Paleo-Crypto Currency, Rhode Island’s Role in American Constitutional Development

If one takes the time to read our Constitution, a rare and heroic act these days, one would come across a relatively odd clause: “No State shall . . . coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.” Article I, section 10, cl. 1.

Baked into this clause is a fascinating history that implicates James Madison’s most famous contribution to Constitution-making and the beginnings of the controversial practice of “judicial review,” a distinctly American contribution to liberal democratic government.


A lord supervising his serfs.

We start with some background. In England, the traditional source of wealth in the elite was land. In medieval times, lords were granted the authority to extract agricultural wealth from their lands through the legal ownership of the land and the legal control of serfs to work the land. In return, the lords were required to contribute to the king’s army, either by equipping themselves to fight in the king’s army or by paying the king to hire substitute mercenaries. That’s why we see the fall of the great traditional families in the United Kingdom (i.e. Downtown Abbey) once the Industrial Revolution made manufacturing instead of agricultural production the key producer of wealth; manufacturing needed far less land than farming. Until then, landed elites lived off of rents from tenants working on their land.

But the United States could never sustain its elites on land wealth. The answer is quite simple, there was just too much of it, compared to an island nation. Tenants in America were not captive of the great land lords, because they could always move west to find land of their own instead of paying rents. As a result, American elites were both less wealthy and could not depend on rent for their wealth. What is key is that many of them turned to banking, that is, lending money as a way to generate income. It was only after the Revolution that banks were commonly chartered. Before Jacksonian America in the early 19th century, not just anyone could become a corporation, one had to apply to the legislature for special permission.


Inflation chart.


The banking function of many American elites made them sensitive to inflation. The creditor makes its money off of the interest charged for the amount it lends. If between the time of lending and repayment, the money loses value (due to inflation), the creditor could potentially have lost money instead of making it, if the inflation outran the interest charges.

After the financial chaos of the Revolution, and the opening up of state governments to broader democratic forces, many states began to issue a lot of paper money (causing inflation). After all, typically there are more debtors than there are creditors—the creditors were outvoted. Many of the Founding Fathers were deeply disturbed by this development, not only did it affect their economic livelihoods as lenders, but it seemed immoral, a kind of theft, by the majority.



Rhode Island was one of the most democratic states, and was one of the worst offenders when it came to paper money printing (a contemporary nickname for it was “Rogue Island”). Rhode Island likely refrained from sending delegates to the Convention because it was concerned that the Convention would curb paper money printing. In fact, the Constitution’s prohibition on states printing paper money was likely the reason that Rhode Island refused to sign onto the Constitution until after Washington’s inauguration (once at least 9 states agreed to it, the Constitution only bound consenting states). Rhode Island later got around the prohibition anyways, because it allowed private banks to issue bills of credit which acted as paper money, which was not technically the state itself printing money.

The state legislatures’ excessive emission of paper money partially inspired one of Madison’s great insights in Federalist No. 10, one of the most studied Federalist Papers.



The advocates for the Constitution for a stronger national union to replace the existing Articles of Confederation (which acted more like a loose association of states than a nation) had to overcome Americans’ fear of centralized power in a distant government. They had just rebelled against a powerful centralizing force across the sea—Parliament and the king. Many of those who opposed the Constitution frequently cited to the respected French thinker, Montesquieu, for the proposition that republics could only work in small and homogenous states. It followed then, that power was better located in the states, perhaps bound in a loose association and not in a far away national government.


James Madison

Madison started with the observation that oppression could come not just from tyrants, like kings, but also from majorities oppressing minorities, i.e. debtors uniting to unfairly oppress their creditors. Small, homogenous polities weren’t necessarily safer republics, if the majority in such a republic would come together to press on the minority group.

Madison suggested then, against Montesquieu, expanding the republic could fix this issue. That was for three major reasons. First, the larger republic would make it more difficult, as a practical matter, for factions to form. There might be issues of communications, and other coordination costs across a larger space. Second, the national government would “filter” out the demagogues, because it would only be filled with the cream of the crop from the entire nation, and it’d have a larger pool of talent and virtue to draw from than that of just singular states. Third, and this is the most modern insight, was that in a larger space there are more competing interests, and those interests would check each others’ excesses.

Those observations were challenged at the time, including by Hamilton who noted that when it came to creditors and debtors at least, the third consideration of multiple interests did not really apply, and have been challenged since but they still represented a foundational view of politics by one of the brightest minds in early America.

The second major contribution Rhode Island made to American constitutional making is slightly more direct.

Again, some background. While the states had prided themselves on the rights of Englishmen (even after the Revolution, many states had passed laws specifically “receiving” existing English common law), they soon developed a unique conception of constitutional law. England did not, and does not have a written “constitution.” Its constitution is simply all the things that Parliament has done as well as the institution of Parliament itself (it’s what constitutes their government). It was in America that was developed the idea that there were at least two types of law, “ordinary law” passed by legislatures and found in the common law as explained by courts, and a written higher supreme law, “constitutional law”. This might have developed because many of the states had started out with written charters granted by the Crown. And it was only through the Revolution and the post-Revolution period, that Americans started to justify constitutional law as higher law because it was enacted by special conventions representing the whole people in a special moment, as opposed to ordinary law enacted by legislatures which only represented the people during ordinary times. The federal Constitution, and some of its state constitutions precedents, only became law after special ratifying conventions met in each state to approve it.

What happened if a legislature passed a law that contradicts the constitution? The answer today is quite obvious, the courts “strike down” (or more accurately, forbid executive officials from enforcing the law) the unconstitutional law as null and void. But it was not always so obvious. It wasn’t until Justice John Marshall in the celebrated case of Marbury v. Madison (1803) that federal courts exercised “judicial review” of ordinary law for consistency with the Constitution. That case was controversial when Marshall issued it and remains controversial amongst the more academically minded today.

Where in Article III, which sets up the federal courts, does it explicitly say that courts had this power? And should federal courts, filled with effectively lifetime appointed officials who had protected salaries be allowed to curb, Congress, with its elected representatives by declaring their laws void? The results aren’t always pretty—consider the fact that the next time the Court exercised its power of judicial review after Marbury was the infamous case of Dredd Scott, where the Court struck down federal laws that tried to limit the expansion of slavery.

One relevant consideration to the legitimacy of judicial review was state court practice (or lack thereof) of judicial review. That’s where Rhode Island comes back into the story in the pre-Marbury case, of Trevett v. Weeden (1786). Some scholars have cited Trevett as an early exercise of judicial review, but the story is more complicated.

The case arose as another offshoot of Rhode Island’s paper money madness. Once everyone realized that Rhode Island was printing endless paper money, the value of the money accordingly dropped, often to a fraction of its face value. Importantly, creditors started to refuse accepting paper money to satisfy debts.



The author's Rhode Island note, and object of the Forcing Act.


In response, the pro-debtor Rhode Island legislature passed the “Forcing Act,” which punished those refusing to accept paper money. Crucially, the Forcing Act would impose such punishments on defendants without the benefit of a full jury (or the ability to appeal), a right guaranteed by the Rhode Island charter (Rhode Island had at that point not passed a state constitution like many of the other states did after the Revolution).


The Rhode Island Charter, granted by King Charles II. The charter famously protected religious liberty.

When a butcher, Weeden, refused to accept paper money from a buyer, Trevett, the buyer brought a suit against the butcher under the Forcing Act. Importantly, Weeden’s attorney made important arguments asking the court to effectively ignore the Forcing Act arguing that it was in violation of Rhode Island’s charter. More specifically, his attorney argued that the legislature overstepped its authority because it violated Rhode Island charter’s guarantee of a jury trial, and that the judiciary was the right institution to enforce the charter. In Trevett then, we see all the key elements of judicial review being fleshed out.

While Trevett is often accepted as an exercise of judicial review, the court actually ducked the issue. Like courts today, when faced with a powerful and foundational argument, the court found a backdoor to avoid the issue. In Trevett, the court did not tackle Weeden’s arguments but dismissed the suit because it found that the Forcing Act suits could only proceed before a special court, and Trevett had been brought in ordinary court.

Interestingly, also like legislatures today, the Rhode Island legislature did not read the case but was very upset at the supposed affront to its authority. The Rhode Island legislature demanded that the judges in the case appear before it to explain themselves. Two of the judges were conveniently ill, and the rest appeared before the legislature to defend themselves. One judge, David Howell, informed the legislature that the court, in fact, did not dismiss the suit because of its use of judicial review, but because of a jurisdictional technicality (the court was not a special court). But, Howell went on to explain that he agreed that the act was unconstitutional and that judges should be able to declare it null and void. In fact, Howell argued that judges were not obliged at all to explain themselves to the legislature, and only accountable to God (!) in their judgments.

The Rhode Island legislature tried to remove the judges from their office, but ultimately decided that since the judges were not charged criminally, they could not be removed. The legislature did, however, receive some satisfaction when it declined to re-elect the judges that defended the court’s actions the next year (at the time, Rhode Island’s judges were elected annually).

While Trevett does not appear to be an actual exercise of judicial review, Weeden’s attorney published his arguments (he even apparently tried to hawk copies to the delegates to the Constitutional Convention), and Howell’s views on judicial review were also disseminated. Without a study of the breadth of the case’s dissemination or citations to the case in the papers of the Framers, its hard to tell what direct impact Trevett had on the federal constitution or later practice. At any rate Trevett, at the very least, is evidence of the debates and formation of important ideas like higher law, judicial independence, and judicial review. The first was formally embodied in the Supremacy Clause of the Constitution, the second in Article III, which allows federal judges to serve for life (subject only to impeachment for misbehavior) and protects their salaries against diminishment.


The pamphlet circulated by Weeden's attorney on the eve of the Constitutional Convention.

So despite being the smallest state in the union, Rhode Island punches above its weight when it comes to bad decisions and constitution-making.

Sources

The dean of early American history is Gordon Wood. His books American Creation and Power and Liberty helped me understand the early American elite and their preoccupation with inflation (and also why Rhode Island was a harbinger of what was to come in later American history, i.e. the shift to democracy rather than gentlemen republicanism).

Two excellent articles on the Trevett case are: Simpson III, B. Mitchell. The Case of Trevett v. Weeden: 1786-2004 found in the Rhode Island Bar Journal and Conley, Patrick T. The Story Behind Rhode Island's Most Important Legal Case: Trevett v. Weeden in 1786 an adaptation of a speech Conley gave in Newport on May 3, 1976. The Conley article in particular is important for tracking down what actually occurred in the case rather than what it's come to stand for. I first read about the Trevett case in Without Precedent, a decent if overly anachronistic biography of John Marshall.

Thanks as always to my best editor Nastassia, the best comma editor in all of America.