Rethinking the Articles of Confederation
The American confederation was destined to become a free-trade area, even without a consolidated union. Hamilton, in Federalist No. 12, all but admitted, and complained, that such would be the case. He worried that the multiplicity of state jurisdictions would keep tariffs too low and variable for the raising of sufficient revenue or the provision of industrial promotion.
The relative situation of these States; the number of rivers with which they are intersected, and of bays that wash their shores; the facility of communication in every direction; the affinity of language and manners; the familiar habits of intercourse – all these are circumstances that would conspire to render an illicit trade between them a matter of little difficulty and would insure frequent evasions of the commercial regulations of each other. The separate States or confederacies would be necessitated by mutual jealousy to avoid the temptations to that kind of trade by the lowness of their duties.