The first type of government in America was based mainly on state government. Before the signing of the Constitution, America had been made up of thirteen colonies, which had been ruled by England. Following the Revolutionary War, these colonies basically governed themselves. They feared a strong central government like the one they lived with under England's rule. However, it was soon discovered that this weak form of state government could not survive and so the Constitution was drafted. The Constitution:

• defines the power of the Federal Government
• defines the relationship between the Federal Government and individual state governments
• assures the rights of United States citizens

This time, it was decided that a government system based on federalism would be established. In this form of government, power is shared between the Federal and state (local) governments. The opposite of this system of government is a centralized government, such as in France and Great Britain, where the national government holds all power.

Sharing power between the Federal Government and state governments allows us to enjoy the benefits of diversity and unity. For example, the Federal Government may set a uniform currency (money) system. Could you imagine if each state had different types of coins, each with a different value? You would need to take along a calculator to go shopping in another state. By setting up a national policy, the system is fair to everyone, and the states do not have to take on the responsibility of regulating their currency (money).