The Tariff Of 1816: A Case Study

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After the War of 1812 Congress adopted a provision for a second Bank of the United States. American manufacturers needed to be protected against British imports’ low prices, but as part of the idea of internal improvement, the government was going to need someone to finance such improvements. After the first national bank disappeared, each state started to form their own banks. Eventually lack of regulations flooded the economy with multiple currencies causing a first sharp recession and then a prolonged depression during the late 1830s and 1840s. As a result, instability and chaos resulted in the banking sector.
Economy, Slavery and Jackson
In 1816, Congress adopted a provision for a second Bank of the United States (BUS) that was to be located in Philadelphia. In return, the bank had to handle the government’s funds without charge, lend the government up to $5 million upon demand, and pay the government a cash bonus of $1.5 million (Tindall & Shi,
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British manufacturers had quite an advantage over American manufacturers in regards to product efficiency, trading networks and of course the capability to offer lower prices. Consequently, the Tariff of 1816 came into place protecting the American interests by imposing tariffs on imports.
Eventually, the desire to grow and progress internally accelerated commercialization creating a “market revolution” (Tindall & Shi, 2013). Henry Clay promoted the “American System” with 3 important measures: 1) high tariffs for imports, 2) high prices for federal lands and 3) a strong national bank. Clay’s promotion of this system was based on the idea that America could succeed on having a sustainable economy (About.com, 2015). Unfortunately with the collapse of crop prices and the decline of land values America was again facing a financial

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