Omar Bennett
The debate over the creation of a national bank in the United States in the 1790s pitted Alexander Hamilton and Thomas Jefferson against each other. Hamilton, the first Secretary of the Treasury, wanted to establish a national bank modelled on Great Britain's, with branches in major cities and the ability to issue a uniform currency. Jefferson, however, believed that a national bank was unconstitutional, arguing that it unfairly favoured wealthy urban businessmen over rural farmers and that states should charter their own banks. This disagreement reflected a broader ideological divide between Hamilton's Federalists, who favoured a strong federal government, and Jefferson's Republicans, who warned that too much power in the hands of the federal government would lead to tyranny.
| Characteristics | Values |
|---|---|
| Thomas Jefferson's opinion on the National Bank | Unconstitutional |
| Jefferson's opinion on the role of the federal government | Too much power in the hands of the federal government would lead to tyranny |
| Jefferson's opinion on the states' role | States should charter their own banks |
| Jefferson's opinion on the National Bank's impact | Unfairly favored wealthy businessmen in urban areas over farmers in the country |
| Alexander Hamilton's opinion on the National Bank | Constitutional |
| Hamilton's opinion on the role of the federal government | The federal government needed to be strong |
| Hamilton's opinion on the necessary and proper clause | Took a more liberal reading of the clause |
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What You'll Learn
- Thomas Jefferson believed a national bank was unconstitutional
- Jefferson's opinion was that states should charter their own banks
- Alexander Hamilton wanted a national bank, modelled on Great Britain's
- Hamilton and Jefferson had opposing views of public policy
- Jefferson believed too much power in federal government would lead to tyranny
Thomas Jefferson believed a national bank was unconstitutional
Thomas Jefferson believed that a national bank was unconstitutional. Alexander Hamilton, the first Secretary of the Treasury, wanted to create a national bank for the US, modelled on Great Britain's national bank. He wanted the government to develop bank branches in major cities, a uniform currency, and a place for the federal government to deposit or borrow money when required.
Jefferson opposed this idea, arguing that states should charter their own banks. He believed that a national bank would unfairly favour wealthy businessmen in urban areas over farmers in the country. He also argued that the Constitution only allowed the means that were "necessary" for effecting the enumerated powers, not those that were merely "convenient".
In a letter to James Madison, Jefferson wrote:
> "I consider the foundation of the Constitution as laid on this ground: That 'all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.' [XIIth amendment.] To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition."
Despite Jefferson's opposition, a national bank was eventually established.
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Jefferson's opinion was that states should charter their own banks
Thomas Jefferson believed that a national bank was unconstitutional. He disagreed with Alexander Hamilton, the first Secretary of the Treasury, who wanted to create a National Bank for the US, modelled on Great Britain's national bank. Hamilton's vision included government bank branches in major cities, a uniform currency, and a place for the federal government to deposit or borrow money when required.
Jefferson, however, thought that states should charter their own banks. He believed that a national bank would unfairly favour wealthy businessmen in urban areas over farmers in the country. He argued that the Constitution did not grant Congress the power to erect a bank. Instead, he interpreted the Constitution as reserving powers not explicitly delegated to the United States or prohibited to the states for the states or the people.
Jefferson's opinion was that the power to erect a bank was not among those specifically enumerated in the Constitution. He also disagreed with the idea that a bank would provide convenience in tax collection, stating that the Constitution only allowed for means that were "necessary" rather than merely "convenient". He believed that interpreting the Constitution to allow for such convenience would grant Congress unlimited power.
Jefferson's stance on the national bank aligned with his broader political beliefs. As a Republican, he argued that too much power in the federal government's hands would lead to tyranny. In contrast, Hamilton, a leading voice of the Federalists, advocated for a strong federal government. The two men's opposing views on the role of the federal government played out in their debate over the creation of a national bank.
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Alexander Hamilton wanted a national bank, modelled on Great Britain's
Alexander Hamilton, the first secretary of the treasury, wanted to create a national bank modelled on Great Britain's. In the summer of 1780, when the Continental Congress was struggling to keep its army in the field, Hamilton was asked to analyse "the defects of our present system". He replied with a lengthy letter proposing remedies, one of which was the creation of a national bank. Hamilton was inspired by the establishment of the Bank of England in 1694, which he believed had contributed significantly to the development of British imperial power.
Hamilton's proposal for a national bank was based on the necessary and proper clause in Article I, Section 8 of the Constitution, which stated that Congress could make laws related to other enumerated powers even if they were not listed. He believed that this clause gave Congress the discretion to decide how to implement its assigned powers, and that a national bank modelled on the British system would be a valuable tool for achieving the basic goals of the government. In his Report on a National Bank, presented to the House of Representatives in December 1790, he explained his proposal in detail. Congress would grant a 20-year charter of incorporation to a Bank of the United States, funded by an initial deposit of $10 million. The government would purchase one-fifth of the bank's stock, and the rest would be sold to private investors. The government would deposit its tax revenues in the bank, and the bank would loan money to both the government and private businesses to stimulate their growth.
Hamilton's plan faced opposition, including from Thomas Jefferson, who believed that a national bank was unconstitutional. Jefferson argued that the Constitution did not grant the government the authority to establish corporations, and that a national bank would favour wealthy businessmen and undermine state banks. Despite this opposition, Hamilton's bill was passed by both the House and the Senate, and signed into law by President Washington in February 1791. The First Bank of the United States opened in Philadelphia in December 1791, with a 20-year charter. However, by 1811, the bank still faced opposition, and the increase in state banks led to concerns about competition and power.
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Hamilton and Jefferson had opposing views of public policy
One of the most significant differences between the two statesmen was their stance on the establishment of a national bank. Hamilton, as the first Secretary of the Treasury, wanted to emulate Great Britain's national bank system, with branches in major cities, a uniform currency, and a place for the federal government to deposit or borrow money. On the other hand, Jefferson believed that a national bank was unconstitutional and unfairly favoured wealthy businessmen in urban areas over farmers in the country. He argued that the power to regulate commerce did not extend to the internal regulation of commerce within a state, which should remain under the purview of the state legislature.
The debate over the national bank reflected a deeper divide between Hamilton's belief in a strong federal government and Jefferson's commitment to states' rights. Hamilton's policies, including the national bank, tariffs, and the assumption of state debts, all contributed to strengthening the federal government's power. Jefferson, on the other hand, advocated for states' rights and believed that states should charter their own banks.
The differences between Hamilton and Jefferson extended beyond economic policy. Hamilton, for instance, wanted to use the military to suppress political dissent, and his party was responsible for the Sedition Act, which made it a crime to speak out against the government. Jefferson, on the other hand, believed in the republican spirit, disentangling government and religion, and ensuring that most office-holders were elected.
The competing visions of Hamilton and Jefferson shaped the early national political landscape, leading to the formation of political factions and the dual-party system that continues to operate in the US today. The Republican Party emerged as the organised opposition to Federalist policies, with Jefferson declaring Hamilton's plan beyond the power of Congress to enact. The election of 1800 settled the debate, with Jefferson's victory signalling a lasting triumph for the Republican model of government.
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Jefferson believed too much power in federal government would lead to tyranny
Thomas Jefferson believed that a national bank was unconstitutional. Alexander Hamilton, the first Secretary of the Treasury, wanted to create a national bank for the US, modelled on Great Britain's national bank. He wanted the government to develop bank branches in major cities, a uniform currency, and a place for the federal government to deposit or borrow money when needed.
Jefferson disagreed with this proposal. He believed that states should charter their own banks and that a national bank unfairly favoured wealthy businessmen in urban areas over farmers in the country. He argued that the Constitution did not give Congress the power to regulate the internal commerce of a state, which should remain exclusively with its own legislature.
Jefferson's views were shaped by his belief that too much power in the federal government would lead to tyranny. He was a Republican who consistently opposed Alexander Hamilton's Federalist beliefs. Hamilton believed that the federal government needed to be strong, and he took a liberal reading of the necessary and proper clause, stating that Congress should do anything it felt was necessary to carry out national responsibilities.
Jefferson, on the other hand, argued that the necessary and proper clause, part of Article I of the Constitution, which allowed Congress to make laws and provisions that were not part of the enumerated powers, should be interpreted strictly. He believed that giving Congress universal power would be dangerous and that they should be "laced up straitly within the enumerated powers".
In the end, despite Jefferson's opposition, a national bank was established.
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Frequently asked questions
No, Thomas Jefferson believed that the national bank was unconstitutional. He thought that states should have the power to charter their own banks and that a national bank would favour wealthy businessmen in urban areas.
Hamilton, the first Secretary of the Treasury, wanted to create a National Bank for the US, modelled after Great Britain's national bank. He believed the federal government needed to be strong.
A national bank was eventually established, despite Jefferson's opposition.
Jefferson believed that the Constitution only allowed the means that were necessary and not merely "convenient". He also argued that the power to regulate internal state commerce remained exclusively with the state legislature.
