A Republic at Risk-Assignment essay -02 - Business Finance
Write at least 550 words.1) When the Constitutional Convention was taking place, what were the major issues that the young nation was facing as a result of the ineffective Articles of Confederation? What fears did the delegates to the convention bring with them that they were trying to resolve at the convention?2) How did James Madison and other delegates resolve these issues as they drafted the new Constitution that defined the rights of the federal and state governments?
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David A. Moss and Marc Campasano: A republic at risk - The Boston Globe
Javier Olivares for the Boston Globe
A republic at risk
In 1787, the challenge was how to keep a fledgling democracy
together
October 01, 2017
EDITOR’S NOTE: If you bingeread today’s headlines, you might think the nation’s civic
bonds were irreparably broken. In the piece below, we rewind the tape 230 years — to a
point when this country, a deadbroke confederation of 13 quarrelsome states, really was
on the verge of coming apart. The problem of the day was: How much freedom should
those states have?
Harvard Business School professor David A. Moss has developed a hugely popular course
that applies that institution’s celebrated case method — which highlights the challenges
facing business executives — to pivotal episodes in American history. In the case below,
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Moss is asking: If you were James Madison, or one of the other delegates in Philadelphia,
what would you have done?
Especially amid the turmoil of today’s politics, it’s useful, even vital, to step back from the
news and contemplate the fundamentals. In that spirit, Moss will lead a public discussion
of this case at Faneuil Hall on Wednesday, Oct. 11, as part of the upcoming HUBweek
festival. You can register at BostonGlobe.com/IdeasOutLoud. We invite you to join this
conversation.
***
ON JUNE 8, 1787, at the Constitutional Convention in Philadelphia, delegates from across
the United States began discussing a curious proposal to expand federal power over the
states. James Madison of Virginia had suggested that the new constitution include a “federal
negative,” which would give Congress the authority to veto any law passed by a state
legislature. He viewed this as a critical safeguard against unchecked power at the state level.
Opponents charged that Madison’s federal negative would allow Congress to “enslave the
states” and let “large States crush the small ones.” Indeed, the question of how much power
— and what types of power — to vest in the federal government went to the very heart of the
debate that unfolded in Philadelphia that summer.
The Constitutional Convention of 1787 capped a tumultuous period in American history. In
1783, after eight years of war, Britain formally recognized its former colonies as the
independent United States of America. Within just a few years, however, the triumphant
Americans found themselves facing calamities on many fronts, ranging from federal
insolvency and widespread economic recession to an armed rebellion in Western
Massachusetts. Said George Washington, the hero of the Revolutionary War, “I am really
mortified beyond expression that in the moment of our Acknowledged Independence we
should, by our conduct, verify the predictions of our transatlantic foe, & render ourselves
ridiculous & contemptible in the eyes of all Europe.”
Sharing Washington’s frustration and embarrassment, James Madison came to believe that
the economic and social turmoil plaguing America in the mid-1780s could be traced to
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David A. Moss and Marc Campasano: A republic at risk - The Boston Globe
defects in the Articles of Confederation, which had been adopted as the nation’s governing
document in 1781. What was needed, Madison argued, was an entirely new constitution that
would create a strong but limited central government with well-defined powers, including
the power to veto state laws. Whether Madison could persuade his fellow delegates at the
Constitutional Convention was far from clear, but there could be little doubt how much was
at stake as the new nation struggled to find its footing in Philadelphia.
AS EARLY AS 1775, a number of political leaders, including Benjamin Franklin, had
suggested that the authority of the Continental Congress should be grounded in a written
constitution. Lawmakers began working on such a document in June 1776, based on the
general understanding that the states would be left to manage their internal affairs while
Congress would handle foreign affairs. Several significant points of contention emerged
during the drafting process, however, including whether more populous states would have
more votes in Congress and whether slave populations would be counted when calculating
each state’s share of wartime expenses.
Lawmakers ultimately resolved their differences by agreeing that each state would have one
vote in the unicameral Congress, war expenses would be distributed based on the value of
each state’s land and improvements, and Congress would not manage state boundaries or
western lands. Representatives finally completed drafting the document, called the Articles
of Confederation, in mid-November 1777.
The Articles, which announced that each state “retains its sovereignty” and that together the
states would form “a firm league of friendship with each other,” vested limited authority in a
national Congress without creating either a chief executive or a judiciary. Specifically, the
Articles conferred upon Congress the authority to borrow as well as the exclusive power to
declare war, to enter into treaties and alliances, to settle disputes between the states, to
regulate weights and measures, and to oversee a national postal system. Nowhere, however,
did the Articles grant the national government superiority relative to the states or the means
to compel them to follow its laws. While permitting the various states to collect taxes and
impose tariffs, and requiring the federal government to honor its war debts, the Articles did
not grant Congress the power to levy taxes.
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David A. Moss and Marc Campasano: A republic at risk - The Boston Globe
Although the articles were ratified in 1781, and American forces secured a major victory at
Yorktown that same year, the struggle to establish a viable nation had only just begun.
Congress had accumulated $27 million in debt during the war. Yet under the Articles it was
unable to impose national taxes or force the states to provide funds. In fact, in 1781,
Congress collected only $422,000 of $5 million requested from the states, with no
contribution at all from Georgia, North or South Carolina, or Delaware.
The states frequently flouted the Articles in other ways — for example, by enacting laws that
discriminated against out-of-state merchants. As a case in point, New York laid heavy duties
on New Jersey and Connecticut merchants who shipped their products to New York City,
provoking retaliatory sanctions from the affected states. In fact, numerous states had begun
imposing tariffs on their neighbors, dramatically impeding interstate commerce.
Amid such political turmoil — and perhaps in part because of it — the American economy
soon took a turn for the worse. Historians continue to debate the extent of the economic
downturn in the mid-1780s, but nearly all agree that it was a difficult period. The most
pessimistic estimates suggest that per capita GNP fell by more than half. If these extreme
estimates are correct, then the economic collapse in the mid-1780s could have been even
worse than that experienced between 1929 and 1933 (the worst phase of the Great
Depression).
One consequence of the downturn was that many individual debtors found it difficult to
make good on their obligations. Compounding their woes, the federal government and a
number of states had fallen behind on paying their own debts, leaving many former soldiers
who had accepted bonds and certificates as payment for their wartime service in a tough
financial squeeze. Many of these former soldiers had no choice but to sell their government
certificates to speculators at deep discounts.
With countless farmers in financial trouble and petitioning for debt relief, several state
legislatures responded around 1786 by issuing substantial amounts of paper money, thereby
allowing debtors to repay their debts in inflated currency. Rhode Island took the policy to its
logical extreme, inducing rapid inflation and imposing penalties on creditors who refused to
accept payment in the sharply depreciated paper money. Within a year, Rhode Island’s paper
dollar was worth only 16 cents in gold.
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In contrast, neighboring Massachusetts remained committed to both fiscal and monetary
conservatism. The state legislature raised taxes to repay its debts and resolutely avoided a
policy of inflation. The resulting pressure on small farmers was enormous, and many lost
their property in court-ordered foreclosures. One former Revolutionary officer, Daniel
Shays, was so angry about the plight of farmers that, starting in the late summer of 1786, he
helped to lead a growing rebellion in Western Massachusetts, its ranks eventually surging to
over 2,000 men.
In the minds of many Americans, the crisis in Massachusetts epitomized all that was wrong
with the new confederation. Economic elites who had never been very comfortable with the
idea of broad-based democracy wondered whether they were headed for a future of class
warfare — and even mob rule.
Javier Olivares for the Boston Globe
THE QUESTION OF what had gone wrong captivated the Virginia statesman James
Madison. Born in 1751 into an affluent slaveholding family, Madison has been described as
possessing “a keen and inquiring mind coupled with a voracious intellectual appetite.”
In March 1784, Madison asked his friend Thomas Jefferson, then in Paris on a diplomatic
mission, to send him whatever books “may throw light on the general Constitution & droit
public [public law] of the several confederacies which have existed.” Madison reasoned that
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David A. Moss and Marc Campasano: A republic at risk - The Boston Globe
by understanding why past confederations had succeeded or failed, he could better identify
what ailed the American confederation. By January 1786, he had received two trunks of
books in English, French, and Latin at Montpelier, his family’s plantation estate. Sitting in
his library, Madison began working through the books, conducting a thorough historical
review spanning thousands of years. The confederations he surveyed ranged from the
Amphyctionic and Achaean confederacies of ancient Greece to the Belgic confederacy in the
Netherlands (also known as the United Netherlands), which was still in place in the 1780s.
Madison took careful notes on each confederation’s structure and operations, specifically
commenting on the deficiencies he perceived in each. He noted that several confederation
governments had been unable to control their members. For example, he pointed out that
Athens and Sparta had waged their many wars against each other while co-members of the
Amphyctionic confederacy, despite the federal authority’s prerogative to mediate such
conflicts.
Madison then began preparing a critique of the new confederation in America. The resulting
1787 document, entitled “Vices of the Political System of the United States,” identified a
range of national failings and attributed them to deficiencies “radically and permanently
inherent in . . . the present System.”
In particular, he faulted the Articles of Confederation for denying the national government
the capacity to enforce its policies. The authors of the Articles, he wrote, had trusted too
much “that the justice, the good faith, the honor, [and] the sound policy” of the state
legislatures would obviate the need for such enforcement power at the federal level. The
states had regularly failed to pursue “concert in matters where public interest require[d] it,”
especially in setting uniform commercial policies. Instead, they had passed laws to limit
interstate trade or to support debtors at the expense of out-of-state creditors, which pitted
states and citizens against each other.
In the final section of “Vices,” Madison proposed an explanation as to why there had been so
much “injustice” in the states’ laws. He rejected the traditional assumption that republican
government worked best on a small scale. All communities, he observed, contained various
factions such as economic classes, religious groups, and political parties. If a single faction,
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or a small concert of factions, won control of a legislature, “what [was] to restrain them from
unjust violations of the rights and interests of the minority, or of individuals?”
Madison suggested that small republics, with less competition among political groups, were
more vulnerable to this problem of tyranny of the majority. In large republics, by contrast,
“[t]he Society becomes broken into a greater variety of interests, of pursuits, of passions,
which check each other, whilst those who may feel a common sentiment have less
opportunity of communication and concert.” With diverse factions tempering each other’s
influence, he suggested, a larger republic’s legislature would enact sounder and fairer
policies.
By the time he completed “Vices,” Madison had begun describing potential constitutional
reforms in his correspondence with other national leaders. His proposed system would be
built on “a due supremacy of the national authority” and would leave the states with enough
power to be “subordinately useful.” To that end, he sought to grant the national government
“positive and compleat authority in all cases which require uniformity.” This federal
supremacy would extend to new judicial and executive branches of the national government,
each superior to the analogous state institutions. To further bolster the national
government’s authority, Madison proposed a “right of coercion” against delinquent states
that would enable the federal government to carry out its laws “by force.”
As a further check on the states, Madison proposed that Congress hold a veto over state laws
“in all cases whatsoever.” He believed that this veto, which scholars call the “federal
negative,” was essential.
AN EMERGING national “consensus” for constitutional reform would soon give Madison the
chance to present his ideas on a national stage. In February 1787, Congress formally called
for a new convention in Philadelphia “for the sole and express purpose of revising the
Articles of Confederation.” The convention started on May 25.
Much of the early debate in Philadelphia focused on questions pertaining to the structure,
authority, and makeup of the new federal government, as well as to the federal government’s
role vis-a-vis the states.
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Against this backdrop, Madison’s proposal for a congressional veto over state laws — his
“federal negative” — finally took center stage at the convention on June 8. While his original
proposal would have applied in “all cases whatsoever,” Madison’s Virginia colleagues had
included a narrower version in the Virginia Plan that limited Congress’s veto only to state
laws “contravening in the opinion of the National Legislature the articles of Union.” The
convention had assented to this more limited federal negative early on and without
argument. On June 8, however, Charles Pinckney of South Carolina suggested extending the
veto to “all laws which [Congress] should judge to be improper,” in line with Madison’s
original conception. Pinckney judged the absolute approach that he was proposing to be “the
corner stone of an efficient national Government,” without which Congress would prove
unable to enforce its policies.
Opponents of the absolute negative expressed horror at the thought of so explicitly
sacrificing the states’ control over their own affairs. Although delegate Elbridge Gerry of
Massachusetts saw the usefulness of vetoing paper money laws, he feared that an absolute
negative would allow Congress to “enslave the states.”
Gerry suggested that the negative might dissuade new states from joining the Union, and
Delaware’s Gunning Bedford worried that the more populous states, which would have
greater influence in Congress, might use the negative to impose their will on smaller states.
With both sides having made their case, the proposal was finally put to a vote at the end of
the day’s session on June 8, 1787. Whether Madison’s notion of an absolute federal veto over
state laws would live or die was now up to the 55 delegates who together comprised the
Constitutional Convention in Philadelphia.
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