George Washington was an athlete, a soldier, and an adventurous leader. It is less appreciated that he constructed an aloof public image of himself, cloaking an activist politician, and a rather ambitious real estate developer. We got a new Constitution because he wanted a new constitution.
(1538)
Some subtle features make the Constitution a vast improvement over the Articles of Confederation.
(472)
The European Union follows the American example. ... (1229)
Until recently, mentally retarded children weren't even considered in school budgets. But in recent decades, they have become one of the biggest challenges.
(1806)
Some builders build whole towns without houses and sell them to custom home builders.
(1819)
Railroads are inherently monopolies. That breeds regulation, and from there on, it's downhill.
(1831)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.
CONSTITUTION I : Turning Colonies into States
The prevailing notion of the Constitutional Convention once depicted James Madison, seized with merging the former colonies into a nation, selling that concept to George Washington. The General, by this account, was known to be humiliated by the way the Continental Congress mistreated his troops with worthless pay. But recent scholarship emphasizes that many other patriots were disappointed with the government they had sacrificed to create. Madison had led protests within Congress itself. A generation younger than the General and not at all charismatic, Madison's political effectiveness first came before Washington's attention as a skillful leader of committees and legislatures. Washington was particularly upset by Shay's Rebellion in western Massachusetts, which actually threatened to topple the Massachusetts government, but Shay's frontier disorder was merely an extreme example of more general restlessness. There was a long background of repeated Indian rebellions in the southern region between Tennessee and Florida, coupled with uneasiness about what France and England were still planning to do to each other in North America. It looked to Washington as though the Articles of Confederation had left the new nation unable to maintain order along thousands of miles of western frontier. The British clearly seemed reluctant to give up their frontier forts as agreed by the Treaty of Paris, and very likely the British were both arming the Indians and agitating them. The innately rebellious Scotch-Irish, the main settlers of the frontier, were threatening to set up their own government if the American one was too feeble to defend them. The Indians for their part were coming to recognize that the former colonies were too weak to keep their promises. With our Army scattered and nursing its own grievances, the sacrifices of eight years of war looked to be in peril. Even Washington's loyal friends were getting out of hand. Not too much earlier, Alexander Hamilton and Robert Morris had cooked up the Newburgh cabal in the hope of provoking a military coup -- and a monarchy. It alarmed Washington that republican government itself was being discredited, leaving only a choice between a King and anarchy. Particularly when he reviewed the shabby behavior seemingly characteristic of state legislatures, something had to be done. Washington decided to set this right, using Madison as his right-hand man. Madison had been to college and could fill in some of the details; Washington only knew he wanted stable government and he did not, he did not, want a king.
Madison was young, vigorous and effective; he had the right perception about the Articles of Confederation as the source of the difficulty; and he was a reasonably close neighbor. After some protracted conversations at Mount Vernon, a plan was devised and put into action. Washington knew he wanted a stronger central government, strong enough to brush aside the quarreling state legislatures and stabilize the new nation, but not so strong as a monarchy or a military dictatorship. There were obviously many other things to be expected from a good central government, but it was not initially useful to pick quarrels about minor things. Madison had read a lot of books, knew about details. These two friendly schemers eventually convinced the country to go along. As things turned out, after a few years several of the issues set aside for later would indeed become seriously troublesome and eventually destroy the friendship between Washington and Madison. Worse still, in seventy years some even deeper issues would provoke a civil war. Even for a century after that, trouble continued to erupt, requiring periodic reconsideration of what powers needed to belong to the states, and what needed to migrate to the federal government.
For immediate purposes, the central problem for the Virginia collaborators was to persuade thirteen state legislatures to give up power for the common good. For this, it would be useful to follow the strategy of convening a Constitutional Convention of newly-selected but eminent delegates, rather than to follow the route of amending the Articles. The amendment approach would directly involve the legislatures in all the preliminary debates and compromises, thus likely failing to surrender enough state power to make a strong nation. The chosen approach was to assemble eminent leaders without political ambitions which would make them unwilling to consent to the loss of local power. Eventual ratification of the final result by the legislatures was unavoidable, but to seek their consent at the end of the process was far preferable. The divided and quarrelsome states would be positioned at a disadvantage in resisting a finished document which had already anticipated and negotiated the main objections, and was the handiwork of a blue-ribbon convention of prominent citizens and heroes. In modern parlance, that is known as framing the debate. In fact, although he had mainly initiated the movement, Washington refused to participate or endorse it publicly until he was confident the convention would be composed of the most prominent men of the nation. This venture had to be successful, or else he would save his prestige for something with more promise. Seeing to it that this was going to work was a task for Madison and Hamilton.
While many details were better left hazy, the broad outline of a new proposal had to appeal to almost everyone. Since the new Constitution was intended to shift power from the states to the national government, it was vital for voting power in the national legislature to reflect population districts of equal size, selected directly by popular elections. No appointments by state legislatures, please. However in the convention, it became evident that small states would fear being controlled by large ones through almost any arrangement, but on the other hand small states were particularly anxious to be defended by a strong national army and navy. England, France and Spain were stated to be the main fear, but small states feared big ones, too. Since the Constitutional convention itself voted as states, small states were already in the strongest voting position they could ever expect, and the Federalists at the convention needed their votes. Eventually, agreement was found for the bicameral compromise suggested by John Dickinson of Delaware, which consisted of a Senate selected and voting as states, and a House of Representatives elected in proportion to population, with all bills requiring the concurrence of both houses. From the perspective of two centuries later, we can retrospectively see that accidentally allowing state legislatures to redraw congressional districts gives them the power to "Gerrymander" election outcomes, and hence restores to the states some of the power Washington and Madison were trying to take away from them. In the 21st Century, New Jersey is an example of a number of states where it can fairly be said that the decennial redistricting of congressional borders accurately predicts the congressional elections for the next ten years. However, the historical irony emerges that Gerrymandering is impossible in the Senate, and hence legislative control over Senators has been weak ever since the 17th Amendment established senatorial election by popular vote. That's eventually the opposite of the result conceded by the Convention, but in accord with the almost certain wishes of the Federalists who dominated it.
This evolving arrangement of the national legislative bodies seemed an improvement over the system for state legislatures, because the Federalists believed corruption was automatically lessened by increasing the size of the legislative body. There were skeptics then as now, and something more was desired to weaken the potential tyranny of the majority always so evident at the state level and in the British parliament. To satisfy this anxiety, some power was redistributed to the executive and judicial branches of government, which were in turn intentionally selected differently. Here is the source of the Electoral College method for election of the President, giving greater weight to the votes of small states (and provoking a ruckus whenever the national popular vote is a close one), while according lifetime appointments to the Judiciary, following selection by the President with the concurrence of the Senate. Without anticipating its emergence, an unexpectedly large bureaucracy has thus come under the control of the executive branch without much of the republicanism so fervently sought by the founders. This may be in general harmony with the Federalist goal of removing patronage from legislature control, but appropriations committee chairmen have since found unofficial ways of asserting power over the bureaucracy. Only in the case of the Defense Department is the will of the constitutional convention made clear: the President is commander in chief, only Congress can declare war. Although this difficult process was meant to discourage wars, it had other features. From placing the command under an elected President, emerges a more explicit emphasis on civilian control of the military, further extended by legislative approval of initiating warfare. Unfortunately, there have been many more armed conflicts than "declarations" of war.
And that's about it for what we might call the first phase of the Constitution. There was a prevalent feeling that national laws should pre-empt state laws. In view of the need to get state legislatures to ratify the document however, this was withdrawn. Phase I of the Constitution was designed to take as much power away from the states as could be taken without provoking them into refusing to ratify it. Since ratification did barely squeak through after huge exertions by the Federalists, the Constitution must come very close to the tolerable limit, and cannot be criticized for going no further. Since no other voluntary federation has gone even this far in the subsequent two hundred years, the margin between what is workable and what is achievable must be very narrow.
The details of this government structure were spelled out in detail in Sections I through IV. However, just to be sure, Section VI sums it all up in trenchant prose:
This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding. The Senators and Representatives before mentioned, and the members of the several state legislatures, and all executive and judicial officers, both of the United States and of the several states, shall be bound by oath or affirmation, to support this Constitution; but no religious test shall ever be required as a qualification to any office or public trust under the United States.
Except for some housekeeping details, the Constitution ends here and can still be admired as sparse and concise. That final phrase about religious tests for office sounds like a strange afterthought, but in fact its position and lack of any possible ambiguity serve to remind the nation of grim experience that only religion has caused more problems than factionalism. There are no details; religion is not to have any part of government power or policy. By tradition, symbolism has not been prohibited. But government as an extension of religion is just as emphatically excluded, as is religion as an agent of government. Many failures of governments, past and present, can be traced to irresolution to summon up this degree of emphasis about a principle too absolute to need elaboration.
http://www.philadelphia-reflections.com/blog/1541.htm
George Washington Demands a New Constitution
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| Parson Weems |
GEORGE Washington was a far more complex person than most people suppose, and he wanted it that way. He was born to be a tall imposing athlete, eventually a bold and dashing soldier. On top of that framework, he carefully constructed a public image of himself as aloof, selfless, inflexibly committed to keeping his word. Parson Weems may have overdone the image a little, but Washington gave Weems a lot to work with and undoubtedly would have enjoyed the stories of the cherry tree and tossing the coin across an impossibly wide Potomac. Washington had a bad temper, and could remember a grievance for life. He married up, to the richest woman in Virginia.
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| Potomac River |
Growing up along the wide Potomac River, Washington early conceived a life-long ambition to convert the Potomac into America's main highway to the Mississippi. He did indeed live to watch the nation's capital start to move to the Potomac swamps across from his Mount Vernon mansion, into a city named for him. After he retired from military command with great fanfare and farewells after the Revolution, he returned to private life on this Virginia farm. During the years after the Revolution and before the new Constitution, his attention quickly returned to building canals along the Potomac, deepening it for transportation, and connecting its headwaters over a portage in Pennsylvania to the headwaters of the Monongahela River, hence the Ohio, then the Mississippi, or up the Allegheny to the Great Lakes. He personally owned 40,000 acres along this path to the center of North America. The opportunity for a national constitutional convention grew out of a meeting with Maryland to reach an agreement about this Potomac vision, which was being blocked by commercial interests in Baltimore. Ultimately, Baltimore won the commercial race. It was the Baltimore and Ohio Railroad which captured the commerce to the west. He made deals, ultimately for Baltimore benefit, with the James River interests, to give them their share of the development of Chesapeake Bay trade. As a young man, he had acted as a surveyor for most of this region, and as a young soldier, he had explored the Indian trade to Pittsburgh, actually started the French and Indian War along this trail, later marching it again with Braddock. And all the while, Washington dreamed of the day. There were competitors; Philadelphia and New York had similar aspirations for their own rivers.
Washington at age 54 was already richer than most people need to be; a lot of this Potomac dream was residual of boyhood ambitions enduring into middle age. In a sense, he had an ambition to make his boyhood home the future center of the universe. Although much of his stock in these real estate enterprises did not result in much wealth, he demonstrated his mixture of public spirit combined with ambition by donating the stock in one of the companies to a future national university, which was to be located across the river near Georgetown. Since that didn't work out, he later placed the nation's capital there. His had always been a somewhat bolder dream than merely to be Cincinnatus, citizen soldier returned home to his farm from the wars.
Washington did more or less gave up this Potomac ambition, but for a loftier one. During the Revolution, he suffered the deepest and most infuriating abuse of himself and his soldiers from the state legislatures, whom he grew to hate, as well as the Continental Congress representing state governments in a weak and nearly useless organization that would not feed and pay its own troops. He was a mean man to cross, but somewhere in his complex character Washington possessed the firmest and most sincere belief in the proper subservience of the military to civilian control. These conflicting feelings led to the most earnest and courteous obedience to a group of politicians he surely loathed. This could not have been hypocrisy; he respected their rank even though he suffered from their behavior. When Congress paid the troops in worthless currency they promised to redeem after the war, it became clear that either their lack of moral fiber or their system of governance led the states and the congress in the direction of dishonoring their debt to the soldiers. This was a dreadful system, which led to death and suffering among the loyal troops, forcing the General into the humiliating position of promising the troops Congress would stand by them, when he privately doubted any chance of it. Washington did not forgive or forget. This was a paltry result to achieve after eight years of war and suffering; this dishonorable system just had to be improved.
To achieve the change he desired, he went about it in a way which most people would not. He chose a young ambitious agent, James Madison, who had caught his attention in the Virginia legislature, in the Continental Congress, and in the negotiations with Maryland over the development of the Potomac. Washington schemed with Madison for weeks on end about ways and means, opportunities, dangers and potential enemies. A great many people, Patrick Henry in particular, wanted the central government to be as weak and ineffective as possible. John Jay in New York, by contrast, had argued so fervently for revisions of the Constitution that he deserves some mention for originating the idea. Madison was supposed to win over the Virginia legislature, make alliances with other states in congress, identify friends and enemies, make deals. Meanwhile, Washington felt it was useful to remain above and aloof, publicly wavering whether this was all a good idea. There was to be a Constitutional Convention in Philadelphia, but while Washington was invited, he let it be known he was uncertain whether he really should accept the invitation. What he really meant was he would preserve his political credibility for a different approach if this one failed to work out. Meanwhile, young Madison on several occasions came to Mount Vernon for three days at a time to talk strategy and give the General all the scoop.
Madison was a brilliant politician, a dissembler in a different way. To begin with, he was a scholar. Both as an undergraduate at Princeton and a graduate student working directly with the great Witherspoon himself, Madison was deeply learned in the history of classical republics. But he was also innately skilled in the manipulative arts of politics. When votes were needed, he had a way of persuading three or four other members to vote for a measure, while Madison himself would then vote against it to preserve influence with opponents for later skirmishes. In fact, as matters later turned out, it becomes a little uncertain just how convinced Madison really was that Washington's powerful central government was a totally good idea. Twenty years younger than the General. he prospered in the image of being personally close to the titan, and he certainly enjoyed the game of politics. The new Constitution was going to be an improvement over the Articles of Confederation, but Madison did not burn with any indignation about injustice to the troops, or any disdain for nasty little politicians in the state legislatures. The new Constitution was a project where he could advance his career, skillfully demonstrating his prowess at negotiation and manipulation. This is not to say he did not believe in his project, but rather to suspect that he was a blank slate on which he allowed Washington to write, and later allowed others to over-write. He was eventually to modify his opinions as a result of new associations and partners, and since he followed Jefferson as President, it became personally useful to modify his viewpoint. What would never change was that he was an artful politician, while Washington by contrast hated, absolutely hated, partisan politics.
This division is not just a difference between two Virginia plantation owners, but an enduring thread running through all elective politics. Washington set the style for generations of citizen leaders in America. In essence, a person of honor distinguishes himself in some way before he enters public office, and on the basis of that reputation plus the radiation of an honorable image, presents himself to voters for public office, is therefore elected to represent their interests. He is expected to compromise where compromise is honorable and publicly acknowledged, in order to achieve one desirable outcome in concert with other outcomes, in some ways inconsistent but still honorable in combination. He reliably will not vote for either issues or candidates in return for some personal consideration other than the worth of the issue or the candidate, with the possible exception of yielding to the clear preferences of his local district. Such a person is not a member of a political organization very long before he encounters another group of colleagues -- who regularly swap votes for personal advantage, or follow a party line, or join a group who agree to vote as a unit no matter what the merits, and acknowledge the frequent necessity to talk one way and secretly vote another. The first sort of politician is usually an amateur, the second type is typically a professional politician. Although it seems a violation of ethics and common public welfare, the fact is the professional vote-swapper will almost always beat the sappy amateur. The response during the Eighteenth Century was for idealists to condemn and attempt to abolish partisanship and political parties. The American Constitution does not make provision for political parties and other forms of vote-swapping or even anticipate their emergence. Although Madison started the process, Jefferson organized it and every politician except Adlai Stevenson has openly participated in a version of it. That the Constitution has not been amended to provide for parties seems to reflect a persisting nostalgic hope that somehow we can return to Washington's stance.
Washington's conception of representative politics was not entirely perfect, either. In order to maintain an image of impartiality, Washington and his imitators isolate themselves in a cloak, holding back their true opinions in a sphinx-like way that hampers negotiation. Unwillingness to be seen swapping votes can lead to unwillingness to compromise, and in the final analysis the difference is one of degree. However, the over-riding issue is that each representative or Senator is equal to every other one. When vote-swapping gets started, it leads to placing power over supposed equals in the hands of more powerful manipulators, masquerading as political leaders. Ultimately, it leads to the adoption of house rules on the very first day of a session which force lesser members to surrender their votes to a speaker or minority leader or committee chairman, when the theory is that there is no such thing as a lesser member. The final reality is that most legislatures must now deal with ten or twenty thousand bills per session, leading to the necessity of appointing someone to set priorities, which in turn leads to the power of party leaders over their grudging servants. These various subversions of the equal rights of elected representatives can lead to such discrediting of the system that honorable people may refuse to stand for office, leaving no one but professional foxes in charge of the hen house. Benjamin Franklin, who was to play an invisibly controlling role in the impending Constitutional Convention, had his own way of coping with the political environment. "Never ask, never refuse, and never resign."
http://www.philadelphia-reflections.com/blog/1538.htm
If Men Were Angels, No Government Would Be Necessary
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| President James Madison |
JAMES Madison, Washington's floor manager at the Constitutional Convention of 1787 in Philadelphia, stated the main reason for holding the Convention in one famous summary of human frailty. After fighting a war for freedom, it had become time to react against anarchy. A league of states would not work, as thirteen years of the Articles of Confederation had demonstrated. Even today, the dynamic explaining why Balkanization invariably is so destructive remains unclear; the related phenomenon of gerrymandering seems to have the same effect. Something to do with birds of a feather, perhaps. Working within that flawed arrangement, the States had refused to pay their share of expenses, abused their ability to deal independently with foreigners, dealt unfairly with their neighbors, and capriciously mistreated their own citizens. Just as the several nations of Europe are today discovering, a debating society of independent states is no good; you must somehow achieve a sense of common citizenship, not focus loyalties within constituent states. Although the states were no good, and you had to say it out loud, in 1787 there remained the awkward problem of getting those same states to ratify a change dethroning themselves.
Two men applied even deeper thinking than that; Benjamin Franklin of Pennsylvania, and John Marshall of Virginia. Both of them had served in state legislatures, and both were dismayed by the experience. Franklin also had a long period of close-up observation of the British Parliament, suffered personal abuse there, and had ample reason to reflect on the earlier abuses by that Parliament under Cromwell which had so much to do with the English Civil War. Certain problems seemed universal in legislative bodies. Although Marshall was not a member of the Virginia Constitutional delegation in 1787, he was active in the politics of the group it represented back home. Both Marshall and Franklin had good reason to be uneasy about universal misbehavior by representative bodies, whether called legislatures, congresses, or parliaments. When people said states misbehaved under the Confederation arrangement, they really meant legislatures misbehaved. Franklin did what he could within the Convention to curb this observed behavior by enumerating limited powers and balancing power against other power. When he had pushed it as far as he could, he wearily agreed to give the product a try. Franklin did not trust Utopias, but he had lived among Quakers for years, the only Utopian society which seemed to endure without resorting to tyranny.
The Constitutional provisions in Article I, Section X became the heart of what the 1787 Convention wanted to change about the relationship of the national and state governments.
States are forbidden to ...
"emit bills of credit, make anything but gold or silver a legal tender in payment of debts, pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts."
This brief clause is almost a complete summary of what state legislatures were doing, which serious patriots regarded as wholly unacceptable. Failure of states to abide by the terms of international treaties must be included in such a summary, although the new Constitution went beyond the powers of Congress by locating treaties beyond the powers of Congress, once ratified. Some observers, in fact, feel that within the First Article clause, protecting the sanctity of contracts was really the nut of the matter for ongoing struggles. The great bulk of the nation's business was to be conducted as private agreements between two contracting citizens. The State -- and the states -- were to stay out of it, except as referee, to see that both sides kept their agreements. As a footnote, the matter was to rise again but in the behavior of the Executive branch, in the 1937 Court Packing uproar, and in the 2009 monetary crisis. Some critics have discomfort that the heaviest emphasis was placed by the Founding Fathers on protecting private property. Are not other issues more important, they ask, like life, liberty, and the pursuit of happiness? The Founders, of course, were here not ranking benevolences by value; they were stating the principal urgency for convening the meeting. In a strange unintended way, however, they here stumbled without knowing it on the right to property as the foundation for all other rights. But John Marshall understood it, and was to spend thirty years hammering it into place.
http://www.philadelphia-reflections.com/blog/551.htm
Articles of Confederation: Fatal Flaw
During the twenty-five years government was in Philadelphia, Americans who disliked being ruled by any really powerful government were bedeviled by repeatedly uncovering something unworkable about their original ideal of a loose association of states. Somehow, they kept confronting the same, subtle main problem of depending on the states to enforce legitimate federal mandates. Gradually acknowledging patchwork repair of their charter was not enough and thus adjusting to the idea of living under a common central government, conciliation was sought in devising their own model of it which would get the states out of the road. Although it is commonplace to say the Articles were a weak failure, they did in fact roughly reflect American attitudes at the beginning of our formative period, so the nature of the final proposal was to define some minimal powers for the national government, some minimal prohibitions for the states, and a vast undefined area of power where the two would have to work out future accommodations. Mid-course correction of demonstrated flaws in the Articles was an important beginning for a Constitution which would not have been even barely acceptable without specifics and proofs. We got it right, the second time. And we got it right in the environment of Quaker Philadelphia, where tolerant examination of new ideas was more venerated than in any other place in the civilized world. But with a combination of wisdom and impasse, a great many issues were simply left to the future.
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Edwin Corwin's "John Marshall and the Constitution" |
Much has been written about the balance of powers between the three branches of the federal government. However, the real balance of power in the Constitution is between the central government and the constituent states. Balancing power within the central government's branches is a way of preventing one side of this argument from tilting the state/federal balance in its own favor, or slowing down the effect of any victories by one side. From this continuing struggle emerges the explanation for filibusters, the seniority system, the confirmation process for Supreme Court and Cabinet appointments. It also calls into question the Seventeenth Amendment, where the state legislatures lost the power to appoint U.S. Senators. In 1786 the states had all the power, in 2009 state power is much diminished; but it is not entirely gone by any means. The cry for states rights is futile. If states are to wrest power back from the federal government, it will be by the adroit exercise of powers buried within the balanced powers of the federal branches.
While features of the present Constitution can sometimes be linked to correction of flaws in the Articles, one by one amendment never seemed to be enough. Later analysis of Original Intent has often had to contend with the unspoken intent of negotiators to strengthen partisan advantage in later struggles. The political battles being fought at the time, which except for slavery are substantially the same today, were sometimes being promoted for reasons which now seem merely quaint. Fine, everyone can agree it was complex. Still there was a recurring uneasiness: what was the underlying flaw in the Articles? What, as they say, is the take-home point?
One widely accepted summary, probably a correct one, of what was centrally wrong with the Articles of Confederation, lies in a concise observation, which follows, from Edward S. Corwin's book John Marshall and the Constitution:
"The vital defect of the system of government provided by the soon obsolete Articles of Confederation lay in the fact that it operated not upon the individual citizens of the United States but upon the States in their corporate capacities. As a consequence the prescribed duties of any law passed by Congress in pursuance of powers derived from the Articles of Confederation could not be enforced."
And that's how many Revolutionary Americans, possibly most of them, had wanted to have it. They were in revolt against all strong government, not just the King of England. They surely would have applauded Lord Acton's declaration that "All power tends to corrupt, and absolute power corrupts absolutely." Thirteen years of near-anarchy taught them they must at least give some limited powers to a central government, but it was to be no more than absolutely necessary. For some, the Ulster Scots in particular, even the absolutely minimum amount was still just a bit too much.
To revise Professor Corwin's analysis somewhat, the insurmountable obstacle for uniting sovereign states effectively is that they are sovereign, and won't give it up. That no longer concerns America, because the Founding Fathers managed to get around it until the Civil War, and then the Fourteenth Amendment enabled the federal judiciary to attenuate state sovereignty somewhat further without eliminating the architecture of a federation of states. In other words, in two main steps we deprived the states of some sovereignty, but no more than absolutely necessary, and we took more than a century to do it. The European Union currently faces the same obstacle, and this is how we solved it. If they can get the same result in some other peaceful way, good luck to them. Our framers used the language "Congress may...or Congress may not..." They only dared to strip state legislaures of a few powers, the right to issue paper money, the power to interfere in private contracts, and such, as enumerated in Article I, Section X , where the operative phrase is "The states are forbidden to..". The framers were willing to strip Congress of many more specific powers than the states; the Constitution can be read as a proclamation of the powers which a central government simply must possess. There might be other desirable powers, but this was the minimum. After eighty years, individual Southern states asserted their unlimited powers extended to nullification and secession, and because of a perceived need to preserve slavery would not back down. The Constitutional consequence of this national tragedy was the Due Process section of the Fourteenth Amendment, which has since been purported by the Supreme Court to mean that what the federal government may not do, the states may not do, either. However, Due Process traces back to the Magna Charta, and has been so tormented by interpretation that for the purpose stated, it is somewhat too elusive. For historical reasons, we never gave a fair trial to the original proposal to address the federal/state dilemma. The Constitutional Convention was held in confidence, many delegates changed their minds along the way, and many ideas were more perceived than enunciated. It is plausible that the original strategy originated with Madison's teachers and emerged from many discussions, but there were several delegates in attendance with the sophistication to originate it. In a convention of egotists, there were even a few who would put their ideas in someone else's mouth.
The concept of how to curtail central government power in a non-violent way, can be called Regulatory Competition. The idea does still work reasonably well with state taxes and corporate regulation. If a state raises a tax, estate tax for example, in a burdensome way, people will flee to a state with more reasonable taxation. Corporations have learned how to shift legal headquarters to Delaware and other states which court them, and in really desperate cases will move factories or whole businesses. There is little doubt this discipline is effective, and little doubt that some cities and states have been punished severely for encouraging an anti-business environment. Whether the Fourteenth Amendment could be cleverly amended to expand this competitive effect without reintroducing segregation and the like, has not been seriously considered, but perhaps it should be. As far as advising our European friends is concerned, it would be important to point out that Regulatory Competition completely depends for its effectiveness on freedom to flee to some other state within the union. A common language is a big help to unity, and ability to move is essential. Underlying these features is a sense of tolerance of cultural differences. That is unfortunately where most such proposed unions have either resorted to violence, or failed to unite. And of course, the power which might otherwise be abused, must be shifted from the federal to the state level.
http://www.philadelphia-reflections.com/blog/472.htm
Enumerated and Implied Powers
GEORGE Washington wanted a stronger central government to protect the country from enemies foreign and domestic, and he wanted it to be effective and workable; either way, he wanted a country he could be proud of. Eight years of war had taught him that to impose taxes and sacrifices in the national interest, state disunity simply had to be controlled. Following the Revolution, disorganization proved just as hurtful as in times of peace. But by 1787 Washington also concluded the states would not surrender power unless the people insisted on it. It was up to prominent men in the Constitutional Convention to suggest a list of other advantages of Union. Tell us what good it will do to upset the Confederation. Having proposed the general shape of the central government, tell us what it can do better than the states. And then help rally public support to make the states agree to it. In this sense, blazoning "We , the People" on Philadelphia's Constitution Center is exactly right. But repeating that slogan too emphatically can suggest that the people were encouraged to modify or re-interpret the Constitution as they pleased. This was a bargain that everyone involved was expected to keep. Amendment was provided for, but it was difficult. As would be said of another context, amendment was to be safe, legal, and rare.
Two small sections, Eight and Nine of Article One, list the national requirements in very sparing language. The states must avoid using their sovereignty to gain advantage over each other. Defense of the coasts against piracy, and a general postal system. Open borders between the states, both physical and economic, promoting trade to the advantage of everyone. Uniformity of weights and measures, patents and copyrights, currency and coinage, bankruptcy and naturalization rules would permit everyone to aspire to wider and easier markets. Uniform rights would unite the various cultures, so a general prohibition was declared of ex post facto laws and suspension of habeas corpus, degrading the currency, injuring the sanctity of contracts (or by implication all the centuries of legal consensus known as the common law). Everyone knew state legislatures had either ignored or flouted these principles; state interference in these particulars was expressly prohibited. Desirable federal powers were stated in a positive way,and limited to what was stated. However, because there remained doubters even after the Constitution was put into action, the Tenth Amendment was soon added to restate the point:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
There were plenty of other negative ways to put all this, but the Constitution said no more than absolutely necessary. Certain powers were essential for a functioning national government, and some few powers would be destructive if the component states exercised them. The framers might have, but did not say, Look at what has happened among the little countries of Europe that might also happen to us. All of the economic discriminations against foreigners which are lumped under the heading of Mercantilism; the use of government power to favor local businesses against competitors who are outside the political boundaries and have no local influence. The expense and nuisance of different coinages, tariffs, licenses and cartels. The inability to assemble parts of manufactures in different jurisdictions, using different rules and regulations, mainly designed to increase prices for the general mass of consumers for the benefit of a few politically well-placed producers. In some ways these negative arguments had the greatest persuasive force, because almost everyone could think of some injury inflicted by similar laws. In 1787 it was only recently that our whole nation had suffered from the mercantile rules of Great Britain, who was supposedly partners with the colonies. But exhortations of this sort were excluded from the document. Private publications like the Federalist Papers could be more explicit because they were not official parts of the agreement, and they could be more easily disavowed. Those who today use such comments to define Original Intent are treading on soft ground.
It was hard to know where to stop with these arguments. The promise was being made that the nation would prosper with expansions of scale, and in fact it soon did. It was also true that expansion of the right of the federal government to tax would automatically constrict the ability of the states to do so, and in time the state legislatures have been reduced to begging for federal funds. [At the same time, it seems inconceivable that the Constitutional Convention would have condoned the present discordance between the several states in what federal taxes they pay compared with what federal benefits they receive.] The ability to levy troops and declare wars has indeed reduced local power to prevent hostilities not of local making or concern. There have been occasions to fear that plebiscites for personal freedom may have sometimes impaired the nation's ability to defend itself. Local gasoline and cigarette tax wars occasionally spring up to exploit differences in state taxation, but in general there remains comparatively little mercantilism at a state level. But regional difference has correspondingly grown along with the sense of local powerlessness to resist it. The Civil War is surely the largest example of a general trend of growing conflicts within those gaps of jurisdiction unimagined by the framers. Section Eight arguments all rode on the rising tide of the Industrial Revolution; they proved in general to depict correct predictions. But they also persuaded 600,000 young men to die, for or against the Union itself.
http://www.philadelphia-reflections.com/blog/1544.htm
Tenth Amendment
The Tenth and Eleventh Amendments are the high-water mark of state power in the American Republic. The main 1787 Constitution lists what the Federal organization might do and might not do, but it only lists a few other things the states may not do. By implication, the states could do everything else. But a great many promises had been made during the ratification campaign, some of them weakened by the atmosphere of salesmanship. The members of the First Congress convened the new government with a long list of hostile, suspicious proposals for amending what many of their constituents regarded as merely honeyed promises. In effect, the anti-federalists were demanding to "have it in writing". Under the circumstances, the most effective promise was one that was simple and short:
X. The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
http://www.philadelphia-reflections.com/blog/1669.htm
Eleventh Amendment
There are certainly a lot of Ingersolls in Philadelphia. A lot of Jared Ingersolls, a lot of Charles Ingersolls, and even a lot of Charles Jared Ingersolls. At a dinner party, a lady whose maiden name is Ingersoll was asked about Charles Ingersoll, and was forced to say, "Just how old would you say he is?"
The one we are talking about here is Jared Ingersoll, Jr., the son of a Tory who had once been tarred and feathered by Revolutionaries in New Haven. Young Jared was in England at the Inns of Court when the Declaration was signed, became a fervent Revolutionary, and represented Pennsylvania at the Constitutional Convention. It was thus difficult to predict where his sympathies would lie in the settling of debts and grievances associated with the Revolutionary War; in fact, he might be as impartial as any lawyer to be found at the time. At their best, all lawyers reach for the peaceful settlement of grievances, serving their clients best by finding a solution that puts an end to reprisals. Furthermore, he had had an excellent legal training, something which could not be said of most apprentice-trained lawyers of that time, and had faithfully attended every single session of the Continental Congress, while commenting very little about his own views. The first ten amendments are the Bill of Rights which had been promised during the ratification process, so the Eleventh became the first real amendment, in the sense that it specifically reverses some feature of the original design. To present observers it may not be easy to surmise just what the purpose might have been to outlaw the method which had been established for an injured citizen to sue a state. To be blunt about this point, the colonists wanted to welch on paying debts to Loyalists and Englishmen, those hated enemies, without admitting this was their motive. The spin they put on this shabby attitude was that states were now sovereign entities without a king, and since historically a British king could not be sued without his consent, therefore neither could the states. Probably the best that can be said for this cloud of words is the point that suing the government should not be made too easy, for fear of overwhelming the court system with endless clamor. The historical episode surrounding the Eleventh Amendment is an important one in our national struggle to balance the accusations of hypocrisy and chiseling, with the opposite tendency of slavish adherence to procedure, or "due process".
Ingersoll had attended the Constitutional Convention as part of the most influential state delegation of insiders, and was set up to practice law in the capital city of Philadelphia just a few blocks from the heart of government. A case came up. The estate of Captain Robert Farquhar, an Englishman, was owed $169,613.33 for "goods" sold in 1777 to agents of the embattled State of Georgia during the Revolution. The executor of Farquhar's estate, a resident of South Carolina named Alexander Chisholm, then sued the state of Georgia after the war was over for that state's extinguishing the debt by a statute passed after the contract. This had been rather common treatment of Loyalist debts by other colonies and thus enlisted their sympathies to Georgia in this case. Furthermore, it was the sort of uncivil behavior that had enraged John Jay and George Washington, leading them to press for the Constitutional Convention. On the other hand, the new state governments were hard pressed for cash, and had to contend with highly combative citizens who resented even the suggestion that they play fair with people who had so recently been trying to kill them. Furthermore, it was entirely realistic for them to fear a flood of lawsuits from people they mercilessly pursued under what "everyone" considered the rebellion's accepted rules of engagement. It was thus clever for Georgia to seek the help of Ingersoll in appealing to the Supreme Court, and the previous tarring and feathering of his Loyalist father was not entirely irrelevant. Ingersoll unfortunately lost his case of Chisholm v Georgia when the Supreme Court (John Jay, CJ) declared that Chisholm was indeed entitled to sue the State of Georgia. It is hard to see how Ingersoll (and his colleague Alexander Dallas) could have won this case when the Constitution which he helped write plainly provided the rules for citizens of one state suing another state; it seems remotely possible that the officials of Georgia were attempting to shift the blame of an inevitable loss of he suit:
Article III - Section 2 -The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party; to Controversies between two or more States; between a State and Citizens of another State; between Citizens of different States; between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.
John Jay ultimately revealed the depth of his dismay at dishonoring debts when he negotiated Jay's Treaty during the Adams administration, providing for adjustment of such debts. Adams, in turn, was to reveal where his own sympathies lay by refusing to announce -- for three years -- the reversal of this position by the Eleventh Amendment, stirred up in his own state. Adams' rather flagrant abuse of a technicality might well have led to another constitutional amendment, except for the Supreme Court later ruling that official enactment of amendments did not require Presidential announcement, but took effect upon ratification by the required number of states.
Adams, in turn, had ample political problems in his home state of Massachusetts. John Hancock, then Governor, called a special session of the Massachusetts legislature to propose an amendment to reverse the Constitutional language on which the Supreme Court's decision had relied: It soon became clear, or perhaps Ingersoll was determined to make it seem clear, that Georgia had been smart to employ this political insider. Congress soon enacted, and the necessary states soon ratified the Eleventh Amendment. It stated that a citizen of another state may not sue a State government in Federal Court:
Amendment XI. The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
Later decisions included citizens of the same state, so in effect this amendment stated that no one may sue a State Government unless the state agrees to be sued. That's essentially what is true of the federal government; the states were given the same sovereignty with all of its features, as the federal government and that was an intentional slap in the Federalist faces.
It sounds as though Jared Ingersoll might have been a states righter, although nothing in his past or future behavior suggests that he was anything but an ardent Federalist. He was even proposed as vice presidential candidate for the Federalist Party. No one called him wishy-washy, or a traitor or a covert anti-federalist, and he never acted like one. He was just a lawyer with a client.
http://www.philadelphia-reflections.com/blog/1667.htm
Revising, Amending, and Skirting The Constitution
In some foreign countries, people who dislike the government about some issue wait for a clear day and go in the streets to riot. Some of our own younger people who spent a little too much time abroad have likewise occasionally called their friends on a cell phone, and agreed to pour out into our town squares to protest. When you try that in Tienanmen Square (1989) or similar places, machine guns can suddenly end the meeting (2,500 dead). We had the Boston Massacre of 1770 (5 people killed) and Kent State of 1970 (4 people killed), where newsmedia somewhat over dramatized the risk involved. In general most Americans feel public demonstrations are neither very dangerous nor very useful.
One measure of Constitutional effectiveness can be found in just this public attitude. The citizenry have been told and generally believe that methods for addressing grievances have been provided in the legislative, judicial and executive branches, ultimately leading to the Constitution itself as the last point of appeal. The 1787 framers in Philadelphia probably had this design in mind, but it was not until the third Chief Justice, John Marshall, made it his life's work that the elegance of the system became widely appreciated. The Constitution is the capstone of our system; every citizen's grievance can be appealed within it. If things are sufficiently dire, even the Constitution can be changed.
A second Constitutional Convention could be called, but most lawyers shudder at what chaos might emerge from making multiple changes without waiting to see how a few worked out. For practical purposes, therefore, amending the Constitution is the last recourse when government goes astray. Amendments don't easily succeed; hundreds were proposed in two hundred years but only two dozen were adopted. In totalitarian countries, millions of amendments might be envisioned, but either nothing significant would be adopted, or nothing significant would be enforced. In our country, it is sufficiently difficult to succeed that frivolous or ill-advised proposals are discarded or modified into less extreme forms by "due process". But enough amendments do succeed to keep the populace out of street protests. Amendments can succeed, if you and the proposal are really serious. So far the only realistic appeal beyond an amendment, has been another amendment.
The step provided before amendment is to appeal to the Supreme Court. That happens about a hundred times a year, with generally satisfing outcome. Perhaps the only serious criticism of the Supreme Court is the difficulty of "gaining cert.", which is the process of petitioning the Court to take the case, by granting a writ of certiorari. Only about 2% of petitions are allowed to present their arguments, and the Court has protected itself from overwhelming volume by limiting its caseload to instances of conflicts between circuits, and cases involving sovereignty of some sort. For such a selective process to remain acceptable, implicitly the rulings of the various Circuit Courts of Appeal would also have to enjoy general approval. That such is the case is evidenced by the fame and distinction reached by certain Judges of Appeals Courts, like Benjamin Cardozo, Learned Hand, and Richard Posner. In Cardozo's case, he was finally appointed to the Supreme Court, but at such an advanced age and short tenure that his Supreme Court reputation is rather modest; he achieved his reputation as an Appellate Judge. The failure of Robert Bork and several others to achieve Senate ratification illustrates a somewhat different version of the same issue: that the higher courts, not just the Supreme Court, are generally held to do as good a job as human systems allow; supremely gifted judges are not exclusively in the Supreme Court. As you go lower in the court system, more dissatisfaction can be heard, ultimately reaching slander accompanied by knowing grins, such as "You show me a hundred thousand dollars, and I'll show you a Philadelphia judge." Whenever criminals meet justice, such mutterings can be expected. But the point to emphasize is that there are no muttered challenges to the contention that the higher you go in the Judiciary, the more distinguished the judge is likely to be.
That's the federal judiciary, of course. State judiciaries are held in less esteem, although they have the power to put people in jail forever, award multimillion dollar verdicts and modify the climate of business. Somehow, the prestige of these judicial systems has eroded to the point where a joke can be heard that being a state supreme court justice is a pretty good way to start a law practice. It's hard to know whether prestige has disappeared because of performance, or the reverse. Whether the steady erosion of state legislative power by Congress has resulted in a parallel loss of status in the judiciary is a serious question. In that case, of course, there is very little the judiciary itself can do about it. In two hundred years, hundreds of amendments have been submitted to overturn Supreme Court rulings which displeased someone. Only three have succeeded. The first was the overturning of Chisholm v. Georgia by the Eleventh Amendment, reflecting a largely unspoken wish to employ state sovereignty to continue the anti-British animosities of the Revolutionary War. While understandable enough, this approach is most unfortunate. The second is the overturning of the Dred Scott decision on the legitimacy of the Fugitive Slave Law by the Thirteenth Amendment. While the outcome meets general approval, here is another court position which could only be changed by winning a war. And finally, the legitimacy of the graduated income tax as an allowable private taking was established by the Sixteenth Amendment, overturning an entirely legitimate decision in Pollack v. Farmers Loan and Trust that the original Constitution prohibited it. In each case, the desired remedy only existed in changing the Constitution. Dissenters are free under the First amendment to describe such a Court decision as asinine, but it is going to continue to stand. Some will be tempted to circumvent the whole process in order to achieve their goal, and two examples come to mind. In the court-packing episode of 1937, most impartial observers would agree that the Supreme Court was forced to reverse its decision under threat of coercion by President Franklin Roosevelt. Amendment of the Constitution was a choice open to him, but he chose another way. The Commerce clause of Article I, Section 8 now continues to read:
The Congress shall have power to .........Regulate Commerce with foreign nations, and among the several states, and with the Indian Tribes
just exactly as it did when for 150 years everyone referred to it as the Interstate Commerce Clause. What has changed is the declaration that Congress may regulate all commerce of any sort, without fear of challenge in the court system. Whatever chances Roosevelt might have had to amend the Interstate Commerce Clause before this uproar, it is clear he could never have achieved its amendment afterward.
The second instance of circumvention is related to the same episode. The insurance industry was highly displeased to find itself regulated by federal agencies, and within six weeks successfully lobbied the McCarran Ferguson Act into law. Congress could not overturn or make an exception to a Supreme Court ruling, but it accomplished the same result by prohibiting federal agencies from taking action in the business of insurance. To maintain regulation for insurance, all of the various states then passed laws establishing insurance regulatory mechanisms, and insurance regulation migrated back to the states. It is now difficult to know whether the same exception could have been created by then re-amending the Constitution. But since the advent of wide-spread current dissatisfaction with health insurance, it it pretty clear that an amendment imitating McCarran Ferguson would never pass, today.
Finally, the Eleventh Amendment may not have been such a good idea, either. The dispute in 1793 (although it avoided saying so) was about compelling Americans to pay just debts regardless of the person they owed them to. And that included paying debts to former Loyalists. John Jay the Chief Justice was sent to England to negotiate a treaty to settle this matter, but after both nations ratified the treaty, state laws were passed to supersede it. From this evolved the issue of whether a treaty takes precedence over American laws, and the ensuing battle firmly established the preemption of Congress by treaties. Two hundred years later, when the British are our allies and Revolutionary debts fade in significance, many people are uneasy about such clear-cut deference to treaties. Our unwillingness to join the League of Nations, and sign the Kyoto Agreement, or enter into many other international cooperative ventures are related to uneasiness about the unintended expansive power inherent in the Constitutional location of a foreign treaty, enacted at a time of limited communication. We are doomed by demography to perpetual minority status in world forums, but forced by economic success to exert leadership or become a target. There is no immediate emergency, but the prescribed generalities of enacting or enforcing treaties need sober reflection in the era of instant communication.
http://www.philadelphia-reflections.com/blog/1668.htm
Seventeenth Amendment
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| Seventeenth Amendment |
The Seventeenth Amendment of the Constitution provides for the direct election of U.S. Senators; prior to that, the states could decide for themselves how to select their Senators. The Amendment was proposed in 1912 and ratified in 1913. Today, so little is written about this matter that most people do not have an opinion whether the Amendment was good or bad, necessary or unnecessary. The Progressives of 1912 professed to be shocked, shocked, that wheeling and dealing went on in the state legislatures every time there was a vacancy in the Senate. Indeed, few contestants on TV quiz shows would be able to tell you what the Amendment was about. It would be hard to find a person who would, without further study, be opposed to a reaffirmation of "The Senate of the United States" shall be composed of two Senators from each State, elected by the people thereof, for six years; and such Senators shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures."
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| Constitutional Convention |
If you search for reasons -- why in the world would there be a fuss about this topic, 125 years after the "Constitutional Convention -- several plausible reasons are stated, all of them amounting to legislature incompetence. Such as deadlocks resulting in vacancies remaining unfilled, influence by corrupt political organizations and special interests through purchase of legislature seats, and neglect of duties by legislators because of politics. Even though news of these matters has failed to persist in the national recollection, they seem plausible enough; it sounds like local politics, all right. But the plausibility was there in 1787, too, and surely the founding fathers expected something like that when they let the States select their Senators as they pleased. The whole idea surely was to give the states additional reassurance that they could block any further transfer of state power to the federal government; direct election of senators clearly reduced the power of state governments in the federal/state struggle. Mostly, of course, by the State Legislators selecting one of their own members to go to Washington.
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| John Marshall |
We have here a tilting of our governance from a Republic toward a Democracy, following the philosophy of John Marshall, of all people, that the behavior of all State legislatures everywhere will inevitably lead to mischief. Just a minute, please, let's give this a little thought. Surely the vast amounts of campaign money required to run for a Senate seat compare with the amount a special interest would have to spend to buy a majority in the Legislature of a State. As a practical matter, most special interests have lost interest in State politics and spend their money in Washington -- except for those few special interests that are exclusively State regulated. This comes down to the insurance and real estate industries, with insurance only there because of the McCarran Ferguson Act. This isn't only because of the Seventeenth Amendment, it also has to do with Franklin Roosevelt's Court-packing attempt, which is discussed elsewhere.
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| " Plato" using Leonardo da Vinci as model. |
The idea of a Republic, originally set down by the Greek philosopher Plato, was that a small group of elite philosophers (you will have to forgive his professional biases) who meet together occasionally, would be better able to pick a member of their group for higher responsibilities, than would the populace. The inner circle would know who was an alcoholic, a phony, a pervert, a coward or a loafer, whereas these qualities can be concealed from mass audiences long enough to get elected. Such an in-group in a legislature may pick a bad person, or deliberately reject a good one, but they do it on purpose, not because they are fooled. The issue of direct election of Senators comes down to whether you think it is more likely that a legislature will be corrupt, or the voting population will be ignorant. Hard choice.
Meanwhile, election to the State legislature has been reduced to an inconsequential backwater, almost guaranteed to have an adverse effect on the members. There was a time when people who wanted to be U.S. Senator knew they must first run for the Legislature, where their skills could be tested, and perfected. National affairs became State affairs, with legislators well aware that they could unseat a Senator whose national behavior displeased them. There are many States, Pennsylvania among them, who collectively pay far more federal taxes than they receive in federal benefits. Call it pork barrel if you like, the present degree of interstate wealth redistribution could not possibly continue at present levels if we repealed the XVII Amendment.
http://www.philadelphia-reflections.com/blog/989.htm
Owen Roberts: A Switch in Time
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| Owen Roberts |
To this day, no one knows quite what to make of Owen J. Roberts, founder of one of Philadelphia's largest law firms. He was Prosecutor of the Teapot Dome scandal, Dean of the University of Pennsylvania Law School, Republican appointee to the U.S. Supreme Court. But then, he abruptly became the source of one of the most radical revisions of our system of government since the Declaration of Independence. Nothing in his prior career, and nothing afterward in his subsequent civic-minded retirement from the Court, seemed to suggest any radical turn of character had taken place. He has been compared with a famous baseball pitcher who threw right-handed or left-handed at will, unexpectedly, capriciously, who knows why.
The issue went far beyond one clause in the Constitution, but the commerce clause was the focus point. Under the limited and enumerated powers allowed to Congress by the Constitution was :
The Congress shall have power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.
That used to be called the interstate commerce clause until the Supreme Court announced its decision in the case of Wickard v. Filburn. When linked with the Tenth Amendment, granting to the States the power to regulate everything not specifically granted to the Federal government, this clause in the Constitution was universally taken to mean that the States had control of commerce within their borders, while Congress would control interstate commerce. Wickard v. Filburn took all that power from the states and gave it to Congress, which henceforth would regulate commerce. John Marshall had certainly triumphed over the hated state legislatures, but the Supreme Court suddenly lost its power to overrule Congress, too. One side had won the old argument, by silencing the umpire. No wonder Franklin Roosevelt started annual celebrations called Jefferson-Jackson Day dinners.
To describe the background, the 1929 stock market crash was quickly followed by the economic Depression of the 1930s. Nothing of this magnitude had been seen before, and there was a stampede to try new and untested solutions. Even government action which actually worsened economic conditions was felt justified if it conveyed to the frightened public the image that its leaders were taking firm action. Since Socialism and Communism were among the solutions grasped for, many unfortunate actions were felt justified as a way to control the Bolshevik threat. Many of these New Deal actions were declared unconstitutional by the Supreme Court, since they involved sweeping revisions in the way all commerce, internal to the States as well as interstate, was conducted.
The Depression and financial panic continued through the 1936 Presidential election, which Roosevelt won decisively. Immediately after the start of his new term, he announced a plan to increase the number of Justices on the Supreme Court, appointing new ones more to his liking. He was at pains to point out that seven of the nine life incumbents had been appointed by Republican Presidents. This was of course the restraint intended by the Constitutional Convention, and the idea of packing the Court with new appointees was exactly what Jefferson and Jackson had tried to do.
In the meantime, the case of Filburn, a dairy farmer, came up. One of the New Deal agencies had assigned him a quota of 200 bushels of wheat he could grow on the side, as part of an effort to raise wheat prices by reducing supply. Filburn had raised 400 bushels, but consumed the extra wheat for his own personal use, hardly a matter of interstate commerce. The Court had repeatedly declared laws like this to exceed the interstate commerce limitation, and were thus unconstitutional for the Congress to enact.
Well, Owen Roberts changed his position, Filburn lost his case. Forever afterward, this change of position was referred to as the switch in time, that saved nine. Since that time, the Court has rarely had the courage to rule any action of Congress unconstitutional, even though it is true that Congress promptly and resoundingly rejected the court-packing proposal.
And furthermore, the power of the state legislatures has shriveled because all commerce (except insurance and real estate) is federally regulated, with a corresponding vast increase in the size of the Federal bureaucracy, as Congress relentlessly pushes to intervene in commerce. Franklin Roosevelt had a certain right to gloat at Jefferson-Jackson Day dinners.
A few weeks before he died, Owen Roberts had all his papers burned. So we will never know whether the present outcome was the result he had in mind.
http://www.philadelphia-reflections.com/blog/599.htm
Delaware's Court of Chancery
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| Chancery |
Georgetown, Delaware is a pretty small town, but it's the county seat so it has a courthouse on the town square, with little roads running off in several directions. The courthouse is surprisingly large and imposing, even more surprising when you wander through cornfields for miles before you suddenly come upon it. The county seat of most counties has a few stores and amenities, but on one occasion I hunted for a barbershop and couldn't find one in Georgetown. This little town square is just about the last place you would expect to run into Sidney Pottier and all the top executives of Walt Disney. But they were there, all right, because this was where the Delaware Court of Chancery meets; the high and mighty of Hollywood's most exalted firm were having a public squabble.
Only a few states still have a court of Chancery, but little Delaware still has a lot of features resembling the original thirteen colonies in colonial times. The state abolished the whipping post only a few decades ago, but they still have a chancellor. The Chancellor is the state's highest legal officer, and four other judges now need to share his workload, which was almost completely within his sole discretion seventy-five years ago. In fact the Chancellor usually heard arguments in his own chambers, later writing out his decisions in longhand. The Court of Chancery does not use juries.
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| Sir Francis Bacon |
Going back to Roman times, the Chancellor was the highest official under the Emperor, and in England the Lord Chancellor is still the head of the bar in a meaningful way. Sir Francis Bacon was the most distinguished British Chancellor, and gave the present shape to a great deal of the present legal system. A court of Chancery is concerned with the legal concept of equity, which is a sense of fairness concerning undeniable problems which do not exactly fit any particular law. The Chancellor is the "Keeper of the King's conscience" concerning obvious wrongs that have no readily obvious remedy. You better be pretty careful who gets appointed to a position like that, with no rules to follow, no supervisor, no jury, dealing with mysterious issues that have no acknowledged solution.
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| George Read |
Delaware's Court of Chancery evolved in steps, with several changes of the state Constitution over a span of two hundred years. As you might guess, a few powerful chancellors shaped the evolution of the job. Going way back to 1792, Delaware changed its Supreme Court from the design of the 1776 Constitution, and George Read was the new Chief Justice. However, it was all a little embarrassing for William Killen, who had been the old Chief Justice, getting a little old. Read refused to have Killen dumped, and in this he was joined by John Dickinson, who had been Killen's law clerk. So Killen was made Chancellor, and a court of Chancery was invented to keep him busy.
Under a new 1831 Constitution, the formation of corporations required separate enabling acts by the Legislature, and limited their existence to twenty years. However, the 1897 Constitution relaxed those requirements and permitted entities to incorporate under a general corporation law and allowed them to be perpetual. By this time, other states were distributing equity cases to the county level, but Delaware was small enough to justify a single state-wide Court. That court was attractive to corporations because it could become specialized in corporate matters, but it retained a pleasing number of equity cases among common citizens, thus maintaining a more generally understandable point of view.
But other states thought they could see what Delaware was up to. In 1899 the American Law Review contained the view that states were having a race to the bottom, and Delaware was "a little community of truck farmers and clam-diggers . . . determined to get her little, tiny, sweet, round baby hand into the grab-bag of sweet things before it is too late." However that may may be, corporations stampeded to incorporate in the State of Delaware, and the equity of their affairs was decided by the Chancellor of that state. In one seventeen year period of time, the U.S. Supreme Court reversed the decision of the Chancellor only once.
 Chancery's jurisdiction was complementary to that of the courts of common law. It sought to do justice in cases for which there was no adequate remedy at common law. 
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A. H. Manchester Modern Legal History of England and Wales, 1750-1950 (1980) |
Some legal scholar will have to tell us if it is so, but the direction and moral tone of America's largest industries has apparently been shaped by a small fraternity or perhaps priesthood of tightly related legal families, grimly devoted to their lonely task in rural isolation. The great mover and shaker of the Chancery was Josiah O. Wolcott (1921-1938), the son and father of a three-generation family domination of the court. Most of the other members of the court have very familiar Delaware names, although that is admittedly a common situation in Delaware, especially south of the canal. The peninsula has always been fairly isolated; there are people still alive who can remember when the first highway was built, opening up the region to outsiders. Read the following Chancelleries quotation for a sense of the underlying attitude:
"The majority thus have the power in their hands to impose their will upon the minority in a matter of very vital concern to them. That the source of this power is found in a statute, supplies no reason for clothing it with a superior sanctity, or vesting it with the attributes of tyranny. When the power is sought to be used, therefore, it is competent for any one who conceives himself aggrieved thereby to invoke the processes of a court of equity for protection against its oppressive exercise. When examined by such a court, if it should appear that the power is used in such a way that it violates any of those fundamental principles which it is the special province of equity to assert and protect, its restraining processes will unhesitatingly issue."
That is a very reassuring viewpoint only when it issues from a person of totally unquestioned integrity, a member of a family that has lived and died in the service of the highest principles of equity and fairness. But to recent graduates of business administration courses in far-off urban centers of greed and striving, it surely sounds quaint and sappy. And many of that sort have found themselves pleading in Georgetown. Just let one of them bribe, muscle, or sneak into the Chancellor's chair some day, and the country is in peril.
http://www.philadelphia-reflections.com/blog/459.htm
Hedge Funds in Delaware
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| Trimming the Hedge |
Some day a shrewd observer of the passing scene will notice the peculiar quality which attracts some businesses to the state of Delaware, and coin a catchy phrase like Delaware Attractiveness to describe it in a nutshell. It surely underlies the way major national corporations predominantly incorporate under the laws of Delaware; other states don't like that. It probably accounts for the unusual accumulation of national credit card companies in that little state. Right now, it must be surmised to account for 24% of American hedge funds locating in Delaware. Just what is Delaware Attractiveness?
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| James Madison |
James Madison, the main author of our national Constitution, disliked taxes and debt and celebrated the ability of taxpayers to move to a different state if their home state raised taxes too high. The right to migrate away acts a a discipline on state governments tempted to abuse power. A good example now exists in New Jersey, where one percent of the population pays 42% of the taxes, and that one percent is moving out of New Jersey as fast as it can. Eventually, that same 42% of taxes will be redistributed to those who remain, and something will be done about New Jersey state expenditures.
So conversely, little Delaware once had few corporations, and little to lose by lowering corporation taxes. Soon, these low taxes attracted corporations from other states to incorporate in Delaware. When credit cards were invented, they were attracted to Delaware by low taxes, gentle regulation and fair-minded courts. They were non-polluting businesses who employed a lot of rural labor made available by enhancements in agricultural productivity. One member of the Delaware Chamber of Commerce once mused, if it would attract the right sort of business, any hampering state legislation could be changed over a weekend.
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| Adlai Stevenson |
This spirit of the American Liechtenstein attracted 24% of hedge funds to Delaware before most people knew what a hedge fund is. Without delving into the full complexity of the subject, a hedge fund addresses the instability of investing for the long term with short term money. Promising higher returns than mutual funds which can generally be liquidated overnight, a hedge fund locks the investor's money up for several years, and hence needs to tell its competitors (and unfortunately also the investor) comparatively little about what it is doing with his money. One hedge fund operator stoutly defended the need to keep others from knowing his positions, illustrating how competitors who knew his positions would destroy him by "front-running", typically by flooding his positions with sell orders about ten minutes before or after the closing bell on the stock market. And, indeed that was a realistic concern, since 70% of current stock trading is performed by unattended computers, who can transact huge sales in seconds when they detect unusual patterns of activity. So, when the stock market crashed in 2007-2009, Congressmen were pressured to find scape-goats. Some blamed computerized trading, and some blamed hedge funds. Quite possibly, it was neither one, since hedge funds were comparatively unaffected by the crash, and "programmed" traders made a great deal of money. However, Delaware is discovering that anyone who visibly escapes a nation-wide panic is under suspicion of causing it, and must fight off hostile legislation at least until the full facts emerge. The ability to front-run, and the ability to avoid having it happen to you, constitute a business advantage, an "edge". There may be more to it than that, but other features are cloaked in the secrecy which hedge funds enjoy, so secrecy is the business plan of hedge funds, apparently more tolerantly treated in Delaware than elsewhere. The price which hedge funds pay for their right to secrecy is the limitation imposed on them by the regulators as to who may be their customers. Somehow, a customer gets defined as a rich sophisticated person, who knows what risks are involved, and can afford to lose his money. Being in a small, closely-knit community where word of mouth is trusted, adds some degree of safety too. Adlai Stevenson once made an observation about trusting such protections:
In the past it was said, a fool and his money are soon parted. But nowadays -- it could happen to anyone.
http://www.philadelphia-reflections.com/blog/1453.htm
Vote Counting, Past and Future
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| Greg Harvey |
The Right Angle Club was recently fascinated to hear Greg Harvey, a Montgomery McCracken expert on election laws, discuss the snarled Florida situation in the 2000 Presidential race, and the prospects for similar problems in upcoming elections. With the aid of retrospect, candidate Al Gore deserves much of the blame for his own loss, and the U.S. Supreme Court does seem to have terminated the uproar without affecting the final result.
A consortium of major newspapers funded an extensive investigation of the Florida election, and were forced to agree that George W. Bush would probably have won that election no matter what. The central issue in these contests is the 35-day time limit to contesting elections. It is true that, right or wrong, the country needs to settle its elections promptly and get on with its business. Furthermore, if a national election is so close that it takes months to decide the winner, there can't be a great deal of difference between the candidates, so who cares.
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| Al Gore |
Looking back at the 2000 election with the leisure of time and appreciable resources, it is possible to see that Al Gore might have won that election if he had made several lucky choices in contesting its result. But it seems highly unlikely that anyone in his position would have been able to identify the winning combination of choices -- within the 35 day time allowed for pursuing them. He had to guess that ballots with two candidates marked ("overballoting") would pick up more Gore votes than ballots without an indicated choice ("underballoting"); he guessed wrong. He had to decide whether challenging late ballots from absentee military was worth the unpopularity of pursuing such a technicality to the disadvantage of soldiers serving overseas. His ticket-mate Joe Lieberman urged him to avoid that touchy issue which did prove to cost him some votes he needed. The decision was one to be proud of, but is a main reason why his party faithfuls later turned rather viciously against Lieberman. A second wrong guess was to fail to go after the software mixup on invalidating the ballots of convicted felons. He might have picked up a couple thousand votes, but only if willing to have the world learn that convicted felons are overwhelmingly pro-Democratic voters. The one decision he made that makes him look rather sappy to professional pols was to challenge ballots in the districts where he was already very popular.
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| Vote |
Vote counters and poll watchers tend to be strong political partisans, usually drawn from the local district. When votes are ambiguous, these people lean in the direction of their party. Therefore, most party insiders would know immediately; if you challenge districts, challenge the districts which favor your opponent. Choices like this do have to be made. The thirty-five day rule makes a challenger run out of enough time to look elsewhere if early guesses prove wrong. So, although it is possible in retrospect to construct for Gore a winning strategy for selective challenges, the newspaper consortium and the Supreme Court which pondered the choices before him rightly concluded he was destined to lose.
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| HAVA |
Some of these lessons are enduring ones, but future elections face unexplored difficulties. A new election law (the Help America Vote Act, or "HAVA") sought to reform the election system by prohibiting the use of punch card ballots, requiring states to use auditable vote records and provisional ballots in doubtful cases, stricter voter identification methods, and state-wide voter registration databases. In response to these record requirements, many states opted for complicated data in code, sequence-scrambled to prevent individual identification. In the event of challenge, however, deciphering these records will be time-consuming, and the potential is created for the candidate who is initially ahead to stretch out the process until the challenge effort collapses at the 35-day time limit.
Several states, including Ohio, are thought to have the potential for very close 2008 results. In that particular state there are some complicated rules about voting in the "wrong" district, that is, to be registered in one district, but attempting to vote in another. It would not seem difficult to do a little of this on purpose, either as a voter, or an election registrar. It seems unlikely that very much challenge among the three possible culprits could be accomplished within thirty five days of a contested election. So the challenger in Ohio would be faced with the same sort of impossible snap decisions that faced poor old Al Gore, surrounded by excited partisans shouting at the top of their voices.
So perhaps Greg Harvey's lawschool classmate Appellate Judge Richard Posner has a sustainable position on this. It was his judgment that the 2000 election was essentially a tie. Letting the Supreme Court decide it wasn't the worst possible choice.
www.Philadelphia-Reflections.com/blog/1515.htm
http://www.philadelphia-reflections.com/blog/1515.htm
As Others See Us
Americans are rightly proud of their Constitution, an achievement no one seems able to match. It's rude to point it out, but some Americans are just a little condescending about Europe's protracted examination of a federal union, and the World's plain inability to design a United Nations Charter that everyone can warm to.
But just a minute, look at the centuries of history we have compiled. After eighty years, the American union broke apart in the bloodiest war in our history, proportional to the population at the time. After another century it was safe to suppose we were past that episode, at least mostly.
And if you were an elected representative of one of the European states, charged with assuring a fair result for your constituents, you would have to warn them of something America seems to demonstrate. The new federal government at first had to be deferential to the various states, in order to persuade them to ratify the document. It wasn't an easy sell, and a promise had to be made and reiterated that every single power being surrendered was absolutely necessary for the common welfare of all. And it was necessary to repeat the promise in the Tenth Amendment, that nothing more was being given, nothing up our sleeve. The Eleventh Amendment which followed soon afterward, could even be described as a test of sincerity. The states demanded something they really should have been ashamed to ask for, but it was given to them as a demonstration who was still boss. The Federalist party soon broke apart, and had to become craven, only persisting in the assertion of powers it was absolutely clear states needed to give up.
But soon after that, the federal government has never ceased to nibble away at the cheese. Step by step, gradually but relentlessly, power has shifted from state capitals to the District of Columbia. It is now possible to say without serious contradiction that state legislatures really don't have much to do of any importance. Is that the lesson European officials are learning from our history?
Maybe not, but Charles de Gaulle once made a wisecrack suggesting another answer. He wanted to go to Heaven, he said. He really did. But he was definitely in no hurry to get there.
http://www.philadelphia-reflections.com/blog/1670.htm
Lessons For the European Union
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| alliance |
Old Europe is long accustomed to instructing Americans in matters of deeper significance, so they have a little trouble acknowledging that the present formation of the European Union is based on the American design, in Philadelphia, of 1787 and perhaps will encounter some of the same problems. The success of that design is the main motive for imitating it, the difficulties Europeans seek to overcome are the same ones we faced, and the difficulties the Europeans will discover in the future after they do it, will be much the same ones we discovered. They can take it or leave it, but here are a few observations.
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| The Declaration of Independence |
The people in power in the individual nations of Europe, and the political factions which elected them, don't really want to give up their power to a central government in Strasbourg. Exactly the same reluctance inspired our thirteen colonies in the Eighteenth Century. Having multiple sovereign governments, however, soon proves inefficient, costly, and dangerous if you have powerful enemies. Free trade and a common currency seem like good things, but there are plenty of people who will resist them because they currently benefit from tariffs, subsidies, protectionism, even blatant favoritism, and don't want to change the rules in the middle of the game. Furthermore, if transitions are too rapid, even from a bad system to a good one, changes can prove extremely disruptive. The Europeans have a big problem we didn't have, of multiple languages, so harmony will be slower to arrive -- try to imagine a common market union in the Balkans.
" But our experience teaches an important principle, unwritten in the Constitution. The outstanding message of the American experience from 1787 to 1850, quite unforeseen by the Founding Fathers, is that no party in power can see the merit of self-restraint until it has spent some time out of power. Nor can any party of complainers and reformers see the true merit of stability and caution until it has spend some time in power, itself. Let's suggest a rule to the Europeans: every political faction is untrustworthy until it has spent two terms in office, and then two terms out of office.
Maybe even that assessment is too generous; after all, in 1850 we were just getting ready to have our Civil War. You'd certainly hate to think it was essential to have one of them, until you reflect that Europe really has had four or five civil wars that were larger than our own during the past two hundred years. Could it be that peaceful union really does lead to more peace? Hard to say for certain, of course, but the evidence is intriguing.
http://www.philadelphia-reflections.com/blog/998.htm
U.S. and E.U. Exchange Experiences (1)
The Global Interdependence Center (GIC), founded by Nobelist Lawrence Klein in 1976, brings noted foreign financiers to address Philadelphians interested in finance, and takes those Philadelphians abroad to return the visits. It's a gracious, entertaining, and highly stimulating travel club of very nice folks. Its 25th Annual Monetary and Trade Conference was especially exhilarating. Christian Noyer, President of the Banque de France, gave a description of the rationale and direction of the European common currency. Since he was the Euro's driving force right from the beginning, the experience of hearing him was pretty much like hearing Alexander Hamilton tell the story of the founding of the American banking system. Such a notable event needs to be reported.
Christian Noyer urges that the central concept of the European Union is deliberate, voluntary surrender of national sovereignty -- for a mutually beneficial purpose. The declared purpose of limited surrender of national control of the currency is economic; price stability, lower interest rates, the stimulation of international trade by lowering transaction costs. But the unstated, grander, purpose is the elimination of war. Because the limited technical purpose has been achieved in almost all areas, the grander purpose of eliminating war has not been an accident. With this simple, even humble, declaration it immediately becomes possible for a mildly irritated American audience to understand that European reluctance to become our active military ally grows out of a highly commendable set of motives, and widely differing historical experiences.
As things worked out, the new nations who have recently joined the Union ("The U") are anxious to modernize, because the people of those nations demand modernization and their leaders must agree to achieve it. Inflation, that hitherto inevitable fund-raiser for national goverments, must be eliminated in order to join, and stays eliminated because the other members of The U will not tolerate it in a partner. In his curious way, "price stability" has placed the Union on the side of the people against the locally powerful, although it would be untactful to emphasize it. From the elimination of inflation comes lower interest rates, and from that, a stable currency. From that comes economic growth, for which the political lingo seems to be "modernity". As a consequence of this undeniable success, all nations in the area want to join the Union, and none wants to leave it. If that prevailing attitude doesn't lead to the elimination of what might then be a civil war, it's hard to know what will eliminate it. The marvel of all this skillful analysis is how natural, soft and modest it sounds, feeling like an old soft shoe. Eventual political unification is clearly an old dream in Noyer's head, but for now he seems content with the vindication that it is possible to have a currency without having a country control it. It seems to be a steamroller of economic logic, flattening out the pretenses of merely political power.
No less an economist than Martin Feldstein has written that stable unified currency is doomed in the European context of widely diverse labor markets; Noyer seems pleasantly serene in the face of this argument. He wouldn't say so, of course, but some in the audience got the idea that Noyer probably believes the power of this cooperative idea will eventually discipline the unions the way it disciplined the politicians. One certainly hopes so, for the sake of this smooth, cuddly French aristocrat.
http://www.philadelphia-reflections.com/blog/1229.htm
U.S. and E.U. Exchange Experiences (2)
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America can learn about itself from the E.U.
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To see the economic power of unifying the currencies of Europe, and the political attractiveness of its results among the people of those countries, makes it suddenly more clear why our own Civil War is so often said to be about the Union and not about slavery. Unlike our grandfathers in the Civil War, we take the benefits of free interstate commerce for granted, while for them it was still a demonstrated achievement. Lincoln for example, was an ardent Whig, which in those days meant an advocate of helping commerce by the intervention of government. There is even a shadow of present concern that Americans will have so forgotten the lessons of free interstate commerce that they might somehow surrender it for some other blandishment. Certainly, free international trade has its enemies. The abolition of slavery was of course an overdue achievement, too, but perhaps our long slog toward equal rights has allowed this second crusade to overshadow the history of what really was the main one. In case anyone feels impelled to start a quarrel about this viewpoint, let me remind him that Quakers started the abolition movement, right here in Philadelphia, and have nothing to apologize about.
Going further back, we got our Constitution more or less right before we convinced the public of the economic benefits of unification; eventually we got a bad Civil War. The Europeans learned that complicated words in a Constitution have consequences, suspiciously loaded the proposed document with interminable conditions, and eventually rejected it. It's an old political trap that a proposal so loaded with attractions will often gather more opposition from objectors to multiple small points than proponents for the big points. Keep it simple, senor. If you expect men to die for that document, they have to be able to recite it. If you must make it complicated, just appoint a Supreme Court and wait a little.
http://www.philadelphia-reflections.com/blog/1230.htm
George Washington on the Federal Union
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| President George Washington |
"It is of infinite moment that you should properly estimate the immense value of your national union to your collective and individual happiness; that you should cherish a cordial, habitual and immovable attachment to it; accustoming yourselves to think and speak of it as of the palladium of your political safety and prosperity, watching for its preservation with jealous anxiety; discountenancing whatever may suggest even a suspicion that it can in any event be abandoned; and indignantly frowning upon the first dawning of any attempt to alienate any portion of our country from the rest, or to enfeeble the sacred ties which now link together the various parts."
http://www.philadelphia-reflections.com/blog/1737.htm
States Rights Confront Civil War
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| Dr. Randall Miller |
Dr. Randall Miller of St. Joseph's University recently gave the Union League an interesting insight into the non-military upheavals of America by Congress during the Civil War. (Parenthetically, Dr. Miller is the author of Encyclopedia of Greater Philadelphia, which may give him still greater prominence in these columns when it reaches print.) Lincoln and the military get most of the headlines, but the greatest nation-building activities were products of the Congress, not Abraham Lincoln directly; the President was too busy directing the war to take much lead in other matters. The Republican Party of that time was freshly created, still strong in its idealism around elements of the party platform which really meant something to them. Although Senators John Sherman of Ohio and William P. Fessenden of Maine are remembered by history, most of the activity was conducted by members of the Congress who had reached seniority in committees, and hence mostly had died off by the end of the War. It seems like one of history's great unfairnesses that a remarkable transformation of the nation was accomplished by people who are now largely unknown.
So Lincoln gets much of the credit by default, and the idealism and grand plans are lost in the current view that the Civil War was about liberating the slaves. That was of course part of it, but the Civil War was in fact mostly fought about the Union, and the Whig principles essential to nation-building. And the transformation was the vision of party policians in offices which we currently regard as being filled by party hacks in safe seats. That wasn't the case at all; these visionaries knew where they wanted the country to go, and cleverly designed a set of programs to make it happen. Lincoln wanted to win the war; these men wanted to have a new nation emerge, after the war.
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| Civil War |
It almost goes without saying that a Civil War over the secession of rebellious state governments from a Union created by the Constitution was going to weaken state power -- and strengthen Federal control -- if the Unionists won the war. That's what the Republicans wanted, and what the Southerners feared. But, strangely, both sides harbored warm feelings for the Constitution, wanting to preserve much of its essence. The Republicans therefore realized that many of the laws which were essential for winning the war, would lose their popularity and hence their force, once victory had been achieved. Reconstruction of the South, for example, was going to be unsustainable as soon as the huge Union Army was demobilized. The liberated slaves were unlikely to migrate to the western wilderness, and so the problems of racial readjustment were going to remain Southern problems for decades to come, without an army of occupation to maintain stability, law and order. In fact, it was largely Southern whites who migrated to the far West, leaving the situation even more unstable back in the old confederacy. How was a brave new nation to emerge from this mess?
War measures did help. There was no Federal currency until the War, and so a national system of greenbacks and war bonds helped to unify a vast and far flung continent. The National Banks, fought over and feared for nearly a century, simply had to be created; all of these national rather than local symbols strengthened the national feeling. Putting 10% tax on state bonds was a pretty good indication that the congressional Republicans knew where they were driving things. The telegraph was of great value to wartime communication; it helped create a virtual community, with national news taking the place of local news.
Up until the Civil War, the main source of Federal income was derived from the sale of land; the new nation had a lot more land than gold. After the war, the nation found itself with taxation as the main source of income. The income tax was a step too far, of course, and it was repealed; but a system of national currency organized a system of national taxes which persisted. The country still had plenty of raw land, but it was distributed by giving it to railroads in return for national transportation, and to land-grant colleges in return for greater uniformity of culture. Notice the hand of Congress, however. This land was to be surveyed land, not the land between this rock and that creek. Surveyors since the time of William Penn and George Washington were the agents of orderliness, law, and peaceful settlement of disputes. To that extent, surveyors broke up the reliance on local clans and territoriality; peace instead of conquest. The leaders of the North, the Republicans in congress and the cabinet knew what they wanted; it was that the sacrifices of the war would find a reward in the peace that would follow, and that reward would be a new nation.
Notice carefully the second section of the Thirteenth Amendment. The first section freed the slaves. The second section gave to the Federal government the charge of enforcing that liberty. The crafters of words and designers of rules, knew exactly where they wanted to go.
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| The Constitution |
They did their work so well, that it begins to look as though the next few decades will display a crisis, created by going too far, too fast. In all these idealistic schemes, the state government is the enemy. State governments would interfere with Reconstruction; state governments would interfere with land grants, and misuse their undisputed control of local law enforcement. State governments would introduce little strategems for restoring the power to tax and control, and to govern. State governments would slowly remember that the Constitution conferred only a few limited powers on the Federal government, and reserved all other powers to the states. The Constitution would never have achieved ratification without this explicit provision in the XII Amendment. And so, step by step, we have achieved some sort of goal by making the state governments into the weakest, most ineffectual, and yes the most corrupt parts of our national system. California, New York, New Jersey, and Michigan lead the way into what seems a certain disaster of enlisting municipal employees into political machines of the worst sort, and bankrupting the states that permit it. Massachusetts, Rhode Island, Maryland and West Virginia are not far behind.
Fanatics could persuade themselves that a solution readily lies in simply going all the way and eliminating state governments. But to do so would destroy James Madison's brilliant insight. The states place a limit on unlimited power from whatever source by offering the citizens a choice: if things get too bad, just move to a nearby state.
http://www.philadelphia-reflections.com/blog/1740.htm
Separation of Church and State
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Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
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It is common for rudimentary histories of America to declare that other Western Hemisphere colonists mostly came to plunder and exploit; the Protestant colonists however came with families to settle, fleeing religious persecution. That may be a considerable oversimplification of events covering three centuries, but it was true that before the Revolutionary War, eleven of the thirteen American colonies approached the de facto condition of having established religions. Massachusetts and Virginia, the earliest colonies, had by 1776 even reached the point of appreciable rebelliousness against their new religious establishments. The three Quaker colonies were late settlements, in existence less than a century before the Revolution, and therefore still comfortable with the idea they were religious utopias. But however differing in intensity all colonials respected the mottos, habits of thought, and forms of speech natural to utopians residing in a religious environment.
Once Martin Luther had let the Protestant genii out of its religious bottle, however, revisionist logic was pursued into many corners. Ultimately, Protestant questers found themselves confronting -- not religious dogmatism, but its opposite -- the secularism of eighteenth century enlightenment. Comparatively few colonists were willing to acknowledge doubts in public about miracles and divinity, but these doubts were sufficiently prevalent among colonial leaders to engender restlessness about the tyrannies and rigidities of their dominant religions, contempt for the self-serving political struggles observable among their preachers, and alarm about the occasional wars and persecutions over dubious religious doctrines. Arriving rather late in this evolution of thought -- but not too late to experience bloody persecutions themselves -- the Quakers sought to purify their Utopia by eliminating preachers from their worship. Thus, the most central and soon the most prosperous of the colonies made it respectable to denounce religious leaders in general for the many troubles they provoked.
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| London Yearly Meeting |
For Quakers, the most wrenching, disheartening revelation came when they were themselves in unchallenged local control during the French and Indian War. The purest of motives and the most earnest desire to do the right thing provided no guidance for those in charge of government when the French and Indians were scalping their western settlers and burning their homes. Yes, the Scotch-Irish settlers of the frontier had unwisely sold liquor and gunpowder to the Indians, and yes, the Quakers of the Eastern part of the state had sought to buffer their own safety from frontier violence by selling more westerly land to combative Celtic immigrant tribes. Similar strategy had worked well enough with the earlier German settlers, but reproachful history was not likely to pacify the frontier Scottish in the midst of widespread massacre. The Quaker government was expected to do what all governments are expected to do, protect their people. To trace the social contract back to William Penn's personal friend John Locke was too bland for a religion which prided itself on plain speech. Non-violent pacifism could not be reconciled with the duties of a government to protect its citizens. The even more comfortably remote Quakers of the London Yearly Meeting then indulged themselves in the luxury of consistent logic; a letter was dispatched to the bewildered Quaker Colonials. They must withdraw from participation in government. And they obeyed.
Although the frontier Scots were surely relieved to have non-Quakers assume control and do their military duty, the western part of the state has never forgotten nor forgiven. In their eyes, Quakers are not fit to be in charge of anything. Quaker wealth, sophistication and education were irrelevant; only Presbyterians are fit to rule.
The French and Indian War turned out fairly well; most of its victories were located on the other side of the Ocean. But twenty years later the Revolutionary War was one of British conquest of America. If there was to be American victory, American troops must do the fighting. Many prosperous and educated Quakers solved their dilemma by fleeing to Canada, but the ardent Quaker proposal for dealing with the British government was not at all impractical. John Dickinson in particular argued that since the British motives were economic, success was most likely to come from economic pressure, adroitly leveraging three thousand miles of intervening ocean. That was shrewd, and potentially effective. But the Scots-Presbyterian position was simpler and more direct. If you want us to fight your war, you are going to have to fight to win. The Virginia cavaliers were probably more likely to win the war if they were put in charge, but the blunt and almost savage frontiersmen were ideally suited for what has come to be called guerrilla warfare. Washington was a leader, French money was welcome, Ben Franklin a diplomat, but the call to battle was the voice of Patrick Henry.
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| Congress Hall |
In all wars, arts of diplomacy and restraints of religion are set aside as insufficient, if not altogether failures. In the Revolution, some Quakers split from pacifism and became Free Quakers, many more drifted into Episcopalianism, never to return to pacifism. The Constitutional Convention of 1787 was held in this environment; previous service in the War counted for something, and the great goal was to strengthen the central government -- for more effective regional defense. A great many leaders were Masons, holding that much can be accomplished by secular leadership, independent of religious reasonings. Neither Washington nor Madison revealed much of their religious positions, although Washington the church attender always declined communion; Franklin and probably Jefferson were at heart deists, believing that God may well exist, but wound up the universe like a clock and let it run by itself. The New England Calvinist doctrines have since evolved as Unitarianism, which outsiders would say theologically is not greatly different from deism. Physically surrounding the Philadelphia convention was a predominantly Quaker attitude; preachers get you into trouble entirely too often.
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| James Madison |
When the first Congress finally met under the new constitution, they confronted over a hundred amendments, mostly submitted from the frontier and fomented by Jefferson, demanding a bill of rights. The demand of these amendments was overwhelmingly that the newly-strengthened central government must not intrude into the rights of citizens. Recognizing the power of local community action, states rights must similarly be protected. Just where these rights came from was often couched in divine terms for lack of better proof that they must be innate, or natural. From a modern perspective, these rights in fact often originated in what theologians call Enthusiasm; the belief that if enough people want something passionately enough, it must have a divine source. The newly minted politicians in the first Congress recognized, something had to be done about this uproar. Congress formed a committee to consider matters, and appointed as chairman -- James Madison. Obviously, the chief architect of the Constitution would not be thrilled to see his product twisted out of shape by a hundred amendments, but on the other hand, a man from Piedmont Virginia would be careful to placate the likes of Patrick Henry. The ultimate result was ten amendments called the Bill of Rights, and Madison packed considerably more than ten rights into the package, in order to preserve the cadence of the Ten Commandments. The First Amendment, for example, is really six rights, skillfully shaped together to sound more or less like one idea with illustrative examples. Overall freedom of thought comfortably might include freedom of speech (and the press), along with freedom of religion, and assembly, and the right to petition for grievances. But what it actually says is that Congress shall not establish a national religion. Since eleven states really had approximated establishing a single religion, the clear intent was to prohibit a single national religion while tolerating unifications at the state level. Subsequent Supreme Courts have extended the Constitution to apply to the states, responding among other arguments to a growing recognition that religious states had the potential to get so heated as to war with each other. No matter what their doctrines, it seemed wiser to deprive organized religions of political power as a step in giving the Constitution monopoly power over the process of political selection.
At first however it was pretty clear; one state's brand of religion was not to boss around the religion of another state. Eventually within one state, Virginia for example, the upstate Presbyterian ministers were not to push around the Episcopalian bishops of the Tidewater. Madison and Jefferson saw well enough where political uprisings tended to start in those days, in gathered church meetinghouses. In this way, an Amendment originally promoted to protect religions has evolved into a way to ease them out of political power. The idea of separation of church and state has grown increasingly stronger, to the point where most Americans would agree it defines a viable republic. No doubt, the spectacle of preachers exhorting the faithful in opposite directions during the Civil War, finally settled the argument.
http://www.philadelphia-reflections.com/blog/1756.htm
School Tax Seldom Equates to School Spending
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| Little Red Schoolhouse |
As this blog went to press, voters throughout South Jersey had just gone to the polls to vote for school boards and school budgets. Or, at least they had the opportunity to do so, but mostly 15% of eligible voters actually troubled to vote. Meanwhile, school officials chewed their nails in apprehension that many budgets would be disapproved by the taxpayers, and then what? As it turned out, Haddonfield and Moorestown approved their budgets, but over half of the 700 school districts of the state did not. The voters wanted to send a message they were angry about property taxes, and the seemingly related fact that over half of school employees are not teachers. Some of them mistakenly believe county taxes have something to do with schools. If they had really understood the situation, they would have been angry that the size of their local school budget has comparatively little to do with the level of their total tax burden.
Meanwhile, voters with children had been agitating to support the budget or even raise it, even if it raised their taxes; but empty nesters were urging each other to go vote down this budget because their taxes were already excessive. The parents of schoolchildren urged the empty nesters to move somewhere else where they couldn't vote down school budgets. Actually however, if more empty nesters moved in, property taxes would go down without affecting the school budget, because empty-nesters pay taxes without using the schools. Both groups are quite misguided, however, because raising or lowering school budgets would probably have very little effect on overall taxes. Even school officials failed to make their best case to the public, because they misunderstood the tricky way taxes are arranged. They defend every budget by saying it is already cut to the bone. Since it presently makes relatively little difference to overall taxes whether the budget is cut or increased, that's not useful in persuading empty nesters. Budget cutting does make a lot of difference to the quality of education, however, but that's only half of the facts, not a balanced one. The moral of all this is that the voters better get educated about the Jersey political scene, before their children lose the chance to get educated at all.
Since I'm an empty nester, I am pretty familiar with the empty-nest viewpoint. Three of my friends have told me they moved to neighboring suburbs in order to lower their tax burden; they undoubtedly know what they are talking about. But no one I know is able to reconcile that fact with the equally certain fact that Haddonfield has the lowest spending on education, per pupil, in the southern half of the state. In fact they don't care, because they know that local school taxes are significantly lower almost everywhere else, and they don't have to explain why. School officials should be more concerned with explaining their rank in per-pupil spending compared with other districts, but they are driven to make cuts in service where ever they can in order to produce a leaner budget for the voters. They too, seem oblivious to the fact that voter anger won't be soothed for long by their budget cutting, because it won't affect overall taxes. Taxes are what people are mad about, but they must consider all of them, and understand that as one goes down, the other will probably go up. In an another article, we discuss how they mysteriously go up even more. A more sophisticated view would be that in addition to concern about eradicating poverty in the long run, residents of New Jersey are increasingly driven by the need to get their children into the better quality colleges. They would like to improve secondary education to do so, but are hampered by the relative unavailability of high-quality colleges in the state. Some of this has to do with the recent tendency of Princeton and Rutgers to seek a geographical diversity of students. But to be cynical about it, the development officers of those colleges know that major donors are to be found in Texas and California. In New Jersey the majority of income taxes are paid by 1% of the population, and that !% are fleeing the state to avoid its heavy income and estate taxes, just as fast as they can. This is the group that tends to donate most heavily to college improvements, and New Jersey colleges are suffering from their flight. That argument may well be hard to sell in Newark and Camden, but it has a major indirect effect on business creation and employment in the state as a whole.
To return to basics, New Jersey school spending is governed by the Abbott decision, which happens to have been written by a friend of mine, who is a fine, smart, well-intentioned jurist. So-called Abbott districts were found by the courts to have significantly underfunded schools, to the point where it seemed an important public issue that the wealthier parts of the state must help these underprivileged kids get an adequate education. Whether improving the school system in their districts would reduce the crime rate, or welfare rate, among these children in later life was not then known, but subsequent experience does not give it much support. Mainly, it wasn't so much trying to reduce public expenditures in the long run that was behind the Abbott decision, as the feeling it was the duty of a prosperous society to give deprived kids an even break, a sort of penance for success. Accordingly, state school tax revenues were rearranged in an effort to make the per-pupil spending for education approximately equal in all districts, and particularly in the most deprived areas, the Abbott Districts. The first clear sign that something unintended was happening is shown in the accompanying table, indicating that spending in the Abbott districts was in fact now about fifty percent greater than in prosperous nearby suburbs. Equality might be all right, but fifty percent greater was probably not acceptable to the tax paying public. Just how that paradox gets accomplished in Trenton is not yet clear, but the discomfort level about it is heightened by noticing there is generally an inverse relationship between the spending per-pupil and the perceived quality of the educational product. You might compare drop-out rates, crime rates, SAT scores or whatever, but public perception is not likely to overcome data seeming to show that the more you spend, the worse the education. One wag commented that the data also seems to show that the further you get from the Delaware River, the lower the educational spending gets; that relationship is also more or less linear. So, what matters here is opinion, and the prevailing opinion is emphatic that this data is upside down. The Abbott decision that school spending must be equalized but is actually greater accounts for much of this funny data, but in addition there almost has to be some overlooked secondary factor which exaggerates the Abbott effect by as much as 50% beyond equality.
Even the education industry has an incentive to explain at least and possibly to correct, this disparity. Because in politics while you can prove almost anything with statistics, it is quite seductive to imply that this data proves that extra educational spending hurts the quality of education, at least above a certain level. The education industry wouldn't be wise to let that sort of accusation go unanswered, even if it comes as a wisecrack. The real empty-nester accusation, sorry to say, is that "My school taxes are way too high. They not only do me no personal good, but are not helping underprivileged children, either." The consequence is empty-nesters are driven out of town and out of state, making taxes higher for everyone else. It could take decades to undo this damage with an angered public, so everybody better get to work explaining and correcting the problem.
http://www.philadelphia-reflections.com/blog/1805.htm
How Does New Jersey State Aid Affect School Districts?
The Sunday, April 11, 2010 Philadelphia Inquirer contained an eighteen-page statistical summary of the schools within the eight-county area around Philadelphia. The New Jersey school districts, but not the Pennsylvania ones, report per-pupil spending right next to the proportion contributed by state government. If you know something about the sociology of New Jersey, you form some conclusions about state school aid which probably apply to all states, while confessing they only provably apply to New Jersey. Let's therefore say, it only provably applies to New Jersey that you spend more for schools if you are spending someone else's money.
In the welter of numbers supplied by this statistical report, it seems useful to focus on the strip of school districts along Haddon Avenue, starting from the place where the retreating British soldiers once ferried from Philadelphia to Camden (in 1778, of course.) Haddon Avenue extends directly East until it strikes King's Highway, where the British then turned North to scuttle toward the safety of their navy at New Brunswick. We are thus talking about the school districts of Camden, Collingswood, Haddon Township, Haddonfield and Cherry Hill, with Haddon Heights and Pemberton thrown in because of special features they illustrate.
Pemberton Township in Burlington County spends the largest amount of per-pupil school money in South Jersey, $18,970. It jumps right out at you that 82% of that money is contributed to the school district by the state government. Starting back at the Delaware River, 99% nonwhite Camden gets 88% of its school money from the state, and has the second-highest spending of $16,131 per pupil. Moving along the path of the British soldiers, the next town after Camden on Haddon Avenue is Collingswood, spending $14,262. Next comes Haddon Township, spending $13,243. It thus seems to prove that the further you get from the Delaware River, the less you spend on education, because next in order comes Haddonfield, with spending of $12,273. But not quite, because Cherry Hill increases a little to $12, 914. The percentage of state funds follows a parallel sequence from Collingswood to Haddonfield (36%, 31%, 6%) and then rises slightly to 11% in Cherry Hill. For comparison, nearby Haddon Heights spends $13,449, of which 10% derives from state government. And just in case you think there is a racial implication, nearby Gloucester City is 84% white, and gets 82% of the $16,046 it spends on schools, from the rest of the state by way of state contributions. However, these numbers also allow you to calculate how much the local districts spent of their own money. It turns out it is just the reverse. The more state aid a district gets, the less it spends, itself. The more state aid it gets, the more it spends, period.
The conclusion seems to emerge that an education assistance program designed to achieve equality, actually stimulates appreciably more spending in poor districts than in prosperous ones; at least so far, poor educational quality in poor districts is acknowledged to remain poor. There are some people who might say these statistics suggest a racial correlation, but some others could say the correlation is with distance from Philadelphia, while others would associate factors undisplayed in the statistics. Because there are more non-teachers than teachers employed by the schools, it is not certain that extra money going to schools will improve the teaching. Nevertheless, what is not demonstrated at all is a tendency for better education to be found where school money is most liberally applied. At least, it is safe to say that anyone who claims the quality of education parallels these spending patterns in New Jersey, would be laughed at.
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| Robin Hood |
Of course it is true that prevailing opinions about the local quality of education are as biased as the opinions about the local football teams, or the differing quality of tomato pies. That's partly because prevailing opinion of the school system has a strong effect on local real estate values, one of the main concerns of real estate agents. My neighborhood in Haddonfield is very close and sociable, so it's been confided that three empty-nest neighbors have sold their Haddonfield houses and moved to Haddon Heights to save money on taxes. When people make decisions like that, they generally know what they are doing. Available data, however, can be misleading to others because total school spending including subsidies does not reflect local property taxes, while local spending does. Empty-nesters are also very likely downsizing to less expensive homes, where of course the taxes seem lower, and are also moving to districts which have fewer children per house. Where that isn't the case in the school districts from which they flee, subsidies are extracted from state income and sales taxes, which move from district to district, right along with empty-nesters who move. For those with children attending public schools, emphasis in these considerations is somewhat different.
The voters have no idea how "equal" became "more" money for education. A fair conjecture would be that the poorer districts kept pressing the legislature for more as a matter of "fairness", leaving the more prosperous districts to shout "outrage", but less effectively. By voting down a majority of local school budgets both groups are shouting, all right, although it would be more effective to shout at their representatives in Trenton. Especially in a census year, when gerrymandering is on every agenda.
http://www.philadelphia-reflections.com/blog/1800.htm
Special Education, Special Problems
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| School Bus |
President John Kennedy's sister was mentally retarded; he is given credit for immense transformation of American attitudes about the topic. Until his presidency, mental retardation was viewed as a shame to be hidden, kept in the closet. Institutions to house them were underfunded and located in far remote corners of a state. Out of mind. And while it goes too far to say there is no shame and no underfunding today, we have gone a long way, with new laws forcing states to treat these citizens with more official respect, and new social attitudes to treat them with more actual respect. We may not have reached perfection, but we have gone as fast as any nation could be reasonably expected to go.
However, any social revolution has unintended consequences; this one has big ones, surfacing unexpectedly in the public school system. For example, the king-hating founding fathers were very resistant to top-down government, so federal powers were strongly limited. So, although John Kennedy can be admired for leadership, the federal government which he controlled only contributes about 6% of the cost of what it has ordered the schools to do, and the rest of the cost is divided roughly equally between state and municipal governments. As the cost steadily grows, special education has become a poster child for "unfunded mandates", increasingly annoying to the governments who did not participate in the original decision. We seem to be waking up to this dilemma just at a time when the federal government is encountering strong resistance to further spending of any sort. The states and municipal governments have always been forced to live within their annual budgets, unable to print money, hence unable to borrow without limit. As Robert Rubin said to Bill Clinton when he proposed some massive spending, "The bond market won't let you."
The cost of bringing mentally handicapped individuals back into the community is steadily growing, in the face of a dawning recognition that we are talking about 8% of the population. Take a random twelve school children, and one of them will be mentally handicapped to the point where future employability is in question; that's what 8% means. Since they are handicapped, they consume 13% of the average school budget, and growing. The degree of impairment varies, with the worst cases really representing medical problems rather than educational ones. Small wonder there is friction between the Departments of Education and the Medicaid Programs, multiplying by two the frictions between federal, state and municipal governments into six little civil wars. An occasional case is so severe that its extreme costs are able to upset a small budget entirely by itself, tending to convert the poor subject into a political hot potato, officially described by everybody as someone else's responsibility. There are 9 million of these individuals in public schools, 90,000 in private schools. They consume as much as 20% of some public school district budgets.
All taxes are bitterly resisted in a recession, especially new ones. Unfortunately, the school budgets are under pressure everywhere by a growing recognition that our economic survival in a globalized economy depends on getting nearly everybody into college. Nearly everybody wants more education money to be devoted to the college-bound children at a time when there is less of it; devoting 13% of that strained budget to children with limited prospects of even supporting themselves, comes as a shock. Recognizing these facts, the parents of such handicapped children redouble their frenzy to do for them what they can. It's a tough situation, because simultaneous focus on specialized treatment for both the gifted and the handicapped is irreconcilably in conflict with the goal of integrating the two into a diverse and harmonious school community.
As school budgets thus get increasingly close scrutiny by anxious taxpayers, handicapped children come under pressure from a different direction. It seems to be a national fact that slightly more than half of the employees of school systems are non-teaching staff. Without any further detail, most parents anxious about college preparation are tempted to conclude that teaching is the only thing schools are meant to do. And a few parents who are trained in management will voice the adage that "when you cut, the first place to cut is ADMIN." Since educating mentally handicapped children requires more staff who are not exactly academic teachers, this is one place the two competing parent aspirations come to the surface.
Unfortunately, the larger problem is worse than that. When the valedictorian graduates, the hometown municipal government is rid of his costs. But when a handicapped person gets as far in the school system as abilities will permit, there is still a potential of state dependence for the rest of a very long life. The child inevitably outlives the parents, the full costs finally emerge. We have dismantled the state homes for the handicapped, integrating the handicapped into the community. But when the parents are gone, we see how little help the community is really prepared, or able to give.
http://www.philadelphia-reflections.com/blog/1806.htm
Selling Entire Towns
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| Jason Duckworth |
Recently, Jason Duckworth of Arcadia Land Company entertained the Right Angle Club with a description of his business. Most people who build a house engage an architect and builder, never giving a thought to who might have designed the streets, laid the sewers, strung out the power and telephone lines, arranged the zoning and otherwise designed the town their house is in. But evidently it is a very common practice for a different sort of builder to do that sort of wholesale infrastructure work -- privatizing municipal government, so to speak. A great deal of what such a wholesale builder does involves wrestling with existing local government in one way or another, getting permits and all that. In a sense, the existing power structure is giving away some of its authority, and does so very cautiously. Sometimes that involves suing somebody or getting sued by somebody. Perhaps even greater braking-power on unwelcome change is that the wholesale builder is in debt until the last few plots are sold, and realizes his profit on stragglers. Since it often happens that the last few plots are the least desirable ones, this is a risky business. Big risks must be balanced by big profit potential, and one of the risks of this sort of privatization is that too much consideration may be given to the players at the front end, the farmer who sells the land and the builder who must keep costs down, at the expense of the long rage interests of the people who eventually live in the new town. Top-down decision making is much more efficient, but its price is decreased responsiveness to the citizens.
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| For Sale |
As it happens, Arcadia specializes in towns designed to look like those built in the late 19th Century. Close together, front door near the sidewalks, front porches for summer evenings. To enhance the feeling of being in an older village, Arcadia specifies certain rules for the architecture, to make it seem like Narberth or, well, Haddonfield. Until recently, suburban design emphasized larger plots of land, and few sidewalks, with streets often ending in cul-de-sacs instead of perpendicular cross-streets in the form of squares. The "new urbanism" appealed to those who were seeking greater privacy, revolving around the idea that if you wanted anything you drove your car to get it. Three-car garages were common, groceries came from distant shopping centers. There are still plenty of new towns built like that today, but Arcadia appeals to those who want to be close to their neighbors, want to meet them at the local small stores scattered among the houses. In the 19th Century, this sort of town design was oriented around a factory or market-place; since now there are seldom factories to orient around, the appeal is to two-income families who want to live in an environment of similar-minded contemporaries. The whole community is much more pedestrian oriented, much less attached to multiple automobiles.
Since Mr. Duckworth mentioned Haddonfield, where I live, I have to comment that the success of living in a town with older houses depends a great deal on the existence of a willing, capable yeomanry. Older houses, constantly at risk of needing emergency maintenance, need available plumbers, roofers, carpenters and handy-men of all sorts. Because it is hard to tell a good one from a bad one until too late, this yeomanry has to be linked together invisibly in a network of pride in the quality of each other's work and willingness to refer customers within a network that sustains that pride. A trademan who is a newcomer to the community has to prove himself, first to his customers, and almost more importantly to his fellow tradesmen. If you happen to pick a bad one, good workmen in other trades are apt to seem mysteriously reluctant to deal with you, because you too are somewhat on trial. Maybe you don't pay your bills, or maybe you are picky and quarrelsome. In this way, the whole community is linked together in a hidden community of trust. Over time, the whole town develops certain recognizeable social characteristics that a brand-new town doesn't yet need. If that time arrives without a network of reliable tradesmen, the town soon deteriorates, house prices fall, people move away.
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| Fannie Mae |
It's curious that the residents of such a town are a breed apart from the merchants in the merchant strip. If the merchants of a town live in that same town, there is much less conflict. More commonly, however, the merchants rent their commercial space and commute from distant places. That disenfranchises them from voting on school taxes and local ordinances, and creates a merchantile mentality as contrasted with a resident community, dominated by high school students. One group wants lower taxes, the other group wants to get their kids into Harvard. One group wants space for customer parking, the other group is opposed to asphalt lots. And in particular, the residents want to avoid garish storefronts and abandoned strip malls. Since the only group which has influence with both sides of this friction are the local real estate agents and landlords, their behavior is critical to the image of the town. When real estate interests are not residents of the town it is ominous, and they are well advised to remember that house sellers are the ones who choose the real estate agent in a house turn-over. There's more to this dynamic than just that, but it's a good place to begin your analysis. Suburban real estate interests are constantly tempted to get into local politics, but politicians are the umpires in this game, and it soon becomes bad for their business if real estate agents seem to be putting their thumb on the scales.
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| FHA Seal |
All politics is local, all real estate is local. Or almost so. The present intrusion of the Federal Government into what is normally a purely local issue, has become more pointed in the present real estate recession. Almost all mortgages are packaged and securitized by "Fannie Mae and Freddy Mac". By overpaying for the mortgages they package, these two federal agencies are subsidizing the banks they buy the mortgages from. Or, that is half of the subsidy. The other half is the Federal Reserve, which presently lends money to banks at essentially zero interest. Acquiring free money from the "Fed", while selling mortgages to Fannie Mae at above-market rates, the federal government supports the banks at both ends. And that's not quite all; there is something called the FHA, Federal Housing Authority, which guarantees mortgages. Essentially an insurance policy, the FHA guarantee is issued for a cost to home buyers who meet standards set by Congress (for which, read Barney Frank and Chris Dodd). Although houses during the boom were selling for 18 times estimated rental value, they are now selling for 15 times rental. FHA will insure such risks, but the banks won't lend for more than the normal rate, which is 12 times rental. Consequently, almost all mortgages are FHA insured, while the federal administration storms with fury that the banks "won't lend". And indeed it looks as though banks will never issue uninsured mortgages until home prices fall another 25%. If home real estate prices do decline to a normal 12 times rental, a lot of people will be unhappy, and not just homeowners. The market is fairly screaming that you should sell your house and rent, but so far at least, these federal subsidies seem to be holding them up. When that time comes, the recession is just about over, but it certainly won't feel that way.
http://www.philadelphia-reflections.com/blog/1819.htm
RR Monopoly Self-Destructs
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| Train Robbery |
A strange part of capitalism is that no company seems to last forever; seventy-five years is long life for corporations. For this puzzle, partial insight emerges from American railroad history. After overcoming their novelty and growth pains, railroads soon had to confront the accusation their great size was itself a problem, unbalancing the playing field. Too big? Management resists that argument. Getting bigger was always good, especially when dealing with foreign competitors. A vital public treasure? Needing railroads doesn't create ownership rights, building them does. Railroad founders discovered a public need and served it; but the public replied it was their need and so it was their railroad, only temporarily in the hands of managers. Nothing useful was going to come of this faux debate, which structured itself in the 19th Century to reach equilibrium, not agreement. There is some reason to hope the ending of the Cold War a century later may have established more permanent understandings, but even those remain hostage to future history. By 1970 history seemed to be making quite the opposite verdict; at least eight major Northeastern railroads collapsed into helpless bankruptcy. Management blamed the senseless labor union work rules. The unions blamed incompetent management. As is usually the case, there's one lesson here for investors, and quite a different one for reformers. All of the debaters need to reflect that possibly the collapse of the railroads was caused by attempting to create institutions which were bigger than they would need to be, fifty years later. Unless a way is provided for them to shrink, some form of shark will eventually eat them alive.
I am greatly indebted to a senior partner of one of Philadelphia's great law firms for insight into the decline of the railroad industry in Philadelphia, which took place during thirteen years of his active law practice on behalf of one of the bankrupt railroads. The insights are his, the opinions are mine.
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| "Rolling Pinochle Game" |
A railroad is inherently a monopoly. At first that isn't obvious, as the railroads snake around to service potential customers. But it soon becomes apparent that it is generally easier to move a factory to an established rail head than to move an established railroad to the factory. Customers who doubt this soon find themselves less competitive than the competitors who recognize facts and respond to them. The location of rivers and raw materials make a difference, quite often enough to move the railroad; but when the railroad moves, it is only a matter of time before the mighty factory has to consider doing the same. That process tends to force everybody to greater efficiency, but it inconveniences many people, who appeal to their unions, who appeal to their politicians. This is a short summary of the origins of the Interstate Commerce Commission Act of 1887, which set the pattern for most later regulation of interstate commerce. The ICC Act, regulating and constraining the activities of railroads, was made law only a decade or so after the transcontinental railroads came into being. Since this had previously been an era of notoriously brutal clashes between the Reading Railroad and the Mollie Maguires, the entire regulatory process has been conducted like a cartoon of that remorseless struggle between one particularly fabled Irish Railroad President and one equally fabled Irish Railroad Union of song and story. The ultimately tragic end of the railroads was declared official by the Railroad Reorganization Act of 1973, which consolidated the freight business into a government-owned company called Conrail. For thirty years before the final demise, just about every president of just about every railroad -- was a lawyer. Others could run the engineering and the finance; in this business, survival itself depended on relations with government.
This description, while accurate in a way, misses a central point: what happens to an industry which was regulated and unionized as a monopoly -- when it develops competition and is no longer a monopoly? It badly needs to downsize, to reduce the overhead which comes from overcapacity, but the unions resist. Unless a way to reduce costs can be found, the company has put its foot on the down-escalator. The stock-market price declines as the profits erode, so borrowing becomes more expensive; the bond markets will sit in judgment on the outcome. A desperate management turns to technology and automation to improve productivity enough to compensate for the bulging overhead; but when improved technology makes even more employees redundant, the union balks, and the increasingly obsolete regulations assist them. Competition from the highways and airlines is not going to relent, the unions feel they cannot or need not compromise, and sometimes will not permit productivity improvements. To the extent a company in that situation cannot reduce costs without reducing employment, it is very likely doomed. As the laws are now structured, the only escape is through bankruptcy. A nation's inability to stop this sort of corrosive cycle is one of the main reasons that typical American corporations seldom survive longer than a century. In the opinion of the constructive destruction theorists, that is a good thing for the nation. But it is a painful way to progress, and one does have to hope that a better way can some day be found.
For railroads, the main destructive force of federal regulation grew out of the rather rapid discovery that congressmen would demand a railroad in every state. While it may be hard to imagine a state that could survive the Industrial Revolution without at least one railroad, that wasn't necessarily imperative when new states were created and land was cheap. And then if the Senate could require at least one railroad, it could also require stops and stations for every hamlet regardless of rational economics. And, if someone got struck by a passing train, it was hard to resist the demand for bridges over the tracks or tunnels under them. if some local developer wanted a grain elevator, the Senator was glad to make one mandatory. In their first fifty years when rail traffic was booming, railroad management was happy to comply. Everybody wanted to see the business get bigger. After 1920, however, the highways were starting to gain on the railroads; it was time to start being cautious. There began to be signs that requiring such excesses as five trainmen for every freight train, limiting the distance they could travel without a replacement, demanding "decent" wages, however that might be defined, and a whole host of other costly impositions on the railroad -- were soon going to be things the railroads could no longer afford. In one way of looking at it, there was not even a need to be clairvoyant. Railroads were a century old in 1930; it was time to invest in something else. And by the way, it was probably time to look for another line of work.
It is common to hear that railroaders failed to notice they were in the transportation business, not merely the railroad business. That seems too easy to say; they were already in three distinct industries, freight, commuter rail, and long-distance rail. All three divisions were once profitable. The automobile first threatened the commuter rail lines, but then the airlines threatened the long-distance passenger business. And then the freight business was parasitized by the rest of the railroad industries. When too many people climbed into the life boat of profitable bulk cargo, it too collapsed from overload and nothing would rescue the whole rail industry except bankruptcy. It now needed suspension of government regulation and union contracts in order to merge, split, reorganize and introduce fifty years of accumulated but stalled productivity enhancements. Only bankruptcy would provide a way to keep the railroads limping along while drastic things were being done to them. Meanwhile, it was business as usual on the rhetoric battlefield; class warfare was never far from the bargaining table.
At this point in the analysis, my lawyer friend paused. In his opinion, the demise of the rail industry was not the main cause of the industrial decline of Philadelphia. The most important labor union struggle, in his opinion resulted from the far more destructive behavior of the longshoremen's union, because ocean ships can quite easily move to another city where they are better treated; union intransigence very quickly destroys an international port. And to be fair, it isn't just unions that are tempted to treat foreigners badly. Almost all sovereign states have a history of taking what they can from non-citizens in their harbors; in America's case, there was a time when piracy was quite a respectable trade, conducted under the name of privateering. In the long run, exploiting foreign traders is self-defeating, but the temptation to exploit is always there. When intransigence gets out of hand, particularly when it is amplified by religious or class warfare, local poverty becomes quickly evident in maritime trade. Railroads just take a little longer to reach the same point.
http://www.philadelphia-reflections.com/blog/1831.htm
Addressing the Flaws of Republics
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| James Madison |
Everyone might profit from reading Plato on the subject of republics, not to mention reading James Madison. But both The Republic and The Federalist were conjuring republics they proposed, not ones they had experienced. After Madison did get hands-on experience he had such radical changes of opinion his good friend George Washington essentially never spoke to him again. Not only in republics of course, does reality prove different from founding theory. It might seem more measured to say of republics that two centuries of their reality proves to be such an extension of theory, it effectively departs from it. In essence, the republican idea is to limit the voters to one periodic review of their representative's term of office overall, not in ongoing picky detail which would hamper him. This definition contrasts republics with democracies, and implies the reason to favor republics. The elected representative is given full power to act during his term in office, but must eventually face the voters for an accounting at the fixed time for re-election. Plato and Madison were right about extending latitude to one's chosen representative, but they failed to predict how effectively that latitude might be stolen by the legislative body itself, and controlled by rules and leadership which skirt ratification by the general public outside their chamber, in any district. The Romans, of course, did know what they were talking about, but history has tended to ascribe Roman difficulties -- assassinations, for example -- to flaws in Roman character rather than in construction of the Roman Republic. After describing some problems history has revealed about our own system, this essay is written to propose a solution. A second essay follows, to defend that solution.
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| Joseph L Bristow |
The differences between House and Senate in the original U.S. Constitution were three, but since the Seventeenth Amendment in 1913, there are now only two. Originally, Senators were selected by the legislatures of the states they came from. A century of experience demonstrated the result was cronyism, members of the legislature using senatorial appointments as bargaining chips and for the most part limiting the choice to one of their own members. The provision probably did attract a higher grade of legislator overall, encouraging those primarily ambitious to be U.S. senators to have a try-out in the minor leagues first. It did give the State government serious power to punish a U.S. senator who failed to please the home state. And this selection process made it simpler and cheaper to run for the job as U.S. senator. This feature encouraged candidates with competing career choices, otherwise discouraged by the expense and unpleasantness of candidacy, to step forward. But by 1913 all this was seen as a way for cronyism to dominate the process, swapping appointments for favors, or even more tangible bribes. From the distance of another century it can be seen that the steadily declining power of state legislatures was matched by a declining quality of their elected membership, leading to a rising level of sordidness in their foibles. Hapless amateurs were largely supplanted by career politicians. After the Civil War "states rights" stirred up memories of secession and led to deliberate weakening of the states' role. Whatever the reasoning, the mentality of Progressivism was sweeping the country in 1913, and popular election of senators was deemed a Good Thing, swept in to general satisfaction. Doubt about whether it all made as much difference as claimed lies in the reality that from 1913 to 2010, one quarter (182) of all Senators have first arrived in the Senate through appointment by a Governor to fill an unexpired vacancy. Many of these vacancies have of course been contrived for the purpose.
sentative lies in the size of the population who vote for them, and the frequency with which they must endure that unpleasantness. Members of the House are elected for two years and members of the Senate are elected for six; the voting constituency of 100 Senators is generally much larger than that of 532 Representatives, so because the population grows faster than the number of states, the representation discrepancy also grows. The frequency of running for reelection seems to be so irksome that whenever a senate seat falls vacant, some sitting Congressman from that state is almost certain to try to switch. Of course it is true that with only a quarter as many senators as congressmen, the power of each vote is weightier. To the extent that committee memberships represent special insider power, a senator does belong to more committees, but is more severely stretched to attend them all. Each senator's vote does have greater scarcity value, but a Representative who tends to business is more likely to know what he is talking about, hence better able to be influential in the committees where most matters are really decided. The limits of merit promotion in both houses of congress lies in the differing power of various committees, while the favor of appointment remains within the iron control of caucus leadership. In public, senators seem generally more polished and experienced in public persuasion. The persuasion that counts however is of gaining the respect of colleagues in your own legislative body, always restrained by the power of leadership to coerce conformity. Public persuasiveness by contrast is often little more than glibness, reflecting greater experience with dodging an issue to conceal a lack of depth in it. Almost all senators aspire to the presidency, although few achieve it. No Congressman has been elected President since Warren Harding; indeed, few Congressmen even dare to seek nomination. The appointment of Gerald Ford was a special situation. However, it is worth pondering that during the early days of the republic, the House of Representatives was considered much more prestigious than the Senate, and that curiosity continues to raise an important question just why it is now reversed.
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| George Washington |
The differences in prestige between the House and the Senate cannot be ascribed to the comparatively minor differences in their Constitutional definition, the size of their district and the frequency of election. Otherwise, we could immediately improve the quality of congressmen by reducing the limit of their number and frequency of re-election, which scarcely anyone has proposed. The more likely source of the problem can be found in the differing rules of procedure which each body has adopted; and reaffirms at the opening of each term. Various strategies of committee assignment and seniority have adapted to the reality that newly elected politicians rarely have any skills other than the ability to get elected. But almost everyone can learn, given enough time being exposed to a topic. A seniority system can occasionally lead to someone who is hopeless, gradually floating into a position where he can do great harm. Provision must be made for graceful exceptions to the seniority rule, usually by excluding a member from important committees until he has demonstrated some competence, less often by later dropping someone who has age- or alcohol-diminished faculties. Underlying this approach is a contempt bred of experience for the wisdom of the voters, back there in the district, whereas the leaders of the fraternity can protect the nation by judiciously devised rules. Sometimes it is unfortunately necessary to be a little hard boiled.
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| Martin Van Buren |
So far so good. When Jefferson and Martin Van Buren invented political parties, the bodies of Congress responded by inventing caucuses. George Washington was not a learned man, but he knew he hated this system. James Madison probably feared political parties more than he hated them, so he incurred Washington's permanent displeasure by getting good at manipulating what he saw as the winning strategy. Van Buren's fate was more ironic; after inventing many of the unpleasant little strategies of modern politics, he was defeated by William Henry Harrison in the "log cabin" election of 1840. Harrison hadn't been born in a log cabin at all, he was born in a Virginia mansion, hee, hee, hee. George Washington wouldn't have chuckled at that one, he would have been livid.
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| Henry Clay |
Party caucuses have only one central feature, which is vote-swapping. Many of the strategies of this unattractive behavior were outlined in elegant detail by Pliny the Younger, in the Roman Senate, and James Madison the student of government had sought to avoid them. When he decided it was hopeless, he joined them and got good at it. In retrospect, the premier example of vote-swapping was the trade which Madison and Hamilton made, placing the nation's capital in Virginia/Maryland instead of Philadelphia, in return for federally redeeming the Revolutionary debts for all 13 states, when Virginians had already paid theirs off. Philadelphia had essentially nothing to say about it. Pliny had cautioned and subsequent practitioners have followed the advice to cover your tracks by swapping votes for an issue seemingly unrelated to the one in dispute. That's about all there is to vote-swapping, find out what the guy wants badly enough, and trade him something for it. It follows that it's wise to give off the appearance that you don't want much of anything. A corollary is that political caucuses try to conduct even innocent or public-spirited discussions in secret, making public only what is expedient to be made public. And a further corollary: some members of a caucus are from totally "safe" districts. Occasionally their votes can safely be traded for something the opposing party wants but the caucus feels necessary to claim to oppose. When a caucus wants something badly enough to trade it for something else, but is three or four votes short, the opposing caucus may trade the four votes from safe districts while violently denouncing the dirty turncoats. All this is known as party loyalty. When things are particularly tough, party loyalty can be enforced by finding out what you want badly, and taking it away from you. When these whips are applied to you, a grievance develops. Fine, what do you want to trade in return for vengeance? Many of these refinements seem to come, not from Rome, but from Sicily.
As was stated at the beginning, the purpose of this essay is not to rail at Congressional corruption, but to counteract it to some degree. Since the worst features of this system require secrecy and public duplicity to be effective, the best remedy is sunshine. Not about what Roosevelt did in his third term, but about what your local congressman might do next week, and his fear you will find out. His fear that a blogger will tip off the local newspaper or radio station, encouraging someone else with ambition to file for election against you. And his fear that when he asks someone for a campaign contribution, that person will bring up the topic in question. His fear that the local political boss will decide he can't win.
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| Boxing Politcians |
This was more or less the system which the founding fathers, James Madison chief among them, envisioned for this shining city on a hill. And which two centuries of rather clever schemers have gradually eroded. The highly desirable feature of a republic is that the elected person is free to represent his own interpretation of what is best for his district or, failing that, what is best for the nation. The elected representative is encouraged to risk defeat in the next election, if in his judgment what is good for the district is bad for the nation. But he is not a suicide bomber, if his vote will make little difference in the outcome he can be forgiven for taking cover. One would wish that fewer of them would speak one way and vote in the opposite direction, but that can be forgiven if someone back home in the district is keeping score and letting others know of it. The fundamental principle of a republic as distinguished from a pure democracy is that a representative, while free to act during his term in offfice, remains obliged to face the voters at the appointed time. Our system has come to exaggerate the actual extent of freedom to use judgment, because the freedom has been stolen by party leaders through the application of schemes too devious to detail. But the freedom is fundamentally a good thing. What has come to be so lacking is the idea of facing an informed electorate in making a choice between you and an informed opponent. The public, it must be feared, doesn't know beans.
And so the proposal for fixing this mess is difficult, but it can be stated simply. The recent economic boom created nearly a thousand billionaires; maybe four hundred would be a number that would escape challenge. If only fifty of them would endow think tanks in all fifty state capitals, and the fifty-first would endow an organization dedicated to making their research available to the public, then perhaps another fifty would be prompted to create a second think tank in each state capital on the opposite political side. Two polarized think tanks in each state capital, just imagine it. As things now stand, it would be a sufficient first step if that happened in only one state, and the rest of the country could watch what happens.
http://www.philadelphia-reflections.com/blog/1976.htm
Washington's Circular Letters
Once Cornwallis had surrendered at Yorktown, there was an understandable reluctance of the troops to get killed for a cause they had already achieved. The British monarchy had much longer experience with wars, and fully expected to make advantage of this universal trait of exhausted soldiers at the end of a long war. The colonies could neither be reconciled nor forcibly subdued, that was clear enough. What was not clear was how much national advantage might still be extracted from the peace conference, by bluffs and intransigence. Diplomats are long accustomed to such manipulation, but the new nation only had Benjamin Franklin who would be equal to it. More than that, however, it seems to be a peculiarly American trait to quit before the last card is played. It would be another century before another General destined to be made President could reduce this to a convincing epigram. "In every war there comes a time," said Ulysses S. Grant, " when both sides want to quit. The side that finally wins the war has a general who is too stubborn to quit." In the Revolutionary War, it is Washington and Franklin who stand out as too stubborn to quit when they were determined to win. Both men were leading Masons, and that has something to do with it, but the quality was surely inborn. During the Nineteenth century, it came to be called, simply, Character.
The Revolutionary Army was seldom well-fed, never well armed. Hardly anyone expected the war to last eight years, or the British soldiers to be so brave and effective. Benedict Arnold had seemed like a perfect soldier, but he had turned traitor nearby at West Point. Conditions for wives and children at home were almost universally bad. And the Congress in Philadelphia proved to be willing to inflate the currency, hold back soldiers' pay, and pinch pennies on supplies. Individual colonies always seemed to promise more soldiers than they actually supplied. Not that they were proud of themselves; they skulked. Surely, some state legislatures and some state representatives were worse than others, but it is almost impossible to identify them. They all must have been somewhat complicit, or we would have heard of more of them denouncing each other. It must have been supremely painful for Washington to receive promises of troops and supplies that he privately doubted, and to assure his troops help was forthcoming. The inevitable disillusionment discredited him more than the Governors who put him in that position. The British troops surely shared the reluctance to get killed for war that was over. They partied and roistered in New York, but who knows what general in London might suddenly order an attack on Newburgh, just to make their overall defeat seem less humiliating?
In sixteen months of this agony, Washington wrote many letters to state Governors, keeping them informed and asking for their help. The custodians of the Headquarters museum proudly show the various tables and chairs for his aides to translate French and Spanish, to make thirteen copies of just about everything, and careful files of all correspondence. Washington was an organized person, they say, or else his chief of staff was organized. Someone like Alexander Hamilton, perhaps. Out of all this headquarters communication system gradually emerged the system of Circulars. The General was in a position to see huge deficiencies in the government system for which he dedicated his life, and apparently grew haunted by the idea that all this suffering would be for nothing if the government which emerged was anything like what he saw before him. His Circulars to the governors began to take on the quality of outlining what kind of government the United States ought to have. It had to have federal power; the states must give up enough of their own power to the decisions of a single executive. It must pay its debts; a mighty nation does not chisel its creditors. It must suppress the inclination to squabble and think the worst of each other.
And then he made a mistake. As a way of proving his sincerity, his lack of personal motive, he announced in advance that he was leaving public service forever. Today, every lame duck knows that is a bad idea, even if you mean it. And while he may have sincerely thought he meant it at the time, events show he really didn't mean it. He discovered how little he knew of the technical details of government, and thus how much he needed James Madison's help. He discovered how much he overshadowed anyone else, and so, how no one else would be able to persuade the others to cooperate. Franklin perhaps knew and privately doubted that even Washington could pull it off. Washington's Circulars were driving him straight toward seeking the Presidency he widely proclaimed he did not want and would not accept. And thereby tarnishing the one thing in life he prized more than any other: his word of honor.
http://www.philadelphia-reflections.com/blog/1997.htm
The states can't issue bills of credit, but it seems they can borrow as much as they want to. So how about the states borrow money from a private non-profit bank that creates money out of thin air (like the Fed) and lends it to the states. The difference is that it would be a zero interest loan, not to be paid back for 99 years, and then extended again for another 99 years. Would this be "issuing bills of credit"?