Until recently, legal and political theory has been dominated by the untested hypothesis that local government functions in a legal system crippled and frustrated by state and federal limitations. It has been asserted that the constitutional limitations historically imposed by state governments on the truncated and dependent local governments has frustrated the proper and natural development of municipal government in the U.S. and accounts for a whole host of contemporary problems. The fundamental power of American local government has been shaped by this "strict" construction of its power, a construction enforced through both state and federal court decisions down through the twentieth century. Dr. Monkkonen is conducting a socio-legal historical analysis of the efforts of state government to control or limit the indebtedness of local governments in the nineteenth century. His preliminary work at the state level indicates that there is no association between states that did and did not impose debt limits on the subsequent indebtedness of local governments. He will now examine legal control of local politics beginning with the Illinois constitution of 1870 as the basis for investigation. He will reanalyze data from a survey of 1200 local governments in Illinois in 1870 together with the censuses of 1870 and 1880 to study the impact of the imposition of debt limits between these dates. Local variations will be studied and extensive archival analyses in a subset of communities will be conducted to understand the political dynamics of variations. Issues that will be explored in the analysis include the nature of corporate, fiscal behavior, how government entrepreneurship was determined, the relationship between levels of government and popular political action, and the success of regulatory laws. Most importantly, the research takes an era of experimentation with local government entrepreneurship and examines whether externally mandated regulations constrict emergent, local public/private capital development or whether municipal corporations (local governments) limit their own fiscal behavior, with the main restriction to local fiscal behavior coming from risk aversive voters more than from any external controls. The Illinois survey and subsequent fiscal limitation activities represent a unique opportunity to examine the interactions between law, politics, and finance. The building and behavior of the American "state" has become a priority agenda for both theory and empirical research. The empirical results of this research will add new evidence that possibly the local state, not the national state, was the locus of American state building and provided a form of corporate entrepreneurship.
