Compact theory in the United States 
Regarding the Constitution of the United States, the compact theory holds that the nation was formed through a compact agreed upon by all the states, and that the federal government is consequently a creation of the states. Consequently, states should be the final arbiters over whether the federal government had overstepped the limits of its authority as set forth in the compact.
Arguments in favor of the theory 
Leading proponents of this view of the U.S. Constitution primarily originated from Virginia and other southern states. Notable proponents of the theory include Thomas Jefferson, James Madison, St. George Tucker, John Taylor of Caroline, and Abel P. Upshur.
Under this theory and in reaction to the Alien and Sedition Acts of 1798, Jefferson claimed the federal government overstepped its authority, and advocated nullification of the laws by the states. The first resolution of the Kentucky Resolutions began by stating:
Resolved, that the several States composing the United States of America, are not united on the principles of unlimited submission to their General Government; but that by compact under the style and title of a Constitution for the United States and of amendments thereto, they constituted a General Government for special purposes, delegated to that Government certain definite powers, reserving each State to itself, the residuary mass of right to their own self Government; and that whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force; that to this compact each state acceded as a state, and is an integral party; that the Government created by this compact was not made the exclusive or final judge of the extent of the powers delegated to itself; since that would have made its discretion, and not the Constitution, the measure of its powers; but that, as in all other cases of compact among powers having no common judge, each party has an equal right to judge for itself, as well of infractions as of the mode and measure of redress.
Arguments against the theory 
Others have taken the position that the federal government is not a compact among the states, but instead was formed directly by the people, in their exercise of their sovereign power. The people determined that the federal government should be superior to the states. Under this view, the states, which are not parties to the Constitution, do not have the right to determine for themselves the proper scope of federal authority, but instead are bound by the determinations of the federal government. The state of Vermont took this position in response to the Kentucky Resolutions. Daniel Webster advocated this view in his debate with Robert Hayne in the Senate in 1830:
[I]t cannot be shown, that the Constitution is a compact between State governments. The Constitution itself, in its very front, refutes that idea; it, declares that it is ordained and established by the people of the United States. So far from saying that it is established by the governments of the several States, it does not even say that it is established by the people of the several States; but it pronounces that it is established by the people of the United States, in the aggregate. . . . When the gentleman says the Constitution is a compact between the States, he uses language exactly applicable to the old Confederation. He speaks as if he were in Congress before 1789. He describes fully that old state of things then existing. The Confederation was, in strictness, a compact; the States, as States, were parties to it. We had no other general government. But that was found insufficient, and inadequate to the public exigencies. The people were not satisfied with it, and undertook to establish a better. They undertook to form a general government, which should stand on a new basis; not a confederacy, not a league, not a compact between States, but a Constitution; a popular government, founded in popular election, directly responsible to the people themselves, and divided into branches with prescribed limits of power, and prescribed duties. They ordained such a government, they gave it the name of a Constitution, therein they established a distribution of powers between this, their general government, and their several State governments.
The leading nineteenth century commentary on the Constitution, Justice Joseph Story's Commentaries on the Constitution of the United States (1833), likewise rejected the compact theory, concluding that the Constitution was established directly by the people, not by the states, and that it constitutes supreme law, not a mere compact.
In the years before the Civil War, the compact theory was used by southern states to argue that they had a right to nullify federal law and to secede from the union. For example, during the Nullification Crisis of 1828-1832, John C. Calhoun argued in his South Carolina Exposition and Protest that the states, as the parties to a compact, had the right to judge for themselves whether the terms of the compact were being honored. Calhoun described this "right of judging" as "an essential attribute of sovereignty," which the states retained when the Constitution was formed. Calhoun said the states had the right to nullify, or veto, any laws that were inconsistent with the compact.
When the southern states seceded in 1860-61, they relied on the compact theory to justify secession. The southern states argued that the northern states had violated the compact by undermining and attacking the institution of slavery and the slaveholders' property rights in their slaves. The southern states stated that they therefore were justified in withdrawing from the compact among the states.
The United States Supreme Court has rejected the idea that the Constitution is a compact among the states. Rather, the Court has stated that the Constitution was established directly by the people of the United States, not by the states.
In one of the Supreme Court's first significant decisions, Chisholm v. Georgia (1793), Chief Justice John Jay stated that the Constitution was established directly by the people. Jay noted the language of the Preamble of the Constitution, which says that the Constitution was ordained and established by "We the people," and stated: "Here we see the people acting as sovereigns of the whole country, and, in the language of sovereignty, establishing a Constitution by which it was their will that the State governments should be bound."
In Martin v. Hunter's Lessee (1816), the Supreme Court explicitly rejected the idea that the Constitution is a compact among the states, stating: "The Constitution of the United States was ordained and established not by the States in their sovereign capacities, but emphatically, as the preamble of the Constitution declares, by 'the people of the United States.'" The Court contrasted the earlier Articles of Confederation with the Constitution, characterizing the Articles of Confederation as a compact among states, while stating that the Constitution was established not by the states, but by the people.
Likewise, in McCulloch v. Maryland (1819), the Supreme Court stated that the federal Constitution proceeded directly from the people, and was not created by the states. The Court stated that the Constitution was binding on the states and could not be negated by the states. The Court again contrasted the Articles of Confederation, which was established by the states, to the Constitution, which was established by the people.
After the Civil War, in Texas v. White (1869), a case discussing the legal status of the southern states that had attempted to secede, the Supreme Court stated that the union was not merely a compact among states; rather, the union was "something more than a compact."
Compact theory in Canada 
In the Canadian context, compact theory posits that Confederation was an agreement between the two founding peoples, French and English, and that therefore Quebec should have special veto powers relating to its position in the federal structure. However, compact theory was rejected by the Supreme Court of Canada in the 1981 Patriation Reference. Compact theory is often advanced by Quebec nationalists.
See also 
- Kentucky Resolutions of 1798; see also "Reclaiming the American Revolution," Wm. J. Watkins, Jr.,Palgrave MacMillan, 2008, p.165.
- In response to the Kentucky Resolutions' assertion that the states formed the federal government by compact and retained the right to judge the federal government's laws, Vermont said: "This cannot be true. The old confederation, it is true, was formed by the state Legislatures, but the present Constitution of the United States was derived from an higher authority. The people of the United States formed the federal constitution, and not the states, or their Legislatures. And although each state is authorized to propose amendments, yet there is a wide difference between proposing amendments to the constitution, and assuming, or inviting, a power to dictate and control the General Government." Anderson, Frank Maloy (1899). "Contemporary Opinion of the Virginia and Kentucky Resolutions". American Historical Review. p. 233.
- Webster's Second Reply to Hayne, January 26, 1830
- Story wrote: "In what light, then, is the constitution of the United States to be regarded? Is it a mere compact, treaty, or confederation of the states composing the Union, or of the people thereof, whereby each of the several states, and the people thereof, have respectively bound themselves to each other? Or is it a form of government, which, having been ratified by a majority of the people in all the states, is obligatory upon them, as the prescribed rule of conduct of the sovereign power, to the extent of its provisions? . . . There is nowhere found upon the face of the constitution any clause, intimating it to be a compact, or in anywise providing for its interpretation, as such. On the contrary, the preamble emphatically speaks of it, as a solemn ordinance and establishment of government. The language is, 'We, the people of the United States, do ordain and establish this constitution for the United States of America.' The people do ordain and establish, not contract and stipulate with each other. The people of the United States, not the distinct people of a particular state with the people of the other states. The people ordain and establish a constitution,' not a confederation.' . . . Nor should it be omitted, that in the most elaborate expositions of the constitution by its friends, its character, as a permanent form of government, as a fundamental law, as a supreme rule, which no state was at liberty to disregard, suspend, or annul, was constantly admitted, and insisted on, as one of the strongest reasons, why it should be adopted in lieu of the confederation." Story, Joseph (1833). Commentaries on the Constitution of the United States 1. Boston: Hilliard Gray & Co. pp. 318–319, 326.
- "[T]he sovereign powers delegated are divided between the General and State Governments, and that the latter bold their portion by the same tenure as the former, it would seem impossible to deny to the States the right of deciding on the infractions of their powers, and the proper remedy to be applied for their correction. The right of judging, in such cases, is an essential attribute of sovereignty, of which the States cannot be divested without losing their sovereignty itself, and being reduced to a subordinate corporate condition. In fact, to divide power, and to give to one of the parties the exclusive right of judging of the portion allotted to each, is, in reality, not to divide it at all; and to reserve such exclusive right to the General Government (it matters not by what department to be exercised), is to convert it, in fact, into a great consolidated government, with unlimited powers, and to divest the States, in reality, of all their rights. . . . But the existence of the right of judging of their powers, so clearly established from the sovereignty of States, as clearly implies a veto or control, within its limits, on the action of the General Government, on contested points of authority. . . . May the General Government . . . encroach on the rights reserved to the States respectively? To the States respectively each in its sovereign capacity is reserved the power, by its veto, or right of interposition, to arrest the encroachment." South Carolina Exposition and Protest, 1828
- For example, South Carolina's statement of secession said: "Thus was established, by compact between the States, a Government with definite objects and powers, limited to the express words of the grant. . . . [T]he constituted compact has been deliberately broken and disregarded by the non-slaveholding States, and the consequence follows that South Carolina is released from her obligation. . . . Those States have assumed the right of deciding upon the propriety of our domestic institutions; and have denied the rights of property established in fifteen of the States and recognized by the Constitution; they have denounced as sinful the institution of slavery; they have permitted open establishment among them of societies, whose avowed object is to disturb the peace and to eloign the property of the citizens of other States. They have encouraged and assisted thousands of our slaves to leave their homes; and those who remain, have been incited by emissaries, books and pictures to servile insurrection." Declaration of the Immediate Causes Which Induce and Justify the Secession of South Carolina from the Federal Union, 1860
- "[The people] made a Confederation of the States the basis of a general government [i.e. the Articles of Confederation]. Experience disappointed the expectations they had formed from it, and then the people, in their collective and national capacity, established the present Constitution. It is remarkable that, in establishing it, the people exercised their own rights, and their own proper sovereignty, and, conscious of the plenitude of it, they declared with becoming dignity, 'We the people of the United States, do ordain and establish this Constitution.' Here we see the people acting as sovereigns of the whole country, and, in the language of sovereignty, establishing a Constitution by which it was their will that the State governments should be bound, and to which the State Constitutions should be made to conform. Every State Constitution is a compact made by and between the citizens of a State to govern themselves in a certain manner, and the Constitution of the United States is likewise a compact made by the people of the United States to govern themselves as to general objects in a certain manner." Chisholm v. Georgia, 2 U.S. (2 Dall.) 419 (1793). Jay went on to say that the people had delegated to the federal judiciary the task of interpreting the meaning, construction, and operation of the Constitution.
- "The Constitution of the United States was ordained and established not by the States in their sovereign capacities, but emphatically, as the preamble of the Constitution declares, by 'the people of the United States.' . . . The Constitution was for a new Government, organized with new substantive powers, and not a mere supplementary charter to a Government already existing. The Confederation was a compact between States, and its structure and powers were wholly unlike those of the National Government. The Constitution was an act of the people of the United States to supersede the Confederation, and not to be ingrafted on it, as a stock through which it was to receive life and nourishment." Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304 (1816).
- "The government proceeds directly from the people; is 'ordained and established' in the name of the people, and is declared to be ordained, 'in order to form a more perfect union, establish justice, insure domestic tranquillity, and secure the blessings of liberty to themselves and to their posterity.' . . . It required not the affirmance, and could not be negatived, by the State Governments. The Constitution, when thus adopted, was of complete obligation, and bound the State sovereignties. . . . To the formation of a league such as was the Confederation, the State sovereignties were certainly competent. But when, 'in order to form a more perfect union,' it was deemed necessary to change this alliance into an effective Government, possessing great and sovereign powers and acting directly on the people, the necessity of referring it to the people, and of deriving its powers directly from them, was felt and acknowledged by all. The Government of the Union then (whatever may be the influence of this fact on the case) is, emphatically and truly, a Government of the people. In form and in substance, it emanates from them. Its powers are granted by them, and are to be exercised directly on them, and for their benefit." McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819).
- "When, therefore, Texas became one of the United States, she entered into an indissoluble relation. All the obligations of perpetual union, and all the guaranties of republican government in the Union, attached at once to the State. The act which consummated her admission into the Union was something more than a compact; it was the incorporation of a new member into the political body. And it was final. The union between Texas and the other States was as complete, as perpetual, and as indissoluble as the union between the original States." Texas v. White, 74 U.S. (7 Wall.) 700 (1869).
- Stephen Brooks, Canadian Democracy: An Introduction, 5th ed. (Don Mills, Ontario: Oxford University Press, 2007), 201.
- Brooks, 201.