Philadelphia Legal Scene
The American legal profession grew up in this town, creating institutions and traditions that set the style for everyone else. Boston, New York and Washington have lots of influential lawyers, but Philadelphia shapes the legal profession.
Whither, Federal Reserve? (2)After Our Crash
Whither, Federal Reserve? (2)
For example, the north European states, Germans, in particular, must resign themselves to subsidizing the Mediterranean nations for years to come, working a hard work ethic while they watch their wards live an easier one. But it can be accomplished; New England has been subsidizing Mississippi for more than a century, and Appalachia has been fighting the rest of the country's wars for them since 1860. The South was always more feudal, had a more distinct class system, had a culture of upper-class military schools, whereas the North had a background of largely religious reasons for emigrating to the New World. Lincoln, for example, was an ardent Whig, which in those days meant an advocate of helping commerce by the intervention of government. That is essentially a 17th Century French idea, said to originate with Cardinal Mazarin and Jean-Baptiste Colbert. Whether it is useful to continue the same idea for four later centuries is an emotional issue in a class with our own reluctance to change a word of the Constitution. 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, for maintaining the Union was a more important justification for Civil War that was the abolition of slavery.
With the American Civil War repeatedly reminding us how dangerous it can be for even unified nations to disagree about vital regional issues, it is useful to review such American inter-state friction even closer to the time of unification, namely the repayment of Revolutionary War debts. Here, the American post-unification memories were still about the same as pre-unification. Essentially, only the legal documents had changed very much. Secretary of the Treasury Alexander Hamilton was trying to arrange equitable federal assumption of all thirteen state war debts after Virginia had already paid off its bonds and obviously had thus given up the leverage of refusing to pay them. Virginia at that time was the largest of the component states, and because George Washington was President, Virginia was politically very powerful. But submerged within the now more powerful national government and subject to its rules, Virginians were now in quite a new position. Because Hamilton was trying to establish a good international credit reputation for the new national government, and because he wanted to acquire a creditor's power over all the states, he was anxious for the federal government to assume all state debts. Naturally, Virginians believed they would not have paid off the bonds if they had known this was coming. That's different in this case from knowing the rules before they acted. Imaginative alternatives were limited because the recent war had left no money in any treasury, or even likelihood that foreigners would extend credit. Because the Europeans chose to create monetary union as a step toward political union, the problem confronted European negotiators who were still positioned on behalf of independent sovereign states. The Greek government was skirting close to default on its bonds, whereas in the other case the
The solution reached was to mollify Virginia with a political plum, the location of the Nation's capital named Washington across the Potomac from George Washington's home, potentially directing the flow of Atlantic trade to the Potomac and to Virginia. Philadelphia was intensely displeased, and there are remarkably few statues and mementos to Virginia patriots to be found in that city, even today. However, the political maneuver remains as a classic; when negotiations reach an impasse on some central issue, try to balance the political debt with arrangements which have little to do with the issues at hand. In the case of the European Union, the Greeks have no money and probably can never repay the present bailouts, let alone any extra future indebtedness. Because of the recent international recession, other sources of funds from unrelated nations may well be unavailable. Argentina has recently nationalized a huge Spanish oil developer operating on the Argentine property, so there is a question whether the Spanish banking system is affected in some way that will further strain the Greek default, and thus further drying up sources of European credit. China is beginning to show signs of the Liquidity Trap, where ample funds are available in its banks but no one wishes to borrow money to build facilities, to produce goods, which the Chinese may not be able to sell. So, there are signs available to even the casual observer that it may simply not be possible to find the money to finance another Greek bailout, except to go back to the Germans. Since Adolph Hitler within recent memory had come close to conquering all of Europe militarily, there is understandable reluctance to appeal to Germany to become the rescuer of Europe, financially. The situation thus comes close to crying out for a solution that benefits some rescuer other than Germany, or which benefits Germany in some way that is not monetary. Like it or not, Germany has already rescued East Germany once, Greece at least twice, and can expect several more decades of subsidizing its less provident fellow Europeans. It is getting to be time for the rest of Europe to express its gratitude in some tangible, visible way.
Originally published: Tuesday, April 17, 2007; most-recently modified: Thursday, July 25, 2019