Because protective tariffs were a key component of the American System, the right answer is C. The American System was based on the belief that the government should promote economic growth by reducing trade barriers and allowing the free flow of investment and people between the United States and other countries.
The American System was developed by Alexander Hamilton with support from John Quincy Adams. It included policies such as protective tariffs, grants for infrastructure development, federal aid to education at all levels from elementary school through college, and efforts to provide for the efficient operation of government agencies.
It lasted from the end of the War of Independence in 1815 until the mid-19th century when it was replaced by the National Policy. The American System played a major role in making possible the industrial revolution and the creation of the American middle class.
This "system" was comprised of three mutually reinforcing components: a tariff to protect and promote American industry; a national bank to facilitate trade; and federal subsidies for roads, canals, and other "internal improvements" to generate lucrative agricultural markets.
The tariff was used by Congress to authorize the president to set the level of import duties. The goal was to make American products more attractive and competitive in the global market by making foreign producers pay a price for their goods that reflected the cost of production. At the same time, the tariff provided much-needed revenue for the federal government.
The tariff also had another important function: it encouraged domestic production by giving companies who exported products a competitive advantage over those who didn't. So not only did the tariff make imports cheaper, it also helped create more jobs for Americans.
Finally, the tariff provided vital funds for federal infrastructure programs since most governments at this time saw tariffs and customs duties as major sources of income. These programs included construction of bridges, roads, and canals (which allowed grain to be transported from Midwest farms to eastern cities).
The second component of the American system was the National Bank. Established by Congress in 1816, the National Bank was given the power by law to print money and lend it at interest.
The American System included three components: imposing protective tariffs, establishing a national bank, and investing in internal growth to build new roads, rivers, and other modes of transportation. These policies helped the United States become an industrial powerhouse at their time.
Protective Tariffs: President Thomas Jefferson implemented the first tariff in 1816 to protect American industry from foreign competition. The tariff would limit how much foreign products could be imported into the United States while giving Americans protection from foreign manufacturers who might underprice them in the market. By keeping out foreign products that could compete with American ones, Jefferson believed it would make America's industries competitive and encourage more investment in them. The tariff also provided much-needed revenue for the federal government, since after war expenditures its budget was seriously depleted. When Jefferson took office the country had just come out of an expensive war with France over possession of a small territory known as Louisiana. The War of 1812 had ended two years before he became president.
National Bank: The second component of the American System was to establish a national bank. The National Bank was given the power to issue notes that were redeemable in gold or silver at a fixed rate of interest. It was intended to give money to businesses which lacked access to traditional banking facilities, such as private banks or credit unions. The National Bank was important for two reasons.
The American system was supposed to combine the nation's economic interests by establishing a tariff to stimulate American manufacture, a network of roads and canals to facilitate trade and transportation, and a national bank to promote commerce and fund the previous two. In addition, the federal government was also supposed to provide for the common defense.