Neo Federalism and The Era of Good Feelings (1816-1825)

• Introduction
  • General Consensus is that the Era of Good Feelings lasted from the end of the war throughout Monroe's presidency.
  • Neo-Federalism: the Democratic-Republicans become more nationalistic and steal some of the Federalist beliefs
    • Expand the navy and build frigates instead of mosquitoes
    • Enlarge West Point
    • Second Bank of the US (the original charter was from 1791-1811)
    • Protective Tariff of 1816: Hamilton had called for this in his Report on Manufacturing a long time ago.
• The Second Bank of the United States: the biggest turn around from the Old Democratic Republicans to the Neo Democratic Republicans
  • The Neo Federalists use the Elastic Clause Article 1 Section 8 Clause 18 to justify the national bank. This is the exact thing they were arguing against way back when Alexander Hamilton first tried to establish the national bank.
  • The states were starting to print their own money and make their own banks, which was disastrous! The state banks that took enormous risks were called wildcat banks. These banks helped bring about the Panic of 1819.
  • The Second Bank of the United States was created in 1816 with a charter for 20 years. This bank was 3.5 times bigger than the first bank, worth 35 million. There is a branch of a national in every state in order to promote nationalism.
• The Protective Tariff of 1816: first proposed by Hamilton in his Report on Manufacturing. The British merchants were crippling the American businesses by selling cheap products with very cheap prices after the War of 1812, so the government established a protective tariff of 20-25% to protect the infant industries. The south opposed the tariff since they decided that they wouldn't build very many factories.
  • The southern opposition was lead by John C. Calhoun (from upstate South Carolina).
  • The NE colonies were led by Daniel Webster.
  • Henry Clay from Kentucky was to unite all this into an idea called the American System.
    • Clay gives the North a high protective tariff, but uses the money to help the southern states generate money for internal improvements in the West and South.
    • The internal improvements help the southerners to get their cotton to market and buy manufactured goods.
    • The internal improvements in the West helped the westerners get their food products to the South and North, and in turn receive manufactured goods.
    • What was the only problem with the plan? The tariff needs to be high enough to be profitable, which always made the southern states to "go nuts."