Alexander Hamilton's February 23, 1791, opinion as to the constitutionality of the Bank of the United States.
(Given while he was Secretary of the Treasury under the First Administration,
George Washington, President, Thomas Jefferson, Secretary of State, and Edmund Randolph,
Attorney-General.)
THE Secretary of the Treasury having perused with attention the papers containing the
opinions of the Secretary of State and the Attorney-General concerning the
constitutionality of the bill for establishing a national bank, proceeds, according to the
order of the President, to submit the reasons which have induced him to entertain a
different opinion.
It will naturally have been anticipated, that in performing this task he would feel
uncommon solicitude. Personal considerations alone, arising from the reflection that the
measure originated with him, would be sufficient to produce it. The sense which he has
manifested of the great importance of such an institution to the successful administration
of the department under his particular care, and an expectation of serious ill
consequences to result from a failure of the measure, do not permit him to be without
anxiety on public accounts. But the chief solicitude arises from a firm persuasion, that
principles of construction like those espoused by the Secretary of State and the
Attorney-General would be fatal to the just and indispensable authority of the United
States.
In entering upon the argument, it ought to be premised that the objections of the
Secretary of State and the Attorney-General are founded on a general denial of the
authority of the United States to erect corporations. The latter, indeed, expressly
admits, that if there be anything in the bill which is not warranted by the Constitution,
it is the clause of incorporation.
Now it appears to the Secretary of the Treasury that this general principle is inherent in
the very definition of government, and essential to every step of the progress to be made
by that of the United States, namely: That every power vested in a government is in its
nature sovereign, and includes, by force of the term, a right to employ all the means
requisite and fairly applicable to the attainment of the ends of such power, and which are
not precluded by restrictions and exceptions specified in the Constitution, or not
immoral, or not contrary to the essential ends of political society.
This principle, in its application to government in general, would be admitted as an
axiom; and it will be incumbent upon those who may incline to deny it, to prove a
distinction, and to show that a rule which, in the general system of things, is essential
to the preservation of the social order, is inapplicable to the United States.
The circumstance that the powers of sovereignty are in this country divided between the
National and State governments, does not afford the distinction required. It does not
follow from this, that each of the portion of powers delegated to the one or to the other,
is not sovereign with regard to its proper objects. It will only follow from it, that each
has sovereign power as to certain things, and not as to other things. To deny that the
Government of the United States has sovereign power, as to its declared purposes and
trusts, because its power does not extend to all cases, would be equally to deny that the
State governments have sovereign power in any case, because their power does not extend to
every case. The tenth section of the first article of the Constitution exhibits a long
list of very important things which they may not do. And thus the United States would
furnish the singular spectacle of a political society without sovereignty, or of a people
governed, without government.
If it would be necessary to bring proof to a proposition so clear, as that which affirms
that the powers of the Federal Government, as to its objects, were sovereign, there is a
clause of its Constitution which would be decisive. It is that which declares that the
Constitution, and the laws of the United States made in pursuance of it, and all treaties
made, or which shall be made, under their authority, shall be the supreme law of the land.
The power which can create the supreme law of the land in any case, is doubtless sovereign
as to such case.
This general and indisputable principle puts at once an end to the abstract question,
whether the United States have power to erect a corporation; that is to say, to give a
legal or artificial capacity to one or more persons, distinct from the natural. For it is
unquestionably incident to sovereign power to erect corporations, and consequently to that
of the United States, in relation to the objects intrusted to the management of the
government. The difference is this: where the authority of the government is general, it
can create corporations in all cases; where it is confined to certain branches of
legislation, it can create corporations only in those cases.
Here, then, as far as concerns the reasonings of the Secretary of State and the
Attorney-General, the affirmative of the constitutionality of the bill might be permitted
to rest. It will occur to the President, that the principle here advanced has been
untouched by either of them.
For a more complete elucidation of the point, nevertheless, the arguments which they had
used against the power of the government to erect corporations, however foreign they are
to the great and fundamental rule which has been stated, shall be particularly examined.
And after showing that they do not tend to impair its force, it shall also be shown that
the power of incorporation, incident to the government in certain cases, does fairly
extend to the particular case which is the object of the bill.
The first of these arguments is, that the foundation of the Constitution is 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." Whence
it is meant to be inferred, that Congress can in no case exercise any power not included
in those enumerated in the Constitution. And it is affirmed, that the power of erecting a
corporation is not included in any of the enumerated powers.
The main proposition here laid down, in its true signification, is not to be questioned.
It is nothing more than a consequence of this republican maxim, that all government is a
delegation of power. But how much is delegated in each case is a question of fact, to be
made out by fair reasoning and construction, upon the particular provisions of the
Constitution, taking as guides the general principles and general ends of governments.
It is not denied that there are implied, as well as express powers, and that the former
are as effectually delegated as the latter. And for the sake of accuracy it shall be
mentioned that there is another class of powers, which may be properly denominated
resulting powers. It will not be doubted that if the United States should make a conquest
of any of the territories of its neighbors, they would possess sovereign jurisdiction over
the conquered territory. This would be rather a result from the whole mass of the powers
of the government, and from the nature of political society, than a consequence of either
of the powers specially enumerated…
The proposed bank is to consist of an association of persons, for the purpose of creating
a joint capital, to be employed chiefly and essentially in loans. So far the object is not
only lawful, but it is the mere exercise of a right which the law allows to every
individual. The Bank of New York, which is not incorporated, is an example of such an
association. The bill proposes, in addition, that the government shall become a joint
proprietor in this undertaking, and that it shall permit the bills of the company, payable
on demand, to be receivable in its revenues; and stipulates that it shall not grant
privileges, similar to those which are to be allowed to this company, to any others. All
this is incontrovertibly within the compass of the discretion of the government. The only
question is, whether it has a right to incorporate this company, in order to enable it the
more effectually to accomplish ends which are in themselves lawful.
To establish such a right, it remains to show the relation of such an institution to one
or more of the specified powers of the government. Accordingly it is affirmed that it has
a relation, more or less direct, to the power of collecting taxes, to that of borrowing
money, to that of regulating trade between the States, and to those of raising and
maintaining fleets and armies. To the two former the relation may be said to be immediate;
and in the last place it will be argued, that it is clearly within the provision which
authorizes the making of all needful rules and regulations concerning the property of the
United States, as the same has been practiced upon by the government…
The constitutionality of all this would not admit of a question, and yet it would amount
to the institution of a bank, with a view to the more convenient collection of taxes. For
the simplest and most precise idea of a bank is, a deposit of coin, or other property, as
a fund for circulating a credit upon it, which is to answer the purpose of money. That
such an arrangement would be equivalent to the establishment of a bank, would become
obvious, if the place where the fund to be set apart was kept should be made a receptacle
of the moneys of all other persons who should incline to deposit them there for
safekeeping; and would become still more so, if the officers charged with the direction of
the fund were authorized to make discounts at the usual rate of interest, upon good
security. To deny the power of the government to add these ingredients to the plan, would
be to refine away all government…