Henry Clay’s American System…Henry Clay of Kentucky, a leader in the House of Representatives, proposed a comprehensive method for advancing the nation's economic growth. His plan, which he called the American System, consisted of three parts: (1) protective tariffs, (2)a national bank, and (3) internal improvements. Clay argued that protective tariffs would promoteAmerican manufacturing and also raise revenue with which to build a national transportation system of federally constructed roads and canals.A national bank would keep the system running smoothly by providing a national currency. The tariffs would chiefly benefit the East, internal improvements would promote growth in the Westand the South, and the bank would aid the economies of all sections. Two parts of Clay's system were already in place in 1816, the last year of James Madison's presidency. Congress in that year adopted a protective tariff and also chartered the Second Bank of the UnitedStates. (The charter of the First Bank-Hamilton's brainchild-had been allowed to expire in 1811.)On the matter of internal improvements, however, both Madison and Monroe objected thatthe Constitution did not explicitly provide for the spending of federal money on roads and canals. Throughout his presidency, Monroe consistently vetoed acts of Congress providing funds for road-building and canal-building projects. Thus, the individual states were left to make internal improvements on their own. The Panic of 1819…The first major financial panic was in 1812. The economic disaster was largely the fault of the Second Bank of the United States, which had tightened credit in a belated effort to control inflation.Many state banks closed and unemployment, bankruptcies, and imprisonment for debt increased sharply. The depression was most severe in the West, where many people were in debt because they speculated on land during the postwar euphoria. minds about a lot of things.How did the panic of 1819 impact American voters?They began to change their minds about a lot of things.