The American System: Topic 5 Lesson 6 KEY
(Page 318-321)
After the War of 1812, leaders such as Calhoun, Webster, and Clay had to deal with serious economic
issues. Despite the nation’s great physical growth and the soaring spirits of its people, the United
States economy faced severe problems. This was due in part to the lack of a national bank.
The charter that had set up the first Bank of the United States ran out in _1811_. Without the Bank to
lend money and regulate the nation’s money supply, the economy suffered. State banks made _loans_
and issued _money__. However, they often put too much money into circulation. With so much money
available to spend, prices _rose__ rapidly.
Why did Democratic Republicans such as Jefferson and Madison oppose a national bank? ___________
___they saw it as unconstitional___________________________________________________
They thought the Constitution did not give the federal government the right to charter corporations,
such as a national bank. By 1816, however, many Democratic Republicans believed that a bank was
needed. They supported a law to charter the second Bank of the United States. By _lending______
_____money___ and ___restoring __order___ to the nation’s money supply, the Bank helped
American businesses grow.
Policies Protect Against Foreign Competition. Another economic problem facing the nation was foreign
competition, especially from __ Britain____. What two events helped keep most British goods out of
the United States? _______ Embargo Act_______ and __________War of 1812__________.
In response, ambitious American business leaders such as ____Francis_____ ____Cabot_______
____Lowell____ established their own mills and factories. As a result, American industry grew quickly
until 1815.
Domestic Problems Caused by Foreign Goods. With the end of the War of 1812, British goods again
poured into the United States. Name two reasons the British could make and sell goods more cheaply
than Americans could. They had a head start in manufacturing goods (older country). And their buildings
and machines had already been paid for. Americans still had to pay for their factories. British
manufacturers hoped to put American rivals out of business. Then, the British planned to raise prices.
Regional Impact of Tariffs. This British strategy caused dozens of New England businesses to fail.
Why did angry business owners ask Congress to place a protective tariff on all goods imported from
Europe? Tariffs are taxes on imported goods. Taxing imports would make domestic products cheaper to
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The American System: Topic 5 Lesson 6 KEY
(Page 318-321)
purchase and would bring more money to American business owners.
Congress responded by passing the Tariff of 1816. It greatly raised tariffs on imports. The Tariff of
1816 impacted the North, West, and South differently because each region had a different economy.
What was the base of the North’s economy? _____manufacturing_______________________.
American factories sold more products, and businesses grew. The economies of the South and West
relied heavily on ____farming____. Goods like cloth and iron became more expensive to southern and
western consumers. Northerners gained income as a result. Higher tariffs led to angry protests.
Lacking factories, southerners did not benefit from the tariff. Also, Southerners bought many
___British___ goods. Why did Southerners object to the tariffs? ____They felt that it made the
northern manufacturers rich at the expense of the South.
Henry Clay Combats Sectionalism. The bitter dispute over tariffs contributed to the growth of
sectionalism. Americans identified themselves as ___southerners____, ___northerners____, or
____westerners______. In Congress, representatives from different sections often clashed.
Henry Clay devised a plan called the ____American_____ ___System_____, which called for high
tariffs on imports. This would help northern factories.
Clay felt that the money from taxes should be used by Congress to build roads, bridges, and canals. A
better transportation system, he believed, would make it easier and cheaper for farmers in the West
and South to ship goods to city markets. In reality, even though tariffs remained high, Congress spent
little on ____internal___ __improvements___- new roads, bridges, and canals. Southerners in
particular disliked Clay’s plan.
Why did some Americans think Clay’s plan for developing transportation with federal support was
unconstitutional? They did not believe the federal government had the authority to build such
projects.
They believed that by regulating industry and building roads and canals, the federal government would
gain too much power.
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