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September 2014 Policy Study, Number 14-4


A Citizens Introduction to Federalism: Federalism and the Future of Constitutional Government


Part V: A Brief Historical Review of Federalism



The debate over the nature of the Union would take center stage and ultimately result in the American Civil War. As mentioned earlier, the dual federalism model held throughout the 1800s even with the disagreements over federal and state power. One policy area that caused disagreement was in internal improvements. Internal improvements consisted of federal financial support for the building of roads, canals, railroads, and other infrastructure projects. Both Thomas Jefferson and James Madison shared a strict constructionist view of the Constitution and believed that internal improvements were a state responsibility, unless a clear national interest was at stake. Policymakers in considering legislation also took the Constitution seriously and many historic debates occurred over the Constitution in Congress.


Burton W. Folsom, Jr., an economic historian, wrote:


Our first Presidents viewed spending bills very differently. The first question they usually asked was, ‘Is this spending constitutional?’ Only if the answer was yes would they then ask if it was wise, if it would benefit the nation, or if it would gain votes.[123]


Folsom argues that “these early Presidents viewed the Constitution as a binding document that separated the powers of government for a purpose.”[124] When Jefferson won the presidential election of 1800, the Democratic-Republicans repealed much of the Hamiltonian economic program, allowed the charter of the Bank of the United States to expire, and cut spending. James Madison followed Jefferson’s philosophy when he was elected President, and the Democratic-Republicans cut spending so much that the nation was ill-prepared both militarily and economically for the War of 1812.


The strict constructionist philosophy also applied to internal improvements. Policymakers who favored federal support for internal improvements believed that not only was Hamilton correct, but it was in the national interest to invest in infrastructure. National Republicans, later members of the Whig Party, such as Henry Clay and John Quincy Adams, believed in what Clay called the American System. The American System called for federal support for internal improvements, a protective tariff, and a national bank. This agenda was opposed by the Democratic-Republicans and later Democrat Party under the leadership of Andrew Jackson.


Madison himself vetoed a spending bill on internal improvements, which was called the Bonus Bill. Although Madison agreed that spending on internal improvements would aid the country, he also argued that Congress did not have the authority to appropriate money for internal improvements.[125] “Madison believed, however, that the country was better off following the Constitution rather than twisting its meaning to secure more rapid economic growth. If we want federal road-building, then pass a constitutional amendment to permit it,” wrote Burt Folsom.[126]


During the Early Republic, the Federalists began to lose power, and with the election of Jefferson in 1800 the only stronghold the Federalists maintained in the federal government was in the Supreme Court. The Supreme Court has played and continues to play a significant role in constitutional issues, especially dealing with federalism. John Marshall, a Federalist from Virginia, was instrumental in establishing the strength of the Supreme Court and upholding Hamilton’s constitutional philosophy. As Chief Justice of the Supreme Court, Marshall’s legacy is a period of constitutional nationalism. Although examining the entire Marshall Court is far beyond the scope of this essay, it is important to examine two cases in regard to federalism.


In Marbury v. Madison, Chief Justice John Marshall elevated the status of the Court with the doctrine of judicial review, which states that the Supreme Court has the authority to declare a law unconstitutional. Later this also applied to striking down state laws that the Court ruled as unconstitutional. Marshall defended the Supremacy Clause of the Constitution and he was criticized, because Article III does not address the doctrine of judicial review. As Jefferson stated:


The opinion which gives to the judges the right to decide what laws are constitutional and what not, not only for themselves, in their own sphere of action, but for the Legislature and Executive also in their spheres, would make the Judiciary a despotic branch.[127]


Marshall’s constitutional nationalism also upheld the implied powers of the Constitution in order to charter a second Bank of the United States. In the aftermath of the War of 1812, Congress passed legislation to charter a second National Bank.


Democratic-Republicans and later Democrats opposed the creation of a national bank and believed that state banks were sufficient. Democrats under the leadership of President Andrew Jackson not only saw the second Bank of the United States as a source of corruption and foreign influence, but also unconstitutional. Jackson despised the second Bank of the United States and its chief supporter in the 1830s, Henry Clay. The constitutionality of the second Bank of the United States came before the court in McCulloch v. Maryland in 1819. The state of Maryland had tried to tax the second Bank of the United States and Chief Justice Marshall ruled that not only could a state not tax the federal government, but the second Bank of the United States was constitutional. Marshall’s legacy of constitutional nationalism is essential to the history of federalism:


John Marshall’s signal achievement was to vindicate federal authority against state attempts to deny the supervisory power of the federal government, which would have made the federal union in effect a confederation of sovereign states. Marshall accomplished this purpose by writing into constitutional law the theory of national-supremacy federalism. Its central principle was that the federal government, founded by the constituent act of the people of the United States, possessed sovereign power in relation to the objects or purposes assigned to it by the Constitution. In the proper exercise of its constitutional powers, this government could control any person or other government within the territorial United States.[128]


Marshall may have provided constitutional validity to the second Bank of the United States, but Jackson would ultimately win his war with the Bank when he vetoed the bill to re-charter the Bank. Jackson not only killed the Second Bank of the United States, but he also followed Madison’s direction by vetoing internal improvement bills. As President, Jackson also paid off the national debt, which he saw as only possible by following the Constitution.


Andrew Jackson may have disagreed with Chief Justice John Marshall over several constitutional issues, but one area where they found common ground was over the nature of the Union. Jackson was a states’ rights Democrat, and just as with his colleague and Chief Justice of the Supreme Court Roger B. Taney, believed strongly in dual federalism and a limited role for the federal government. Jackson rejected the theories of nullification and secession and believed they were treasonous, and he would have to deal directly with these issues in the Nullification Crisis of 1832.


This constitutional crisis started when Congress passed a tariff in 1828, which was opposed by many in the South. Southerners viewed tariffs as benefiting northern manufacturers at their expense, and the tariff of 1828 was labeled the “Tariff of Abominations” by many in the South, especially in South Carolina. John C. Calhoun, who served as Vice President and later Senator from South Carolina, drafted the South Carolina Exposition and Protest, which outlined South Carolina’s grievances with the tariff. Building on the Virginia and Kentucky Resolutions, John C. Calhoun defended the theory of nullification and the ability for states to check the federal government.


South Carolina nullified the tariff and Andrew Jackson responded sharply. Jackson “declared nullification illegal and the Union indissoluble,” and he even responded by sending a fleet of ships into Charleston Harbor to signal his ability to enforce federal law.[129] Jackson also struck at the heart of the Compact Theory of the Union when he stated that the “Constitution of the United States, then, forms a government, not a league, and whether it be formed by the States, or in any other manner, its character is the same.”[130] He also described South Carolina’s actions as “treason.”[131] The Nullification Crisis of 1832 eventually came to an end when South Carolina backed down and a revised tariff bill was passed by Congress. Although the nullification controversy had ended, it still did not resolve the growing tensions between North and South over issues such as slavery and the growth of federal power.


The American Civil War was a turning point in the history of federalism and in the history of the United States. Although the issue of slavery was a major factor in causing the war, it was only part of a larger constitutional question. The Civil War was also fought over the nature of the Union and the role of the states within the Union:


Was the Union older than the states? Or was it the other way around? Did the Framers of the Constitution create a perpetual Union, a truly national government with substantial powers? Or did they create a mere voluntary federation of sovereign states? These questions, for which there were impressive and persuasive arguments on both sides, were almost continuously debated from the birth of the Republic to the end of the Civil War. In effect, the Civil War settled the issue of state sovereignty vs. nationalism by military force.[132]


The eleven states of the south, starting with South Carolina which was the hotbed of secession, seceded from the Union and formed the Confederate States of America. The Confederate States of America formed its government based on the philosophy of states’ rights and the defense of the institution of slavery. Abraham Lincoln, who was elected President in the 1860 election, refused to recognize the Confederate States of America, and he argued, just as Jackson did during the Nullification Crisis, that secession was illegal. Lincoln referred to the Southern states as “states in rebellion.”


President Lincoln’s eventual victory in the Civil War in April 1865 settled a number of issues including slavery and the issue of secession:


The victory of the Union fundamentally changed nation-state relations forever. Most obviously, it settled that the states were subordinate entities in the American scheme of government. The concept of states as sovereign bodies that had created a ‘compact’ of the Constitution, and were thus ultimately superior to the national government and able to withdraw from it, was dead.[133]


Federal policy also changed during the Civil War. The Democrat Party had been split in half with Southern Democrats leaving Congress to join the Confederacy, and this left members of the Republican Party an open door to legislate. The Republican Party favored nationalist legislation in the tradition of Alexander Hamilton, and they passed historic legislation including: the Homestead Act, which encouraged westward settlement through the sale of cheap land; the Morrill Act, which provided land grants for the use of establishing colleges for agriculture and mechanics; the Pacific Railroad Act, which provided funding to create a transcontinental railroad to connect East and West; legislation to increase tariffs; and the National Banking Acts. Even with these Hamiltonian policies the federal government was still limited.


Scholars are still debating the impact the Civil War had on federalism. It is clear that President Lincoln utilized vast executive powers during the Civil War. Even Confederate President Jefferson Davis faced staunch criticism in the Confederacy for centralizing power during the Civil War. The question that is still being debated is the Civil War’s impact on the growth of the federal government. As Peter Zavodnyik wrote:


While the federal establishment lost much of its excess weight in the years after the war, the precedents established during the conflict remained. The Civil War saw the national government make its first foray into financial regulations with its establishment of a network of national banks. State educational institutions received federal funds for the first time and the tax code was deployed to penalize activities viewed unfavorably by Washington. Agriculture won for itself a place at the table with the formation of a department devoted to its interests. These initiatives would serve as important precedents in coming years.[134]


Allen C. Guelzo, a historian of the American Civil War and Abraham Lincoln, argues that it is wrong to consider Lincoln the cause of government centralization:


There is nothing obtuse about seeking long-term causes for the emergence of a federal government that has grown to such a gargantuan size that the entire American system seems to have become a relentless, interfering bureaucracy rather than an of-by-and-for-the-people democracy. But the effort to hang this around Lincoln’s neck is both naïve and ill-informed…There is no doubt that the wartime emergency of 1861-1865 called out a significant increase in the size and scope of the federal government; what is important to notice, however, is that:

  • This increase was in response to a threat to the very life of the republic,
  • It bears no proportional resemblance to the scope of modern ‘big government,’ and,
  • The increase shrank back to its prewar proportions with no sense of having established a permanent precedent, much less a government-knows-best philosophy.[135]

The Civil War also changed federalism through the Civil War or Reconstruction Amendments. With the destruction of the institution of slavery, Republicans pushed and amended the Constitution with the 13th, 14th, and 15th Amendments. As Eugene Hickok stated:


The Thirteenth Amendment abolished slavery, the Fourteenth Amendment’s primary purpose was to establish the legal and political rights of newly freed slaves, and the Fifteenth guaranteed former slaves the right to vote. The Fourteenth Amendment in particular also helped to usher in dramatic changes in how the Constitution would shape the new relationship between the states and the Bill of Rights. The Fourteenth Amendment (adopted in 1868) provides, in part, that ‘No State shall…abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.’[136]


Before the Civil War no definition of citizenship had existed and in the Dred Scott case the Supreme Court ruled that slaves were not citizens. Now with slavery abolished the Civil War Amendments strengthened the federal government’s role in regard to civil rights. The14th Amendment’s legacy is still controversial because it eventually is utilized by progressives in their “modern rights revolution” such as the “right to privacy.”[137]


In the aftermath of the Civil War, the United States began an economic transformation from an agrarian to an industrial economy. By 1890 the census declared the western frontier closed and the United States was a manufacturing powerhouse. This was the age of industrialization, or otherwise referred to as the Gilded Age. Large corporations ranging from railroads, to steel, to oil, among others, turned the United States into an economic powerhouse. The federal government, although still limited, promoted economic development through policies such as the protective tariff. As Peter Zavodnyik wrote:


During the last quarter of the nineteenth century, the federal government involved itself in matters not included among its enumerated powers, including education, agriculture, and labor. An intricate web of financial relationships between the American people and their national government grew steadily, as federal policies in a variety of areas affected the daily lives of citizens.[138]


The growth of industry and urbanization also brought political, social, and economic problems, and it created a public outcry from a number of factions such as farmers and labor for both the federal and state governments to start regulating business and the economy.




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