Philadelphia Society, unlike many of the people who labor in the groves of academe, have a wholesome respect for the American constitutional system, despite the distortions that have been inflicted upon that system in recent decades. Moreover, judging from the conversations I have had with various members throughout the years, most of you are well informed as to how we happened to have been so blessed. Judging by a look at the program you will hear tomorrow, you will be even better informed twenty-four hours from now.
Again, unlike denizens of the academy, we all appreciate our economic system of private enterprise for profit in as free a market as possible. But I expect that most of you assume that the economic system was born part and parcel with the constitutional order, in keeping with the Framers' intentions. But that is not the way things were. "Wait a minute!" you may be thinking. The English philosopher John Locke, whose views were familiar to virtually every American of the founding generation, had taught that the ownership of property was a God-given natural right, antecedent to civil society, and the revolutionary state constitutions and bills of rights had given ringing approval to that dictum. James Madison, in the Constitutional Convention, cited "the security of property" as being first among "the primary objects of civil society," and the other delegates echoed that sentiment.
But one cannot leap from the framers' belief in the sanctity of private property to the conclusion that they advocated either capitalism or a free market economy. The very thinkers whom Americans looked to for their ideas about private property placed limitations on the right. John Calvin opined that a man might choose among many callings but was bound by God's law to follow the one that promised the greatest public good. John Locke taught that a man could accumulate property, but only insofar as he could consume it and none went to waste; the rest belonged to the public. Sir William Blackstone in his Commentaries on the Laws of England famously defined property as “that sole and despotic dominion which one man claims and exercises over the external things of this world, in total exclusion of the right of any other individual in the universe"; but after formulating that definition on the second page of book two of the Commentaries, Blackstone devotes the remaining 518 pages of the volume to qualifying and specifying exceptions to it.
In addition to the many such qualifications that Americans had inherited from the mother country, the states or local governments fixed the prices of bread, regulated rates charged by millers and innkeepers, and interfered in buying, selling, and lending. They routinely set aside private contracts on the basis of the medieval concept that everything had an intrinsic "fair value" and therefore a "just price." A modern market definition of contracts was yet to appear in America.
Overcoming these obstacles to the emergence of a free market order was made difficult by two ideological considerations. The first was the commitment to a republican form of government. Most Patriots had come by their republicanism willy-nilly, as a by-product of the general reaction against the supposed excesses of George III and with neither a historical nor a philosophical understanding of what they were embracing. Between 1776 and 1787, however, increasing numbers of public men took the trouble to learn about the history of republics and to study the writings of theorists of republicanism. Two distinct species of republican ideology arose as a result--one, the more nearly classical, may be described as puritan, and was concentrated in New England; the other, the more modern, may be described as agrarian and was concentrated in the tobacco belt.