Another major defect in the existing national government was its lack of power to regulate commerce, both interstate and foreign. There was no field that more immediately needed "Federal superintendence." The states erected tariff barriers against one another and, in ocean commerce, made their own regulations about foreign trade and shipping.
As to raising armies, the existing government had only the power to make requisitions upon the states for quotas of men. During the Revolution, this had led to great inefficiency and "gave birth to a competition between the States, which created a kind of auction for men."
Those nearest the area of combat, for mere survival, raised more troops; those farther removed, fewer. The whole faulty system resulted in the "slow and scanty levies of men in the most critical emergencies in our affairs — short enlistments at an unparalleled expense — continual fluctuations in the troops, ruinous to their discipline, and subjecting the public safety frequently to the perilous crisis of a disbanded army."
The whole system of quotas and requisitions on states in regard to men and money was, from every view, "a system of imbecility in the union, and of inequality and injustice among the members."
The inequality was shown very glaringly in the fact that all states had an equal voice in making decisions under the Confederation. This principle gave "to Rhode-Island an equal weight in the scale of power with Massachusetts, or Connecticut, or New-York; and to Delaware, an equal voice in the national deliberations with Pennsylvania or Virginia, or North-Carolina." A sixtieth part of the union, "about the proportion of Delaware and Rhode-Island," had several times prevented the Confederation from doing anything at all about important measures. This violated the "fundamental maxim of republican government, which requires that the sense of the majority should prevail."
But the crowning defect of the Confederation was its want of judiciary power. Who was to have the final say in determining what the national law was? There should be "one court paramount to the rest — possessing a general superintendence, and authorized to settle and declare in the last resort, an uniform rule of civil justice."
All told, the Confederation was a "system so radically vicious and unsound, as to admit not of amendment but by an entire change in its leading features and characters." It was "one of the most execrable forms of government . . . ever contrived. . . . The fabric of American Empire ought to rest on the solid basis of THE CONSENT OF THE PEOPLE. The streams of national power ought to flow immediately from that pure original fountain of all legitimate authority."
In this essay Hamilton made several strong points about the lack of power of the national government under the Confederation.
For one thing, it could not regulate or control either interstate or foreign commerce. The states erected high tariff barriers against one another. (The basic clause in the Articles of Confederation read: ". . . each State retains its sovereignty, freedom, and independence.") For example, only hats made in Connecticut could be sold in that state, making Danbury "the Hat City," as it is still known. New York levied duties on firewood brought in from Connecticut, and on vegetables from New Jersey.
Patrick Henry, once an eloquent advocate of Free Trade, turned provincial in the 1780s and, as a member of the House of Delegates, proposed that the Virginia legislature prohibit the importation from other states or foreign nations of any beef, pork, butter, cheese, or distilled liquor, and that heavy duties be imposed to discourage the import of coal, iron, and cordage. The Virginia legislature did not go as far as Henry proposed, but considerably increased duties on beef, strong drink, and other items.
Foreign trade presented a different but rather similar problem. To increase its export and import business, the infant republic had great need to negotiate advantageous commercial treaties with European nations. The national government had the right to negotiate such treaties, but the right was largely theoretical. As European diplomats asked, what was the point of negotiating a commercial treaty with the national government so long as the individual states could tax and regulate foreign trade as they pleased?
South Carolina, for instance, levied a general tax of 2.5 percent on foreign imports, with much higher rates for certain specified articles. Massachusetts prohibited the export of American goods on British ships; it doubled the tonnage duties on goods imported on other than American ships. New York, Pennsylvania, Maryland, North Carolina, Rhode Island, and New Hampshire had similar discriminatory laws against foreign shipping and trade.
The greatest of the Confederation's disabilities was the fact that the Continental Congress did not have the authority to raise any revenue directly for the support of the national government in carrying out its various functions. When Congress passed an appropriation bill for a specific purpose, all it could do was to request the states to contribute their allotted share of the general assessment. As states did not like to tax their own people for general purposes, it is no wonder that many of them were very slow in paying.
In 1781, before the Revolution had been won, Congress asked the states for $8,000,000 to meet emergency needs. At the end of three years, less than $1,500,000 of this assessment had been paid. A number of states followed the example of New Jersey which, in 1786, refused to pay a penny toward carrying out Congressional decisions they disapproved of.
Consequently, in want of ready money, the national government was often delinquent in meeting its debts and obligations, which hurt American credit and prestige. There was a growing opinion on both sides of the Atlantic that a young nation, apparently unable to pay its domestic and foreign debts when due, could not long endure.