PHILADELPHIA REFLECTIONS
Musings of a Philadelphia Physician who has served the community for six decades

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Benjamin Franklin
A collection of Benjamin Franklin tidbits that relate Philadelphia's revolutionary prelate to his moving around the city, the colonies, and the world.

Conventions and Convention Centers
When you have a big convention center, some circus is always coming to town. Philadelphia has always been a convention town, has had and still has lots of convention sites, and hopes to have more of the kind of famous convention we have had in the past.

Philadelphia Changes the Nature of Money
Banking changed its fundamentals, on Third Street in Philadelphia, three different times.

Whither, Federal Reserve? (2)After Our Crash
Whither, Federal Reserve? (2)

Federalism Slowly Conquers the States
Thirteen sovereign colonies voluntarily combined their power for the common good. But for two hundred years, the new federal government kept taking more power for itself.

Robert Morris and America
Robert Morris was an energetic problem-solver. In solving those problems he devised some innovative solutions which have become such axiomatic principles of a republic and its economics, that his name is seldom associated with them.

Controlling the Currency
Robert Morris confronted an enduring theme of American politics in 1779: how can citizens without political power protect their assets from government confiscation?

Right Angle Club 2012
This ends the ninetieth year for the club operating under the name of the Right Angle Club of Philadelphia. Before that, and for an unknown period, it was known as the Philadelphia Chapter of the Exchange Club. www.philadelphia-reflections.com/topic/175.htm

American Finance After Robert Morris
Robert Morris can be fairly said to have made the American Revolution possible.

..Tax and Fiscal Issues in the Constitution
For some founding fathers, monetary issues were all that mattered.

Morris at the Constitutional Convention

{Constitutional Convention 1787}
Constitutional Convention 1787

TRUE, George Washington was the presiding officer of the Constitutional Convention. But Pennsylvania was the host delegation, so the role of presiding host should have fallen to Benjamin Franklin, the President of Pennsylvania. However, Franklin was getting elderly and turned the job over to Robert Morris, who among other things was rich enough to host some necessary parties. The rules of decorum at that time thus kept Washington and Morris out of the floor debates. The proceedings were in any event kept secret, so occasional frowns or encouraging smiles are not recorded for history.

But Morris had been an active debater in the Assembly and other meetings, so he knew enough to line up a consensus in advance for the matters he thought were essential. Obviously, Morris was strongly in favor of giving the national government power to levy taxes for defense purposes, and Washington whose troops had suffered severely from the inability of the Continental Congress to pay them, also regarded this taxing power as the central reason for changing the rules. By making it the central argument for holding the convention at all, Washington, Franklin and Morris had made taxation power a foregone conclusion. And by giving them what they wanted from the outset, the rest of the convention was in a position to do almost anything else it wanted without open comment from the Titans. The sense of this trade-off was captured by Gouverneur Morris, the editor of the Constitution, in Article I, Section 8:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
This formulation had the effect of greatly empowering James Madison, the only participant who had studied the inside details intensively, and cared about every comma. It also encourages the military to believe that federal taxation was mainly their entitlement, whereas those whose main goals are defined as "the general Welfare" tend to regard defense spending as an unnecessary deduction from their share.

http://www.philadelphia-reflections.com/images/missing_img.gif
Pawn Broker Sign

Most of the convention delegates had experience with state legislatures, and Franklin and Morris had spent decades struggling with the weaknesses of legislators. A wink or a quip in a tavern was as good as an hour's speech for reminding the delegates what they already knew about human nature. What was designed was a dual system of powers of taxation, with federal oversight of balanced state budgets combined with a federal power to tax on its own in emergencies or unforeseen situations. Since the members of the first few congresses after 1789 were largely the same people as the members of the constitutional convention, many details of this balance were worked out over a few following years. State powers to tax and borrow were tightly constrained, only the federal government could tax and borrow without limit. Since government borrowing is merely the power to defer taxes until later, the borrower of last resort was the U.S. Congress, alone empowered to encumber the wealth of the whole nation in a federal pawn shop window called the funded National Debt. For almost two centuries, this pawn shop window seemed able to support any imaginable expense. Today, we monitor this as the ratio of national debt to Gross Domestic Product (GDP), and we now have a clearer idea what level of that ratio flirts with hopeless inability to pay the federal government's debt. The experts say it's close to a 60% ratio, and unfortunately almost every nation on earth now exceeds that limit. The system continues to lack an unchallenged definition of its limit, but the system is nevertheless still Morris's system, wrapped in a mountain of descriptive detail by Alexander Hamilton. If a nation borrows more than that and clearly will never repay it, that nation is to some degree a slave to its creditors, with war its only hope if creditors are unrelenting. Perhaps another way to refine the thought is to say that if the nation wishes to mortgage everything it owns down to the last shoe button, the creditors will only accept additional debt if it is proposed by someone with the power to pawn the last shoe button. To foreigners, the proof of who has what power is much more certain if written down. Morris's protege Alexander Hamilton went ever further: "credit" is established when creditors can see that somebody is in the habit of getting the nation's bills paid, and "credit" is injured whenever anyone in charge, welches.

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i hate the comments they
Posted by: [none]   |   May 14, 2012 9:40 AM
Many many quality pinots there.
Posted by: Holland   |   Nov 23, 2011 9:18 AM

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