Creating the Constitution: Revolutionary Statecraft, Confederation Crises, and the Founding Financial System
Political Authority and Revolutionary State Constitutions
Questions of Political Legitimacy: Following the declaration of independence, Patriots faced fundamental questions regarding the allocation and boundaries of political authority. A Philadelphia newspaper framed the central debate by asking, "Which of us shall be the rulers?"
Scope of Authority: Debate centered on whether ultimate sovereignty would reside within a national government or remain with individual states.
Institutional Control: Conflict arose over whether traditional elites or average citizens would control newly formed republican institutions.
Societal Inclusivity: Questions emerged regarding whether women would receive expanded political and legal rights, and what legal status enslaved populations would hold within the new republic.
Congressional Mandate (May 1776): The Second Continental Congress formally advised the former colonies to reject British royal authority and draft republican state governments.
State Compliance: Within six months, Virginia, Maryland, North Carolina, New Jersey, Delaware, and Pennsylvania ratified new state constitutions.
Charter Revisions: Connecticut and Rhode Island revised their existing colonial charters to eliminate all references to the British Crown.
Popular Sovereignty and Democratic Impulse: The Declaration of Independence established the foundational principle of popular sovereignty, holding that governments derive "their just powers from the consent of the governed."
The Pennsylvania Constitution of 1776: Radical democratic reform flowered in Pennsylvania through a political coalition comprising Scots-Irish farmers, Philadelphia artisans, and Enlightenment-influenced intellectuals.
Ousting the Proprietary Elite: In , these coalition insurgents removed all officeholders associated with the Penn family's proprietary government.
Franchise Expansion: The new constitution eliminated property ownership as a voting qualification, extending the right to vote and hold office to all taxpaying men.
Unicameral Architecture: It established a unicameral (one-house) legislature invested with complete legislative power, completely omitting the office of governor and eliminating executive veto power.
Social and Legal Provisions: Provisions mandated the creation of a system of elementary education and prohibited the imprisonment of citizens for debt.
Conservative Patriot Responses and Mixed Government Theory
Conservative Patriot Backlash: Pennsylvania's radical democratic model alarmed elite Patriots who feared majority tyranny and mob rule.
John Adams's Critique: Writing from Boston, John Adams denounced Pennsylvania's unicameral system as "so democratical that it must produce confusion and every evil work."
Restriction of Office Holding: Adams argued that political office should be reserved strictly for "men of learning, leisure and easy circumstances."
Property Defense: Adams warned that granting ordinary citizens dominance in the legislature would lead to redistributionist policies: "If you give [ordinary citizens] the command or preponderance in the . . . legislature, they will vote all property out of the hands of you aristocrats."
Thoughts on Government (1776): To counter Pennsylvania's democratic design, John Adams published the treatise Thoughts on Government, adapting British Whig political theory to a republican framework.
Theory of Mixed Government: Adams adapted the British concept of mixed government (which balanced the monarchy, House of Lords, and House of Commons) to disperse power and protect liberty in a republic.
Separation of Powers: He mandated distinct institutional roles: lawmaking to legislatures, executive administration to governors, and legal enforcement to an independent judiciary.
Bicameralism: Adams insisted on a bicameral (two-house) legislature containing an upper house composed of substantial property owners to check and balance popular majorities in the lower house.
Executive and Judicial Controls: He proposed an elected governor equipped with veto power and an appointed—rather than elected—judiciary.
Implementation of Conservative Constitutions:
New York Constitution (): Instituted strict property qualifications that excluded of white men from voting in assembly elections and from voting for governor and state senators.
South Carolina Constitution (): Elite planters used steep property requirements to disqualify approximately of white men from holding political office. Candidates for governor were required to possess a debt-free estate worth (approximately today), senatorial candidates required , and assembly candidates required .
Massachusetts Constitution (): Authored primarily by John Adams, this document raised property requirements for voting and office holding, intentionally slanting representation in the lower house toward eastern, mercantile interests.
The Articles of Confederation: Structure, Authority, and Weaknesses
Conception of Central Power: In , Patriots sought a national authority with strictly limited jurisdiction. Carter Braxton of Virginia argued that the Continental Congress should "regulate the affairs of trade, war, peace, alliances, \&c." but "should by no means have authority to interfere with the internal police [governance] or domestic concerns of any Colony."
Structure under the Articles: Approved by the Continental Congress in November , the Articles of Confederation created a loose political union where "each state retains its sovereignty, freedom, and independence."
Equality of State Representation: As an association of equal sovereign states, each state possessed exactly one vote in Congress, regardless of geographical size, population, or total wealth.
Legislative Thresholds: Enacting key legislation required the assent of of the states; amending the Articles required unanimous consent from all states.
Enumerated Powers vs. Institutional Deficits:
Powers Granted: The Confederation Congress was empowered to declare war, negotiate foreign treaties, resolve interstate disputes, borrow and print currency, and request financial requisitions from states "for the common defense or general welfare."
Executive and Judicial Absence: The framework omitted both a chief executive officer and a national judicial branch.
Enforcement Weaknesses: While Congress could negotiate international treaties, it lacked the authority to enforce compliance because the states maintained sovereign independence.
Taxation Limitations: Most critically, Congress possessed no independent power to levy taxes directly on states or individual citizens.
Western Land Claims, Conflict, and Territorial Cessions
Ratification Delays (–): Although Congress functioned as a governing body throughout the Revolutionary War—raising the Continental Army, forging the alliance with France, and funding military operations—formal ratification of the Articles was delayed until .
Conflict Over Charter Boundaries: States with colonial charters extending boundaries west to the Pacific Ocean (such as Virginia, Massachusetts, and Connecticut) laid claim to massive western tracts.
Landless State Opposition: Landless states like Maryland and Pennsylvania refused to ratify the Articles until land-rich states surrendered their western claims to the central government.
Financial Crisis and Nationalist Reform:
Fiscal Collapse: By , the Confederation government faced bankruptcy, prompting General George Washington to demand a national tax system, warning that without one, "our cause is lost."
Superintendent of Finance (): Nationalist leader Robert Morris assumed financial leadership and persuaded Congress to charter the Bank of North America—a private institution in Philadelphia—to stabilize hyperinflated Continental currency through issued bank notes.
Bureaucracy and Import Duty: Morris organized a central administrative bureaucracy and proposed a national import tax. The proposal was blocked by Rhode Island and New York (whose representative stated that having fought British import duties, the state would not accept them from Congress).
Western Settlement and Statehood Conflicts:
Extinction of Indian Land Titles: In , Congress asserted that the Treaty of Paris had terminated Native American rights to western lands, transferring ownership directly to the United States.
Settler Migration: By , over settlers had moved into Kentucky and Tennessee.
The State of Franklin: Residents in what is now eastern Tennessee organized an independent state named Franklin in and petitioned for admission to the Confederation; Congress refused recognition to maintain its territorial authority.
Southern Territorial Cessions and Slavery: Congress formed the Southwest and Mississippi Territories (future states of Tennessee, Alabama, and Mississippi) from lands ceded by North Carolina and Georgia. Because these state cessions stipulated that "no regulation . . . shall tend to emancipate slaves," human bondage was legally extended across all territories south of the Ohio River.
Land Ordinances of the 1780s and the Northwest Territory
Territorial Policy Framework: Between and , the Confederation Congress enacted three major land ordinances to govern the "Old Northwest" (banning slavery north of the Ohio River):
Ordinance of : Drafted by Thomas Jefferson, this law established the fundamental principle that federal territories would progress toward statehood as their settled populations grew.
Land Ordinance of : Established a standardized grid system for surveying and selling land:
Pricing: Fixed a minimum land price of per acre.
Parcel Division: Mandated that half of all townships be sold in large contiguous blocks of acres each (accessible only to wealthy land speculators), while the remaining townships were sold in parcels of acres each (restricting direct purchases to prosperous farmers).
Northwest Ordinance of : Provided the formal administrative blueprint for creating territories that later became the states of Ohio, Indiana, Illinois, Michigan, and Wisconsin.
Slavery and Education: Banned slavery throughout the Northwest Territory and allocated revenue from specific land sales to fund public elementary education.
Governance Milestones: Appointed a territorial governor and judges initially. Upon reaching free adult male inhabitants, the territory could elect a local legislature. Upon reaching free inhabitants, the territory could draft a republican constitution and apply for full admission into the Confederation on equal footing with existing states.
Historical Significance and Impact:
Orderly Expansion: Prevented the creation of permanent, subordinate colonial dependencies in the West.
Sectional Division: Institutionalized a geographic and political dividing line between free and slave states that intensified future sectional conflict.
Dispossession of Native Americans: Invalidated Native American land claims across vast territories without consent, leading directly to renewed military conflicts on the frontier.
Shays's Rebellion and the Crisis of the Confederation
Economic Distress (–): Post-war economic depression left thousands of farmers in western Massachusetts burdened by heavy private debt and high state taxes levied to pay off war bonds held by wealthy urban creditors.
Creditor Protections vs. Farmer Demands: Western farmers, including many Revolutionary War veterans, demanded paper money issuance and tax relief. The state legislature refused and instead backed urban lenders, threatening judicial foreclosure on rural farms and property.
Insurrectionary Tactics: Led by Revolutionary War veteran Daniel Shays, armed rural citizens organized as "Shaysites" and blockaded county courthouses to prevent judges from issuing property foreclosures.
Revolutionary Symbolism: The insurgents viewed their blockades as a direct continuation of the "Spirit of ," using crowd action to resist economic oppression and demand redress of grievances.
Government Countermeasure: Governor James Bowdoin characterized the protesters as rebellious insurrectionists seeking mob rule. Bowdoin raised a privately funded state militia force of several thousand men commanded by former Revolutionary General Benjamin Lincoln to suppress the uprising and prevent "a state of anarchy, confusion and slavery."
Suppression and Pardons: In January , Lincoln's army arrested over Shaysites and reopened the courts. Shays and prominent leaders were indicted for treason and several received death sentences, though Shays and most followers ultimately received reprieves or official pardons.
National Political Aftermath:
Jefferson's View: Writing from Paris, Thomas Jefferson treated the uprising lightly, remarking that "a little rebellion now and then" served a healthy purpose in maintaining political liberty.
Nationalist Alarm: Nationalists argued the crisis proved state governments could not maintain public order. James Madison asserted: "Liberty may be endangered by the abuses of liberty as well as the abuses of power."
Impetus for Constitutional Reform: The armed revolt convinced political leaders across twelve states that a major national reform was required to grant the federal government power to tax, stabilize the economy, and enforce order.
The Constitutional Convention and the Virginia Plan
The Philadelphia Convention (): In the summer of , delegates from twelve states assembled at the Pennsylvania State House in Philadelphia. Rhode Island declined to send representatives. Delegates were initially authorized only to revise the Articles of Confederation.
Fiscal Imperative: The core structural problem facing delegates was the national government's inability to levy taxes, which left states individually burdened with Revolutionary War debts and beholden to wealthy bondholders.
James Madison's Strategy: Rejecting simple revisions, Madison prepared comprehensive research on American political history and international republics to construct a totally new national constitution.
Rejection of Classical Republican Dogma:
Classical View: Classical political theory maintained that republican government could succeed only in small, homogeneous states (such as ancient Rome or Denmark) where citizens shared uniform interests.
Madison's Extended Republic: Madison posited that a large, extended republic incorporating diverse geographic regions, economic interests, and social factions would better preserve liberty by preventing any single majority faction from dominating the state.
The Virginia Plan Mechanics: Presented as the initial agenda for the convention, Madison's plan proposed a dominant central government:
Three Branches: Divided power among legislative, executive, and judicial branches with full authority over national issues.
Bicameral Representation: Proposed a bicameral Congress where representation in both houses was determined proportionally by population size or state tax contributions.
Federal Veto: Granted the national legislature explicit authority to veto state laws that conflicted with national statutes.
Debates on Representation, Executive Power, and the Great Compromise
The Small-State Counter-Proposal (New Jersey Plan): Small states opposed proportional representation, fearing domination by populous states.
William Paterson's Plan: The New Jersey Plan maintained a unicameral legislature with each state retaining a single, equal vote, while expanding federal power over trade and taxation.
Elitist Views on Democracy: Connecticut delegate Roger Sherman argued against direct popular election of legislators, stating ordinary voters lacked relevant information, were "constantly liable to be misled," and "should have as little to do as may be" with national governance decisions.
The Great Compromise (Connecticut Compromise): Formulated by Roger Sherman, the convention adjusted representation in Congress:
House of Representatives: The lower house assigned representation proportionally based on state population, satisfying large states.
Senate: The upper house granted each state equal representation, assigning two senators per state who voted independently, satisfying small states.
Debates Over the Executive Branch:
Single vs. Plural Executive: On June 1, James Wilson proposed placing executive authority in a single individual. Opponents warned this risked creating an elected monarchy.
Electoral College Mechanics: Debated through early September, delegates rejected direct popular election and legislative election, establishing the Electoral College. Each state was assigned a designated number of presidential electors equal to its total combined representation in the House of Representatives and Senate.
The Ratification Debates, Anti-Federalist Opposition, and the Bill of Rights
Signing and Ratification Mechanism: On September 17, , delegates voted on and signed the proposed Constitution. Ratification required approval from specially elected state conventions in at least states rather than state legislatures.
Anti-Federalist Arguments:
Omission of Rights: Opponents centered their attack on the convention's rejection of George Mason's proposal to add a national bill of rights (modeled on his Virginia Declaration of Rights), arguing the new national government would strip citizens of personal liberties.
Centralized Tyranny: Anti-Federalists argued that an expansive national state would consolidate power, destroy state sovereignty, and serve aristocratic interests.
Federalist Strategy and The Federalist Papers:
Public Arguments: Pro-ratification Federalists argued that adding a bill of rights was redundant and potentially dangerous, as listing specific rights might imply that unlisted rights were not protected.
Essays: Alexander Hamilton, John Jay, and James Madison published a series of political essays known as The Federalist Papers in New York newspapers between and to defend the Constitution's structural balance.
Ratification Battles:
Massachusetts Compromise: Anti-Federalists initially held a majority in the Massachusetts convention. Federalists secured narrow approval by establishing a protocol: ratifying the Constitution while formally attaching proposed constitutional amendments to be submitted to the first Congress.
Official Enactment: On July 2, , Congress announced that the requisite nine states had ratified the Constitution.
Final States: New York approved ratification by a narrow margin of votes; Rhode Island ratified by votes over a year after George Washington was inaugurated as president.
The Bill of Rights (): To fulfill political promises made to his Virginia constituents and secure full public legitimacy, James Madison drafted amendments in the First Congress. Ten were ratified in , becoming the Bill of Rights.
Omissions: The Bill of Rights contained no protections or political guarantees for women, left state-level property restrictions on voting intact, and left the institution of human slavery protected.
Slavery, Representation, and the Slave Trade Compromise
The Three-Fifths Clause: To resolve representation disputes between free and slave states, the convention agreed to count three-fifths () of a state's total enslaved population for both legislative representation in the House of Representatives and direct tax obligations.
Sectional Interests and the Transatlantic Slave Trade:
Northern Moral and Political Objections: Northerners viewed the transatlantic slave trade as exceptionally violent and immoral, noting that imported slaves inflated the South's political representation under the Three-Fifths Clause.
Upper South Position: States in the Upper South (such as Virginia and Maryland) supported banning transatlantic slave imports because they already possessed a surplus of domestic enslaved labor and stood to profit by selling enslaved people to the Deep South at inflated prices.
Deep South Demands: South Carolina and Georgia refused to join the Union unless the foreign slave trade remained legally protected.
The "Dirty Compromise": New England delegates formed an economic and political coalition with delegates from South Carolina and Georgia:
Slave Trade Protection: New England agreed to a constitutional clause prohibiting Congress from banning the foreign slave trade for years (until ).
Commercial Legislation: In exchange, Deep South delegates dropped their requirement for a supermajority on commercial laws, allowing Congress to pass navigation and trade legislation by a simple majority vote.
Hamiltonian Economic Philosophy and Financial Policies
Washington's Divided Cabinet: President George Washington appointed John Adams as Vice President, Alexander Hamilton as Secretary of the Treasury, and Thomas Jefferson as Secretary of State.
Federalist Vision (Hamilton): Favored an energetic national government using fiscal power to promote commercial and industrial growth.
Republican Vision (Jefferson): Sought strict constitutional limits on federal authority to preserve a agrarian economy dominated by independent farmers.
Hamilton's View of Human Nature and Governance:
Incentives and Passions: Hamilton asserted that self-interest was the "most powerful incentive of human actions," driving citizens to accumulate property and build industry. He argued government must harness these private human "passions" and make them "subservient to the public good."
Class Inequality: Hamilton regarded socioeconomic inequality as "the great \& fundamental distinction in Society" and argued government should not attempt to redistribute wealth.
Tying Wealth to the State: To ensure federal stability, Hamilton aimed to make the national government a "Repository of the Rights of the wealthy," linking the personal financial interests of wealthy elite investors directly to the solvency of the United States.
Federal Debt Assumption:
Proposal: Hamilton proposed that the national government assume responsibility for paying off approximately in unpaid state debts remaining from the Revolutionary War.
Debt Conversion Mechanics: Creditors holding old state bonds or promissory notes exchanged them for new federal debt certificates issued at full face value.
Speculation Controversy: Critics noted that original holders (veterans and farmers) had sold depreciated war notes to wealthy speculators for pennies on the dollar. Paying full face value rewarded speculators using tax dollars. Hamilton countered that failing to honor face value would destroy national credit and trust.
Southern Objections: Southern states that had already paid off their war debts argued federal assumption forced them to pay taxes to clear the debts of Northern states.
Outcome: Washington and Congress enacted Assumption. By the end of , of domestic debt was converted into federal bonds.
The Bank of the United States and Federal Revenue Policies
Creation of the Bank of the United States (BUS): In , Congress passed a -year charter for the Bank of the United States despite fierce constitutional opposition.
Constitutional Debate:
Strict Construction (Jefferson): Jefferson maintained that because the Constitution did not explicitly grant Congress the power to charter a corporation or bank, the proposal was unconstitutional.
Implied Powers (Hamilton): Hamilton countered that the creation of a bank was a necessary and proper instrument to carry out the government's enumerated financial functions.
Functions of the BUS:
Serves as a secure depository for federal government funds.
Issues paper banknotes backed by specie (gold or silver) to create a uniform national currency.
Regulates state-chartered banks by periodically presenting state banknotes to their banks of origin, demanding redemption in specie to curb paper inflation.
Deepens financial ties with wealthy private elites, who were allowed to purchase of the bank's capital stock (the federal government owned the remaining ).
Economic Impact: The combination of Bank stock and federal bonds created over in new financial securities. This capitalized emerging securities markets, enabled federal borrowing, and provided investment capital for state-chartered banks and private business corporations.
Frontier and Working-Class Opposition: Rural citizens and frontier populations lacking access to capital viewed Hamilton's system as an unconstitutional corporate monopoly that entrenched class privilege and concentrated power in the hands of urban elites.
Excise Taxation (): To generate reliable government revenue to pay recurring interest on newly issued debt bonds, Hamilton persuaded Congress in to enact a federal excise tax on the domestic production, sale, and consumption of specific commodities, including whiskey.