Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Anne Mayhew, an American Institutionalist and Economic Historian:
As I remember Curtis Nettels' book, THE EMERGENCE OF A NATIONAL ECONOMY was quite good on the era of the Articles and the difficulties involved.

In some ways the story of the first constitution, the Articles of Confederation, is similar to the current EU and euro mess in that the "central government" could request payments but could not levy taxes on its own and was otherwise without significant powers. States became competitive in tariff policies and the central government was without power to honor its debts after the Revolution, much less to pursue any national policies.  In other ways the story was very different because the economies of the various states and regions were so much less integrated due to slow transportation and lack of communication.  A strong government of the sort that we are familiar with today was simply not possible.  Also, banking was in its infancy so that banking control was not a major issue.  (Of course, banking did become a big issue with the First and Second Banks of the U.S. but in the absence of peripheral American involvement in the Napoleonic Wars, the 2nd Bank probably would not have been created and after it ceased to exist in the 1830s, the U.S. did without a central bank, for better and for worse, for several decades.)

The bigger story to me is that railroads, steamships, the telegraph and telephone brought about practical integration throughout the 19th century that made greater legal and administrative integration imperative.  So long as the notes of the many state chartered banks that developed in the early 19th century circulated within limited geographic areas, the effects of the failure of one bank was of limited national importance.  By mid-19th century geographic
isolation was becoming sufficiently eroded so that when finance for the Civil War became important, the National Banking Act also tackled (though not very well) the need for more national control.  And so on through the creation of the FED, the reforms of the 1930s and on.

A similar story can be told for the commerce clause of the Constitution.  It may have created a national economy in a legal sense when the Constitution was
adopted but it took the railroad and steamship to make it a reality and to produce the conflicts that led to the interpretations that gave it meaning.  And that story continues today as well.

I would say, however, that the technological realities of today make the kind of loose confederation that the EU has attempted unworkable. [I might even make the same argument about the IMF but that is another story.]  But, I would be careful in saying that the abortive effort at loose confederation under the Articles of Confederation in the American past showed a similar unworkability.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Sep 24th, 2011 at 02:18:43 PM EST
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