The Republic of Virtue: How We Tried to Ban Corruption, Failed, and What We Can Do About It

by F.H. Buckley

In Federalist 81, Hamilton noted that cases where “the state tribunals cannot be supposed to be impartial” would be decided in federal court. By dividing things up in this way, the Framers offered Americans the best of both worlds. Purely federal matters would belong in federal courts, and we wouldn’t have Texas treaties that conflict with New York treaties. And since diversity cases would belong in federal courts, we’d also be saved from state courts sticking it to out-of-state defendants. At the same time, letting state courts decide on purely in-state disputes would give states the incentive to adopt the best set of laws. States would compete with each other in their legal regimes, just as they had competed for migrants by liberalizing their policies according to the Frontier Thesis of Frederick Jackson Turner. There would be experimentation with different tort and contract laws in what Justice Louis Brandeis called the “laboratory” of the states,11 and then each state could look at the others to see what works and what doesn’t.