Jefferson's Opinions on the Constitutionality of a National Bank: 1791 (2024)

Alexander Hamilton, the first Minister of Finance underGeorge Washington, attempted to establish a national bank for the young United States. Based on the National Bank of Great Britain, Hamilton wanted the government to develop bank branches in major cities, a unified currency, and a place where the federal government could deposit or borrow money when needed.Thomas Jeffersonbelieved that this national bank was unconstitutional. Unlike Hamilton, Jefferson believed that states should charter their own banks and that a national bank unfairly favored wealthy urban businessmen over rural farmers. Despite Jefferson's opposition, a national bank was eventually established.

The bill establishing a national bank requires, among other things

1. To turn the subscribers into a business.

2. To enable them in their business capacity to receive land grants; and so far it is against the laws of Mortmain.(1)

3. To enable alien subscribers to own land, and so far this is contrary to the laws of alienation.

4. To transfer these lands, on the death of an owner, to a certain line of successors; and so far the course of Descents changes.

2. "To borrow money." But this bill does not lend money or guarantee borrowing. The holders of the bank will be as free as all other holders of money whether or not to lend their money to the public. The operation proposed in the bill, first to lend them two million and then to lend them back, cannot change the nature of the final act, which will still be a payment and not a loan, whatever you want to call it.

3. To “regulate commerce with foreign nations, and among the states, and with the Indian tribes.” Establishing a bank and regulating commerce are very different actions. He who establishes a bank creates an object of commerce in its notes, just as he who earns a bushel of wheat or draws a dollar from the mines; however, none of these individuals regulate the trade therein. Creating something that can be bought and sold doesn't mean prescribing rules for buying and selling. Moreover, if this were an exercise of the power to regulate commerce, it would be invalid, as it extends equally to the internal commerce of any State and to the external. For the power which the Constitution gives to Congress does not include the internal regulation of the commerce of a State (that is, the commerce between citizen and citizen), which remains solely in its own legislature; but only on external commerce, that is, commerce with another state, or with foreign nations, or with the Indian tribes. The bill therefore presents the measure not as a rail regulation, but as “productive with significant benefits for trade”. Still less are these powers covered by any other special enumeration.

II. They also do not fall within any of the general sentences, namely the following two:

1. To lay taxes to provide for the general welfare of the United States, that is, "to impose taxes for the purpose of providing for the general welfare." For the imposition of taxes is the power, and the general welfare is the end for which the power is to be exercised. They will not impose taxes ad libitum for any purpose; but only to pay the debt or provide for the welfare of the Union. In like manner they may do nothing they please for the common good, but raise taxes for that purpose only. By regarding the latter sentence, not as descriptive of the purpose of the former, but as giving them a separate and independent power to do any act they may desire and which might be beneficial to the Union, all preceding and subsequent lists of power are given. . completely useless.

It would reduce the whole instrument to a single phrase, namely, to establish a Congress with power to do whatever would be beneficial to the United States; and as they would be the sole judges of good or evil, it would also be a power to do whatever evil they pleased.

It is a settled rule of construction that a phrase should have one of two meanings, so as to give it a meaning which gives some meaning to the other parts of the instrument, and not one which would render all the others useless. This universal power was certainly not intended to be given to them. The intention was to bind them closely together within the enumerated powers, and the powers without which these powers as a means could not be exercised. It is well known that the very power now presented as a means was rejected as an end by the convention which formed the Constitution. A motion was presented to them to authorize Congress to open canals, and an amendment to authorize them to take up canals. But the whole was rejected, and one of the reasons for rejection advanced in the debate was that they would then have the power to create a bank, thereby eliminating the great cities, where prejudice and jealousy existed on the subject, would be to the detriment of the bank. of the reception of the constitution.

2. The second general phrase reads: "to make all laws necessary and appropriate for the execution of the enumerated powers." But it's all possible without a bank. A bank is therefore not necessary and therefore not permitted under this sentence.

If it has been urged that a bank will afford great facilities or convenience in the collection of taxes, suppose this were true: yet the Constitution authorizes only those means which are "necessary," and not those which are merely "convenient." to exercise the listed powers. . If such a construction is granted in this sense, by which any unenumerated power is granted, it will go to all, for there is not one that ingenuity cannot torture for convenience in a particular case, to one of them a long list of listed powers. It would consume all the delegated powers and reduce the whole to one power, as previously noted. Therefore the Constitution limited them to the necessary means, that is to say, to those without which the grant of power would be harmless.

But let us examine this convenience and see what it is. The report on the subject, page 3, states that the only general convenience is to prevent the transportation and re-transportation of money between the States and the treasury (for I am ignoring the increase of the circulating medium, which is attributed to it as a need, and which, according to my ideas about paper money, is clearly a disadvantage. Each state will have to pay into the treasury a sum of tax money; and the treasury in each state will have to pay a share of the interest on the national debt and the salaries of the government officials residing in that state. In most states there will still be a surplus of tax money going to the seat of government for the government officials residing there. The payments of interest and wages in each state can be made by treasury orders to the collector of the state .This will take up the greater part of the money which he has collected in his State, and consequently prevent the great mass of them from being taken out of the State. If there is a balance of trade in favor of that country above that where the government resides, the excess taxes will be paid by the money changers, which will be deducted from the commercial balance. And that's how it must be if there was a bank. But if there is no trade balance, direct or circular, all the banks in the world would not be able to pay the surplus in taxes, but in the form of money. The orders and bills of the treasury may prevent the movement of the principal sum of the money collected without the assistance of any bank; and where these fail, even with that help it cannot be prevented.

Perhaps banknotes are a more useful instrument than government bonds. But a small difference in the degree of convenience cannot constitute the necessity which the Constitution imposes on the assumption of any unenumerated power.

Moreover, the existing banks will undoubtedly make arrangements to lend their agency, as will the more favorable banks, as there will be competition among them; whereas the bill leaves us bound to the National Bank, which is free to refuse any scheme but on their own terms, and that on such refusal the public is not free to employ any other bank . I believe Philadelphia now makes this claim with their postal notes, which, in consultation with the treasury, are paid for by every state collector to whom they are presented. This means alone is sufficient to prevent the existence of the necessity which might justify the adoption of an unenumerated power as a means of effecting an enumerated power. The thing may be done, and has been done, and well done, without this supposition, and therefore it does not rest on the degree of necessity which can fairly justify it.

It could be said that a bank whose notes had a currency for all states would be more convenient than a bank whose currency was limited to a single state. So it would be even more convenient if there were a bank whose accounts had a currency all over the world. But from this superior convenience it does not follow that there is any power anywhere to establish such a bank; or that the world might not do as well without it.

Can it be thought that the Constitution intended that Congress should, for convenience, be given more or less power to subvert the oldest and most fundamental laws of the several States; such as those against Mortmain, the laws of alienation, the rules of descent, the acts of distribution, the laws of expropriation and confiscation, the laws of monopoly? Nothing other than a necessity, insurmountable in any other way, can justify such a prostitution of laws, which are the pillars of our entire legal system. Will Congress be too narrow-minded to fairly implement the Constitution, unless they can, at their least convenience, violate the constitutions of the State Government?

The president's negativity is the shield the Constitution provides to protect against legislative invasions: 1. The prerogative of the executive. 2. From the judiciary. 3. By the states and state legislatures. In the present case, it concerns a right that remains exclusively vested in the States, and therefore one of the rights that the Constitution wants to place under its protection:

It must be added, however, that unless the opinion of the President, considering all that is urged for and against this bill, is reasonably clear that it is not authorized by the Constitution; If proponents and opponents were so equal as to balance his judgment, a just respect for the wisdom of the legislature would naturally decide the balance in favor of their opinion. These are mainly cases in which they are clearly misled by mistakes, ambitions or interests, for which the Constitution has put a stop to the president.