III.                  The Debate on the Meaning of Federalism

1.       The Civil War was fought over the issue of national supremacy vs. states’ rights, but its conclusion only settled the fact that the national government’s sovereignty came from the people, that the national gov’t was supreme, and that states couldn’t secede, but left other issues open.

2.       In the U.S.’s early years, the Supreme Court was led by Alexander Hamilton’s firm supporter: Chief Justice John Marshall.

                                                               i.      In a series of rulings, he upheld the supremacy of the national gov’t.

                                                             ii.      In McCulloch v. Maryland, James McCulloch, a Baltimore cashier of the Bank of the United States, refused to pay the taxes that the state of Maryland levied on money and was jailed.

a.       Marshall ruled that Maryland had no right to tax the notes of national currency, and thus, McCulloch had the right not to pay a tax that wasn’t supposed to be levied.

b.       That ruling also firmly strengthened the “necessary and proper” (elastic) clause.

3.       Later, the Supreme Court ruled that since state governments couldn’t tax federal bonds, the national gov’t couldn’t tax the interest people earned from state and municipal bonds… but in 1988, it changed its mind and gave Congress the power to do so; so far, Congress has chosen not to do so.

4.       In response to the Alien and Sedition Acts, James Madison and Thomas Jefferson wrote the Virginia and Kentucky Resolutions, stating that states had the right to “nullify” laws that, in the state’s opinion, violated the Constitution, thus presenting the concept of nullification.

                                                               i.      John C. Calhoun later revived this doctrine, and the ensuing battle later led to the explosion of the Civil War.

5.       The doctrine of Dual Federalism emerged after the Civil War; it stated that though the national gov’t was supreme in its sphere, state governments were supreme in theirs as well, and that these two spheres should be kept separate.

                                                               i.      This applied to commerce: Congress could regulate interstate commerce, but states regulated intrastate commerce.

                                                             ii.      The courts were left to specify the difference between inter- and intrastate commerce, but for a while, it simply classified differences according to product…then came the question of when commerce turned from interstate to intrastate.

                                                            iii.      Eventually, the courts decided to let Congress regulate practically everything that flowed within the stream of interstate commerce; anything that was related to interstate commerce, such as window washers working on a building housing an insurance company that dealt insurance to people inside and outside of the state, was regulated by Congress.

                                                            iv.      Currently, the differences are complex and hard to explain, but the concept of dual federalism is far from being extinct.