A National Strategy

One of the USA's greatest innovations was the American school, or system, of economics. Partly created by Alexander Hamilton and John Q. Adams, and pioneered by Henry Clay and Daniel Webster of the Whig party, it was a economic plan consisting of three main points. 1. Establishment of a central, national bank, that would issue credit from the government, rather than borrowed from private banks. 2. Use of selective protective tariffs or taxes on imports, and occassional government subsidies for industry 3. Improvement of physical infrastructure.

This national system was distinct from Mercantilism, Adam Smith's free market Capitalism, and the socialist models of Marx and his followers.This system was the dominant one used by the U.S. from about 1820 until about the mid 1940's, when Keynesian policies took over. Under the American system we became the largest economy in the world with the highest standard of living -surpassing the Brits by 1880. Some notable early achievements, infrastructure-wise, include the Erie Canal, the Cumberland Road, and the Union Pacific Railway (Private industry was regulated to make sure national needs were met)

The South, and Andrew Jackson, opposed the plan: Plantation owners needed cheap manufactured goods from abroad (they now would cost more due to tariffs) and their cotton would be in less demand. Jackson was opposed because he feared bankers, ... he sought to protect the 'common man.'

After Abe Lincohn's election in 1860, he implemented the national plan of Hamilton, Clay,List, and Carey, in its entirety, and as a result, the industrial and manufacturing capacity of the U.S. took off like a rocket in the 1870's.

President Woodrow Wilson partly ended the program in 1913, with the creation of the Federal Reserve System.

Parasitic speculation largely caused the Stock market crash of 1929, triggering the Great Depression.

The Smoot-Hawley tariff of 1930 remains a much debated law- did it really worsen the Depression ? It was signed into law AFTER the market crash, and tariffs usually work unless other nations enact retaliatory measures. Canada soon raised its duties, but a nation can do so with purposes other than retaliation. FDR undid most of the Smoot- Hawley act in 1933, but the economy really didn't improve until war production ended the crisis, in about 1940. The debate continues...(Smoot-Hawley wasn't really part of our normal national economic strategy, because the tariff was considered to be excessive by any standard).

Roosevelts New Deal partially revived the American national policy, blending it with Keynesianism. Although it did not completely work, the New Deal definitely softened the blow.

The mixed Keynesian-national system prevailed here until 1973, when President Nixon cut the tariffs, went off the gold standard, and ended the Bretton Woods economic structure. Currencies were allowed to 'float.' Every American administration since Nixons's has followed basically the same economic model -Monetarism: massive deregulation, privitization and 'contracting out'... 'Free trade' and 'globalization' are really terms for the block transfer of enormous amounts of money across borders i.e.,' corporatism.'

People imagine that the dominant economic school for the last 200 years has been the classical, liberal, free market policies advocated by Adam Smith and David Ricardo, but they are wrong- the American, national strategy competed with the 'British' system and won.

(Incidentally, two countries were able to end the Great Depression within their own countries in less than 24 months- Nazi Germany, and pacifistic Sweden. They achieved this by implementing modified Keynesian ideas).