As a form of government, "federalism" describes a system of divided powers, each sovereign within its limited realm but concerned with different spheres—one general, the other local. The federal system created by the United States Constitution is the first specimen of this type, though many other states have subsequently adopted federal forms.
Over time, federalism has come to convey a variety of meanings, some of them contradictory. At the beginning of the twenty-first century, the meaning of federalism—like its related terms, federative system, federal union, federal state—is difficult to disassociate from a strong central government within a single nation-state. In its eighteenth-century signification, however, a federal relationship meant compact, alliance, or treaty among independent sovereignties seeking a cooperative relationship. The federative power, as the seventeenth-century philosopher John Locke defined it, concerned those powers of war and peace, of treaty and alliance that commonwealths had need of in their transactions with other states. The formal compacts among equal parties resulting from the exercise of this power—written constitutions, treaties, alliances—were things to which the adjective "federal" might apply. European publicists could speak of the "federal constitution" of Europe as actually existing, and meant by the term the web of treaties, laws, and restraints that was to govern the relations of civilized states.
At the root of the federal principle was the idea of a covenant or foedus (its etymological root). This and "synonymous ideas of promise, commitment, undertaking, or obligating, vowing and plighting one's word," as S. Rufus Davis has suggested in The Federal Principle (1978), were joined together with two other things: "the idea of cooperation, reciprocity, mutuality," and "the need for some measure of predictability, expectation, constancy, and reliability in human relations" (p. 3). As important as each of these three concepts—commitment, reciprocity, predictability—is to human relations generally, when states and peoples had need of such values they made use of the term "federal."
European colonists perched on the eastern rim of North America were not in fact the first inhabitants of the continent to make use of ideas recognizably "federal." A recognition that strength lay in union and danger in discord; a pledge of perpetual peace within, and of concerted action toward enemies without; an understanding of how individuality might be preserved by common action; the vital significance attached to sworn oaths and plighted faith—all these hallmarks of the federal principle were reflected in the institutions and norms of various Indian confederacies, especially the great league of the Iroquois or Six Nations.
Such a constellation of ideas was also central to the Articles of Confederation formed among the American states in the aftermath of their 1776 Declaration of Independence from Great Britain. The experience of the Revolutionary War, however, showed how difficult it was for states to cooperate in an enterprise they all regarded as vital. When the framers of the Constitution met in Philadelphia in 1787 to address the deficiencies of the Articles of Confederation, they had to find a solution that somehow avoided the extremes of "anarchy" and "consolidation"—what the Virginian James Madison termed "a perfect separation and a perfect incorporation, of the 13 States." Neither alternative found significant support within the convention. As James Wilson noted in his important explication of the new Constitution, "consolidation" would demand "a system of the most unqualified and unremitted despotism," whereas separation into "a number of separate states, continuous in situation, unconnected and disunited in government" would make the states "at one time, the prey of foreign force, foreign influence, and foreign intrigue; at another, the victims of mutual rage, rancor, and revenge."
As an experiment in federal government, the U.S. Constitution was unique in creating a general government that could carry its laws into execution through a regular executive and judicial establishment, one that did not depend on requisitions or edicts to the states to do its legitimate business. Conscious that the states would have to give up some of their sovereignty, and conscious, too, of the impossibility of legislating for communities as opposed to individuals, the framers brought forth a new political edifice devoted to federal objects yet fashioned on the norms and institutions of constitutional government existing within the American states. Unlike the state governments, which generally claimed a plenary authority over the lives and liberties of their citizens, the federal government was one of enumerated and limited powers. The powers so granted, as James Madison emphasized during the ratification debates, were "few and defined" and would be exercised "principally on external objects, as war, peace, negotiation, and foreign commerce." Supremacy was accorded neither to the federal government nor the state governments but to the Constitution itself, though the more perfect union was justified by Federalists as being an indispensable means to the preservation of both states and nation.
What were the limits of the powers respectively given to the federal government and the states under the Constitution? And where was the authority lodged to decide this delicate question? Those questions arose immediately with the formation of the new government in 1789 and remained of key importance.
The controversy pit "nationalists" like Alexander Hamilton, the first secretary of the Treasury, against "State rights" or "compact" theorists like Thomas Jefferson, a clash that achieved its first great expression in the contrary opinions of Hamilton and Jefferson over the constitutionality of a national bank in 1791. Hamilton took an expansive view of the implied powers vested in the national government by the Constitution, a view later unfolded eloquently and authoritatively in a Supreme Court opinion of 1819, McCulloch v. Maryland. Chief Justice John Marshall acknowledged that the powers of the national government were limited and enumerated but nevertheless found that Congress enjoyed "the right to legislate on that vast mass of incidental powers which must be involved in the constitution, if that instrument be not a splendid bauble." Marshall continued, "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."
The contrary position of the "compact school," by contrast, held that the federal Constitution was a creature of the states, each of whom enjoyed the right to accede or not to the compact, and who, as the original parties, must ultimately retain the right to interpret the extent to which the compact was fulfilled. In cases not within the compact, wrote Thomas Jefferson in his draft of the Kentucky resolutions, the pretended legislation of Congress was "void, and of no force." Some, like John C. Calhoun, insisted that each state enjoyed a right to nullify a federal law within its jurisdiction that, in its judgment, was unconstitutional; others who subscribed to the compact theory, like John Randolph, were content with affirming a constitutional right of secession. According to this view, the national judiciary did not enjoy the ultimate authority to decide the line of partition created by the Constitution. That power instead lay with the original contracting parties, the people of the states.
In between these rival understandings of the Constitution lay a third view, one which was probably more expressive of the general consensus from 1789 to 1829 than either of the two extreme alternatives. The moderates saw a "partly national, and partly federal" system, though they were not always in agreement among themselves. Some carved out an ample dominion for federal power while also believing that it would be utterly contrary to the spirit of the constitution to preserve the Union by force, a position adopted by constitutional commentator William Rawle in 1825. Other moderates, by contrast, chastised secessionists for counseling action that was patently unconstitutional. But they also believed that the theory of implied powers was equally destructive of the constitutional order, a position taken by James Madison. Despite these differences, the moderates were united in the conviction that to push either national or state powers too far would destroy the constitutional order, which they saw as a vital barrier against powerful tendencies toward anarchy or despotism.
It is customary to associate the clash between national sovereignty and the compact school with North and South, but in the period from 1789 to 1829 the picture is more complicated. After Jefferson became president in 1801, his administration accepted a more expansive conception of federal power. By the same token, many northern Federalists brought against his administration the same charge of unconstitutionality that Republicans had made against the Federalists in the 1790s. The acquisition of Louisiana in 1803, they argued, went far beyond the implied powers claimed by the administrations of George Washington and John Adams from 1789 to 1801. They also claimed unconstitutional usurpation against Jefferson's Embargo of 1807-1809 and later against "Mr. Madison's War" of 1812, when several New England states refused to heed the president's call to mobilize their militia for national service. From 1815 to 1830, similar flip-flops occurred over the issues of internal improvements, the national bank, and the protective tariff, with leading political figures sometimes reversing their previous judgments of what was constitutional. The most contentious issue, temporarily put to rest by the Missouri Compromise, concerned the extension of slavery.
The elapse of three decades from the establishment of the federal government did not bring a greater consensus on the fundamentals, but rather a drift toward constitutional doctrines mutually antagonistic and irreconcilable. This lack of consensus regarding the basics of American federalism—the sense, as the statesman Henry Clay put it, "that we are as much afloat at sea as the day when the Constitution went into operation"—was felt to be profoundly threatening to the sustenance of the constitutional order. Thirteen years after Marshall's confident opinion in McCulloch he wrote despairingly to a close friend that his hopes for the Union were nearly at an end. "The union has been prolonged thus far by miracles; I fear they cannot continue."