Article I, Section 08, Clause 04

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To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

March 23, 2011 – Article I, Section 08, Clause 04 of the United States Constitution – Guest Essayist: Horace Cooper, legal commentator and a senior fellow with The Heartland Institute

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Article 1, Section 8, Clause 4

4:  To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

Here are two special grants of authority to Congress that the framers of the Constitution agreed were necessary.  The first power is Congress’ authority “to establish an UNIFORM RULE of naturalization throughout the United States.”

Naturalization is defined as the process of becoming a citizen or the establishment of citizenship rights.  At the time of creation of our Constitution, naturalization was commonly recognized as “The act of investing aliens with the privileges of native subjects.” It was also common among most of the European nations that the law draw a distinction between being a citizen and being an alien (a visitor or temporary resident).  Arguably, this distinction, which we still observe today, existed at least as early as the foundation of the Roman Empire.

The power to establish “uniform” rules of naturalization is among only three that Alexander Hamilton identified in Federalist #32 as being exclusive powers of the federal government.  The other two being setting rules and exercising jurisdiction over the District of Columbia and the right of Congress to exclusively “lay duties on imports and exports.”

Prior to the adoption of the U.S. Constitution, the states had created their own individual rules for determining citizenship.  As sovereigns, they could do so.  However, with the ratification of the Constitution, Congress was given the authority to establish a uniform naturalization policy – one for the entire nation.

Here’s an interesting side note:  Modern readers may not be aware that throughout much of the early part of our nation’s history policymakers were aggressively trying to encourage migration to the U.S. and it was felt that by granting central authority to the Federal Government barriers to immigration could be lowered.

The lack of a uniform immigration rule was — generally speaking — considered one of many defects in the Articles of Confederation.  James Madison notes in Federalist #42 that “The dissimilarity in the rules of naturalization has long been remarked as a fault in our system, and as laying a foundation for intricate and delicate questions.”  Madison and the other founders were concerned about the fact that now that the states were a nation, should Virginia be allowed to set the naturalization rules for South Carolina or vice versa? As long as states had this citizenship power, they would in essence interfere in the ability of people who happened to arrive in a given state to be able to migrate to another state.  This would frustrate the notion that we were actually citizens of a nation.

Also in Federalist #42 Madison posits the potential that without a uniform rule for citizenship a person could become a resident of two different states – one with strict rules for admission and another with less strict.  In the event this individual committed a crime that might lead to forfeiture of his citizenship rights in one state, he could potentially argue that his rights in the other state allow him to supersede the penalty.  “The new Constitution has accordingly, with great propriety, made provision against them, and all others proceeding from the defect of the Confederation on this head, by authorizing the general government to establish a uniform rule of naturalization throughout the United States.”

Now turning to the topic of bankruptcy.  Notwithstanding Madison’s view that “The power of establishing uniform laws of bankruptcy is so intimately connected with the regulation of commerce, and will prevent so many frauds where the parties or their property may lie or be removed into different States, that the expediency of it seems not likely to be drawn into question….” there is quite a bit of discussion that could be had on this topic.

Today the discussion of bankruptcy is fraught with disputes over the moral legitimacy of needing to give bankrupt individuals a second chance versus a system that allows scofflaws to walk away from their financial obligations.  The American federal system of bankruptcy from its inception has erred on the side of the “second chance” perhaps because so many of the earliest U.S. residents were men and women who migrated for to America for a “second chance.”

Bankruptcy or insolvency is a legal status of a person who cannot repay the debts he owes to his creditors. Note that unlike naturalization law, even though bankruptcy cases are filed in United States Bankruptcy Court (units of the United States District Courts), and there are federal laws which govern bankruptcy procedure, state laws have a significant impact on the outcome of disputes.

While the framers might have dismissed the need for a comprehensive discussion on the topic – the topic of bankruptcy is not only interesting, it is example where the U.S. was quite advanced in its attitudes – well ahead of other countries of its day.

The American system is in many ways a response to the history of Bankruptcy while being much more modernist.  In England, the first official bankruptcy laws were passed in 1542, while Henry VIII ruled.   Under its terms, a bankrupt individual was considered a criminal and was subject to criminal punishment, which could range from imprisonment in debtors’ prison to hanging.  By the early Eighteenth century, a significantly more enlightened attitude dawned.  The British adopted statutes that allowed the discharge of some debts as long as debtors agreed to pay what they could afford.

Under the Articles of confederation, most states were still throwing into jail individuals who could not pay their debts.  Robert Morris, a signer of the Declaration of Independence was one of many prominent Americans subject to this indignity.   However, because of Congress’ grant of this power, the U.S. was able to take the lead in the uniquely American practice of debtor’s “relief.”   Under its terms, not only was prison ended for debtors, but also individuals could choose to initiate bankruptcy for themselves rather than wait for creditors to force them and the Court’s involvement ensured a far more equitable accounting of the debts and the ability to discharge those that simply could not be paid.

As the process of examination unfolds throughout this 90 day cycle it becomes increasingly clear that the United Constitution is a remarkable document which addresses policy issues of the past and the present in very careful and well thought out ways.

Horace Cooper is a legal commentator and a senior fellow with The Heartland Institute