Essay on Federalist No. 7

Introduction

Before getting to the plain language summary of Federalist No. 7, I’d like to take a moment to voice my disagreements and intrigue with some statements made by Alexander Hamilton in Federalist No. 7. They are as follows.

1. Hamilton points out that it was well known that some states “had serious and animated discussion concerning the rights to the lands which were ungranted at the time of the Revolution, and which usually went under the name of crown lands.” There is an issue here that is important to discuss. Why should the States have first claim to uninhabited land? The John Locke/libertarian theory of homesteading would give property rights to the first individuals that mixed their labor with the land. The idea that all land must immediately be assigned to some government body is affront to the notion of property rights. Unsettled “crown land” should have remained open and without ownership until a pioneering individual claimed it as his own by improving the the land with his work.

2. Hamilton writes “The competitions of commerce would be another fruitful source of contention.” A couple of sentences later he writes “Each State, or separate confederacy, would pursue a system of commercial policy peculiar to itself.” This is the crux of the issue. It would be the particular policies pursued by the various state governments that would cause conflicts. Naturally occurring competition between economic actors benefits far more people than it harms. However, the few that are harmed by competition tend to seek government intervention to protect them from competition. This leads to policies that cause conflict. If left up to the free market, those producers who satisfied the largest amount of people would win the competition. This is the most equitable solution. It should be pointed out that dueling government policies are the antithesis of the free market.

3. Hamilton writes “The habits of intercourse, on the basis of equal privileges, to which we have been accustomed since the earliest settlement of the country, would give a keener edge to those causes of discontent than they would naturally have independent of this circumstance.” Here we see that trade policy in the United States from the very beginning was “the basis of equal privilege” or free trade between the states. The fact that trade was so free would only serve to highlight the harm caused by trade restrictions. Trade restriction can only be carried out by governments. Again, we see various governments interfering with the naturally occurring state of things: free trade and equal privilege.

4. Hamilton observes “The spirit of enterprise, which characterizes the commercial part of America, has left no occasion of displaying itself unimproved. It is not at all probable that this unbridled spirit would pay much respect to those regulations of trade by which particular States might endeavor to secure exclusive benefits to their own citizens. The infractions of these regulations, on one side, the efforts to prevent and repel them, on the other, would naturally lead to outrages, and these to reprisals and wars.” This passage is so revealing. PEOPLE JUST WANT TO TRADE. The desire to obtain what what one considers beneficial is so strong that laws will be ignored and regulations disdained in order to get it. When artificial barriers are put up so that some industry in one particular state or country can benefit, people are forced to go around the laws to do business. This creates criminals and can eventually lead to war. It would be much easier to just get the government the hell out of the way and let the people trade.

5. Hamilton’s discussion of the effect of national debt on the relationships between the states gives a vivid example of why all national debt should be avoided in the first place. This discussion starts with sentence “The public debt of the Union would be a further cause of collision between the separate States or confederacies.” This is true. Nowadays, under our powerful federal government that Hamilton wanted so badly, it isn’t states that clash over national debt but rather the citizens versus the government. Citizens are sick of it and the government wants to keep borrowing. Going forward, ALL nation debt should be avoided. Indeed, “The public debt of the Union would be a further cause of collision:, between many factions of society.

6. Hamilton notes “the reluctance with which men commonly part with money for purposes that have outlived the exigencies which produced them, and interfere with the supply of immediate wants.” This is crucial to understanding the nature of debt. You get something now without paying. However, some day you’ll have to pay it back. When the time comes, you may not even remember what you spent the money on or why you owe it. Regardless, you’ll have to pay it back and the only way to do that is by giving up something that you would have otherwise enjoyed in the present.

7. Hamilton eloquently observes “There is, perhaps, nothing more likely to disturb the tranquillity of nations than their being bound to mutual contributions for any common object that does not yield an equal and coincident benefit.” Think bank bailouts. Think military-industrial complex. Think bureaucrats making three times as much as average citizens.

8. Hamilton write “America, if not connected at all, or only by the feeble tie of a simple league, offensive and defensive, would, by the operation of such jarring alliances, be gradually entangled in all the pernicious labyrinths of European politics and wars; and by the destructive contentions of the parts into which she was divided, would be likely to become a prey to the artifices and machinations of powers equally the enemies of them all. Divide et impera must be the motto of every nation that either hates or fears us.” Its pretty sill to accept that a nation that just fought and won a war against the greatest military power on the earth would so easily and recklessly give up its recent hard won freedoms. The fact that the won the war under “only by the feeble tie of a simple league” doesn’t seem to matter to Hamilton.

Summary

Hamilton starts off Federalist No. 7 by observing that some of his opponents claim that disunited states would have no reason to start wars with each other. In fact, the states, if disunited, would be motivated to fight wars for the same reasons that any other nation throughout history decided to fight a war. In addition, there were more specific reasons that might cause the various states might fight with one another. These particular motivations were so strong that they could be seen in spite of the restrictions placed on the states by the Articles of Confederation. They would only be made worse if the states were to act as completely separate nations.

According to Hamilton, “Territorial disputes have at all times been found one of the most fertile sources of hostility among nations.” It was likely that more wars had been started over territorial disputes than for any other reason. Of course, amongst the various states there would be an abundance of territorial disputes. Indeed, there was a huge amount of unsettled land within the borders of the United States. Many of the states were in the middle of disputes over which states would have rights to particular unsettled territories. If the states were to be completely independent nations, every single state would likely try to make a claim for some of the uninhabited lands. It was a widely known fact there had been serious disagreements between some states over land that truly belonged to nobody at the time of the Revolutionary War. The lands were generally known as “crown lands.” The states who had the land inside their borders claimed it as there own. Other states argued that crown land should rightly belong to the Union. In the west there existed an enormous amount of uninhabited land that had once belonged to king of Great Britain. Such lands had been ceded to the United States as a part of the peace treaty which ended the war. Many argued that the western land belonged to the Confederacy because it acted as a single country in signing a treaty with a foreign nation. By convincing the states to forfeit their land claims to the federal government, the federal congress was able to keep the peace between the various states. This was only able to be accomplished because the existence of a union provided a forum for settling disputes. If the mechanism for settling disputes, the Union, were to be eliminated, the disputes would once again come back to life. The large, western territory belonged to the Union “by cession at least, if not by any anterior right.” If the Union were to come to an end, the compromise reached by the various states would be terminated, and the various states would move to start reclaiming land in the west. All states would insist on being granted their fair portion of the land. The states would argue that the land was obtained by a war fought by all of the states. The land was ceded to a Union formed by all of the states. Therefor, each state had a right to some of the land. Even in the unlikely event that all of the states agreed to share the western land, there would still exist the the problem of fairly dividing the land. Each state would have its own ideas for the right way to split up the land. All would act in their own best interest in trying to secure lands and it would be nearly impossible for a peaceful solution to be agreed upon.

We can see, therefor, that the issue of dividing up the western lands would provide an “ample theatre for hostile pretensions” if there was no federal government to mediate disputes. If history was any guide, it seemed quite clear that many of the states would resort to violence to enforce their claims. Take, for example, “the dispute between Connecticut and Pennsylvania, respecting the land at Wyoming”. Such an example warned against being naive in thinking that land disputes would be easily settled. The Articles of Confederation required that all parties in such a dispute submit the issue to a federal court for a decision. In the case mentioned above the federal court decided in favor of Pennsylvania. However, Connecticut strongly disagreed with the decision. In fact, it looked as if Connecticut wasn’t going to accept the ruling. Finally, through negotiation and bargaining, a solution was found that compensated Connecticut for some of her perceived loss. The purpose of  mentioning this case was not to insult Connecticut. There was no doubt that she honestly believed that she had been wronged. Rather, it shows that “States, like individuals, acquiesce with great reluctance in determinations to their disadvantage.”

Another example of a conflict between states was the conflict between New York and Vermont. Anybody who had witnessed the inner workings of this conflict first hand could verify that New York not only experienced opposition from the states involved in the case but also from other states who had nothing to do with the case. Those involved in the case could also comprehend the danger posed to the Union had New York decided to enforce her claim militarily. There were two reasons that for the aforementioned conflict. First, Vermont was afraid of how powerful New York was becoming. Second, their were powerful individuals in other states who had received land grants by the state of Vermont. It seemed as if certain states who brought forth titles to land were actually more interested in weakening New York than enforcing their claims. The states most interested in weakening New York were New Hampshire, Massachusetts, and Connecticut. New Jersey and Rhode Island were also strong supporters of Vermont. Maryland also supported Vermont, until she discovered Vermont’s strong connection to Canada. These small states all banded together to stop New York’s “growing greatness.” Similar conflicts would occur between the other states if they became disunited.

Economic competition between the states would also cause problems. States with natural disadvantages would try to leach off of other states with better economies.  Each state would have different economic policies depending on their varying situations. The different policies would favor some products from some states and discriminate against certain products from certain other states. This would cause conflict. Free trade amongst the states had long been common policy; even since the very beginning of the colonies. That fact would make trade restrictions all the more unpalatable. However, it must be realized that these acts, no matter how harmful they may have been, were actually legal acts committed by independent, sovereign nations.  Despite all of this, the commercial spirit which characterized America was not likely to be subdued by laws and trade restrictions. Citizens of one state would certainly ignore the laws and commercial regulations of other states. States would then be forced to treat citizens of other states as criminals. This would lead to “outrages, and these to reprisals and wars.”

Some states would not take kindly to the various regulations imposed by other states. Just such a situation existed between the states of New York, Connecticut, and New Jersey. New York, in order to generate revenue for the government, taxed imports. New York than sold its imports to consumers in Connecticut and New Jersey. As a result of the import tax, consumers had to pay higher prices for the goods they desired. Of course, New York wouldn’t be willing to give up government revenue just so people in other states could pay less for goods. It would have also been quite unrealistic to determine which goods were being sold to people in other states in order to charge them less.  Connecticut and New Jersey weren’t likely to continue putting up with paying import taxes to New York that their states didn’t benefit from. New York wouldn’t be able to continue in their “quiet and undisturbed enjoyment of a metropolis” as long as they continued to benefit in a way that was so despised by their neighbors. Connecticut and New Jersey would surely bring pressure on New York from both sides of its border that New York wouldn’t long be able to ignore.

Public debt would also cause animosity between the states. The act of taking on debt in the first place and then paying it back would certainly lead to disagreement. It would be quite difficult or even impossible to decide how much debt each state would be responsible for. In truth, there was no solution that wouldn’t lead to severe objections. Of course, such objections would be blown out of proportion by opponents of any such plan.  States even disagreed on the basic issue of whether debt should be paid back. Some states didn’t think that national credit was all that important. Citizens of those states had “little, if any, immediate interest in the question” and felt “an indifference, if not a repugnance, to the payment of the domestic debt at any rate.” On the other side of the issue were those citizens who had loaned money to the federal government. They were the creditors of the various states and would do everything they possibly could to be paid back. Any lag in paying back the debt would upset the creditors. It would be difficult for the states to come to an agreement because each state would have a different idea about the best way to handle the problem. Citizens who were owed money would pressure their state governments to do something. Likewise, foreign government would move to secure their financial interests as well. As a result, the states would be thrown into turmoil both domestically and from abroad.

If we imagine a situation in which the states finally did reach an agreement on the debt issue, it is easy to see that the debt burden would have fallen more heavily on some states than on others.   States forced to pay back more of the debt would try to escape their obligation. Other states would be against changing the agreement because it would mean that they’d have to pay more debt themselves. If any state refused to pay back their share, other states would take the opportunity to refuse to pay their part as well. The refusal to comply with debt agreements would cause bitter and hateful disputes. Even if the agreement were in actuality fair and proportional, some states would still be unable to pay.  This could be caused by a lack of funds, financial mismanagement, or governmental errors. Also, men hate to pay money for things that happened far in the past and keep them from taking care of present needs. Any failure to pay obligations would lead to arguments and retaliation. As Hamilton eloquently observes, “There is, perhaps, nothing more likely to disturb the tranquility of nations than their being bound to mutual contributions for any common object that does not yield an equal and coincident benefit.” Indeed men fight more over money than over anything else.

The violation of private contracts by parties in two separate states could also lead to problems. Citizens of one state will force their government to take action to protect their rights from abuses by citizens in other states. It would be unreasonable to expect objectivity from lawmakers in the various states to keep them from acting in favor of their own citizens and against citizens from other states. In fact, left to their own devices, many state legislatures had passed laws in favor of their own citizens. Connecticut was prepared to retaliate with its full strength against laws passed by Rhode Island.  It was reasonable to expect that future conflicts caused by state legislatures would not be solved by reason and compromise but rather by war.

The likelihood that separate states or confederacies would ally themselves with foreign governments and the effect it would have on the peace and prosperity of the country as a whole were discussed in previous papers. If America was not united under a strong federal government, the states would certainly be “be gradually entangled in all the pernicious labyrinths of European politics and wars.” The divided states would become the victims of foreign powers that in reality were enemies of the United States. Divide and command would be “the motto of every nation that either hates or fears us.”

 

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