Economic Interests and the Adoption of the United States Constitution

Robert A. McGuire, University of Akron

The adoption of the Constitution greatly strengthened the national government at the expense of the states. This article examines how our Founding Fathers designed the Constitution, examining findings on the political and economic factors behind the provisions included in the Constitution and its ratification. The article discusses the views of Charles Beard and his critics and focuses on recent quantitative findings that explain the making of the Constitution. These findings suggest that personal interests of the Founding Fathers, as well as constituents’ interests, played an important role in drafting the Constitution. They also suggest that economic and other interests played important roles at the ratifying conventions.

The Adoption of the Constitution

During the summer of 1787, fifty-five men attended the constitutional convention in Philadelphia that drafted the Constitution of the United States. In less than a year after the convention finished, New Hampshire, on June 21, 1788, became the ninth state to have ratified the Constitution that was drafted. As a result, Congress declared the Constitution to be in force beginning March 4, 1789, because ratification by only nine of the thirteen states was required for the Constitution to be considered adopted by the ratifying states. The Constitution thus replaced the Articles of Confederation and Perpetual Union as the law of the land. Under the Articles, which had been in effect only since 1781, the American political system consisted of a loose confederation of largely independent states with a very weak central government. Under the Constitution, the Articles were replaced with a political system that consisted of a powerful central government with, ultimately, little state sovereignty.

Fiscal and Economic Problems under the Articles of Confederation

Under the Articles of Confederation, the central (federal) government had little or no power to raise revenues and had difficulty repaying its domestic and foreign debt. The fiscal problems under the Articles were twofold. First, the primary source of revenues to fund the federal government was requisitions to the state governments asking them to send to the federal government state-collected tax revenues. Yet the Articles did not include any enforcement mechanism to ensure that the state governments would send in the full amount of the funds requested of them, which they never did. Second, each state had a single vote in the federal Congress and the unanimous consent of the thirteen states was required for the Congress to enact any federal taxes. A single state could thus block federal tax legislation. This de facto veto power on the part of each state created substantial decision-making costs for Congress and prevented proposed federal imposts (import duties) from being enacted under the Articles. The central government also lacked the legal power to enforce uniform commercial or trade regulations – either at home or abroad – that might have been conducive to the development of a common economic trading area. Likewise, the Confederation government possessed uncertain authority to deal with foreign powers. Its problems raising revenues and repaying existing debts created uncertainty about the financial viability of the federal government. Although state and local interference in trade was not a major problem at the time, many commercial interests apparently feared that local and state barriers to trade could develop in the future under the Articles of Confederation. Western landowners also were often impatient with the federal government because of its inability to establish order on the frontiers.

How the Constitution Strengthened the Power of the Central Government

Under the Constitution, the power to tax, along with the authority to settle past federal debts, was firmly delegated to the central (national) government, improving the central government’s financial future as well as improving capital markets (the markets for funds). The Constitution, unlike the Articles, required only a simple majority vote of the representatives in both chambers of the national Congress to enact tax legislation. There were, and are, checks on simple majority voting though. The president can veto congressional legislation and a two-thirds vote in Congress can override the presidential veto. But neither of these constraints on majority voting creates the magnitude of decision-making costs that unanimous voting under the Articles created. The assignment of the sole right “To coin money, [and] regulate the value thereof,” to the national government and the prohibition on states from emitting “bills of credit” (paper money) also were expected to improve capital markets. A national judiciary was created under the Constitution and the power to make treaties with foreign nations was firmly delegated to the central government.

How a Strong Central Government Affected the Economy

With respect to interstate trade, Gary M. Walton and James F. Shepherd (1979) suggest “the possibility of such barriers [to interstate commerce] loomed as a threat until the Constitution specifically granted the regulation of interstate commerce to the federal government” (pp. 187-88). Walton and Shepherd conclude that the most important changes associated with the Constitution “were those changes that strengthened the framework for protection of private property and enforcement of contracts” (pp. 187-88). These changes were most important because they increased the benefits of exchange (the cornerstone of a market economy) and created incentives for individuals to specialize in economic activities in which they had a particular advantage and then engage in mutually advantageous exchange (trade) with individuals specializing in other economic activities. Specific provisions in the Constitution that helped to increase the benefits of exchange were those that prohibited the national and state governments from enacting ex-post-facto laws (retroactive laws) and a provision that prohibited the state governments from passing any “law impairing the obligation of contracts.” These prohibitions were important to the development of a market economy because they constrained governments from interfering in economic exchange, making the returns to economic activity more secure.

Because the economies of the thirteen states were not highly interconnected in the 1780s, the immediate consequences for the nation of adopting the Constitution were not at all large. But the change in our fundamental political institution was ultimately to have a profound influence on our nation’s history, because the Constitution over time became the foundation of the supremacy of the national government in the United States.

The “Important Question”: How Did Constitutional Change Come About?

How did this fundamental change come about? Why did our nation’s Founding Fathers replace the Articles of Confederation, our first “constitution,” with the United States Constitution? In defending the Constitution in late 1787, Alexander Hamilton observed “It has been frequently remarked that it seems to have been reserved to the people of this country . . . to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force” (Hamilton, Jay and Madison, 1937, No. 1, p. 3). To paraphrase Hamilton: How did “this country” decide “the important question”?

Since the middle of the nineteenth century, hundreds of scholars have studied and debated the possible explanations for such an important change in the fundamental political institution of our nation. Many historians have concluded that the Constitution was drafted and adopted as a result of a consensus that the Articles of Confederation were fatally flawed. Other scholars have argued that the limitations of the Articles could have been eliminated without fundamentally altering the balance of power between the states and the central government. Others have suggested that the adoption of the Constitution was the product of conflict between various economic and financial interests within the nation, a conflict between those who, because of their interests, wanted a strengthened, more powerful national government and those who, because of their interests, did not.

Charles Beard’s “Economic” Interpretation

In 1913, Charles A. Beard (1913 [1935]) consolidated various scholarly views of the Constitution and, in the process, offered what became identified as “the” economic interpretation of the Constitution. Beard (pp. 16-18) argued that the formation of the Constitution was a conflict based upon competing economic interests – interests of both the proponents and opponents. In his view, the Federalists, the founders who supported a strong, centralized government and favored the Constitution during its drafting and ratification, were individuals whose primary economic interests were tied to personal property. They were mainly merchants, shippers, bankers, speculators, and private and public securities holders, according to Beard (pp. 31-51). The Anti-federalists, the opponents of the Constitution and supporters of a more decentralized government, were individuals whose primary economic interests were tied to real property. Beard (pp. 26-30) contended these opponents consisted primarily of more isolated, less-commercial farmers, who often were also debtors, and northern manorial planters along the Hudson River. However, Beard (pp. 29-30) maintained that many southern slaveowning planters, who held much of their wealth in personal property, had much in common with northern merchants and financiers, and should be included as supporters of the Constitution.

Beard (pp. 31-51) claimed that support for his argument could be found in the economic conditions prevailing during the 1780s. As a result, he suggested that the primary beneficiaries under the Constitution would have been individuals with commercial and financial interests – particularly, those with public securities holdings who, according to Beard, had a clause included in the Constitution requiring the assumption of existing federal debt by the new national government. Commercial and financial interests also would benefit because of more certainty in the rules of commerce, trade, and credit markets under the Constitution. More isolated less-commercial farmers, debtors, paper money advocates, and the northern planters along the Hudson would be the primary beneficiaries under the status quo. They would have had greater ability at the state level with decentralized government to avoid heavy land taxation – levied to pay off the public debt – and to promote paper money and debt moratorium issues that advanced their interests. Consequently, they opposed the Constitution.

Criticisms of Beard’s View: Brown and McDonald

Beard’s thesis soon emerged as the standard historical interpretation and remained so until the 1950s, when it began to face serious scholarly challenges. The most influential and lasting of the challenges were those by Robert E. Brown (1956) and Forrest McDonald (1958). Robert E. Brown’s (1956) critique dismisses an economic interpretation as utterly without merit, attacking Beard’s conclusions in their entirety. Brown counters Beard’s views that eighteenth-century America was not very democratic, that the wealthy were strong supporters of the Constitution, and that those without personal property generally opposed the Constitution. Brown examines the support for the Constitution among various economic and social classes, the democratic nature of the nation, and the franchise within the states in eighteenth-century America. He maintains that Beard was plain wrong, eighteenth-century America was democratic, the franchise was common, and there was widespread support for the Constitution.

In contrast, Forrest McDonald’s (1958) study empirically examines the wealth, economic interests, and the votes of the delegates to the constitutional convention in Philadelphia that drafted the Constitution in 1787 and of the delegates to the thirteen ratifying conventions that considered its adoption afterward. McDonald’s primary interest is in testing Charles A. Beard’s thesis. Based on his evidence collected from the Philadelphia convention, McDonald (1958, p. 110) concludes, “anyone wishing to rewrite the history of those proceedings largely or exclusively in terms of the economic interests represented there would find the facts to be insurmountable obstacles.” With respect to the ratification of the Constitution, McDonald (1958. p. 357) likewise concludes, “On all counts, then, Beard’s thesis is entirely incompatible with the facts.”

Neither Brown nor McDonald, however, offered any modern rigor (no formal or statistical analysis of any type) in testing the behavior of the Founding Fathers during the drafting or ratification of the Constitution. Yet Brown and McDonald are still credited by many with delivering the fatal blows to Beard’s economic interpretation of the Constitution. (Examples of economists, historians, political scientists, and legal scholars who credit Brown and McDonald, or both, with proving Beard incorrect include Buchanan and Tullock (1962), Wood (1969), Riker (1987), and Ackerman (1991).

The New Quantitative Approach

Recently economic historians have begun to reexamine the behavior of our Founding Fathers concerning the Constitution. This reexamination, which employs formal economics and modern statistical techniques, involves the application of an economic model of voting behavior during the drafting and ratification processes and the collection and processing of large amounts of data on the economic and financial interests and other characteristics of the men who drafted and ratified the Constitution. The findings of this reexamination, which have become the accepted view among quantitative economic historians today (Robert Whaples, 1995), provide answers to many heretofore-unresolved issues involving the adoption of the Constitution.

What factors explain the behavior of George Washington, James Madison, Alexander Hamilton, and the other Founding Fathers regarding the Constitution? Why did they include a prohibition on state paper-money issues in the Constitution? Why did they decide to allow for duties (taxes) on imports but not on exports? Why did they fail to adopt a clause giving the national government an absolute veto over state laws? Were the economic, financial, and other interests of the founders significant factors in their support for the Constitution, or their support for specific clauses in it, or their support for ratification? Were, for example, the slaveholdings of the founders a significant factor in their behavior? Were the founders’ commercial activities significant factors? Were the private or public securities holdings significant factors?

The Rational Choice Model

The critical reexamination of the adoption of the Constitution, which began in the mid-1980s (Robert A. McGuire and Robert L. Ohsfeldt, 1984), offers an economic model of the founders that is based on rational choice and methodological individualism, and employs formal statistical techniques. Methodologically, such an approach analyzes the choices of the individuals involved in the drafting and ratification of the Constitution. The object of analysis is the behavior of the individual Founding Fathers not the behavior of some social class or group. The economic model presumes that a founder was motivated by self-interest to maximize the satisfaction he received from the choices he made at the constitutional convention attended. But neither self-interest nor economic rationality implies that a founder was concerned only with his financial or material well-being. The economic model indicates that a founder weighed the benefits (the satisfaction) and the costs (the sacrifice) to himself of his actions, making those choices that were in his self-interest, broadly defined to include any pecuniary and non-pecuniary benefits and costs of his choices. This is the presumption of rational choice.

Personal and Constituent Interests

More precisely, the economic model is that a founder acted individually to maximize the net benefit he received from his votes. A founder would have voted in favor of a particular issue at Philadelphia, or in favor of ratification, if he expected the net benefit he would receive would have been greater if the issue, or the Constitution, was adopted. Because a founder was from a particular state or locality, the founder represented the citizens (the constituents) of the state or locality in which he resided as well as represented his own personal interests at Philadelphia or a ratifying convention. The benefit of a founder’s vote was affected directly by the anticipated impact of his vote on his personal interests and indirectly by the anticipated impact of his vote on his constituents’ interests. A founder’s personal interests depended on his own economic interests and ideology and his constituent interests depended on the economic interests and ideologies of his constituents. The interests may have been purely economic (pecuniary interests, such as the ownership or value of specific economic assets) or ideological (non-pecuniary interests, such as beliefs about the moral correctness of a particular form of government). The potential effect of personal interests on a founder’s vote is straightforward; the founder would have benefited or been harmed directly. The potential effect of constituents’ interests on a founder’s vote is through the impact of his vote on the potential for maintaining his decision-making authority, continuing to represent his constituents.

Statistical Tests

To quantitatively test the economic model, the founders’ observed votes on a particular issue at Philadelphia or on ratification are statistically related to measures of the economic interests and ideologies of the founders and their constituents. The statistical technique employed is called multivariate logistic regression. Estimation of a logistic regression model is designed to determine the marginal or incremental impact of each explanatory variable – the measures of the economic interests and ideologies – on the dependent variable – the “yes” or “no” votes on a particular issue at Philadelphia or ratification. The estimated logistic regression produces for each explanatory variable an estimated coefficient that captures the influence (its direction and magnitude) of the explanatory variable on the probability of a founder voting in favor of the issue being estimated, holding the influence of all other explanatory variables constant. The benefit of this approach is that each potential factor, each explanatory variable, affecting a vote is examined separately from the influence of the other factors, while at the same time, controlling for the influence of the other factors. This reduces to a minimum the incidence of spurious relationships between any particular factor and a vote. For example, if the relationship between the vote on an issue and the founders’ slaveholdings is examined in isolation, a positive correlation may be indicated. But if other interests are taken into account (for example, the founders’ public securities holdings), the correlation with slaveholdings could change and, in fact, be negative.

The modern economic history of the Constitution indicates that Charles Beard’s economic interpretation has not yet been refuted. The issues, in fact, have not been heretofore tested. Earlier historical studies did not have the benefit of modern economic methodology and systematic statistical analysis. As such, their conclusions cannot pass scientific scrutiny. Major advances in both economic thinking about political behavior and statistical techniques have taken place in the last thirty or so years. These modern methods allow for a systematic quantitative analysis of the voting behavior of the founders employing, among other data and evidence, the types of non-quantitative data about the founders that historians collected decades ago but never systematically analyzed. They failed to systematically analyze such data and evidence because the necessary techniques did not exist and because they generally were not trained in quantitative analysis.

Findings of the Quantitative Approach: A New Economic Interpretation of the Constitution

One unambiguous conclusion can be drawn from the recent quantitative studies: There is a valid economic interpretation of the Constitution. The idea of self-interest can explain the design and adoption of the Constitution. This does not mean that either the framers or the ratifiers of the Constitution were motivated by a greedy desire to “line their own pockets” or by some dialectic concept of “class interests.” Nor does it mean that some “conspiracy among the founders” or some fatalistic concept of “economic determinism” explains the Constitution. Nor does it mean that the founders were completely selfish in a purely financial or material sense. It does mean that the pursuit of one’s “interests” both in a narrow, pecuniary (financial) sense and a broader, non-pecuniary sense can explain the drafting and ratification of the Constitution. (See McGuire (2001).)

The recent quantitative studies contend that the Constitution was neither drafted nor ratified by a group of disinterested and nonpartisan demigods motivated only, or even primarily, by high-minded political principles to promote the nation’s interest. The fifty-five delegates to the Philadelphia convention that drafted the Constitution during the summer of 1787 were motivated by self-interest, in a broad sense, in choosing its design. Quantitative research suggests that these framers of the Constitution can be seen as rational individuals who were making choices in designing the fundamental rules of governance for the nation. In doing so, they rationally weighed the expected costs and benefits of each clause they considered. They included a particular clause in the Constitution only if they expected the benefits from its inclusion to exceed the costs they expected to result from inclusion. Likewise, the more than 1,600 delegates who participated in the thirteen state ratifying conventions, which took place between 1787 and 1790 to consider adopting the Constitution, can be viewed as rational individuals who were making the choice to adopt the set of rules embodied in the Constitution as drafted at the Philadelphia Constitutional Convention. In doing so, they rationally weighed the expected costs and benefits of their decision to ratify. They voted to ratify only if the benefits they expected from adoption of the set of rules embodied in the Constitution exceeded the costs they expected to result from that set of rules. If not, they voted against ratification.

Contrary to earlier views that the founders’ specific economic or financial interests cannot be principally identified with one side or the other of an issue, the modern evidence indicates that their economic and financial interests can be so identified. When specific issues arose at the Philadelphia convention that had a direct impact on important economic interests of the founders, their economic interests, even narrowly defined, significantly influenced the specific design of the Constitution, and the magnitudes of the influences were often quite large. The types of economic interests that mattered for the choice of specific issues were those that were likely to have accounted for a substantial portion of the overall wealth or represent the primary livelihood of the founders.

Even when the founders were deciding on the general issue of the basic design of the Constitution to strengthen the national government, economic and other interests significantly influenced them. In terms used in constitutional political economics, even when the founders were making fundamental “constitutional” choices rather than more specific-interest “operational” choices, the modern evidence indicates their choices were still consistent with self-interested and partisan behavior. In terms used among legal scholars, even when the founders were involved in the “higher lawmaking” of the “constitutional founding,” they were still self-interested and partisan. Partisan behavior explains even this “constitutional moment.” However, the modern evidence does indicate that fewer economic and financial interests mattered for the basic design of the Constitution than for specific-interest aspects of it.

Specific Empirical Findings from the Constitutional Convention and the Ratifying Conventions

Financial Securities

The financial securities holdings of the founders often had a significantly large influence on their behavior and founders with such financial assets were often aligned with each other on the same issue. These findings are in contrast to a strongly held view among many historical scholars that the founders’ financial securities holdings had little or no influence on their behavior or that these founders were not aligned on common issues. For a small number of the issues considered at the Philadelphia convention, the founders’ financial securities holdings mattered. Moreover, during the ratification process, the financial securities holdings had a major influence. Specifically, delegates with private securities holdings (private creditors) or public securities holdings (public creditors), and especially delegates with large amounts of public securities holdings (generally, Revolutionary War debt), were significantly more likely to vote in favor of ratification.

This does not mean that all securities-holding delegates voted together at the constitutional conventions. What it does mean is that the holdings of financial securities, controlling for other influences, significantly increased the probability of supporting some of the issues at the Philadelphia convention, particularly those issues that strengthened the central government (or weakened the state governments). For example, one issue that the securities holders were more likely to have supported was a proposal to absolutely prohibit state governments from issuing paper money. This means that the securities holders (creditors) at the convention desired to constrain the states’ ability to inflate away the value of their financial holdings through expansion of the supply of state paper money. Not surprisingly, the twelve founders at Philadelphia with private securities holdings voted unanimously in favor of the prohibition. Likewise, those with public securities holdings were significantly more likely to have favored it. The evidence indicates that a founder at Philadelphia with any public securities holdings, who at the same time possessed the average values of all other interests represented at the convention, was 26.5 percent more likely to vote yes than was an otherwise average delegate with no public securities holdings. With respect to the ratification process, a delegate’s financial securities holdings, controlling for other influences, significantly increased his probability of voting in favor of ratification at his state convention. An implication that can be drawn from this evidence is that to the extent some delegates with financial securities holdings did not support strengthening the central government, or did not vote for ratification, it was the effects of their other interests that influenced them to vote “no.”

Slaveowners

The view of many historical scholars is that delegates who were slaveowners and those who represented slave areas generally supported strengthening the central government and supported ratifying the Constitution. While this may be correct as far as it goes, the issue of the influence of slaveholdings on the behavior of the Founding Fathers, as is the influence of any factor, is actually more complex. The quantitative evidence indicates that, although a majority of the slaveowners and a majority of the delegates from slave areas, may have, in fact, voted for issues strengthening the central government or voted for ratification, the actual influence of slaveholdings or representing slave areas per se was to significantly decrease a delegate’s likelihood of voting for strengthening the central government or voting for ratification.

As with the findings for financial securities holdings, this does not mean that all slaveholding delegates or all delegates from slave areas voted together at the various constitutional conventions. What it does mean for the Philadelphia constitutional convention is that slaveholdings, controlling for other influences, decreased the probability of voting at the convention for issues that would have strengthened the central government. For example, one issue that slaveholders at Philadelphia were less likely to have supported was a proposal that would have given the national legislature an absolute veto over state laws, which would have greatly strengthened the central government. This means that if the national veto had been put into the Constitution at Philadelphia, which it was not, the national Congress, especially if it had a majority of non-slaveholding representatives, could have vetoed state laws concerning slavery, for example. This would have given the national Congress the power to limit the economic viability of slavery, if it so chose. Not surprisingly, the evidence suggests that a delegate at Philadelphia who owned the most slaves at the convention, for example, and had average values of all other interests, was one-twelfth as likely to have voted yes on the national veto than an otherwise average delegate with no slaveholdings. Likewise, during the ratification process, slaveholdings, controlling for other influences, significantly decreased the probability of voting in favor of ratification at the state ratifying conventions. An implication from this evidence is that in the case of the slaveholding delegates and the delegates from slave areas, who did vote to strengthen the central government or did vote for ratification, it was the effects of their other interests that influenced them to vote “yes.”

Commercial Interests

The modern evidence confirms that the framers and the ratifiers of the Constitution, who were from the more commercial areas of their states, were likely to have voted differently from individuals from the less commercial areas. Delegates who were from the more commercial areas were significantly more likely to have voted for clauses in the Constitution that strengthened the central government and were significantly more likely to have voted for ratification in the ratifying conventions. The Founding Fathers who were from the more isolated, less commercial areas of their states were significantly less likely to support strengthening the central government and significantly less likely to vote for ratification.

Local and State Office Holders

But surprisingly, the findings for the ratification of the Constitution strongly conflict with the nearly unanimous prevailing scholarly view that the localism and parochialism of local and state officeholders were major factors in the opposition to the Constitution’s ratification. The modern quantitative evidence, in fact, indicates that there were no significant relationships whatsoever between any measure of local or state office holding and the ratification vote in any ratifying convention for which the data on officeholders were collected.

The Founders Mattered: How the Constitution Would Have Been Different If Men with Different Interests Had Written It

One of the more important findings of the modern approach to the adoption of the Constitution is that it makes evident the importance to historical outcomes of the specific individuals involved in any historical process. The modern evidence attests to the paramount importance of the specific political actors involved in the American constitutional founding. The estimated magnitudes of the influences of many of the economic, financial, and other interests on the founders’ behavior are large enough that the findings suggest the product of the constitutional founding most likely would have been dramatically different had men with dramatically different interests been involved.

For example, had all the founders at Philadelphia represented a state with a population the size of the most populous state, and possessed the average values of all other interests represented at Philadelphia, the Constitution most certainly would have contained a clause giving the national government an absolute veto over all state laws. If the national veto had been put into the Constitution, which it was not, and representation in the national Congress was based on the population of a state, which it was and is in the House of Representatives, rather than each state possessing an equal vote as under the Articles, representatives from the most populous states could have controlled legislative outcomes. This would have given “large” states potential control over the “small” states. As might be expected, the modern findings indicate that the predicted probability of voting yes on the national veto for a founder at Philadelphia who represented the most populous state and possessed the average values of all other interests is 0.837. But the predicted probability for an “average” delegate, one with the average values of all measured interests including state population, is only 0.379.

Or, had all the founders at Philadelphia represented a state with the heaviest concentration of slaves of all states, and possessed the average values of all other interests, the Constitution likely would have contained a clause requiring a two-thirds majority of the national legislature to enact any commercial laws. If the two-thirds majority requirement had been put into the Constitution, which it was not, it would have been more difficult to enact commercial laws, laws that could have regulated the slave-based export economies of the southern states. The two-thirds requirement would have made it much more difficult for a future northern majority to impact negatively on the southern economy through commercial regulation. Again, as might be expected, the modern findings indicate that the predicted probability of a yes vote on the two-thirds issue for an otherwise “average” founder who represented a state with the heaviest concentration of slaves is 0.914; but it is only 0.206 for an “average” founder. The Constitution also might not have contained a clause prohibiting the national legislature from enacting export duties (taxes) had there been no delegates with merchant interests at the Philadelphia convention; there might have been only a fifty-fifty chance of passing the prohibition. The predicted probability of a yes vote to prohibit national-level export duties for an otherwise “average” delegate without merchant interests is 0.505. But it is 0.790 for an otherwise “average” delegate with merchant interests, and nine of the Founding Fathers at the Philadelphia convention had merchant interests.

Interests of the Ratifiers Mattered

With respect to ratification, the quantitative evidence indicates that the magnitudes of the influences of the economic and other interests on the ratification votes were even more considerable than for the Philadelphia convention. The outcome of ratification appears to have depended even more on the specific individuals involved. The estimated influences were considerable enough that they suggest the outcome of ratification almost certainly would have been different had men with different interests attended the ratifying conventions. Had there been, among the ratifiers, fewer merchants, more debtors, more slaveowners, more delegates from the less-commercial areas, or more delegates belonging to dissenting religions, there would have been no ratification of the Constitution, at least no ratification as the Constitution was written. For example, at the Massachusetts ratifying convention, the predicted probability of a yes vote on ratification for an otherwise “average” delegate who was a debtor is only 0.175 but if the same delegate was not a debtor it is 0.624. For an otherwise “average” Baptist, the predicted probability of a yes vote is only 0.162 but if the Massachusetts delegate was not a Baptist it is 0.657. At the North Carolina ratifying convention, the predicted probability of a yes vote for an otherwise “average” delegate who was not a merchant is 0.175 but if the same delegate was a merchant it is 0.924. For an otherwise “average” North Carolina delegate from the least commercial areas in the state, the predicted probability of a yes vote is a trivial 0.002 but if the delegate was from the most commercial areas in the state it is 0.753. At the Virginia ratifying convention, the predicted probability of a yes vote for an otherwise “average” slaveowner is 0.451 but if the otherwise “average” delegate was not a slaveowner it is 0.837. Differences of these magnitudes suggest that ratification of the Constitution strongly depended on the specific economic, financial, and other interests of the specific individuals who attended the state conventions.

Broader Implications for Constitution Making

Overall, the modern approach to explaining the design and adoption of the Constitution suggests that it is unlikely that any real world constitution would ever be drafted or ratified through a disinterested and nonpartisan process. Because actual constitutional settings will always involve political actors who possess partisan interests and who likely will be able to predict the consequences of their decisions; partisan interests will influence constitutional choice. The economic history of the drafting and ratification of our nation’s Constitution makes it hard to envision any actual constitutional setting, including any setting to reform existing constitutions, in which self-interested and partisan behavior would not dominate. The modern evidence suggests that constitutions are the products of the interests of those who design and adopt them.

The Statistical Approach versus the Traditional Approach

Much of the differences between the modern evidence and the evidence found in the traditional historical literature is a matter of the approach taken, as well as the questions asked, rather than a matter of arriving at fundamentally different answers to identical questions. Many studies in the traditional literature question an economic interpretation of the Constitution because they question whether the Constitution is strictly an economic document designed solely to promote specific economic interests. Of course, it was not designed merely to promote economic interests. Many others question an economic interpretation because they question whether the founders were really attempting to solely, or even to principally, enhance their personal wealth, or the wealth of those they represented, as a result of adopting the Constitution. Of course, the founders were not. Others question an economic interpretation because they question whether the founders were really involved in a conspiracy to promote specific economic interests. Of course, they were not. Others question an economic interpretation because they question whether political principles, philosophies, and beliefs can be ignored in an attempt to understand the design of the Constitution. Of course, they cannot. In contrast, the modern economic history of the Constitution does not take any of these positions.

Yet the conclusions drawn from the modern evidence on the role of the economic, financial, and other interests of the founders are fundamentally different from the conclusions found in the traditional literature. The primary reason is that the statistical technique employed in the modern reexamination yields estimates of the separate influence of a particular economic interest or other factor on the founders’ behavior (how they voted) taking into account, and controlling for, the influence of other interests and factors on the founders’ behavior. The traditional literature nearly always draws conclusions about how the majority of the delegates with a particular interest – for example, how the majority of public securities holding delegates – voted on a particular issue, without regard to the influence of other interests and factors on behavior and without any formal statistical analysis. Prior studies, consequently, do not control for the confounding influences of other factors when drawing conclusions about any particular factor. As a result, the modern reexamination and the prior studies will often reach different conclusions about the influence of the same economic interest or other factor on the founders’ behavior. The conclusions differ because in a sense the studies are asking different questions. The modern economic history of the Constitution asks: How did a particular economic interest (for example, slaveholdings) per se influence the founders’ voting behavior taking into account all the influences of other factors on those founders’ voting behavior (for example, the slaveholding founders)? Prior historical studies more simply ask: How many of the founders with a particular economic interest (for example, founders with slaveholdings) voted the same on a particular issue?

The modern approach to the adoption of the Constitution may be disquieting to individuals of all political persuasions. It may be personally difficult for many to embrace. The evidence suggests motivating factors and intent on the part of our Founding Fathers that may be distasteful to conservatives, moderates, and liberals alike, to those on the left, in the middle, and on the right. The methodology employed, rational choice and methodological individualism, will be acceptable to some. But methodological individualism and a presumption of rational choice are likely to be troublesome to others. Some may have difficulty because an economic approach to the adoption of the Constitution appears “too calculating.” To some, it may appear “too deterministic” or “too economic.” Yet it actually is a dispassionate, almost antiseptic, view of the founders. It does not offer a special approach to the behavior of the founders because of the unique position reserved for them in our nation’s history. It treats them as it would any political actor. The modern approach represents an impartial, disinterested explanation of the behavior of our Founding Fathers, employing what are today commonly accepted techniques of economic and statistical analysis. Yet many individuals tend to look at our Founding Fathers through rose-colored glasses. They often place the founders on a pedestal and treat them as demigods. Many contend that the founders were motivated primarily, if not solely, by high-minded political principles “To Form a More Perfect Union.” The modern approach takes a broader view.

Annotated References

Ackerman, Bruce. We the People, two volumes. Cambridge, MA: The Belknap Press of Harvard University Press, 1991.

A view of the American constitutional founding by an eminent legal scholar. Ackerman offers a “dualist” theory of the founders’ politics in an attempt to recover the “true” revolutionary character of the founders, contending they were “dualist democrats.” Given this dualism, it is claimed that the founders behaved differently during “constitutional politics” than during “normal politics.” The founders thus were able to suspend their self-interests during the framing of the Constitution and promote instead the “rights of citizens and the permanent interests of the community.” Dismisses an economic interpretation as not serious. Indicates how a modern legal scholar thinks about the issues. Not a quantitative study.

Beard, Charles A. An Economic Interpretation of the Constitution of the United States. New York, NY: Macmillan Publishing Company, 1913 (1935).

A must read. The classic study of economics and the Constitution. Beard consolidated existing scholarly views and, in the process, his study became identified as “the” economic interpretation of the Constitution. Argues that the adoption of the Constitution was based on a conflict among competing economic interests. Contends that the founders who supported the strong, centralized government in the Constitution were merchants, shippers, bankers, land speculators, or private and/or public securities holders. Contends that the opponents, who supported a more decentralized government, represented agrarian interests and were less-commercial farmers, who often were also debtors, and/or northern planters along the Hudson. Contains little empirical evidence. Offers no formal or quantitative analysis.

Brown, Robert E. Charles Beard and the Constitution: A Critical Analysis of An Economic Interpretation of the Constitution. Princeton, NJ: Princeton University Press, 1956.

The first significant blow to Beard after nearly a half-century of acceptance. Dismisses an economic interpretation as utterly without merit, attacking its conclusions in their entirety. Brown maintains that eighteenth-century America was democratic, the franchise was common, and there was widespread support for the Constitution, claiming that his evidence counters Beard’s contention about the lack of democracy and the narrow support for the Constitution. Brown accuses Beard of taking the Philadelphia debates out of context, falsely editing The Federalist, and misstating facts. Not an empirical study per se. Offers no formal or quantitative analysis of the economic or financial interests of the founders.

Buchanan, James M., and Gordon Tullock. The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor, MI: University of Michigan Press, 1962.

An important read. The first modern attempt by economists to develop an economic theory of constitutions. The premise is that citizens rationally devise constitutions, which contain the fundamental rules of governance to be used for future collective decisions in a society. As constitutions specify the constraints placed on governments and individuals, they establish the incentive structure for the future. Buchanan and Tullock maintain that it is in the self-interest of rational citizens to adopt a constitution that contains economically “efficient” rules that promote the interests of the society as a whole rather than the interests of any particular group. Suggests that the theory is applicable to the American founding. No empirical evidence is presented, however.

Elliot, Jonathan, editor. The Debates in the Several State Conventions on the Adoption of the Federal Constitution as Recommended by the General Convention at Philadelphia, in 1787, 5 volumes. Philadelphia, PA: J. B. Lippincott, 1836 (1888).

Worth perusing. Contains a record of the speeches and debates during the ratification process at most of the state ratifying conventions, as well as numerous other documents and correspondence pertaining to the Constitution’s ratification and drafting. The original source of information on what was said at the constitutional conventions. Elliot’s “Debates” are a most illuminating source of information concerning the views of both the supporters and opponents of the Constitution. Contains a record of the debates over ratification in the ratifying conventions in Massachusetts, New York, Pennsylvania, Virginia, South Carolina, and North Carolina. Contains only small fragments of the debates in the ratifying conventions in Connecticut, New Hampshire, and Maryland. No debates from the other four state ratifying conventions are included.

Farrand, Max, editor. The Records of the Federal Convention of 1787, 3 volumes. New Haven, CT: Yale University Press, 1911.

Worth perusing. Reputably the best source of information concerning what took place at the Philadelphia Constitutional Convention in 1787. Contains copies of the official journal of the convention; James Madison’s highly respected notes of the entire proceedings; the diaries, notes, and memoranda of seven others (Alexander Hamilton, Rufus King, George Mason, James McHenry, William Pierce, William Paterson, and Robert Yates); the Virginia and the New Jersey plans of government presented at the convention; several documents recording the work of the Committee of Detail that wrote the first draft of the Constitution; a list of the framers, their attendance records, whether they signed the Constitution, and for thirteen of the sixteen non-signing framers whether the debates indicated they favored or opposed the Constitution; and hundreds of letters and correspondence of many of the framers and their contemporaries.

Hamilton, Alexander, John Jay, and James Madison. The Federalist: A Commentary on the Constitution of the United States, Being a Collection of Essays written in Support of the Constitution agreed upon September 17, 1787, by the Federal Convention. New York, NY: The Modern Library, 1937.

A must read to understand the arguments put forth by the contemporary supporters of the Constitution. Commonly referred to today as The Federalist Papers, a collection of eighty-five essays written, between October 1787 and May 1788, under the pseudonym “Publius,” in support of the Constitution during the ratification debate in New York, seventy-seven of which originally appeared in the New York press. They appeared in book form in the spring of 1788 and it was soon after revealed that Alexander Hamilton, James Madison, and John Jay collectively wrote them. Given the “Papers” were part of a political campaign to win ratification, they should not be considered unbiased interpretations of the Constitution. Yet because Hamilton and, especially, Madison, the “Father” of the Constitution, were both at the Philadelphia convention that drafted the Constitution and Jay was a renowned lawyer, The Federalist soon became the authoritative interpretation of the intention of the framers as well as the meaning of the Constitution. Still viewed as such today by many but some scholars readily acknowledge the biased political nature of their conception.

Jensen, Merrill. The Making of the Constitution. New York, NY: Van Nostrand, 1964.

A culmination of more than two decades of scholarship on constitutional history and the Confederation period. Presents an interesting view of the issues. Concludes that many of the framers “who agreed on ultimate goals differed as to the means of achieving them, and they tended to reflect the interests of their states and their sections when those seemed in conflict with such goals.” Suggests that throughout the Philadelphia convention the framers expressed their common belief that men conducting public business must be restrained from using their influence to further their private interests. Jensen’s conclusion about the controversy over Charles Beard is especially revealing, as he maintains that the founders would have been bewildered because they “took for granted the existence of a direct relationship between the economic life of a state or nation and its government.” Not a study of economic interests, however.

Jillson, Calvin C. Constitution Making: Conflict and Consensus in the Federal Convention of 1787. New York, NY: Agathon Press, 1988.

An argument for the importance of economic and other interests by a respected political scientist. Employs modern statistical techniques to describe the voting alignments among the states at the Philadelphia convention. The findings indicate that many of the long recognized voting alignments existed over many of the issues considered at Philadelphia. Concludes that issues of basic constitutional design were decided on the basis of principle, whereas specific economic and political interests decided votes involving more specific issues. Is limited though because it does not use explicit data to measure economic or other interests. Employs the historical literature to categorize the interests of the states represented at the convention and then tests whether the states voted together on particular issues, concluding that when they did, economic or political interests mattered. Employs fairly sophisticated statistical techniques. Concerns issues of interest mainly to political scientists, voting alignments and coalition formation.

McDonald, Forrest. We the People: The Economic Origins of the Constitution. Chicago, IL: University of Chicago Press, 1958.

An important read to understand the scholarly opinion of an “economic interpretation of the Constitution” among many. The most important and lasting blow to Beard after nearly a half-century of acceptance. Empirically examines the wealth and economic interests of the framers of the Constitution and ratifiers at the thirteen state conventions. Several economic interests are reported for nearly 1,300 (about three-quarters) of the founders. The votes on several issues at the Philadelphia convention and the votes at the ratifying conventions also are reported. Concludes that for the Philadelphia convention and the ratifying conventions the facts do not support an interpretation of the Constitution based on the economic interests represented. Further concludes there is no measurable relationship between specific economic interests and specific voting at the Philadelphia convention nor generally between specific economic interests and the votes at most of the ratifying conventions. Argues that an economic interpretation is more complex than that offered by Beard. Contains much empirical evidence but offers no formal or quantitative analysis. Many of its conclusions are overturned in McGuire’s To Form A More Perfect Union.

McGuire, Robert A. To Form A More Perfect Union: A New Economic Interpretation of the United States Constitution. New York, NY: Oxford University Press, (2002, in press).

Should be read by anyone interested in the modern “economic interpretation of the Constitution” and what the evidence indicates formally. The culmination of more than a decade and a half of modern research critically reexamining the adoption of the Constitution that seriously challenges the prevailing interpretation of our constitutional founding. Based on large amounts of new data on the economic, financial, and other interests of the Founding Fathers, an economic model of their voting behavior, and formal statistical analysis. The votes of the founders on selected issues at the Philadelphia convention and the votes during ratification are statistically related to measures of the founders and their constituents’ interests. The findings indicate that the economic and other interests significantly influenced the drafting and ratification of the Constitution. The magnitudes of the influences are shown to be substantial in many cases. Indicates how the Constitution would have been different had different interests been present at Philadelphia and how ratification would have been different had different interests been represented at the ratifying conventions. Attests to the importance of the specific individuals involved in historical events to historical outcomes.

McGuire, Robert A., and Robert L. Ohsfeldt. “Economic Interests and the American Constitution: A Quantitative Rehabilitation of Charles A. Beard.” Journal of Economic History 44 (1984): 509-519.

Quite readable. A useful preliminary study, reexamining the adoption of the Constitution employing the methods of modern economic history. Discusses the issues in a straightforward fashion with a minimum of technical jargon. Develops an economic model of the behavior of the Founding Fathers, discusses the data and evidence collected on the economic and other interests, and reports preliminary statistical findings on the role of economic interests in the drafting and ratification of the Constitution. The findings are dated though because of their preliminary nature. The findings have been superceded by those reported in McGuire’s To Form A More Perfect Union.

Riker, William H. “The Lessons of 1787.” Public Choice 55 (1987): 5-34.

Quite readable. Written with a minimum of technical jargon by an eminent political scientist and constitutional expert. While emphasizing a rational choice view of the founders, it places little weight on the importance of economic interests per se. Riker maintains that military threats to the status quo during the 1780s explain the adoption of a strengthened central government. Presumes the framers of the Constitution were different from modern day politicians. Their achievements could not be duplicated today because, according to Riker, they were not constrained, as so many contemporaries are, by the foolish views of their constituencies. Maintains that the framers were less partisan and more disinterested than politicians are today. The approach presumes there was near unanimity among the framers. Indicates how an important political scientist thinks about the issues. Not a quantitative study.

Rossiter, Clinton. 1787: The Grand Convention. New York, NY: Macmillan Publishing Company, 1966.

An influential study of the Philadelphia convention that maintains economic interests motivated the founders throughout their deliberations. Contends, however, that the founders were essentially “like-minded gentlemen” whose interests and political ideologies were similar. Openly rejects an economic interpretation during ratification, claiming that “Virginia ratified the Constitution . . . because of a whole series of accidents and incidents that mock the crudely economic interpretation of the Great Happening of 1787-1788.” Further concludes “the evidence we now have leads most historians to conclude that no sharp economic or social line can be drawn on a nationwide basis.” Offers no formal or quantitative analysis of the role of any economic, financial, or other interests, however.

Storing, Herbert J. The Complete Anti-Federalist, volumes 1 through 7. Chicago, IL: University of Chicago Press, 1981.

A must read for anyone seriously interested in our nation’s founding. Places the essays in The Federalist in perspective. It is not at all necessary to read the volumes in their entirety. The seven volumes are the magnum opus for the arguments of the contemporary opponents of the Constitution. Given the success of the supporters of the Constitution and the esteem given their arguments presented in The Federalist, the opponents have often been denigrated and ignored. Yet many prominent Americans in the 1780s did oppose the Constitution. Among some of the better know Anti-Federalists, and opponents of the Constitution, are Patrick Henry and George Mason of Virginia, and Melancton Smith of New York. The Complete Anti-Federalist is a superb attempt, in Storing’s words, “to make available for the first time all of the substantial Anti-Federal writings in their complete original form and in an accurate text, together with appropriate annotation.” See, especially, the introduction, contained in volume one, which gives valuable coherence to Anti-Federalist thought.

Whaples, Robert. “Where Is There Consensus among American Economic Historians? The Results of a Survey on Forty Propositions.” Journal of Economic History, 55 (1995): 139-154.

The title of this article says it all. Whaples surveyed economists and historians whose specialty is American economic history to determine whether, and where, there is consensus among economic historians on forty important historical issues concerning the American economy. Reports the findings of the survey so that they indicate whether there are differences in the consensus on various issues among scholars trained in economics versus scholars trained in history.

Wood, Gordon S. The Creation of the American Republic 1776-1787. Chapel Hill, NC: University of North Carolina Press, 1969.

An important read. A widely acclaimed, and monumentally influential, study of the American founding by an eminent historian. Contends it is nearly impossible to identify the supporters or opponents of the Constitution with specific economic interests. Argues that the founding can be better understood in terms of the fundamental social forces underlying the ideological positions of the founders. Wood maintains the Constitution was founded on these larger sociological and ideological forces, which are the primary interests of the book. Concludes, “The quarrel was fundamentally one between aristocracy and democracy.” Offers no formal or quantitative analysis of the role of any economic, financial, or other interests.

Walton, Gary M., and James F. Shepherd. The Economic Rise of Early America. New York, NY: Cambridge University Press, 1979.

Quite readable. A concise presentation of the economic history of early America from the colonial period through the early national period by two eminent economic historians of early America. In addition to the material on the colonial period, contains a discussion of general economic conditions in the United States in the 1780s, a discussion of the Articles of Confederation, and the immediate and longer-term influences on the American economy brought about by the adoption of the Constitution. A nice starting point for a general understanding of the economic history of early America. It is somewhat dated though, as there has been new scholarship on the early American economy in the last twenty years.