Because the United States began as a confederation of sovereign states, its Constitution of 1787 gave special status to the representation of sectional interests distinguishing citizens according to the state government that had jurisdiction over them. The Constitution took no explicit account of the interests associated with various functional economic groups--farmers, sailors, merchant, and so forth. Our system of federalist checks and balances was supposed to solve the problem of rivalrous functional interests by recognizing the police powers of the separate state governments and, within the national government, by establishing three separate but interdependent branches. This plan was intended to frustrate any schemes promoted by economic factions, at least at the national level. For a century and a half the system worked more or less as intended, but it was never completely successful.

        National Economic Interests?

        Although the Constitution made no provision for formal economic representation, the politicians and organized private groups proceeded to established facto what the framers of the Constitution had hoped to prevent. In the late nineteenth century, as the national economy became more tightly integrated, national economic interest groups--manufacturers, railroad companies, investment bankers, farm organizations, and labor unions--reallocated their lobbying efforts from the states to the national government. By the early twentieth century, the influence of these broad economic factions on policy-making could be clearly discerned. Certain Progressive intellectuals, most notably Herbert Croly, argued that effective government required a reorganized structure that would recognize and deal directly with powerful private actor in the modern, highly organized economy. Proposals proliferated for some kind of formal cooperation or partnership of business, labor, and government.