One of the early and ongoing disputes engendered by federalism was whether the federal government has the constitutional authority to develop economic infrastructure on the state and local level. These infrastructure projects were referred to in the early republic as internal improvements. Internal improvements were always a flashpoint of federalism. From the eighteenth-century debates between the Federalists and Anti-Federalists to the twentieth-century debates between Democrats and Republicans, the role of the national government in the affairs of state and local economic development policy remains a central question.
Alexander Hamilton, whose loose interpretation of the Constitution authorized the creation of a national bank, favored internal improvements to facilitate economic growth, but he thought that the Constitution prohibited the federal government from funding internal improvements such as canals. Hamilton supported a constitutional amendment authorizing the federal government to fund and construct internal improvements.
One of the first large internal improvements, the national road, illustrates the nature of the debate. Presidents Jefferson and Madison thought internal improvements unconstitutional. Yet, they facilitated the creation of a national road that eventually stretched from Baltimore, Maryland, to the Ohio Valley by allowing the sale of federal lands in western territories to pay the states to build the road. President James Monroe believed internal improvements unconstitutional and vetoed a bill that would have allowed federal tollbooths to fund road repairs. President John Quincy Adams advocated significant federal participation in internal improvements, but his ideas faltered with the election of President Andrew Jackson who, arguing that internal improvements were a dangerous expansion of federal power, turned the national road over to the states for construction and maintenance.
The Whig Party took up the call for internal improvements, largely under the direction of President John Quincy Adams and Henry Clay of Kentucky. Clay’s American System advocated internal improvements, intergovernmental grants, and nationally directed monetary policy based upon central banking. Opposition to federal participation in internal improvements declined slowly during the nineteenth century.
Internal improvements during the early republic were generally restricted to facilitating the transportation of the post—a federal responsibility—by improving roads, bridges, ports, waterways, tunnels, dams, and similar transportation and common-use infrastructure. Later, internal improvements would include education institutions, forts and military installations, the national bank, homesteading and land policy, and by the twenty-first century, internal improvements would include all areas of policy conceivably related to economic development infrastructure.
Internal improvements were an important component of the New Deal public works agenda of Franklin D. Roosevelt. And the creative federalism period of Presidents John F. Kennedy and Lyndon B. Johnson saw the establishment of new federal agencies and programs to develop internal improvements as the national government assumed responsibility for the economic welfare of all U.S. citizens.
Internal improvements have enjoyed a bipartisan endorsement for the past several decades and only in the context of limiting federal spending and reducing “pork barrel” spending have internal improvements faced any recent criticism.
Maurice G. Baxter, Henry Clay and the American System (Lexington: University Press of Kentucky, 1995); Daniel Walker Howe, The Political Culture of the American Whigs (Chicago: University of Chicago Press, 1979); Forrest McDonald, Novus Ordo Seclorum (Lawrence: University Press of Kansas, 1985), 265; and Robert Allen Rutland, The Republicans (Columbia: University of Missouri Press, 1996).