So this is an intensely locally oriented political system. And liberty is understood as the preservation of this local power. There is Parliament, which arguably can pass statutes and restrain what these local institutions do. Parliament does pass navigation acts, does choose to get involved in wars, for example, when the English declare war on the French, and there's a French army on the American frontier. So Parliament has some power, and colonial legislatures also have some power. But their power is very limited, because in the end they've always got to come back to these local institutions to get anything enforced.

We need to understand the American Revolution essentially as the effort of Parliament to change this, to centralize power within the imperial British system. Because of the power of these local juries, these local militias sitting with their guns behind stone walls, and the like, the British fail to do that. That leaves the United States with basically a bunch of local communities governing themselves, with state governments a little bit on top of that, and essentially up until 1787 no national government whatever.

There are two problems with this — and I don't want to talk about the constitution, I want to talk instead about John Marshall — there are two problems with this local power. One is that dominant majorities within local communities can be extremely oppressive to minorities they don't like. Quakers, for example, in 1660, when they appeared in Massachusetts, were told to leave. If they returned, they were hanged. We should understand that these local communities were not the rule of law or liberty in any way we understand it. They were about local majorities in total control of their local communities.

The other problem is that these local juries, which are somewhat unpredictable, do not create a very good legal order, we might want to call it, for inter-jurisdictional investment. If one wants to think forty years in the future of building a railroad line, for example, one might need help getting across a locality that the locality is not willing to render. There's the problem of protecting local minorities and the problem of creating a better atmosphere for trans-jurisdictional investment that leads to an effort by what I think we fundamentally have to call Federalists — who, even though they're driven out of political power in the election of 1800, remain in control of the judiciary for the next twenty years — to create a system of law, essentially to constrain these localities.

The system of law involves things like setting aside jury verdicts when they ignore judicial instructions; having judges state the law to the jury; having those judicial statements go up on appeal to be tested by an appellate court; having the opinions on appeal published so that they could create precedents for people in the future to follow; legalizing the whole trial process by creating a legal profession without which it became, as a practical matter, quite impossible to go to court and function in court; creating a system of legal education, especially a system of interstate legal education.

The first law school is in Litchfield, Connecticut and gets up to about 100 to 200 students at any one point in time. They are from all over the country; this is not a local school. The idea was to bring together people from all over the country so as to build interstate connections that will enable people to function as members of an interstate profession rather than a local community. And it's curious that right next to the law school, which of course only admitted men, there was a women's school, a finishing school for women for which women also come from all over the country, the idea being that we're going to create this interstate elite through marriage. It happened all the time. When Litchfield collapses, Harvard replaces it.

The whole idea in the 1830s is to create what we would understand to be the rule of law: a legal profession talking to judges who were functioning independently of the real power center, localities, in order to control the excesses of local self-rule and to create a better environment for inter-jurisdictional investment. But one has to understand that in pre-Civil War America power still remained very, very intensely local — so intensely local that when some people in the South don't like who wins the 1860 election they decide they're going to leave. They are quite convinced, when they leave, that they're going to win. The precedent is the American Revolution. No military force, it was thought, could control that vast a territory as the South. They think they will win. They lose. And everything is changed by that loss. Suddenly what becomes clear, which had never been clear before, was that a coercive institution of a central government could actually go out to the localities and impose law, we might call it, or maybe we ought to call it, instead, the will of the central government.

That terrified people who were worried about what they understood to be liberty. It's important to realize that the engine of this central government is not the Executive; it's the Congress of the United States which is threatening to create a British parliamentary system by impeaching the President, by passing a statute prohibiting the President from firing his cabinet, by passing the Military Reconstruction Act of 1867 which provided that the President could not issue any orders to the army except through the General-in-Chief Ulysses Grant, who could not be fired without the consent of Congress. This is an attempt not at executive despotism, but at legislative despotism. And people who were worried about traditional liberties were terrified about this.

They go about further institutionalizing what we would now call the rule of law. They establish things like the civil service system in order to limit the power of Congress, really, over the bureaucracy. It wasn't the President who controlled the bureaucracy because civil officials were appointed on the recommendation of senators and representatives, not really the President. The civil service system is designed to restrict congressional power.