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Elliot’s Debates: Volume 4

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Jefferson on Banks

IDEAS OF MR. JEFFERSON ON BANKS; REFERRED TO BY MR. MADISON IN THE PRECEDING LETTER.

[E X T R A C T.]

The bill for establishing a national bank, in 1791, undertakes, among other things,—

1. To form the subscribers into a corporation.

2. To enable them, in their corporate capacities, to receive grants of lands; and, so far, is against the laws of mortmain. [Note †: Though the Constitution controls the laws of mortmain so far as to permit Congress itself to hold lands for certain purposes, yet not so far as to permit them to Communicate a similar right to other corporate bodies.]

3. To make alien subscribers capable of holding lands; and, so far, is against the laws of alienage.

4. To transmit these lands, on the death of a proprietor, to a certain line of successors; and, so far, changes the course of descents.

5. To put the lands out of the reach of forfeiture, or escheat; and, so far, is against the laws of forfeiture and escheat.

6. To transmit personal chattels to successors, in a certain line; and, so far, is against the laws of distribution.

7. To give them the sole and exclusive right of banking, under the national authority; and, so far, is against the laws of monopoly.

8. To communicate to them a power to make laws, paramount to the laws of the states; for so they must be construed, to protect the institution from the control of the state legislatures; and so, probably, they will be construed.

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, (12th amend.) 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.

The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States by the Constitution.

I. They are not among the powers specially enumerated. For these are,

1. A power to lay taxes for the purpose of paying the debts of the United States. But no debt is paid by this bill, nor any tax laid. Were it a bill to raise money, its organization in the Senate would condemn it by the Constitution.

2. To “borrow money.” But this bill neither borrows money nor insures the borrowing of it. The proprietors of the bank will be just as free as any other money-holders to lend, or not to lend, their money to the public. The operation proposed in the bill, first to lend them two millions, and then borrow them back again, cannot change the nature of the latter act, which will still be a payment, and not a loan, call it by what name you please.

3. “To regulate commerce with foreign nations, and among the states, and with the Indian tribes? To erect a bank, and to regulate commerce, are very different acts. He who erects a bank creates a subject of commerce in its bills; so does he who makes a bushel of wheat, or digs a dollar out of the mines: 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 selling. Besides, if this were an exercise of the power of regulating commerce, it would be void, as extending as much to the internal commerce of every state, as to its external. For the power given to Congress by the Constitution does not extend to the internal regulation of the commerce of a state, (that is to say, of the commerce between citizen and citizen,) which remains exclusively with its own legislature; but to its external commerce only, that is to say, its commerce with another state, or with foreign nations, or with the Indian tribes. Accordingly, the bill does not propose the measure as a “regulation of trade,” but as “productive of considerable advantage to trade.”

Still less are these powers covered by any other of the special enumerations.

II. Nor are they within either of the general phrases, which are the two following:—

1. “To lay taxes to provide for the general welfare of the United States;” that is to say, “to lay taxes for the purpose of providing for the general welfare;” for the laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. Congress 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. In like manner, they are not to do any thing they please, to provide for the general welfare, but only to lay taxes for that purpose. To consider the latter phrase, not as describing the purpose of the first, but as giving a distinct and independent power to do any act they please which might be for the good of the Union, would render all the preceding and subsequent enumerations of power completely useless, it would reduce the whole instrument to a single phrase— that of instituting a Congress with power to do whatever would be for the good of the United States; and, as they would be the sole judges of the good or evil, it would be also a power to do whatever evil they pleased. It is an established rule of construction, where a phrase will hear either of two meanings, to give it that which will allow some meaning to the other parts of the instrument, and not that which will render all the others useless. Certainly no such universal power was meant to be given them. It was intended to lace them up straitly within the enumerated powers, and those without which, as means, these powers could not be carried into effect. It is known that the very power now proposed as a means, was rejected as an end by the Convention which formed the Constitution. A proposition was made to them, to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected; and one of the reasons of objection urged in debate was, that they then would bare a power to erect a bank, which would render great cities, where there were prejudices and jealousies on that subject, adverse to the reception of the Constitution.

2. The second general phrase is, “to make all laws necessary and proper for carrying into execution the enumerated powers.” But they can all be carried into execution without a bank. A bank, therefore, is not necessary, and consequently not authorized by this phrase.

It has been much urged that a bank will give great facility or convenience in the collection of taxes. Suppose this were true; yet the Constitution allows only the means which are “necessary,” not those which are merely “convenient,” for effecting the enumerated powers. If such a latitude of construction be allowed to this phrase as to give any non-enumerated power, it will go to every one; for there is no one which ingenuity may not torture into a convenience, in some way or other, to some one of so long a list of enumerated powers. It would swallow up all the delegated powers, and reduce the whole to one phrase, as before observed. Therefore it was that the Constitution restrained them to the necessary means; that is to say, to those means without which the grant of the power would be nugatory.

Perhaps bank bills may be a more convenient vehicle than treasury orders. But a little difference in the degree of convenience cannot constitute the necessity which the Constitution makes the ground for assuming any non-enumerated power.

Can it be thought that the Constitution intended that, for a shade or two of convenience, more or less, Congress should be authorized to break down the most ancient and fundamental laws of the several states, such as those against mortmain, the laws of alienage, the rules of descent, the acts of distribution, the laws of escheat and forfeiture, and the laws of monopoly?

Nothing but a necessity invincible by any other means, can justify such a prostration of laws, which constitute the pillars of our whole system of jurisprudence. Will Congress be too strait-laced to carry the Constitution into honest effect, unless they may pass over the foundation laws of the state governments, for the slightest convenience to theirs?

The negative of the President is the shield provided by the Constitution to protect, against the invasions of the legislature, 1. The rights of the executive; 2. Of the judiciary; 3. Of the states and state legislatures. The present is the case of a right remaining exclusively with the states, and is, consequently, one of those intended by the Constitution to be placed under his protection.

It must be added, however, that, unless the President”s mind, on a view of every thing which is urged for and against this bill, is tolerably clear that it is unauthorized by the Constitution, if the pro and the con hang so even as to balance his judgment, a just respect for the wisdom of the legislature would naturally decide the balance in favor of their opinion. It is chiefly for cases where they are clearly misled by error, ambition, or interest, that the Constitution has placed a check in the negative of the President. February 15, 1791.

THOMAS JEFFERSON.

NOTES—ON BANKS.

March 11, 1798. When the bank bill was under discussion, in the House of Representatives Judge Wilson came in, and was standing by Baldwin. Baldwin reminded him of the following fact, which passed in “the grand Convention.” Among the enumerated powers given to Congress, was one to erect corporations. It was, on debate, struck out. Several particular powers were then proposed. Among others, Robert Morris proposed to give Congress a power to establish a national bank. Gouverneur Morris opposed it, observing that it was extremely doubtful whether the Constitution they were framing could ever be passed at all by the people of America; that, to give it its best chance, however, they should make it as palatable as possible, and put nothing into it, not very essential, which might raise up enemies; that his colleague (Robert Morris) well knew that “a bank was in their state (Pennsylvania) the very watchword of party; that a bank had been the great bone of contention of parties of the state from the establishment of their Constitution; having been erected, put down, erected again, as either party preponderated; that, therefore, to insert this power would instantly enlist against the whole instrument the whole of the anti-bank party in Pennsylvania. Whereupon it was rejected, as was every other special power, except that of giving copyrights to authors, and patents to inventors; the general power of incorporating being whittled down to this shred. Wilson agreed to the fact.—Jefferson”s Memoirs.

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