Orientation and Getting Started
The Creation of the Constitution
The Road to Philadelphia
Federalism
Congress
Slavery and the Constitution
The Presidency
The Federal Judiciary
Some Other Important Details
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Madison and the Federal Veto

The Convention takes up the Federal Veto

When the Convention first took up this proposition in the Committee of the Whole on May 31, the only suggestion was that the veto should be expanded even further. Benjamin Franklin suggested that, in addition to vetoing laws that encroached on legitimate federal powers, state laws also needed to be vetoed if they contravened “any treaty subsisting under the authority of the Union.” Madison then reports that this momentous clause was “agreed to without debate or dissent.” Madison must have been elated. And he probably then regretted that the Virginia Plan had been so restrained in its aims. Soon enough, he began to argue that Congress should be given even more expansive latitude to exercise the federal veto. 

On June 8, Charles Pinckney moved “that the national legislature should have authority to negative all laws which they should judge to be improper.” He defended this expansion of the federal veto because the federal government needed to protect itself from the encroaching powers of state legislatures. Then he added, “this universal negative was in fact the corner-stone of an efficient national government.” Madison seconded this motion, and expanded on the reasons for it. Not only was the “indefinite power to negative legislative acts of the states” necessary to protect national prerogatives and the integrity of treaties, but it was also necessary to guard against the tendency of state governments “to infringe the rights and interests of each other; [and] to oppress the weaker party within their respective jurisdictions.” A universal veto was “the mildest expedient” they could adopt to prevent these internal abuses committed by the states.

Unjust Paper Currency Laws

A modern reader of Madison’s notes might well wonder: Just what were the Framers talking about when they spoke of “unjust” and “improper” state laws that violated individual rights? Madison had named what he saw as the most prominent abuses in the list of “Vices” he compiled before the Convention: “Paper money, instalments of debts, occlusion of Courts, making property a legal tender.” This list can be broken down into three categories of perceived injustices committed by state legislatures: 1) They changed the value of currency (by issuing “paper money”); 2) they altered the obligation of private contracts (installment laws and making property a legal tender); and 3) after the first two violations had occurred, the states prevented the legal means of redress to the injured party by excluding certain kinds of suits from trial (“occlusion of Courts”). All three of these measures were seen by almost everyone at the Convention as ways to help the borrowing class by cheating the lenders from what was contractually owed to them. 

In an era when plastic cards have almost supplanted paper money, and the current controversies over currency relates to the use of “bitcoins,” the idea that our Founder Fathers had an almost universal distrust and even loathing of paper currency probably strikes us as quaint, if not bizarre. It may be difficult for us to understand why so many reasonable, well-informed men at this time viewed “paper money” as a bald-faced example of political skullduggery. But from the perspective of 1787, governments had shown themselves to be incompetent (whether through ineptitude, greed, or currying political favor) at controlling the value of currency unless it was issued in the form of precious metals. Under political pressure, it was very tempting to simply print more paper money when more was demanded, undermining its real value. And when the value of money fluctuates, there will always be winners and losers. 

A lender might agree to a contract in which he loans $100 to a borrower at 5 percent interest for one year (expecting to be paid $105 at the end of the year). But if, by the end of that year, the real value of $105 in paper money is actually only worth $90 because of inflation, then the lender will have lost $15 on the transaction, and the borrower would have gained it. The borrower would have followed the letter of the law by paying back the loan, but in fact the lender would have been cheated out of what was rightfully his due. That was why so many people at the time viewed “paper money” as no better than theft by legislation. The state of Rhode Island had been particularly guilty of printing paper money that was not worth its face value, and then passing laws that forced contract-holders to accept the deflated currency in lieu of the payment terms spelled out in their contracts. Other states had interfered with contracts by passing “installment laws” (which changed the time period within which contracts had to be fulfilled) or by requiring lenders to accept land (which was usually depreciating in value and difficult to sell) instead of cash as the fulfillment of a contract. 

Several times during the Convention, and in the context of debating several diverse issues, the Framers of the Constitution spoke out against the evils of “paper emissions.” Madison “considered the emissions of paper money, and other kindred measures,” as aggressions committed by one state against another, since “the creditor states must suffer unjustly from every emission by the debtor states.” The New Jersey Plan, which had no federal veto, left the states “as much at liberty as ever to execute their unrighteous projects against each other.” Gouverneur Morris “recited the history of paper emissions, and the perseverance of the legislative assemblies in repeating them, with all the distressing effects of such measures before their eyes.” George Mason “had a mortal hatred to paper money,” and his fellow Virginian, Edmund Randolph, likewise confessed “his antipathy to paper money.” George Read of Delaware thought that, if the Constitution even appeared to allow the printing of money, it “would be as alarming as the mark of the beast in Revelation.” In all their debates that summer, only John Mercer of Maryland admitted that he “was a friend to paper money,” although he quickly conceded that he would never agree to allow it “in the present state and temper of America.” For most of the Framers of the Constitution, “paper money” was almost shorthand for “unjust laws.”

Avoiding Unjust Laws

Was the federal veto the best way to solve the problem of unjust laws, especially if what the delegates meant by “unjust laws” was so frequently reducible to “paper money” and other interferences with contracts? Several delegates offered arguments on both sides of the question. James Wilson, who was a strong nationalist, thought that Congress could safely be trusted with questions that concerned the common good. And even John Dickinson, who was generally a stout defender of states’ rights, “deemed it impossible to draw a line between the cases proper, and improper, for the exercise of the negative,” and therefore he thought the broader power was necessary. But his colleague from Delaware, Gunning Bedford, thought that the small states would be especially harmed by this power. He also questioned the practicality of such a veto power: Would the states have to wait for the Congress to approve each state law before it went into force? How long would it take Congress to review all the legislation from all 13 states? Pierce Butler said it was not the small states that had the most to fear from the power; rather, it was the most distant states—like South Carolina—which would be cut off from “all hope of equal justice.”