The American System’s Forgotten Hero

Part two of two: Mathew Carey understood how to mobilize economic ideas

The War of 1812 was a crucial trigger for the development of the American System. Alexander Hamilton had already provided a foundation of ideas and the conflict sparked a stronger sense of national identity. Henry Clay would lead a new generation of politicians interested in economic nationalism. But the American System would require an American School of journalists and economists to work with campaigners and businesses to help promote these ideas among the public. Mathew Carey performed a vital role in this process. His corpus of work included 59 pamphlets, between 30 and 40 newspaper essays, around 12 to 15 circulars to manufacturers, and about 10 memorials to Congress. It cost him $4,000 to publish and his post-1824 attentions were almost entirely focused on economic writing.

Like so many other contributors to the American System, Carey did not live in abstractions. Carey’s thinking had deep roots in the business world of Philadelphia where he had previously supported local tax reform and the First Bank of the United States as a Philadelphia Selectman and a director of the Bank of Pennsylvania. He was concerned with designing solutions tailored for the specific needs of his time and place, rather than making theoretical observations or pursuing a universal theory. Carey wanted practical national policy, embracing the scientific method and statistical evidence, collecting as much information as he could through the limited means of his era. That is not to say he lacked ideals. Carey believed in maintaining “class harmony and balance” by harnessing the nation’s resources between West, South, and North. He published The New Olive Branch in 1820, outlining his theory of class harmony and toning down the fiery partisanship of his youth.

The nation could not be dependent on one source of wealth and employment and needed to move away from reliance on exporting agriculture and importing manufacturing. A large and competitive domestic market could accommodate both industries and support commerce too. Carey had no personal stake in manufactures, seeing his role as a public citizen working for the general welfare of his country. Hamilton’s 1791 Report on Manufactures was a crucial text for Carey, arguing that machinery enables the greater division of labor and increased productivity of national talent. However, the South opposed protectionism that might undermine the institution of slavery. Carey was opposed to slavery but did not see how it could be abolished so he attempted to reconcile slavery within his system, which was a serious flaw to be corrected by later generations of economic nationalists under Abraham Lincoln.

Assembling the American System

When Carey first launched the Pennsylvania Herald in 1785, he was an ardent protectionist and favored home industry. This reflected his old feelings towards English trade protections against Ireland. In 1785, he wrote of “the highest degree of pleasure to find the legislatures of the different states turning their attention to every object that can check the progress of importations, and tend to the promotion of domestic manufactures”. Carey had closely followed the passage of the Pennsylvania Protective Act of 1785. These observations were based more on emotion and politics than theory and economics. But this was evolving beyond anti-Britishness. Protectionism would create jobs, protect specie, and deter against luxury. The Constitution had aimed to remedy these problems and a tariff bill was produced on July 4, 1789, for revenue that could reduce debt and support manufactures. After the War of 1812, Carey believed there needed to be a renewed push for protectionism.

The work began with grassroots campaigning, not writing a large tome on economics to rival Adam Smith or David Ricardo, though Carey did write a huge deal. In February 1818, Carey made his first major move towards backing a tariff to protect domestic industries by founding the Philadelphia Society for the Promotion of American Manufactures. This led to the formation of similar societies, such as the Philadelphia Society for the Promotion of National Industry. It had ten members from manufactures, medicine, science, and literature, and published 13 addresses, many of which were written or edited by Carey himself and were distributed nationally. Carey criticized the popular assumptions people held from Smith’s The Wealth of Nations. Smith’s teachings were helpful for a leading industrial power like Britain but not a nation in its early stages of development. Carey went on to found the Pennsylvania Society for the Promotion of Domestic Industry in August 1819. Carey wrote often to leading manufacturers to enlist their support. Circulars were distributed in the hope of inspiring similar local initiatives elsewhere and the addresses were widely referenced in Congress. A national convention of manufactures was held on November 29, 1819, in New York with Carey as one of the delegates and acting as secretary. Gradually and at a local level, Carey was building a movement.

Carey understood the importance of internal improvements from his time following local and state politics in Philadelphia. Business growth depended on the spread of trade routes, transportation, and communications. That is why Carey called for the funding of new turnpikes and canals to boost trade, create jobs, reduce freight charges, and raise land values. Carey had his sights on Pittsburgh where the freight charge was $45 per ton and could be reduced to match the $10 per ton rate for water transportation between Albany and Buffalo. In 1821, Carey started a campaign for the Chesapeake and Delaware Canal that had originally started construction in 1801 but had been given up in 1805. Carey held a meeting in Judd’s Hotel, Philadelphia on September 12, 1821, with 60 citizens who responded to Carey’s invitation. Carey had also been recently elected to the American Philosophical Society and gotten its support for the scheme.

On January 28, 1822, a general meeting of canal stockholders was held in Wilmington with Carey as chairman alongside a new board of directors. Subscription books were opened in May 1822, but the campaign ultimately failed. Carey tried to host another meeting in November with only six people replying to his invitation. Carey turned to the newspapers and memorials for legislative action, with thousands of signatures and resulting in $100,000 from the Bank of Pennsylvania. The next meeting was held on April 10, 1823. Strong attendance was achieved, with a committee of 25 appointed, 2,000 copies of an address sent out, and Carey was made chairman of a subcommittee of five people to take the next steps. They sold $360,000 of stock in five weeks but it still was not enough. By July 15, 1823, Carey was removed as a director. It showed the limits of private action and the necessity of government intervention in building the American System.

Reliable currency was another key ingredient as America needed a stable currency with reliable exchange of notes to carry out business. Carey published widely on banking and currency during the 1810s when the nation was struggling to finance the war with Britain. In response to the expiration of the first Bank of the United States’ charter, Carey travelled to Washington to persuade the Pennsylvania delegation to support renewal and published a pamphlet and a series of essays in the Jeffersonian press. The expiration of the charter was not immediately calamitous but certainly contributed to the crisis of 1814 as banks expanded and weakened. Carey also foresaw the problems that would blight the Second Bank of the United States. He believed that banks had a primary responsibility to the public welfare above shareholders. This meant banks should be responsible for managing periods of speculation and relieving periods of difficulty. As a result of these efforts, Carey became isolated from some of his old friends in Philadelphia, but he would still be appointed a director of the Bank of Pennsylvania in January 1819.

Building the American School

To advance his movement, Carey began to look at journalistic and academic circles. In 1822, Carey offered to support a lectureship in political economy at the University of Maryland to the economist Daniel Raymond with a salary of $500 for a year’s course. However, neither the university nor Raymond accepted. While Raymond was more isolated, Hezekiah Niles was a close collaborator. German economist Friedrich List was based in Pennsylvania from 1825 to 1832 and a famous voice in the economic debates of the time. Henry Charles Carey, initially opposed his father’s teachings, became one of the American System’s leading voices after 1842. Grandsons Henry Charles Lea and Henry Carey Baird also defended the American System. The “friends of national industry in Wilmington and its vicinity” presented a silver urn to Carey as a token of gratitude in 1821 with similar rewards after his retirement as his leadership was widely recognized. After the 1828 tariff battle, Carey was also praised in Montgomery County as “a pillar of adamant to the American System; a hedge of thorns to British agents.”

Carey would eventually lose $300 on publishing protectionist tracts in collected editions. He proceeded with the “Hamilton Series” in 1822, using Hamilton and Colbert as pseudonyms for his writing. The essays were repetitive in content but kept the protectionist flame burning. This was a period of extremely high activity as Carey supported another unsuccessful attempt to form a national manufacturers’ society, sent circulars and memorials in 1824 to Delaware, Massachusetts, and Pennsylvania, and wrote a petition to the Board of Managers for the Pennsylvania Society for the Encouragement of American Manufactures in March 1824 and became vice-president of the Franklin Institute for the Promotion of Mechanic Arts in February 1824. Carey was also editor of The Political Economist which was a source of support for the American School from January 1824 to May 1824 with 150 subscribers but still leading to a loss of up to $70 for Carey.

Carey wanted to establish a Manufacturers’ and Mechanics’ Loan Company, but this also did not get off the ground. He continued as a bank director and supporter of the canal, chairing meetings and writing addresses. He set out plans in October 1824 for a Society for the Promotion of Internal Improvements with 25 members and $100 initiation fee to support the spread of information about canals, roads, bridges, and railroads, attracting 22 subscribers by November. A meeting was held in December and Carey became vice-president and chairman of the acting committee. He wrote as “Fulton” in favor of a canal between the Susquehanna and Alleghany rivers. Momentum continued to grow in 1825 for a canal through Pennsylvania as meetings, petitions, and travels abroad helped to support the society.

In June 1825, Carey went to Salem to push for manufacturers’ societies in New York, Boston, Sale, Hartford, and Providence. Interest in protection was waning and would not return until the following year. This led only to the Pennsylvania Society for the Promotion of Manufactures and the Mechanic Arts being successfully established. Protectionists began to rally when the depressed woolen industry was debated by state and national conventions in Boston, Germantown, Pittsburgh, Baltimore, Poughkeepsie, Albany, Wilmington, Harrisburg, Trenton, Rutland, Vermont, Newport, Rhode Island, Middleton (CT), and counties in Pennsylvania, New Hampshire, Kentucky, Ohio, Virginia, and so on. But Carey was cut out of the Harrisburg convention. This was the start of him stepping away from the cause, writing in November 1827:

“Oh God! How lamentable that such a glorious cause, in which the prosperity of a great and rising empire is so deeply involved, should be risqued, and probably shipwrecked, by the miserable saving of a few paltry dollars! And that on the part of men, many of them worth hundreds of thousands, and with fortunes at stake on the issue!”

Internal improvements were also held back by skepticism of railroads and the speculative bust in Britain. But still Carey pressed ahead. In 1828, Carey founded the Pennsylvania Society for promoting the culture of the Mulberry, and the raising of Silk Worms and wrote a rebuttal to the Boston Report which argued for free trade. On February 25, 1828, he chaired a meeting of protectionists with between 800 and 1,000 people in attendance. Carey wrote addresses in favor but failed to secure the support needed to circulate them in the South. Carey finally gave up the fight in the face of southern resistance and threats of nullification, announcing he had been:

“begging and praying other people in vain to defend their own causes – a cause in which I never had any interest whatever – but in which I have expended nearly 4000 dollars, and three-fourths of my time, for above nine years and a half, to an incalculable loss of business, friends, and enjoyment.”

Although Carey swore to never run for elected office in 1822 and was feeling increasingly jaded, he campaigned for Henry Clay’s 1832 presidential bid. Carey eventually supported a tariff compromise in his fourth Olive Branch publication in April 1832 as part of efforts to preserve the Union, retreating from the fight but still convinced of his opinions. “Every fact that comes to my knowledge, connected with the subject, serves, more and more, to confirm me in the soundness of the doctrines. Our national experience affords the strongest corroboration of it.” He criticized the Jackson administration’s Bank War and continued to write essays against the nation’s dependency on cotton and the blame wrongly assigned to the tariff. After the nullification crisis was over, Carey turned his attention towards charity and writing about poverty. When Carey died on September 16, 1839, “thousands followed Mr. Carey to the grave with grief for his loss, and reverence for his worth; but more mourned, in unobtrusive silence, their friend and benefactor.”

Mathew Carey’s Legacy

Many achievements can be found in Carey’s career, such as the extension of canals in Pennsylvania, founding of institutions dedicated to the growth of manufacturing, and a collection of influential and insightful economic writing. The 1824 and 1828 tariff bills were shaped by protectionist principles, following the failed 1820 tariff and setting an example for economic nationalists after the reversals of 1832 onwards. Henry Clay paid tribute to Carey in March 1824 saying, “he merits the public gratitude, for the disinterested diligence with which he has collected a large mass of highly useful facts, and for the clear and convincing reasoning with which he generally illustrates them.” Carey was also burned in effigy in South Carolina and toasted together with Niles as “the big ourang-outang and baboon of the ‘monkey system’”.

It is hard to directly link the economic gains of 1824 to 1837 with the legislative initiatives backed by Carey. Neither can Carey claim to have invented his own system of political economy. But Carey was a highly intelligent and hardworking individual who used his place in public life to promote and advance the economic ideas of Hamilton and inspire future leaders such as Henry Clay and Friedrich List to champion “the American System”. Certainly, economic nationalism had roots going back to Jean-Baptiste Colbert in France and European mercantilism. But it was being applied to the unique historical and geographical circumstances of the early American republic, providing an example to countries as varied as Canada, Japan, and South Korea in developing their national industry. What Carey accomplished was to demonstrate the importance of building institutions and spreading networks that can advance economic ideas and influence policy. Carey should again be an example to those interested in reviving the American System.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David A. Cowan is a Ph.D. Candidate in history at the University of Cambridge and a former staffer and researcher in the UK Parliament. He has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, Fusion, and National Review.