The writings of James Madison, comprising his public papers and his private correspondence, including numerous letters and documents now for the first time printed. |
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FEBRUARY 2.—BANK OF THE UNITED STATES. |
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 | The writings of James Madison, |  |
FEBRUARY 2.—BANK OF THE UNITED STATES.
Mr. Madison began with a general review of the advantages
and disadvantages of banks. The former, he stated, to consist
in, first, the aid they afford to merchants, who can thereby
Second. The aids to merchants in paying punctually the
customs. Third. Aids to the Government in complying punctually
with its engagements, when deficiencies or delays happen
in the revenue. Fourth. In diminishing usury. Fifth.
and represented by notes. Sixth. In facilitating occasional
remittances from different places where notes happen to
circulate.
The effect of the proposed bank, in raising the value of
doubt raise that of the stock subscribed into the bank; but
could have little effect on stock in general, as the interest on
it would remain the same, and the quantity taken out of the
market would be replaced by bank stock.
The principal disadvantages consisted in, first, banishing
the precious metals, by substituting another medium to perform
their office. This effect was inevitable. It was admitted
by the most enlightened patrons of banks, particularly
by Smith on the Wealth of Nations. The common answer to
for something equally valuable that would be imported
in return. He admitted the weight of this observation in
general; but doubted whether, in the present habits of this
use to it.
Second. Exposing the public and individuals to all the
in so great a country as this, and might happen from
various causes, as false rumors, bad management of the institution,
an unfavorable balance of trade from short crops, &c.
It was proper to be considered, also, that the most important
of the advantages would be better obtained by several
banks, properly distributed, than by a single one. The aids
to commerce could only be afforded at or very near the seat
of the bank. The same was true of aids to merchants in the
payment of customs. Anticipations of the Government
would also be most convenient at the different places where
the interest of the debt was to be paid. The case in America
was different from that in England: the interest there was all
due at one place, and the genius of the Monarchy favored the
concentration of wealth and influence at the metropolis.
He thought the plan liable to other objections. It did not
make so good a bargain for the public as was due to its interests.
The charter to the Bank of England had been
granted for eleven years only, and was paid for by a loan to
the Government on terms better than could be elsewhere got.
Every renewal of the charter had, in like manner, been purchased;
in some instances, at a very high price. The same
had been done by the Banks of Genoa, Naples, and other like
banks of circulation. The plan was unequal to the public
creditors; it gave an undue preference to the holders of a
particular denomination of the public debt, and to those at
and within reach of the seat of Government. If the subscriptions
should be rapid, the distant holders of evidences of
debt would be excluded altogether.
In making these remarks on the merits of the bill, he had
reserved to himself the right to deny the authority of Congress
to pass it. He had entertained this opinion from the date of
the Constitution. His impression might, perhaps, be the
stronger, because he well recollected that a power to grant
charters of incorporation had been proposed in the General
Convention and rejected.
Is the power of establishing an incorporated Bank among
the powers vested by the Constitution in the Legislature of the
United States? This is the question to be examined.
After some general remarks on the limitations of all political
power, he took notice of the peculiar manner in which the
Federal Government is limited. It is not a general grant, out
of which particular powers are excepted; it is a grant of particular
powers only, leaving the general mass in other hands.
So it had been understood by its friends and its foes, and so it
was to be interpreted.
As preliminaries to a right interpretation, he laid down the
following rules:
An interpretation that destroys the very characteristic of
the Government cannot be just.
Where a meaning is clear, the consequences, whatever they
may be, are to be admitted—where doubtful, it is fairly triable
by its consequences.
In controverted cases, the meaning of the parties to the instrument,
if to be collected by reasonable evidence, is a proper guide.
Contemporary and concurrent expositions are a reasonable
evidence of the meaning of the parties.
In admitting or rejecting a constructive authority, not only
the degree of its incidentality to an express authority is to be
regarded, but the degree of its importance also; since on this
will depend the probability or improbability of its being left
to construction.
Reviewing the Constitution with an eye to these positions,
it was not possible to discover in it the power to incorporate a
Bank. The only clauses under which such a power could be
pretended are either:
- The power to lay and collect taxes to pay the debts,
and provide for the common defence and general welfare: or, - The power to borrow money on the credit of the United
States: or, - The power to pass all laws necessary and proper to
carry into execution those powers.
1.
2.
3.
The bill did not come within the first power. It laid no tax
to pay the debts, or provide for the general welfare. It laid
no tax whatever. It was altogether foreign to the subject.
No argument could be drawn from the terms "common defence
and general welfare." The power as to these general
purposes was limited to acts laying taxes for them; and the
general purposes themselves were limited and explained by
the particular enumeration subjoined. To understand these
terms in any sense, that would justify the power in question,
would give to Congress an unlimited power; would render
nugatory the enumeration of particular powers; would supersede
all the powers reserved to the State Governments. These
terms are copied from the articles of Confederation; had it
ever been pretended that they were to be understood otherwise
than as here explained?
It had been said, that "general welfare" meant cases in
which a general power might be exercised by Congress, without
interfering with the powers of the States; and that the
establishment of a National Bank was of this sort. There
were, he said; several answers to this novel doctrine.
- The proposed Bank would interfere, so as indirectly to
defeat a State Bank at the same place. - It would directly interfere with the rights of the States
to prohibit as well as to establish Banks, and the circulation
of Bank notes. He mentioned a law in Virginia actually
prohibiting the circulation of notes payable to bearer. - Interference with the power of the States was no constitutional
criterion of the power of Congress. If the power
was not given, Congress could not exercise it; if given, they
might exercise it, although it should interfere with the laws,
or even the Constitution of the States. - If Congress could incorporate a Bank merely because
the act would leave the States free to establish Banks also,
any other incorporations might be made by Congress. They
could incorporate companies of manufacturers, or companies
for cutting canals, or even religious societies, leaving similar
29incorporations by the States, like State Banks, to themselves.
Congress might even establish religious teachers in every
parish, and pay them out of the Treasury of the United States,
leaving other teachers unmolested in their functions. These
inadmissible consequences condemned the controverted principle.
1.
2.
3.
4.
The case of the Bank established by the former Congress
had been cited as a precedent. This was known, he said, to
have been the child of necessity. It never could be justified
by the regular powers of the articles of Confederation. Congress
betrayed a consciousness of this in recommending to the
States to incorporate the Bank also. They did not attempt
to protect the Bank notes by penalties against counterfeiters.
These were reserved wholly to the authority of the States.
The second clause to be examined is that which empowers
Congress to borrow money.
Is this bill to borrow money? It does not borrow a shilling.
Is there any fair construction by which the bill can be deemed
an exercise of the power to borrow money? The obvious
meaning of the power to borrow money, is that of accepting
it from, and stipulating payment to those who are able and
willing to lend.
To say that the power to borrow involves a power of creating
the ability, where there may be the will, to lend, is not only
establishing a dangerous principle, as will be immediately
shown, but is as forced a construction as to say that it involves
the power of compelling the will, where there may be
the ability to lend.
The third clause is that which gives the power to pass all
laws necessary and proper to execute the specified powers.
Whatever meaning this clause may have, none can be admitted,
that would give an unlimited discretion to Congress.
Its meaning must, according to the natural and obvious
force of the terms and the context, be limited to means necessary
to the end, and incident to the nature of the specified
powers.
The clause is in fact merely declaratory of what would have
resulted by unavoidable implication, as the appropriate, and,
as it were, technical means of executing those powers. In
this sense it has been explained by the friends of the Constitution,
and ratified by the State Conventions.
The essential characteristic of the Government, as composed
of limited and enumerated powers, would be destroyed,
if, instead of direct and incidental means, any means could be
used, which, in the language of the preamble to the bill,
"might be conceived to be conducive to the successful conducting
of the finances, or might be conceived to tend to give
facility to the obtaining of loans." He urged an attention to
the diffuse and ductile terms which had been found requisite
to cover the stretch of power contained in the bill. He compared
them with the terms necessary and proper, used in the
Constitution, and asked whether it was possible to view the
two descriptions as synonymous, or the one as a fair and safe
commentary on the other.
If, proceeded he, Congress, by virtue of the power to borrow,
can create the means of lending, and, in pursuance of these
means, can incorporate a Bank, they may do any thing whatever
creative of like means.
The East India Company has been a lender to the British
Government, as well as the Bank, and the South Sea Company
is a greater creditor than either. Congress, then, may incorporate
similar companies in the United States, and that too
under the idea of regulating trade, but under that of borrowing
money.
Private capitals are the chief resources for loans to the
British Government. Whatever then may be conceived to
favor the accumulation of capitals may be done by Congress. They
may incorporate manufacturers. They may give monopolies
in every branch of domestic industry.
If, again, Congress by virtue of the power to borrow money,
can create the ability to lend, they may, by virtue of the power
to levy money, create the ability to pay it. The ability to
this, on the general prosperity of agriculture, manufactures,
and commerce. Congress then may give bounties and make
regulations on all of these objects.
The States have, it is allowed on all hands, a concurrent
right to lay and collect taxes. This power is secured to them,
not by its being expressly reserved, but by its not being ceded
by the Constitution. The reasons for the bill cannot be admitted,
because they would invalidate that right; why may
it not be conceived by Congress, that a uniform and exclusive
imposition of taxes, would not less than the proposed Banks
"be conducive to the successful conducting of the national
finances, and tend to give facility to the obtaining of revenue,
for the use of the Government?"
The doctrine of implication is always a tender one. The
danger of it has been felt in other Governments. The delicacy
was felt in the adoption of our own; the danger may also
be felt, if we do not keep close to our chartered authorities.
Mark the reasoning on which the validity of the bill depends!
To borrow money is made the end, and the accumulation of
capitals implied as the means. The accumulation of capitals
is then the end, and a Bank implied as the means. The Bank
is then the end, and a charter of incorporation, a monopoly,
capital punishments, &c., implied as the means.
If implications, thus remote and thus multiplied, can be
linked together, a chain may be formed that will reach every
object of legislation, every object within the whole compass
of political economy.
The latitude of interpretation required by the bill is condemned
by the rule furnished by the Constitution itself.
Congress have power "to regulate the value of money";
yet it is expressly added, not left to be implied, that counterfeiters
may be punished.
They have the power "to declare war," to which armies are
more incident than incorporated banks to borrowing; yet the
power "to raise and support armies" is expressly added; and
for the government of armies"; a like remark is applicable
to the powers as to the navy.
The regulation and calling out of the militia are more appertinent
to war than the proposed Bank to borrowing; yet the
former is not left to construction.
The very power to borrow money is a less remote implication
from the power of war, than an incorporated monopoly
Bank from the power of borrowing; yet, the power to borrow
is not left to implication.
It is not pretended that every insertion or omission in the
Constitution is the effect of systematic attention. This is not
the character of any human work, particularly the work of a
body of men. The examples cited, with others that might be
added, sufficiently inculcate, nevertheless, a rule of interpretation
very different from that on which the bill rests. They
condemn the exercise of any power, particularly a great and
important power, which is not evidently and necessarily involved
in an express power.
It cannot be denied that the power proposed to be exercised
is an important power.
As a charter of incorporation the bill creates an artificial
person, previously not existing in law. it confers important
civil rights and attributes, which could not otherwise be
claimed. It is, though not precisely similar, at least equivalent,
to the naturalization of an alien, by which certain new
civil characters are acquired by him. Would Congress have
had the power to naturalize, if it had not been expressly
given?
In the power to make by-laws, the bill delegated a sort of
Legislative power, which is unquestionably an act of a high
and important nature. He took notice of the only restraint
on the by-laws, that they were not to be contrary to the law
and the constitution of the Bank, and asked what law was
intended; if the law of the United States, the scantiness of
their code would give a power never before given to a corporation,
superseded, not only by the laws of Congress, but by the bylaws
of a corporation within their own jurisdiction. If the
law intended was the law of the State, then the State might
make laws that would destroy an institution of the United
States.
The bill gives a power to purchase and hold lands; Congress
themselves could not purchase lands within a State
"without the consent of its Legislature." How could they
delegate a power to others which they did not possess themselves?
It takes from our successors, who have equal rights with
ourselves, and with the aid of experience will be more capable
of deciding on the subject, an opportunity of exercising that
right for an immoderate term.
It takes from our constituents the opportunity of deliberating
on the untried measure, although their hands are also to
be tied by it for the same term.
It involves a monopoly, which affects the equal rights of
every citizen.
It leads to a penal regulation, perhaps capital punishments,
one of the most solemn acts of sovereign authority.
From this view of the power of incorporation exercised in
the bill, it could never be deemed an accessory or subaltern
power, to be deduced by implication, as a means of executing
another power; it was in its nature a distinct, an independent
and substantive prerogative, which not being enumerated in
the Constitution, could never have been meant to be included
in it, and not being included, could never be rightfully exercised.
He here adverted to a distinction, which he said had not
been sufficiently kept in view, between a power necessary and
proper for the Government or Union, and a power necessary
and proper for executing the enumerated powers. In the
latter case, the powers included in the enumerated powers
were not expressed, but to be drawn from the nature of each.
expressly enumerated. This constituted the peculiar nature
of the Government; no power, therefore, not enumerated
could be inferred from the general nature of Government.
Had the power of making treaties, for example, been omitted,
however necessary it might have been, the defect could only
have been lamented, or supplied by an amendment of the
Constitution.
But the proposed Bank could not even be called necessary
to the Government; at most it could be but convenient. Its
uses to the Government could be supplied by keeping the
taxes a little in advance; by loans from individuals; by the
other Banks, over which the Government would have equal
command; nay greater, as it might grant or refuse to these
the privilege (a free and irrevocable gift to the proposed Bank)
of using their notes in the Federal revenue.
He proceeded next to the contemporary expositions given
to the Constitution.
The defence against the charge founded on the want of a
bill of rights pre-supposed, he said, that the powers not given
were retained; and that those given were not to be extended
by remote implications. On any other supposition, the power
of Congress to abridge the freedom of the press, or the rights
of conscience, &c., could not have been disproved.
The explanations in the State Conventions all turned on
the same fundamental principle, and on the principle that the
terms necessary and proper gave no additional powers to
those enumerated.
[Here he read sundry passages from the Debates of the
Pennsylvania, Virginia, and North Carolina Conventions,
showing the grounds on which the Constitution had been
vindicated by its principal advocates, against a dangerous
latitudes of its powers, charged on it by its opponents.]
He did not undertake to vouch for the accuracy or authenticity
of the publications which he quoted. He thought
it probable that the sentiments delivered might, in many instances,
complexion of the whole, with what he himself and many
others must recollect, fully justified the use he had made of
them.
The explanatory declarations and amendments accompanying
the ratifications of the several States formed a striking
evidence, wearing the same complexion. He referred those
who might doubt on the subject, to the several acts of ratification.
The explanatory amendments proposed by Congress themselves,
at least, would be good authority with them; all these
renunciations of power proceeded on a rule of construction,
excluding the latitude now contended for. These explanations
were the more to be respected, as they had not only been
proposed by Congress, but ratified by nearly three-fourths of
the States. He read several of the articles proposed, remarking
particularly on the 11th and 12th; the former, as guarding
against a latitude of interpretation; the latter, as excluding
every source of power not within the Constitution itself.
With all this evidence of the sense in which the Constitution
was understood and adopted, will it not be said, if the
bill should pass, that its adoption was brought about by one
set of arguments, and that it is now administered under the
influence of another set? and this reproach will have the
keener sting, because it is applicable to so many individuals
concerned in both the adoption and administration.
In fine, if the power were in the Constitution, the immediate
exercise of it cannot be essential; if not there, the exercise of
it involves the guilt of usurpation, and establishes a precedent
of interpretation levelling all the barriers which limit the
powers of the General Government, and protect those of the
State Governments. If the point be doubtful only, respect
for ourselves, who ought to shun the appearance of precipitancy
and ambition; respect for our successors, who ought not
lightly to be deprived of the opportunity of exercising the
rights of legislation; respect for our constituents who have
who are themselves to be bound down to the measure for so
long a period; all these considerations require that the irrevocable
decision should at least be suspended until another
session.
It appeared on the whole, he concluded, that the power
exercised by the bill was condemned by the silence of the
Constitution; was condemned by the rule of interpretation
arising out of the Constitution; was condemned by its tendency
to destroy the main characteristic of the Constitution;
was condemned by the expositions of the friends of the Constitution,
whilst depending before the public; was condemned
by the apparent intention of the parties which ratified the
Constitution; was condemned by the explanatory amendments
proposed by Congress themselves to the Constitution;
and he hoped it would receive its final condemnation by the
vote of this House.
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