updated 7/16/2008 5:14:37 PM ET 2008-07-16T21:14:37

Delaware, the first state to ratify the Constitution, the second smallest state in area, sixth smallest in population, is a small corner of America, with some considerable claims on the national attention. The mouth of the Delaware River was explored by Henry Hudson, and the Dutch and Swedes built settlements on the west bank in the 1630s. But the three counties of Delaware owe their separate existence to the politics of the proprietors of William Penn’s colony of Pennsylvania, and to Delawareans’ own speed in ratifying the Constitution which made it literally the “First State.”

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Through most of its history, Delaware has been unusually affluent. It had the nation’s highest income levels during the early 20th century and still has high income levels today. It houses, in beautiful cobblestone mansions in its chateau country, many members of the most numerous wealthy family in America, the du Ponts. Delaware’s racial and ethnic mix is much like that of the rest of the East Coast and not that much different from the nation’s, though with more blacks and fewer Hispanics; there is a mixture here of suburbs, old immigrant neighborhoods, urban black neighborhoods, attractive beach towns and farmlands. Sussex County in southern Delaware is a world of its own. It produces more chickens that any other county in the country (chickens outnumber people by 300–1 in Delaware) and also thousands of tons of processed chicken dung (or “broiler litter”). Its beach communities are bustling with growth and there is a move toward historic preservation in the old towns inland.

For much of the last two centuries the central focus of Delaware’s economy was the business started when Eleuthere Irenee du Pont, the practical-minded son of a dreamy, idealistic French immigrant, built a gunpowder mill on the banks of Brandywine Creek in 1802. This was the first enterprise of the family du Pont, and it expanded to become one of America’s great munitions and chemical companies. It switched from gunpowder to dynamite in the 1880s and grew especially rapidly during World War I, generating so much capital that the company bought a large share of General Motors stock in the 1920s and controlled GM for 30 years when it was America’s largest corporation. DuPont capital also financed what was arguably the world’s finest research and development program. In the years on either side of World War II, DuPont prospered by bringing to the consumer and industrial markets new synthetics and plastics like rayon, nylon, synthetic dyes, cellophane, lucite, teflon, dacron, orlon, kevlar: “Better Living Through Chemistry.”

Delaware has used its status as a state to pass laws that set national policy. In the late 19th century, it passed pioneering laws of incorporation, giving more flexibility and power to managers and owners. About half of the nation’s publicly traded companies are incorporated in Delaware—their legal births take place in a federal-style building near the Capitol in Dover—which means that much of the nation’s corporate law, especially on mergers and acquisitions, is made in Delaware’s Chancery Court. Delaware takes care in choosing judges and writing corporate law to produce a reliable legal environment. In the last quarter century, Delaware has fostered a new industry: credit cards. In 1981 Governor Pete du Pont pushed through a law abolishing Delaware’s usury laws and lowering its bank franchise tax. Inflation was high, and banks were looking for a state with no limit on interest rates to locate their credit card operation. South Dakota abolished its usury law in 1980, but didn’t have a labor force large enough to support many banks; Delaware did. MBNA moved in from Maryland in 1982 and invented the affinity card in 1983; it became the nation’s largest credit card issuer and its CEO Charles Cawley replaced the du Ponts as Delaware’s most visible philanthropist and community leader. Cawley retired in 2003 and MBNA was acquired by Bank of America in 2005. But Delaware still issues most of the nation’s credit cards, DuPont is developing alternative fuels, life sciences businesses are growing (AstraZeneca has its U.S. headquarters here) and the state’s economy may surge again from the rise of an industry as little anticipated now as the credit card business was in 1980.

One way Delaware thrives is by “exporting taxes.” As Jonathan Chait, irritated at the $2 tolls and the traffic jams in the toll booths on the Delaware Turnpike, wrote in the New Republic, “The organizing principle of Delaware government is to subsidize its people at the rest of the country’s expense.” State government gets 3% of its operating budget from the Turnpike tolls, 22% from corporate and franchise taxes and 9% from slot machines, mostly patronized by out-of-staters. A 1993 U.S. Supreme Court decision has allowed Delaware to tax unclaimed property from other states. Exporting taxes has allowed Delaware to be one of the five states with no sales tax and, first under du Pont and then under Republican Mike Castle and Democrat Tom Carper, to lower its income tax several times. The Census Bureau reports that Delaware’s state government has the fifth highest revenue per capita of any state, but the Tax Foundation reports that it has the third lowest per capita revenue derived from its own residents. Delaware boosters can argue that its state policies have enabled America’s industrial economy to grow robustly, have provided easy credit to millions and have led the nation in a virtuous cycle of lowering taxes. Certainly Delaware has done well. Its population grew 18% in the 1990s and another 9% from 2000 to 2006—faster than any other state in the East or Midwest.

Delaware is on both sides of the Mason-Dixon line; it has immigrant communities in the Wilmington area and southern-accented farmers in Kent and Sussex Counties (plus Latino migrants working in its chicken plants); its New Castle County suburbs range from very affluent to not-so-affluent. Well-preserved 18th century buildings line the streets of New Castle, the capital in 1776–77, while mansions gaze out over rolling countryside in Centreville, north of Wilmington. Newark has grown from a country crossroads to a small city as the University of Delaware has expanded; new housing has sprung up along U.S. 40 west of Wilmington while some country towns have changed little since the 1950s. Delaware’s considerable variety has produced a robust two-party politics in which tiny Delaware has often voted like the nation as a whole. But in the 1990s Delaware, like so many of America’s largest metro areas, trended toward the Democrats. Now Democrat Ruth Ann Minner holds the governorship and both U.S. Senate seats—Joseph Biden was first elected in 1972, Tom Carper in 2000—are held by Democrats. Former Republican Governor Mike Castle holds the state’s single seat in the U.S. House. In 2000 Al Gore carried the state 55%-42% and in 2004 John Kerry carried it 53%-46%; it was not a target state, but it got plenty of ads because most of it is in the Philadelphia media market. New Castle County, which casts nearly two-thirds of its votes, went 60% for Kerry, Sussex County 60% and Kent County 56% for George W. Bush. In 2006 there was a Democratic uptick. Carper’s majority surged to 70%, Castle’s fell to 57%; Democrats picked up seats in, but did not win control of, the state House. In a closer contest, Joseph Biden’s son Beau Biden was elected attorney general by a 53%-47% margin.

Delaware elections are not bitter contests. Thanks to the state’s small size there is still an intimacy to politics here. Personal campaigning is still important; voters are not surprised to run into their senators in the supermarket. Successful Delaware politicians are almost always nice people; they couldn’t get elected otherwise. Then there is Delaware’s unique custom, dating back to 1792, of “Return Day.” On the Thursday after the election, winning and losing candidates come to the Sussex County seat of Georgetown and ride together in carriages to receive the bipartisan cheers of the voters and, literally, bury a hatchet in a box of Lewes beach sand. Not a bad example for the nation.

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