DISCLAIMER: I am not a historian nor a political scientist. I do have a fascination and interest in the Constitution and so I started reading the Federalist Papers and posting my interpretation on my own blog. I thought it might be of some interest here. Your interpretations and thoughts are greatly appreciated in the comments!
You can find the Federalist Papers in their entirety at The Library of Congress website.
Federalist No 7. and links to the previous papers below the fold and also previously posted at my LiveJournal
Federalist No. 1 here
Federalist No. 2 here
Federalist No. 3 here
Federalist No. 4 here
Federalist No. 5 here
Federalist No. 6 here
Federalist No. 7 continues Hamilton's discussion of the dangers of dissension among the states.
In the first part of this essay Hamilton points to territorial disputes as a potential major source of dissension between states. He reminds the reader that the young nation has much unsettled land for which opposing claims could be made by many states. He then describes a contemporary dispute involving Pennsylvania and Connecticut known as the Pennamite-Yankee War which was a dispute between Connecticut settlers of the Wyoming Valley and settlers of Pennsylvania.
King Charles II of England had granted the land to Connecticut in 1662, and also to William Penn in 1681. The charter of each colony assigned the territory to the colony; thus overlapping land claims existed. Both colonies purchased the same land by treaties with the Indians. Connecticut sent settlers to the area in 1754. Yankee settlers from Connecticut founded the town of Wilkes-Barre in 1769. Armed bands of Pennsylvanians (Pennamites) tried without success to expel them in 1769-70, and again in 1775. The "wars" were not particularly bloody—in the First Pennamite war, two men from Connecticut were killed and one from Pennsylvania in the course of two years. Pennsylvania followed suit and established a settlement through two lessees, Ogden and Stewart.
In 1771, Connecticut's claim was confirmed by by King George III. In 1773, more settlers from Connecticut erected a new town, which they named Westmoreland. However, the Pennsylvanians refused to leave, and, in December 1775, the militia of Northumberland County, Pennsylvania, actually made an abortive attack on a Connecticut settlement. On July 3, 1778, the infamous Wyoming Massacre occurred, which was an episodic event within the Pennamite-Yankee War period.
Hamilton then appeals directly to the citizens of New York reminding them about the dispute with Vermont.
Originally inhabited by Native American tribes (Abenaki, and Iroquois), the territory that is now Vermont was claimed by France but became a British possession after France's defeat in the French and Indian War. For many years, the surrounding colonies disputed control of the area, especially New Hampshire and New York. Settlers who held land titles granted by these colonies were opposed by the Green Mountain Boys militia, which eventually prevailed in creating an independent state, the Vermont Republic, which was founded during the Revolutionary War and lasted for 14 years.
Hamilton reminds the reader that the dispute between New York and Vermont concerned other nearby states New Hampshire, Connecticut, Rhode Island, Massachusetts, and even Maryland. This is a good example of how a seemingly regional territorial dispute could have quickly spread to other states as the essentially became an issue of small states vs. large states.
The next potential source of dispute among the states or confederacies would involve issues of commerce. Just as Jay had used commerce as a potential source of threats from foreign entities in Federalist No. 4 the same kind of argument is made my Hamilton here applied to states. It was obvious that some states had resource advantages that gave them trade advantages. New York collected duties on its imports. Hamilton then argues that citizens of neighboring New Jersey and Connecticut would likely argue against being taxed by the State of New York.
Would Connecticut and New Jersey long submit to be taxed by New York for her exclusive benefit? Should we be long permitted to remain in the quiet and undisturbed enjoyment of a metropolis, from the possession of which we derived an advantage so odious to our neighbors, and, in their opinion, so oppressive? Should we be able to preserve it against the incumbent weight of Connecticut on the one side, and the co-operating pressure of New Jersey on the other? These are questions that temerity alone will answer in the affirmative.
The next source of potential disputes among the states cited by Hamilton involved the issue of public debt. The biggest issue facing the young nation just after the Revolutionary War was the war debt:
The greatest adverse economic legacy of the war, however, was currency and debt. Continental currency had an enormous inflation rate and had depreciated dramatically. To make matters worse, the national government owed approximately $12 million in foreign debt and $44 million in domestic debt; and state governments owed approximately $25 million, mostly in war debts. The primary concerns of post-war economic planners were reducing the inflation rate and raising the value of the currency; and repaying and financing government war debts.
The issue as Hamilton viewed it as a source of dispute was how to fairly divide the debt amongst the states. Hamilton postulates that even if agreement was made about the division of debt, unforeseen practical circumstances might make the arrangement unworkable for some states.
If even the rule adopted should in practice justify the equality of its principle, still delinquencies in payments on the part of some of the States would result from a diversity of other causes--the real deficiency of resources; the mismanagement of their finances; accidental disorders in the management of the government; and, in addition to the rest, the reluctance with which men commonly part with money for purposes that have outlived the exigencies which produced them, and interfere with the supply of immediate wants. Delinquencies, from whatever causes, would be productive of complaints, recriminations, and quarrels. There is, perhaps, nothing more likely to disturb the tranquillity of nations than their being bound to mutual contributions for any common object that does not yield an equal and coincident benefit. For it is an observation, as true as it is trite, that there is nothing men differ so readily about as the payment of money.
The last sentence sums up the entire argument and it remains true to this day.
Hamilton then closes out this paper with the issue of contracts between states as a source of dispute. He gives and example between Connecticut and Rhode Island (but I am unable to track down this particular example). He argues that it would be expected that a loose confederation of the states would result in the same kinds of regional disputes that entangled contemporary Europe.
From the view they have exhibited of this part of the subject, this conclusion is to be drawn, that America, if not connected at all, or only by the feeble tie of a simple league, offensive and defensive, would, by the operation of such jarring alliances, be gradually entangled in all the pernicious labyrinths of European politics and wars; and by the destructive contentions of the parts into which she was divided, would be likely to become a prey to the artifices and machinations of powers equally the enemies of them all. Divide et impera must be the motto of every nation that either hates or fears us.
Hamilton closes reiterating that a loose confederation, subject to weakening by internal disputes, would then be susceptible to foreign threats, magnifying the danger to the new nation.