In the last post, I discussed how the Congress passed and submitted to the States in 1789 twelve Amendments to the Constitution for the United States. Ten of these Amendments were ratified effective December 15, 1791 and became known as the Bill of Rights. The next two Amendments came relatively shortly thereafter: the Eleventh Amendment was ratified effective February 7, 1795, and the Twelfth Amendment was ratified effective June 15, 1804.
BRIEF HISTORY, 1789 THROUGH 1804
George Washington, elected the first president in 1789, worked with the heads of the departments of State, Treasury, and War, along with an Attorney General (the Justice Department wasn’t created until 1870), the group of which later became known as his cabinet. Based in New York, the new government acted quickly to rebuild the nation’s financial structure. Enacting the program of Treasury Secretary Alexander Hamilton, the government assumed the Revolutionary War debts of the states and the national government, and refinanced them with new federal bonds. It paid for the program through new tariffs and taxes. The tax on whiskey led to a revolt in the west; Washington raised an army and suppressed it. Fleshing out the Constitution’s specification of the judiciary as capped by a Supreme Court, the Judiciary Act of 1789 established the entire federal judiciary. The Supreme Court became important under the leadership of Chief Justice John Marshall (1801–1835), a federalist and nationalist who built a strong Supreme Court and strengthened the national government.
The 1790s were highly contentious. The party system emerged in the contest between Hamilton and his Federalist party, and Thomas Jefferson and his Republican party. Washington and Hamilton were building a strong national government, with a broad financial base and the support of merchants and financiers throughout the country. Jeffersonians opposed the new national Bank, the Navy, and federal taxes. The Federalists favored Britain, which was embattled in a series of wars with France. Jefferson’s victory in 1800 opened the era of Jeffersonian democracy, and doomed the upper-crust Federalists to increasingly marginal roles.
Hamilton led the Treasury Department as a trusted member of President Washington’s first Cabinet. He successfully argued that the implied powers of the Constitution provided the legal authority to fund the national debt, to assume States’ debts, and to create the government-backed Bank of the United States. Hamilton opposed friendly relations with the French revolutionaries. Hamilton’s views became the basis for the Federalist Party, which was opposed to the Democratic-Republican Party led by Thomas Jefferson and James Madison. In 1795, he returned to the practice of law in New York. He called for mobilization against the French First Republic in 1798–99 under President John Adams, and became Commanding General of the U.S. Army, which he reconstituted, modernized, and readied for war. The army did not see combat, and Hamilton was outraged by Adams’ diplomatic approach to the crisis with France. His opposition to Adams’ re-election helped cause the Federalist party defeat in 1800. Jefferson and Aaron Burr tied for the presidency in the electoral college, and Hamilton helped to defeat Burr, whom he found unprincipled, and to elect Jefferson despite their philosophical differences.
Also in 1800, slavery was ended in the Northwest Territory, stemming from the Ordinance of 1787 establishing the territory and written by Thomas Jefferson. Jefferson had proposed that all slavery be prohibited by the year 1800, but that proposal had been defeated by one vote. In 1804, New Jersey became the last northern State to abolish slavery.The acquisition of the Louisiana Purchase from Napoleon in 1803 opened vast Western expanses of fertile land, which perfectly met the needs of the rapidly expanding population of yeomen farmers whom Jefferson championed. This acquisition doubled the land size of the United States but added tremendously to the national debt: the price of the purchase included bonds of $11,250,000 and $3,750,000 in payments to United States citizens with claims against France.
The national debt was also burdened with the cost of a lesser known war. The First Barbary War (1801-1805), also known as the Tripolitanian War and the Barbary Coast War, was the first of two Barbary Wars, in which the United States and Sweden fought against the four North African states known collectively as the “Barbary States”. Three of these were autonomous, but nominally provinces of the Ottoman Empire: Tripoli, Algiers, and Tunis. This war had been declared by the pasha of Tripoli and is memorialized in the anthem of the United States Marine Corps.
NATIONAL DEBT, PRIVATE BANKING, AND FOREIGN ALLIANCES
Before 1776, Britain had not allowed banks in the American colonies. In the years following 1776, a crazy quilt of State and even foreign notes began to circulate as resourceful citizens sought ways to expand manufacturing and trade. At the same, the new American government faced significant debt incurred prior to the signing of the Constitution but that Britain was not going to pay. The Republicans (those wanting strong State power and minimal federal power and control) wanted the States to agree to pay from their tax revenues. They felt that it would be fair to buy back earlier American notes issued by the States for pennies on the dollar and to start fresh with a balanced budget. This was modeled on the view that delegates to Congress were empowered with the fiduciary authority to commit their States to fund the federal budget so that the States would remain in control of national indebtedness levels and solutions.
Hamilton came to his role as head of the Treasury Department from a strong Federalist viewpoint. He argued that a strategy that did not accept all outstanding debts would hurt American citizens and war veterans who had bought securities or taken IOUs in good faith. Also, he said, it would irreparably damage the trustworthiness of the new American government on world markets. He believed that the Constitution gave implied powers to the Federal government to assume the debts of the States. This Hamiltonian doctrine of “implied powers” has led to the supremacy of the federal government over the State governments and to a change in the role of delegates to Congress from being empowered representatives of the interests of the States to, in my opinion, largely self-serving members of an elite club working to find favor within the federal system.
In his 1790 report – The Report on the National Bank – Hamilton proposed the creation of a Bank of the United States, for which the federal government would provide one-fifth of the capitalization, and private investors would provide the rest. This bank would operate as a government bank. The four-fifths of the bank’s capitalization that private investors contributed would be available for lending out to entrepreneurs to fuel economic development. The profits that the Bank of the United States earned would help pay off the federal debt in proportion to the government’s one-fifth holding in the bank. Congress chartered the First Bank of the United States in 1791 over Jefferson’s strong objections. In his 1791 report – The Report on the Subject of Manufactures – Hamilton suggested that the Bank of the United States would lend entrepreneurs money to build a system of manufacturers. Also, Hamilton planned to increase the tariff on foreign-made goods, so that people would prefer to manufacture in the United States. Finally, Hamilton proposed to encourage immigration, as there was a lack of labor.
Hamilton’s arguments were political as well as economic. Through payment by the central government of the States’ debts, Hamilton hoped to bind the men of wealth and influence – who had acquired most of the domestically held bonds – to the national government. But such powerful opposition arose to the funding and assumption scheme that Hamilton was able to push it through Congress only after he had made a bargain with Thomas Jefferson, who was then Secretary of State, whereby he gained Southern votes in Congress for it in exchange for his own support in locating the future national capital on the banks of the Potomac. The Southern States were never truly supportive of a national bank modeled after the Bank of England, federal control of indebtedness, and especially of Hamilton’s immigration proposals.
Hamilton continued to be very pro-Britain (he was not at all a fan of the French revolution, 1789 through the late 1790s), while Jefferson and his party remained staunchly pro-France. When war broke out between France and England in February 1793, Hamilton wished to use the war as an excuse for ending the French alliance of 1778 and steering the United States closer to England, whereas Jefferson insisted that the alliance was still binding. Washington essentially accepted Hamilton’s advice, and in April of 1793 issued a proclamation of neutrality that was generally interpreted as pro-British. Britain still ruled the oceans, and America was still very much a neophyte in terms of having its own navy.
THE RISE OF CENTRAL BANKING
The First Bank of the United States was a cornerstone of Hamilton’s fiscal policy. It helped fund the public debt left from the American Revolution, facilitated the issuance of a stable national currency, and provided a convenient means of exchange for all the people of the United States. It was capitalized at $10 million and fully subscribed almost instantly, with the federal government holding the largest block of ownership, 20 percent. A substantial interest in the bank was also purchased by European investors.
The bank accomplished all that Hamilton had hoped for and also succeeded in an unforeseen role: the regulation of private banks chartered by several States. At this time, the issuance of notes was a more conspicuous feature of banking than were deposits. Bank notes entered circulation as the money banks lent to their borrowers, and these notes constituted most of the total currency in circulation.
The rapid growth of the young country generated powerful demand for loans and tended to stimulate the over-extension of credit. The Federalists felt that it was in the general interest to restrain such over-expansion, and the central bank imposed that restraint automatically. As the depository of the government, with offices in the chief seaports and commercial centers, it constantly received from collectors of revenue the notes of private banks by which moneys due the government were paid. As fast as it received such notes, it called for their redemption in gold and silver by the banks of issue, thus automatically restricting the over-extension of credit and protecting the economy from inflation. Conversely, in periods of panic or deflation, the bank could ease the pressure. It was engaged precisely in what came later to be called “central banking”.
Despite its successes, the bank met political opposition that gathered force with partisan changes taking place in the country. In large part this opposition was based on the very restraints the bank imposed on private, State-chartered banks; this was also seen as an affront to States’ rights, and the bank’s federal charter was called unconstitutional. In 1811, when the 20-year charter expired, renewal was politically impossible. Its officers acknowledged reality and successfully sought a state charter in New York. Think about these arguments as you consider the current shift in power from the Federal Reserve system (completely private) to the U.S. Treasury Department.
I hope this little bit of history helps you to put these two Amendments into their historical context. It may also help you to understand the roots of many issues that cause political division in our current era.
TEXT AND COMMENTARY
The Eleventh Amendment was adopted to overrule the U.S. Supreme Court’s decision in Chisholm v. Georgia (1793). In that case, the Supreme Court had held that states did not enjoy sovereign immunity from suits made by citizens of other states in federal court. The Eleventh Amendment limits the power of federal courts to hear lawsuits against State governments brought by the citizens of another state or the citizens of a foreign country. The Supreme Court has also interpreted the Eleventh Amendment to bar federal courts from hearing lawsuits instituted by citizens of the state being sued and lawsuits initiated by the governments of foreign countries. For example, the state of New York could invoke the Eleventh Amendment to protect itself from being sued in federal court by its own residents, residents of another state, residents of a foreign country, or the government of a foreign country. This Amendment was written to articulate a balance between State sovereignty and Federal oversight in cases of lawsuits against States.
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
The catalyst for the Twelfth Amendment was the U.S. Presidential election of 1800. It replaced the procedure provided in Article II, Section 1, Clause 3, by which the Electoral College originally functioned. Under the original text of the Constitution, only landowning white males could run for office and vote, and the voting privilege itself was restricted in presidential elections to slates of electors who would effectively choose the country’s President and Vice President. The framers had viewed political parties with suspicion, but by the 1790s party politics had taken root and the interests of party organizations had begun to exert influence. In 1796 the Federalist Party supported John Adams for President, but it split its vote such that the Democratic-Republican candidate, Thomas Jefferson, earned the second greatest number of votes, thereby securing the post of Vice President. To forestall this situation from occurring again, each party sought to ensure that all of its own electors were united. In 1800, this produced an electoral college tie between Jefferson, the Democratic-Republican candidate for President, and Aaron Burr, the party’s candidate for Vice President. Under the rules, the electors voted for two candidates without specifying who should hold which office. The election ultimately went to the House of Representatives, where Jefferson was elected President.
These elections revealed both the growing influence of political parties and a serious deficiency in the presidential election process. The effect of the Twelfth Amendment was to require separate votes for Presidential and Vice-Presidential candidates. Should an election result in a tie, the House of Representatives would choose from among the top three electoral vote recipients on the basis of one vote per State. The Twelfth Amendment came into effect with the 1804 election.
An Elector cannot vote for both a President and a Vice President coming from the same state as the Elector, and a Vice-Presidential candidate must meet the same eligibility requirements as a Presidential candidate. If the Electors cannot choose a President, the House has a process to do so. If the Electors cannot choose a Vice President, the Senate has a process to do so. If no President has been chosen by March 4th following Election Day, the Vice President becomes President.
The Electors shall meet in their respective states and vote by ballot for President and Vice-President, one of whom, at least, shall not be an inhabitant of the same state with themselves; they shall name in their ballots the person voted for as President, and in distinct ballots the person voted for as Vice-President, and they shall make distinct lists of all persons voted for as President, and of all persons voted for as Vice-President, and of the number of votes for each, which lists they shall sign and certify, and transmit sealed to the seat of the government of the United States, directed to the President of the Senate; — The President of the Senate shall, in the presence of the Senate and House of Representatives, open all the certificates and the votes shall then be counted; — The person having the greatest number of votes for President, shall be the President, if such number be a majority of the whole number of Electors appointed; and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice. And if the House of Representatives shall not choose a President whenever the right of choice shall devolve upon them, before the fourth day of March next following, then the Vice-President shall act as President, as in case of the death or other constitutional disability of the President.– The person having the greatest number of votes as Vice-President, shall be the Vice-President, if such number be a majority of the whole number of Electors appointed, and if no person have a majority, then from the two highest numbers on the list, the Senate shall choose the Vice-President; a quorum for the purpose shall consist of two-thirds of the whole number of Senators, and a majority of the whole number shall be necessary to a choice. But no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.
Election Day, 2020 will be here in just about three weeks. Some say that the deep divisions in our nation may make this election the first in which Congress is involved in the electoral process. However events unfold, it is good to know that there are steps to ensure that national leadership continues and that it is determined in such a way that all States continue to have a say.