Under the colonial system of home rule, Americans acquired substantial experience with self-government. Each of the thirteen colonies had an elected legislature that worked with a royal governor to manage its domestic affairs. Trade, defense, and other aspects of foreign policy were controlled by Great Britain. Starting in the 1750s, attempts to compel the colonies to absorb a larger share of the costs of the common defense strained relations between the Crown and its American subjects.

On the eve of the Revolutionary War, America had many leaders, but none had experience in forming collective agreements across the original thirteen colonies, soon to be states. The first attempt to create a national government, the Articles of Confederation, minimized conformity costs by giving each state a veto over national policy. However, the transaction costs associated with change proved too high. The inability to compel states to contribute to the war effort nearly doomed America’s drive for independence. The timely infusion of cash and military personnel from France, rather than effective institutions, ultimately defeated the British.

America’s difficulties in fulfilling its collective obligations persisted after the war. In 1787 delegates gathered in Philadelphia to reform the Articles of Confederation. Rather than reform existing institutions, the deliberations resulted in a plan for a new form of government. The Constitution reflected the highest political and economic theories of the Enlightenment. Many of the institutions it created, however, were born of compromises among state and sectional interests. The bicameral national legislature sought to balance the influence of large and small states. Provisions protecting slavery and counting slaves as three-fifths of a person for the purposes of apportioning legislative seats helped shore up support in Southern states.

The difficult fight to ratify the Constitution in the thirteen states was led by three nationalists—Alexander Hamilton, John Jay, and James Madison—who penned the essays that became The Federalist Papers. These essays, including Madison’s powerful argument in Federalist No. 10 for pluralism as an antidote to factions, provide the clearest articulation of the theory underlying the Constitution. The new national government that emerged from the Convention of 1787 was weaker than Madison and others had wanted, but it far surpassed the Articles’ anemic institutions and laid the foundation for the expansion of federal power over the last two centuries.