKinley asked his fellow Congressmen: who originated the free trade, low tariff policy?
“Who has demanded a tariff for revenue only…. What portion of our citizens? What part of our population? not the agriculturalist; not the laborer; not the mechanic; not the manufacturer; [there is] not a petition before us, to my knowledge, asking for an adjustment of tariff rates to a revenue basis.”
Congressman McKinley answered his own question:
“England wants it, demands it–not for our good, but for hers; for she is more anxious to maintain her old position of supremacy than she is to promote the interests and welfare of the people of this republic, and a great party in this country voices her interest…. She would manufacture for us, and permit us to raise wheat and corn for her. We are satisfied to do the latter, but unwilling to concede to her the monopoly of the former.”
The future President then explained why the British system was not appropriate to the United States:
“…|Free trade may be suitable to Great Britain and its peculiar social and political structure, but it has no place in this republic, where classes are unknown, and where caste has long since been banished; where equality is a rule; where labor is dignified and honorable; where education and improvement are the individual striving of every citizen, no matter what may be the accident of his birth, or the poverty of his early surroundings. Here the mechanic of today is the manufacturer of a few years hence. Under such conditions, free trade can have no abiding place here.”
American System Agriculture
Five years later, on Dec. 13, 1887, Congressman McKinley spoke to a farmers’ organization called the Ohio State Grange. He set forth the political reasoning behind his agricultural policy. It was the policy of the American Revolution, and of Abraham Lincoln, who had given free land to family farmers. It was an argument for the practical realization of the democratic republic, against the European feudal system. What McKinley said is still valid today against the British-Swiss food cartels, and a rebuke to populists misguided by British anti-industrial propaganda:
“Tell me how land is held, and I can tell you almost to a certainty the political system of the coutry, its form of government, and its political character. When land is divided into small farms, the property … of those who till them, there is an inducement, ambition, and facility for independence, for progress, for wider thought and higher attainments in individual, industrial life. Over such a population no government but a free one, under equal laws and equal rights, with equal opportunities, can exist for any length of time. The small farm, thoroughly worked, was the ancient model, commended by the early sages and philosophers; as old Virgil put it, `Praise a large farm, cultivate a small one.’
“We must avoid in this country the holding of large tracts of land by non-resident owners for speculative purposes, and set our faces like flint against alien land-holding in small or large tracts. Our public domain must be re-dedicated to our own people, and neither foreign syndicates nor domestic corporations must be permitted to divert it from the hallowed purposes of actual settlement by real farmers.
“One of the great lessons of history is that agriculture cannot rise to its highest perfection and reach its fullest development without the aid of commerce, manufactures, and mechanical arts. All are essential to the healthy growth and highest advancement of the others; the progress of one insures the prosperity of the others. There are no conflicts, there should be no antagonisms. They are indispensable to each other. Whatever enfeebles one is certain to cripple the rest.”
Congress passed in 1890 a great protectionist tariff bill, which was known as the “McKinley Act,” in honor of its author who was the principal spokesman for the nationalist policy. McKinley commented that his 1890 Act had “no friends in Europe.”
Having been elected Ohio’s governor, William McKinley spoke in Boston Oct. 4, 1892, on the purposes of his legislation. He showed how the strong-central-government economic system, identified with American Revolution and with Lincoln’s American Union, improves life for the common people, as compared to the British Free Trade system:
“We … are opposed to British political economy…. Free trade shaves down [the workingman’s] labor first, and then scales down his pay by rewarding him in a worthless and depreciated State currency.”
On the question of federal government control of currency and credit, McKinley told the Boston crowd:
“The currency of this country should be as national as its flag. It should be as unsullied as the national conscience and as sound as the government itself. And there is not a business man or working man, no matter to what political party he belongs, if he will honestly vote his convictions, who will not vote against the party that proposes to re-establish a system under which this country lost millions upon millions of dollars. We have had all the Confederate currency we want. We are for a United States currency in some form for all time in the future. We are not only opposed to Confederate currency, but we are opposed to British political economy. We not only fight for our industries and our labor, that they may be prosperous and well-paid, but we insist that when they have earned their money they shall be paid in a dollar worth full one hundred cents. When a workingman gives ten hours a day to his employer–ten full hours–he is entitled to be paid in a dollar worth full one hundred cents. Free trade shaves down his labor first, and then scales down his pay by rewarding him in a worthless and a depreciated State currency.”
On the protective tariff, McKinley said:
“[Anti-nationalists say] that protection is unconstitutional…. I know of but one constitution which it violates and that is the constitution of the Confederate [slave] States…. But we are not operating under it. That instrument went down under the resistless armies of Grant and Sherman and Sheridan, and the constitution of Washington and Lincoln was sustained.
“Unconstitutional?…. They do not seem to know that the man who made the first Protective Tariff law we ever had, in 1789 … made the Constitution of the United States. James Madison, a member of the Constitutional Convention, and who afterwards became President … reported that bill to Congress. It passed the House of Representatives, composed … largely of members of the Constitutional Convention[,] … unanimously, and passed the Senate … by a vote of five to one, and in that body were a large number of men who made the Constitution itself. And that Protective Tariff law was signed by George Washington, President of the United States.
“They put into the preamble of that law … `We levy these duties to raise money to pay the debts of the government; to provide money for the expenses of the United States, and to encourage and protect manufactures in the United States….’
“Ah, but [the anti-nationalists] say, if you had not had the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or dear depends upon what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man.
“[It is said] that protection is immoral…. Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefitting mankind everywhere. Well, they say, `Buy where you can buy the cheapest’…. Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: `Buy where you can pay the easiest.’ And that spot of earth is where labor wins its highest rewards.
“What has this Protective Tariff law of 1890 done? Why, it has increased factories all over the United States. It has built new ones, it has enlarged old ones…. [For example, we] used to buy our buttons made in Austria by the prison labor of Austria. We are buying our buttons today made by the free labor of America. We had 11 button factories before 1890; we have 85 now. We employed 500 men before 1890, at from $12 to $15 a week; we employ 8,000 men now, at from $18 to $35 a week.
“…|Well, but, they said, this tariff law of 1890 was going to increase the price of necessaries of life, and was going to diminish the wages of labor. It has done neither. The necessities of life are cheaper today than they were 18 months ago. The commodities that go into the household of every man and woman are cheaper today … and the price of labor has increased to some extent.”
The McKinley Act of 1890 was a serious blow to British global power. Teddy Roosevelt’s intimate friend and guide, British diplomat Sir Cecil Spring-Rice, complained in a letter to London:
“We must count on the present tariff for a year and a half at least … probably for much longer. We must reconcile ourselves to it and look for new markets. A serious aspect of it is the reciprocity clause, which drives us out of the W[est] Indies and S[outh] America.”
McKinley was elected President in 1896, campaigning against the British Free Trade doctrine. He immediately put through Congress yet another bill increasing the tariff protection for American industry.
In the years of McKinley’s presidency, the U.S. economy surged ahead.
Comparing 1896 (the last year of his pro-Free Trade predecessor) to 1901 (when McKinley was murdered), the average value per hectare of farm production increased 48 percent, while industrial and mineral production increased as follows: copper +31 percent, lead +50 percent, coal +53 percent, zinc +73 percent, iron ore +80 percent, cement +111 percent, steel +155 percent, railroad rails +156 percent. (1) The dollar value of production increased, for locomotives and railroad cars +73 percent, musical instruments +125 percent, farm equipment +149 percent, ships and boats +211 percent, electrical equipment (industrial and commercial) +271 percent; meanwhile, the average hourly earnings for workers in all U.S. industry increased by an estimated 10 percent. (2)
•1. Guetter, Fred J., Statistical Tables Relating to the Economic Growth of the United States (Philadelphia: McKinley Publishing Co., 1924).
•2. Historical Statistics of the United States, 1789-1945 (Washington D.C.: U.S. Department of Commerce, 1949).
“Two systems are before the world…. One is the English system; the other we may be proud to call the American system … the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world….”
Henry C. Carey, economics adviser to Abraham Lincoln.
William McKinley, 25th President of the United States.
“Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave.”
“Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man.”
The British system: Southern blacks work the cotton fields in 1879, more than 15 years after the Emancipation Proclamation.
U.S. Steel Corporation
The American System: (left) U.S. steelworkers around the turn of the century; (right) the Manchester Locomotive Works in Manchester, N.H., circa 1870.