The History of Federalism

Early U.S. Supreme Court Decisions

Many early U.S. Supreme Court decisions, such as McCulloch v. Maryland, established the rights of power between federal and state governments.

Learning Objectives

Describe the three key cases that helped determine the balance of power between Congress and the States.

Key Takeaways

Key Points

  • State of Maryland placed a tax on all banks not chartered by the legislature and McCulloch, head of the Baltimore branch of the Second Bank of the U.S. refused to pay the tax.
  • The Court determined that Congress had the power to create the Bank and that Maryland could not tax the Bank without violating the Constitution.
  • Ogden purchased a license to move boats between Elizabeth, NJ and New York, NY and asked the court to restrain Gibbons from operating in those waters.
  • The Supreme Court ruled in favor of Gibbons arguing that the source of Congress’ power to promulgate the law was the Commerce Clause.
  • Barron sued the mayor of Baltimore for damages that occurred when the city diverted the flow of streams while engaging in street construction.
  • The Supreme Court decided that the Fifth Amendment ‘s guarantee that government takings of private property for public use require just compensation, is a restriction upon the federal government.

Key Terms

  • monopoly: An exclusive control over the trade or production of a commodity or service through exclusive possession.
  • litigation: The conduct of a lawsuit.

McCulloch v. Maryland (1819)

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Text of McCulloch v. Maryland decision: Handed down on March 6, 1819, the text of the McCulloch v. Maryland decision appears as recorded in the minutes of the Supreme Court

On April 8, 1916, Congress passed an act providing the incorporation of the Second Bank of the US. The Bank went into full operation in Philadelphia, Pennsylvania and in Baltimore, Maryland in 1817, carrying out business as a branch of the Bank of the US.

On February 11, 1818, the General Assembly of Maryland passed an act placing a tax on all banks not chartered by the legislature. Maryland attempted to impede operations of a branch of the Second Bank of the US by imposing a tax on all bank notes not chartered in Maryland. The Second Bank of the US was the only out-of-state bank in Maryland and the law was perceived to be targeting the US Bank. James McCulloch, head of the Baltimore Branch of the Second Bank of the US, refused to pay the tax.

The lawsuit was filed by John James, an informer seeking to collect half the fine. The case was appealed to the Maryland Court of Appeals where the state argued that the Constitution is silent on the subject of banks because the Constitution did not specifically state that the federal government was authorized to charter a bank. The court upheld Maryland and the case was appealed to the Supreme Court.

Both sides of the litigation admitted that the Bank had no authority to establish the Baltimore branch. Chief Justice John Marshall believed that the case established the principles that the Constitution grants Congress implied powers for implementing the Constitution’s expressed powers, in order to create a functional national government and that state action may not impede valid constitutional exercises of power by the federal government.

The court determined that Congress had the power to create the Bank. Marshall supported this with four arguments. First, historical practice established Congress’ power to create the Bank. Second, he argued that it was the people who ratified the Constitution and thus the people are sovereign, not the states. Third, Marshall admitted that the Constitution does not enumerate a power to create a central bank but that this is not dispositive to Congress’ power to establish such an institution. Fourth, he invoked the Necessary and Proper Clause, permitting Congress to seek an objective within its enumerated power so long as it is rationally related to the objective and not forbidden by the Constitution. The Court rejected Maryland’s interpretation of the clause and determined that Maryland may not tax the Bank without violating the Constitution.

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Gibbons v. Ogden (1824)

In 1808 The Legislature of New York granted Robert Livingston and Robert Fulton exclusive navigation privileges to waters within the jurisdiction of the state. They petitioned other states and territorial legislatures for similar monopolies, hoping to develop a national network of steamboat lines. Only the Orleans Territory accepted and awarded them a monopoly in the lower Mississippi. Competitors challenged Livingston and Fulton, arguing that the commerce power of the Federal government was exclusive and superseded state laws. In response to legal challenges, they attempted to undercut their rivals by selling them franchises or buying their boats.

Former New Jersey Governor Aaron Ogden tried defying the monopoly, but purchased a license from Livingston and Fulton in 1815 and entered business with Tomas Gibbons from Georgia. The partnership collapsed in 1818 when Gibbons operated another steamboat on Ogden’s route between Elizabeth, NJ and New York City, licensed by Congress under a 1793 law regulating coasting trade. They ended up in the New York Court of Errors, which granted a permanent injunction against Gibbons in 1820.

Ogden filed a complaint in the Court of Chancery of New York asking to restrain Gibbons from operating on those waters, contending that states passed laws on issues regarding interstate matters and states should have concurrent power with Congress on matters concerning interstate commerce. Gibbons’ lawyer argued that Congress had exclusive national power over interstate commerce according to Article I, Section 8 of the Constitution. The Court of Chancery and the Court of Errors of New York were in favor of Ogden and issued an injunction restricting Gibbons from operating his boats. Gibbons appealed to the Supreme Court, arguing that the monopoly conflicted with federal law.

The Supreme Court ruled in favor of Gibbons, arguing that the source of Congress’ power to promulgate the law was the Commerce Clause. Chief Justice Marshall’s ruling determined that a congressional power to regulate navigation is granted. The court went on to conclude that congressional power over commerce should extend to the regulation of all aspects of it.

Barron v. Baltimore (1833)

John Barron co-owned a profitable wharf in the Baltimore harbor and sued the mayor of Baltimore for damages, claiming that when the city had diverted the flow of streams while engaging in street construction, it had created mounds of sand and earth near his wharf making the water too shallow for most vessels. The trail court awarded Barron damages of $4,500, but the appellate court reversed the ruling.

The Supreme Court decided that the Fifth Amendment’s guarantee that government takings of private property for public use require just compensation is a restriction upon the federal government. Chief Justice Marshall held that the first ten amendments contain no expression indicating an intention to apply them to the state governments.

The case stated that the freedoms guaranteed by the Bill of Rights did not restrict the state governments. Later Supreme Court rulings would reaffirm this ruling and, beginning in the early 20th century, the Supreme Court used the Due Process Clause of the Fourteenth Amendment to apply most of the Bill of Rights to the states through the process of selective incorporation.

Federalism and the Civil War: The Dred Scott Decision and Nullification

The Dred Scott Decision questioned the authority of the federal government over individual states in dealing with the issue of slavery.

Learning Objectives

Identify Dred Scott and the outcome of his trials before various state and federal courts

Key Takeaways

Key Points

  • Dred Scott sued his owner for freedom in a Missouri court in 1846 claiming that his precense and residence in free territories required his emancipation. The case was dismissed because Scott failed to provide a witness testifying that he was a slave.
  • He was awarded a new trial and the Court found Scott and his family legally free.
  • The case went to the Supreme Court of Missouri which reversed the jury ‘s decision, stating that the Scotts were still legally slaves.
  • Scott sued the federal court, which held that Scott was a slave.
  • Scott appealed to the U.S. Supreme Court and the court ruled Scott was a slave and had no authority to sue because he was not a U.S. citizen.

Key Terms

  • escrow: A written instrument, such as a deed, temporarily deposited with a neutral third party (the Escrow agent), by the agreement of two parties to a valid contract. The escrow agent will deliver the document to the benefited party when the conditions of the contract have been met. The depositor has no control over the instrument in escrow.
  • obiter dictum: a statement or remark in a court’s judgment that is not essential to the disposition of the case.

Dred Scott was born a slave in Virginia and in 1820 was taken by his owner, Peter Blow, to Missouri. In 1832, Blow died and U.S. Army Surgeon Dr. John Emerson purchased Scott. Emerson took him to Fort Armstrong, Illinois, which prohibited slavery in its 1819 constitution. In 1836, Scott was relocated to Fort Snelling, Wisconsin, where slavery was prohibited under the Wisconsin Enabling Act. Scott legally married Harriet Robinson, with the knowledge and consent of Emerson in Fort Snelling.

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Dred Scott: Dred Scott, the plaintiff in the Dred Scott decision, who sued for his freedom in a Missouri Court.

In 1837, Emerson was ordered to Jefferson Barracks Military Post, south of St. Louis, Missouri. Emerson left Scott and Harriet at Fort Snelling, renting them out for profit. Emerson was reassigned to Fort Jessup, Louisiana, where he married Eliza Sanford. He sent for Scott and Harriet and while en route, Scott’s daughter Eliza was born on along the Mississippi River between Iowa and Illinois. By 1840, Emerson’s wife, Scott, and Harriet returned to St. Louis while Emerson served in the Seminole War. Emerson left the Army and died in 1843. Eliza inherited his estate and continued to rent Scott out as a slave. In 1846, Scott attempted to purchase his family’s freedom, but Eliza refused, prompting Scott to resort to legal action.

Scott sued Emerson for his freedom in a Missouri court in 1846. He received financial assistance from the son of his previous owner, Peter Blow. Scott claimed that his presence and residence in free territories required his emancipation. In June 1847, Scott’s case was dismissed because he had failed to provide a witness testifying that he was in fact a slave belonging to Eliza Emerson.

The judge granted Scott a new trial which did not begin until January 1850. While the case awaited trial, Scott and his family were placed in the custody of the St. Louis County Sheriff, who rented out the services of Scott, placing the rents in escrow. The jury found Scott and his family legally free. Emerson appealed to the Supreme Court of Missouri; she had moved to Massachusetts and transferred advocacy of the case to her brother, John F. A. Sanford. November 1852, the Missouri Supreme Court reversed the jury’s decision, holding the Scotts as legal slaves.

Scott sued in federal court in 1853. The defendant at this point was Sanford, because he was a resident of New York, having returned there in 1853; the federal courts could hear the case under diversity jurisdiction provided in Article III, Section 2 of the Constitution. Judge Robert Wells directed the jury to rely on Missouri law to settle the question of Scott’s freedom. Since the Missouri Supreme Court had held Scott was a slave, the jury found in favor of Sanford. Scott then appealed to the U.S. Supreme Court.

The decision began by concluding that the Court lacked jurisdiction in the matter because Scott had no standing to sue in Court, as all people of African descent, were found not to be citizens of the United States. The decision is often criticized as being obiter dictum because it went on to conclude that Congress had no authority to prohibit slavery in federal territories, and slaves could not be taken away from their owners without due process.

The decision was fiercely debated across the country. Abraham Lincoln was able to win the presidential election in 1860 with the hope of stopping the further expansion of slavery. The sons of Peter Blow purchased emancipation for Scott and his family on May 26, 1857. Their freedom was national news and was celebrated in northern cities. Scott worked in a hotel in St. Louis and died of tuberculosis only eighteen months later.

The Dred Scott decision represented a culmination of what was considered a push to expand slavery. Southerners argued that they had a right to bring slaves into the territories, regardless of any decision by a territorial legislature on the subject. The expansion of the territories and resulting admission of new states was a loss of political power for the North. It strengthened Northern slavery opposition, divided the Democratic Party on sectional lines, encouraged secessionist elements among Southern supporters of slavery to make bolder demands, and strengthened the Republican Party.

Dual Federalism: From the Civil War to the 1930s

America functioned under dual federalism until the federal government increased influence after the Civil War.

Learning Objectives

Describe dual federalism and its development in American history

Key Takeaways

Key Points

  • Dual federalism is the theory where governmental power is divided into two separate spheres; one belonging to the federal government and the other to each state.
  • Dual federalism was used in the U.S. under Jacksonian democracy (Andrew Jackson), emphasizing local autonomy and individual liberty.
  • After the Civil War, the federal government increased power and moved away from dual federalism.

Key Terms

  • laissez-faire: an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies with only enough government regulations sufficient to protect property rights against theft and aggression.
  • Jacksonian Democracy: Political movement toward greater democracy for the common man, typified by American politician Andrew Jackson and his supporters.

Dual federalism is a theory of federal constitutional law in the United States where governmental power is divided into two separate spheres. One sphere of power belongs to the federal government while the other severally belongs to each constituent state. Under this theory, provisions of the Constitution are interpreted, construed and applied to maximize the authority of each government within its own respective sphere, while simultaneously minimizing, limiting or negating its power within the opposite sphere. Within such jurisprudence, the federal government has authority only where the Constitution so enumerates. The federal government is considered limited generally to those powers listed in the Constitution.

The theory originated within the Jacksonian democracy movement against the mercantilist American system and centralization of government under the Adams administration during the 1820s. With an emphasis on local autonomy and individual liberty, the theory served to unite the principles held by multiple sectional interests; the republican principles of northerners, the pro-slavery ideology of southern planters, and the laissez-faire entrepreneurialism of western interests. President Jackson used the theory as part of his justification in combating the national bank and the Supreme Court moved the law in the direction of dual federalism. The Court used the theory to underpin its rationale in cases where it narrowed the meaning of commerce and expanded state authority through enlarging state police power.

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Andrew Jackson: Andrew Jackson, who put forth the theory of dual federalism.

The Democratic-Republicans believed that the Legislative branch had too much power and was unchecked, the Executive branch had too much power and was unchecked, and that a Bill of Rights should be coupled with the Constitution to prevent a dictator from exploiting citizens. The federalists argued that it was impossible to list all the rights, and those that were not listed could be easily overlooked because they were not in the official Bill of Rights.

After the Civil War, the federal government increased in influence greatly on everyday life and in size relative to state governments. The reasons were due to the need to regulate business and industries that span state borders, attempts to secure civil rights, and the provision of social services. National courts now interpret the federal government as the final judge of its own powers under dual federalism.

The New Deal: Cooperative Federalism and the Growth of the National Government

Cooperative federalism is a concept in which national, state and local governments interact cooperatively to solve common problems.

Learning Objectives

Describe how the federal government works with the states under a model of cooperative federalism

Key Takeaways

Key Points

  • The United States moved from dual federalism to cooperative federalism in the 1930s.
  • National programs would increase the size of the national government and may not be the most effective in local environments.
  • Cooperative federalism does not apply to the Judicial branch of the government.

Key Terms

  • Cooperative federalism: Cooperative federalism is a concept of federalism in which national, state and local governments interact cooperatively and collectively to solve common problems, rather than making policies separately.

The New Deal: Cooperative Federalism and the Growth of the National Government

Cooperative federalism is a concept of federalism where national, state and local governments interact cooperatively and collectively to solve common problems, rather than making policies separately but more or less equally or clashing over a policy in a system dominated by the national government. This concept arose after dual federalism in the United States in the 1930s.

In the American federal system, there are limitations on national government’s ability to carry out its policies through the executive branch of state governments. There are significant advantages in a federal system to obtain state assistance in the local implementation of federal programs. Implementing programs through national employees would increase the size and intrusiveness of the national government and local implementation may assure the programs are implemented taking local conditions into account. Congress often avoids the adoption of completely nationalized programs by creating a delivery system for federal programs and by motivating compliance—threatening states that they will pose power over the regulated area completely.

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Congress of the United States: The Congress Building of the United States is the seat of national or federal government which governs cooperatively with state and local government.

While the federal system places limits on the ability of the national government to require implementation by a state executive branch or its local political subdivisions, that limitation does not apply in the same way to state judicial systems. This is because the founders understood that state courts would be courts of general jurisdiction, bound to apply both state and federal law and because the state courts adjudicate cases between citizens who are bound to comply with both state and federal law. When Congress seeks to establish federal legislation that governs the behavior of citizens, they are free to choose among three judicial enforcement paradigms. It may open both federal and state courts to enforcement of that right, by specifically providing concurrent jurisdiction in the federal courts. It may grant exclusive jurisdiction to the federal courts, or it may choose to leave enforcement of that right to civil dispute resolution among parties in the state court.