III. Constitution as Covenant: The Union (1861-1932)
It is for us the living rather to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion--that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth.
Final section of "The Gettysburg Address", Abraham Lincoln (1863)
Lincoln, on the battlefield after a brutal three days that had seen the defeat of Robert E. Lee's most drastic offensive into Union territory, gives a short speech. It is known to history as "The Gettysburg Address". Several historians have amply examined its content, and focused on the quasi-religious, even messianic quality of it. They have pointed out the biblical language, which was meant to appeal to a nation which was far more pious and adherent to fundamentalist Protestantism than the deistical mystics of the founding generation. Jefferson's God is "God the Creator" - a masonic God. A God appropriate to a group creating. Lincoln's God is present on the battlefield, "Doing right, as God gives us the wisdom to know the right" as Lincoln would later put it. Lincoln's God is God the Lawgiver, God the Leader, God the Father. Appropriate to a nation involved in a war, a war which Lincoln, by slight of hand, turned into a crusade.
Reading the post Civil War constitutional amendments, this language is carried over to the beginning of the 14th amendment. "Due Process of Law" goes from being a protection, to the central concept of the government. The government is no longer a contract, but a covenant - an agreement of spirit. Government is what people are "due". This conveniently allowed for the disenfranchisement - both expressly and implicitly of the recently defeated. The Union would forbid those engaged in Rebellion from voting or holding office. It would be repeated in the constitutions written by states in the wake of the war, for example the Colorado Constitution of 1876, which explicitly invokes God as the source of all blessings, though it is otherwise the Preamble to the Constitution of 1787, verbatim.
The Fourteenth Amendment, understood in the light that the framers of it desired it to be seen, established a national citizenship, and removed pre-war precedent as precedential. It overturned Barron v Baltimore. It placed sharp limits on state legislature's powers: specifically they could not remove the rights of national citizenship.
The political answer to "Constitution as Contract" is to create a higher power from which the Constitution derives its force. The language is not present in the Constitution of 1787, but it is in the Declaration of Independence. Thus the social work of the Gettysburg Address is to link the religious sentiment of its moment, with the previous Democratizing wave of the late 18th century. In fact, the Constitution of 1787 was ratified by end running the Articles of Confederation, which did, expressly, state the Union as being eternal. This twist - that Lincoln needed the very concept which the order he was attempting to preserve had disposed of - an eternal and perpetual covenant - is not inconsequential. It allowed him to unify the democratist sense - which arises out of the idea that the nation is of a substance which is defined as being higher than any particular law - with the formalist impulse to capture it on paper.
This nature of a covenant, formed in the wake of a civil war that ran from 1861 to 1865, explains both the strengths and failures of the Union. As a covenant, it protects property as zealously as the First Republic did, but as a covenant, not a contract, its power could not be limited by exact words, only by the long sense of usage. If we look at a decision which was, until a few years ago, a musty backwater of constitutional law, and compare it with the decisions of John Marshall - the founding Federalist of the Supreme Court - the difference is clear. The decision is MacPherson v Blacker. Instead of a cogent statement of principles, such as the ringing "The Power to Tax is the Power to Destroy" from McCullough v Maryland, we are treated to a rambling recitation of how states have behaved in the past, and a general conclusion that what is being done here is not outside that general usage, and hence, whatever the merits of it as government, it is not unconstitutional. Such is the nature of the spiritual agreement, an agreement of organic law, rather than of precise articulation.
The covenant had, of course, a monetary reality. Lincoln, in the losing days of the Civil War, had to borrow money. To do so he needed to promise future tax revenues, in solid currency, to bankers. With a stroke of his pen, he created the "National Banking System", an architecture that allowed income taxes - the first internal taxes since the Federalist Republic - and would lay the ground work for passing an act which, under the Federalist Republic, would have been considered by many to be unconstitutional: The Legal Tender Act - making paper legal tender. The success of this system is shown by a simple fact - every note printed under the National Banking system, and it successor the Federal Reserve - is still legal tender.
As with the Federalist Republic, the cost of this covenant was the acceptance of a particular kind of property - corruption. The political party system which had grown up in response to a need for an unwritten constitutional arrangement was to be recognized as a protected part of the new order. Treating the flow of business relationships and bribes as akin to a right was the cost of the Union recruiting effort during the war, the effort to build a transcontinental railroad after the war, and the substructure of the financial system under the robber barons. If the Federalist Republic had to capitulate to slave owners, then it was to the corrupt moneyed interests that the Union's Covenant bowed to implicitly. Throughout the course of the Union, it would be bedeviled by scandal, ballot box stuffing, political machines, corrupt giveaways and devil's bargains.
The other group which had to be asked, literally hat in hand, for support was the community of bankers. In order to finance the war, Lincoln needed to print money, and sell bonds which would back that money. There was only one means to do this: the growing banking and syndicate arrangements centered in New York City, though not restricted to them. Lincoln would charger the "National Banking System" in 1862, which would allow banks to print money provided the met certain requirements. Privately printed money was taxed at 10%. The central government instituted an internal income tax as an expedient to provide a revenue stream as collateral, and began issuing paper money. Any note printed since the institution of the "National Banking System" is still valid currency, though, of course, a collector would pay a great deal more than the face value for a 1 dollar bill of that time. New banks were chartered - hence "First National Bank of ....."
The basis for this money had to be more than a contract, since it was clear the debt would extend far beyond the war itself, and the ability to sell bonds an essential aspect of any future plan to "Reconstruct" the South or finish the transportation network which would bind the nation together. Not only the constitution, but the dollar bill, had to take on a kind of sacred aura. Money is the constitution we carry with us.
This nature as a covenant explains the central position of the Gold Standard. The First Republic had fought over a national banking system, and with Andrew Jackson, finally abolished it. The Union remade this system, first as a war time necessity, but then as national policy. The covenant was that the government would not abuse paper money, but would, instead, base it on sound gold - or perhaps, if one was a populist radical, gold and silver together would be acceptable. Gold's near religious quality lead William Jennings Bryan to declare that the east was "crucifying the common man on a Cross of Gold." in his speech to the Democratic Nominating Convention in 1892.
The economic basis of this, however, was that a gold standard allowed America's entry into the first era of Globalism. With less fanfare and bloodshed, England gradually moved to a Gold Standard at the same time - dumping the silver system which was rooted in the "Queen Anne Penny", whose establishment in the colonies by act of Parlaiment in 1710 would begin the process of creating American monetary cycles.
Most importantly, the nature of a covenant is that one cannot leave it. Contracts can be cancelled, and the states leaving the Union to form the Second Confederation were doing precisely that: nullifying the contract which had grown useless to them. The reply of the Union was that the original was not a contract - but a declaration. As such, the confederacy was a rebellion, and while the right to revolution is enshrined in the Declaration of Independence, there is nothing in that document that says that there is a right to successful revolution, any more than there is an inalienable right to catching the happiness that one pursues.
The core of the constitutional change in the Union was twofold. The written constitution was changed to add three amendments, essentially a second bill of rights, national citizenship and due process being the core of this process. The unwritten constitution was altered in two important ways. The first was the codification of the two party system. The late Federalist Republic, as a result of the Andrew Jackson's presidency, shifted the filtering mechanism between people and power from the written constitutional mechanisms and formal constitutional structures, to the political party. The opponents of Jackson gathered to form the "Whig" Party, and they selected their candidate at a "National Convention". At the convention, the locally powerful political chiefs of the party met, and they reached an agreement on who was to run, and on what platform. With the coming of the Union, the parties were recognized as organs of government: in the decision on who was to win the election of 1876, it was not balance of slaveholders, but parties, which was maintained.
This change, as with the founding, was effected by overcoming the specific requirements of the formal document: the ratification of the Constitution avoided the requirements of the convention, and a good legalistic argument could be made that the 14th Amendment was never legally passed with all of the "t"'s crossed. However, this is not the nature of constitutional change - this occurs when there is the creation of an institutional will - a recognition by each group in power, that that power rests on their accepting certain articles as constitutionally binding. Instituionalization is not merely the agreement by a collection of individuals in an institution at a moment.
What makes such institutionalization work is that certain points are established as bright lines, beyond which it becomes acceptable to sound the cry of alarm. The end of a constitutional order lives in perpetual cry of alarm - as the boundaries become blurred. In the Federalist Republic the two great institutional lines were - to the South, protection of walking property - to the North, the ability to wash their hands of it. To both, new areas to expand agriculture to. When these lines were incompatible, the hysteria became a perpetual flowing wave, and there was no longer a safe place to rest an institution
As the Federalist Republic had first codified the party of establishments rights under the new Constitution, and then was forced to accept a counter balancing series of rights from the opposition party, so too did the election of 1876 represent the final phase of Constitution making under the Union. The acceptance of Southern agricultural patterns and population distribution - laws declaring negroes could not leave the county of their birth were held Constitutional - was the analog of accepting the primacy of the railroads in the North.
Thus the creation of a covenant of money, and a liberation of economic development by accepting that a "Corporation" has a constitutional right to profit, would be the heart of the new economic engine, this process parallels in the Union the property rights phase of the Federalist Republic - the dramatic expansion of an economic conception of rights occupies the second phase of the legal theory of both the Union and the Federalist Republic. The Union could not have internal taxes, because corruption would have made these unworkable. Good data on anything was nearly impossible to find. A nation which could not follow its Constitutionally mandated duty on voting rights, could hardly count money with any greater efficiency.
These twin changes were harnessed in the service of managing the explosive economic growth of the Union. Cities increased in size dramatically, a railroad network was built, and industrialization become the engine of economic change. A series of cases gave the central government near plenipotentiary power over the growth over Railroads beginning in the 1880's. These cases would be extended to cover roadways in general later on. States could not tax railroad land, railroad concessions, could not regulate railroad rights of way. The railroad interests held enormous power through control of water rights and land rights, and a virtual exemption from state power.
The mid-point of the Republic saw the supreme court assert the rights of corporations to make a profit, and be free from most forms of federal or state regulation. The Union grew and prospered - becoming not merely a continental power - but an imperial one, with dependencies overseas in the Phillipines and the Panama Canal Zone. The need to generate exports, again, drove legal policy. Corporations created development, corporations created taxable exports, corporations generated people wealthy enough to demand imports.
In dealing with Constitutional cycles, the point where centralization's hold weakens, and the disruption produced by the centralized order is the mark of the other great cycle - the rise and fall of democratizing waves. The Revolutionary War and the Jacksonian Revolt are two obvious examples, and the civil rights movement, with its impact on voting rights, and the anti-war movement of the 1960's provide another example. However, the seeming lack of a real democratist revolt - despite the Populist Party of Weaver - in the late 19th century has, repeatedly, acted as an obstacle to understanding creating a unified framework. Various suggestions, driven by single patterns, fail, since they do not recognize the nature of a Democratist revolt.
Democratization decentralizes - both in progressive and reactionary directions - and importantly it decentralizes not only power, but the control of liquidity. It is linked with the creation of a new kind of organization, and a new body of people to run them. The entrance of a new group of voters is the signal of the Democratising moment, but it is not the limit of it. The reason for this failure is that the paradigm of most existing academics is either pro or anti the overt turbulence of the last Democratising wave. Hence, there is a direct need to elevate and sanctify the decentralizing impulse or deny its validity and attack it.
The midpoint moment of a Republic is, then, signaled by a series of events. These events can be enumerated: a pressure for power outside of the center, a pressure for increased franchise, a decentralization of the control of money, an easing of the debt burden, and a consequent return to economic instability. Debt, in the early Republic enforces discipline, its removal creates growth. This growth is so explosive that it creates tensions which overwhelm the centralized control of the currency. There is an illusory moment of infinit possibility, as there is, no longer, a central authority controlling the flow of liquidity. The institution of Free Banking by Jackson is clearly one such moment, but what of the other?
An examination of the creation of the vast financial empires of the late 19th century should be sufficient to answer the question, when the central bank is no longer able to assure the stability of the system, then money has been decentralized. In 1901, JP Morgan demonstrates that he is the central bank of the United States, by stemming a panic. Clearly, by the time he does this, the power has already shifted. While anti-corporatists may attempt to deny it, the decentralizing movement of power from a government planned system of transportation expansion, and government monetary policy to the robber barron era is of the same process as the creation of populist and democratic movements.
The other side of this is the pressures for an increase in the franchise - the right to vote. Constitutionalist periods restrict the right to vote, even as they expand powers, the instrument of the government is denied opposing political forces, who would not honour the new order. Here, the Union follows exactly the pattern of the Federalist Republic: new territories offer the vote to attract people, in the case of the Union, it begins in the 1880's with the expansion of the franchise to women in Rockie Mountain States.
The other signal event is the limit of federal expansion of its main thrust. There is a decision which implicitly recognized that the rights framework which the constitutional lens produces has reached its limit. In the Federalist Republic this is the Barron v Baltimore decision, which refused to extend the Bill of Rights to the States, and rested on the argument that there was no Federal citizenship as a universal protection. In the Union, it was the decision to overturn the income tax Pollock v Farmer's Loan Company. The Court recognizes that the very tax which had formed the basis for the Union victory in the Civil War was, in fact, unconstitutional. This "high water mark" of the rights framework occurs roughly 35 years into the Constitutional cycle.
Thus, the absence of a historical explosion in the Union is not a bar to their having been a democratist moment. It merely used an elite, rather than popular, model of democracy - economic elites of corporations were the means by which money was decentralized. Corporations, in the form of "trusts" became banks, and generated their own money systems. These trusts are typical portrayed as the extension of greedy and rapacious capitalism, and this is not inaccurate, but it is also not sufficient - corporations were the means by which sufficient liquidity was generated in an era where the net money supply was nearly static relative to population and economic activity.
In 1873, a Panic swept the banking system, the resulting collapse in economic activity would force the economy to wallow in periods of intense downturn in job demand, investment supply and even total activity. There were repeated cycles of panic and depression. At the same time that industrial infrastructure was desparately needed for competitiveness and exporting, there was a "money drought" of deflation.
The single most important grant of expansion in the legal framework was the decision Santa Clara v Southern Pacific Railroad in 1886. Most important Supreme Court Decisions are quite long and involved, not this one:
The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids any state to deny any person within its boundaries equal protection under the laws, applies to these corporations. We are all of the opinion that it does.
Now if one has a broad concept of citizenship, this is confusing - does this mean corporations can vote? However, in its place it merely asserted two points: corporations were groups of individuals, who, if the corporation they belonged to was infringed upon, would have their rights infringed upon - and a narrow conception of personhood already in Constitutional Law. The protections provided by the XIVth Amendment were taken to be strictly majoritarian - if the majority does not uphold a privilege, it does not exist.
The proof of this is seen in the Railroad cases, the overwhelming interest that protects railroads from state intervention is, at first, the overwhelming federal interest in interstate commerce and its supremacy, not "corporate personhood". However, the combination of Santa Clara and the Railroad cases would create a new lens, that corporations had rights which could not be regulated by governments, because they were intrinsic. This idea, of intrinsicity, had been submerged from American law, but only for a very short period time.
This intrincisity was used to expand corporate power and control of wealth, not because of a desire to enslave the working classes, but because of the same pressure which forced Jackson to open to free banking - the need to generate local flows of liquidity to drive economic expansion. The Union, because of its hard money policy forced by the nature of its currency, had perpetual liquidity crunches, which created the paradoxical situation that in an era of unparalleled expansion, physical capital formation, population growth and interconnection, there were frequent depressions and panics - beginning in 1873, growth in nominal terms sputtered along. Not because the country was not expanding, but because it could not find a way to generate money that matched the demand for expansion and goods.
The creation of the trust - a group of interdependent corporations which by self dealing could, in effect, create a local monetary system borrowing resting on future revenues of the group, was the manner in which this was to occur. The populists on the outside might be bimetallicists, the insiders knew that gilding with gold was the real "license to print money."
Thus, corporate expansion, aside from its inherent seductive qualities because of graft and bribery and power - was an attempt to solve one of the oldest problems in political economy: the need for one currency to price the present, and another to price the future. The history of paper money, and its failures, from the South Sea bubble forward is the story of this problem. Hard money works best when it is in the eternal now, and decisions are strictly based on a trade off of desire for convenience, but this system does not generate enough currency to price what does not exist yet - trading desire today, not for the same object tomorrow or next week, but new objects which no one knows what demand for them will be.
The cycle reaches that peculiar point - where a new "future currency", such as joint stock in a company, is created. However, such "future currency" is only useful if it can be converted to hard "present currency". And here hangs the tale: at a certain point the future currency becomes less and less liquid, and its price inflates because it is illiquid. There is a moment where demand curve reversal occurs. Normally, the higher the price of a commodity goes, the more incentive to sell there is, as the demand goes up, it creates more and more supply in the form of people willing to sell. However, illiquidity takes hold where increases in demand convince more and more people not to sell. Demand does not produce more supply, thus equalizing, but instead, less and less supply, which, in turn, produces more demand, and raises the demand/supply ratio. The more people want the commodity, the fewer people willing to sell it. This reversal is a "bubble", the unsustainable inflation of an asset or commodity class.
The owners of such assets who realize that the value of their asset is, in no small measure, because of their illiquidity want to convert without having to sell. Thus, in each cycle, is born the idea of borrowing against the value of the future asset. This creates an infection, and when the inevitable selloff begins, it destroys the price of the asset, and, of course, creates a wave that rolls through the economy, as each creditor sees his debtors default, and becomes a debtor in turn.
The solution is, of course, to restrict who can print money, making it so that a selloff is against the interests of those printing the money, and allowing a sustained bubble. The rise of Wall Street and corporate wealth are not an example, then, of anti-democratic tendencies, but an example of the same need for liquidity which had previously driven both the American Revolution and the Jacksonian Revolt, and which drove the agrarian and western states to push for silver coinage.
As the Jacksonians had created the party apparatus as a new layer with constitutional implications, to harness decentralized power and wield it into an effective agency for centralizing its effect, so too did the gilded age reinvent the corporation for the same end. The same danger lurked in the system: created to circumvent constitutional restrictions on the action of the central government, they created a mechanism of power where all activity gravitated to, rather than solving a political problem through the play of legislation, it was far easier simply to move more power to the extra constitutional wing of the government.
This creation of corporation is paralleled by the gradual institutionalizing of party structures: legislative bodies begin devising and implementing party leadership hierarchies in Congress, the various political machines are gradually absorbed, in most cases, to the state party apparatus, the normative symbols for both parties are created, and important questions, such as the Election of 1876's Commission, are divided along party lines. In otherwords, parties become, less and less, extra-constitutional.
The other important democratization of this period is the response against the use of corruption as a mechanism of government. It is here that the new kind of State arises. The old state is run by corrupt party regulars, in a kind of feudal structure where hierarchical loyalty is bout with the promise of localized autonomy and proift - the very centralized protection of corruption, running from Grant forward, becomes an issue, and an issue that produces localized rebellion, and finally the Progressive movement in government. Government is to be run, in their view, by meritocratically chosen civil servants, by examination, expecting fidelity to written rule, and to integrity, When, in 1880, James Garfield was shot, and then died, it brought to the White House Chester A. Arthur, who had been made VP because of his role as Republican Party fixer.
The political tension which would dominate the politics of the remaining years of the Union was simple: by ending silver’s role as a currency basis, the Union plugged the hole which had drained the Federalist Republic. It allowed a quasi feudal agricultural arrangement to continue in the South, but share croppers could not be used as a store of value. Proof that it was the monetary nature of slavery, and not the illiberty of the enslaved, which was the heart of the political turmoil of the Federalist Republic. But the end of both silver and the asset base of the Federalist Republic deprived people of a secondary currency – a circulating medium to do regular business among themselves. This lack of a consumer currency meant that the disparity in wealth grew rapidly in the United States – corruption and relationships, political machines and organized crime – supplied some of what this demonetized economy needed. It created inefficiencies in pricing which would spark periodic bank panics, a series of which resulted in the economic turbulence of the 1890’s and first decade of the 20th Century. Since these are overshadowed by the events that come after them, we forget that the Crashes in the market that these provoked are the second largest in history. We also forget that the financial system twice tottered at the brink of collapse, only to be saved by several large bankers, under the guidance of JP Morgan, to provide liquidity.
Thus the pendulum was already swinging against decentralization of money by 1895, even as the old Democratic Party preached for a silver money – “the peole’s currency” – a new idea of internal taxes and a central bank was being put forward. The long fight over the income tax is, in effect, the long fight to establish the Market state as the crucial reality of political economy. A state which cannot tax income, cannot tax the size of its internal market. A state which must export to tax, must remain a mercantile state – because the incentive for the government is to encourage exports, and then tax the imports that concentration of wealth brings. The mercantile state must be corrupt, because it is the excessive concentrations of wealth itself which it can access to do business. Either the consumption as imports, or the liquidity of industrializing trusts.
The era of trust busting is, as well, the growing understanding of counterweighting the very entities which the Union had allowed into existence to create physical capital. It should be remembered that the transcontinental railroads, and the tycoons that they spawned, were not fierce market competitors. Instead they relied on government grants of land, they relied on government demand for transport, they relied on court cases – the “Railroad Cases” for the powers to be vest in the government. In an era where “every fortune is made by corner or monopoly” – the “laissez-faire” fantasy that a gold standard unregulated economy is a paradise of capitalism evaporates. Instead, there was a series of interlocking agreements, cartels and oligopolies, backed by agreements not to compete. This would have one important effect that would later become critical: a service would only be extended to those who it was profitable to provide it to. And because of the instability of that system, most people would not risk all in it.
In economic terms there are two distortions involved: the laissez-faire argument is that what is taxed encourages people not to earn and buy, but to do themselves. This means less specialization and less economy. The counter-argument is that risk causes people not to put their savings into banks and make sure they can do themselves should their be a panic. When the effort lost from “the people’s hedge” against catastrophe grows to be more than the distortion from taxes, then the progress to laissez faire reduces, rather than increases, market efficiency. The Union, in the series of Panics beginning in the 1890’s, reached this point. The “First National Bank of Mattress”, what economists call the “liquidity preference”, robbed millions from circulation.
The dramatic equalization of the long period of deflation – because capitalism is a deflationary pressure – came to an abrupt end with war time inflation caused by the conflict of 1914-1918, which the US entered in 1917. Under Wislon there was a dramatic era of reform, but one in pursuit of a vision recognizable to the Union: by continuing to break up trusts, by creating a central bank to provide the liquidity that the large trusts used provide – it was hoped that a “small is beautiful” competitive market place would emerge. It was a classical economic view of a currency system and entrepreneurial competition. The diagnosis rested on the notion that it was large corporate holding companies which were the stifling force against economic competition, and hence the source of instability.
Thus despite neo-gilded ages economic ideas that abound on the American far right - from the idea that America is a fundamentalist "Christian" nation, to the idea that "laissez-faire" economics was ever truly practiced in the US, or that it would work at all - an examination on the golden age which these myths invoke show, instead, a government that pervasively interfers with the economy, merely that it does so to concentrate wealth, mainly by running a monetary system which outlaws free banking and a controls money by basing it on one specie base - gold - and not another - silver. This would create political tension even within the Republican Party, as the "Silver Republicans" would revolt from the Gold Standard hegemony. In 1896, both parties faced internal dissent between gold and silver wings - it was an example of a deeper economic conflict finding the wrong public expression, and thus pointed towards the wrong solutions.
What was to bring down the Union? A government which won the Civil War, organised the West, built a transcontinental railroad, saved Europe, created a financial system which we recognize today, granted suffrage to women and turned America from a dangerous provincial animal into a world power of the second tier - considered to be, along with Japan and German a rising state of the world? The same failure which collapsed the First Republic - a failure to live up to its basic idea.
The Union was a covenant - the government did not protect its citizens first, it protected their ability to own property, and assured them a constant stream of new opportunity, Consider the case Minor v. Happersett, decided in 1875 which held that a state could constitutionally forbid a woman citizen to voe, despite her invocation of the citizenship. The decision conveniently does not discuss the equal protection and due process clauses. The decision reads "citizenship... conveying the idea of membership of a nation, nothing more." This nearly biblical reading of the XIVth Amendment is, in fact, a direct menas of defusing its mandate for Democracy, which is rooted in Lincoln's idea, and accepts the idea that a nation is a tribe, and that membership in the tribe, while sacred, does not assure any right or rights beyond that which a current majority of the tribe are willing to extend.
First, westward expansion , then integration, and finally civilization. It assured them that if they gave their faith to the government and its closely associated group of moneyed interest - that the financial system would be sound. When the financial system collapsed, it was more than a financial panic, which had been weathered before. The inability of government to interfere in private business had been the haven for the corruption and private dealings of those who controlled the money supply. As slaves had been the specie of the south, so too was the stock market the instrument of printing inflationary money in a time of a gold standard. The inability of this corrupt and intransparent system to stave off economic collapse was merely the culmination of a long process.
In otherwords, at the end, the constitutional principle had become little more than a fig leaf for those profiting from an expedient bargain to maintain their hold. This had been seen once before, and it would be seen again. The original sin of the Union - corruption - would eventually corrode the trust that its people had in the financial system, and this would lead directly to the Stock Market Crash in 1929 which its moneyed elite could not stem. The evolution of this, however, shows, that it was not the original intent to produce it, merely that individual assurances made to individual groups of their protection as members of the new order were, eventually, fused together to produce an overwhelming block on further action.
It is wrong to say that the Crash of 1929 brought about the Great Depression, instead, both were brought about by the same basic cause. A new modern economy could create wealth faster than it could dig up gold. The amount of "value" in the economy could rise much faster than the amount of land and gold. Hence, the economy was like a dog on a long leash chasing a rabbit. All seems well until the moment where the leash is pulled taut. With the crash of 1929, and the climbing unemployment of the following years, there was a desperate need for people to escape, in each past "panic", they had gone farther west, to find land where they could establish subsistence agriculture or ranching or seek a fortune in mining. In 1932, the nation had run out of out. Since the Union had built its success on solving the problem of expansion that had torn apart the Federalist Republic, its failure to supply new frontiers was its death warrant.
Though an obstinate supreme court would try and revive the corpse of a government that could not interfere with business, the new president finally prevailed in his call for "reformation" of the government, not mere reform. He would extend the reach, without amendment to the basic document, of the government into every phone, light bulb, gallon of milk and mile of paved road in the nation.
The arc of the Union - from Lincolnian invocation, through the Radical Republican period of constituion building culminating in the deal of 1876 - trading the presidency for a narrow conception of citizenship, would then reach its constitutional limit in the 1890's. The unity of a national monetary, transportation, communication and legal framework, when combined with the liquidity of corporations allowed the Union to finish the process of physical expansion, and launch a program of industrial expansion. This combination would allow the United States to become a colonial power with a war that, like the Mexican American War, was short, overwhelmingly victorious, and would give America a hero-president. TR, however, was to outshine Zachary Taylor.
This high water mark of optimism was rapidly crushed by depression, war only to leave a false paradise of the 1920's. What was occurring, of course, was a massive program of borrowing, eroding the basis of the currency. By 1932, when FDR would take power, he would find out just how much more in gold backed obligations existed than could be paid, even though the US had more gold than any other single nation.
When, in 1890 the frontier largely closed, it created an intense debate over how to reopen it, or expand physically. TR would begin the project of making the far Western coast colonizable - the Panama Canal, water projects, road projects and agricultural expansion were, in effect, designed to create a second coast. It was a project that would bear tremendous fruit, but not as quickly as TR, or the Union he championed, needed. TR's idealism is still striking, believing that if only the various parties would behave well, that the Union could be made to work, if only the working man and the business man would stay within some boundary of responsibility. This change in rhetoric shows his consciousness that the Union was no longer held together by necessity, but by political will. As such, it parallels the debates within the late Federalist Republic, of how to get the various factions to come to a balance without leaving, or threatening to leave, the Union. This key moment shows that crisis has begun, because it changes the basis of the polity from shared necessity, to discipline. Outside crisis, such as "The Great War" and could force cooperation, but only as long as the direct crisis was in place.
At the same time, the peak of the Progressive reforming movement sees the third great flurry of constitutional amending: of the amendments to the Constitution, all but 2 are passed in 4 periods of activity: the 1789-1804 Federalist Wave, the Post-Civil War Wave from 1865-1870, the Progressive Wave from 1912-1920, and the Voting Rights Wave from 1961-1972. Income tax, direct election of Senators, women's suffrage are the three most lasting monuments to an attempt to reform the existing structure.
What held the entire structure together, as just before the Civil War, was the promise of expansion, where anyone could mine benefits and profit from them. With the disintegration of the ability to engage in commodity agriculture caused by the collapse of farm prices, and the collapse of metropolitan liquidity caused by the Crash of 1929 and the attendent Depression, both of these frontiers closed at once. Where as previous Depressions did not threaten the constitutional order, because the promise of future expansion created a consensus to reform the problems and engage in disciplining the political system to avoid rupturing the polity - the Depression beginning in 1929 ended the promise of expansion.
For want of air, the Second Republic, was, then, dead.