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Op-Ed:
America’s forgotten economist
[The Center Square]
It is often forgotten, but America’s conservative
tradition was not based on free trade, but rather economic nationalism.
The American System became the basis of conservative economic policy.
This economic philosophy was developed by Secretary of the Treasury
Alexander Hamilton and the Federalists, continued by the Whigs under the
leadership of Henry Clay, and was eventually adopted by the Republican
Party. |
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 The American System called for tariffs to not only provide
revenues for the government, but also to protect the American economy, as well
as funding internal improvements, and a national bank. These ideas were also
referred to as the American School of political economy. Today these ideas are
often referred to as economic nationalism or economic patriotism.
Perhaps one of the more forgotten individuals from American
history is Pennsylvania’s Henry C. Carey (1793-1879), who was an influential
economist. Henry C. Carey was the son of Matthew Carey, an influential
publisher, friend of Benjamin Franklin, and an economist. Matthew Carey, just as
his son Henry, was influenced by the economic policies of Alexander Hamilton. In
1822, Matthew Carey published Essays on Political Economy, which reflected
Hamilton’s economic philosophy.
 Henry C. Carey followed his father and wrote extensively on political economy.
Carey was known as the “Philadelphia high priest of the tariff.” Carey’s
writings on political economy demonstrated that he was committed to the American
System. Carey also defended the American tariff system against the free-trade
system of England. Some of Carey’s works on political economy included
Principles of Political Economy, The Harmony of Interests, Principles of Social
Science, among other writings which were widely influential in 19th century
America. Carey believed that the tariff was not only important for the national
economy, but also for his home state of Pennsylvania.
Abraham Lincoln, a Whig supporter of Henry Clay and future Republican president,
was a student of political economy and was influenced by both Matthew and Henry
Carey’s ideas. In fact, Henry Carey would become an economic adviser to
President Abraham Lincoln and champion the American System during Lincoln’s
administration. Carey became the “apostle of protectionism,” and he believed the
Morrill Tariff Act to be one of the most important pieces of economic
legislation that was passed. Protectionism in the 19th century,
just as it is today, was a controversial political issue, but Carey’s influence
was reflective of the political economy of the Republic Party from President
Lincoln through President Herbert Hoover. During this time, the Republican Party
followed the American System, which included a tariff policy. The protective
tariff became a pillar of the economic policy of the Republican Party. The
Democrat Party tended to support more free trade and lower tariffs.
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Henry Carey, along with other economists such as
Friedrich List, became well known political economists during the
19th century and their ideas influenced the political economy of the
Republican Party until libertarian and classical liberal economic
ideas became more popular in the aftermath of World War II. Economic
theorists such as Friedrich Hayek, Ludwig Von Mises, and Milton
Friedman became dominant thinkers within the post-war conservative
movement and the American School of economic thought became
obsolete. The Republican Party was transformed from a party that
supported protectionism and economic nationalism to a party that
embraced free-trade and globalization. Republicans and conservatives
who were critical of the free trade ideology became almost
nonexistent. President Donald J. Trump’s victory in
the 2016 presidential election brought a change to Republican
economic policy by shifting back to the American School of
economics. President Trump campaigned on a platform of renegotiating
trade deals, and he often spoke about the dangerous loss of over
five million manufacturing jobs that had a devastating impact on the
middle-class. Economic nationalism or protectionism
was a centerpiece of President Trump’s America First economic
agenda. President Trump utilized tariffs to protect the steel
industry that was being decimated and he was the first to take on
the unfair trade practices utilized by communist China. President
Trump also advocated “Buy American” provisions and placed the
interests of the nation before globalization.
President Trump also advocated improving our national
infrastructure. The American System that Henry C. Carey supported
and defended was resurrected by President Trump’s administration.
Both President Trump and the COVID-19 pandemic awakened the American
people that the United States has outsourced too much of our
manufacturing to foreign countries.
This not only has economic consequences in terms of decimating the
middle-class, but it also impacts our national security.
It is still too early to see if the Republican Party will return to
the principles of the American System. Nevertheless, Henry C. Carey,
America’s forgotten economist and adviser to President Lincoln,
should no longer be just a footnote in history, but will once again
be a presence in the great debate over economic theory and policy.
John Hendrickson is policy director for Tax Education
Foundation of Iowa, a public policy think tank. John C. Mozena is
president of the Center for Economic Accountability, a nonprofit
organization working to improve state and local economic development
policy across America. |
