The Mises Institute monthly, free with membership
Volume 16, Number 3
Henry Clay: National Socialist
by Thomas J. DiLorenzo
While American "liberals" tend to view Franklin Delano Roosevelt, Lyndon Johnson, and
as their political and philosophical idols, conservatives at the Weekly Standard
magazine and elsewhere have begun touting Henry Clay as their first political icon.
But Henry Clay can only be considered to be a "conservative" if conservatives embrace the
economics of national socialism, for that is what Clay devoted his entire forty-year
political career to. If that is the legacy contemporary conservatives want to claim, then
proponents of free markets, property rights, and limited constitutional government should
have no use for conservatism.
Lincoln was the first Republican president and considered himself the
political heir to Clay, whom Lincoln eulogized in 1852 as "the beau ideal of a statesman" and the
"great parent of Whig Principles." "During my whole political life," Lincoln stated, "I have
loved and revered [Clay]
as a teacher and leader."
the moment Lincoln first entered political life," writes Lincoln biographer Robert W. Johannsen,
"he had demonstrated an
unswerving fidelity to the party of Henry Clay and to Clay's American System, the
program of internal improvements [i.e., corporate welfare for railroad and steamship
businesses], protective tariffs, and centralized banking."
Clay was a corrupt statist who spent his political career promoting
mercantilism, protectionism, inflationary finance through central banking, and military
adventurism in the quest for empire. Upon entering Congress in 1811 he helped persuade the
government to attempt to conquer Canada, which it tried to do three times. He waged a
thirty-year battle with James Madison, John C. Calhoun, Andrew Jackson, and other
defenders of the Constitution over federally funded corporate welfare.
Presidents Madison and Monroe both vetoed so-called "internal improvements" bills
sponsored by Clay that
would have been the very first federally funded pork-barrel programs. Clay was the
fiercest congressional proponent of protectionism from the War of 1812 until his death
forty years later. He used his power as Speaker of the House in the early 1820s to push
through the first protectionist trade bill in U.S. history.
Dissatisfied that the new tariffs "fell short of what many of my
friends wished," he
then sponsored the notorious 1828 "Tariff of Abominations." Raising tariff rates to 45 percent of
the value of imported products
nearly precipitated a secession crisis as the South Carolina legislature nullified the
tariff, refused to collect it, and forced the federal government to back down. The tariff
was reduced in 1832.
At the time, about 80 percent of all American exports came from the
southern states. Since Southerners purchased virtually all of their manufactured goods
from Europe or Northern industrialists, they paid a grossly disproportionate share of the
tariff and considered it to be an illegitimate and unconstitutional tool of political
plunder. Clay apparently threw a fit on the floor of the House of Representatives after
this bitter defeat and promised that he would someday "defy the South, the President,
and the devil"
himself to raise tariffs once again.
Henry Clay was a lifelong promoter of central banking and participated in
a pitched political battle with President Andrew Jackson over the rechartering of the Bank
of the United States in 1831--a battle that Jackson won. One reason Clay was such a strong
central banking was that he saw it as a tool for lining his own pockets. The Second Bank
of the United States was chartered in January 1817 and quickly led to the nationwide
depression of 1819. But Speaker of the House Clay saw to it that branch banks were opened
in his home state of Kentucky and were managed by his political cronies there, enabling
them to reward their political supporters with cheap credit.
Having incurred an incredible $40,000 in personal debt through ten years
of high living in Washington, D.C., Clay left Congress for a term in 1822 to become
general counsel of the Bank of the United States. He was paid a salary as well as per-case
fees, and was also given large holdings of real estate in Ohio and Kentucky for his "services." By
the time he resigned to
become secretary of state in 1825 he "was pleased with his compensation," writes Clay
biographer Maurice Baxter.
One of Clay's first public statements as secretary of state was to
endorse a policy of genocide toward American Indians. The Indians' "disappearance from the
at a cabinet meeting, "will be no great loss to the world." He "did not think them, as a race,
These statements helped pave the way for the federal government's
cruel ethnic cleansing of the Cherokee nation, forcing everyone to walk from North Georgia
and East Tennessee to Oklahoma during the winter of 1838.
Approximately 100,000 Cherokees were dragged from their homes, which were
then burned and plundered by federal soldiers. One-fourth of the Cherokees died along the
way. Men, women, and children wept for the entire journey, which came to be known as the
Trail of Tears.
Henry Clay died in 1852 without seeing his "American System" put fully into place. But the
man who eulogized him at his Washington, D.C., funeral service, Abraham Lincoln,
implemented it fully during his administration. The National Currency Act of 1862
established central banking and fiat currency; massive subsidies were given to railroads,
the steamship industry, and hundreds of other rent-seeking businesses; tariffs were
increased threefold and remained high for decades; an internal revenue bureaucracy was
created; and the federal government was massively centralized.
After the war the federal government completed its program of ethnic
cleansing by killing off most of the Plains Indians and putting the survivors on
reservations where, as General William Tecumseh Sherman, commander of the "Indian Wars,"
put it, "they can be watched." By 1890 Henry Clay's "American System" had finally been
Thomas DiLorenzo teaches economics at Loyola College.
FURTHER READING: Maurice G. Baxter, Henry Clay and the American System
(Lexington: University Press of Kentucky, 1995); Robert V. Remini, Henry Clay:
Statesman for the Union (New York: W.W. Norton & Co., 1991); Glyndon Van Deusen,
Life of Henry Clay (Westport, Conn.: Greenwood Press, 1964).