By Arnold Kling
That is the title of a work from 1925 by Shih Shun Liu. Richard Johnsson has placed it on line. Some quotes.
In the earlier stages of human development, race or nationality rather than territory formed the basis of a community of law…
In the days, which followed the downfall of the Roman Empire, as in the days of ancient Greece and Rome, but in a much more marked degree, racial consanguinity was treated as the sole basis of amenability to law. Thus, in the same country – and even in the same city at times – the Lombards lived under Lombard law, and the Romans under Roman law. This differentiation of laws extended even to the various, branches of the Germanic invaders; the Goths, the Franks, the Burgundians, each submitted to their own laws while resident in the same country…
With the introduction of the territorial basis of sovereignty, to which the feudal system signally contributed, the theory of the personality of laws inevitably gave way to that of absolute territorial jurisdiction. In Europe, the system of “judge-consuls” began gradually to decline, and the incumbent of the consular office was forthwith converted into a mere commercial representative
One might argue that extraterritoriality (applying the laws of my nation to me when I am in your territory) is like virtual federalism. Understanding why extraterritoriality disappeared might explain why virtual federalism could prove difficult in practice.