TAKE OUT YOUR NOTES ON THE AMERICAN SYSTEM FROM YESTERDAY! WRITE DOWN YOUR HOMEWORK.

Trade Barrier Homework Take out your homework from before break and review your responses with your seatmates.

ECONOMIC NATIONALISM Learning Target 3: Economic actions of the government impact the nation. Alexander Hamilton James Madison James Monroe Henry Clay

How a Tariff Works At this point, for Americans, which cloth is cheaper? What might happen to the American business? Once the tariff is added, which cloth is cheaper? What two groups benefits from the tariff? Who is hurt by the tariff? If you were the British government, what would you do to American goods coming in to your country? Once the tariff is added, which cloth is cheaper? What two groups benefits from the tariff? Who is hurt by the tariff? If you were the British government, what would you do to American goods coming in to your country?

The U.S. after the War of 1812 After the U.S. signed the Treaty of Ghent, the American people intensified their national pride and unified under the Democratic- Republican party This is known as the era of good feelings since most of the U.S. was “getting along” and grew in nationalism Although national pride increased, the nation’s economy needed reconstruction and direction Madison and the following Presidents implemented a plan called the American System. It was mainly promoted by Henry Clay, a member of Congress. It was a three part plan to unify and strengthen the economy. It was meant to bring balance to agriculture, commerce, and industry.

Important Economic Terms Means of Spending: the programs or items that a group chooses to invest their capital in Embargo: stops exports or imports of a product or group of products to or from another country (usually for political reasons) Regulation: any law or decision made by the government to control the economy in any way Subsidy: A government grant of money to domestic producers to encourage exports (sometimes seen as a tariff in reverse) Trade Barrier: any type of regulation meant to restrict or lessen trade between two countries or groups (tariff, embargo, license, quotas, etc.) Tariffs: Taxes on imports (items from other countries) What is confusing to you? What questions do you have?

American System Simulation To understand what the American System is you are going to take on the role of an economic think tank that advises the President on economic issues You will be posed with three issues/problems: You will be given options You will rank the options and give a justification for your top pick You may be asked to share your choice You will take notes as you go. After each round you will be told what the actual solution was

Scenario 1 The economy is struggling after the War of Although trade with Europe is slowly increasing, you need to make a quick fix to a bigger problem. Many of the states and many businesses nationally are poor or are in debt and need money to build themselves back up economically. As the President’s economic think tank, which of the following is the best solution to the above problems? Rate the options from 1-4 and give a reason for your #1 option. Lower federal taxes so that everyone has more money that they can keep. Ignore the problem. The government should not grow too controlling or powerful. Things will get better over time. Go to war with neighboring countries to get their resources and use them to help those in need. Create a national bank to manage the nation’s money and use it to give loans to those in need.

American System Step 1 Three Part Economic Plan meant unify/nationalize the U.S. economy The 2nd National Bank- Collected tax money, gave loans, and boosted business James Madison signed the re-charter and it lasted for 20 years.

Scenario 2 After the war, many U.S. factories in the North are struggling to make ends meet. European factories are able to sell textiles and other manufactured products at a lower price and U.S. factories in the North are struggling as a result. Northern factories try to build their business back up by charging higher prices on their products. Unfortunately, American people are poor and instead they buy these products from a cheaper source, England and Europe. Southern cotton farmers are doing well, though, and they are able to export much of their cotton to England’s growing textile market. They don’t want England to place a tariff on the cotton they export into Europe. Americans in the West are hoping the government will do anything to raise enough money to pay for new roads, railroads and canals to move goods to the west. As the President’s economic think tank, which of the following is the best solution to the above problem? Rate the options from 1-4 and give a reason for your #1 option. Have the government give the factory businesses subsidies (Money to boost their business) Issue an embargo on Europe. This way, Americans are forced to buy American products. Create a tariff on European imports. This will make European goods more expensive and make American prices more competitive Ignore the problem. The government should not grow too controlling or powerful. They can fix their own problems.

American System Step 2 Three Part Economic Plan meant unify/nationalize the U.S. economy Tariffs to protect American manufacturing- Help factories compete with foreign factories and use taxes for internal improvements

Scenario 3 Farmers in the recently purchased west are struggling in two areas: 1) It is difficult for them to transport all the supplies and materials they need to start out in the unsettled West 2) They are unable to efficiently transport all of their harvested goods to a market since they are in unsettled territory. All of their buyers are in the East. At the same time, Americans in the North and South are complaining about government imposed taxes. As the President’s economic think tank, which of the following is the best solution to the above problem? Rate the options from 1-4 and give a reason for your #1 option. Encourage the farmers to move back to cities in the east so that they have a definite and successful job, Develop and pay for transportation systems out to the west such as steamships, bridges, roads, and railroads. Develop a trade agreement with Native Americans, Canada, and Mexico so the Western farmers have a closer market that they can bring their goods to. Ignore the problem. The government should not deal with a problem that only helps one section of the country.

American System Step 3 Three Part Economic Plan meant unify/nationalize the U.S. economy Federally funded internal improvements- Connect the country and boost agriculture through trade within the country

The American System Proposed by Henry Clay Meant to bring balance to agriculture, commerce, and industry Three Part Economic Plan meant unify/nationalize the U.S. economy 1.A new National Bank- Collect money, make loans, and use money to fund internal improvements 2.Tariffs to protect American manufacturing- Help factories compete with foreign factories and use taxes for internal improvements 3.Federally funded internal improvements- Connect the country and boost agriculture through trade within the country

Which section of the country would least benefit the American System? Why?

Exit Slip Answer on a post it The American System, the government’s plan to help balance farming, industry, and trade in the U.S. economy after the War of 1812, had three parts to it. What are the three parts to the American System? 2 nd National Bank; Tariff; Internal Improvements (Railroads, bridges, etc.) On the bottom of your post it let me know how well you’re understanding today’s lesson…. √++ to √-