Hamilton's Opinion as to the Constitutionality of the Bank
of the United States, 1791
[Given while he was Secretary of the Treasury under the First
Administration, George Washington, President, Thomas Jefferson, Secretary of
State, and Edmund Randolph, Attorney-General.]
The Secretary of the Treasury having perused with attention the papers
containing the opinions of the Secretary of State and Attorney General,
concerning the constitutionality of the bill for establishing a National Bank,
proceeds, according to the order of the President, to submit the reasons which
have induced him to entertain a different opinion.
It will naturally have been anticipated, that in performing this task, he
would feel uncommon solicitude. Personal considerations alone, arising from the
reflection that the measure originated with him, would be sufficient to produce
it. The sense which he has manifested of the great importance of such an
institution to the successful administration of the department under his
particular care, and an expectation of serious ill consequences to result from
a failure of the measure, do not permit him to be without anxiety on public
accounts. But the chief solicitude arises from a firm persuasion, that
principles of construction like those espoused by the Secretary of State and
Attorney General, would be fatal to the just and indispensable authority of the
In entering upon the argument, it ought to be premised that the objections
of the Secretary of State and Attorney General are founded on a general denial
of the authority of the United States to erect corporations. The latter,
indeed, expressly admits, that if there be anything in the bill which is not
warranted by the Constitution, it is the clause of incorporation.
Now it appears to the Secretary of the Treasury that this general principle
is inherent in the very definition of government, and essential to every step
of progress to be made by that of the United States, namely: That every power
vested in a government is in its nature sovereign, and includes, by force of
the term, a right to employ all the means requisite and fairly applicable to
the attainment of the ends of such power, and which are not precluded by
restrictions and exceptions specified in the Constitution, or not immoral, or
not contrary to the essential ends of political society.
This principle, in its application to government in general, would be
admitted as an axiom; and it will be incumbent upon those who may incline to
deny it, to prove a distinction, and to show that a rule which, in the general
system of things, is essential to the preservation of the social order, is
inapplicable to the United States.
The circumstance that the powers of sovereignty are in this country divided
between the National and State governments, does not afford the distinction
required. It does not follow from this, that each of the portion of powers
delegated to the one or to the other, is not sovereign with regard to its
proper objects. It will only follow from it, that each has sovereign power as
to certain things, and not as to other things. To deny that the government of
the United States has sovereign power, as to its declared purposes and trusts,
because its power does not extend to all cases would be equally to deny that
the State governments have sovereign power in any case, because their power
does not extend to every case. The tenth section of the first article of the
Constitution exhibits a long list of very important things which they may not
do. And thus the United States would furnish the singular spectacle of a
political society without sovereignty, or of a people governed, without
If it would be necessary to bring proof to a proposition so clear, as that
which affirms that the powers of the federal government, as to its objects,
were sovereign, there is a clause of its Constitution which would be decisive.
It is that which declares that the Constitution, and the laws of the United
States made in pursuance of it, and all treaties made, or which shall be made,
under their authority, shall be the serene law of the land. The power which can
create the supreme law of the land in any case, is doubtless sovereign as to
This general and indisputable principle puts at once an end to the abstract
question, whether the United States have power to erect a corporation; that is
to say, to give a legal or artificial capacity to one or more persons, distinct
from the natural. For it is unquestionably incident to sovereign power to erect
corporations, and consequently to that of the United States, in relation to the
objects intrusted to the management of the government. The difference is this:
where the authority of the government is general, it can create corporations in
ad cases, where it is confined to certain branches of legislation, it can
create corporations only in those cases.
Here then, as far as concerns the reasonings of the Secretary of State and
the Attorney General, the affirmative of the constitutionality of the bill
might be permitted to rest. It will occur to the President, that the principle
here advanced has been untouched by either of them.
For a more complete elucidation of the point, nevertheless, the arguments
which they had used against the power of the government to erect corporations,
however foreign they are to the great and fundamental rule which has been
stated, shall be particularly examined. And after showing that they do not tend
to impair its force, it shall also be shown that the power of incorporation,
incident to the government in certain cases, does fairly extend to the
particular case which is the object of the bill.
The first of these arguments is, that the foundation of the Constitution is
laid on this ground: " That all powers not delegated to the United States
by the Constitution, nor prohibited to it by the States, are reserved for the
States, or to the people." Whence it is meant to be inferred, that
Congress can in no case exercise any power not Included in those not enumerated
in the Constitution. And it is affirmed, that the power of erecting a
corporation is not included in any of the enumerated powers.
The main proposition here laid down, in its true signification is not to be
questioned. It is nothing more than a consequence of this republican maxim,
that all government is a delegation of power. But how much is delegated in each
case, is a question of fact, to be made out by fair reasoning and construction,
upon the particular provisions of the Constitution, taking as guides the
general principles and general ends of governments.
It is not denied that there are implied well as express powers, and that the
former are as effectually delegated as the tatter. And for the sake of accuracy
it shall be mentioned, that there is another class of powers, which may be
properly denominated resting powers. It will not be doubted, that if the United
States should make a conquest of any of the territories of its neighbors, they
would possess sovereign jurisdiction over the conquered territory. This would
be rather a result, from the whole mass of the powers of the government, and
from the nature of political society, than a consequence of either of the
powers specially enumerated.
But be this as it may, it furnishes a striking illustration of the general
doctrine contended for; it shows an extensive case in which a power of erecting
corporations is either implied in or would result from, some or all of the
powers vested in the national government. The jurisdiction acquired over such
conquered country would certainly be competent to any species of legislation.
To return: It is conceded that implied powers are to be considered as
delegated equally with express ones. Then it follows, that as a power of
erecting a corporation may as well be implied as any other thing, it may as
well be employed as an instrument or mean of carrying into execution any of the
specified powers, as any other instrument or mean whatever. The only question
must be in this, as in every other case, whether the mean to be employed or in
this instance, the corporation to be erected, has a natural relation to any of
the acknowledged objects or lawful ends of the government. Thus a corporation
may not be erected by Congress for superintending the police of the city of
Philadelphia, because they are not authorized to regulate the police of that
city. But one may be erected in relation to the collection of taxes, or to the
trade with foreign countries, or to the trade between the States, or with the
Indian tribes; because it is the province of the federal government to regulate
those objects, and because it is incident to a general sovereign or legislative
power to regulate a thing, to employ all the means which relate to its
regulation to the best and greatest advantage.
A strange fallacy seems to have crept into the manner of thinking and
reasoning upon the subject. Imagination appears to have been unusually busy
concerning it. An incorporation seems to have been regarded as some great
independent substantive thing; as a political end of peculiar magnitude and
moment; whereas it is truly to be considered as a quality, capacity, or mean to
an end. Thus a mercantile company is formed, with a certain capital, for the
purpose of carrying on a particular branch of business. Here the business to be
prosecuted is the end. The association, in order to form the requisite capital,
is the primary mean. Suppose that an incorporation were added to this, it would
only be to add a new quality to that association, to give it an artificial
capacity, by which it would be enabled to prosecute the business with more
safety and convenience.
That the importance of the power of incorporation has been exaggerated,
leading to erroneous conclusions, will further appear from tracing it to its
origin. The Roman law is the source of it, according to which a voluntary
association of individuals, at any tome, or for any purpose, was capable of
producing it. In England, whence our notions of it are immediately borrowed, it
forms part of the executive authority, and the exercise of it has been often
delegated by that authority. Whence, therefore, the ground of the supposition
that it lies beyond the reach of all those very important portions of sovereign
power, legislative as well as executive, which belongs to the government of the
To this mode of reasoning respecting the right of employing all the means
requisite to the execution of the specified powers of the government, it is
objected, that none but necessary and proper means are to be employed; and the
Secretary of State maintains, that no means are to be considered as necessary
but those without which the grant of the power would be nugatory. Nay, so far
does he go in his restrictive interpretation of the word, as even to make the
case of necessity which shall warrant the constitutional exercise of the power
to depend on casual and temporary circumstances; an idea which alone refutes
the construction. The expediency of exercising a particular power, at a
particular time, must, indeed depend on circumstances, but the constitutional
right of exercising it must be uniform and invariable, the same to-day as
All the arguments, therefore, against the constitutionality of the bill
derived from the accidental existence of certain State banks, institutions
which happen to exist to-day, and, for aught that concerns the government of
the United States, may disappear tomorrow, must not only be rejected as
fallacious, but must be viewed as demonstrative that there is a radical source
of error in the reasoning.
It is essential to the being of the national government, that so erroneous a
conception of the meaning of the word necessary should be exploded.
It is certain that neither the grammatical nor popular sense of the term
requires that construction. According to both, necessary often means no more
than needful, requisite, incidental, useful, or conducive to. It is a common
mode of expression to say, that it is necessary for a government or a person to
do this or that thing, when nothing more is intended or understood, than that
the interests of the government or person require, or will be promoted by, the
doing of this or that thing. The imagination can be at no loss for
exemplifications of the use of the word in this sense. And it is the true one
in which it is to be understood as used in the Constitution. The whole turn of
the clause containing it indicates, that it was the intent of the Convention,
by that clause, to give a liberal latitude to the exercise of the specified
powers. The expressions have peculiar comprehensiveness. They are thought to
make all laws necessary and proper for carrying into execution the foregoing
powers, and all other powers vested by the Constitution in the government of
the United States, or in any department or officer thereof."
To understand the word as the Secretary of State does, would be to depart
from its obvious and popular sense, and to give it a restrictive operation, an
idea never before entertained. It would be to give it the same force as if the
word absolutely or indispensably had been prefixed to it.
Such a construction would beget endless uncertainty and embarrassment. The
cases must be palpable and extreme, in which it could be pronounced, with
certainty, that a measure was absolutely necessary, or one, without which, the
exercise of a given power would be nugatory. There are few measures of any
government which would stand so severe a test. To insist upon it, would be to
make the criterion of the exercise of any implied power, a case of extreme
necessity; which is rather a rule to justify the overleaping of the bounds of
constitutional authority, than to govern the ordinary exercise of it.
It may be truly said of every government, as well as of that of the United
States, that it has only a right to pass such laws as are necessary and proper
to accomplish the objects intrusted to it. For no government has a right to do
merely what it pleases. Hence, by a process of reasoning similar to that of the
Secretary of State, it might be proved that neither of the State governments
has a right to incorporate a bank. It might be shown that all the public
business of the state could be performed without a bank, and inferring thence
that it was unnecessary, it might be argued that it could not be done, because
it is against the rule which has been just mentioned. A like mode of reasoning
would prove that there was no power to incorporate the inhabitants of a town,
with a view to a more perfect police. For it is certain that an incorporation
may be dispensed with, though it is better to have one. It is to be remembered
that there is no express power in any State constitution to erect corporations.
The degree in which a measure is necessary, can never be a test of the legal
right to adopt it; that must be a matter of opinion, and can only be a test of
expediency. The relation between the measure and the end; between the nature of
the mean employed toward the execution of a power, and the object of that power
must be the criterion of constitutionality, not the more or less of necessity
The practice of the government is against the rule of construction advocated
by the Secretary of State. Of this, the Act concerning lighthouses, beacons,
buoys, and public piers, is a decisive example. This, doubtless, must be
referred to the powers of regulating trade, and is fairly relative to it. But
it cannot be affirmed that the exercise of that power in this instance was
strictly necessity or that the power itself would be nugatory, with out that of
regulating establishments of this nature.
This restrictive interpretation of the word necessary is also contrary to
this sound maxim of construction, namely, that the powers contained in a
constitution of government, especially those which concern the general
administration of the affairs of a country, its finances, trade, defense, etc.,
ought to be construed liberally in advancement of the public good. This rule
does not depend on the particular form of a government, or on the particular
demarcation of the boundaries of its powers, but on the nature and object of
government itself. The means by which national exigencies are to be provided
for, national inconveniences obviated, national prosperity promoted, are of
such infinite variety, extent, and complexity, that there must of necessity be
great latitude of discretion in the selection and application of those means.
Hence, consequently, the necessity and propriety of exercising the authorities
intrusted to a government on principles of liberal construction.
The Attorney General admits the rule, but takes a distinction between a
State and the Federal Constitution. The latter, he thinks, ought to be
construed with greater strictness, because there is more danger of error in
defining partial than General powers. But the reason of the rule forbids such a
distinction. This reason is, the variety and extent of public exigencies, a far
greater proportion of which, and of a far more critical kind, are objects of
National than of State administration. The greater danger of error, as far as
it is supposable, may be a prudential reason for caution in practice, but it
cannot be a rule of restrictive interpretation.
In regard to the clause of the Constitution immediately under consideration,
it is admitted by the Attorney General, that no restrictive effect can be
ascribed to it. He defines the word necessary thus: ``To be necessary is to be
incidental, and may be denominated the natural means of executing a
But while on the one hand the construction of the Secretary of State is
deemed inadmissible, it will not be contended, on the other, that the clause in
question gives any new or independent power. But it gives an explicit sanction
to the doctrine of implied powers, and is equivalent to an admission of the
proposition that the government, as to its specified powers and objects, has
plenary and sovereign authority, in some cases paramount to the States; in
others, co-ordinate with it. For such is the plain import of the declaration,
that it may pass all tams necessary and proper to carry into execution those
It is no valid objection to the doctrine to say, that it is calculated to
extend the power of the government throughout the entire sphere of State
legislation. The same thing has been said, and may be said, with regard to
every exercise of power by implication or construction.
The moment the literal meaning is departed from, there is a chance of error
and abuse. And yet an adherence to the letter of its powers would at once
arrest the motions of government. It is not only agreed, on all hands, that the
exercise of constructive powers is indispensable, but every act which has been
passed, is more or less an exemplification of it. One has been already
mentioned that relating to lighthouses, etc. that which declares the power of
the President to remove officers at pleasure, acknowledges the same truth in
another and a signal instance.
The truth is, that difficulties on this point are inherent in the nature of
the Federal Constitution; they result inevitably from a division of the
legislative power. The consequence of this division is, that there will be
cases clearly within the power of the national government; others, clearly
without its powers; and a third class, which will leave room for controversy
and difference of opinion, and concerning which a reasonable latitude of
judgment must be allowed.
But the doctrine which is contended for is not chargeable with the
consequences imputed to it. It does not affirm that the national government is
sovereign in all respects, but that it is sovereign to a certain extent; that
is, to the extent of the objects of its specified powers.
It leaves, therefore, a criterion of what is constitutional, and of what is
not so. This criterion is the end, to which the measure relates as a mean. If
the end be clearly comprehended within any of the specified powers, and if the
measure have an obvious relation to that end, and is not forbidden by any
particular provision of the Constitution, it may safely be deemed to come
within the compass of the national authority. There is also this further
criterion, which may materially assist the decision: Does the proposed measure
abridge a pre-existing right of any State or of any individual? If it does not,
there is a strong presumption in favor of its constitutionality, and slighter
relations to any declared object of the Constitution may be permitted to turn
The general objections, which are to be inferred from the reasonings of the
Secretary of State and Attorney General, to the doctrine which has been
advanced, have been stated, and it is hoped satisfactorily answered, Those of a
more particular nature shall now be examined.
The Secretary of State introduces his opinion with an observation, that the
proposed incorporation undertakes to create certain capacities, properties, or
attributes, which are against the laws of alienage, descents, escheat and
forfeiture, distribution and monopoly, and to confer a power to make laws
paramount to those of the States. And nothing, says he, in another place, but
necessity, invincible by other means, can justify such a prostration of laws,
which constitute the pillars of our whole system of jurisprudence, and are the
foundation laws of the State governments. If these are truly the foundation
laws of the several States, then have most of them subverted their own
foundations. For there is scarcely one of them which has not, since the
establishment of its particular constitution, made material alterations in some
of those branches of its jurisprudence, especially the law of descents. But it
is not conceived how anything can be called the fundamental law of a State
government which is not established in its constitution unalterable by the
ordinary legislature. And, with regard to the question of necessity, it has
been shown that this can only constitute a question of expediency, not of
To erect a corporation, is to substitute a legal or artificial for a natural
person, and where a number are concerned, to give them individuality. To that
legal or artificial person, once created, the common law of every State, of
itself, annexes all those incidents and attributes which are represented as a
prostration of the main pillars of their jurisprudence.
It is certainly not accurate to say, that the erection of a corporation is
against those different head's of the State laws; because it is rather to
create a kind of person or entity, to which they are inapplicable, and to which
the general rule of those laws assign a different regimen. The laws of alienage
cannot apply to an artificial person, because it can have no country; those of
descent cannot apply to it, because it can have no heirs; those of escheat are
foreign from it, for the same reason; those of forfeiture, because it cannot
commit a crime; those of distribution, because, though it may be dissolved, it
As truly might it be said, that the exercise of the power of prescribing the
rule by which foreigners shall be naturalized, is against the law of alienage,
while it is, in fact, only to put them in a situation to cease to be the
subject of that law. To do a thing which Is against a law, is to do something
which it forbids, or which is a violation of it.
But if it were even to be admitted that the erection of a corporation is a
direct alteration of the state laws, in the enumerated particulars, it would do
nothing toward proving that the measure was unconstitutional. If the government
of the United States can do no act which amounts to an alteration of a State
law, all its powers are nugatory; for almost every new law is an alteration, in
same way or other, of an old law, either common or statute.
There are laws concerning bankruptcy in some States. Some States have laws
regulating the values of foreign coins. Congress are empowered to establish
uniform laws concerning bankruptcy throughout the United States, and to
regulate the values of foreign coins. The exercise of either of these powers by
Congress, necessarily involves an alteration of the laws of those States.
Again. Every person, by the common law of each State, may export his
property to foreign countries, at pleasure.: But Congress, in pursuance of the
power of regulating trade, may prohibit the exportation of commodities; in
doing which, they would alter the common law of each State, in abridgment of
It can therefore never be good reasoning to say this or that act is
unconstitutional, because it alters this or that law of a State. It must be
shown that the act which makes the alteration is unconstitutional on other
accounts, not because it makes the alteration.
There are two points in the suggestions of the Secretary of State, which
have been noted, that are peculiarly incorrect. One is, that the proposed
incorporation is against the laws of monopoly, because it stipulates an
exclusive right of banking under the national authority; the other, that it
gives power to the institution to make laws paramount to those of the States.
But, with regard to the first: The bill neither prohibits any State from
erecting as many banks as they please, nor any number of individuals from
associating to carry on the business, and consequently, is free from the charge
of establishing a monopoly; for monopoly implies a legal impediment to the
carrying on of the trade by others than those to whom it is granted.
And with regard to the second point, there is still less foundation. The
by-laws of such an institution as a bank can operate only on its own members
can only concern the disposition of its own property, and must essentially
resemble the rules of a private mercantile partnership. They are expressly not
to be contrary to law; and law must here mean the law of a State, as well as of
the United States. There never can be a doubt, that a law of a corporation, if
contrary to a law of a State, must be overruled as void unless the law of the
State is contrary to that of the United States and then the question will not
be between the law of the State and that of the corporation, but between the
law of the State and that of the United States.
Another argument made use of by the Secretary of State is, the rejection of
a proposition by the Convention to empower Congress to make corporations,
either generally, or for some special purpose.
What was the precise nature or extent of this proposition, or what the
reasons for refusing it, is not ascertained by any authentic document, or even
by accurate recollection. As far as any such document exists, it specifies only
canals. If this was the amount of it, it would, at most, only prove that it was
thought inexpedient to give a power to incorporate for the purpose of opening
canals, for which purpose a special power would have been necessary, except
with regard to the western territory, there being nothing in any part of the
Constitution respecting the regulation of canals. It must be confessed,
however, that very different accounts are given of the import of the
proposition, and of the motives for rejecting it. Some affirm, that it was
confined to the opening of canals and obstructions in rivers, others, that it
embraced banks; and others, that it extended to the power of incorporating
generally. Some, again, allege, that it was disagreed to because it was thought
improper to vest in Congress a power of erecting corporations. Others, because
it was thought unnecessary to specify the power, and inexpedient to furnish an
additional topic of objection to the Constitution. In this state of the matter,
no inference whatever can be drawn from it.
But whatever may have been the nature of the proposition, or the reasons for
rejecting it, nothing is included by it, that is the proposition, in respect to
the real merits of the question. The Secretary of State will not deny, that,
whatever may have been the intention of the framers of a constitution, or of a
law, that intention is to be sought for in the instrument itself, according to
the usual and established rules of construction. Nothing is more common than
for laws to express and elect more or less than was intended. If, then, a power
to erect a corporation in any case be deducible, by fair inference, from the
whole or any part of the numerous provisions of the Constitution of the United
States arguments drawn from extrinsic circumstances regarding the in tension of
the Convention must be rejected.
Most of the arguments of the Secretary of State, which have not been
considered in the foregoing remarks, are of a nature rather to apply to the
expediency than to the constitutionality of the bill. They will, however, be
noticed in the discussions which will be necessary in reference to the
particular heads of the powers of the government which are involved in the
Those of the Attorney General will now properly come under view.
His first objection is, that the power of incorporation is not expressly
given to Congress. This shall be conceded, but in this sense only, that it is
not declared in express terms that Congress may erect a corporation. But this
cannot mean, that there are not certain express powers which necessary include
it. For instance Congress have express power to exercise exclusive legislation
in all cases whatsoever, over such district (not exceeding ten miles square) as
may, by cession of particular States and the acceptance of Congress, become the
seat of the government of the United States; and to exercise like authority
over all places purchased, by consent of the legislature of the State in which
the same shall be for the erection of forts, arsenals, dock-yards, and other
needful buildings. Here, then, is express power to exercise exclusive
legislation, in all cases whatsoever, over certain Ices, that is to do, in
respect to those places, all that any government whatsoever may do. For
language does not afford a more complete designation of sovereign power than in
those comprehensive terms. It is, in other words, a power to pass all laws
whatsoever, and consequently, to pass laws for erecting corporations, as well
as for any other purpose which is the proper object of law in a free govern
Surely it can never be believed that Congress, with exclusive powers of
legislation in all cases whatsoever, cannot erect a corporation within the
district which shall become the seat of government, for the better regulation
of its police. And yet there is an unqualified denial of the power to erect
corporations in every case on the part both of the Secretary of State and of
the Attorney General; the former, indeed, speaks of that power in these
emphatical terms: That it is a right remaining exclusively with the States.
As far, then, as there is an express power to do any particular act of
legislation, there is an express one to erect a corporation in the case above
described. But, accurately speaking, no particular power is more than that
implied in a, general one. Thus the power to lay a duty on a gallon of rum is
only a particular implied in the general power to collect taxes, duties,
imposts, and excises. This serves to explain in what sense it may be said that
Congress have not an express power to make corporations.
This may not be an improper place to take notice of an argument which was
used in debate in the House of Representatives. It was there argued, that if
the Constitution intended to confer so important a power as that of erecting
corporations, it would have been expressly mentioned. But the case which has
been noticed is clearly one in which such a power exists, and yet without any
specification of express grant of it, further than as every particular implied
in a general power can be said to be so granted.
But the argument itself is founded upon an exaggerated and erroneous
conception of the nature of the power. It has been shown that it is not of so
transcendent a kind as the reasoning supposes, and that, viewed in a just
light, it is a mean which ought to have been left to implication, rather than
an end which ought to have been expressly granted.
Having observed that the power of erecting corporations is not expressly
granted to Congress, the Attorney General proceeds thus:
" If it can be exercised by them, it must be
"1. Because the nature of the federal government implies it.
"2. Because it is involved in some of the specified powers of
" 3. Because it is necessary and proper to carry into execution some of
the specified powers."
To be implied in the nature of the federal government, says he, would beget
a doctrine so indefinite as to grasp every power.
This proposition, it ought to be remarked, is not precisely, or even
substantially, that which has been relied upon. The proposition relied upon is,
that the specified powers of Congress are in their nature sovereign. That it is
incident to sovereign power to erect corporations, and that therefore Congress
have a right, within the sphere and in relation to the objects of their power,
to erect corporations. It shall, however, be supposed that the Attorney General
would consider the two propositions in the same light, and that the objection
made to the one would be made to the other.
To this objection an answer has been already given. It is this, that the
doctrine is stated with this express qualification, that the right to erect
corporations does only extend to cases and objects within the sphere of the
specified powers of the government. A general legislative authority implies a
power to erect corporations in all cases. A particular legislative power
implies authority to erect corporations in relation to cases arising under that
power only. Hence the affirming that, as incident to sovereign power, Congress
may erect a corporation in relation to the collection of their taxes, is no
more to affirm that they may do whatever else they please, than the saying that
they have a power to regulate trade, would be to affirm that they have a power
to regulate religion; or than the maintaining that they have sovereign power as
to taxation, would be to maintain that they have sovereign power as to
The Attorney General undertakes in the next place to show, that the power of
erecting corporations is not involved in any of the specified powers of
legislation confided to the national government. In order to this, he has
attempted an enumeration of the particulars which he supposes to be
comprehended under the several heads of the Covers to lay and collect taxes,
&c.; to borrow money on the credit of the United States, to regulate
commerce with sovereign nations; between the States, and with the Indian
tribes, to dispose of and make all needful rules and regulations respecting the
territory of other property belonging to the United States. The design of which
enumeration is to show, what is included under those different heads of power,
and negatively, that the power of erecting corporations is not included.
The truth of this inference or conclusion must depend on the accuracy of the
enumeration. If it can be shown that the enumeration is defective, the
inference is destroyed. To do this will be attended with no difficulty.
The heads of the power to lay and collect taxes are stated to be:
1. To stipulate the sum to be lent.
2. An interest or no interest to be paid.
3. The time and manner of repaying, unless the loan be placed on an
This enumeration is liable to a variety of objections. It omits in the first
place, the pledging or mortgaging of a fund for the security of the money lent,
an usual, and in most cases an essential ingredient.
The idea of a stipulation of an interest or no interest is too confined. It
should rather have been said, to stipulate the consideration of the loan.
Individuals often borrow on considerations other than the payment of interest,
so may governments, and so they often find it necessary to do. Everyone
recollects the lottery tickets and other douceurs often given in Great Britain
as collateral inducements to the lending of money to the government. There are
also frequently collateral conditions, which the enumeration does not
contemplate. Every contract which has been made for moneys borrowed in Holland,
induces stipulations that the sum due shall bedded from taxes, and from
sequestration in time of war, and mortgages all the land and property of the
United States for the reimbursement.
It is also known that a lottery is a common expedient for borrowing money,
which certainly does not fall under either of the enumerated heads.
The heads of the power to regulate commerce with foreign nations, are stated
1. To prohibit them or their commodities from our ports.
2. To impose duties on them, where none existed before, or to increase
existing; duties on them.
3. To subject them to any species of custom-house regulation.
4. To grant them any exemptions or privileges which policy may suggest.
This enumeration is far more exceptionable than either of the former. It
omits everything that relates to the citizens' vessels, or commodities of the
The following palpable omissions occur at once:
1. Of the power to prohibit the exportation of commodities,
which not only exists at all times, but which in time of war it would be
necessary to exercise, particularly with relation to naval and warlike stores.
2. Of the power to prescribe rules concerning the characteristics and
privileges of an American bottom, how she shall be navigated, or whether by
citizens or foreigners, or by a proportion of each.
3. Of the power of regulating the manner of contracting with seamen; the
police of ships on their voyages, &c., of which the Act for the government
and regulation of seamen, in the merchants' service, is a specimen.
That the three preceding articles are omissions, will not be doubted there
is a long list of items in addition, which admit of little, if any question, of
which a few samples shall be given.
1. The granting of bounties to certain kinds of vessels, and
certain species of merchandise; of this nature, is the allowance on dried and
pickled fish and salted provisions
2. The prescribing of rules concerning the inspection of commodities to be
exported. Though the States individually are competent to this regulation, yet
there is no reason, in point of authority at least, why a general system might
not be adopted by the United States.
3. The regulation of policies of insurance; of salvage upon goods found at
sea, and the disposition of such goods.
4. The regulation of pilots.
5. The regulation of bills of exchange drawn by a merchant of one State upon
a merchant of another State. This last rather belongs to the regulation of
trade between the States, but is equally omitted in the specifications under
The last enumeration relates to the power to dispose of, and make all
needful rules and regulations respecting the territory or other property
belonging to the United States.
The heads of this power are said to be:
1. To exert an ownership over the territory of the United States
which may be properly called the property of the United States, as in the
western territory, and to institute a government therein, or
2. To exert an ownership over the other property of the United States.
The idea of exerting an ownership over the territory or other property of
the United States, is particularly indefinite and vague. It does not at all
satisfy the conception of what must have been intended by a power to make all
needful rules and regulations, nor would there have been any use for a special
clause, which authorized nothing more. For the right of exerting an ownership
is implied in the very definition of property. It is admitted, that in regard
to the western territory, something more is intended; even the institution of a
government, that is, the creation of a body politic, or corporation of the
highest nature; one which, in its maturity, will be able itself to create other
corporations. Why, then, does not the same clause authorize the erection of a
corporation, in respect to the regulation or disposal of any other of the
property of the United States.
This idea will be enlarged upon in another place.
Hence it appears, that the enumerations which have been attempted by the
Attorney General, are so imperfect, as to authorize no conclusion whatever;
they, therefore, have no tendency to disprove that each and every of the
powers, to which they relate, includes that of erecting corporations, which
they certainly do, as the subsequent illustrations will snore and more evince.
It is presumed to have been satisfactorily shown in the course of the
1. That the power of the government, as to the objects intrusted
to its management, is, in its nature, sovereign.
2. That the right of erecting corporations is one inherent in, and
inseparable from, the idea of sovereign power.
3. That the position, that the government of the United States can exercise
no power, but such as is delegated to it by its Constitution, does not militate
against this principle.
4. That the word necessary, in the general clause, can have no restrictive
operation derogating from the force of this principle indeed' that the degree
in which a measure is or is not necessary cannot be a test of constitutional
right, but of expediency only.
5. That the power to erect corporations is not to be considered as an
independent or substantive power, but as an incidental and auxiliary one, and
was therefore more properly left to implication, than expressly granted.
6. That the principle in question does not extend the power of the
government beyond the prescribed limits, because it only affirms a power to
incorporate for purposes within the sphere of the specified powers.
And lastly, that the right to exercise such a power in certain cases is
unequivocally granted in the most positive and comprehensive terms. To all
which it only remains to be added, that such a power has actually been
exercised in two very eminent instances; namely, in the erection of two
governments, one northwest of the River Ohio, and the other southwest the last
independent of any antecedent compact. And these result in a full and complete
demonstration that the Secretary of State and the Attorney General are mistaken
when they deny generally the power of the national government to erect
It shall now be endeavored to be shown that there is a power to erect one of
the kind proposed by the bill. This will be done by tracing a natural and
obvious relation between the institution of a bank and the objects of several
of the enumerated powers of the government; and by showing that, politically
speaking, it is necessary to the effectual execution of one or more of those
In the course of this investigation, various instances will be stated, by
way of illustration of a right to erect corporations under those powers.
Some preliminary observations may be proper.
The proposed bank is to consist of an association of persons, for the
purpose of creating a joint capital, to be employed chiefly and essentially in
loans. So far the object is not only lawful, but it is the mere exercise of a
right which the law allows to every individual. The Bank of New York, which is
not incorporated, is an example of such an association. The bill proposed ill
addition that the government shall become a joint proprietor in this
undertaking, and that it shall permit the bills of the company, payable on
demand, to be receivable in its revenues; and stipulates that it shall not
grant privileges, similar to those which are to be allowed to this company, to
any others. All this is incontrovertibly within the compass of the discretion
of the government. The only question is, whether it has a right to incorporate
this company, in order to enable it the more effectually to accomplish ends
which are in themselves lawful.
To establish such a right, it remains to show the relation of such an
institution to one or more of the specified powers of the government.
Accordingly it is affirmed that it has a relation, more or less direct, to the
power of collecting taxes, to that of borrowing money, to that of regulating
trade between the States, and to those of raising and maintaining fleets and
armies. To the two former the relation Nay be said to be immediate; and in the
last place it will be argued, that it is clearly within the provision which
authorizes the making of all needful rules and regulations concerning the
property of the United States, as the same has been practiced upon by the
A bank relates to the collection of taxes in two ways indirectly, by
increasing the quantity of circulating medium and quickening circulation, which
facilitates the means of paying directly, by creating a convenient! species of
medium in which they are to be paid.
To designate or appoint the money or thing in which taxes are to be paid, is
not only a proper, but a necessary exercise of the power of collecting them.
Accordingly Congress, in the lava concerning the collection of the duties on
imposts and tonnage, have provided that they shall be paid in gold and silver.
But while it was an indispensable part of the work to say in what they should
be paid, the choice of the specific thing was mere matter of discretion. The
payment might have been required in the commodities themselves. Taxes in kind,
however ill-judged, are not without precedents, even in the United States; or
it Night have been in the paper money of the several States, or in the bills of
the Bank of North America, New York and Massachusetts, all or either of them;
or it might have been in bills issued under the authority of the United States.
No part of this can, it is presumed, be disputed. The appointment, then, of
the money or thing in which the taxes are to be paid, is an incident to the
power of collection. And among the expedients which may be adopted, is that of
bills issued under the authority of the United States.
Now, the manner of issuing these bills is again matter of discretion. The
government might doubtless proceed in the following manner:
It might provide that they should be issued under the direction of certain
officers, payable on demand, and, in order to support their credit, and give
them a ready circulation, it might, besides giving them a currency in its
taxes, set apart, out of any moneys in its treasury, a given sum, and
appropriate it, under the direction of those officers, as a fund for answering
the bills, as presented for payment.
The constitutionality of all this would not admit of a question, and yet it
would amount to the institution of a bank, with a view to the more convenient
collection of taxes, For the simplest and most precise idea of a bank is, a
deposit of coin, or other property, as a fund for circulating credit upon it,
which is to answer the purpose of money. That such an arrangement would be
equivalent to the establishment of a bank, would become obvious if the place
where the fund to be set apart was kept should be made a receptacle of the
moneys of all other persons who should incline to deposit them there for
safe-keeping; and would become still more so, if the officers charged with the
direction of the fund were authorized to make discounts at the usual rate of
interest, upon good security. To deny the power of the government to add these
ingredients to the plan, would be to refine away all government.
A further process will still more clearly illustrate the point. Suppose,
when the species of bank which has been described was about to be instituted,
it was to be urged that, in order to secure to it a due degree of confidence,
the fund ought not only to be set apart and appropriated generally, but ought
to be specifically vested in the officers who were to have the direction of it,
and in their successors in office, to the end that it might acquire the
character of private property, incapable of being resumed without a violation
of the sanctions by which the rights of property are protected, and occasioning
more serious and general alarm the apprehension of which might operate as a
check upon the government. Such a proposition might be opposed by arguments
against the expedience of it, or the solidity of the reason assigned for it,
but it is not conceivable what could be urged against its constitutionality;
and yet such a disposition of the thing would amount to the erection of a
corporation; for the true definition of a corporation seems to be this: It is a
legal person, or a person created by act of law, consisting of one or more
natural persons authorized to hold property, or a franchise in succession, in a
legal, as contradistinguished from natural, capacity.
Let the illustration proceed a step further.. Suppose a bank of the mature
which has been described, with or without incorporation, had been instituted,
and that experience had evinced as it probably would, that, being wholly under
a public direction, it possessed not the confidence requisite to the credit of
the bills. Suppose, also, that, by some of those adverse conjunctures which
occasionally attend nations, there had been a very great drain of the specie of
the country, so as not only to cause general distress for want of an adequate
medium of circulation, but to produce, in consequence of that circumstance,
considerable defalcations in the public revenues. Suppose, also, that there was
no bank instituted in any State; in such a posture of things, would it not be
most manifest, that the incorporation of a bank like that proposed by the bill
would be a measure immediately relative to the effectual collection of the
taxes, and completely within the province of the sovereign power of providing,
by all laws necessary and proper, for that collection? If it be said, that such
a state of things would render that necessary, and therefore constitutional,
which is not so now, the answer to this, and a solid one it doubtless is, must
still be that which has been already stated circumstances may affect the
expediency of the measure, but they can neither add to nor diminish its
A bank has a direct relation to the power of borrowing money, because it is
an usual, and in sudden emergencies an essential, instrument in the obtaining
of loans to government.
A nation is threatened with a war, large sums are wanted on a sudden to make
the requisite preparations. Taxes are laid for the purpose, but it requires
tine to obtain the benefit of them. Anticipation is indispensable. If there be
a bank the supply can at once be had. If there be none, loans from individuals
must be sought. The progress of these is often too slow for the exigency ill
some situations they are not practicable at all. Frequently when they are, it
is of great consequence to be able to anticipate the product of them by advance
from a bank.
The essentiality of such an institution as an instrument of loans is
exemplified at this very moment. An Indian expedition is to be prosecuted. The
only fund, out of which the money can arise, consistently with the public
engagements, is a tax, which only begins to be collected in July next. The
preparations, however, are instantly to be made. The money must, therefore, be
borrowed and of whom could it be borrowed if there were no public banks?
It happens that there are institutions of this kind, but if there were none,
it would be indispensable to create one.
Let it then be supposed that the necessity existed, (as but for a casualty
would be the case,) that proposals were made for obtaining a loan; that a
number of individuals came forward and said, we are willing to accommodate the
government with the money; with what we have in hand, and the credit we can
raise upon it, we doubt not of being able to furnish the sum required; but in
order to this, it is indispensable that we should be incorporated as a bank.
This is essential toward putting it in our power to do what is desired, and we
are obliged on that account to make it the consideration or condition of the
Can it be believed that a compliance with this proposition would be
unconstitutional? Does not this alone evince the contrary? It is a necessary
part of a power to borrow, to be able to stipulate the consideration or
conditions of a loan. It is efficient as has been remarked elsewhere, that this
is not confined to the mere stipulation of a franchise. If it may, and it is
not perceived why it may not, then the grant of a corporate capacity may be
stipulated as a consideration of the loan. There seems to be nothing unfit or
foreign from the nature of the thing in giving individuality, or a corporate
capacity to a number of persons, who are willing to lend a sum of money to the
government, the better to enable them to do it, and make them an ordinary
instrument of loans in future emergencies of the state. But the more general
view of the subject is still more satisfactory. The legislative power of
borrowing money, and of making all laws necessary and proper for carrying into
execution that power, seems obviously competent to the appointment of the
organ, through which the abilities and wills of individuals may be roost
efficaciously exerted for the accommodation of the government by loans.
The Attorney General opposes to this reasoning the following observation:
"Borrowing money presupposes the accumulation of a fund to be lent, and is
secondary to the creation of an ability to lend." This is plausible in
theory, but is not true in fact. In a great number of cases, a previous
accumulation of a fund equal to the whole sum required does not exist. And
nothing more can be actually presupposed, than that there exist resources,
which, put into activity to the greatest advantage by the nature of the
operation with the government, will be equal to the effect desired to be
produced. All the provisions and operations of government must be presumed to
contemplate things as they really are.
The institution of a bank has also a natural relation to the regulation of
trade between the States, in so far as it is conducive to the creation of a
convenient medium of exchange between them, and to the keeping up a full
circulation, by preventing the frequent displacement of the metals in
reciprocal remittances Money is the very hinge on which commerce turns. And
this does not merely mean gold and silver; many other things have served the
purpose, with different degrees of utility. Paper has been extensively
It cannot, therefore, be admitted, with the Attorney General, that the
regulation of trade between the States, as it concerns the medium of
circulation and exchange, ought to be considered as confined to coin. It is
even supposable that the whole or the greatest part, of the coin of the country
might be carried out of it.
The Secretary of State objects to the relation here insisted upon by the
following mode of reasoning: To erect a bank, says he, and to regulate
commerce, are very different acts. He who creates a bank, creates a subject of
commerce, so does he who snakes a bushel of wheat, or digs a dollar out of the
Nines, yet neither of these persons regulates commerce thereby. To make a thing
which may be bought and sold, is not to prescribe regulations for buying and
This making the regulation of commerce to consist in prescribing rules for
buying and selling this, indeed, is a species of regulation of trade, hut is
one which falls more aptly within the province of the local jurisdictions than
within that of the general government, whose care they must be presumed to have
been intended to be directed to those general political arrangements concerning
trade on which its aggregated interests depend, rather than to the details of
buying and selling. Accordingly, such only are the regulations to be found in
the laws of the United States whose objects are to give encouragement to the
enterprise of our own merchants, and to advance our navigation and
manufactures. And it is in reference to these general relations of commerce,
that an establishment which furnishes facilities to circulation, and a
convenient medium of exchange and alienation, is to be regarded as a regulation
The Secretary of State further argues, that if this was a regulation of
commerce, it would be void, as extending as much to the internal commerce of
every State as to its external. But what regulation of commerce does not extend
to the internal commerce of every State? What are all the duties upon imported
articles amounting to prohibitions, but so many bounties upon domestic
manufactures, affecting the interests of different classes of citizens, in
different ways? What are all the provisions in the Coasting Acts which relate
to the trade between district and district of the same State? In short, what
regulation of trade between the States but must affect the internal trade of
each State? What can operate upon the whole, but must extend to every part?
The relation of a bank to the execution of the powers that concern the
common defense has been anticipated. It has been noted, that, at this very
moment, the aid of such an institution is essential to the measures to be
pursued for the protection of our frontiers.
It now remains to show, that the incorporation of a bank is within the
operation of the provision which authorizes Congress to make all needful rules
and regulations concerning the property of the United States. But it is
previously necessary to advert to a distinction which has been taken by the
He admits that the word property may signify personal property, however
acquired, and yet asserts that it cannot signify money arising from the sources
of revenue pointed out in the Constitution, " because," says he,
" the disposal and regulation of money is the final cause for raising it
But it would be more accurate to say that the object to which money is
intended to be applied is thermal cause for raising it, than that the disposal
and regulation of it is such.
The support of government — the support of troops for the common
defense — the payment of the public debt, are the true final causes for
raising money. The disposition and regulation of it, when raised, are the steps
by which it is applied to tile ends for which it was raised, not the ends
themselves. Hence, therefore, the money to be raised by taxes, as well as any
other personal property, must be supposed to come within the meaning, as they
certainly do within the letter, of authority to make all needful rules and
regulations concerning the property of the United States.
A case will make this plainer. Suppose the public debt discharged, and the
funds now pledged for it liberated. In some instances it would be found
expedient to repeal tile taxes; in others, the repeal might injure our own
industry, our agriculture and manufactures. In these cases they would, of
course, be retained. Here, then, would be moneys arising from the authorized
sources of revenue, which would not fall within the rule by which the Attorney
General endeavors to except them from other personal property, and from the
operation of the clause in question. The moneys being in the coffers of
government, what is to hinder such a disposition to be made of them as is
contemplated in the bill; or what an incorporation of the parties concerned,
under the clause which has been cited?
It is admitted that with regard to the western territory they give a power
to erect a corporation that is, to institute a government; and by what rule of
construction can it be maintained, that the same words in a constitution of
government will not have the same effect when applied to one species of
property as to another as far as the subject is capable of it? Or that a
legislative power to make all needful rules and regulations, or to pass all
laws necessary and proper, concerning the public property, which is admitted to
authorize an incorporation in one case, will not authorize it in another? will
justify the institution of a government over the western territory, and will
not justify the incorporation of a bank for the more useful management of the
moneys of the United States? If it will do the last, as well as the first, then
under this provision alone, the bill is constitutional, because it contemplates
that the United States shall be joint proprietors of the stock of the bank.
There is an observation of the Secretary of State to this effect which may
require notice in this place: — Congress, says he, are not to lay taxes ad
libitum, for any purpose they please, but only to pay the debts or provide for
the welfare of the Union. Certainly no inference can be drawn from this against
the power of applying their money for the institution of a bank. It is true
that they cannot without breach of trust lay taxes for any other purpose than
the general welfare; but so neither can any other government. The welfare of
the community is the only legitimate end for which money can be raised on the
community. Congress can be considered as under only one restriction which does
not apply to other governments, they cannot rightfully apply the money they
raise to any purpose merely or purely local.
But, with this exception, they have as large a discretion in relation to the
application of money as any legislature whatever. The constitutional test of a
right application must always be, whether it be for a purpose of general or
local nature. If the former, there can be no want of constitutional power. The
quality of the object as how far it will really promote or not the welfare of
the Union must be matter of conscientious discretion, and the arguments for or
against a measure in this light must be arguments concerning expediency or
inexpediency, not constitutional right. Whatever relates to the general order
of the finances, to the general interests of trade, etc., being general
objects, are constitutional ones for the Application of money.
A bank, then, whose bills are to circulate in all the revenues of the
country, is evidently a general object, and, for that very reason, a
constitutional one, as far as regards the appropriation of money to it. Whether
it will really be a beneficial one or not, is worthy of careful examination,
but is no more a constitutional point, in the particular referred to, than the
question, whether the western lands shall be sold for twenty or thirty cents
A hope is entertained that it has, by this time, been made to appear, to the
satisfaction of the President, that a bank has a natural relation to the power
of collecting taxes — to that of regulating trade — to that of
providing for the common defense and that, as the bill under consideration
contemplates the government in the light of a joint proprietor of the stock of
the bank, it brings the case within the provision of the clause of the
Constitution which immediately respects the property of the United States.
Under a conviction that such a relation subsists, the Secretary of the
Treasury, with all deference, conceives that it will result as a necessary
consequence from the position that all the special powers of government are
sovereign, as to the proper objects
that the incorporation of a bank is a constitutional measure, and that the
objections taken to the bill, in this respect, are ill-founded.
But, from an earnest desire to give the utmost possible satisfaction to the
mind of the President, on so delicate and important a subject, the Secretary of
the Treasury will ask his indulgence, while he gives some additional
illustrations of cases in which a power of erecting corporations may be
exercised, under some of those heads of the specified powers of the government,
which are alleged to include the right of incorporating a bank.
1. It does not appear susceptible of a doubt, that if Congress
had thought proper to provide, in the collection laws, that the bonds to be
given for the duties should be given to the collector of the district, A or B.
as the case might require, to inure to him and his successors in office, in
trust for the United States, that it would have been consistent with the
Constitution to make such an arrangement; and yet this, it is conceived, would
amount to an incorporation.
2. It is not an unusual expedient of taxation to farm particular branches of
revenue — that is, to mortgage or sell the product of them for certain
definite sums, leaving the collection to the parties to whom they are mortgaged
or sold. There are even examples of this in the United States. Suppose that
there was any particular branch of revenue which it was manifestly expedient to
place on this footing, and there were a number of persons willing to engage
with the government, upon condition that they should be incorporated, and the
sums invested in them, as well for their greater safety, as for the more
convenient recovery and management of the taxes. Is it supposable that there
could be any constitutional obstacle to the measure? It is presumed that there
could be none. It is certainly a mode of collection which it would be in the
discretion of the government to adopt, though the circumstances must be very
extraordinary that would induce the Secretary to think it expedient.
3. Suppose a new and unexplored branch of trade should present itself, with
some foreign country. Suppose it was manifest that to undertake it with
advantage required an union of the capitals of a number of individuals, and
that those individuals would not be disposed to embark without an
incorporation, as well to obviate that consequence of a private partnership
which makes every individual liable in his whole estate for the debts of the
company, to their utmost extent, as for the more convenient management of the
business — what reason can there be to doubt that the national government
would have a constitutional right to institute and incorporate such a company?
None. They possess a general authority to regulate trade with foreign
countries. This is a mean which has been practiced to that end, by all the
principal commercial nations, who have trading companies to this day, which
have subsisted for centuries. Why may not the United States, constitutionally,
employ the means usual in other countries, for attaining the ends intrusted to
A power to make all needful rules and regulations concerning territory, has
been construed to mean a power to erect a government. A power to regulate
trade, is a power to make all needful rules and regulations concerning trade.
Why may it not, then, include that of erecting a trading company, as well as,
in other cases, to erect a government?
It is remarkable that the State conventions, who had proposed amendments in
relation to this point, have most, if not all of them, expressed themselves
nearly thus: Congress shall not grant monopolies, nor erect any company with
exclusive advantages of commerce! Thus, at the same time, expressing their
sense, that the power to erect trading companies or corporations was inherent
in Congress, and objecting to it no further than as to the grant of exclusive
The Secretary entertains all the doubts which prevail concerning the utility
of such companies, but he cannot fashion to his own mind a reason, to induce a
doubt, that there is a constitutional authority in the United States to
establish them. If such a reason were demanded, none could be given, unless it
were this: That Congress cannot erect a corporation. Which would be no better
than to say, they cannot do it, because they cannot do it — first
presuming an inability, without reason, and then assigning that inability as
the cause of itself. Illustrations of this kind might be multiplied without
end. They shall, however, be pursued no further.
There is a sort of evidence on this point, arising from an aggregate view of
the Constitution, which is of no inconsiderable weight: the very general power
of laying and collecting taxes, and appropriating their proceeds — that of
borrowing money indefinitely — that of coining money, and regulating
foreign coins — that of making all needful rules and regulations
respecting the property of the United States. These powers combined, as well as
the reason and nature of the thing, speak strongly this language: that it is
the manifest design and scope of the Constitution to vest in Congress all the
powers requisite to the effectual administration of the finances of the United
States. As far as concerns this object, there appears to be no parsimony of
To suppose, then. that the government is precluded from the employment of so
usual and so important an instrument for the administration of its finances as
that of a bank, is to suppose what does not coincide with the general tenor and
complexion of the constitution, and what is not agreeable to impressions that
any new spectator would entertain concerning it.
Little less than a prohibitory clause can destroy the strong presumptions
which result from the general aspect of the government. Nothing but
demonstration should exclude the idea that the power exists.
In all questions of this nature, the practice of mankind ought to have great
weight against the theories of individuals.
The fact, for instance, that all the principal commercial nations have made
use of trading corporations or companies, for the purpose of external commerce,
is a satisfactory proof that the establishment of them is an incident to the
regulation of the commerce.
This other fact, that banks are an usual engine in the administration of
national finances, and an ordinary and the most effectual instrument of loan,
and one which, in this country, has been found essential, pleads strongly
against (he supposition that a government, clothed with most of the most
important prerogatives of sovereignty in relation to its revenues, its debts,
its credits, its defense, its trade, its intercourse with foreign nations, is
forbidden to make use of that instrument as an appendage to its own authority.
It has been stated as an auxiliary test of constitutional authority to try
whether it abridges any pre-existing right of any State, or any individual. The
proposed investigation will stand the most severe examination on this point.
Each State may still erect as many banks as it pleases. Every individual may
still carry on the banking business to any extent he pleases.
Another criterion may be this. Whether the institution or thing has a more
direct relation, as to its uses, to the objects of the reserved powers of the
State governments than to those of the powers delegated by the United States.
This, rule, indeed, is less precise than the former, but it may still serve as
some guide. Surely a bank has more reference to the objects intrusted to the
national government than to those left to the care of the State governments.
The common defense is decisive in this comparison.
It is presumed that nothing of consequence in the observations of the
Secretary of State, and Attorney General, has been left un-noticed.
There are, indeed, a variety of observations of the Secretary of State
designed to show that the utilities ascribed to a bank, in relation to the
collection of taxes, and to trade, could be obtained without it; to analyze
which, would prolong the discussion beyond all bounds. It shall be forborne for
two reasons. First, because the report concerning the bank, may speak for
itself in this respect; and secondly, because all those observations are grounded on the erroneous
idea that the quantum of necessity or utility is the test of a constitutional
exercise of power.
One or two remarks only shall be made. One is, that he has taken no notice
of a very essential advantage to trade in general which is mentioned in the
report, as peculiar to the existence of a bank circulation, equal in the public
estimation to gold and silver. It is this that renders it unnecessary to lock
up the money of the country, to accumulate for months successively, in order to
the periodical payment of interest. The other is this: that his arguments to
show that treasury orders and bills of exchange, from tint. course of trade,
will prevent any considerable displacement of the metals, are founded on a
particular view of the subject. A case will prove this. The sums collected in a
State may be small in comparison with the debt due to it; the balance of its
trade direct and circuitous with the seat of government, may be even, or nearly
so; here, then, without bank bills, which in that State answer the purpose of
coin, there must be a displacement of the coin, in proportion to the difference
between the sum collected in the State, and that to be paid in it. With bank
bills, no such displacement would take place, or as far as it did, it would be
gradual and insensible. In many other ways, also, would there be at least a
temporary and inconvenient displacement of the coin, even where the course of
trade would eventually return it to its proper channel.
The difference of the two situations in point of convenience to the
treasury, can only be appreciated by one, who experiences the embarrassments of
making provision for the payment of the interest on a stock, continually
changing place in thirteen different places.
One thing which has been omitted, just occurs, although it is not very
material to the main argument. The Secretary of State affirms that the bill
only contemplates a repayment, not a loan, to the government. But here he is
certainly mistaken. It is true the government invests in the stock of the bank
a sum equal to that which it receives on loan. But let it be remembered, that
it does not, therefore, cease to be a proprietor of the stock, which would be
the case, if the money received back were in the nature of a payment. It
remains a proprietor still, and will share in the profit or loss of the
institution, according as the dividend is more or less than the interest it is
to pay on the sum borrowed. Hence that sum is manifestly, and in the strictest
sense, a loan.
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