1810 James Madison - Planting the seeds of "The American System"

In 1809, Congress passed the Non-Intercourse act with both France and Great Britain hoping to force them into respecting American neutrality and open up trade with her.   But instead of bringing either country to heel, the Non-Intercourse act led to the British sustaining the Orders in Council and led to more seizure of American ships by both Britain and France.   The impact of this led to an overall decline in the American economy, but at the same time forced American industry to become more reliant on a domestic market for it's materials and less dependent on foreign trade.   President James Madison recognized this and in his 1810 address to Congress, he shared the good news that domestically the country was rebounding.  Agriculture was thriving and manufacturing was expanding.   The two were feeding off each other and creating new jobs.   But more than that, there was a rising nationalism and a sense of pride in America.   This rising nationalism was showing itself not only in the hard work and ingenuity of the people, it was also showing in the policies which fostered the development of domestic markets.   Madison considered this to be "justly regarded" as more than fair compensation for the hardships and losses resulting from the injustice brought on by Great Britain and France.  Madison suggested that it was these injustices that were the "general impulse" that got it all started.  

"I feel particular satisfaction in remarking that an interior view of our country presents us with grateful proofs of its substantial and increasing prosperity. To a thriving agriculture and the improvements related to it is added a highly interesting extension of useful manufactures, the combined product of professional occupations and of household industry. Such indeed is the experience of economy as well as of policy in these substitutes for supplies heretofore obtained by foreign commerce that in a national view the change is justly regarded as of itself more than a recompense for those privations and losses resulting from foreign injustice which furnished the general impulse required for its accomplishment."

Then Madison asked Congress to consider how far additional legislation could go to "to guard the infancy of this improvement in the distribution of labor by regulations of the commercial tariff is a subject". 

How far it may be expedient to guard the infancy of this improvement in the distribution of labor by regulations of the commercial tariff is a subject which can not fail to suggest itself to your patriotic reflections.

These words must have been music to the ears of the young senator Henry Clay from Kentucky.  Henry Clay was assigned to fill the seat of Buckner Thruston who resigned to serve as a circuit court Judge.   It was Clay's second time appointed a Senator.  He was sworn in as Senator once before in December of 1806, but only served 2 months.  In 1810,  Henry Clay was only 33 years old; he served his first term while under the required age of 30.   Henry Clay would go on to serve a total of 49 years in various positions as Senator, Speaker of the House, and Secretary of State.   Throughout Clay's political career, he developed and pushed a national economic plan he called "The American System".  In 1832, Henry Clay delivered a defense of the "The American System" in a speech that spanned 3 days in  Congress.   In the speech he described the economic plan having three parts that reinforce each other.

1. Tariffs to protect American Industry
2. A National Bank
3. Federal spending on roads, canals and other "internal improvements"

Clay built on top of the economic principles first developed by the First Secretary of Treasury Alexander Hamilton.  The "American System", which ran counter to federalism became one of the main planks of the Whig party.   Perhaps it was this speech by James Madison in 1810, that helped to plant the seed in Henry Clay's mind.  It would be many years before Henry Clay would see his "American System" come to full growth.  The first signs of it budding would not be until after the war of 1812 when Henry Clay and John C. Calhoun worked with Congress to pass the tariff of 1816 with the help of James Madison (see Madison Protecting American Manufacturing , Tariff of 1816).  

http://www.presidency.ucsb.edu/ws/index.php?pid=29452
The Rise of American Democracy:  Jefferson to Lincoln by Sean Willentz (2006) pgs. 142-143
http://ebusinessinusa.com/2462-embargo-acts.html
https://en.wikipedia.org/wiki/Henry_Clay
http://edmannino.com/blog/henry-clay-and-the-american-system-a-blueprint-for-american-business/
http://www.senate.gov/artandhistory/history/common/generic/Speeches_ClayAmericanSystem.htm
Henry Clay The Essential American, David S. Heidler and Jeanne T. Heidler (2010)
https://upload.wikimedia.org/wikipedia/commons/9/92/Henry_Clay.JPG
https://upload.wikimedia.org/wikipedia/commons/c/c3/Hartmann_Maschinenhalle_1868_%2801%29.jpg