The Bank's Constitutionality: A Historic Opinion

In 1791, Thomas Jefferson and Alexander Hamilton expressed differing opinions on the constitutionality of a bill for establishing a national bank. Hamilton, the Secretary of the Treasury, defended the bill, arguing that the division of legislative power allowed room for differences in opinion. He asserted that the national government was sovereign to a certain extent, defined by its specified powers. Jefferson, on the other hand, believed that the foundation of the Constitution reserved powers not delegated to the United States for the states or the people. He argued that erecting a bank and regulating commerce were distinct acts, and that the bill's powers were not among those enumerated in the Constitution. The debate over the bank bill's constitutionality played a significant role in shaping early American political parties.

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Hamilton's opinion on the constitutionality of a national bank

Alexander Hamilton, the Secretary of the Treasury, believed that the federal government should establish a national bank. In his opinion, the Constitution vested the national government with "implied, as well as express powers". He argued that the government had the right to employ all means "requisite and fairly applicable to the attainment of the ends of such power". Hamilton's view was that a national bank was necessary for economic development and that it fell within the scope of the government's powers. 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.

However, some, including Thomas Jefferson, believed that a national bank was unconstitutional. Jefferson, the Secretary of State, argued that the Constitution did not delegate the power to incorporate a bank to the United States, and that this power was reserved for the states. He also believed that a national bank would unfairly favour wealthy businessmen in urban areas over farmers in rural areas.

Hamilton and Jefferson's disagreement over the constitutionality of a national bank highlights a broader conflict over the role of national government in the economy. Hamilton wanted to use the federal government to promote economic development, while others, like Jefferson, favoured more limited government intervention.

In Federalist 78, Hamilton acknowledged the existence of certain specified exceptions to legislative authority in the Constitution, such as the prohibition on passing bills of attainder or ex post facto laws. However, he maintained that the government had power to act unless expressly prohibited from doing so. He recognised that there would be cases clearly within the power of the national government, others clearly outside its powers, and a third category open to interpretation.

Hamilton also addressed arguments against the constitutionality of a national bank, dismissing them as fallacious. He asserted that the existence of state banks did not negate the need for a national bank and that circumstances could affect the expediency of a measure without changing its constitutionality. Hamilton's opinion on the constitutionality of a national bank played a significant role in shaping the economic policies of the early United States.

Jefferson's opinion on the constitutionality of a national bank

In 1791, Thomas Jefferson opined on the constitutionality of a national bank, deeming it unconstitutional. He believed that the establishment of a national bank would unfairly favour wealthy businessmen in urban areas over farmers in rural regions.

Jefferson's opinion, expressed in a letter to James Madison, centred on several key points. Firstly, he argued that the incorporation of a bank and the powers it assumed were not delegated to the United States by the Constitution. He asserted that the powers specifically enumerated in the Constitution did not include those that a national bank would possess. For example, he stated that the bill was not a measure to raise money or borrow money, and that it did not regulate commerce with foreign nations or among the states, which was beyond the scope of a national bank's capabilities.

Jefferson also emphasised that creating a bank did not equate to regulating commerce. He compared it to producing wheat or mining currency, arguing that these actions did not constitute the regulation of buying and selling. He further elaborated that even if the bank bill was considered an attempt to regulate commerce, it would be void as it would extend to the internal commerce of states, which was beyond the jurisdiction of Congress.

Additionally, Jefferson questioned the necessity of a national bank. He acknowledged that bank bills might be more convenient than treasury orders, but he maintained that this minor difference in convenience did not justify assuming non-enumerated powers as outlined in the Constitution. He also pointed out that existing banks were already providing similar services, and there was no evidence of a refusal to lend their agency.

Jefferson's stance contrasted with that of Alexander Hamilton, who sought to establish a national bank modelled after Great Britain's. Hamilton envisioned bank branches in major cities, a uniform currency, and a repository for federal funds. Despite Jefferson's opposition, a national bank was eventually established.

Madison's opinion on the constitutionality of a national bank

James Madison, a Virginia congressman, was a critic of Alexander Hamilton's plan to create a national bank. Madison believed that Congress did not have the constitutional power to issue charters of incorporation, a power that was absent from the Constitution. He argued that the power to create corporations had to be explicitly authorized and could not be implied from the text of the Constitution. Madison and Thomas Jefferson, as nationalists, had previously defended the doctrine of implied or inherent powers advanced by Hamilton to defend the bank bill. However, they became concerned about the tendency of Hamilton's measures and challenged them with a strict constructionist position.

Madison considered the First National Bank unconstitutional, and in 1811, he allowed its charter to elapse. When the War of 1812 created a new need for the bank, the question of its constitutionality remained. Madison supported the chartering of the Second Bank in 1816, which led his critics to claim that he had pro-Federalist sympathies.

In a letter from June 25, 1831, Madison wrote about the "almost necessity" of the measure, referring to the national bank. He acknowledged that the bank had been in operation for twenty years with legislative recognition and the acquiescence of local authorities and the nation at large. Madison suggested that a veto from the executive, under these circumstances, would have defied the obligations derived from precedents indicating the national judgment and intention.

Madison's opinions on the constitutionality of a national bank contributed to the birth of the Republican Party, along with Jefferson's attack on the bank's constitutionality and his interpretation of the 'necessary and proper' clause of the Constitution. Madison's stance on the bank bill also influenced public opinion, as historians have noted.

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The role of the President in the bill's passage

The process of a bill becoming a law is a long and complex one, and the President plays a crucial role in this process. Once a bill is introduced, it is assigned to a committee whose members will research, discuss, and make changes to the bill. The bill is then put before that chamber to be voted on. If the bill passes one body of Congress, it goes to the other body to go through a similar process of research, discussion, changes, and voting. Once both bodies vote to accept a bill, they must work out any differences between the two versions. If the bill passes in both chambers, it is presented to the President.

The President then considers the bill. The President can approve the bill and sign it into law. Or the President can refuse to approve a bill. This is called a veto. If the President chooses to veto a bill, in most cases, Congress can vote to override that veto, and the bill becomes a law. If the President does not sign off on a bill and it remains unsigned when Congress is no longer in session, the bill will be vetoed by default. This action is called a "pocket veto," and it cannot be overridden by Congress.

In the case of the opinion on the constitutionality of the bank, there was much anxiety caused by Washington's long delay in signing the bill. This was due to the opposition of Madison and Jefferson, which marked the birth of the Republican Party. Jefferson's attack on the constitutionality of the bank and his narrow interpretation of the "necessary and proper" clause of the Constitution became central tenets of Republican dogma.

Hamilton's opinion, on the other hand, defended the constitutionality of the bank. He argued that the national government was sovereign to a certain extent, namely to the extent of the objects of its specified powers. He also pointed out that the proposed measure did not abridge any pre-existing right of any state or individual, which was a strong presumption in favor of its constitutionality.

The impact of public opinion on the bank bill

Public opinion on the bank bill, which proposed the establishment of a National Bank, had a significant impact on the birth of the Republican Party in the United States. The opposition to the bank bill, led by Madison and Jefferson, marked the beginning of the Republican party, with Jefferson's views on the constitutionality of the bank becoming central tenets of Republican dogma.

The debate around the bank bill also highlighted the division between two schools of thought on public policy. On one side was Hamilton, who proposed the creation of the Bank of the United States, modelled on the Bank of England. Hamilton's vision was for a privately directed yet government-connected bank, which opponents believed was designed to support the special interests that controlled its policies. On the other side were Madison and Jefferson, who argued against the constitutionality of the bank bill, citing that the incorporation of a bank was not among the powers enumerated by the Constitution.

The press played a crucial role in shaping public opinion on the bank bill. The constitutional issue was widely discussed in newspapers such as the Federal Gazette and the Va. Gazette (Richmond). Madison's impassioned argument against the bank bill in the House of Representatives gained significant public attention. Additionally, the delay by President Washington in signing the bill caused anxiety among supporters of the bill, including Hamilton, and further intensified the public discourse.

It is worth noting that the impact of public opinion on the bank bill has been a subject of interest for historians. Joseph Charles, in his book "The Origins of the American Party System," points out that historians have often focused on the impact of the bank bill on public opinion while neglecting to examine the impact of funding and assumption measures. Charles argues that these funding and assumption measures were the true "first milestones in the growth of parties."

While the bank bill debate had a significant impact on public opinion and the birth of the Republican Party, it is important to acknowledge that public opinion in modern times is influenced not only by ideas and the press but also by economic power. Moneyed interests, business interests, and lobbyists can shape public opinion and influence government decisions, often at the expense of the general public.

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