Jan. 31, 2018—In an op-ed published in the Washington Post on the eve of President Trump’s State of the Union address, Senate Democratic minority leader Chuck Schumer urged the President to propose “a substantial investment in our nation’s infrastructure.” Among the historical examples which he raised was none other than Whig leader Henry Clay, whom he said was known for advocating a “program of `internal improvements’ such as roads and canals to link together a growing America.”
Henry Clay, who served as both a Congressman and Senator from the 1810s to the 1840s, is indeed an appropriate example—and not just because the Whig Party was the precursor of the Republicans (a fact Schumer apparently used to “stick it” to the Republican President). Clay, along with his colleagues John Quincy Adams and John Calhoun, was the statesman who popularized Treasury Secretary Alexander Hamilton’s economic program as the “American System.” His campaign took off big time with a major Congressional speech in 1824 in favor of a protective tariff, but his program actually was comprised of three planks: 1) Protective Tariffs, 2) a National Bank, and 3) Internal Improvements.
What Clay–and his devotee Abraham Lincoln – understood was that the Federal government had to take responsibility for developing the nation as a whole, using its Constitutional powers. To do so required sovereign control over its national currency and credit, fostering of technological advance in industry and agriculture, and building a national infrastructure of transportation (among other areas). No one part of this program would function without the other two.
It’s not at all clear that Schumer was proposing following Clay’s example. But if Democrats were to take Schumer’s citation seriously, they would not only steer the Democratic Party away from “free trade,” but immediately take up a campaign for the only means for funding the crucial infrastructural investments the United States needs, a National Bank. Such a bank, like the Second National Bank, must function as a source of Federally-backed, long-term, low-interest credit. With the support of Clay and President Adams, Second National Bank President Nicholas Biddle provided that credit to create one of the nation’s greatest expansions of infrastructure by investing in canals and railroads.
Through the backing of government bonds, along with dedicated income streams to pay the interest, such a bank today would not balloon the deficit, but, if it invested correctly, would rebuild the nation. By supporting construction of a high-speed rail network, nuclear power plants, and the space program, for example, a new National Bank would dramatically increase the productivity of the economy—as hasn’t been seen what’s called the Golden Era between 1948 and 1973–leading to a rapid rise in living standards that hasn’t been seen for the working population since that period.
Henry Clay was bitterly aware of the necessity for the National Bank, because, as he admitted, his major political error during his career was to have opposed the re-chartering of Hamilton’s First National Bank of the United States in 1811. As a result, the United States went into the War of 1812 not only without military preparedness (thanks to the previous Jefferson-Gallatin concentration on debt payoff), but without control of its own currency. It was left at the mercy of private banking pirates, and narrowly escaped total disaster.
Clay learned his lesson. He fought Andrew Jackson’s destruction of the Second National Bank, and sought to rally the nation for the American System as a philosophy of government. To get a taste, read these words from his 1830 speech to a Society of Mechanics in Cincinnati, Ohio, when he was fighting for the life of the Bank.
With respect to the American System, which demands your undivided approbation, and in regard to which you are pleased to estimate much too highly my service, its great object is to secure the independence of our country, to augment its wealth and to diffuse the comforts of civilization throughout society. That object, it has been supposed, can be best accomplished by introducing, encouraging and protecting the arts among us. It may be called a system of real reciprocity, under the operation of which one citizen or one part of the country, can exchange one description of the produce of labor with another citizen or another part of the country for a different description of the produce of labor. (emph. added)
It is a system which develops, improves and perfects the capabilities of our common country, and enables us to avail ourselves of all the resources with which Providence has blest us. To the laboring classes it is invaluable, since it increases and multiplies the demands for their industry, and gives them an option of employments. It adds power and strength to our Union by new ties of interest, blending and connecting together all its parts, and creating an interest with each in the prosperity of the whole. It secures to our own country, whose skill and enterprise, properly fostered and sustained, cannot be surpassed, those vast profits which are made in other countries, by the operation of converting the raw material into manufactured articles. It naturalizes and creates within the bosom of our country all the arts, and mixing the farmer, manufacturer, mechanic, artist, and those engaged in other vocations, together, admits of those mutual exchanges, so conducive to the prosperity of all and every one, free from the perils of the sea and war.
These noble aims, he knew, could only be achieved by Federal government direction of the nation’s credit through a National Bank, investment in infrastructure, and protection of labor.
Democrats who are intent on restoring American prosperity should seize Schumer’s opening. Learn the lessons of the leaders of the American System of Economics—Hamilton, Clay, Lincoln, and FDR–and act.
Tags: Chuck Schumer, Henry Clay, infrastructure, Second National Bank