Elliot’s Debates: Volume 4
Alexander Hamilton on Banks
HAMILTON’S ARGUMENT ON THE CONSTITUTIONALITY OF A BANK OF THE UNITED STATES.
It 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 up by the attorney-general. 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,” say’s he, “the disposal and regulation of money is the final cause for raising it by taxes.” But it would be more accurate to say that the object to which money is intended to be applied is the final cause for raising it, than that the disposal and regulation of it is such. The support of a government, the support of troops for the common defence, 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 the ends for which it was raised, not the ends themselves. Hence, therefore, the moneys 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 al 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 the taxes; in others, the repeal might injure our own industryour agriculture and manufactures. In these cases, they would, of course, be retained. Here, then, would be money, 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 constitute 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 money of the nation? 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 only under 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 largo 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, &c., being general objects, are constitutional ones, for the application of money. A bank, them, 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 per acre. A hope is entertained that, by this time, it has been made to appear to the satisfaction of the President, that the bank has a natural relation to the power of collecting taxes; to that of regulating trade; to that of providing for the common defence; 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 specified 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 law, 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 enure to him and his successors in office, in trust for the United States, 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 form particular branches of revenue; that is, to sell or mortgage 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 funds vested 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 a 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 the Consequences 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 he 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 practised 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 them? 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 have 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 privileges. 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 thisthat 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. 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 languagethat it is the manifest design arid 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 power.
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 the impressions that any mere 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. The fact 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 commerce. This other fact, that banks are a usual engine in the administration of national finances, and an ordinary and the most effectual instrument of loans, and one which, in this country, has been found essential, pleads strongly against the supposition that a government, clothed with most of the important prerogatives of sovereignty, in relation to its revenues, its debt, its credit, its defence, its trade, its intercourse with foreign nations, as forbidden to make use of that instrument, as an appendage to its own authority. It has been usual, as an auxiliary test of constitutional authority, to try whether it abridges any preëxisting right of any state, or any individual. 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. * * *
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 defence is decisive in this comparison.