Notes from the Editor

• Author: By John Foust
• Pages: 3-3

THE CONSTRUCTION LAWYER 3Winter 2020

John Foust

NOTES FROM THE EDITOR

Published in The Construction Lawyer, Volume 40, Number 1 Winter 2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

By John Foust

John Foust is a partner with Ralls Gruber & Niece in

San Francisco, California.

Internal Improvements

A shared belief in the

need to invest in public

infrastructure to support

economic development

is one of the few things

that unites Americans on

either end of the political

spectrum. But that was not

always the case. The issue

of government subsidies

for what was then called

“internal improvements” was

a major point of contention between the high Federalists

led by Alexander Hamilton, who saw public infrastructure

as essential to the economic health and physical security

of the country, and the more laissez-faire Democratic-

Republicans led by Jefferson and Madison. By the end of

the 1700s, the leaders of the emerging Republican Party

were openly attacking the Federalist agenda on internal

improvements as a scheme to subsidize the wealthy at the

public’s expense, and they warned of its potential to create

self-perpetuating bureaucracies that would under mine

local authority.

Eventually, the opposition to internal improvements

that had united the Republican Party in its infancy

evolved into an intra-party rift. When Thomas Jefferson

became the first Republican to win the presidency

in 1800, he suddenly warmed to the idea of internal

improvements. Jefferson recognized that the nation

lacked an adequate transportation network necessary to

support interstate trade and westward expansion, both

of which he considered to be vital to the nation’s health.

In his address to the Congress in 1806, the man who had

formerly derided Hamilton’s internal improvements as an

abominable encroachment of federal power now spoke

of “roads, rivers, canals, and such other objects of public

improvement as it may be thought proper to add to the

constitutional enumeration of Federal powers.”

Opposing Jefferson’s newfound zeal for internal

improvements were the Old Republicans, led by John

Randolph and Nathaniel Macon, who continued to

reject public works as a form of nationalist overreach

that threatened to supplicate the states under federal

authority. Ironically, these opponents of federal

infrastructure gained momentum when a group of

nationalist congressmen, including John C. Calhoun and

Henry Clay, put forward the Bonus Bill of 1817 seeking to,

as Calhoun said in his 1817 address to Congress, “bind

the Republic together with a perfect system of road and

canals.” The Bonus Bill narrowly passed both chambers

of Congress but was vetoed by President Madison on

the last day of his administration, March 3, 1817, as an

unconstitutional extension of federal power.

Madison’s veto of the Bonus Bill turned out to be

more than just a temporary setback for those who sought

to establish a federal system of internal improvements;

it marked the beginning of an era of growing hostility

toward public works. In 1822, President James Monroe

authored a report entitled Views of the President of the

United States on the Subject of Internal Improvements, in

which he expanded upon Madison’s argument that the

national government lacked the constitutional power to

construct internal improvements. With the election of

John Quincy Adams for a single term beginning in 1825

came a short-lived revival of nationalism, culminating in

the passage of the General Survey Action—something

of a watered-down version of the Bonus Bill. However,

Andrew Jackson’s 1828 defeat of Adams struck a death

knell to the concept of internal improvements, essentially

wiping the issue from the national agenda. During the

following era of Jacksonian Democracy, there would be

little political support for public works of improvement,

and any support that managed to survive Jackson would

be crushed by the Panic of 1837.

The 1840s brought the rise of laissez-faire, and private

interests—namely, the railroad companies—stepped in

to ll the void, often informally subsidized by state and

local governments’ nancial and legal incentives. Not

until the Progressive Era of the 1890s did America begin

publicly investing in its national infrastructure. And it was

during that era that our country rst began developing the

complex body of public contracting law that we have today.

In this issue of The Construction Lawyer, four articles

focus on legal issues that arise in the context of public

contracting for internal improvements. Jennifer Dauer

discusses subcontractor bidding issues on public projects,

and Gretchen Ostroff provides a detailed analysis of

the “commercially useful function test” and penalties

for noncompliance with public goals for disadvantaged

business entities. Our other two articles deal with disputes

on public projects. Kelli Goss, Ty Holt, and Jim Butler

provide a useful primer on litigating claims against state and

local governments; Kevin Gleeson and Mark McAlpine

discuss collateral claims against public entities and their

agents. More than 230 years after Hamilton rst promoted

his vision of publicly funded internal improvements, that

vision has embedded itself in our laws and left its mark on

the profession of every construction lawyer.