Constitution III, Amendments, Afterthoughts and Rights

James Madison

Out of nearly 12,000 proposed, there have only been 27 successful amendments to the Constitution in two centuries; it's intentionally hard to get one passed. The Federalists wanted no amendment process at all; the anti Federalists wanted repeat conventions in which everything would be on the table for reconsideration. The original document was probably better because of this tension; if it will be hard to change, you had better get it right the first time. And it had better be short and spare. Try to avoid bees in your bonnet.

There will of course have to be some mid-course adjustments, most notoriously the XII Amendment correction of a drafting oversight which had created the appearance of a tie vote in the 1800 Electoral College between Jefferson and Burr. Since the election campaign had been conducted with the clear intention that Burr would be the vice president on a combined ticket, what was really overlooked was the possibility that ambition would so overwhelm a candidate that he would niggle and cavil about a technicality, essentially trying to steal an election from a running-mate. When Burr later killed Jefferson's enemy Hamilton in a duel, not only was Burr twice disgraced, but the whole episode terminated expectation that gentlemen in high office are depended on to do the right thing. Although philosophical debate continues whether mankind is inherently good or inherently evil, American law assumes that while innocence is presumed, frailty is universal.

Sometimes the amendment process has been brushed aside. William Henry Harrison was the first president to die in office, making John Tyler the first vice-president to face certain ambiguities of the Constitution on what had been intended. By that time, the tradition had grown that the vice-presidential candidate was usually a member of the second strongest faction within the winning party; combining the two makes a stronger ticket but a secretly jealous one. When the contingency of presidential death in office actually happened, therefore, there were voices that the vice-president was intended to remain vice-president but assume the extra powers and duties of the president. Rather than have a debate or a Supreme Court wrangle, Tyler settled any such question by simply making himself president, thus establishing an enduring tradition. This solution raised the difficulty that no succession plan had been provided for the vacant vice-presidential post.

Somewhat similar corrective themes continue through Amendments XXII (two term Presidential limit), XXV (Presidential succession), XXVII (Congressional compensation). At least when dealing with politicians, it is better to be too specific than too trusting.

The Fourteenth Amendment is clear enough in its many sentences, and noble in intent. But that intention to reverse the original Constitutional tolerance of slavery and the later injustices of Reconstruction is couched in broader language than necessary for that purpose alone. It thus weakens itself by hinting sanctimony, the inclusion of soaring principles. As the grievous wounds of the Civil War have gradually healed, Abolitionists as well as slavers now seem often to have acted with excess, and malice toward some. Others may honorably disagree with this view. Nevertheless, it is quite right to emphasize that just as undue deference should not be accorded to some, undue suspicion should not be inflicted on others.

By a series of amendments, the right to vote has been extended gradually over the centuries. Amendment XXIV (Abolition of poll taxes) probably had other motivations but has the effect of removing a restraint on the vote of poor people, Amendment XIX (Women's suffrage), XXIII (Presidential electors for the District of Columbia), and XXVI (Reducing the voting age to 18) can be characterized as removing discrimination, but also can be seen as a gradual extension of suffrage by those who already have it, to others they have mistrusted for reasons defensible and indefensible. The common goal is to achieve sufficient trust and education to make any restrictions seem unnecessary to everyone, while recognizing that continuing immigration of other cultures creates restlessness at the margins. Furthermore, poor people will outnumber rich ones for a long time to come and hence could potentially mistreat the minority. As long as only a minority of the enfranchised population at any level troubles to exercise its right to vote, the level of discomfort with this issue is enough to stimulate progress toward universal suffrage, while satisfaction with gradualism allows time to adjust to it.

Amendment XVI (Income tax) may cause dissatisfaction because America has traditionally . But it really is just a mid-course adjustment in the legal system, since a court had declared income taxation to be unconstitutional, and the Constitution was simply amended to remedy that misapprehension. An implicit point, however, is that as the federal government preempts the sources of taxation for itself, the states are weakened by the need to appeal for revenue. The XVII Amendment (Direct election of Senators) rather severely curtailed the control of the states over the central government, but the XI Amendment strengthened the states by forcing the citizen of a different state to sue a state in its own court. The issue of state and federal control, so central to the original Constitution, nowadays seems to be fading in the public mind.

And finally, we are left to consider the first ten amendments, the so-called Bill of Rights. While Madison always inclined somewhat in that direction, and grew more defiantly libertarian as he got older, the situation he faced when the first Congress convened was daunting. Between final ratification and actual convening of much the same people into the first congress, the states submitted over two hundred petitions for rights to be included in the Constitution by amendment. Thomas Jefferson and Patrick Henry had been tireless in stirring up the demand for rights to protect the individual from the government. Much of this reflected the French Revolution which went on for ten years during this period, and drew on affection for France for its assistance to the struggling colonies during their rebellion against Great Britain. Others, of course, only needed to look toward George Washington, who had once heard the screams of Braddock's soldiers as they were tortured to death by the French and their Indian allies at Fort Duquesne. Washington had earlier and personally started the French and Indian War. John Adams was not pleased by torch lit mobs breaking windows in Philadelphia in sympathy with France. So, as the main leader in the new congress, Madison had the task of satisfying everybody about the Bill of Rights he had promised. It must be acknowledged that he did a masterful job. Not everybody was convinced it was a natural right of mankind to give everyone everything it might seem desirable to have. Somewhere in this arose the accepted definition of a right as something everyone would give to others, in order to have for himself. Madison was forced to search for common denominators, the maximum -- and minimum -- number of rights which everyone would agree to. It offended his constitutional craftsmanship to see Congress drowned in a rush to confer greater force than a law by saying the same thing in an amendment. Indeed, when some advocates strove to make a dubious right into a constitutional right, almost by definition it was not something everyone would agree to in order to have for himself. Madison did things in his life that may be questioned, but his achievement of condensing this hotch-potch of proposals into ten simple declarations, and then getting a raucous inexperienced congress to pass it -- is a political achievement to be marveled at. Even two centuries later, anyone who proposed opening up the Bill of Rights and recasting it in conformity with more modern understanding, would be hooted out of the room. May that ever remain the case.

Amendments IX (Non-enumerated rights) and X (Rights reserved to the states) deserve a different emphasis. Here lay the promise that the federal government had been proposed to achieve only those things a central government could achieve better; the states could do everything else. For this to be workable, the enumerated rights had to be comprehensive enough to satisfy the Federalists, and not include anything the anti-Federalists thought was improper. The anti Federalists knew very well this included everything the Federalists could possibly get the states to agree to, so the border was inevitably contentious. They got it wrong with slavery, and some of the amendments made mid-course adjustments. Boundary warfare would continue indefinitely in congress, and sometimes wars and depressions cause proponents to change positions. But the document, freely agreed to by formerly sovereign states, has endured as nothing even remotely comparable has endured.

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Concessions and Agreements

Concessions and Agreements

The United States Constitution is a unique achievement, but it had precursors with influence on the thinking of the Founding Fathers. In the days of difficult ocean travel, almost all colonies were bound by some sort of agreement about how they were to maintain loyalty to their European owners in spite of receiving some latitude to govern themselves. Charters and documents defining these roles were generally written by the owners, and the colonists could take them or leave them, that's the way it was going to be. In the case of New Jersey in 1664, however, a very formidable lawyer and friend of the King named William Penn was agreeing to his own conditions of sale, taking care that the grant of governing authority he received was favorable. Penn's relationship to the King was unusually good to say the least; he had to be more wary of nit-pickers in the King's administration, trying to anticipate every conceivable disappointment of some successor King.

For his part, Penn wanted to be able to make colonial land attractive to resell to religious groups who had experienced harsh recent government oppression; he wanted no obstacles to his announcing there would be none of that in New Jersey. Although he hastily rejected any such title, he had been offered the role of sub-king, and needed to repeat the formalities of the Charter to define his role and reassure his settlers. Furthermore, he was dealing with the heirs of Carteret and Berkeley, active participants in North and South Carolina. So Penn's method of achieving basic rights was influenced by prior thinking in the Carolinas, where the thinking of John Locke secondarily influenced matters in Delaware and Pennsylvania. These ideas were incorporated in a New Jersey document called "Concessions and Agreements." The concepts were not wholly the ideas of William Penn, but he did write it, and it does contain many ideas that were uniquely his. Understandings about limits were set down, argued about, and agreed to. The owner risked money, the colonist risked his life. Neither would agree unless a reasonable bargain was struck in advance of any dispute. Furthermore, the main value of a colony was beginning to shift from trading rights to real estate rights. Carteret and Berkeley had not only been principals in both the Carolinas and the Jerseys, but had been involved in a number of such investments in Africa and the West Indies; New Jersey was just another business deal. It was conventional for documents of this type to define the method of selection of a governor, the establishment of an assembly of colonists, and some sort of council to attend to day to day affairs. In that era, few colonists would cross the ocean without a guarantee of religious freedom, at least for their own brand of religion. Standard clauses which may sound strange in today's real estate world, were then necessary because it was a transfer of not merely land, but also the terms of government. In the case of the Quaker colonies, many of these stipulations were included in the earlier charter from the King. It seems very likely that Penn hovered around and negotiated these points which he wished to have the King agree to; and then once the land was safely his, Penn repeated and expanded these stipulations with the colonists in the his Concessions and Agreements .

Proprietors House

Quakers had suffered persecution and imprisonment, and knew exactly what they feared; on the other side, it seems likely Carteret and Berkeley were less interested. So this real estate transfer document conceded almost anything the colonists wanted and the King would stand for, couched in conciliatory phrases. For example, no settler was to be molested for his conscience, and liberty was to be for all time, and for all men and Christians. Elections, by the way, must be annual, and by secret ballot. While law and order must prevail, nevertheless no man is to be imprisoned or molested except by the agreement of twelve men of the neighborhood. On the matter of slavery, no man was to be brought to the colony in bondage, save by his own consent (that is, indentured servants were to be permitted). And in what proved to be a final irony for William Penn, there was to be no imprisonment for debt. Almost all of these innovative ideas survived into the U.S. Constitution a century later, but the most innovative idea of all was to set them all down in a freely-made agreement in writing. This was not merely how a government was organized, it defined the set of conditions under which both sides agreed it would operate.

It was of course, more than that. It was a set of reassurances to settlers who had been in New Jersey before the English arrived that they also would be treated as equals. It was a real estate advertisement to the fearful religious dissenters back in England that it was safe to live here. And it was a reminder to future Kings and Parliaments that this is what they had been promised.

The pity and a warning, is that the larger vision of a whole continent governed fairly by common consent may have been too grandiose for a little band of New Jersey Quakers, surrounded as they were by an uncomprehending world. All utopias are helpless when stronger neighbors reject the basic premise. It was the expansion of the pacifist concept to the much larger neighboring territory of Pennsylvania that proved to be just too much for such a small group of friends to manage by consensus, particularly when unbelieving immigrants began to outnumber them. But the essential parts of it certainly remained in the minds of delegates to the Constitutional Convention in 1787.

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Human Rights

The Founding Fathers, mindful of Cromwell and the English Civil War, were strongly concerned that majority rule might turn into a tyranny over minorities, and searched for some way to protect minorities. Since everyone could imagine being in a minority on some dispute, it was a universal concern. In those strongly religious days, it seemed self-evident that minorities had certain "divine" rights, conferred by God, which mere legislatures must not violate. As dissenting minorities became increasingly secular, the language shifted to "natural" rights, enshrined by purely logical analysis: there exist some rights anyone would give to others in order to preserve them for himself. In more contemporary language, the demand is now for "human" rights, whose source and authority lie mostly in the intensity with which they are demanded, to a point where some believers actually devote their lives to achieving them. Underneath all this semantic wrestling, one essential of any right is universally demanded: no government, whether by king or elected majority, may overrule it.

The founders of the American republic arrived at a formulation: strengthen central majority-rule government to a point where it can be effective, but keep it too weak for the majority to tyrannize a minority. This effort grew out of general perception that the Articles of Confederation were too weak to be effective, so the federal government must be made supreme over the states. But having achieved that, a new concern would immediately arise. Since slaves and poor people would probably always outnumber rich ones, how can a democracy be prevented from becoming a vehicle for slaves to free themselves, and poor people to vote themselves the property of rich ones? This concern was surely heightened by the earlier maneuvering of Madison and Washington to have the Convention delegates made up of the most prominent people in the colonies. The plan was to ensure the new Constitution would be adopted by the little legislatures making way before a Convention of celebrities. It probably did not occur to the two Virginia plantation owners that this selection process would result in heightened concern for the best interests of rich people, but it probably would not have bothered them much. Except for perhaps Gouvernor Morris, Convention delegates were not aristocrats, but self-made men, and with few exceptions successful ones. It is still hard to argue with their instinctive reaction that if the laws made it impossible to be a self-made success, then it is impossible to see how anyone would achieve success fairly. Eighty years later the slave component of this issue was finally settled, so then perhaps the wariness could be relaxed somewhat. And that certainly did happen.

The approach the Constitutional Convention adopted was to weaken the ability of the new government to be misused by a popular majority. They designed a separation of its powers, hoping that a balance of power would develop among the Legislative, Executive and Judicial branches, each selected in a different way. As the matter was finally adopted and ratified, it seemed a little inadequate. James Madison in particular rebelled against the final step of giving the Supreme Court the power to review the laws passed by Congress and signed by the President, for constitutionality. It remained for the fourth Chief Justice, John Marshall, to assert the judicial review principle successfully in 1803, sixteen years after the Constitutional Convention. In the greatest of ironies, he did so in a case called Marbury v. Madison.

This case, strengthened and amplified by later cases with the same effect, was to enshrine the Constitution as the capstone of the legal system in the United States, with all lesser laws consistent with and dependent on constitutional powers enumerated, powers implied, and powers forbidden. This capstone structure, rather than American provincialism so noticed by Europeans, explains why American law has drifted from common law to statutory law, while references in Supreme Court opinions to tendencies in foreign law are greeted with derision. Foreigners were not given a vote in our system, and our system is grimly determined to recirculate the opinions of the voters through the system, especially through the choke-point of the Constitution. In biochemical terms, the Constitution is the rate limiting factor. It is far too late to try to make it easier to amend the Constitution, just as it is surely too late to eliminate the Electoral College for selecting the President. Too many balance-wheels have been hooked to these fundamentals. Blame it on interest groups if you please, but seriously disturbing these fundamentals will surely prove unsettling enough to undermine the interest groups that assail them.

With the blocking of other avenues to overturn majority rule, the system itself has possibly provided a new one, which may some day be named after James Wilson of Pennsylvania. Wilson lived at the corner of 3rd and Walnut, making it convenient to sign both the Declaration of Independence and the Constitution. Although he spoke 168 times at the Constitutional Convention, his name is most often associated with the idea that basic legal principles should be part of the general background of all educated citizens. Sometimes referred to as the founding professor of the first law school, the University of Pennsylvania, Wilson recognized that the actual practice of the law soon drifts away from legal principles and settles on legal mechanics. Law students eventually come to learn that what matters most is what some judge recently handed down as an important opinion which sets a new precedent. Step by step the law moves from principles to precedents, and from early precedents to recent precedents. The system is said to be a variant on the scientific method -- hypothesis, tests of the hypothesis, modified hypothesis and then tests of it -- first created by Sir Francis Bacon. The law, in short, drifts away from Original Intent but does so proudly, not as a subversion of original principles but as a reasoned response to actual experience. Perhaps, in this enlightened process, new human rights can be discovered. Such as a right to abortion, based on a right to privacy, based on something or other you will have to read the original opinion to recall. It is not necessary to be a fundamentalist Christian to be alarmed by this process when it travels so far from the choke point of the Constitution, overturning dozens of state laws as it goes. Entirely too many plain non-lawyers who have no serious objection to abortion have read the Constitution and are now mistrustful of the reasonings of Justice Blackmun, the profession which acquiesced to his action, and the intellectual migration process which is being defended. Whether they know it or not, these are followers of James Wilson, of 3rd and Walnut, Philadelphia.

Jennifer Nedelsky is a Canadian lawyer who has been active in promoting an alternative to our system of using a constitutional right as a legal "trump card for displeasing laws.", as well as the failed European attempt to invent dozens of new human rights as a way of limiting government power. In Canadian law, a feature is called the "time limited notwithstanding clause." The legislative branch in Canada is permitted to pass laws which violate a constitutional right, "not withstanding that right for five years". It is possible to understand the appeal of this legal safety valve, to wait out the popular appeal of a mere fad, or to provide emergency relief in the face of unexpected circumstances. Some of the enduring problems with the legislation passed during the Roosevelt court-packing era might have been more generally acceptable with this clause attached. And it might address the temptation recently voiced by Rahn Emanuel, that no crisis should ever be wasted; it is true that some appalling legislation does occasionally turn out to be useful.

Ultimately, however, we are likely to fall back on the comfort that our Constitution more or less as originally created, has lasted over two hundred years while no other constitution can match that claim. Others have their proposed systems and we have our proven one.

http://www.philadelphia-reflections.com/blog/1554.htm

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Constitution IV: The Unforseen

A flexible and adaptable Constitution is not exactly the same as a "Living" Constitution, which has come to imply the courts can amend it without following prescribed procedure for amendment.

Manipulation of the Legislature.

The founding fathers spent much time and energy wrangling about the size of electoral districts, generally agreeing that larger districts produced a better representative. James Madison was persuasive that poor people would always greatly outnumber rich ones and would follow the example of the French Revolution in stripping rich people of their property, with disruptive consequences. Possibly because the Industrial Revolution made a much larger proportion of the population prosperous, or possibly for other reasons, the much-predicted outcome did not significantly occur. Rather, we have seen progressive waves of new immigrants start at the bottom of the economic ladder and work upward in a generation or two. At the present time, the argument about the relative sizes of the economic classes has devolved into a debate about the optimum size of the immigrant class, which in turn depends mostly on our ability to assimilate them. Nevertheless, Hannah Arrendt and others have taken Madison at his word, and searched the Constitution for clever ways in which that notorious schemer might have had his way. Somehow, the provable fact that affluent classes exercise their right to vote more vigorously than indigents do is taken to be proof of the Madisonian outcome. President Barrack Obama apparently sees some sort of political opportunity in the statistics, and we are therefore likely to hear more about this.

It can be predicted that Americans will continue to prefer the approach of achieving equality by making poor people richer to the alternative of making rich people more poor. But it can also be safely predicted that grumbling about republican (representative) government will continue, because of certain features of human nature that were poorly anticipated by the founding fathers. Although it should be obvious we have long outgrown any plausible alternative, the representatives of the people immediately turn their backs to their elective constituencies after the election, and begin to address their new main concern, which is how to deal with their new colleagues. If they are fortunate enough to represent a "safe" district, they may not even pause to reflect much on the electorate at election time. They are not to be blamed for this; influencing elected colleagues is their life; elections are periodic threats to that career. It should thus be immediately clear that voters can most readily increase their influence on legislative bodies by maintaining an even balance of political parties within their districts. In a word, gerrymandering has become a far more important obstacle to voter influence than race and social class will ever be. Gerrymandering in the house of representatives, that is, because the Senate and other districts with immovable boundaries cannot be gerrymandered. Our system requires boundaries to react to population changes; therefore the control of legislative boundaries must somehow be removed from political control. The simplest approach would seem to be to avoid all mention of techniques and specifics, except one. The election should be voided unless it produces a reasonably balanced outcome; one that approximates the vote split of the entire state. Another measurement objective might be to reduce protracted incumbency in cases where boundary adjustments prove impractical.

Once elected, the representative of the people often finds his worst enemies are the leadership of his own party, seeking to control his vote. The methods employed to gain power over the freedom of a representative to vote his conscience are numerous, devious and highly effective. The consequence of this game is that experience is so much the master over the uninitiated that families pass these secrets around within the political class, and we become more of an aristocracy than we imagine. No doubt the rules of the chamber evolve over decades or even centuries, and respond to realities which most outsiders cannot appreciate. In all probability, the key to making reasonable rule changes is to transform the rules committee into a committee of the whole for a longer time, perhaps a whole week, at the beginning of each session. It is the nature of politicians to scheme in an elaborate game of chess, and it would be unwise to create the chaos of protracted rule modification as part of some larger contraption. But limiting rule changes to a single voice vote at the beginning of a whole legislative season is also unwise.

What might help is drawing the attention of think tanks and colleges to this clandestine issue. In rural state capitols, the first need is for the creation and funding of think tanks, now largely absent. As the newspaper industry experiences relentless shrinkage, philanthropic attention may well be necessary. The assiduous attention of lawmakers to these mundane issues is such that the publication of a few books on the topic might achieve enormous benefit.

Manipulation of the Courts.

The Constitution does not directly mention English Common Law, and strictly read could be held to limit the federal court system to disputes under the statutes and treaties created by the legislative and executive branches. Since the nation began to function without any statutes passed by the Congress at all, and until the time of the Civil War had less shelf space devoted to all of the accumulated statutes than to the volumes of Common Law, it would have to be assumed it was intended by the Constitutional convention to let the courts themselves decide how much weight to give to the laws of our former masters. In any event, that is about what happened. One by one, as cases came before it, the Supreme Court made references to particular points of common law that became binding on the lower jurisdictions. This unspoken and somewhat obscure process gave rise to a rather questionable concept known as The Law, and therefore sometimes to conflicts between statutes and The Law. The early courts were careful to avoid open conflicts as much as they could, and tended to search for technical and procedural flaws upon which to base their determinations. John Marshall, who did most to forge new concepts of the role of the courts, was particularly careful to avoid open conflicts with clearly specified statutes until he was ready to declare the Supreme Court's right to "review" them. Step by step, the common law was restated to originate with the Court. In time, the findings of the Court became an extension of the Constitution. Americans scoff at the interminable volumes of the proposed European constitution, contrasting them with the few short statements of our own. But if the accumulated findings of the U.S. Supreme Court were appended to the brief preamble we call the Constitution, ours would be far larger. It might claim to be far more flexible but it is also more arbitrary. Flexible or arbitrary, its main weakness is to be so hidden from public view that one bad mistake would cripple its effectiveness. Roe v. Wade came pretty close.

A question has to be raised whether the Supreme Court missed an opportunity to organize and proclaim the organizing principle of Common Law, which in its present form was created by Lord Chancellor Sir Francis Bacon. Picking up on Galileo and other early 16th Century thinkers, Bacon's common law follows the principles of science. Hypothesis is offered, then it is tested and revised hypothesis is offered. Then the new hypothesis is tested, and revised. It is called the scientific method, but might just as well be called the legal method. No principle endures unless it withstands continuing testing. Hypothesis from any source is given a respectful hearing, but it is not allowed to stand unless it be lawful. That is, unless repeated testing confirms its validity. Statutes, on the other hand, are created by the opinion of half the voters, plus one. We thus have created half the system of scientific method by passing laws and sending them to the courts for the accumulation of experience. The life of the law, said Holmes, has not been logic, it has been experience. What our system lacks is for some way to recirculate the experience of the courts back to the legislators, for reconsideration.

System Overload

We may be a nation of laws but not of men, but that does not mean the more laws we have, the better. The United States Congress currently considers about 25,000 bills each year, but at least they have a fairly adequate staff to help them, and they work full time, year round. By comparison, it is more appalling to learn that the New Jersey Legislature considers 10-12,000 bills a year, since you have to multiply that by fifty on the assumption other states act the same way. And almost more disconcerting to learn that New Jersey passes 300 laws a year, meeting thirty times a year in three-hour sessions. It must then be reflected that new laws are then sent to the executive branch for implementing regulations. The regulatory process ordinarily results in a notice of proposed rule-making, a comment period, evaluation of public comments, and then finally the issuance of final rule-making. The Federal Register publishes all this activity, and runs to more than a hundred thousand pages a year. Periodically, the whole business is restated in the Consolidated Code. Even though each enacted law only goes through this process once, quite a large industry is created just to disseminate new laws. In the process we make a travesty of the ancient doctrine that ignorance of the law is no excuse . No one at all knows what the law is. The legal profession has been driven to specialization and subspecialization, just so one lawyer can claim a comprehensive grasp of a tiny portion of this stuff. Consequently, we see law firms of a thousand or more lawyers emerge in an effort to cover the entire field and keep up with it. Law firms thus are driven into the communication system employed by ant hills and beehives, rising administrative and communication costs. The public is terrified of involvement in a system which was designed to protect their rights and promote their interest, but with charges of $600 per hour can easily bankrupt anyone who has a serious issue. The country watched Richard Nixon and William Clinton accumulate millions of dollars in legal costs; when the President of the United States, himself a lawyer, cannot afford to defend himself, things are reaching some sort of limit.

A few years ago, overcrowding in the Philadelphia prisons got to the point where a Judge Shapiro ordered Mayor Ed Rendell to stop sending any more prisoners to jail until conditions improved. That was fine for convicted felons, but enthusiasm in the rest of the community was restrained. The overloaded judiciary tends to respond to the avalanche of litigation by almost forcing litigants to settle rather than go to trial, and if a trial is unavoidable, to seek a lighter sentence by foregoing a right to trial by jury. Plea-bargaining is routine. Finally, a whole section of this legislative torrent has been moved away from challenge by the concept of "standing". Using the principle that someone may not use the courts to settle a grievance unless he can show some harm to himself has been caused, or some advantage to him would result from winning the case, the concept of standing has been driven by court overload to be ever more strictly applied. I cannot sue my town for having too few school crossing guards, since I am too old to need them, and personally no better off if we have lots of them. It thus is inevitable that concerned citizens are driven away from the courts for relief from high-handed behavior by government, or inefficiency, or unnecessary cost. Directed by the courts to further their goals in the legislature, the citizen finds that legislatures can do little except pass laws. And passing too many laws is the underlying problem. The political parties have lately chosen to take sides on de-regulation and re-regulation, but this formulation is really intended to influence the relative size of the private and public sectors of the economy. That's quite a different issue from excessive particularization of instructions and warnings, and excessive use of the legal system in both the private and public sectors. There's a concept known as "capricious abuse of judicial process", for which citizens can be punished, but legislatures somehow cannot. Those who designed and sanctified limited government in 1787 when we started with no statutes at all, do not seem to have anticipated the danger of excessive growth.

http://www.philadelphia-reflections.com/blog/1577.htm

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American Succession

George Washington

It may seem a startling focus for a famous war hero, but one of the most important precedents George Washington wanted to establish as America's first president, was that he was determined not to die while in office. His original intention was to serve only one four-year term as president, only accepting a second term with considerable concern that it would increase his chances of dying in office. His reasons are perhaps not totally clear, since he repeatedly stated his concern that he had promised the American public that he would retire from public office when he resigned his commission as General, and was determined to seem a man of his word. While this sounds a little off-key to modern ears, it must be remembered his resignation as General had caused an international stir, even prompting King George III to exclaim that this must be the greatest man who ever lived. Washington may have sincerely thought he was following the pattern of Cincinnatus, the Roman citizen soldier who declined further public life in order to return to his farm. But in retrospect we can see that for a thousand years before Washington's military resignation it was essentially unheard of for a leader with major power to be removed by any means except death. Regardless of where he might have got the idea, Washington was consciously trying to establish a tradition of public service by those who were natural leaders, dutifully responding to the need of the nation, and stepping down when the service was completed. It was an important day for him and for the nation, when he stood before John Adams in 1796, honorably and humbly turning over supreme power to a successor who had been chosen, by others, in a lawful way. Peaceful succession is part of the original intent of the founder of the Constitution, if anything is.

Some have written that Washington was not our first president, but our eleventh if one counts those elected the presiding officers of the Continental Congress, under the Articles of Confederation. But none of them could be said to be the head of state, and absolutely none of them could be confident the public would re-elect them indefinitely. Washington was not so much aiming for a two-term limit as he was setting a pattern for returning the choice to the people after a stated term, and deploring anyone who sought unlimited power for its own sake. The office should seek the man, not the man seek the office, and even if the public got carried away by adulation, the man should in good time step aside. For over a century the two-term tradition was later unchallenged, until Franklin Roosevelt succumbed to exactly the temptations that Washington foresaw. We have seldom amended the Constitution, but after Roosevelt it was soon amended to emphasize what so many had previously considered it unnecessary to state.

John Adams

The idea of a fixed term of office has had an unexpected calming effect on partisanship in America. In parliamentary systems like the British, a prime minister answers weekly questions from his opposition, with full realization that he can be dismissed from office at any moment he angers a majority into a vote of no-confidence. Under the American Constitution, a recent election mandate eats into the stated time in office, making it progressively less rewarding to evict the officer for the residual time before another election does it automatically. America does indeed have an impeachment process, but in fact it has been rarely employed. In America, if someone is elected for a specific term, it is almost certain he will serve out the full term. There are times when partisanship seems unlimited, but in fact we probably have less of it than if we encouraged partisan outcry to go on to evicting an incumbent from office.

Washington was not so successful in promoting another component of his ideal statesman. In his view, a district would naturally select the most prominent citizen available to represent the district, since that person would do it more ably than anyone else and give up the office when duty was completed; that was behind the stated ideal of republican government. Madison was for a time persuaded that such choices should be filtered a second time, with the House of Representatives electing Senators from its midst, but that failed to win approval. In the Eighteenth century the concept of professional bureaucrats and professional politicians had not yet taken hold. In its place was the fear of "ambitious" leaders, who would be held in check by a tradition of underpaying elected representatives, or even of gentlemen of means who would refuse to accept any pay for doing their duty. It proved unanswerable when ambitious men assailed this republican concept by protesting the establishment of aristocracies, oligarchies and failure of the upper class to understand the needs and anxieties of the common man. This viewpoint eventually replaced the "natural" local leaders with those who had experienced life in a log cabin, or endured the purifying experiences of other hardships. The original idea of the founders was to elect leaders who could not be bought; ambitious men could be bought. When political parties made their appearance, a new thought appeared; perhaps ambitious men could be controlled.

As the practical realities of politics in action began to surface, members of elected bodies with varying degrees of ambition and altruism sought refuge from pressures being applied to them. After all, one of the undeniable implications of the Constitution was that every single member of an elected body had just as much power and rights as every other one. Out of this tension emerged the seniority system, another unwritten rule with the power of reality forging it into an implicit rule. In time, everyone would achieve seniority at the same point in his career, and hence the procedural powers necessary to running the place could be assigned with lessened fear of improper pressure. Newcomers regularly complain about the seniority system but eventually yield to it as the least worst accommodation to necessity. But even minor imperfections will be exploited if a system endures long enough. In this case, political parties in the home states are persuaded that the fruits of seniority might be disproportionately available to them if they elect young candidates and keep them in office indefinitely. Eventually such stalwarts can rise to positions that allow them to reward the home district. This has the interesting consequence of creating political families, whose senior representative acquires the power to select his son or grandson to take his place in the rising chain of command. That's not as bad as an inherited aristocracy, perhaps, but it has several similarities.

http://www.philadelphia-reflections.com/blog/1540.htm

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Unwritten Constitution

After Franklin Roosevelt was elected to the Presidency four times, the 80th Congress reacted by proposing what is now the Twenty-second Amendment of the Constitution, that two terms are all that will be permitted in the future. The supporters of Roosevelt have continued to argue that the Amendment was a mean-spirited insult to a man who was no longer able to defend himself. In their view, the Amendment implies that Roosevelt wished to be a dictator, in the pattern of most dictators from Julius Caesar or even earlier. That would seem an unfairness to a man who apparently had sufficient popularity to be re-elected for as many decades as he lived. Dictators, by contrast, characteristically have a succession problem leading them to believe realistically a blood-bath might ensue in the aftermath of relaxation of iron rule during a transition. That is indeed the usual case; if there were nothing more to it, this Amendment would not have much justification. That is not all there is to it.

It might well be said that George Washington started an unwritten rule by voluntarily stepping down after two terms, since he too could have been re-elected as many times as he pleased. Furthermore, political parties as we know them had not then been invented, so he could not have been motivated by the reasons I now wish to explore. He apparently just felt in his bones that a limited period was best, and the nation came to agree with his opinion. Ullyses Grant and Theodore Roosevelt both seem to have toyed with the idea of longer presidency, but retreated in the face of public hostility. Just why the public felt that way is not clear; much was said about Washington's wise words, but that seems unconvincing.

As the country has grown in size, the man we elect to leadership is mainly elected for symbolizing the attitudes of the network of acquaintances he brings along to power. What we know as political parties only partly represent that power network. It is composed of those who seek an agenda that is not currently being addressed, plus those who oppose the agenda that is being pursued. When the combined numbers become a majority, the incumbents are replaced, and the cycle then goes on to repeat itself indefinitely. In that sense, the terms of office state a minimum. It is disruptive to replace governance too soon and too often. The Constitution is silent on the other side of it, of how long is too long, probably because there were no useful models to follow in this first democracy of modern times. We have to surmise that Washington reflected on this question for a period of time before he announced his answer with his own example. Eight years is long enough.

Washington surely had ample opportunity to observe the gradual assumption of power by the network of people who actually carried out public policy, to the point where they bitterly resist the loss of their power which is inevitably the consequence of losing their leader. He may have lost his taste for glory but they have not. Indeed, when you can see signs of their rebellion, you know it is time for the whole lot, to go. It is really pretty hard to see the frail, sick, disabled Roosevelt hungering for more power; it was his cronies who did. That he could be persuaded to make the effort is as good as sign as you can find, that it was well past time for him to retire.

We live in an age of aphorisms, called bites of sound. The argument might well be reduced to saying that since power corrupts, there does come a time to throw the rascals out. When the new reforming heroes take over, power will similarly corrupt them in time, so we must throw them out, in turn. It's a system we sort of eased our way into, and after a while we came to feel that eight years is about long enough to get your reforms reformed, not quite long enough for corruption to become entrenched. And after two hundred years, we finally got around to making it official. Instead of talking about plumbing inspectors taking bribes, or lobbyists paying for Vicuna coats, or drunken congressmen cavorting in fountains with women of light repute, let's go right to the central figure in the controversy, the man who was indispensable even when he was uremic. The example has to do with patent protection, deemed important enough to write into the third Article of the Constitution, even though term limits were left vague.

Franklin Roosevelt hated monopoly, as do most of the rest of us. He carried this antipathy to the point of opposition to all patent protection for inventions, which Benjamin Franklin felt promoted innovation, but which FDR saw as creating monopoly. Both tradition and the Third Article stood in the way of his doing much about it, at least overtly. However, he did control the appointment of federal judges, who controlled the enforcement of patents. We are told that all judicial nominees were interviewed privately on their views about patents, and one by one the judiciary was filled with patent-hating judges. Roosevelt as mentioned was elected four times, and it reached the point where it was effectively impossible to enforce any patent. The Eighth Judicial Circuit in Minneapolis did not sustain a single patent until 1969, since Roosevelt appointees continued on the bench long after new presidents, even new political parties, had come and gone. Regardless of how we may feel about trial lawyers and Bleak House lawyers, and litigation -- and even ridiculous assertions of patent protection for the human genome or patents for business methods -- the state of patent protection is most readily demonstrated by the number of patent lawyers. In 1950, there were only ten patent lawyers in Philadelphia, 4000 in the whole country. In 2007, there are four thousand patent lawyers in Philadelphia and over a million nationwide. Whether the instinct is to see this as a good thing or a bad thing, it is certainly proof that the Constitutionally protected right of patent protection was snuffed out by a process entirely contrary to Constitutional intent. And that process, whether saintly or utterly corrupt, was only made possible by flouting the traditional limitation on terms of office.

http://www.philadelphia-reflections.com/blog/1345.htm

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Constitution V: The Unforeseeable

At the 1787 Constitutional Convention in Philadelphia, the Framers had pride in their accomplishment, but great anxieties about how long it would survive. Few of them would have predicted it would survive for several centuries, unmatched in durability by any of its imitators. A dozen wars and unimaginable changes in the nature of American society have not shaken it. It survived two particularly ominous threats, the Civil War, and the 1937 Roosevelt Court-Packing episode, but more remarkably it survived momentous, unpredictable, changes in our political, social and economic environment.

The Invention of Political Parties.

It emerges in retrospect that the founding of the American republic took place during The Enlightenment, a comparatively brief interlude of general allegiance to rational behavior. Almost all efforts at representative government for thousands of years had previously developed many political parties, and vicious ones at that. The Framers expected that elected representatives would disagree about policy and decisions, but would refuse to win political arguments by personally attacking the political opponents who expressed disagreement. The Enlightenment was world-wide, but the American version had strong doses of Virginia Cavalier courtesty and Pennsylvania Quaker humility of speech. Scarcely anyone in the former colonies was truly to the manner born, and so almost everyone was both self-conscious and a little unrealistic about the mannerisms of gentlemen. Mix that with an aversion to the aristocracy recently rejected, and there emerged a hesitation to declare a true gentleman would want to be elected public representative for any reason except sincere desire to serve the public as a duty, and certainly not to seek raw power itself. George Washington was the particular exemplar of this model. Renouncing personal power at the moment of his greatest military acclaim, Washington was outspoken about his hatred of partisanship. Resigning as the victorious leader of the armed forces, his return to private life was an act that exited notice and admiration from the whole world, which had fully expected him to create a throne and sit on it firmly. He soon refused to come out of retirement to accept the Presidency unless it was offered unanimously, and agreed to only one term of office. After he was persuaded to accept a second term, he adamantly refused a third because he wanted to establish a tradition of voluntary transfers of power. Along that line, he was seriously concerned that he might die in office, preventing him from establishing a tradition of peaceful transfer of power. No one dared suggest political parties in Washington's presence, but the moment John Adams became President, partisan ugliness began. And it was Thomas Jefferson who was itching to begin it. Jefferson never considered waiting patiently for Adams to complete two terms, but began attacking him during the first one. However much Washington wanted to establish an enduring tradition of courtliness, his administration during the Philadelphia years now sticks out as a quaint aberration.

So the republic was started and established for at least Washington's term, with the proclamation that partisan politics of the sort universally seen before and afterwards was only to be deplored. This period was the ten-year temporary period when Philadelphia was the nation's capital, so the concept persisted in Philadelphia as the dominant local standard for another fifty years. Meanwhile the rest of the country degenerated into the deplorable politics of the frontier, the ignoble, and well, the gutter. Even after Philadelphia evolved into a serious player of machine and state politics, enough guilt about naked ambition remained to restrain the Quaker State from its normal role as a national political power. James Buchanan was indeed elected president, but is believed to have been a failure. Since then he serves as an example of why politics are inherently dirty, not suitable for the ambition of authentic Philadelphians. Digby Baltzell blames much of this on Quakerism; that's a partial possibility, but ignores its lack of application to non-Philadelphia Quakers like Herbert Hoover and Richard Nixon, and its visible watermarks stamped on Philadelphians of all religions.

Not mentioning parties, the Constitution says nothing about their number or management. Since the original language contemplated the election of individuals, it leans toward all-or-none victories, thereby sparing us a debate about proportional representation. We expect a two-party system, although we do not forbid more than two. The purpose of a party is to help people get elected, so can he win? is the decisive question in the selection of a party candidate. Extremists in both parties disqualify themselves by this test, so when the election finally arrives, comparatively little difference separates the two candidates, and losers can accept the winner. Our elections are unlikely to be followed by civil war, are more likely to be followed by legislative cooperation. Consider the situation with proportional representation among a dozen parties spread over the political spectrum: in nations that try it, one party seldom wins a majority, and must form coalitions after the election results are known in order to achieve that governing majority. A succinct summary of the difference is that Americans make their deals before the election; countries with proportional representation have the election first and make deals later, after the electorate is excluded. In the rare circumstance when the public wants the wrong thing, proportional representation is a way to do the right thing against the wishes of the public. While it is possible to envision a good outcome from such a situation, it is not easy to imagine public approval of it.

The Mysteries of Property

Everyone was once a nomad. When vast unoccupied land stretched in all directions, ownership meant very little; everyone moved at will. A particular water hole had importance, perhaps, but ownership of it merely meant fighting off others who came near; tribal ownership was a matter of having enough friends to help exclude intruders. If the tribe moved away and came back, intruders again had to be thrown out. This was essentially the situation of native American Indians when the Europeans arrived.

Conventions of land ownership existed under English common law in 1787 but were only a step better organized than the Indian conventions. All land belonged to the king, who might cede large estates to loyal nobles, but could also take it back if the vassal proved disloyal. The Magna Carta and the English Civil War could be viewed as steps in the disruptive process of eventually ceding portions of the King's land to individuals permanently, to have and to hold. The concept of private property became embedded in English common law and was carried over into our own Constitution, although the awkwardness of Indian rights created incentive to be a little vague. English common law was not so much transferred into our system as recognized to "inform" it, a characterization which allowed the Judiciary to adopt, modify or ignore the awkward parts. Although the rules were imprecise, the Framers of the Constitution and John Marshall's court created a hybrid system, with enough flexibility to deal with remnants of the two preceding theories of land ownership, the farmer and the cowboy. Pre-revolutionary Royal caprice was frozen at the moment of independence, followed by successive recorded transfers through an unbroken chain to the present. If you could establish your position to the satisfaction of the courts, it was your land, your property. This seems to have been the basic model the Framers envisioned when they wrote the Constitution, and served as a template for other kinds of ownership when they wrote of the sanctity of contracts. Because this uniform theory of ownership contained some delicate threads of reasoning, well recognized to conflict with the attitudes of the earlier Indian owners, and a little stretched when extended to concepts like intellectual property, it was essential to establish it as uncontested. Land ownership at that time was the main place to store wealth, and transforming a limitless continent into useful property was the main route to acquiring wealth. Money in the form of currency was a tool for facilitating wealth transfers, banking was a step removed and remained contentious for a century. Property was wealth, and more sophisticated definitions of wealth were treated as property organized around the principles of real estate. When the Framers spoke of the sanctity of voluntary contracts they also had in mind preventing the recent abuses of debt forgiveness under state legislatures responding to unfettered majority rule. If the chain of ownership broke at any point, and particularly if contracts were unenforced the Framers had reason to fear the country could fall apart.

The certitudes of the Eighteenth century were also the certitudes of the Nineteenth; and even for most of the Twentieth century those who challenged it were regarded as nuisances, intellectual triflers, perhaps Bolsheviks. The courts, however, began to observe evolving ideas of society conflicting somewhat with this central core of our law. Small businesses protested the unfairness of competing with big business, unrestrained by governmental antitrust laws. Labor unions rebelled at the situation of worker powerlessness in their eternal struggle for higher wages against huge companies intent on reducing costs. Private companies could not possibly compete against businesses run by government, but perhaps it would be more profitable for all businesses to be run by the government. One by one, foreign socialist and communist countries have tried it and were competitive failures, but perhaps Singapore and China, or Denmark and the Netherlands, have perfected government ownership to a point where some corporate state could impoverish us if we persist in the old economic model. So far, it has not been necessary to argue justice and logic; the economic failures of other systems make adoption of their legal ideas laughable.

Nevertheless, the premise of unlimited open land is disappearing. Only 2% of workers in the economy work in agriculture. If land is no longer the unwritten monetary standard, perhaps its requirements should no longer be the tentpole of the legal system. Perhaps the government has a legitimate role in health care, support of the arts, support of the poor and retired, education of the young. An underlying concept seems to be that certain economically unprofitable but desirable activities will not flourish in a property-based economy unless they are identified politically and reimbursed by taxation. Perhaps in an information age, government is the logical and most efficient manager of information. Perhaps if government interfered more in private transactions, society as a whole would benefit. It can be difficult to tell how much this sort of reasoning is based on changing concepts of private ownership, and how much is a claim of collective rights; the two visions tend to merge in weakening individual control of property, while enlarging public claims to the same property. Something called Society is claimed to exist, and claimed to have rights.

This assault on old attitudes currently achieves prominence in the Green revolution, where residents of urban skyscrapers feel passionately about swamps and mountain tops they have never seen. If an eagle roosts on a farmer's land, somehow it is not the farmer's eagle, it is everybody's eagle. Green revolutionaries need to become far more explicit about their rights to the private property of others if they hope to convince judges that they have a case; but their ardor is not deniable.

http://www.philadelphia-reflections.com/blog/1581.htm

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Globalization

Peter Aloise

The Right Angle Club recently heard from one of its own members about the complex issues involved in the topic of globalization. Peter Alois defined globalization as the development of an increasingly integrated world marketplace, although enthusiasts call it Free Trade, and opponents say it interferes with Fair Trade. Although there can be local exceptions, globalization generally leads to lower prices, so consumers are pleased, producers are worried. Since Free Trade can be defined as international commerce without government interference, globalization can also be defined as a general reduction of government influence in trade. But whether you love it or fear it, globalization is a reality; it is here.

Hindrances to trade can take many forms, including subsidies to local merchants, who then can underprice foreign competitors. Carrying things to an extreme, the French fairly recently prohibited the use of American words. While the reasoning used to justify this intrusion into private life was the preservation of the beauty of native French phonetics, this unfortunate government adventure calls attention to the possibility that one of the main functions of local languages is to make it difficult for foreigners to understand what is being said. The Anglo-Saxon response tends to note the large expense of teaching foreign languages in our schools, so why doesn't the rest of the world just stop the nonsense and start speaking English?

Dubai Waterfront

There does seem to be something about this issue related to fair play, a thoroughly Anglo-Saxon concept. When corruption of trade practices around the world is ranked, it is notable that both New Zealand and Canada, which are ranked at the top, are former British colonies. Somalia, certainly one of least British of countries, is ranked at the bottom. Not doubt the French would be offended by this observation. It is also irksome to Fair Trade advocates (ie Globalization opponents) that national prosperity is also fairly parallel to Free Trade policies, absence of corruption, and so on. It was George Washington (probably ghost-written by James Madison) who most famously framed the American Doctrine: Honesty is the best policy.

Some of the members of the Right Angle Club, an outspoken lot, took up the other side of the proposition. Underpricing by foreigners leads to competitive advantage for them, and loss of jobs for Americans. This dislocation is the unfortunate side of creative destruction, and a compassionate government should assist its wounded casualties. Whether it should go to the lengths of raising prices for other Americans by hobbling the foreigners, is a more open question. In the passion of argument, it was mentioned that this country was founded on such principles. Well, it would be hard to find anything written in the Constitution or spoken in its debates which supports that claim. But it must be admitted that the new nation wasted little time in creating tariff protection for struggling new American manufactures, and took an awful long time to get rid of protective tariffs. The confusions of the newly developing Industrial Revolution were perhaps not the best time to develop enduring principles of trade fairness, and thus we should not necessarily be held to them forever. But there is certainly room for the argument that a nation may need a certain set of policies when it is new and struggling, that are not necessarily appropriate when it become rich enough to claim to dominate world trade.

http://www.philadelphia-reflections.com/blog/1660.htm

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Africa Comes to the Schuylkill

Ghazvinian book

A journalist, John Ghazvinian, recently toured the many countries of Africa, wrote a book about it and carried his message to the Right Angle Club of Philadelphia. Philadelphia does not think of itself as particularly involved in oil matters, or African ones. But the fact is the refineries on the Schuylkill down by the airport generate two thirds of the gasoline now used on the East Coast, and right now it mostly comes from Nigeria. There was a time when the crude oil coming to Philadelphia came from Venezuela, but politics are a little unpleasant there at present, and anyway Venezuelan oil is heavy and full of acids. The refineries which specialize in that kind of heavy oil are on the Gulf Coast. Long before the Venezuelan era, the Philadelphia refineries were constructed to refine crude oil from upstate Pennsylvania. They were once the main source of dominance of the Pennsylvania Railroad, because oil refining from Bradford County gave the Pennsy a return freight, whereas the competitive railroads running out of New York and Baltimore had to return from the West without cargo.

African Map

There are 54 countries on the continent of Africa, quite different from each other in character. One dominant characteristic of Africa is its lack of natural ports, and even the Mediterranean ports are cut off from the rest of the continent by the huge transcontinental stripe of Sahara desert. Major wars and famines, monstrous genocides, unspeakable cruelty and poverty go on there without much notice by the rest of the world.

Nigeria

The largest country in Africa is Nigeria. Anyone with even minor dealings with Nigeria soon sees that corruption and dishonesty pass all Western imagination, and they have serious tribal warfare as well. The discovery of large deposits of oil in the region faced the international oil companies with a rather serious difficulty. For instance, Shell Oil has had over 200 employees kidnapped for ransom, and is seriously contemplating abandoning its whole venture. At the moment, corruption is coped with by constructing oil wells a hundred miles out in the ocean.It's almost true that the huge tanker ships make from Philadelphia and return, without the crew talking to any natives of Africa.

We hear that genocide is in full bloom in the Sudan, and that poverty in that country similarly passes belief.

Chad Poverty

They have oil in the South of Sudan, so we may hear more of it. Chad has poverty and oil, and civil war. They have a big Exxon facility, but there isn't a single gasoline station in Chad. At the moment, Angola has paused in its enormous civil war, which killed millions, and Chevron will surely encounter unrest before it is done. Gabon appears to be extremely prosperous, from oil money of course, but they are being ravaged by the Dutch Disease, of which more later.

Apparently, Equatorial New Guinea sets some sort of record for wild behavior. It has lots of oil, and a strong Chinese influence. The current

Mbasogo and Jintao

President of Equatorial New Guinea got his job by shooting his uncle. But don't feel too sorry for the uncle, who used to have an annual Christmas morning celebration, consisting of herding his enemies into a football stadium, and shooting them for the edification and entertainment of the populace. After listening to Mr. Ghazvinian, it seems small wonder that so few American tourists, or journalists, or even missionaries, manage to complete extensive African excursions. As everyone notices, if you don't have journalists, there is never any news.

Let's turn to the Dutch disease,

David Ricardo

of which Africa currently displays many examples likely to torment economics students for decades after Africa eventually rivals Houston. Let's start with David Ricardo, who electified the Nineteenth Century world of economics with his principle of comparative advantage. Ricardo pointed to the obvious truth that always and everywhere a nation does best for itself by identifying its best economic feature and then sticking to it. If every country wakes up and does that, every country must then trade with its neighbors for other things it isn't so suited to make. Consequently, tariffs and trade barriers are a hindrance for everyone, in time impoverishing all nations in the cycle, whatever short-run advantages of tariffs may seem enticing.

North Sea Gas

So far as I know, Ricardo was quite right, but someone had better hurry up and reconcile his underlying premise of comparative advantage with the Dutch Disease. The Dutch disease was identified and named by an anonymous writer for the London Economist about thirty years ago. Noticing that the Netherlands experienced a marked worsening of its general economy after the discovery of North Sea gas deposits, the observer for the magazine concluded that sudden accumulation of wealth in the gas industry led to a rise in the value of the Dutch currency, soon making it impossible for non-gas industries to export, unable to compete at home with now-cheaper foreign imports. Naturally, investors rushed to invest in gas, sold their holdings in other industries, and Holland was propelled in the direction of a one-industry economy, quite at the mercy of fluctuating prices of gas. Thus was the Dutch Disease born, and Ricardo's principle of comparative advantage exposed to quite a severe challenge from which it has not completely recovered. This is important, so how about a simpler description: When gold is discovered, people drop tools to have a gold rush. Wealth lost from dropping tools is greater than wealth gained from the gold.

Fear of the Dutch disorder seems to be the reason why the Chinese are buying our Treasury Bonds, the Japanese engaging in the astonishing "carry trade," and the Arabs buying American private equity funds. The common strand through all these schemes is this: By sending their bonanza savings abroad, they "sterilize" them from their tendency to force their currency upwards. They are exporting inflation, but also endangering their own struggling non-bonanza industries, which are the main hope for diversifying their economies and getting rid of the Dutch effect. Somewhere during this balancing act, politicians get involved, and make things worse. So they call in their generals and admirals, to explore solutions we prefer they were not in a position to explore. Simpler description: When you discover oil, inflation soon follows. And all too often, revolution follows that.

The 1787 the American Constitution unknowingly cured thirteen cases of the Dutch Disease, by imposing absolute freedom of interstate commerce. After eighty years, the benefits of this national union would persuade the North to bleed and die for it. Although the Confederacy thought they were fighting for their way of life, meaning slavery, even the Southerners today recognize they are better off in a Union. Unfortunately today, the European nations are still having a hard time believing the benefits of union could possibly outweigh their allegiances to language, religion, and the wartime sacrifices of their ancestors. They are very wrong, but we are wrong to sneer at them. Except for maybe Switzerland, it is difficult to name another instance in all of history where several independent states gave up local sovereignty for the benefits of a diversified economy with local pockets of comparative advantage. Let's restate it again: the Dutch disease is a result of sudden single-industry prosperity in a country too small to control it.

By the way, what eventually happened to the Dutch? It seems likely that absorption of little Holland into the European Common Market helped dilute the corrupting effect of gas prosperity. It suggests the possibility that Dutch can be reconciled with Ricardo through the common denominator of reduced national barriers to trade and currency-- reduced sovereignty in a milder form. But it's a hard slog. Maybe we could envision annexing Alberta to soften the commotion of oil tar, but it takes a lot of imagination to see the amalgamation of China and India, any time soon. There may thus be nations too big to merge, but nevertheless it would probably be less destabilizing to merge with all of Canada than just with Alberta if you overlook the obvious fact that it is easier to persuade a small country than a big one. Just kidding for the sake of example, of course, since Canada shows no interest in the idea.

Meanwhile, take a look backward from the highway overpass the next time you travel to the Philadelphia Airport. There's a lot more going on in those refineries than just black liquid flowing into steel pipes.

http://www.philadelphia-reflections.com/blog/1261.htm

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Constitutionality of the Monetary System

The Constitution

In noting that our Constitution has lasted for over two centuries, we assert that this simple short document has largely anticipated everything important to anticipate, including the Industrial Revolution, atomic warfare, and the Information Age, to name a few. When an occasional issue arises that is not only unmentioned in the Constitution but where no one is certain what to do, our system leaves us spiritually adrift. Such an issue is found in o0ur monetary system, where we have been wandering for two hundred years.

The founding fathers worried a great deal that popular majorities would abuse minorities, particularly in the case of the majority poor people voting themselves the property of minority rich ones, or that debtors in the majority might dishonor the rights of creditors. Although we have developed a welter of laws about debt and creditors, bankruptcy and taxation, they are if anything too specific. What is lacking is a few general words in the Constitution about the principles of credit and money. The problem now is the same as it was in 1787; we don't know what to say.

Albert Gallatin

For a very long time, some very well educated people were strongly opposed to the creation of a bank, later to mean a banking system. Alexander Hamilton's proposition that a "national debt is a national treasure" was greeted with horror by several Presidents, as well as by Albert Gallatin, one of the most sophisticated financial thinkers of the time. Underlying this perplexing reaction to the simple proposal to create a bank was surely the perception that making the Federal Government into a substantial debtor creates a powerful ally to all debtors in their eternal struggle with all creditors; the outcome of such an unequal struggle would inevitably be to the disadvantage of creditors. In common parlance the word capitalist seems to imply a creditor. It took a very long time for it to become understandable that debtors, too, were essential beneficiaries of a capitalist system, but that idea still often meets with dissent. However, when millions of the world population belong to religions which prohibit the payment of interest, it should not be surprising to find many Americans who cannot get their heads around the idea that debtors and creditors need each other to an equal degree.

In the case of inflation, governments have always been somewhat favorable to debauching the currency. Naturally, a major debtor hopes to repay its debt with cheaper money. Since it has more or less always been necessary to use police powers to maintain a common currency, Kings and governments have long been in control of money, whether that means gold bars or beaded wampum. And for the same length of time, governments have been discovered bending the rules in favor of themselves. Bronze has been substituted for gold, the edges of coins have been shaved, the printing presses print paper money unrestrainedly, and the consumer price index has been manipulated to encourage inflation. Political parties have sought votes from debtors by promising to regulate banks, promote silver as a substitute for gold, disadvantage foreign competitors, inhibit or manipulate the value of currency on foreign exchanges.

Alan Greenspan

For forty years we have operated without any fixed standard for money. Money for all that time has lacked any physical representation, or discipline. Money has become a computer notation. At first it was based on calculations of monetary aggregates, a bewildering concept promoted by Milton Friedman. More recently, it is entirely based on inflation targeting as promoted by Alan Greenspan. With a target of maintaining steady prices, an inflation rate of 2% is set as a specific target for the Federal Reserve. If inflation falls below that target, more money is created; if it rises above that level, less money is created. How much there is of it does not matter; it's beyond calculation. Although this simplified description fills almost any listener with doubts, it seemed vindicated by seventeen years without a notable recession. Even though events beginning in 2007 raise pretty serious doubts, it may still prove to be the best possible monetary system.

Even though this most fundamental of all commercial issues cries out for a simple principle to be stated in the Constitution so that neither populist congressmen not rapacious financiers can ruin us, it is not presently possible even to imagine what a new Constitutional amendment would, should or even could say. Meanwhile, some immense power rests in the hands of shadowy figures whom we blindly trust, for lack of a better idea about how we should select them or what we should instruct them to do.

http://www.philadelphia-reflections.com/blog/1557.htm

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Patent Pending

Constitution

Most of the members of the Constitutional Convention of 1787 were also members of the early Senate and Congress during the time when Philadelphia was seat of government. The Constitution had made provision for copyrights and patents "for a limited time", and the early Congresses fixed a reasonable time as seventeen years. A couple of years ago, Congressman Bono sponsored a law, widely supposed to be for the benefit of her constituent Walt Disney extending the time to 99 years. Since the creation of monopolies for a limited time was stated to be for the purpose of encouraging innovation, lawsuits were promptly filed with the contention that 99 years was essentially unlimited, and in any event would throttle innovation. In the Eldred case, the U.S. Supreme Court reluctantly held that it was up to Congress to decide how long was a limited time, meanwhile expressing its dismay at the earlier Congress which had allowed the time to be so extended by what is widely reported to be a log-rolling contest among lobbyists. The disgust of the Supreme Court was very thinly disguised in its opinion, which quite obviously hoped for Congress to take another look at what it had done.

So now the question arises, of how such a strange provision got to be in the Constitution in the first place. The members of the convention were mostly farmers and plantation owners, quite recently returned to civilian life after struggling with King George III over governmental intrusion into trade and commerce. Why ever would these people, who were otherwise so parsimonious in their rules and principles, think to intervene in patents and copyrights? It has been suggested that Thomas Jefferson, who was a writer and an inventor, might have been the source of this provision. Unfortunately, Jefferson was three thousand miles away during all of the Constitutional Convention, and was quite dismayed with the completed Constitution when he later returned.

It's a job for some graduate student in American History, looking around for something to write his thesis about. James Madison kept extensive secret diaries of the interior arguments at the Convention, and Benjamin Franklin's Collected works run to over eighty volumes. Surely, among all those scribblings by quill pens, can be found some revealing references to the originator of the bizarre little patent clause. And if it turns out to have been anyone except Ben Franklin, it will be a great surprise. Surely there is a broad hint in the fact that for many years the Franklin Institute essentially was the U.S. Patent Office. Just think for a moment of the value of holding a patent on the invention of electricity. Makes Microsoft seem rather trivial. And as for a comparison with Mickey Mouse, well, really.

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Signers and Non-Signers of the Constitution

Signers of The Constitution

John Dickinson was an active participant in designing both the Declaration of Independence and the Constitution, but he signed neither one of them. His position on the Declaration was that England had certainly behaved in an offensive way; but the situation was getting better and it was still possible to patch things up, even with a British fleet in New York harbor displaying hostile intent. His later position on the Constitution is less clear. Dickinson asked George Read to sign his name, because he was sick. Whether this was a real illness or a diplomatic illness is not readily known.

Three active delegates made no bones about their opposition to the final product: John Randolph and George Mason of Virginia were not mollified by private assurances that a Bill of Rights was necessary but could be added later; they refused to sign a constitution that did not currently include this most passionate of their demands. There is little doubt of their sincerity, but any politician today would recognize that they also needed to protect their flank from Patrick Henry who smelled a rat and stayed at home denouncing the whole enterprise. Henry was a powerful speaker, representing the Scotch-Irish Virginia piedmont area. In Scotland, Ireland and America, that group had been abused by perfidious English kings three times, and wanted iron-clad protection against any backsliding to English rule or English government models. It's quite possible that Virginia's George Wythe and James McClurg left the convention early in order to avoid the local political consequences of signing the document, or the equally uncomfortable stance of opposing the clear leadership of George Washington. Some idea of the feelings of Virginia can be gained by noticing that of the seven delegates sent by Virginia, only John Blair joined the two instigators, George Washington and James Madison, in signing public approval. A majority of the Virginia delegation thus ducked enthusiastic endorsement of their local iconic hero, and in the long run Virginia held back on ratification until only one last vote was needed for enactment. Without George Washington, there can be little doubt the whole effort would have failed. Indeed, a case could be made that the location of the District of Columbia and the election of Virginians as four of the first five presidents had some of the characteristics of trying to persuade the six hundred pound Virginia gorilla to play nice.

Elbridge Gerry of Massachusetts similarly refused to sign a constitution which did not include a Bill of Rights. However, Gerry is the politician responsible for inventing the technique of packing his opposition into one voting district (by shifting its borders) so his own party could win narrow majorities in several other districts. This sleazy manipulation of loopholes in the system has forever after been known as Gerrymandering, and raises a question perhaps unfairly, of where Gerry actually stood on every other issue in the Constitutional Convention. By contrast, it is impossible to imagine George Washington doing such a thing, and quite possible to imagine he would never again speak to someone who did.

In addition to the three delegates who stayed to the end but refused to sign, an additional four left early to demonstrate their protest: John Lansing and Robert Yates of New York; and Luther Martin and John Mercer of Maryland.

We are left less clear about the opinions of seven more who simply left the convention early (Oliver Ellsworth of Connecticut, William Houstoun and William Pierce of Georgia, Caleb Strong of Massachusetts, William Houston of New Jersey, and William Davie and Alexander Martin of North Carolina.) The same uncertainty extends to the eighteen delegates who were invited to attend but either refused or regretted their inability to attend: (Erastus Wolcott of Connecticut, Nathaniel Pendleton and George Walton of Georgia, Charles Carroll, Gabriel Duvall, Robert Hanson Harrison, Thomas Sim Lee, and Thomas Stone of Maryland, Francis Dana of Massachusetts, John Pickering and Benjamin West of New Hampshire, Abraham Clark and John Neilson of New Jersey, Richard Caswell and Willie Jones of North Carolina, Henry Laurens of South Carolina, and Patrick Henry, Richard Henry Lee, and Thomas Nelson of Virginia). These men were originally selected because of their local eminence, so some of them may not have been able to spend several months in a City that took days to reach on horseback. On the other hand, we certainly know where Patrick Henry stood and the large number of other abstentions from certain states suggests more than personal inconvenience was involved. After all, Rhode Island refused even to nominate anyone. In this last case, a political issue was highlighted. The Articles of Confederation which were being replaced not only required unanimous consent to change them, but they affirmed the Articles to be permanent. Under ordinary contract law, that would be dispositive. But George Washington was hell-bent on replacing the Articles of Confederation, so anything they said would no longer matter.

There remains a need for someone, perhaps in a doctoral thesis, to examine the voluminous correspondence and recollections of the large group of non-signers to assess the true nature of their failure to attend or sign. There was plenty of room for honest disagreement, personal business back at home, illness, or feelings of inadequacy. On the other hand, plenty of other subsequent politicians have exhibited an unwillingness to offend anyone, a hope to seek advantage from both sides, a habitual tendency toward waiting to see who would win before stating their own opinion. Politics would be better without such personal inadequacies, but politics would not be politics without them. In fairness to their quandaries, the voting on the Constitution was by states, requiring nine to adopt it. If the vote of their state was a foregone conclusion, some delegates probably had a right to go home and let it happen in their absence. In the case of Alexander Hamilton, here stood the single New York delegate in attendance at the final signing. Since he had been agitating for this sort of reform for seven years before Madison and Washington convinced each other, it seems possible that others withdrew to let him have the lime light. There is little doubt the single remaining responsibility of the signers was to go home and "deliver" their state for ratification, and Hamilton went at that with a vengeance. Although the moment of final signing appears on portraits and in sculpture, it was only the beginning of the battle for adoption, not the final victory. Indeed the Constitution as we now perceive it did not take more or less final form until the early government shaped its actual operation. Most of that shaping process also took place in Philadelphia, during the first ten years while the seat of government was still located there. Many if not most of the elected members of the First Congress had been members of the Constitutional Convention, returning to Philadelphia to finish the job by making a good beginning to the country.

Signers of the Constitution.

George Washington

George Reed, Delaware

Gunning Bedford, Jr., Delaware

John Dickinson, Delaware

Richard Bassett, Delaware

Jacob Broom, Delaware

James McHenry, Maryland

Daniel of St. Tomas Jenifer, Maryland

Daniel Carroll, Maryland

John Blair, Virginia

James Madison, Jr., Virginia

William Blount, North Carolina

Richard Dobbs Spaight, North Carolina

Hugh Williamson, North Carolina

John Rutledge, South Carolina

Charles Cotesworth Pinckney, South Carolina

Charles Pinckney, South Carolina

Pierce Butler, South Carolina

William Few, Georgia

Abraham Baldwin, Georgia

John Langdon, New Hampshire

Nicholas Gilman, New Hampshire

Nathaniel Gorham, Massachusetts

Rufus King, Massachusetts

William Samuel Johnson, Connecticut

Roger Sherman, Connecticut

Alexander Hamilton, New York

William Livingston, New Jersey

David Brearly, New Jersey

William Paterson, New Jersey

Jonathan Dayton, New Jersey

Benjamin Franklin, Pennsylvania

Thomas Mifflin, Pennsylvania

Robert Morris, Pennsylvania

George Clymer, Pennsylvania

Thomas Fitzsimons, Pennsylvania

Jared Ingersoll, Pennsylvania

James Wilson, Pennsylvania

Gourvernor Morris, Pennsylvania

Non-Signers of the Constitution

Oliver Ellsworth, Connecticut

William Houstoun, Georgia

Caleb Strong, Massachusetts

William Davie, North Carolina

Alexander Martin, North Carolina

George Walton, Georgia

Charles Carroll, Maryland

Gabriel Duvall, Maryland

Thomas Stone, Maryland

Francis Dana, Massachusetts

Benjamin West, New Hampshire

Abraham Clark, New Jersey

Richard Caswell, North Carolina

Willie Jones, North Carolina

Henry Laurens, South Carolina

Patrick Henry, Virginia

Richard Henry Lee, Virginia

Thomas Nelson, Virginia

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Franklin Declares Independence a Year Early

Joseph Priestly

Joseph Priestly became a close friend of Benjamin Franklin almost as soon as they met. Priestly was an Anglican clergyman who broke loose and formed the Unitarian Church, and meanwhile his scientific discoveries also entitle him to be called the Father of Chemistry. Franklin of course was the discoverer of electricity; it would be hard to be sure which of the two was more brilliant. In July, 1775, Franklin wrote the following letter to Priestly, which makes a trenchant case that the American colonies should, and would, break away from England. Since some legal authorities, following Lincoln's lead, maintain that Jefferson's manifesto "informs" the United States Constitution, it might be well to begin referring to this letter as an even clearer statement of the mind set of America's founding leaders.

General Thomas Gage

" Dear Friend (wrote Franklin),

"The Congress met at a time when all minds were so exasperated by the perfidy of General Gage, and his attack on the country people (i.e. Of Lexington and Concord), that propositions of attempting an accommodation were not much relished; and it has been with difficulty that we have carried another humble petition to the crown, to give Britain one more chance, one opportunity more of recovering the friendship of the colonies; which however I think she has not sense enough to embrace, and so I conclude she has lost them for ever.

"She has begun to burn our seaport towns; secure, I suppose, that we shall never be able to return the outrage in kind. She may doubtless destroy them all; but if she wishes to recover our commerce, are these the probable means? She must certainly be distracted; for no tradesman out of Bedlam ever thought of encreasing the number of his customers by knocking them on the head; or of enabling them to pay their debts by burning their houses.

"If she wishes to have us subjects and that we should submit to her as our compound sovereign, she is now giving us such miserable specimens of her government, that we shall ever detest and avoid it, as a complication of robbery, murder, famine, fire and pestilence.

"You will have heard before this reaches you, of the treacherous conduct to the remaining people in Boston, in detaining their goods, after stipulating to let them go out with their effects; on pretence that merchants goods were not effects; -- the defeat of a great body of his troops by the country people at Lexington; some other small advantages gained in skirmishes with their troops; and the action at Bunker's-hill, in which they were twice repulsed, and the third time gained a dear victory. Enough has happened, one would think, to convince your ministers that the Americans will fight, and that this is a harder nut to crack than they imagined.

"We have not yet applied to any foreign power for assistance; nor offered our commerce for their friendship. Perhaps we never may: Yet it is natural to think of it if we are pressed.

"We have now an army on our establishment which still holds yours besieged.

"My time was never more fully employed. In the morning at 6, I am at the committee of safety, appointed by the assembly to put the province in a state of defence; which committee holds till near 9, when I am at the congress, and that sits till after 4 in the afternoon. Both these bodies proceed with the greatest unanimity, and their meetings are well attended. It will scarce be credited in Britain that men can be as diligent with us from zeal for the public good, as with you for thousands per annum. -- Such is the difference between uncorrupted new states, and corrupted old ones.

"Great frugality and great industry are now become fashionable here: Gentlemen who used to entertain with two or three courses, pride themselves now in treating with simple beef and pudding. By these means, and the stoppage of our consumptive trade with Britain, we shall be better able to pay our voluntary taxes for the support of our troops. Our savings in the article of trade amount to near five million sterling per annum.

"I shall communicate your letter to Mr. Winthrop, but the camp is at Cambridge, and he has as little leisure for philosophy as myself. * * * Believe me ever, with sincere esteem, my dear friend, Yours most affectionately."

[Philadelphia, 7th July, 1775.]

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After the Convention:Hamilton and Madison

Signers

The Federalist Papers were written by three founding fathers after the Constitution had been completed and adopted by the Convention. Detecting hesitation in New York, the aim was for publication in New York newspapers to persuade that wavering State to ratify the proposal. It is natural that The Federalist was composed of arguments most persuasive to New York, putting less stress on matters of concern to other national regions. This narrow focus may explain the close cooperation of Hamilton and Madison, who must surely have suppressed some latent concerns in order to present a unified position. In view of how much emphasis the courts have placed on the original intent of almost every word in the Constitution, it seems a pity that no one has attempted to reconcile the words of the principal explanatory documents with the hostile disagreements of their two main authors, almost as soon as the Constitution came into action. Perhaps the psychological hangups would be more convincingly dissected by playwrights and poets, than historians.

John Jay wrote five of the essays, mostly concerned with foreign relations; his presence here highlights the historical likelihood that Jay might have been the one who first voiced the idea of replacing the Articles of Confederation. At least, he seems to have been first to carry the idea of a general convention for that purpose to George Washington (in a March 1786 letter). The remaining essays of The Federalist were written under the pen name of Publius by Alexander Hamilton and James Madison, both of whom had a strong enough hand in crafting the Constitution, but who quickly became absolutely dominant figures in the two central political factions after the Constitution was actually in operation. And their eagerness to be central is itself telling. They were passing from a stage of pleasing George Washington with his favorite project, into furthering a platform for launching their own emerging agendas. It is true that Madison's Federalist essays were mainly concerned with relations between the several states, while Hamilton concentrated on the powers of the various branches of government. As matters evolved, Hamilton soon displayed a sharper focus on building a powerful nation; Madison scarcely looked beyond the strategies of internal political power except to see clearly that Hamilton was going to get in the way. These two areas are not necessarily incompatible. But it is nevertheless striking that two such relentlessly driven men could work together to achieve the same set of rules for the game they were about to play so unflinchingly. Thomas Jefferson had been in France during the Constitutional Convention. It was he who was most dissatisfied with the resulting concentration of power in the Executive Branch, but Madison eagerly became the most active agent for forming the anti Federalist party, with all its hints that Washington was too senile to know the difference between a President and a King. Washington abruptly cut him off and never spoke to Madison after the drift of his opinions became undeniable. Today, it is common to slur politicians for pandering to lobbyists and special interests, but that presents only weak competition with the personal forces shaping leadership opinion, chief among them being loyalty to, and perceived disloyalty from, close political associates.

As a curious thing, both Hamilton and Madison were short and elfin, and both relied for influence heavily on their ability to influence the mind of

George Washington

George Washington, who projected the power and manner of a large formidable athlete. Washington had no strong inclination to run things and, once elected, no particular agenda except to preside in a way that would meet general approval. He had mainly wanted a new form of government so the country could defend itself, and pay its soldiers. Madison was a scholar of political history and a master manipulator of legislative bodies, while Hamilton's role was to supply practically unlimited administrative energy. Washington was good at positioning himself as the decider of everything important; somehow, everybody needed his approval. On the other hand, both Madison and Hamilton were immensely ambitious and needed Washington's approval. This system of puppy dogs bringing the Master a bone worked for a long while, and then it stopped working. Washington was very displeased.

The difference between these two short men immediately appeared in the way they chose a role to play. Madison the Virginian chose to dominate the legislative process as the leader of the largest state delegation within the

Alexander Hamilton

House of Representatives, in those days the dominant legislative chamber. Hamilton sought to be Secretary of the Treasury, in those days the largest and most powerful department of the executive branch. It's now a familiar pattern: one wanted to form policy through dominating the board of directors, while the manager wanted to run things his way, even if that led in a different direction. Both of them knew they were setting the pattern for the future, and each of them pushed his ideas as far as they would go. Essentially, this could go on until Washington roused himself.

After a short time in office, Hamilton wrote four historic papers about two general goals: a modern financial system, and a modern economy. For the first goal, he wanted a dominant national currency with a mint to produce it and a bank to control it. Second, he also wanted the country to switch from an agricultural base to a manufacturing one. You could even say he really wanted only one thing, a national switch to manufacturing, with the necessary financial apparatus to support it. Essentially, Hamilton was the first influential American to recognize the power of the Industrial Revolution which began in England at much the same time as the American Revolution. Hamilton was swept up in dreams of its potential for America, and while puzzled -- as we continue to be today -- about some of its sources, became convinced that the secrets lay in the economic theories of

David Hume

David Hume and Adam Smith in Scotland, and of Necker in France. Impetuous Hamilton saw that Time was the essence of opportunity; we quickly needed to gather the war debts of the various states into the national treasury, we quickly needed a bank to hold them, and a mint to make more money quickly as liquidity was needed. It seemed childishly obvious to an impatient Hamilton that manufacturing had a larger profit margin than agricultural products did; it was obvious, absolutely obvious, that this approach would inspire huge wealth for the new nation.

Industrial Revolution

Well, to someone like Madison who was incredulous that any gentleman would think manufacturing was a respectable way of life, what was truly obvious was that Hamilton must be grabbing control of the nation's money to put it all under his own control. He must want to be king; we had just got rid of kings. Furthermore, Hamilton was all over the place with schemes and deals; you can't trust such a person. In fact, it takes a schemer to know another schemer at sight, even when the nature of the scheme was unclear. Madison and Jefferson couldn't understand how anyone could look at the vast expanses of open continent stretching to the Pacific without recognizing in this must lie the nation's true destiny. Why would you fiddle with pots and pans when with the same effort and daring you could rule a plantation and watch it bloom? If anyone had used modern business jargon like "Win, win strategy", the Virginian might well have snorted back, "When you say that to me, friend, smile."

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Alexander Hamilton, Celebrity

He had the kind of taudry private life and flashy public behavior that Philadelphia will only tolerate in aristocrats, sometimes.

It comes as a surprise that most of the serious, important things Alexander Hamilton did for his country were done in Philadelphia, while he lived at 79 South 3rd Street. That surprises because much of his more colorful behavior took place elsewhere. He was born on a fly-speck Caribbean island, the "bastard brat of a Scots peddler" in John Adams' exaggerated view, was orphaned and had to support himself after age 13. The orphan then fought his way to Kings College (now Columbia University) in New York in spite of hoping to go to Princeton, and has been celebrated ever since by Columbia University as a son of New York. He did found the Bank of New York, and he did marry the daughter of a New York patroon, and he was the head of the New York political delegation. As you can see in the statuary collection at the Constitution Center, he was a funny-looking little elf with a long pointed nose, frequently calling attention to himself with hyperkinetic behavior. Even as the legitimate father of eight children, Hamilton had some overly close associations with other men's wives, probably including his wife's sister. Nevertheless, he earned the affection of the stiff and solemn General Washington, probably through a gift of gab and skill getting things done, while outwardly acting as court jester in a difficult and dangerous guerilla war. There is a famous story of his shaking loose from the headquarters staff and fighting in the line at Yorktown, where he insolently stood on the parapet before the British enemy troops, performing the manual of arms. Instead of using him for target practice, the British troops applauded his audacity. Harboring no such illusions, Aaron Burr later killed him in a duel as everyone knows; it was not his first such challenge.

Alexander Hamilton

Columbia University President Nicholas Murray Butler told other stories of celeb behavior to reinforce Hamilton's New York flavor. But in the clutch, General Washington learned he could always trust Hamilton, who wrote many of his letters for him and acted as his reliable spymaster. When the first President faced signing or not signing the fateful bill to create the National Bank, a perplexed Washington had to choose between: the violent opposition of Thomas Jefferson and James Madison, or the bewildering complexity of Alexander Hamilton's reasoning in arcane economics. On the one hand, there was the simple principle that owing money was seemingly always evil; on the other was the undeniable truth that for every debit created, you create a balancing credit somewhere. Washington ultimately chose to go with Hamilton, whose reasonings he likely didn't understand very well. If you doubt the difficulty, try reading Hamilton's Report on the Bank, written to persuade the nation and its first President of the soundness of his ideas. And then consider the violence of even present-day arguments about such "supply side" economics.

Nicholas Murray Butler

All of these momentous events happened in Philadelphia at places now easily visited in a morning's stroll. But Hamilton's image as a Philadelphian, doing great things in and for Philadelphia, was forever tarnished at one single dinner he hosted. Jefferson and Madison, his political opponents but his guests, were persuaded to provide Virginia's votes for the federal takeover of state Revolutionary War debts, in return for offering New York's votes for moving the nation's capital to the banks of the Potomac. True, Pennsylvania allowed itself to be pacified with having the capital remain here for ten years while the southern swamps were being drained. But it was Hamilton who cooked up this deal and sold it to the other vote swappers. Philadelphia felt it was entitled to the capital without needing to ask, felt that Hamilton was deliberately under-counting Pennsylvania's war debts, and this city has never appreciated the insolent idea that its entitlements were forever in the hands of wine-swilling hustlers. As the economic consequences of this backroom deal became evident during the 19th Century, it was increasingly unlikely that Philadelphia would lionize the memory of the man responsible for it. Let New York claim him, if it likes that sort of thing. When Albert Gallatin, who was more or less a Pennsylvania home town boy, attacked Hamilton as a person, as a banker, and as a Federalist -- he had a fairly easy time persuading Philadelphians that this needle-nosed philanderer was an embarrassment best forgotten.

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Madison in Philadelphia

There is a phrase much used in diplomacy and politics, sometimes attributed to Lord Palmerston, sometimes to Cicero.

In politics, there are no permanent friends, no permanent enemies, only accommodations.

Lord Palmerston

Regardless of who coined the adage, it is difficult to imagine stone-faced George Washington listening with approval. It is nevertheless generally held to be the central truth of modern politics, and James Madison was our first modern politician. The only American scholar of politics and political history available to Washington who therefore depended on him for advice, Madison eventually evolved into a practicing politician. An evolution in the core beliefs of both these men, based on their new political experiences seems to explain the slow transformation of the original friendship of these two allied Virginia plantation owners, into coolness bordering on hostility. On one level, their disagreements may be seen as responses to their new roles: Washington was in absolute charge of the executive department, while Madison constantly needed to mould his personal views to accommodate the collective viewpoint of the legislative body. It seems possible neither man realized this would become a common experience. On another level it seems possible to view the two of them as having differing reactions to the Industrial Revolution. Although they were both Virginia plantation owners, Washington's wartime experience had carried him into the far corners of the new nation, his role as Chief Executive put him into a cosmopolitan circle with a wider appreciation of new transformative economic forces. Of the two, he was better able to understand what Hamilton was talking about, better able to appreciate that the strength of a nation has an economic base rather than a military one. The mythology of the era has Alexander Hamilton in combat with James Madison, with Washington in the middle but eventually siding with Hamilton. That's true enough, but the greater truth is that these individuals were cast as the symbols of the changing beliefs of the country. It must be conjectured the high adventure of creating a new form of government held the two together, even as many things turned out to be unanticipated. Washington seems more dismayed by gradually perceiving some unwelcome imperatives of the Constitution, while Madison simply set about to make the most of them. Washington believed in character, a personality based on steadfastness, courage and determination. Adaptability, yes, flexibility, no.

James Madison

The organizing principle of every legislature, congress, or parliament is that each member has one vote and therefore is the equal of every other member. Washington understood leaders would emerge, able to persuade others. What he did not anticipate was that some would acquire the power to compel obedience. Unofficial ways to acquire power over colleagues differ among legislatures, but have certain recurring features.

Vote-swapping.

The press of business usually requires a division of labor into committees, who soon acquire special expertise. A chairman is selected to handle routine matters, and to negotiate compromises with overlapping committees; the chairman acquires power. Members differ in their degree of interest in a topic; those who have little interest in any particular outcome have an opportunity to trade their vote for assistance in another matter of much greater concern to them; why not? From this evolves the strategy of striving to discover what each voter wants most of all; offering assistance on that favorite topic is the first step in enlisting later support on some other issue. If he wants your help badly enough, he may even vote against something he really favors. If he wants to be chairman of a committee important to his interest, it may even be possible to force him to vote for something he privately hates. Vote-swapping is the fundamental currency of legislative trading, and it is sometimes a loathsome business. But just try to imagine George Washington swapping votes to become chairman of a committee, or to enact an appropriation; it couldn't happen.

One suspects it did happen, at least once. Washington badly wanted the nation's capitol to be across the Potomac river from his plantation. Indeed, he wanted the Potomac River to be the main commercial highway of the nation to the Great Lakes and the Mississippi. He never said he wanted the nation's capital to be named after him, but he did not dissent a great deal, either. When there was quibbling about the location of the White House, the old surveyor went there himself and laid it out with a surveyor's transit. Washington wanted Virginia to be the biggest most important state in the union; three of the first four presidents were Virginians. And so, when Hamilton and Jefferson negotiated the Compromise of 1790, everyone knew what Washington's feelings were. The revolutionary debts of Virginia became federally assumed, in return for relocating the capital from the banks of the Delaware to the banks of the Potomac. Robert Morris was fit to be tied. Washington stood aloof and uninvolved. Anyone who has ever been involved in one of these compromises knows that some participants see nothing wrong with it, while others hate themselves for having anything to do with it. In fact, the legislators who are most offended by vote-swapping are the ones who once somehow got unwillingly dragged into it, and never entirely forgave themselves. Natural politicians like Madison, however, are irked by those who criticize such a natural and effective process, whose successes are everywhere to be noted. While no one can read the minds of these two founding fathers, there seems little doubt they were on different sides of this enduring division in the personality types of people in public office, and therefore heading for a collision when a sufficiently major issue arose.

The genius of the evolving American form of government was to leave land ownership in private hands, while creating a new power center in banking and finance.

The issue was major, all right. It was the question of whether this proud new nation was going to join the Industrial Revolution, for all its smoke and crowding, greed and striving. Or whether it was going to sweep majestically along with the romantic movement of the day, the happy farmer and the noble savage, spreading out on a bountiful endless continent. To some extent, this was an echo of the French Revolution which so enthralled Madison's best friend Thomas Jefferson, drawing on the conflict between England and France in our own rather recent revolution. Great Britain was a century ahead of France in the Industrial Revolution, which originated north of Manchester where William Penn's Quakers came from. Yes, factories were sort of polluting and crowded, certainly enough to get Marx and Engels excited. But there was another undeniable truth: England was richer, was acquiring a world empire, had a bigger navy, and was soon to beat Napoleon at Waterloo. It was rather easy to prove to George Washington that an economically strong nation was likely to be militarily strong as well. Eventually, the point would be brought home to Robert E. Lee. American tourists in Europe today echo the sentiment when they chose an itinerary: no churches, and no museums, please.

Still another historical curiosity emerges from this ten years of Philadelphia as the nation's capital, which is really our national epic poem, waiting for its Homer to write it. Just about everybody at the Convention agreed the national government had to be strengthened; the state legislatures were going to ruin us. Madison, representing the views of the landowner aristocracy, was also afraid the national government could get too strong and ruin them by disturbing private property ownership. Hamilton didn't care about land, he cared about money; he wouldn't mind a King if one was necessary to get things done. It should be remembered that feudalism was largely based on the king's right to reassign land ownership in return for military support. The genius of the evolving American form of government was to leave land ownership in private hands, while creating a new power center in banking and finance. So it eventually evolved that Madison and his friends from Appalachia wanted to limit the powers of the national government strictly to those few areas where we needed them strong; enumerated powers were the result. The Federalists following Hamilton, stretched enumerated power as far as it would reach with extra "implied" powers. If you were to defend the nation, you needed a navy; eventually, it would be implied you needed an air force, maybe atom bombs. Increasing Federalism was the driving force of the Republican Party down to the time of Franklin Roosevelt, indeed down to the moment when the Philadelphian Owen Roberts tipped the Supreme Court majority in favor of eliminating the commerce clause. Since that time, the Republican descendants of Alexander Hamilton have sought to shrink and restrain the federal powers and bureaucracy, while the political descendants of James Madison have sought to populate Virginia with civil servants up to and beyond the Piedmont. Both Madison and Hamilton must be turning in the grave about the way this topic evolved. But the power being struggled for is all commercial power; ownership control of land remains off the political table. Perhaps the day will come when fresh land stops seeming unlimited, making monopoly control of it seem more threatening. More likely, the agricultural economy will nearly vanish, taking its power struggles along with it.

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Gallatin Part II

Act 1 Gallatin Triumphantly Returns to Congress.

When Washington pardoned the Whiskey Rebels, Gallatin was immediately elected to Congress. It was his payback time for Hamilton and all his works. The desperate Federalists tried to oust him a second time with a Constitutional Amendment, which failed before the force of Gallatin's oratory. Gallatin then threw his influence behind Jefferson's deadlocked congressional contest with Aaron Burr, electing Jefferson and earning his own reward as Secretary of the Treasury. Although elected Vice President, Burr's fury is turned against Hamilton, foreshadowing the coming duel.

Act 2 The Virtuoso Financier.

Jefferson proves hopeless in domestic affairs, so Gallatin essentially takes over that role, just as Hamilton had taken over from Washington, who was another Virginia cavalier adrift in these matters. Gallatin promptly repealed the whiskey tax, cut government expenses, in particular the million dollar annual tribute to the Barbary pirates, and almost performed magic in financing the Louisiana Purchase together with Stephen Girard and William Bingham.

Act 3 Burr Kills Hamilton

After his Vice President kills the leader of the opposition party, Jefferson's party was on the political defensive. But not Gallatin, who spits out his famous remark, "A majority of both parties seem disposed to deify Hamilton and treat Burr as a murderer. The duel, for a duel, was certainly fair." It is an all-time low moment in the politics of the young nation.

Act 4 Diplomacy or War?

As the Napoleonic wars engulf the whole world, both England and France harass our merchant ships, and cries go up for war. Partly out of desire to annex Canada in the process, Gallatin sneers at proposals to restrain the fighting Europeans with mere sanctions. His prediction proves dismayingly correct that nothing would come of it except to make our own citizens into smugglers.

Act 5 War It Is.

The First Bank's charter was to expire in 1811, and the bank closed, creating an opportunity for Girard to buy it out and finance the coming war himself. Gallatin was desperate to end the war as quickly as possible, especially after the British burned Washington. To speed matters up, Gallatin took a leave of absence and went off to the peace conference in St. Petersburg himself.

Epilogue in front of the curtain.

Gallatin finally announces his resignation from the longest term of Treasury Secretary in our history. He is seventy years old, three score and ten. Rather than play golf, he was to spend the last eighteen years of his life in three more careers. As a diplomat, he negotiated both our permanent northern and southern borders. As an academic, he founded the discipline of ethnology with the study of native Indian languages, meanwhile founding New York University. And as a banker, he founded a bank which has since evolved into JPMorgan Chase. After all, a man has to find something to keep himself busy.

http://www.philadelphia-reflections.com/blog/1348.htm

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Unwritten Features of the Constitution

In their early writings, James Madison and the Federalists who participated in drafting the Constitution repeatedly emphasized their allegiance to republican ideals, republicanism, and a republican form of government. This sounds a little odd today, since obviously they were not alluding to the present Republican and Democratic parties, which had not been created. It seems natural to us to regard a republican form of government as a gradual extension of a democratic one, when the size of the electorate grows so large it cannot be readily managed by voice votes in a town meeting, when therefore it becomes necessary to select proxies, or representatives. That description greatly underestimates the subtlety of the Founding Fathers.

Two centrally important members of the Convention, James Madison and Gouverneur Morris, felt especially strongly about a feature that does not occur to many others. When the voters in a particular district pick a representative, they are generally trying to choose one who will not only reflect issues of local importance, but one who will be able to persuade representatives of other districts to vote favorably. In this way, representatives tend to be selected who are taller, handsomer, more intelligent, richer, and more famous than the average person in the district being represented. Not by much, perhaps, and sometimes not at all. But as a general thing, the election of representatives tends to create a House of Representatives who are superior in certain ways to the average person being represented. When candidates and political parties engage in public combat, an impression is given that "politicians" are low characters, but that is in fact not usually true. Many factors will discourage the best candidates from participating in disagreeable contests, and many stratagems are employed in an attempt to elect the worse of two candidates. But it is seldom the case that a successful candidate is less attractive or talented than the average person in his district. Republican governments almost always are composed of more distinguished persons than average, exposed to greater temptations perhaps and subject to more detailed scrutiny.

Madison was so taken with this idea that he proposed the Senate should be made up of people drawn from the House of Representatives in a second round of voting, thereby further purifying the result. For various reasons this approach was not adopted by the Convention, but it does have a logic to it, and it clearly illustrates that Madison was looking for results not always explicitly stated. Gouverneur Morris, on the other hand, was openly enthusiastic for this outcome, because he perceived that the government would be largely concerned with the rules of commerce and therefore the selection process would likely lead to a Congress that was richer and more able in those qualities of importance to commerce. On the one hand, America would gain national advantage in the Industrial Revolution then under way, and it would anyway be highly desirable to select richer people. In his later years, Morris was given to blunt and open preference for the smart set, and is often described as a covert aristocrat. At the time of the Convention however it seems likely he was making a perfectly valid point which had escaped many of his colleagues.

Both Madison and Morris were seriously concerned about a flaw in the republican form of government. They thought it obvious there would always be more poor people than rich ones. Without some effort to rebalance things, the poor would inevitably destroy the common good by using their numerical strength to redistribute wealth from rich to poor. In doing so, everyone would be worse off, even the poor. The poor were more likely to be uneducated and thus more likely to put their own enrichment ahead of almost any other issue, using their own grievances as a justification. There was almost universal agreement among other members of the Convention, because it was well recognized that the main need for a new constitution had grown out of the egregious conduct of state legislatures under the Articles of Confederation, particularly in watering the currency with paper money, and profligate use of debt forgiveness. It would be impossible to have a prosperous country if it suffered from instability, destruction of merit incentives and respect for the property of others. If debts were capriciously forgiven, no one would lend. With paper currency printed indiscriminately, savings would be impossible.

Accordingly, the Convention set about balancing these innate tendencies as well as it could. There was general agreement that election districts with larger population size tended to produce better candidates. Not only employing the reasoning that in a larger district it would be harder to elect an unknown, insignificant person, they felt they could also see examples justifying faith that a larger number of competing internal interests would hold each other in check within the person of their elected representative. An indirect way of accomplishing this was to limit the total number of districts while also providing they be of equal population. Political parties were soon to come forward as a way of raising campaign funds, but nevertheless a person of greater means would have an advantage in a larger district, and persons of greater means could be expected to have greater talents, or would in any event be more likely to resist the pressures for redistributing the wealth of the rich. Members of the Senate were selected by the state governments (at least, as long as state assent was necessary for ratification of the Constitution), but the 17th Amendment changed that to popular election, with a clear resulting decrease of state influence and power. On the other hand, a heavy majority of Senators in the 21st Century continue to be independently wealthy, thereby still accomplishing two original objectives of the founding fathers at one stroke.

The original working concept of the Federalists was that the skills and prestige of the rich and powerful would promote the owners of property into elective office, and their power would be joined to that of judges, presidents, cabinet officers, and military officers to form an effective counterbalance to the majority voting power of the poor or others who lacked property to protect. The Federalists differed with the anti-Federalists on the source of danger to be guarded against; one group feared impetuous and ignorant greed inciting the multitude, while the other group mainly feared corruption and power-hunger among the powerful few. But both political parties acknowledged that each potential danger was realistic to some degree, and hence there was reason to hope both sides could agree to a balance of power as a sensible check on each other. True, the Fifth Amendment's "takings" clause did specifically provide for just compensation for private property seized by government under Eminent Domain, and the Eleventh Amendment protected state governments against private lawsuits in Federal court, but these seem rather feeble additions to the protections against potential tyrannies of the unpropertied majority, as soon to be seen in the revolutionaries of France. Thus an initial assessment would have to be that protection of the minority with property against legislative assault by the unpropertied majority, was only strong in the short run. But it was likely to succumb in the long run to majoritarian tyranny, as the less educated gradually learned how to use their voting power. To strengthen the balance, therefore, resort was made to limiting the voting franchise to owners of property, and specifically to freehold property, without debt. There was shrewdness to this idea, since it hints at a perception that future class divisions might not lie between rich and poor, but between creditors and debtors. The voting exclusion of females, children and slaves was surely irrelevant to the main issue, based on the 18th Century assumption that any votes from those excluded would anyway be passive, dominated by the male head of household. In any event, the limitation of voting power to freehold property owners was apparently a step too far, and did not last long.

It is not certain how consciously another important feature was considered. State legislatures prior to the Constitution were held in such disdain, that stripping them of the power to corrupt truly important issues was almost a universal goal. Awkwardly, a peaceful transfer of state power over the military and the currency could not be accomplished without securing the agreement of the states who had to ratify the Constitution. This was accomplished by specifying the strictly limited powers of the new Federal government, and ceding control of everything not specifically mentioned, back to the states. One by one, the functions which were vitally important were debated and defended in detail; the list was short. Everything else remained under state control. To go about things in this way had one significant advantage over complete federal control, and Madison specifically anticipated it. If a state government abused its power, the victims of that abuse could escape by relocating to a neighboring state. The potential abuse easiest to understand was a burdensome tax rate. But all of the commercial rules of the new entities called corporations were even more to the point, since rich people could move whole factories and businesses if they perceived enough grievance at home. Powerful people had ways of getting the attention of state governments, their U.S. Congressmen and Senators, and the constituents who voted for them. In New Jersey at present, 4% of the taxpayers pay 76% of state taxes; it is easy to demonstrate that the 4% are moving to other states about as fast as they can. Whether by industry or individually, the residents of a state know very well what their alternatives are in other states, and corporations can negotiate them directly. Whether to bluffing or actually moving, state politicians respond to the threat and which has considerable indirect effect at a national level. The system of checks and balances extends far beyond the words of the Constitution, and well beyond the rules of the Federal government. Its unwritten power extends beyond the control of a handful of Supreme Court justices, spatting over original intent. Its potential weakness, of course, lies in the Court's relative inability to protect what is not stated to be any of its business.

One final point about the unspoken cleverness of our Constitution. Some of its most important powers were either unrecognized or intentionally unmentioned by its originators, to whom we look for original intent. After two centuries, we can see as they could not, that it was not merely the first time thirteen sovereign states gave up their power voluntarily and more or less cooperatively. In two hundred or more years, it begins to look as though nobody else can even imitate it successfully. One therefore hesitates to suggest changes of any sort, for fear some unrecognized balance will become unbalanced. Madison believed that increasing size leads to better government and better candidates for office; few would dispute that our Federal government generally does a better and more professional job than the fifty states which make it up. But stop to consider the United Nations. Invested with as much enthusiasm and much more idealism than our 1787 founders, the U.N. flounders and fumbles, and after fifty years must still be assessed to be a failure. Madison would seemingly have predicted that a bigger organization would be even stronger, even electing an assembly of giants. It hasn't worked out that way, and it is impossible to define what it lacks that the American Constitution has in abundance. By itself, this is the strongest possible argument for what is called original intent, but is really just a fearful plea to -- leave it alone.

http://www.philadelphia-reflections.com/blog/1574.htm

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Delaware's Court of Chancery

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.

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.

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.

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

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Hedge Funds in Delaware

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?

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.

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

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Dark Morning at the Supreme Court

Congress recently extended copyright duration to 99 years if owned by a corporation, or the life of the author plus 50 years if the author retained the rights. Widely referred to as the Sonny Bono law, it was assumed to be a favor from Congressman Bono to the Walt Disney Corporation, whose copyright on Mickey Mouse was nearing expiration. Eldred, a publisher of reprints of old books, took this matter through the courts as an action against John Ashcroft, the Attorney General, to prevent his enforcement of a law which, in their view, violated the intent of the Constitution. Thus, the case of Eldred v. Ashcroft came up for oral argument at the U.S. Supreme Court. Since I was interested in reprinting important books about the dim Philadelphia past, and discovered it was now usually impossible to determine who had copyright ownership, I went to Washington to hear arguments which might clarify the best approach to take. And perhaps to take the measure of the people on both sides of the argument.

Supreme Court

fubar So, the Metroliner to Washington and overnight in a hotel. On advice of people who knew people involved in Supreme Court matters, I set my alarm for 5 AM, arrived at the Court building at 5:30 AM. It was still pitch dark at that hour, and rather cold. Occasional fine showers would describe the weather. When I arrived, there were already 75 people standing in line. Several policemen kept the line in order, and chatted affably with the standees by way of implying that it wasn't their fault. When it's dark and the line is rather impromptu, some people will try to cheat on the queue, especially since many standees didn't know whether it made a difference or what to do if it did. What to do is to shout at the culprits to get back to the end of the line where they belong, which they mostly do after the policeman shambles over. At 9:30 AM, the line started to move forward. The policemen had been counting, too, and came back to about where I was standing. Sorry, sir, this is all that will be allowed in. What to do? Well, you can stand in another line to be formed, for fifteen-minute tourist visits, first-come, first-served. As events unfolded, however, a number of people at the very front of the line had been paid to hold a place for someone else and the someone else didn't show up in time to get in as the line surged forward, so there were a few extra seats and I got one. I didn't dare get out of line to count the people behind me, but it was surely several hundred, forced to end up in the fifteen minute line. The crowd exchanged a lot of grumbles about all this, mostly with focus on why don't they allow this to be televised. Why not, indeed.

Inhibiting the behavior of the Justices might be one explanation. Some of them sat there silent as a stone, but many of them interrupted at will, and with acidity. Not only are the counsels at a great disadvantage in trying to make nice to people who will decide their case, they are strictly limited to concise presentation, where a interruption breaks the stream of argument. It becomes very clear that the proceedings are not held primarily for marshaling all arguments -- weak and strong -- on both sides, but rather to summarize the strongest, and give the Justices a chance to ask questions. The Justices and their clerks have presumably already read the full arguments which have been printed and handed in. This really isn't a trial. Public comments ("amicus briefs") must be printed and attached to the main briefs at the time the Court agrees to hear the case ("grants a writ of Certiorari")). Since the Court only agrees to hear a hundred cases a year, it "grants cert" less than 2% of the time. A case is supposed to be ripe for decision, all useful arguments having already been voiced, when cert is granted.

So, under the present understanding of things, it may not be time to put these oral arguments national television. A more important step might be to find an effective way to publish the briefs on the Internet. Even then, the Court will probably squirm at the idea that they must listen to huge media campaigns, orchestrated to convey the implication that the Justices better yield to public opinion wrapped in the spin of the litigants. Since Walt Disney owns one of the three national television networks, that might not be an impossible development.

To get back to this case, it seems a little strange that copyright protection was deemed important enough to be among the few basic principles in the Constitution. Many have expressed the opinion that patents and copyrights must have originated with Ben Franklin, the only real author and inventor attending the secret Philadelphia meetings of the Constitutional Convention. For what it is worth, the minutes show it was Madison who proposed the idea, Pinckney who seconded it, but Franklin was the world's expert on keeping his fingerprints off ideas. Most of the members of the Convention, farmers though they were, were also members of the first Congress under the Constitution, when that Congress set the time of copyright at seventeen years. It is a pity they did not say so in 1787. In the eventual 7-2 Eldred v. Ashcroft decision, Justice Ginsburg chose to define the issue at stake as whether Congress had the right to set the duration of patents and copyrights. Of course that was always beyond real dispute. But whether anybody ought to set it at 99 years, well beyond any author's lifetime, emphasizing the point by adding 50 years to any author's lifetime, introduces fundamental questions of wisdom. One by one, every single Justice found a way to observe that this law was not wise. But rather than stir up a controversy with Congress over the fundamental rights of each branch, the Supreme Court seems to have decided to give public opinion a chance to force Congress to eat its words.

Although the decision in Eldred is a disappointment to me and my private interests, I can live with it as a concession to public tranquility. But I really don't see why an overflow auditorium could not be provided next to the Court, where people who travel on the Metroliner and stand in the dark and cold for five hours, could at least watch a closed-circuit version of the oral arguments.

http://www.philadelphia-reflections.com/blog/994.htm

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Second Mortgages Want to Be First

Chrysler Logo

In a bankruptcy proceeding, there has long been a traditional conflict between the holders of first mortgages and the holders of second mortgages. It goes like this: since the holder of a first mortgage gets paid first, his incentive is to hurry up the process and get the money. The holder of a second mortgage, however, only gets paid what is left, so this party will normally wish to stall proceedings in the hope the market will improve and give the second mortgage a better payout. Normally, this sort of predictable dispute is covered by contracts, and in any event most banks hold both kinds of mortgages and are neutral about what is just and fair. In the current banking crisis, however, the major banks have developed an incentive to favor the second mortgage, so they have a new view of what is just and fair. Four of the largest banks hold a total of $440 billion of second mortgages, but have very few first mortgages because they were sold off in the securitization process. The banks mostly retained the function of servicing first mortgages, however, so they now have quite a conflict of interest.

Something like this seems to be going on with the resolution of the Detroit auto makers, with the difference that politicians tend to favor the interest of the auto workers in the bankruptcies because there are more voters to be influenced. And in the case of the auto companies, there are stockholders who will be wiped out by a bankruptcy unless the liquidation of the company assets produces enough cash to satisfy the creditors, secured and unsecured. After all, stockholders aren't creditors at all; they are owners of the company. No matter how things turn out, however, the secured creditors would normally have first call on whatever is salvaged. So, it's one class of secured creditor against another, or else it is the secured creditors against the "stakeholders", employees or any other unsecured creditor. If the government intervenes, there is the additional issue of the Fifth Amendment of the Constitution, which prohibits government from the "taking" of private property without just compensation. Representative Conyers of Michigan, whose political allegiance is not in doubt, has introduced legislation to prohibit lawsuits in these matters. So now, the prospect grows of a constitutional clash between Congress and the Supreme Court, over the Constitutionality of such a law which denies due process. So that gets us into the fourteenth amendment, too. If we look beyond the technicalities, the looming clash is between President Obama and Chief Justice Roberts. One of them wants to take money from secured creditors and make it available to someone with more political clout; and the other surely wants to preserve the sanctity of contracts, the rights of property holders, due process, and the right of the Supreme Court to declare contrary laws to be unconstitutional.

Unless someone backs off, the situation would seem to be as monumental as Franklin Roosevelt's Supreme Court-packing proposal. Because -- there is every reason to anticipate a 5-4 vote by the Supreme Court, a 5-3 vote if Justice Souter is not replaced by that time, and strenuous efforts to alter the balance.

http://www.philadelphia-reflections.com/blog/1631.htm

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Jury Nullification

Tom Monteverde

We must be grateful to the distinguished litigator, Tom Monteverde, for bringing up the topic of the importance of the jury in American history. Juries seldom realize how much power they can have if they unite on a common purpose. In fact, juries have the implicit right to veto almost anything the rest of government does, by rendering it unenforceable.

William Penn

The right to a jury trial originated in the Magna Carta in 1215, but a jury's essentially unlimited power was established four centuries later by Quakers. This legal revolution grew out of the 1670 Hay-market case, where the defendant was William Penn. Penn was accused of the awesome crime of preaching Quakerism to an unlawful assembly, and while he freely admitted his guilt he challenged the righteousness of such a law. The jury refused to convict him. The judge thus faced a defendant who said he was guilty and a jury that said he wasn't. So, the exasperated judge responded -- by putting the jury in jail without food.

The juror Edward Bushell appealed to the Court of Common Pleas, where the problem took on new dimensions. The Justices certainly didn't want juries flouting the law, but nevertheless couldn't condone a jury being punished for its verdict. Chief Justice Vaughn decided that intimidating a jury was worse than extending its powers, so the verdict of Not Guilty was upheld, and Penn was set free. Essentially, Vaughn agreed that any jury that couldn't acquit was not really a jury. In this way, the legal principle of Jury Nullification of a Law was created. A verdict of not guilty couldn't make William Penn innocent, because he pleaded guilty. A verdict of not guilty, under these circumstances, meant the law had been rejected. Jury nullification thus got to be part of English Common Law, hence ultimately part of the American judicial system.

Andrew Hamilton

This piece of common law was a pointed restatement of just who was entitled to make laws in a nation, whether or not nominally it was ruled by a king, or a congress. Repeated British evasion of the principles of jury trial became an important reason the American colonists eventually went to war for independence. The 1735 trial of Peter Zenger was an instance where Andrew Hamilton, the original "Philadelphia Lawyer", convinced a jury that a British law against newspapers criticizing public officials for improper conduct was too outrageous to deserve enforcement in their court. In that case, defiance became even more likely when the judge instructed the annoyed jury that "the truth is no defense". Benjamin Franklin's Pennsylvania Gazette was here quick to come to the side of jury nullification, saying, "If it is not the law, it ought to be law, and will always be law wherever justice prevails."

John Hancock

The Zenger case is often stated to be the origin of the Freedom of the Press in our Constitution fifty years later, but in fact the First Amendment merely provides that Congress shall pass no laws like that. Hamilton had persuaded the Zenger jury they already had the power to stop enforcement of such tyranny, and the First Amendment could be seen as trying to prevent enactment of laws that foreseeably incite a jury to revolt.

The Navigation Acts of the British government, for example, were predictably offensive to the American colonists, whose randomly chosen representatives on juries then rendered unenforceable with their wide-spread refusal to convict. This in turn provoked the British ministry. John Adams made a particularly famous defense of John Hancock who was being punished with confiscation of his ship and a fine of triple the cargo's value. Adams was later singled out as the only named American rebel the British refused to exempt from hanging if they caught him. As everyone knows, Hancock was the first to step up and sign the Declaration of Independence, because by 1776 there was widespread colonial outrage over the British strategem of transferring cases to the (non-jury) Admiralty Court. Many colonists who privately regarded Hancock as a smuggler were roused to rebellion by the British government thus denying a defendant his right to a jury trial, especially by a jury almost certain not to convict him. To taxation without representation was added the obscenity of enforcement without due process. John Jay, the first Chief Justice of the Supreme Court of the newly created United States, ruled in 1794 that "The Jury has the right to determine the law as well as the facts." And Thomas Jefferson built a whole political party on the right of common people to overturn their government, somewhat softening it is true when he saw where the French Revolution was going. Jury Nullification then lay fairly dormant for fifty years. But since the founding of the Republic and the reputation of many of the most prominent founders was based on it, there was scarcely need for emphasis.

Slave

And then, the Fugitive Slave Law " of 1850 began to sink in. It became evident that juries in the Northern states would routinely refuse to convict anyone under that law, or under the Dred Scott decision, or any other similar mandate of any branch of government. In effect, Northern juries threw down the gauntlet that if you wanted to preserve the right of trial by jury, you had better stop prosecuting those who flouted the Fugitive Slave law. In even broader terms, if you want to preserve a national government, you better be cautious about strong arming any impassioned local consensus. A rough translation of that in detail was that no filibuster, no log-rolling, no compromises, no oratory, no threats or other maneuvers in Congress were going to compel Northern juries to enforce slavery within their boundaries of control. All statutes lose some of their majesty when the congressional voting process is intensely examined, and public scrutiny of this law's passage had been particularly searching. Even if Southern congressmen were successful in passing such laws, it wasn't going to have any effect around here. The leaders of Southern states quickly got a related message, and their own translation of it was, we have got to declare our independence from this system of government that won't enforce its own laws. If juries can nullify, then states can nullify, and national union was coming to an end. Both sides disagreed so strongly on one issue they were willing, for the second time, to risk war for it.

Ku Klax Klan

The idea should be resisted that Jury Nullification is always a good thing. After the Civil War, many of the activities of the Ku Klux Klan were tolerated by sympathetic juries. Many lynch mobs of the Wild Wild West were encouraged in the name of law and order. Prohibition of alcohol by the Volstead Act was imposed on one part of society by another, and Jury Nullification effectively endorsed rum-running, racketeering, and organized crime. The use of marijuana and abortion are two further examples where disagreement is so strong that compromise eludes us. What is at stake here is protecting the rights of a minority, within a society run by majority. If minority belief is strong enough, jury nullification issues an unmistakable proclamation: to proceed farther, means War.

Oliver Wendell Holmes

That's a somewhat strange outcome for a process started by pacifist Quakers, so the search goes on for a better idea. Distinguished jurists differ on whether to leave things as they are. In a famous exchange, Oliver Wendell Holmes once had dinner with Judge Learned Hand, who on parting extended a lawyer jocularity, "Do justice, Sir, do justice." To which, Holmes then made the somewhat surly response, "That is not my job. My job is to apply the law."

Thus lacking any better approach, it is hard to blame the US Supreme Court for deciding this was something best left unmentioned any more than absolutely necessary. The signal which Justice Harlan gave in the majority opinion on the 1895 Sparf case was the very narrow ruling that a case may not be appealed, solely on the basis that the trial jury was not informed of its right to nullify the law in question. Encouraged by this vague hint, what has evolved has been a growing requirement that incoming jurors take an oath "to uphold the law", officers of the court (ie lawyers)are discouraged from informing a jury of its true power to nullify laws, and Judges are required to inform the jury in their charge that they are to "take the law as the judge lays it down" (ie leave appeals to higher courts). If a jury feel so strongly that it then persists in spite of those restraints, well, you apparently can't stop them. Nobody thinks this is a perfect solution, and aggrieved defendants like the Vietnam War protesters are quite vocal in their belief that the U.S. Supreme Court finally emerged with a visibly asinine principle: a jury does indeed have the right to nullify, but only as long as that jury is unaware it has that right. That's almost an open invitation to perjury if accurate; but while it's not precisely accurate, it comes close to being substantially true.

That's where matters stand, and apparently will stand, until someone finds better arguments than those of Benjamin Franklin, John Jay, Andrew Hamilton -- and William Penn.

http://www.philadelphia-reflections.com/blog/1060.htm

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Lessons For the European Union

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.

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

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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

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U.S. and E.U. Exchange Experiences (2)

America can learn about itself from the E.U.

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

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Franklin and Marshall

John Marshall

Marshall had one advantage over Franklin -- youth. Seeing what was needed, and subsequently noticing that the first three Chief Justices had failed to supply it, he accepted John Adams' appointment to be Chief Justice immediately, and devoted his remarkable legal mind to a lifetime of strengthening the role of the Supreme Court as the Federalists had intended, and as the Jeffersonian party had attacked. Marshall promptly found ways to confer on the Court the ability to review and prevent unconstitutional behavior by the Presidents and Congress, the the other two of the three co-equal branches of the national government. But his main task, never completely successful, was to devise hammerlocks for those intransigent state legislatures. Marshall had enemies who were allied with the legislatures, especially Presidents Jefferson, Madison (!) and Jackson, who would gladly have cut his political throat.

Although Marshall always seemed to win his battles, he did have to exercise caution in the face of Andrew Jackson's ruthless willingness to fight dirty. But probably, in his own view, he could be said to have lost the whole war, if his life's goals could be stated as trying to prevent the country from disintegrating into a civil war by learning to play by fair rules. Lincoln gets credit for saving "The Union" ( that is, national government under the 1787 Constitution), but at the price of 600,000 casualties. Only if you add a further century to the review, can Marshall (and the 1787 Constitution) be viewed as a success.

http://www.philadelphia-reflections.com/blog/1634.htm

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Constitution, Part

EVOLVING scholarship now places the ideas and driving vigor behind the Constitution as mainly Washington's, with young Madison mainly his leg man. Young Alexander Hamilton was a second devoted agent of Washington, easily recruited after his earlier relationship as the General's chief aide and assistant during the Revolution. These three made things happen. Madison seems to have begun the relationship absorbed with advancing his place in the Virginia dream of the Potomac River: future gateway to the West and main highway of the nation. Hamilton was ambitious as well, perceiving early where the Industrial Revolution was going to take America. He was not landed gentry. He had his aristocratic ambitions, but they grew out of an orphaned boyhood spent in a Caribbean counting house; above all, Hamilton was a risk taker and a climber. As we now know the different paths they took into the future, we see they were very different. But at the beginnings of the Constitution, they were both Washington's boys, following Washington's orders, advancing his vision.

The Potomac vision was just between Madison and the General until Hamilton eventually put the deal together at a famous dinner party in Philadelphia. In the meantime, the two younger men advanced Washington's central goals in different arenas and different parts of the country. Throughout the early years Washington maintained his natural aloof dignity. A better idea of what he was seeking emerges from how he acted. Start with his being aroused from plantation retirement by Shay's Rebellion.

Daniel Shay was a leader of 1200 rebellious farmers in central Massachusetts who in 1786 stirred up concern about chaotic government by making it even more chaotic, surrounding the debtor's courthouse in Springfield Mass. and threatening to raid the local armory to overthrow the Massachusetts government. The rebellion was eventually put down but only after two years of fighting which thoroughly frightened local citizens. The rest of the country had some sympathy with a former captain in the Revolutionary War who lost his property because of currency shortages very similar to the ones that started the Revolution. Regardless of the rights and wrongs, the public demanded a government which could maintain law and order. Washington was disgusted with the sort of government he had helped create, and was still blistered by the Continental Congress' inability to raise troops and pay them, inflicting hardships on the patriots it had begged to set them free. He wrote dozens of letters around the country protesting the sorry situation, and privately set about to recruit people like Madison and Hamilton to help. Madison's initial task was to persuade the Virginia Legislature and the Virginia congressional delegation, and to help devise the necessary legal provisions that would make this country a fit place to live. Washington's position in public opinion could not be resisted and he got what he wanted. But if he could have read a letter written by Thomas Jefferson at the time, he would have seen a warning that important people disagreed with him. Said Jefferson:

"A little rebellion now and then is a good thing . . . .It is a medicine necessary for the sound health of government... God forbid we should ever be twenty years without such a rebellion. The people cannot be all, and always, well informed. The part which is wrong will be discontented, in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions, it is lethargy, the forerunner of death to the public liberty . . . . and what country can preserve its liberties, if its rulers are not warned, from time to time, that this people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to the facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed, from time to time, with the blood of patriots and tyrants. It is its natural manure." (1787)

Let's jump ahead. Washington is now our first president, confronted with our ships and sailors under attack by the Barbary Pirates."Would to Heaven we had a navy to reform those enemies to mankind, or crush them into non-existence," Gen. Washington wrote in 1786. The nation built that navy largely because the pirates' hostage-taking and escalating ransom demands became politically unbearable. The ships were built in time, and in one of history's great ironies, it was President Jefferson who gets credit for subduing the pirates on the Shores of Tripoli.

Throughout Washington's long career it became evident that whenever America developed enemies in the neighborhood, their uniform response was to stir up the backwoods Indians to assassination of the settlers. Andrew Jackson is the President who is most famous for responding by confronting whole regions of Indians with the choice of extermination or eviction to lands further west, but Washington was well aware of the realities of the frontier. In response to British-inspired Indian massacres while he was at Valley Forge, Washington dispatched General Sullivan to march against the Iroquois, and exterminate them. There is doubt the settlers around Wilkes Barre in the Wyoming Valley had any right to be there, but Washington knew that above all else, a leader of a country is expected to protect it.

The most dramatic illustration of Washington's idea of a central government came in the Whiskey Rebellion. When Hamilton persuaded him to impose a tax on whiskey, the corn growing frontiersmen around Pittsburgh started a rebellion against the tax. The old General's reaction was prompt and violent. Riding his horse at the head of 1500 militia, Washington marched across Pennsylvania to put a sudden end to any such ideas of defiance against his new system of proper government. He made a great show of pardoning the intimidated farmers, but he left them with no mistaking that George Washington meant business. And still, there was a warning if he could only see it. Albert Gallatin, who was to be Jefferson's future Secretary of the Treasury and thought leader in everything economic, was one of the leaders of the Whiskey Rebellion.

Washington wanted a strong central government. One that would pay its troops and keep its promises, collect its taxes and defend the coasts. The rest of this mechanical formula called the Constitution was for Madison to work out. Hamilton was to persuade him that a country had to be rich and strong to be able to protect its citizens, so Washington went along with the Bank and the Report on Manufactures. He agreed with anything Madison proposed in the way of process and balances of power. What Washington wanted of a country was law and order. When Madison eventually started talking like Jefferson, Washington never spoke to him again.

http://www.philadelphia-reflections.com/blog/1543.htm

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Twenty Five Years at the Center

Congress met in "Congress Hall" from 1790-1799 First 10 amendments, the "Bill of Rights," were added here.

Philadelphia was the center of the nation from the time of the First Continental Congress (1775) until the nation's capitol was moved to the District of Columbia in 1800. For thirteen of those years (from 1775 until the 1788 inauguration of George Washington as the first President under the Constitution) our governing concept was that of a confederation of sovereign states. The framework of our rules was a little vague at the beginning of that period, eventually becoming explicit when the Articles of Confederation were finally ratified in 1781. Until that rather late moment in the eight-year war, the thirteen rebel colonies governed themselves in a manner similar to thirteen nomadic tribes. Later on, when the Constitution was agreed to in 1787, there was another period of ambiguity until the newer rules actually began to apply. Speaking loosely, for thirteen years the country operated according to the Articles of Confederation. For another twelve years, the United States were absorbed in the task of transition from the Articles to the Constitution of a unified nation.

http://www.philadelphia-reflections.com/blog/1663.htm

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Subtleties of the Constitution

Citizens and academics have little appreciation for the intense attention that politicians apply to the rules. By 1787 James Madison had read everything he could get his hands on related to voting procedures, representation, democratic and republican nuances, recent and past. Consider the size of the legislative body, a seemingly inconsequential matter.

Remember, one way to prevent a decision in favor of some particular thing, is to prevent any decision at all. Those who experience blockade by inaction, legitimately argue that improving the committee means reducing its size. With effective procedures and experienced leaders, a legislative body of two or three hundred can remain productive and efficient. Whatever the limit was, it was safely larger than anything the Constitutional Convention of 1787 had in mind for the United States Congress. Therefore, the convention concentrated on the number of constituents each congressman should have. Divide that number into the population of the nation, and you arrive at the size of the body without specifying it. It would be two centuries before America itself grew to the size where it was necessary to constrain the number of congressmen to a manageable size. During the earlier years of the republic, however, there might be concerns that "the body" was too small and thus too easily controlled by personal dominance. But the nation would eventually grow to the point where the size of Congress had to be limited to around 500 members; that would eventually reverse some important considerations. If we ever reach a size where both the size of the body and the number of constituents per congressman are both undesirably large, there could be a lot of squirming.

The most serious issue for the founders was the number of constituents each representative should have. Here, the argument was that a congressman representing a small group would likely respond to the narrow parochial interests of that small group, while a representative of a large group would more likely have many narrow interests to consider, thus be more likely to represent the interests of the nation as a whole. Natural conflicts between farmers and fishermen would likely illustrate this dynamic; small districts or less numerous ones would likely split between those representing fishermen and those representing farmers, large districts or more numerous ones would force the representative to respect the interest of both. Small districts would be more partisan, in this view. The other extreme would be districts so large that every representative was forced to consider broader concerns, and the republic would end up so bland that important constituencies go unrepresented. The latter concern was wide spread at the time of the founding of the country; it was accepted that republics must remain small to remain republics. Madison found this to be one of the most serious obstacles to agreeing to a national republic, and he took considerable trouble to rebut it. This theory was behind the otherwise peculiar concept which Benjamin Franklin had advanced for many decades, which was that England and British America ought to have separate parliaments, united in allegiance to the same king. There seemed little difference between that idea and the design of the Articles of Confederation with thirteen colonies reporting to the Continental Congress, so it was fortuitous that the abject failure of the Articles made it unnecessary to argue the merits of this multi-chamber approach at the Constitutional Convention.

Nevertheless, it was a serious concern, based on clear logic. The anti-Federalists were a national group, ultimately a political party of individualists hostile to overbearing top-down authority. Their cause was hampered by the plain failure of the Articles of Confederation, but nevertheless they were legitimately very restless about a Congress with a weak perception of its duty to represent minorities. The anti-Federalists somehow envisioned each representative as a lawyer defending local interests at court. Indeed, in the days of a strong British monarchy, that was essentially how the British Parliament operated. As the King lost effective power to rule, ministries elected from within the Parliament took over the powers and attitudes of monarchs. In a sense, that was worse, because the districts lost their power to nominate their own representative, who was selected for them by the party leaders -- now acting in the role of substitute King. So that was no good, either, and the anti-Federalists even though collectively a majority, were basically supporters of the Articles of Confederation, and the Articles were a failure. They thus lost the ratification battle, but although soon taking over the government, had no better proposal to make. A few decades later the South seceded and essentially reinstated the Articles of Confederation in their own part of the country; once again the loose confederation idea failed.

In advancing his argument that a large republic was indeed going to be workable, Madison promoted the idea that a large constituency would produce statesmen of distinction. Only a person of great merit, wealth and effectiveness would be well enough known to be elected. Therefore, congressmen with large districts to represent would tend to be rich, well-born and famous. Senators would be even more so because they were selected by legislatures and governors (before the Seventeenth amendment), and thus the entire government would become progressively and permanently made up of the elite. Madison particularly liked this idea, because it seemed to solve what he considered the main flaw of elected government. Poor people would always outnumber rich ones, and would inevitably use their voting power to enrich themselves at the expense of the upper classes. Constructing an elitist government by enlargement of congressional district size was thus a highly elegant design feature. Unfortunately for Madison, the scheme didn't produce that result.

Much has been written about the most famous about-face in American history, when Madison the Federalist founder became Madison the leader of the anti-Federalist faction. Madison, George Washington's trusted Federalist agent, became Jefferson's anti-Federalist agent, and Washington never spoke to him again. Briefly, it has been speculated that the Virginia tobacco plantation culture out of which Madison had emerged, had begun to crumble, undercutting Madison's Virginia base. And it has been speculated that Hamilton's spectacular leadership of the American banking version of the Industrial Revolution unsettled Madison's earlier conviction that the Old Dominion of Virginia would rule the new nation. And it has been muttered that Madison, the ever-scheming politician, saw that his own future presidency would be more enhanced by Jefferson's popularity than by Washington's physical leadership in his lame-duck years. There may be still other important considerations in Madison's famous switch which we can only hope historians will be able to uncover. But there seems little doubt that Madison was able to see with his own eyes that the Congress of Merit, Distinction, and Success which he had imagined would result from large congressional districts, had in fact already in Washington's administration begun to deteriorate into the stereotype of professional professional politician which today's satirists and cartoonists are pleased to pillory in their blogs on the Internet. Madison had feared the poor would outvote the rich, but in fact the main form this demographic took was that machine politics and special-interest factionalism essentially drove the natural leadership of gentlemen entirely off the stage. The rules changed; winning this game required power and organization, not just the offer of service.

Over time, the relationship between the Senate and the House of Representatives changed, and the size of the membership had much to do with it. At first, the House was more powerful and prestigious. Direct election by constituents had more prestige than appointment by Legislatures. Later on, the Senate was a more suitable size as a deliberative body than the much larger House; running for election every six years was much to be preferred over running every two years. In the past century, the volume of work forced both bodies to develop a standing committee system. With five hundred members, the House could develop specialists in certain areas, and often a senior member in a safe district could remain in a topic area for thirty or more years. The Senate had fewer members, so each Senator is on several committees. Whatever the merits of a smaller deliberative body, the Senators have increasingly found themselves spread too thin, with new members taking too long to become expert, and older members too tired to keep up with everything. The consequences in both chambers have produced a phenomenon that even Madison never envisioned.

The legislative staff has continued to grow, and has in general grown increasingly professional and proficient at their jobs. In general, the staff went to better Universities and got better grades there than the member they work for, and need not worry about running for election. Often having spent their lives immersed in a legislative topic, they know it cold. Consequently, we have all the makings of a "Yes, Minister," phenomenon in which the people who were not elected are more expert and more academically serene than the member who was elected, and who has the vote. The member and the staff member desperately need each other to succeed, but nevertheless, the potential for secret resentments and secret contempt is present every day in a highly tense environment of constant overwork. When Ronald Reagan introduced the idea of shrinking the government, and the younger George Bush actually tried to do it, the result was leaks to the newspapers and rumors to the effect that a President who had gone to Yale and had an MBA from Harvard, was a bumpkin. Just how serious all this is, and how exaggerated, is hard to say. But it is a concept that would have dominated the thinking of James Madison for months, if it had ever occurred to him. We have entered an era of 1200-page bills, much of which first surfaces in conference committees a few hours before the vote. Only a handful of members and a handful of staff know what is in these bills, and it can sometimes be a month after passage before the press discovers many buried features. The members cannot master these masterworks of legislation, so they get bigger by being patched. And by getting bigger, it is harder to master them. If, as someone like Ronald Reagan would genially remark, we just fired all the staff, then the bills would be reduced to one or two pages. In some ways, legislation would be better, in some ways worse. But it would be different, because maybe it should be different.

http://www.philadelphia-reflections.com/blog/1689.htm

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Robert Barclay Justifies Quaker Meetings

Robert Barclay

As part of the dissidence and Civil War of 17th Century England, Robert Barclay the Scotsman emerged with a point of view which was structured and reasoned in detail. What was almost unique was his reduction of it to a handful of pithy "Sound Bites". Coupled with membership in a prominent family, these abilities made him a particular friend of James, Duke of York, later King. Barclay became a Quaker at an early age.

The whole point of the Reformation was revulsion against corrupt Catholic clergy, shielded behind some impossibly convoluted legalisms of doctrine. But for the governing establishment any reform was going too far if it led to anarchy and chaos. The establishment did recognize that public revolt against universal micromanagement led to the scaffold for Kings who insisted on it. But in their view the need for law and order still demanded some legitimacy, if not organized law. The Ranters, who paraded about stark naked and lived in ways resembling the hippies of the 1960s, were beyond the pale. Quakers, who professed no formal doctrine except silent meditation, were possibly just as bad. After all, silent meditation could lead you anywhere including regicide. But the Quakers at least were quiet about it.

George Fox the founder of Quakerism, had already provided one basis for containing fears of anarchy, by organizing local monthly meetings for worship within regional quarterly meetings; quarterly meetings in turn were within an overall framework of a yearly meeting. Occasional monthly meetings might develop a consensus for wild and antisocial behavior, indeed often did so, but would have to persuade the quarterly meetings which outnumbered them. In extreme cases, the whole religion assembled in a yearly meeting. The innate conservatism of the meek would usually silence the extremism of the rebellious few. Very few kings would deny they could go no further toward despotism themselves, without the public behind them. The Quaker problem was to demonstrate what their consensus really was.

Free Quaker Meeting House

Barclay recognized and framing the matter in Quaker terms, drove to the heart of this matter. Why have a Quaker meetinghouse at all? If the purpose is to meditate in silence, why not do that at home or in a cave?

Essentially, the answer emeged that any religion which renounced a priesthood, which even renounced having a written doctrine, still needed some sort of institutional memory. If every Quaker began with a clean slate, to develop his own organized set of moral principles, most of them would never get very far. Even if they did, they would have no time left for milking cows and weaving cloth. Single silent meditation was inefficient, particularly if you had faith that eventually everyone was going to achieve the same conviction as the Sermon on the Mount. The founders of Quakerism took a chance, here. To assume the same outcome, you would have to assume everyone started with the same instincts and talents; even 21st Century America would have private doubts about that one. Feudal England would have rejected it contemptuously. Carried to an extreme it was a claim that everyone was as good a philosopher as Jesus of Nazareth, as good a person, as much a Son of God. No, that was an arrogant claim. The humble claim was that collectively, listening respectfully to one another in a gathered meeting, the whole world would over time reach the same truths as the Creator. If not, it was as good as you were going to get.

Like all the early Quakers, Robert Barclay spent some time in jail. He did visit America in 1681, but it is doubtful if he spent any time here while he was Governor of East Jersey, from 1682 to 1688. The King insisted on his appointment.

http://www.philadelphia-reflections.com/blog/1706.htm

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George Washington on the Federal Union

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

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Franklin Endorses the Constitution

Monday Sepr. 17, 1787. In Convention (6th and Chestnut, Philadelphia).

The Engrossed Constitution being read, Docr. Franklin rose with a Speech in his hand, which he had reduced to writing for his own conveniency, and which Mr. Wilson read in the words following:

Mr. President,

Bust of Benjamin Franklin

I confess that there are several parts of this constitution which I do not at present approve, but I am not sure I shall never approve them: For having lived long, I have experienced many instances of being obliged by better information or fuller consideration, to change opinions even on important subjects, which I once thought right, but found to be otherwise. It is therefore that the older I grow, the more apt I am to doubt my own judgment, and to pay more respect to the judgment of others. Most men indeed as well as most sects in Religion, think themselves in possession of all truth, and that wherever others differ from them it is so far error. Steele, a Protestant in a Dedication tells the Pope, that the only difference between our Churches in their opinions of the certainty of their doctrines is, the Church of Rome is infallible and the Church of England is never in the wrong. But though many private persons think almost as highly of their own infallibility as of that of their sect, few express it so naturally as a certain French lady, who in a dispute with her sister, said, "I don't know how it happens, Sister, but I meet with no body but myself, that's always in the right"- "Il n'y a que moi qui a toujours raison."

Signing of the Constitution

In these sentiments, Sir, I agree to this Constitution with all its faults, if they are such; because I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, and can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other. I doubt too whether any other Convention we can obtain may be able to make a better Constitution. For when you assemble a number of men to have the advantage of their joint wisdom, you inevitably assemble with those men, all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views. From such an Assembly can a perfect production be expected? It therefore astonishes me, Sir, to find this system approaching so near to perfection as it does; and I think it will astonish our enemies, who are waiting with confidence to hear that our councils are confounded like those of the Builders of Babel; and that our States are on the point of separation, only to meet hereafter for the purpose of cutting one another's throats. Thus I consent, Sir, to this Constitution because I expect no better, and because I am not sure, that it is not the best. The opinions I have had of its error, I sacrifice to the public good--I have never whispered a syllable of them abroad-- Within these walls they were born, and here they shall die--If every one of us in returning to our Constituents were to report the objections he has had to it, and endeavor to gain partisans in support of them, we might prevent its being generally received, and thereby lose all the salutary effects and great advantages resulting naturally in our favor among foreign Nations as well as among ourselves, from our real or apparent unanimity. Much of the strength and efficiency of any Government in procuring and securing happiness to the people, depends, on opinion, on the general opinion of the goodness of the Government, as well as of the wisdom and integrity of its Governors. I hope therefore that for our own sakes as a part of the people and for the sake of our posterity, we shall act heartily and unanimously in recommending this Constitution (if approved by Congress and confirmed by the Conventions) wherever our influence may extend, and turn our future thoughts and endeavors to the means of having it well administered.

On the whole, Sir, I cannot help expressing a wish that every member of the Convention who may still have objections to it, would with me, on this occasion doubt a little of his own infallibility--and to make manifest our unanimity, put his name to this instrument.

He then moved that the Constitution be signed.

President's Chair

When the last members were signing it, Doctor Franklin looking towards the President's Chair, at the back of which a rising sun happened to be painted, observed to a few members near him, that Painters had found it difficult to distinguish in their art a rising from a setting sun. I have, said he, often and often in the course of the Session, and the vicissitudes of my hopes and fears as to its issues, looked at that behind the President without being able to tell whether it was rising or setting: But now at length I have the happiness to know that it is a rising and not a setting Sun.

http://www.philadelphia-reflections.com/blog/1739.htm

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States Rights Confront Civil War

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.

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.

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

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Separation of Church and State

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.

Simplified histories of America often declare that other Western Hemisphere colonists mostly came to plunder and exploit; whereas English Protestant colonists came with families to settle, fleeing religious persecution. That's a considerable condensation of events covering three centuries, but it is true that before the Revolutionary War, eleven of the thirteen American colonies approximated 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 still comfortable with the notion they were religious utopias. But while 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 its many corners. Ultimately, all Protestant questers found themselves confronting -- not religious dogmatism, but its opposite -- the secularized eighteenth century enlightenment. Comparatively few colonists were willing to acknowledge doubts openly about miracles and divinity, but private doubts were sufficiently prevalent among colonial leaders to engender restlessness about the tyrannies and particularly the rigidities of the dominant religions, adding to discomfort with self-serving political struggles observable among their preachers, and alarm about the occasional wars and persecutions over arguable religious doctrines. Arriving quite late in this evolution of thought -- but not too late to experience a few bloody persecutions themselves -- the Quakers sought to purify their Utopia by eliminating preachers from their worship entirely. Thus, the most central and soon the most prosperous of the colonies made it respectable to criticize religious leaders in general for the many troubles they provoked.

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 western settlers and burning their cabins. 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 frontier Scots in the midst of massacre. The Quaker government was expected to do what all governments are expected to do, protect their people right or wrong. To trace the social contract back to William Penn's friend John Locke was too bland for a religion which prided itself on plain speech. Non-violent pacifism just 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 of their military duty, the western part of the state has never forgotten nor forgiven. In their eyes, Quakers were not fit to be in charge of anything. Quaker wealth, sophistication and education were irrelevant; only Presbyterians are fit to rule. A strong inclination toward pre-destination reinforced that idea.

The French and Indian War in fact turned out fairly well; most of its victories were located on the European side of the Ocean. But twenty years later the Revolutionary War turned into a reassertion of the 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 a coercive 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 counter-pressure, adroitly leveraged by 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 a conventional war if 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 and Ben Franklin was a diplomat, but the clarion call to this particular battle was the voice of Patrick Henry.

Congress Hall

In all wars, diplomatic arts and religious restraints 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 eventually held in this persisting 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 had 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.

James Madison

When the first Congress finally met under their new constitution, they immediately confronted over a hundred Constitutional 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 strengthened. Just where these rights came from was often couched in divine terms for lack of better proof that they were 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 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 a single established religion, the clear intent was to prohibit a single national religion while tolerating unifications within the various states. Subsequent Supreme Courts have extended the Constitution to apply to the states as well, responding 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 firm step toward giving the Constitution itself dominant power over the processes 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

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Go to Delaware, Elephants?

Dead Elephant

No one is supposed to know where elephants go to die, but if they are smart as people say they are, my suggestion is to search for dead elephants in the state of Delaware. Most taxes, and estate taxes in particular, are considerably lower, there. At least this was the message Christopher J. Topolewski, Esq. conveyed to the Right Angle Club recently. His firm, West Capital Management, has prepared a table comparing the taxes in the three states that come together at the southeast corner of Pennsylvania, which for residents of the Philadelphia area are within easy commuting distance of each other. Although Delaware has a marriage penalty (one couple is taxed more than the sum of two singles), it has no estate tax at all, no sales tax, and a property tax rate only half that of Pennsylvania, only a quarter of that in New Jersey. For residents of New Jersey there is almost no tax which is not lower in Delaware, but ex-Pennsylvanians would then have to be careful to die or cohabit, since ordinary income tax and capital gains taxes are higher in Delaware than Pennsylvania. If you must die (and who doesn't?), go die in Delaware.

This was a situation specifically contemplated as a way to discipline greedy state governments, by James Madison when he was formulating the U. S. Constitution. And there is evidence it is working. By happenstance I once encountered an official of New Jersey taxation, who told me that 43% of New Jersey taxes are paid by 1% of the population. And that 1% was moving out of the state as fast as it could. West Capital reports that taxation as a percent of income is 1.23% in Delaware, 3.46% in Pennsylvania, and 5.82% in New Jersey. Relating total income to total tax revenues would be the best way to detect hidden indirect taxes, such as overtaxing utility bills in the knowledge it will be passed on to the consumer. Armed with even partial information, it becomes easier to understand why New Jersey would depose a governor who had been Co-chairman of Goldman Sachs, during a financial crisis. If a financial whiz can't change this, maybe it requires a meat ax.

This is a time of growing restlessness about public spending, and Tea Party revolts are likely to accelerate during the remaining nine months before the next election. Conjecture is growing about a coming deadlock between a Republican Congress and a, lasting at least two more years. What might emerge from a strong third party congressional delegation is too arcane to discuss.

It seems almost inconceivable that professional politicians would demonstrate such a forest of tin ears as to let this happen, but the rest of Mr. Topolewski's talk just heated up the fire. His long-scheduled talk was designed to give guidance about the new estate tax laws, but he found himself confounding his audience with the news that there are no new estate tax laws; in fact, there will be no estate tax laws at all after this year unless they emerge from the congressional gridlock we already have. Which apparently will be followed by a gridlock we can scarcely imagine. Imagine asking your lawyer to write a will which straddles the contingency that there will be no law, that there will be a continuation of the present one, or will be a new law of quite uncertain wording. One of the suggestions offered is to allow your executor the discretion to accept or disclaim certain hypothetical provisions.

And that brings up an old story. William Penn was the largest private land owner in the history of America, possibly the whole world. He had a trusted agent, who gave him an enormous pile of papers to sign. A busy rich man like Penn is regularly confronted with a discouragingly large number of routine legal documents to sign. So, Penn signed them all, not noticing that one of the various papers in the pile gave the entire state of Pennsylvania -- to his agent. The outcome of the ensuing uproar was that Penn spent six years in debtors prison.

http://www.philadelphia-reflections.com/blog/1776.htm

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Three Revolutions at Once, Maybe Four

Tea Party Sticker

The rise of the Tea Party movement in 2010 reopens a lifetime question in my mind. What was the American Revolutionary War all about; surely, a tax on tea isn't outrageous enough to go to war over, is it? It only aggravates curiosity to learn this particular law passed by the British Parliament, actually lowered the price of tea.

A somewhat different importance for the 21st Century is, of all the dozens or even hundreds of little civil wars that have popped up in the past two centuries, this American one seems to have had the biggest impact on the thoughts and behavior of the civilized world. The French Revolution comes close, but we meant to speak of persuasive influence on serious minds, not merely bloodiness and lasting grievance. Here are three suggestions, maybe four.

In retrospect, we can see the outlines of three major revolutions, coming together at the end of the 18th Century. The first is the Industrial Revolution, which had its beginnings in England around the city of Manchester. That was a region of major Quaker concentration, many of whom migrated to William Penn's social experiment in seeing what peace could do. The Industrial Revolution flourished in Great Britain far more readily than in France, and in a sense more than in America. But of the three major countries, America had the largest amount of unsettled land, and the greatest natural resources of the three major countries. America was able to think bigger and broader, necessarily requiring broad support from an immigrant population. Diversity was often later to prove a mixed blessing, but in the Industrial Revolution it was vital.

Dissent, French Style

The second major revolution taking place at that time concerned the place of property in the life of every citizen. Up until that time, the King owned all the land and could redistribute it to suit his political needs. What critically mattered was not who formerly owned the land, but rather what was the latest King's latest word on who owned it right now. The American system gravitated to the notion that when the King or any other owner sold the land, it was no longer his; we now think that's quite self-evident. Each successive owner can sell it to his neighbor or bequeath it to his heirs, and at that moment it is no longer his, either. This idea of private property spread throughout the world, but in America it was a clean sweep. Adopting the rather brutal rough justice of the frontier, the Indian prior ownership just didn't count. They had sided with the British in our revolution, and were insistently resistant to assimilation. And anyway, Pope Nicholas in the 13th Century had established the notion of first discovery, which applied to Christians, only, and so Indians didn't count. Fair or unfair, this was going to be the way it was, from that point forward from 1787 when the Constitution was enacted. The longer the situation lasted, the more unlikely it became that it would ever change. America had so much land and so little coinage, that land itself became a sort of monetary standard. The particular American advantage was there was so much land that early settlers and landed gentry could not monopolize it; from meaning land at first, property soon meant any valuable possession. No King, particularly not George III, was going to take this away from the whole population on this side of the Atlantic. England could do as it pleased with its land and its King. If we needed Independence to preserve a general right to hold private property, plenty of men were willing to die to achieve it. And the whole Western world soon followed our example.

The third revolution was the one you read about, Lexington and Concord, Bunker Hill and the Tea Act. That whole chain of events chronicles how America came to be Independent, but somehow fails to explain why we wanted Independence. The Industrial and the Property revolutions explain it better, but such theorizing would certainly mystify the Revolutionaries themselves.

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And finally, one begins to wonder if we aren't toying with a reversion to the ideas underlying monarchy when we examine some currently widespread views. There's a notion going about that everybody owns everything, which if carried to an extreme means no one owns anything. When you can notice people who live on the 70th floor of a Manhattan apartment building, proclaiming a right to tell Alaskans whether or not they can drill for oil, you behold this monarchy of the many. And when you see prosperous educated adults shouting at rallies, you can see Alaskans for example want to tell New Yorkers to mind their own business. This land, they seem to say, isn't everybody's at all, it is mine.

It never really was entirely the King's, either. The King was a single person, sometimes a rather brutal one who wasn't likely to tolerate advice from his subjects. At times of crisis, somebody has to make a decision, any decision, and act on it. But most of the time, kings seemed to be in the position of that Czar. The one who said, "I don't rule Russia. Ten thousand clerks rule Russia."

http://www.philadelphia-reflections.com/blog/1803.htm

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Conflict Within the Bill of Rights

Thomas Jefferson

When the First Congress convened in 1789, it confronted more than a hundred proposed amendments to the Constitution, largely stirred up by supporters of Thomas Jefferson who feared a strong central government would be too similar to the monarchy we had just discarded. Essentially, Congress dumped these noisy dissatisfactions into the lap of James Madison who had largely written the Constitution, constituting a committee with Madison as its chairman. The first ten amendments thus emerged together as a package, enabling trade-offs and compromises between them; all subsequent amendments have been taken up individually, one by one. Since the First Congress and the Constitutional Convention were largely the same people, much of the durability of the Constitution can be traced to them. And therefore, the ability of the nation to feel its way into a new idea, sometimes retreating and sometimes plunging ahead, has migrated into the hands of the Supreme Court. This result was probably accidental, but nevertheless the power of the Supreme Court was greatly strengthened by default; it alone can tip-toe out of a Constitutional tangle created by momentary impulses.

After duplicates and half-baked ideas were winnowed out, Madison's committee boiled down the wildly disparate proposals into ten amendments, supposedly limited to ten by alluding to Ten Commandments which seemed sufficiently comprehensive to Moses, and presumably to God. Two main principles emerged. The first was that the Constitution should be parsimonious in granting divine, or natural, rights, because what Nature's God had granted was hard to tell but what the judiciary could enforce had limits. And secondly, granting even these few self-evident rights to slaves would likely tear the Union apart.

James Madison

So, Madison's committee narrowed the legally enforceable definition of human rights to a handful, trying to select those which were so self-evident they could withstand the tension on those charged with enforcing them. When contemplating the problem of extending mandated rights to slaves, however, there was no obvious solution at all. The evasion agreed upon was to limit the Federal Government to enforcing a handful of enumerated powers, while leaving all unspecified matters to the state legislatures. The boundary might shift with time, but without saying so, the Bill of Rights kept the Union out of the main foreseeable trouble. The unmentioned conflict between universal rights and slavery defaulted to the individual states, or whoever, but definitely not to the Federal Government.

That tap-dance held together for nearly a century, and then it didn't and we had a Civil War. During all of that time, the balance of power was steadily shifting from the confederated states to the centralized federal government, and after the Civil War it shifted some more. However, the southern confederation may have been defeated, but it was not exactly reconciled, nor were the former slaves exactly equalized.

Robert E. Lee

Many post-war expedients were tested to heal these wounds, some of them useful and some, like forcible Reconstruction, disruptive. Two expedients opened new wounds and distracted the country for a century. The first was intentional weakening of the quality and effectiveness of state governments, to the point where it can now be asserted that state government is the weakest part of our whole government structure. Those who prized universality and efficiency, or who sought greater international power, regarded state legislatures as a hindrance; just look who got us into a Civil War. Consequently, corruption and ineffectiveness were privately tolerated in state legislatures, because discrediting state governments made them easier to control. Repairing the resulting imbalance in our overall system is now growing to be one of our greatest problems.

The second response to a sluggish equalization of racial rights was invented by Madison himself. He felt that the ability to migrate from one state to another would discipline any temptation of a state to mis-behave. If your state taxes you unfairly, move. If your state government gets too corrupt, first try to throw the rascals out, but in the last extremity, go somewhere else. This concept has worked magnificently in maintaining national interest rates with appropriate local modifications, and we are about to learn whether it will adequately restrain the half dozen states who have pushed the limits of taxes and borrowing. In the case of former slaves, massive out-migration took a century to happen and then it happened all at once, just after World War II. Wave after wave of slave descendants from the rural South, got on buses and came to the heart of Northern cities. Overwhelming the ability of weakened local governments to cope, city institutions disintegrated, particularly the public school and justice systems. The consequence is continuing disarray in Washington DC, Baltimore, Detroit -- and Philadelphia -- together with a host of smaller cities like Reading, Newark, Paterson, Wilkes-Barre and many others, in all of which the unsustainable wave of immigrants added to local industrial and civic problems which had other causes. So now we have two new problems, weakened state government and disruptive migrations, which in other circumstances tended to mitigate each other, but in this case made each other worse.

Lyndon Johnson

It took a century for Madison's scheme to break down into war, and Lyndon Johnson was surely quite right to feel a century was long enough to tolerate the dissentions and disunity of enduring that war. If he could not make people love one another, at least he could enforce the law. State governments were not doing it, so he whipped the Congress into taking it on as a Federal duty, by passing the Civil Rights Act. Half a century has passed and there has been progress, but surely not an end to the disunity. State governments have been further weakened, but mass migrations have calmed down. In another half century, the slavery issue and its consequences may fully subside. Meanwhile, the extension of federal power continues, now threatening to extend to the medical profession, the finance industry, the automobile industry, and the Internet. But our Constitution continues to survive more or less intact, into its third century, and we grow increasingly wary of tinkering with it as we watch many other nations fail to achieve its essential quality. Which is, it survives.

http://www.philadelphia-reflections.com/blog/1820.htm

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Restoring the Gold Standard by Levering Judges' Salaries

Generally speaking, creditors hate inflation and favor a gold standard because they fear debtors -- who outnumber them at the polls -- will dishonor their debts by inflating the currency. And debtors generally are rather serene about the risk of inflation, for the same reason in reverse. Since governments are almost invariably debtors, the combination of government and debtors on the side of promoting inflation represents a dishearteningly strong force for creditors to combat. It is plain for everyone to see that inflation has been steadily moving ahead. But it is something for everyone to ponder that leaving creditors with only one recourse is almost certain to translate that particular recourse into action. Creditors will raise interest rates in anticipation of inflation, and the economy will suffer for debtors as well as everyone else.

So, hard-money advocates like the Paul family of Texas have been rather nonplussed to discover that Federal Judges have handed them in 2010 a very effective weapon they had long overlooked. It should be no surprise that it came from that direction; judges are long accustomed to looking backward to the historical origins of the laws they are charged with interpreting. In this case, the defining statement is found in the Declaration of Independence.

Parenthetically, conservatives are reluctant to include the Declaration in an explanation of the Constitution, since it is plainly true the Constitution was written to correct the weaknesses of the Articles of Confederation, which was much more closely defined by the circumstances of the Declaration. The almost immediate response to any such logical jump over the Constitution, particularly those of Abraham Lincoln, is to thump the maxim that The Declaration of Independence is not Law. And it isn't; it's just in this case it makes a concise statement of a major reason we were offended by the King of England:

"He has made judges dependent on his will alone, for the tenure of their offices, and the amount and payment of their salaries."

Note the operative phrase dependent on his will alone , which takes us back to the Magna Carta, where even the King must obey the Law. If judges are the umpires, it isn't in accord with deeply felt British culture that the King could force the umpires to favor his wishes in their official decisions, by threatening punishment on their persons. No, a thousand times no. Anyone can see that.

Furthermore, the determination of underlying intent is so difficult to prove, and so easy to deny, that it is scarcely mentioned in debate. If two motives seem possible, the other party will assert the high-sounding one and deny the ulterior one. The offended party will instinctively suspect the reverse, and will brush aside any protestations to the contrary. Since that is bound to happen, please skip the preliminaries and get on with the evidence. So it is in this case; any reduction in judge's salary is treated like an attempt to influence official decisions. The Administration maintains a reduction of Federal judge salaries is necessary for budgetary reasons. Please don't insult my intelligence that way. You aren't allowed to reduce the salaries of judges for any reason.

From this rather easy position to take, it is only a short step to say that refusing to raise judge salaries during an inflation is a reduction of salary in real terms, after adjusting for inflation. Your paper money is phoney; I want to preserve my purchasing power. Your refusal to adjust for inflation is even more clearly a salary reduction, since the link to gold was severed during the Nixon and Johnson administrations. We are not on anything remotely resembling a gold standard; we are on a monetary standard which is by law adjusted to inflation, and just about nothing else. Hubert Humphrey may have thought he was creating a loophole by mandating concern with unemployment, but just try to convince the judges of the Supreme Court of that one.

And so, it seems predictable that Judge Beer of the Eastern District of Louisiana, and his fellow judges, will achieve an effective gold standard for Federal Judges if they have the fortitude to tough it out. After that it gets harder, Congressman Paul. You have to push the concept that what is fair for Federal Judges is fair for everyone else. You should assume that judges will vote in their own favor, and therefore reasonably assume that the public will vote in its own favor, too. If that be treason, said Patrick Henry, make the most of it.

http://www.philadelphia-reflections.com/blog/1838.htm

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Checks and Balances (??)

King George III

Because America had recently revolted to rid itself of King George III, the Constitutional framers of 1787 sought to construct a government forever free from one-man rule. Inefficiency could be accepted but dictatorial central power, never. Pursuing many good ideas then turned out to be surprisingly more productive than marching single file, so the nation rallied behind the governing document which laid out what the plan is, and has loved it ever since. It is unrealistic however to expect a wind-up toy to keep working forever, and the Constitution is no different. After two centuries, some chinks have appeared, and in particular the recent behavior of the 111th Congress has revived some old worries about authoritarian leadership.

Founding Fathers

Political parties existed in 18th Century England and Europe, but the founding fathers seem not to have worried about them much. Within ten years, however, Thomas Jefferson had created a really partisan party which provoked the creation of its partisan opposite. James Madison was slowly won over, but George Washington never budged. Although they were firm friends, when Madison's partisan position became clear to him, Washington essentially never spoke to him again. Andrew Jackson, with the guidance of Martin van Buren carried the partisan idea much further toward its modern characteristics, and then Franklin Roosevelt attempted to centralize government considerably more than the U.S. Supreme Court would permit. Because the issue of states rights versus federal power was often mixed with the more primary issue of individual personal and economic liberty, Abraham Lincoln, Theodore Roosevelt, John Kennedy and Lyndon Johnson must be included among the leaders who moved the original standards of personal freedom considerably back toward a position that George III might have accepted. Fine points of this history are not important to the present concern, which focuses more on the accumulated small changes which bring us to our present position. Wars and economic crises induced several presidents, nearly as many Republicans as Democrats, to consent to a migration of power advantage which never quite returned to baseline after each crisis. Primary among these migrations was the erosion of the original assumption of perfect equality among members of Congress. A new member of Congress today may tell his constituents he will represent them ably, but when he arrives for work he is figuratively given an office in the basement, and allowed to sit on empty packing cases. This is not accidental; every hotel in the country treats new arrivals with greater deference. Rather, the slight is an intentional warning from the true masters of power to bumptious new egotists, that they will get nothing in the new environment unless they earn it. Not a bad idea? This schoolyard bullying is a very bad idea.

Houses of Congress

Partisan politics begins with vote-swapping, and evolves into a system of bestowing the votes of the members on their party leaders, and ultimately amounts to declaring betrayal if the member votes his own mind in defiance of the leader. The rules of the "body" are adopted within moments of the first opening gavel, but they took centuries to evolve and will only significantly change direction on those few occasions when newcomers overpower the old timers, and only then if some leader among the old timers takes the considerable trouble to organize them. In the vast majority of cases, after adoption the opportunity to change the rules is then effectively lost for two years. Even the Senate, with six-year staggered terms, has argued that it is a "continuing body" and need not reconsider its rules except in the face of a serious uprising on some particular point. Both houses of Congress place great weight on seniority, for the very good reason of training unfamiliar newcomers in obscure topics, and for the very bad reason of concentrating power in "safe" districts where political parties are able to exercise iron control of the nominating primaries. Those invisible bosses back home in the district, able to control nominations in safe districts, are the real powers in Congress. They indirectly control the offices and chairmanships which accumulate seniority in Congress; anyone who desires to control Congress must control the local political bosses, few of whom ever stand for election to any office if they can avoid it. In most states, the number of safe districts is a function of controlling the gerrymandering process, which takes place every ten years after a census. Therefore, in most states it is possible to predict the politics of the whole state for a decade, by merely knowing the results of the redistricting. The rules for selecting the members of the redistricting committee in the state legislatures are quite arcane and almost unbelievably subtle. An inquiring newsman who tries to compile a fifty-state table of the redistricting rules would spend several months doing it, and miss the essential points in a significant number of cases.

So that's how the "Will of Congress" is supposed to work; the recent process can be far less laudatory, and in fact calls into question the whole idea of balance of power between the three branches of government. We here concentrate on the Health Reform Bill and the Financial Reform Bill, which send the same procedural message even though they differ widely in their central topic. At the moment, neither of these important pieces of legislation has been subject to judicial review, so the U.S> Supreme Court is not yet encumbered with stare decisis of its own creation.

Three branches of government

In both cases, bills of several thousand pages each were first written by persons who if not unknown, are largely unidentified. It is thus not yet possible to determine whether the authors were affiliated with the Executive Branch or the Legislative one; it is not even possible to be sure they were either elected or appointed to their positions. From all appearances, however, they met and organized their work fairly exclusively within the oversight of the Executive Branch. Some weighty members of the majority party in Congress must have had some involvement, but it seems a near certainty that no members of the minority party were included, and even comparatively few members of highly contested districts, the so-called "Blue Dogs" of the majority party. The construction of the massive legislation was conducted in such secrecy that even the sympathetic members of the press were excluded, and it would not be surprising to learn that no person alive had read the whole bill carefully before it was "sent" to Congress. It seems quite fair to surmise that no member of Congress except a few limited members of the power elite of the majority party were allowed to read more than scattered fragments of the pending legislation in time to make meaningful changes.

The next step was probably more carefully managed. No matter who wrote it or what it said, a majority of both houses of Congress had to sign their names as responsible for approving it. Because of the relatively new phenomenon of national televising of the whole procedure, the nation was treated to the sight of congressmen of both parties howling that they were only given a single day to read several thousand pages of previously secret material -- before being forced to sign approval of it by application of unmentioned disciplines enabled by the rules of "the body". When party members in contested districts protested that they would be dis-elected for doing so, it does not take much imagination to surmise that they were offered various appointive offices within the bureaucracy as a consolation. As it turned out, the legislation was only passed narrowly on a straight-party vote, so there can be little doubt of its impending failure if the corruptions of politics could have been set aside, with members voting on the merits. Nevertheless, since this degree of political hammering did result in a straight-party vote, it leaves the minority party free to overturn the legislation when it can. The prospect of preventing an overturn in succeeding congresses seems to be premised on "fixing" flaws in the legislation through the issuance of regulations before elections can open the way to overturn of the underlying authorization.

Bill become a Law

The "regulatory process" takes place entirely within the Executive branch. Congress passes what it terms "enabling" legislation, containing language to the effect that the Cabinet Secretary shall investigate as needed, decide as needed, and implement as needed, such regulations as shall be needed to carry out the "Will" of Congress. Since the regulations for two-thousand page bills will almost certainly run to twenty thousand pages of regulations with the force of law, the enabling committee of Congress will be confronted with an impossible task of oversight, and thus will offer few objections. The Appropriations Committees of Congress, on the other hand, are charged with reviewing every government program every year, and have the power to throttle what they disapprove of, by the simple mechanism of cutting off the program's funds. Members of the coveted Appropriations Committees are appointed by seniority, come from safe districts, and are attracted to the work by the associated ability to bestow plums on their home districts. By the nature of their appointment process, unworried by the folks back home but entirely beholden to the party bosses, they have the latitude to throttle anything the leadership of their party wants badly enough to throttle. The outcome of such take-no-prisoners warfare is not likely to improve the welfare of the nation, and therefore it is rare that partisan politics are allowed to go so far.

The three branches of government have become unbalanced. These bills were almost entirely written outside of the Legislative branch, and the ensuing regulations will be written in the Executive branch. The founding fathers certainly never envisioned that sweeping modification will be made in the medical industry and the financial industry, against the wishes of these industries, and in any event without convincing proof that the public is in favor. This is what is fundamentally wrong about taking such important decisions out of the hands of Congress; it threatens to put the public at odds with its government.

Justice George Sutherland

There is no need to go further than this, harsher words will only inflame the reaction further than necessary to justify a pull-back. And yet, the Supreme Court would do us a mercy if it doused these flames; the Supreme Court needs a legal pretext. May we suggest that Justice George Sutherland, who sat on the court seventy years ago, may have sensed the direction of things, short of a single word. Justice Sutherland recognized that although it is impractical to waver from the principle that ignorance of the law is no excuse, it is often possible for a person of ordinary understanding to read a law in its entirety and still be confused as to its intent. He thus created a legal principle that a law may be void if it is too vague to be understood. In particular, a common criminal may well be less able to make a serious analysis. Therefore, at least in criminal cases, a law may well be void for vagueness. In this case, we are not speaking of criminals as defendants, or civil cases of alleged damage of one party by a defendant. Here, it is the law itself which gives offense by its vagueness, and Congress which created the vagueness is the defendant. Since we have just gone to considerable length to describe the manner in which Congress is possibly the main victim, this situation may be one of the few remaining ones where a Court of Equity is needed. That is, an obvious wrong needs to be corrected, but no statute seems to cover the matter. The Supreme Court might give some thought to convening itself as a special Court of Equity, on the special point of whether this legislation is void for vagueness, and it only makes the injury worse by allowing the Executive Branch to diminish the vagueness (through corrective regulation) in its own preferred direction.

We indicated earlier that one word was missing in this bill of particulars. That would be needed, to expand the charge to void for intentional vagueness, an assessmment which is unflinchingly direct. It suggests that somewhere in at least this year's contentious processes, either the Executive Branch or the officers of the congressional majority party , or both, intended to achieve the latitude of imprecision, that is, to do as it pleased. Anyone who supposes the general run of congressmen voluntarily surrendeed such latitude in the Health and Finance legislation, has not been watching much television. Given the present vast quantity of annually proposed legislation, roughly 25,000 bills each session, the passage of a small amount of vague legislation might only justify voiding individual laws, whereas an undue amount of it might additionally justify a reprimand. However, engineering laws which are deliberately vague, might rise to the level of impeachment.

http://www.philadelphia-reflections.com/blog/1883.htm

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Addressing the Flaws of Republics

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.

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.

The relative power of a senator and a representative 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.

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.

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.

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.

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

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Washington's Circular Letters

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?

Head Quarters Newburgh NY

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

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Wyoming, Fair Wilkes Barre

Wyoming Valley

There are a dozen or so places on the planet where a natural bowl formation famously moderates the climate. Cuernavaca in Mexico, the Canary Islands, and Chungking in Western China all claim to have temperatures which range from 70 to 75 degrees Fahrenheit, year round. In Cuernavaca at least, they claim it only rains at night. These three places have a high plateau in the cener of a mountain bowl, like an angel food cake pan, which may (or may not) contribute to the unusually mild climate effect. Several other places within inner China compete for the title of Shangri La, famous in song and story, never precisely located by tourists. The Wyoming Valley of the Susquehanna River once enjoyed a similar luster during the Romantic Period at the very beginning of the Nineteenth century, although unfortunately its temperature is plainly not so balmy. Wyoming of song and poem was imagined to be the home of the Noble Savage, unstained by the wayward influences of civilization, and thus a model for the democratic ideal expected to emerge in Old Europe once the aristocrats were exterminated by nature's noblemen, European version. That seems to have been Robespierre in France, as disappointing to idealists as the Iroquois along the Susquehanna.

Massacre Monument

But one must not scoff. The Wyoming Valley was created long ago by a lake between two mountain ridges, which gradually dried up leaving flat topsoil deep at the bottom of the valley when the river finally broke through at Nanticoke, and drained it. Its appearance is enhanced by surroundings in all directions of at least fifty miles of bleakness. Nowadays, the best way to appreciate the natural beauty of the place is to arrive from the south, gaining the summit of the ridge by one of the secondary roads. Housing development down below stops at the edge of the level plain, so as one ascends to the southern rim it is possible to see the inside of the bowl without seeing much of the town, and thus appreciate how it must have looked to frontiersmen searching for likely places to settle. It's quite beautiful. Descending into the bowl, the potholes in the road and roadhouses along the way do begin to make an impression. In full sight, it looks as though a city suburb has filled the place to its edge, with a rather decaying Nineteenth century town center, but towering wooded mountainsides. There's a quiet park in the very center, through which the quiet river runs. In a little subdivision named Wyoming there is a monument to The Massacre, now described as a hopeless defense by untrained Revolutionaries against the fearsome Indians and British Loyalists. The names of the fallen and the names of those who escaped are carved on this monument near Forty Fort. One presumes the wounded and some bystanders were massacred, the officers and trained infantry were more likely to escape the hopeless odds by fleeing into the woods. It is claimed that common soldiers were finished off by Indian Queen Esther smashing their heads between two flat rocks. Wounded officers were tortured to death.

Wilkes Barre

Just where the Connecticut immigrants, or invaders, first arrived in the Wyoming Valley is not known. Their most likely entrance was at the top of the northern end of the valley, where ski lodges now cluster, after coming up the mountains from the east. The hills rising from the Delaware watershed are wooded but too rocky for farming. It's therefore inexpensive to set aside parks named "Promised Land" and "The Lord's Valley" and such, with some Milfords scattered here and there in the woods. A section of the upper Delaware River fifty miles long , from Port Jervis down to the Delaware Water Gap at Stroudsburg is enclosed in a National Wildlife and Recreation Area of about a mile's width on either side of the river. It's surprising how little is said of this rather large national park close to two large metropolitan areas. No doubt the visitors arel torn between wishing it were more appreciated, and hoping to keep it secret and unspoiled.

Wyoming Massacre

The Decision of Trenton(1782) simply gave the disputed land back to Pennsylvania. There is a strong presumption the Connecticut migrants were privately promised land in the Western Reserve, in Ohio, whenever Ohio became a state. In spite of the implicit guarantees, the Pennsylvanians nevertheless treated the usurpers pretty roughly, and traces of Connecticut trail westward toward the Ohio line. There's a Westmoreland County near Pittsburgh, where many stranded families in the bituminous coal regions can thus trace their ancestry back to the Mayflower. It is truly extraordinary that such bitterness could leave so little trace of itself later. History may not be bunk, but persistent grievances are surely a menace to peaceful existence. The events of the Pennamite Wars are widely believed to have led to the slanting of the 1787 Constitution toward the protection of individual property rights, but the wording to that effect within the Constitution is hard to locate. Somehow, like the implicit promises of the Western Reserve, ways were found to provide credible promises that it soon wouldn't matter which state you lived in. Somehow the word got to John Marshall that in actual practice, what would matter was whether an identified person could demonstrate clear title to specific land back to, or a little beyond, 1787, no matter what state the land was in. And the obscurity of the complex connection between this revolution in the law of property, and the very sad events in the Wyoming Valley, suited everybody concerned. Stare decisis.

http://www.philadelphia-reflections.com/blog/1999.htm

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Regulation Precision: Not Entirely Good Idea

Without proof of special damages or reference to extrinsic circumstances

Per Se

Lawyers have a word for it, as they do for most things they handle frequently. Ordinary citizens are mostly baffled by the term "per se violation", and even more put off by "rule of reason". If the reader is a lawyer, these terms are clear enough but the average person requires some explanation. It's supplied next, before proceeding to the point, which is that per se is a mixed blessing.

When the Constitution was adopted in 1787, we had no laws, but we had courts and crimes. To some extent, the problem was addressed by adopting English Common Law as a default. Until Congress got around to writing statutes on the subject, common law would have to do. Roughly speaking, the amount of statutory law written by Congress began to occupy as much shelf space as common law during the Civil War. Since that time, the volumes of statutory law have come to exceed the volumes of common law by a great deal. But the result has one over-riding principle: the entire legal code of the nation was examined in detail and re-written as a uniquely American product.

In a sense, to state the principles of law was just the first step. Statutory law generally stated what was forbidden or punishable in a general way, defined it, and left it to judge and jury to determine if the facts of a case fit the meaning of the statute. When such generalities prevailed, decisions were based on the "totality of the circumstances", using the "rule of reason". This approach left a great deal to the discretion of the judge, and created the opportunity for "loopholes" . Judges in a huge modern nation are not uniformly of the same level of education or skill, and cultural differences cause variation in what they would generally accept as reasonableness. So, appeals are made possible to courts of appeal; if courts of appeal differ on the same point, the matter is resolved by the Supreme Court. Legislatures and Congress are then free to clarify the issue, but unless they do, rulings of the appeals system have the force of law. Not everyone was happy with the outcomes of this rough-and-ready system of approximated justice.

Law Books

Their reaction took two forms: regulations, and "per se" laws. Through regulations, the executive branch acquired the ability to interpret Congress's statute, and implement it in specific ways and circumstances. The result of a staggering proliferation ( a hundred thousand pages a year) of regulations with the force of law, originating in the executive branch, is the growing feeling that legislation is slipping away from the legislative branch in a manner not intended by the Constitution. To this, Congress responds with laws of far greater specificity, per se laws. For example, instead of passing a law prohibiting monopoly, Congress might specify the allowable percentage of customers a company might have within a specific market area. Per se laws and per se regulations greatly reduce the latitude a local judge has to examine the totality of circumstances, using the rule of reason. As one loophole after another gets closed, the number of pages of codified law is vastly increased. The typical state legislature now deals with about ten thousand bills a year, and the U.S. Congress deals with twenty-five thousand. Although the resulting law may be clearer when you do locate it, the nation has a much harder time finding what the law says. By attempting to create more stability and certainty about the laws, this process -- even making allowances for computer searching -- has greatly increased public uncertainty about what the law does say and what it intends, because it is impossible to carry around a general idea of what the law says. Elements in a system confused by a vast history of specific decisions by Congress are less to be pitied however, than the plight of Congress itself wallowing in an endless prospect of newly proposed legislation.

which prohibits "every contract, combination … or conspiracy, in restraint of trade

Rule of Reason

Much is to be lamented in the present situation. It's hard to say whether we strive for micromanagement because we have lost trust in judges, or whether we trust them less because we have less need to trust. To the extent that judges represent the collective will of society, an increasing hunger for diversity of opinion leads to less trust in the system, and a desire to narrow judge's power of discretion. The increasing volume of litigation is wasteful of resources but here again, it is hard to know whether increasing the lawyer supply provokes legislation, or whether we just train more lawyers to cope with it. It is somewhat idle to tabulate the proportion of legislation which breaks new ground, and how much converts rules of reason into lists of per se violations and requirements. But a very substantial proportion of this legislative blizzard is of the per se nature, closing little loopholes, specifying endless contingencies. If the Law were a computer, massive micro-programming would steadily improve the performance; in this case, it seems to be breaking it down. The most disheartening feature of the present legal trajectory is that it does not appear to be reaching for equilibrium; breakdown seems to be its only end-point. Neither the regulatory process nor the legislative one contains an adequate mechanism for reducing the number of laws, one which can address the growth of them. Repeated waves of "Reform" have made little impact, consolidations of the code periodically plod along step by step, while the supply of per se laws keeps rollin' along. The nation almost seems to have decided just to wait until something breaks.

http://www.philadelphia-reflections.com/blog/2010.htm

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Lowering the Taxes on Corporations

In the early years of the 21st Century, Ireland lowered taxes on corporate profits to a 12.5% rate, far lower than neighboring countries. Whatever else it did, it promptly encouraged corporations in Germany, Denmark, the United Kingdom and other neighbors -- to move headquarters to Ireland where taxes were so low. Ireland is primarily rural, and a housing shortage developed in the cities as workers migrated to take advantage of the new jobs. Home prices went through the roof, mortgage applications overwhelmed local banks, who promptly re-sold mortgages to foreign banks. Sound familiar? It caused a housing bubble and then a horrendous international financial crisis. The European Union is financially and politically strained by the consequences, and threatened to break apart over it.

Irish Jig

That sounds pretty bad, and should be a lesson to others. What Canada and a number of the individual United States got out of it was mainly this: if you lower corporation taxes, it causes prosperity. And so it might, if politicians would do it gradually and moderately. Gradually and moderately are unfamiliar words in politics. Furthermore, there has long been a fundamental unfairness in taxing corporate profits twice -- once when the profits are made, and a second time when dividends are paid to shareholders. But it is obviously dangerous business, particularly when the governments involved are inexperienced. Canadians started talking about lowering their taxes to 16.5%, and no one could say whether that is a safe level or not. Within weeks, twenty-nine states with Republican governors were sending up trial balloons about joining this movement, and Governor Mitch Daniels of Indiana was much in demand as a consultant, and maybe a Presidential candidate, because Indiana had lowered corporate taxation some time ago, with favorable results.

This was exactly the sort of behavior James Madison had in mind when he designed the United States Constitution; it gave the people a way of disciplining overbearing state governments. Raise our taxes, and we will move. So there are strong arguments that these governors are approaching the right thing, and equally strong indications that everybody had better be plenty careful how this is approached.

The basic idea is good; double taxation should stop, and there is nothing in Madison's Constitution to prevent the Governors from doing what they say they would like to do. So how's this for a suggestion: if this movement gets started, let's take the opportunity to reduce all corporate income taxation to zero. If everybody has the same zero rate, the incentive to migrate will disappear, and that's a good thing.

But if a major revenue source for the states disappears, what will take its place? At that moment of what would look like crisis, it would be time for a national reconsideration and revision of the tax codes. And that would be an even more desirable outcome, provided it is done in an orderly and sensible way.

http://www.philadelphia-reflections.com/blog/2064.htm

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Adrift With The Living Constitution

Senator Joe Sestak

Former Congressman Joe Sestak visited the Franklin Inn Club recently, describing his experiences with the Tea Party movement. Since Senator Patrick Toomey, the man who defeated him in the 2010 election, is mostly a Libertarian, and Senator Arlen Specter who also lost has switched parties twice, all three candidates in the Pennsylvania senatorial election displayed major independence from party dominance, although in different ways. Ordinarily, gerrymandering and political machine politics result in a great many "safe" seats, where a representative or a Senator has more to fear from rivals in his own party than from his opposition in the other party; this year, things seem to be changing in our area. Pennsylvania is somehow in the vanguard of a major national shift in party politics, although it is unclear whether a third party is about to emerge, or whether the nature of the two party system is about to change in some other way.

For his part, Joe Sestak (formerly D. Representative from Delaware County) had won the Democratic senatorial nomination against the wishes of the party leaders, who had previously promised the nomination to incumbent Senator Specter in reward for Specter's switching from the Republican to Democratic party. For Vice-Admiral Sestak, USN (ret.) it naturally stings a little that he won the nomination without leadership support, but still came reasonably close to winning the general election without much enthusiasm within his party. He clearly believes he would have beaten Toomey if the party leaders had supported him. It rather looks as though the Democratic party leadership would rather lose the election to the Republicans than lose control of nominations, which are their real source of power. Controlling nominations is largely a process of persuading unwelcome contenders to drop out of the contest. Sestak is therefore making a large number of thank-you visits after the election, and clearly has his ears open for signs of what the wandering electorate might think of his future candidacy.

Senator Patrick Toomey

America clearly prefers a two-party system to both the dictatorial tendencies of a one-party system, as well as to European multi-party arrangements, such as run-offs or coalitions. A two-party system blunts the edges of extreme partisanship, eventually moving toward moderate candidates in the middle, in order to win a winner-take-all election. Therefore, our winner-take-all rules are the enforcement mechanism for a two-party system. Our deals and bargains are made in advance of the election, where the public can express an opinion. In multi-party systems the deals are made after the election where the public can't see what's going on, and such arrangements are historically unstable, sometimes resulting in a victory by a minority fringe with violently unpopular policies. In our system, a new third-party mainly serves as a mechanism for breaking up one of the major parties, to reformulate it as a two-party system with different composition. Proportional representation is defended by European politicians as something which promotes "fairness". Unfortunately, it's pretty hard to find anything in politics anywhere which is sincerely devoted to fairness.

Going far back in history one of the great theorists of legislative politics was the Roman Senator Pliny the Younger, who wrote books in Latin about how to manipulate a voting system. For him, parties were only temporary working arrangements about individual issues, a situation where he recommended "insincere voting" as a method for winning a vote even if you lacked a majority in favor of it. Over the centuries, other forms of party coalitions have emerged in nations attempting to make democracy workable. Indeed, a "republic" itself can be seen as a mechanism devised for retaining popular control in an electorate grown too large for the chaos and unworkability of pure town hall democracy. A republic is a democracy which has been somewhat modified to make it workable. Our founding fathers knew this from personal experience, and never really considered pure democracy even in the Eighteenth century.

Senator Specter

The two main actors in shaping the American Republic were George Washington and James Madison. Madison was young, scholarly and largely unknown; Washington was old, famous, and insecure about his lack of academic political education. Both of them knew very well that if Washington really wanted something he was going to have it; what mainly restrained him was fear of looking foolish. But he hated partisanship and conniving, partly as a result of having been the victim of General Mifflin and the Conway Cabal. Washington hated political parties and anything resembling them; Madison was young and uncertain, and briefly surrendered the point. It took about two years of real-life governing for Madison to conclude that political parties were absolutely essential to getting something accomplished. In this he experienced for the first time those unwelcome "pressures from the home state", with Thomas Jefferson determined to thwart Alexander Hamilton, and Patrick Henry thundering and denouncing any hesitation in going for the jugular vein of opponents. Madison was deeply concerned with making his new nation a success, and eventually joined Jefferson in the Virginia policy of opposing banks, cities and manufacturing. When Washington saw that Madison was committed to this course, he never spoke to him again. For Washington, honesty was always the best policy, and personal honor is never regained once it is lost. The compromise of 1790 was particularly vexing to their relationship, when Washington's honor and personal finances were used as bargaining chips for moving the nation's capital opposite Mount Vernon on the Potomac River, in return for placating Hamilton and Robert Morris with the assumption of state revolutionary war debts.

Henry Clay 1811

Legislative partisan politics took a violent turn in 1811, when 34-year old Henry Clay was elected to his first term as member of the House of Representatives. The Senate was less prestigious than the House in those days, and Clay had spent his time as a senator studying the landscape of the House, before he made his big move upward. Up until that moment, the role of Speaker was that of mediator and administrator of the rules, partisanship was considered a shameful thing in a Speaker. Young Clay was elected Speaker on the first day of the first session after he moved to the House as a member. Seniority was brushed aside, and this newcomer took over. It takes only a moment's reflection to surmise that a lot of politics had taken place before the House convened. Not only that, but Clay immediately added the power of the Speaker to appoint committee chairmen, to the invisible powers of majority leader. The office of majority leader had not yet been created, but it was not long in emerging that anyone who could assemble enough votes for Speaker was also able to make highly partisan choices for Committee Chairs. Eventually, the seniority system was imposed in part as a reaction to perceived abuses of Speaker power. It is worth a digression to reflect on the role of any seniority system, which as it is clearly seen in labor-management industrial relations, serves to deprive management of promotion power, usually substituting seniority for selection by merit. In the case of the Speaker, the seniority system catapults the power of the Speaker over that of every member of his caucus. To rise in a seniority system for committee chairmen, a member must first be appointed to a desirable committee -- by the Speaker, or by his instructed favorites on the appointment committee. It puts in the hands of the Speaker or his agents the power to humiliate a member by ignoring his seniority; the other members know immediately what that means. To understand the power of this threat, reflect on Woodrow Wilson's famous observation that "Congress in committee, is Congress at work."

Soon after Henry Clay made his dramatic moves, Martin van Buren extended the idea of partisan party politics to the actual election of Congressmen. Much of the whoopla and deceptiveness of subsequent campaigns was invented by Andrew Jackson's vice president. And that included their own deal, in which van Buren worked for Jackson's election in return for a promise that he would be the successor President. After that came the election of 1848, in which William Henry Harrison was elected as a man born in a log cabin. When, in fact he had been born in one of the largest mansions in Virginia. That had been approximately George Washington's residence description, too, but it is hard to see Old Stone Face lowering himself to accept any office unless it was offered unanimously.

Compare that with the campaign financing episode which created the urban political machine. The Philadelphia traction king Wm. L. Elkins was narrowly concerned with building street car lines along with his business associate P.A.B. Widener; Widener had been a city politician before he got into street cars. One or the other of these two approached the Mayor of Philadelphia with the complaint that it interfered with building street car lines to have to bribe every bartender on every street corner. So he made a proposal. It wasn't the money that bothered him, because he could just raise trolley fares to cover it, it was the protracted delays. So, how would it be if the trolley company just delivered a big lump-sum bribe to the mayor. That would give enormous political power to the party boss through the power to distribute or withhold the boodle to party workers. And it would save the trolley company lots of time, while not costing any more than the "retail graft" system. Since then, just about every urban political machine in the country has been largely financed through the macing of utilities.

The downward trend of serial modifications to the Philadelphia Constitution of 1787, should be clear enough without further illustration. If the Tea Parties aren't mad about it, they should be. More likely, however, they are mainly mad about the modern pinacle of sly tinkerings, plainly displayed on TV during the enactment of the Obama Health Bill. The point was repeated for emphasis in the Dodd-Frank financial bill, in case it is ever claimed to have been accidental. In both cases, 2000 page bills were prepared out of sight, and thrust before the Congress with orders to enact them in four hours. If that's representative government, perhaps we ought to go back to having a King.

http://www.philadelphia-reflections.com/blog/2097.htm

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Constitutional Liberty

Richard Henry Lee

Something can of course be learned by asking a man's friends, but descriptions given by his enemies are usually briefer. The Lee family of Westmoreland County Virginia were bitter enemies of Robert Morris the Financier of the Revolution, and they surely said unfair things about him. Morris paid as little attention to the Lees as possible, but for generations the Lees had been neighbors of the Washingtons, and could not be brushed aside. Furthermore, they were close to the center of Thomas Jefferson's anti-Federalist party. So insights into the Lee family probably illuminate the main disputes before, during, and after the Revolution. They even illuminate the mixed character of George Washington, who was sometimes exceptional by Virginia standards. Nevertheless, there was the same quality of heedless idealism to be found in Samuel Adams of Massachusetts and Patrick Henry of Virginia which goes beyond the ability of two-feet-on-the-ground revolutionaries like Robert Morris and Benjamin Franklin to understand, or even abide; this conflict runs throughout the history of the American founding. It seemed to baffle even those who switched positions, like James Madison going in one direction, and Thomas Paine, going the other. So, although it therefore cannot be an inborn character, it must quickly acquire very deep roots.

Arthur Lee

Arthur Lee and his brothers William and Richard Henry Lee of Virginia, were passionate rebels of the Patrick Henry ("Give me liberty or give me death") sort, conducting lifelong attacks on Robert Morris. Highborn Tidewater aristocrats, they were ancestors of Virginia's revered General Robert E. Lee. Arthur had even attended Eton College and later studied medicine in England. The Lee brothers started attacking Robert Morris well before his famous abstention from the critical 1776 vote on independence. It's much too easy to shrug the Lees off as landed aristocrats who disdained self-made men, or as passionate Jacobins who hated rich people, or maybe just narrow-minded nuts. Out of their often inaccurate attacks emerges an outline of what a lot of other people thought about Robert Morris. Many of these polar mind-sets outline the main divisions of political strife in America right up to the present. For present purposes, let's try to understand why Morris might risk his substantial fortune in underground smuggling before the war, and then dedicate his huge energies to winning the war -- while at the same time, not only refuse to agree to the Declaration of Independence (he did finally sign it in August 1776), but speak out in public opposition to independence. What explains Morris' apparent double-talk?

Robert Morris Signature

The explanation I choose to accept is that Robert Morris' real feelings were too sophisticated for this particular crisis, reaching clearer expression in his later activities promoting the Articles of Confederation and its revision the United States Constitution. A man given to terse one-liners, Morris said in December 1775 that he joined his fellow Americans in striving for "Constitutional Liberty" but could not join them in promoting independence.

Morris was never explicit about what would achieve Liberty without Independence; possibly something like the independent Irish parliament which English Whigs then supported, or the Scottish local parliament which exists today. Both of them link a single King to a commonwealth. At the time, no one was interested in the political philosophy of a shipping merchant.

But today we are in a position to see no member nation of the British Commonwealth has a written constitution; written constitutions are a comparatively recent innovation and not necessarily an essential one. The American Constitution today continues to argue about original intent and living documents, so it is still possible to prefer the wisdom of a benign King to written constitutions. The British goal seems to be to infuse overarching principles of government so deeply into citizen minds that such principles overwhelm any written commandments, however vague all that may sound to outsiders who prefer to niggle over documents. Not in America, of course, because an immigrant nation like ours cannot grow cultural roots sufficiently deep in a few generations, and must have written rules. Great Britain's recent difficulties with immigrants from the Commonwealth may well reassert the limits of unwritten constitutions; constant questioning of the written American constitution by more recent immigrant groups may become a part of the British life, too.

The Articles of Confederation were written by the eminent lawyer John Dickinson, said to be the man closest to sharing Robert Morris' political philosophy. However, for five years the Articles were un ratified, and Morris began to believe this lack of ratification was the reason the states were so resistant to taxation. So Dickinson gets credit for writing the Articles, but Morris must be seen as their father. Believing the lack of federal taxation was the main difficulty, and blaming the unratified Articles as the reason for it, our businessman man-of-action pushed them through. Unfortunately, with the Articles it didn't work because the taxation problem still remained, so Morris turned his immense energies toward replacing the Articles with something which would work. It does not twist American history a great deal to believe that Robert Morris, Jr. was one of the main driving forces behind both the Articles of Confederation, and the Constitution of the United States. He was neither a lawyer nor a political scientist, and therefore was quite indifferent to who got credit for the documents. As Ronald Reagan was to discover two centuries later, that's one of the best ways to get anything done.

Morris could read; he knew the Articles didn't endorse Federal taxation. But he was apparently convinced an unwritten constitution always contains the latitude to do what simply has to be done; anything else amounts to shooting yourself in the foot. After the Battle of Trenton, when Morris became President of the United States for three months in everything except name, he still blamed his troubles on the inability to levy taxes, which in turn was due to failure of the states to ratify those Articles. So sensible a man as John Dickinson would never assume overly strict interpretation was intended; obviously, a state must confiscate private property when otherwise it cannot survive. After five years of state inaction, Morris abruptly pushed the Articles through to ratification. But he was wrong, it didn't help. When he finally grasped that the explicit limitations on taxation were intentional, intended to override any implicit power in the Articles whatever, he promptly threw his weight behind John Jay, George Washington and James Madison to support a new Constitutional Convention setting it right, especially the national government's ability to levy taxes. Since Washington had by then become his best friend, who actually lived next door in Morris' Market Street house for years, there is not much paper trail of this interaction between these old friends. Once he got his tax mandate at the Convention however, Morris had hardly anything further to say. His frenetic later activity immediately after the Constitution was enacted can almost surely be attributed to lifelong habits of a negotiator, avoiding mention of anything which might distract from his main goal, in this case of ratifying the Congressional right to levy federal taxes, but not abandoning subordinate goals for a moment. What the Lees hated about Morris therefore cannot be easily explained, but certainly one feature of it was his ability to hold his cards. The Lees didn't hold their cards, they flourished them. In their eyes, no gentleman would do anything else.

The incidents of June, 1776 place the Lees in a more favorable light if they are seen as urging instinctive decisions by popular mandate, essentially favoring an unwritten British Constitutional arrangement. The Lees believed the place of a gentleman was at the head of a troop, daring the rest to follow their lead. The British had blockaded Boston, passed the Prohibitory Acts, fought naval battles in the Delaware River in May of that year. A huge British fleet had landed in New York harbor, and the agitated colonists were about to declare war. At the very moment of crisis, that rich Philadelphia merchant had refused to vote for independence. The Virginia tobacco planters were dancing a war dance in a city known for its pacifist Quakers, while their neighbor George Washington was conducting an actual war with the British. It was then revealed that Robert Morris had been participating in a gunpowder smuggling operation known as the Secret Committee, and Morris had made considerable profits from it. While many of his friends defended Morris, it was pretty easy to go wild with indignation about trusting him to sit on a secret espionage committee, unwatched. The very least that could be done was to appoint Arthur Lee, already a member of the Continental Congress, to that Secret Committee to sound the alarm if anything looked funny. The ironic fact seems to be that Morris and the Lees were passionately committed to the same unwritten approach to government, primarily based on trust in personal character, otherwise defined as fidelity to an unwritten tribal code. If you are the right sort of person, you will be with us; if you are not with us, you must not be the right sort of person. Unfortunately, a nation of immigrants may not survive if it adopts such notions.

The Lees had expressed disruptive views of Morris in the past; but they were exactly the sort of clan likely to confront scoundrels whenever facts called for it, and sometimes even when they didn't. The underlying conflicts, fiercely advocating both a strong centralized government and a loose decentralized one but not defining either, continue to run through American politics until the present. Whether Morris ever acknowledged it or not, he ended up on the side of defined contracts, as opposed to a Code of Honor. But he spent his life as a man of his word, because in business your word is your bond; if you are any good, you won't need to cheat. If our Tower of Compromises is to endure, its limits of such agreement must be few, but they must somehow be strictly understood.

http://www.philadelphia-reflections.com/blog/2115.htm

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Power of the Purse

Liberty Bond

In 1917, Congress passed a law, quite possibly not understanding its full implications. From the founding of the republic until that time, Congress had approved the exact amount of each bond issue as enacted, neither more nor less. With the First Liberty Bond Act of 1917, however, Congress began to allow the administration to issue bonds as it pleased, up to some specified debt limit. Periodically since that time, as the amount in circulation approaches the debt limit, Congress raises the limit. No doubt this procedural change seemed like legislative streamlining, making it unnecessary for Congress to interrupt other activities to respond to a debt level which creeps up on its own time schedule. The overall effect of this change was significantly different however, and probably unintentionally.

If the authorized debt limit is raised by large enough steps, it effectively amounts to Congress turning over debt decisions to the executive branch. Conversely, raising the limit only a small amount soon triggers a repeat request, which by routine becomes so inconsequential that Congress stops paying attention to it. Regardless of the size of the block grant, bulk authorization of blocks of debt results in the power of debt creation shifting toward the President. That was not what the Constitutional Convention intended.

Founding Fathers

The Founding Fathers remembered taxation as one of the main issues of the rebellion from England. Whether by King or President they had no intention of permitting the Executive to tax as he pleased; the issue traced back to the Magna Charta. Nor would they permit unlimited federal borrowing to generate escape hatches which would soon enough transform into higher taxes. Taxes therefore must originate in the House of Representatives, and bond issues were approved one by one. Following the 1917 liberalization it required only fifty years before unrestrained bond limits reached a point where future national debt obligations loomed beyond easy ability to pay them off. If they were ever pronounced unpayable by the international bond market, interest rates would rise, and eventually federal bonds would become unsalable. With Greeece, Portugal and Ireland already flirting with bankruptcy, the approaching danger seems quite understandable to the voting public.

Constitutional Convention

The issue is constrained by another barrier. The Fourteenth Amendment to the Constittution, Section Four, forbids dishonoring "the validity of the public debt of the United States, authorized by law." Enacted after the Civil War, this Amendment was intended to prevent future states or congresses from reversing the Reconstruction Acts, but it has the additional effect of preventing future Congresses from dishonoring interest and debt repayments on existing debt. The present Congress therefore retains the latitude to prohibit issuance of additional debt, but is forbidden from dishonoring existing debt.

This seems like a good principle to re-emphasize, entirely disregarding the merits of the TARP, the Dodd/Frank Act, or Obamacare. Indeed, restating the Constitutional intent for Congress to be chiefly responsible for taxes and debts, seems like a very good thing to do, quite regardless of whether present national debt limits ought to be raised. The 1917 Act was a mistake, probably an unconstitutional one, and should be reversed. Holding conferences in the White House about whether to issue debt raises uncertainty about whose duty it is. The responsibility belongs to the House of Representatives, and should stay there.

http://www.philadelphia-reflections.com/blog/2138.htm

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Fort Wilson

James Wilson

October 4, 1779. The British had conquered but abandoned Philadelphia; order was still only partially restored. Joseph Reed was President of the Continental Congress, inflation ("Not worth a Continental") was rampant, and food shortages were at near-famine levels because of self-defeating price controls. In a world turned upside down, Charles Willson Peale the painter was leader of a radical group of admirers of Rousseau the French anarchist, called the Constitutionalist Party, leaners in the radical direction actually followed by the French Revolution in 1789. Peale was quick to admit he had no clue what to do with his leadership position, and soon resigned it in favor of painting portraits of the wealthy. Others had deserted the occupied city, and many had not yet returned. The Quakers of the city hunkered down, more or less adhering to earlier instruction from the London Yearly Meeting to stay away from any politics involving war taxes. About two hundred militia roamed the city streets making trouble for anyone they could plausibly blame for the breakdown of civil order. Philadelphia was as close to anarchy as it would ever become; the focus of anger was against the pacifist Quakers, the rich merchants, and James Wilson the lawyer.

Fort Wilson

Wilson had enraged the mob by defending Tories in court, much as John Adams got in trouble for defending British troops involved in the Boston Massacre; Ben Franklin advised Wilson to leave town. It is still possible to walk the full extent of the battle of Fort Wilson in a few minutes, and a pity the tourist bureau has not marked it out. Begin with the Quaker Meeting at Fourth and Arch. A few wandering militiamen caught Jonathan Drinker, Thomas Story, Buckridge Sims, and Matthew Johns emerging from the Quaker church, and rounded them up as prisoners. The Quakers were marched down the street for uncertain purposes when the militia encountered a group of prominent merchants emerging from the City Tavern. Unlike the meek Quakers, Robert Morris and John Cadwalader the leader of the City Troop ordered the militia to release the prisoners, behave themselves, and disperse; Timothy Matlack shouted orders. It was exactly the wrong stance to take, and about thirty prominent citizens were soon driven to retreat to the large brick house of James Wilson, at the corner of Third and Walnut, known forever afterward as Fort Wilson. Doors were barred, windows manned, and Fort Wilson was soon surrounded by an armed, shouting, mob. Lieutenant Robert Campbell leaned out a third story window, and was soon dropped dead by a lucky bullet. Crowbars were sought, the back door forced open, but the angry mob immediately scattered after fusillades from inside.

Joseph Reed

Down the street came President Reed on horseback, ordering the militia to disperse, with Timothy Matlack at his side; both men were well-known radicals, switching sides to maintain law and order. The City Troop arrived, an order was given the cavalry to Assault Every Armed Man. The mob was finally dispersed by this makeshift cavalry charge, cutting and slashing its way through the dazed militia. When it was over, five defenders were dead and about twenty wounded. Among the militia the casualties were heavier, but inaccurately reported. Robert Morris took James Wilson in hand and retreated to his mansion at Lemon Hill; Wilson was the founder of America's first law school. Among other defenders huddled in Fort Wilson were some of the future signers of the Constitution from Pennsylvania: General Thomas Mifflin, Wilson, Morris, George Clymer. Equally important was the deep impression left on radical leaders like Reed and Matlack, and Henry Laurens, who could see how close the whole war effort was to dissolution, for lack of firm contol. Inflation continued but the conter-productive price control system was abandoned and never revived; the patriots had a bad scare, and the heedless radicals forced to confront the potentially disastrous consequences of their own amateur performance when entrusted with the power and responsibility they had just been demanding. It was one of those rare moments in a nation's history when the way suddenly opens to previously unthinkable actions.

Timothy Matlack

The Battle of Fort Wilson was the only Revolutionary War battle fought within Philadelphia city limits; a revolution within a revolution, every participant was a Rebel patriot. Reed and Matlack were the two most visibly appalled by the whole uproar, forced by circumstances to attack the forces of their own political persuasion. But it seems very certain that Robert Morris and the other prosperous idealists were also left with an indelible conviction that even a confederation must maintain central command and discipline with an iron will, or all might be lost. A knowledgable French observer estimated that Robert Morris then owned assets worth eight million dollars, an almost unimaginable sum for the time. But he would lose every penny if effective political control could not be restored. A few days later in the October election, he and all the other Republican (conservative) officials lost their seats. It did not matter; Morris then knew what to do and his opposition didn't.

http://www.philadelphia-reflections.com/blog/2144.htm

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Father of the Bureaucracy

Robert Morris

Under the Articles of Confederation, America had a President who presided, but there was no executive branch for him to do anything administrative. The day to day business of the nation was conducted by committees of Congress, who mainly contracted out the actual work. Evidently, Robert Morris the businessman had observed this system with displeasure, because it only took him a few days to replace it with departmental employees, reporting to him. The affairs of the nation were evidently in such disarray that there is scarcely any recorded resistance to this astonishing re-arrangement, probably viewed as only one of a series of brisk actions by this foremost businessman of the nation, acting in an emergency and to some extent using his own money. Furthermore, the immediate administrative improvement was apparently so obvious to everyone that the system continued after Morris left office, and was absorbed into the 1787 Constitution without much recorded debate. Without dissent, as we say, the bureaucracy had been created. As the press of business steadily increased the bureaucracy, from a handful of employees to many millions of them, a fourth branch of government was created without any Constitutional mission statement, not one single word. Following directions set by early America's preeminent no-nonsense businessman, control of the bureaucracy was placed within the Executive branch, in time largely located within the District of Columbia, and governed by rules made by the Civil Service Commission. Sometimes this fourth and largest branch of government skirts dangerously close to encouraging insubordination to their politically appointed superiors.

For some reason, the State Department is particularly suspected of such "Yes, Minister" behavior. Increasingly, government subcontractors are relied upon ("privatization"), as growth of public sector work forces a return to the subcontractor approach of two centuries earlier; such subcontractors increasingly find the bureaucracy assumes the role of a second Board of Directors. And for the same reason as before: the work of the central government keeps increasing. At a state and local level, an uncomfortable amount of political funding can be traced to utilities and other corporations who have been awarded legal monopolies, uncomfortably like the mercantilism which our colonist ancestors had found so repugnant to deal with. In the 21st Century we are finally approaching the point where we can foresee the number of people working for some level of government becoming greater than the number of voting citizens, and therefore able to control their income and the nature of their work. When the bureaucracy begins to exert political election power over its elected superiors, elected politicians are almost certain to rebel at what they will surely see as going a step too far. However, on the topic of salary and work environment, they are likely to become allies. Public discontent is already echoed in the growing political movement to limit or shrink the size of government; it would be well to examine and pilot test alternative options, before this one gets us into trouble.

In retrospect, this was one of many features of creating the three branches of government where broader implications went unnoticed in 1787. The British government had three branches, King, Parliament and Judiciary. To create a government consisting of a President, a Congress, and a Judiciary did not then seem like much of a departure. However, the Revolution deposed the King and made the people sovereign. When the real implications of that breezy slogan had to be translated into legislative language serious implications emerged, unexpected then, and now hard to change.

http://www.philadelphia-reflections.com/blog/2168.htm

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Corporations: Property, but also Immortal Persons

Proprietor House

The Proprietorship of West Jersey is the oldest stockholder corporation in America. Devised by William Penn it has been doing business in Burlington, New Jersey since 1676. The Proprietorship of East Jersey may possibly have been created slightly earlier by William Penn, but recently dissolved itself, thus leaving a clear path for West Jersey to claim to be the oldest. For a hundred years before 1776, corporations were devised by the King through royal charters, and for a century after 1776 most state legislatures passed individual laws to create each corporation, one by one. Consequently, there were a great many variations in the powers and scope of older corporations, with heavy emphasis on the purpose to which the business was limited. Eventually, so many corporations were created that a body of law called the Uniform Law of Corporations simplified the task of incorporation for the legislatures. The Proprietorships of East and West Jersey would now probably be described as real estate investment trusts (REIT), but the Uniform laws now tend to diminish the emphasis on corporate purpose. It is now common to have a corporation proclaim the ability "to do whatever it is legal to do."

Lady Justice

Many voices have been raised in opposition to corporations, largely claiming unfairness for a large and established corporation to compete with newcomers, especially small newcomers striving for the same line of business. Because of its immortality, a stockholder corporation can achieve dominance no individual could hope for, while because of its multi-stockholder ownership, it can generally raise larger amounts of capital. Moreover, because of its size and durability a corporation can become more efficient and offer the public lower prices and higher quality. As much as anything else, a corporation can generally hire more employees and pay them higher wages; as even the unions admit, corporations create jobs, jobs, jobs. No doubt, state legislatures are attracted by the tax revenue derived from major corporations, but the quickest way to stimulate the economy has repeatedly been found to grow out of lowering corporation taxes. Since there is scarcely any purpose to creating a for-profit corporation unless it eventually pays its stockholders some kind of dividend, all corporation taxes have the handicap of double-taxation for a fixed amount of business. The Republic of Ireland recently lowered its corporate tax rate severely and triggered so much new corporate activity that it inflated and destabilized its whole economy. The result was a dangerous economic crisis, but politicians privately and world-wide silently derived only one real conclusion: lower your corporate taxes if you are looking to stimulate jobs, jobs, jobs.

The corporate model of business thus looks pretty safe, in spite of envious criticism, and is what most people mean when they speak of capitalism. The Constitution had the intention of extracting Interstate Commerce for the Federal Government and leaving the regulation of every other business to state legislatures. The Roosevelt Supreme Court-Packing dispute of 1936 twisted the meaning of Interstate Commerce to mean almost all commerce, but Congress wasted no time specifically exempting the "Business of Insurance" from federal regulation and returning it to the state legislatures in the 1945 McCarran-Fergusson Act. Although the matter remains one of some dispute, it is roughly correct to say that all commerce is federally regulated, except insurance. The corporation is nevertheless usually a creation of some legislature, and legislators have wide latitude in regulating them. To illustrate, in the early days of banking corporation, the Bank of Hartford was delayed in receiving incorporation by strong legislative suggestion that a closed stockholder list would result in refusal to incorporate them, whereas opening up the list to new stockholders might result in rapid approval. The implication was strong: the legislators wanted some cheap or free stock as a condition of incorporation. The following year, 250 banks were incorporated, and the year after that, over 400 more. Macing of incorporation applicants by politicians was sharpened to a fine point in Pennsylvania in the late 19th Century, when legislatures accorded monopoly status to public utility corporations, withholding it from competitors. It is now a textbook statement that the funding of substantially all municipal political machines is derived from voluntary contributions by utilities with politically granted monopolies, who are consequently indifferent to the retail prices of their products.

John Marshall

So there is still room for public concern and vigilance, and both the courts and the Constitution protect but restrain corporations. In the early 19th Century when public opinion was becoming firmer about incorporation, it was contended they should be treated as persons, possibly resembling real persons more closely by imposing a finite life span on their charters. Although corporation entities are still to some degree treated like individuals, the legal doctrine prevailed that they are in fact contracts between the state and the stockholders. The paradox is thus defended that although legislatures can create corporations, they cannot dissolve them! After all, a contract is an agreement between two parties, and it requires both parties to agree to dissolve the agreement. And then, the final uncertainty was removed by John Marshall. The U.S. Supreme Court in the Dartmouth College case applied Article I, section 10 of the Constitution. That section provides that state governments may not pass any law impairing the obligation of contracts. The Supreme Court decision written by Marshall made it clear that this provision of Constitution eliminated any distinctiveness between a contract involving a state and a contract involving two citizens. There had been a growing feeling that private property was not to be disturbed by state power, and this linkage to Article 1 affirmed that point and finally settled matters. Shares of company stock were property, protected from state legislatures as belonging to the owner and not to the state in any sense. All the while that this quality of property was established, certain features of the corporation as a person endured. Most of the attention to this point arose after the Civil War, when the mixture of concepts ( a slave was a person who was also private property) more or less applied to the institution of slavery as well. More recently, potential muddles have been created by limiting campaign contributions of corporations, thus impairing their right to free speech in the role of a person. It even appears to be true that some of the 1886 precedents were created by an error of a court reporter. The dominant precedent in operation here, would appear to a layman as, "If it ain't broke, don't fix it." Additional centuries including a Civil War thus encrusted conditions and traditions onto the hybrid idea of a corporation which now allow it to stand on its own feet, more or less free at last.

The legal profession can certainly be congratulated for constructing two institutions which include the majority of working Americans -- the corporation and the civil service -- without the slightest mention of either one in the Constitution. Although everything seems to be reasonably comfortable, and no one is actively proposing substitutes, it is uncomfortable to hear so much dissension about original intent of the Framers, when so much of American Law traces its history to events and institutions which the Framers never imagined. Constitutional Law, both within and without original intent, will soon be dwarfed in effect by non-constitutional accretions to it. Sooner or later, the advocates of some undefined cause could find it in their interest to challenge the Judicial system for what has been allowed to happen. Expediency has triumphed. We started with nothing but the common law (defined as law created by judicial decision), and we are slowly returning to that condition under a different name, misleadingly called statutes.

http://www.philadelphia-reflections.com/blog/2170.htm

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Morris Upended by a Nobody

The Revolutionary War ended militarily with the Battle of Yorktown in 1781, and diplomatically with the Treaty of Paris in 1783. The careers of Washington and Franklin appeared to be complete, while the economic and financial career of Robert Morris seemed likely to stretch for decades into the future. But as matters actually turned out for these three fast friends, it was Washington who was propelled into a new political career, Franklin soon died, and Morris got himself into a career-ending mess. The financial complexity and economic power of the United States did grow massively in the next several decades, but unfortunately Robert Morris was soon unable to exert leadership. At the end of Washington's eight years as President, the power of the Federalists, and particularly the three men most central to it, was coming to a close. John Adams had a tempestuous single term, and then Federalism was all over.

Robert Morris

The end of the Eighteenth century marked the end of The Enlightenment and the beginning of the Industrial Revolution, accompanied by many national revolutions, not just the American one. This was a major turning point for world history. The momentum of these upheavals still continues, but it is clear that the Industrial Revolution of which the Morris banking revolution was an essential part swept the world far faster than the social and political revolution, in which he also played a pivotal role. In the banking and industrial revolution, it is universally agreed that Morris was almost always right. In the social and political world it is conversely agreed he was quite wrong. Essentially, Morris assumed that a small minority, an aristocracy of some sort, would rule any country. Within weeks of the ratification of the new Constitution, or even somewhat in anticipation of it, America made it clear that replacing an aristocracy of inheritance with an aristocracy of merit would not satisfy the need. Morris, born illegitimate and soon an orphan, was obviously in favor of promotion based on merit. John Adams defined leadership even more narrowly; he said a gentleman was a man who went to college, and he probably meant Harvard. Nobody extended the leadership class to include Indians and slaves, but the backwoodsmen of Appalachia made it clear that power and leadership at least included them. Thomas Jefferson was the visible leader of this expansion of franchise, but changed his mind several times. James Madison switched sides; Thomas Paine switched in the opposite direction. The leaders of Shay's Rebellion and the Whiskey Rebellion lacked coherence and consistency on this point; instead of agitating for a refined goal, they mostly seemed to be running around looking for a leader. William Findlay, on the other hand, knew what he wanted. The issue might be defined as follows: it was obvious that hereditary aristocracy was too small and too inflexible to suffice; but it was also obvious that every man a king was too inclusive. An expanded leadership class was needed, but its boundaries were indistinct and contentious. But to return to Findlay, who at least had a clear idea of what he wanted.

William Findlay

William Findlay was a member representing Western Pennsylvania in the State Legislature, in 1785. It would be difficult to claim any notable accomplishment in his life; he was largely uneducated. The new leadership class must therefore include both the uneducated and the mediocre. The Legislature at that time met in the State House, Independence Hall, in Philadelphia, where no doubt the unconventional dress and manners of backwoodsmen did not pass without audible comment. Findlay made his own political goals quite explicit; he was for paper money to facilitate land speculation which could make him rich. Wealth was a goal, but it did not confer distinction. The rights of the Indians, the rights of the descendants of William Penn, the rights of the educated class and the preservation of property were all just obstacles in the way of an ambitious man who had carefully studied the rules. Everybody's vote was as good as everybody else's, and if you shrewdly controlled a majority of them, you could do as you please. If this meat axe approach had any rational justification, it lay in the essential selfishness of every single member of the Legislature, working as hard as he could to further his own interest. If someone controlled a majority of such votes, then the majority of the public were declaring in favor of the outcome. Those who believed in good government and the public interest were saps; the refinements of education mostly just created hypocritical liars. There was a strain of Calvinism in all this, and a very large dose of Adam Smith's hidden hand of the marketplace. If you were rich, it was proof that God loved you, if you were poor, God must not think much of you, or He wouldn't have made you poor. Findlay had the votes and meant to become rich; if his opponents didn't have the votes, they could expect soon to be poor. In this particular case, the vote coming up was a motion to renew the charter of the Bank of North America. Findlay wanted it to die.

It came down to a personal debate between Findlay, and Robert Morris. Morris had conceived and created America's first bank, the Bank of Pennsylvania. Today it would be called a bond fund, with Morris and a few of his friends putting up their own money to act as leveraging for loans to run the Revolutionary War. After a short time, it occurred to Morris that the money in a bank could be expanded by accepting interest-bearing public deposits and making small loans at a higher interest rate, which is the way most banks operate today. Accordingly, a new bank called the Bank of North America was chartered to serve this function, which greatly assisted in winning the Revolutionary War. There was no banking act or general law of corporations; each corporation had its individual charter, specifying what it could do and how it would be supervised. When the charter came up for renewal, Findlay saw his chance to kill it. Morris, of course, defended it, pointing out the great value to the nation of promoting commerce and maintaining a stable currency. The reply was immediate. Morris had his own money invested in the bank and only wanted to profit from it at the public expense. His protests about the good of commerce, and the public interest in stable money, were simply cloaks for this rich man's greed to make more money. Findlay made no secret of his interest in reverting to state-authorized paper money, which could then be used by the well-connected to buy vast lands in Ohio for speculation. There were enough other legislators present who could see welcome advantages, and by a small majority the charter was defeated.

At this point, Morris made a staggering mistake. After all, he was a simple man of no great background, largely uneducated but fortified by his ascent in society from waterfront apprentice to the highest of social positions, a friend of George Washington and Benjamin Franklin, acclaimed as a financial genius, the man who saved the Revolution, very likely the richest man in America. For many years, he had harbored not the slightest doubt of his personal genius, his absolute honesty, and total dedication to the welfare of his country. To have this reputation and accomplishment sneered at by a worthless backwoodsman, a man who would stoop to using the votes of other backwoodsmen to accomplish self-enrichment, was intolerable. Morris announced and actually did sell out his entire business interest as a merchant, at a moment when he fully understood the new nation was about to enjoy an unprecedented post-war boom. So much for his self-interest. It helps a great deal to understand that John Hancock and Henry Laurens had done the same thing in Boston and Charleston, against what we now see as a strange aristocratic tradition of prejudice against bankers and businessmen. In even the few shreds of aristocracy now surviving in Britain and Europe, the tradition persists that a true aristocrat is so independently wealthy that no self-interested temptations can attract him away from purest attention to the public good. The original source of this wealth was the King, who conferred high favor on those who served the nation well. A curious exception was made for wealth in the form of land, the only dependable store of tangible wealth, and transactions in land. Wealth was something which came from God and the King in return for public service. Land ownership was its tangible storage and transfer medium. Otherwise, grubbing around with trade and manufacture was beneath the dignity of a true gentleman.

We now know what was coming. Wealth was soon to be the reward of skill and merit, recognized by fellow citizens in the marketplace, by consensus. Findlay and his friends wholly accepted this conclusion, unfortunately skipping the merit part of it for several decades. In their view, you were entitled to the money if you had the votes. As the nation gradually recognized that rewards must be durable, and once granted were yours to have and to hold, the new nation gradually came to see the need for durable ownership of property. Unless or until the owner places it out at risk in the marketplace, legislative votes may not affect its ownership. Our system ever since has rested on the three pillars of meritorious effort, assessment of value by the free market, and respect for pre-existing property. That's quite a change from the Divine Right of Kings, and therefore quite enough material to keep two political parties agitated for a couple of centuries. And quite enough change to bewilder even so brilliant a victim as Robert Morris.

http://www.philadelphia-reflections.com/blog/2181.htm

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Morris Defends Banks From the Bank-Haters

Robert Morris

In 1783 the Revolution was over, but the new nation would not launch its new system of government until 1790. It was a fragile time, and a chaotic one. Just after the British abandoned their occupation of Philadelphia in 1778, Robert Morris had been given emergency economic powers in the national government, but the state legislatures were struggling in parallel to create their own models of governance, often in overlapping areas. Thus it came about that the Pennsylvania Legislature was still occupying the Pennsylvania State House now called Independence Hall, when it issued the charter for America's first true bank the Bank of North America in 1778, as it also was in 1784 when the charter came up for renewal. Morris was a member of the Assembly both times. Although he was not a notable orator, it was said of him that he seldom lost an argument he seriously wanted to win. Keeping that up for several years in a small closed room, will itself make you many enemies.

Tavern and Bank

Morris was deeply invested in the bank, in many senses. He had watched with dismay as the Legislature squandered and mismanaged the meagre funds of the rebellion, issuing promissory notes with abandon and no clear sense of how to repay them, or how to match revenues with expenditures. There was rioting in the streets of Philadelphia, very nearly extinguishing the lives of Morris and other leaders, just a block from City Tavern. Inflation immediately followed, resulting in high prices and shortages as the farmers refused to accept the flimsy currency under terms of price controls. Every possible rule of careful management was ignored, and promptly matched with a vivid example of what results to expect. Acting only on his gut instincts, Robert Morris stepped forward and offered to create a private currency, backed by his personal guarantee that the Morris notes would be paid. The crisis abated somewhat, giving Morris time to devise The Pennsylvania Bank, and then after some revision the first modern bank, the Bank of North America. The BNA sold stock to some wealthy backers of which Marris himself was the largest investor, to act as last-resort capital. It then started taking deposits, making loans, and acting like a modern bank. Without making much of a point of it at the time, the Bank interjected a vital change in the rules. Instead of Congress issuing the loans and setting the interest rates as it pleased, a commercial bank of this sort limits its loans to a fraction or multiple of its deposits, and its interest rates are set by the public through the operation of supply and demand. The difference between what the Legislatures had been doing and what a commercial bank does, lies in who sets the interest rates and who limits the loans. The Legislature had been acting as if it had the divine right of Kings; the new system treated the government like any other borrower. As it turned out, the government didn't like the new system, and has never liked it since then. Today, the present system has evolved a complicated apparatus at its top called the Open Market Committee of the Federal Reserve, most of whose members are politically appointed. Several members of the House Banking Committee are even now quite vocal in their C-span denunciation of the seven members of the Open Market Committee who in rotation are elected by the commercial banks of their regions. Close your eyes and the scene becomes the same; agents of the government feel they have a right to control the rules for government borrowing, while agents of the marketplace remain certain governments will always cheat if you allow them to.

Seigniorage

That's the real essence of Morris's new idea of a bank; other advantages appeared as it operated. The law of large numbers smooths out the volatility of deposits, and permits long-term loans based on short term deposits. Long-term deposits command higher loan prices than short-term ones can; higher profits result for the bank. And a highly counter-intuitive fact emerges, that making a loan effectively creates money; both the depositor and the borrower consider they own it at the same time. And finally there is what is called seigniorage. Paper money (gold and silver "certificates") deteriorates and gets lost; the gold or silver backing it remains safe in the bank's vault, where it can be used a second time, or even many times.

For four days, Morris stood as a witness, hammering these truisms on the witless Western Pennsylvania legislators. At the end of it, scarcely one of them changed his vote, and the bank's charter was lost. But at the next election the Federalists were swept back into majority, defeating the opponents of the bank. Although, as we learn democracy works, still not convincing them.

http://www.philadelphia-reflections.com/blog/2188.htm

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Funding the National Debt

Alexander Hamilton

Although Alexander Hamilton's arresting slogan that "A national debt is a national treasure" has diverted attention to the underlying idea toward him, Robert Morris had introduced and argued for the same insight in the preamble to his 1785 "Statement of Accounts". The key sentence was,"The payment of debts may indeed be expensive, but it is infinitely more expensive to withhold payment." This fatherly-sounding advice was surely a distillation of a long life as a merchant, and the gist of it may have been passed down to him as an apprentice. Failure to pay your debts promptly and cheerfully results in the world assigning a higher interest rate to your future credit; it is not long before compounded interest begins to drag you down. It doesn't exactly say that, but that's what it means.

Liberty Bond

Another way of looking at this folk wisdom is that it leads to a simplified method of organizing the finances of an organization. Because higher rates of interest are demanded of long-term borrowing than short-term, it becomes efficient to segregate them. That is, to establish a cash account for every-day transactions, and a separate bond account for long term, or capital, debt. As bills arrive, they need only be verified for accuracy and sent for payment from either a cash account or a capital account. The original wisdom of agreeing to such debts lies with management, not the treasurer. The job of the treasurer's office is to pay legitimate bills as quickly and cheerfully as possible, ignoring any imprudence of earlier agreeing to pay them; rewards will come from lower interest charges and improved credit rating. An unexpected benefit of thus organizing institutions and governments is to make the accounting profession possible. Accountants perform the same function in every business, whether the business is selling battleships, or parsnips. The accounting profession made itself computer-ready, two hundred years before the computer was invented.

Robert Morris

In the same document, the retiring national Financier was advising the wisdom of "funding" the war debts, which were largely owed to France, with whom relations were rapidly souring. Lump them all together into a fund, issue bonds and sell them as representations of the nation's capital at the time of issue. Disregard what the money was used for, by either the debtor or the creditor. In spite of appearances, money sequestered in a fund for later payment, belongs to the creditor the moment it is promised, not the moment it is transferred. Morris and Hamilton discovered that the fund itself had the property of a bank, in creating money. As long as the creditor did not cash your bonds, he could use them as money, in effect doubling the amount of money you yourself can spend. It was this discovery which so exhilarated Alexander Hamilton, causing him to over-praise the methodology to an already suspicious Congress. Tending toward the teachings of Shakespeare's Polonius, Hamilton's excitable manner caused them to remember, neither a borrower nor a lender be. But Congress was eventually persuaded. The federal government lumped the states' debts together in an "assumption of debts" , consolidated all these various little debts into a single "funded debt", and made the deal work with changing the "residency" of the nation's capital from Philadelphia to the banks of the Potomac. It was called the Great Compromise of 1790.

Morris well understood that a funded system requires some final payor of last resort. Such a payor need set aside only a small portion of the debt for dire contingencies, but his name gets first attention on the list presented to prospective creditors. In 1778 Morris had offered his own personal wealth as that last resort, which the public at the time trusted far more than the Treasury of the United States. Over the next twenty years he came to realize that the last resort of established nations, no matter what the paper said, was the aggregate underlying wealth of the whole nation. With a vast continent stretching to the West, and countless immigrants clamoring to join from the East, the wealth supporting the debt of the United States in 1790 seemed endless. After two hundred years we have finally begun to accumulate a national debt which equals our Gross Domestic Product, and have only begun to pull back as we observe what happens to other nations who got to that point sooner. Let's hope devising an automatic check and balance does not require a second Robert Morris. Men like him can be hard to find.

http://www.philadelphia-reflections.com/blog/2189.htm

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How Could We Improve State Legislatures?

Nearly every student of government agrees, state government is the weakest part of the American system. Almost every federal congressman, at least, seems to hold that belief, while almost any lawyer would prefer to have his case in Federal court rather than before a state judge. Although the followers of Thomas Jefferson kept the nation in an uproar for forty years, pursuing his notion of government identical with the will of the people, the public opinion he prized nevertheless remains scornful of state government. Such scorn by itself can undermine legislative quality.

Students of government point to instability and unpredictability as main features of concern about state government. The legal profession values a central principle, called stare decisis: Leave the Law Alone. Stability, or order is desired so highly that dictatorship, corruption and poverty may be tolerated in order to achieve it. Conversely, inability to predict what is coming next is highly destabilizing, a sign of amateurism at the controls. Any decision is better than no decision, even a bad decision is better than no decision. The public hesitates to act in the face of indecisive governance, and dynamism drains from the environment. Most of the time it doesn't make much difference what a rule says as long as it is emphatic and prompt. And it's usually the case that bad decisions are quickly reversed. Test it yourself: how much difference does it make whether a street runs East, or West? But it would make a considerable difference if almost any street changed Eastward to Westward to Eastward again, several times capriciously. Suppose someone did make a bad mistake: Eastward to Westward and back to Eastward again. Everyone can now see that Westward was a dumb idea, you bonehead. It will be a very long time before anyone tries that, again.

A second general characteristic of state government is to be located in a small remote town. The capital of Michigan is in Lansing, not Detroit. In New York it is in Albany, not New York City, and in Pennsylvania it moved from Philadelphia to Harrisburg. Even in little Delaware it is in Dover, in Maryland it is in Annapolis rather than Baltimore. And so through most of the fifty states, we see the same pattern. No doubt it could be argued: getting away from big-city bosses and political machines is a positive, and stretching a network of highways through the open countryside to the new capital is a source of real estate development for the state. But it definitely creates weakness of the governing system to locate it in towns that have little newspaper coverage, no think tanks, few universities, and even poor airports, school systems, museums and civil society. These are generally one-industry towns, where the children of the bureaucracy all go to school with each other, along with the offspring of lobbyists. Voices in the past have been raised against the development of a ruling class, as might have been seen in Potsdam outside of Berlin and similar political suburbs. But we have just as surely developed a bureaucratic subclass in Bethesda, Maryland and Alexandria, Virginia. No doubt there are many other similar clusters, in other states. Where the children of bureaucrats are clustered in the schools near the Washington Post and the National Journal it can be argued they know the inside game of politics as well as the children of Boston know the inside baseball of the Red Sox, and there is a certain value to developing such a political artisan class. But in the vast majority of the country, the dominant problem is that the voters of the state have not the faintest idea of how their state government is functioning. The children of bureaucrats may still learn at the dinner table how to adopt "Yes, Minister" behavior or how to find lifetime bureaucratic jobs with accidentally high fringe benefits. The big flaw is the rest of the state does not realize the smallest part of how prevalent such behavior is in the capital. If the politician who is caught in a scandal is largely unknown to the general public, it is an advantage to the political class. With less notoriety, there is less scandal, possibly even lighter punishment from judges he has been involved in appointing. Rising above this sort of sorry behavior, the quality of legislation is surely diminished when there is diminished fame for doing a good job, diminished scorn for incompetence. To a certain extent, this pressure for mediocrity is augmented by the reduced importance of the subject material. The federal government is involved in foreign policy and monetary issues Constitutionally forbidden to the state legislature. Even at the bottom of the hierarchy of public notice, the activities of mayors and city councils have a more direct effect of the lives of the local voter than state government does, with importance shaved off at both the top and the bottom. Such activities really can possibly afford to be relegated to some rural small town with nothing to do except play poker and drink in the bar of the local hotel; it's a question which is cause, which is effect. The Constitution provides that the Federal government shall be limited to a dozen specified activities, while everything else is governed by the states. Unfortunately, two hundred years of chipping away at this government of limited powers have left the states with little scope to govern anything substantive except the insurance industry. That does not prevent most state governments from considering more than two thousand bills a session, but these are matters of little import, boring, boring.

The Progressive Movement of the early Twentieth century saw much the same problems, being handled by much the same sort of people; but they over-reacted to it. Like most reform movements, the Progressives wanted to make a big splash and then go home. A century later, it is difficult to assess how outrageously corrupt the Senatorial process may or may not have been at that time in the past. Somehow, the public became convinced the U.S. Senate was a terribly rotten organization because of the terribly rotten selection system for U.S. Senators. Consequently, the Seventeenth Amendment passed with little fanfare, taking the selection process away from "the states" and giving it to a statewide popular election. In states with large urban political machines, this change meant giving the nominating process to big-city bosses, taking it away from the legislatures. That is definitely a distinction without much difference. Most big-city political bosses are content to select obedient hacks for nomination to the legislature, but this is the source of most rotten boroughs, gerrymandering, corruption and mediocrity. In the areas of rural machine politics, the boss himself is more commonly attracted to the appointive legislative jobs. In New Jersey, the election law prohibits more than small campaign contributions to legislators, but permits unlimited contributions to the county boss. Either way, the progressive reform of 1913 has not had much progressive effect. One thing is very certain. When the method of selection of the state's U.S. Senator is left to the legislature, the resulting Senator is pretty certain to be a current member of the Legislature. And in the instant you aspire to being U.S. Senator, it becomes very clear you will greatly enhance your chances if you first run for the legislature. There were once likely to be half a dozen senatorial aspirants within the Legislature at any one time, so there was an appreciable improvement in the quality of the Legislatures. True, there was probably more grand-standing and maybe even vote-swapping in return for assistance on the Senatorial seat selection. But there was also much more attention paid in return to the state's interests, by the U.S. Senate. The state's voice on the national scene was considerably louder. The value of a legislative seat, and the later experience it provided, were much enhanced.

A measured assessment of the effects of the Seventeenth Amendment is long overdue. My own view is that ripping the selection process away from the state legislatures and substituting a second popularly elected national legislative house, was both an over-reaction and a careless gesture without much improvement. Because vested interests have been created, it is now nearly useless to ask the present Congress to study the matter. We have to hope that some very rich private citizen will see the need for a serious study of these issues, and both fund the effort as well as leave it alone. If it gets captured by ideologues, it will require a second study, or maybe even a third.

http://www.philadelphia-reflections.com/blog/2216.htm

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