 Home Index Freedom Documents Constitution In-Depth About Us Contact Us Education Site Map Links Archives E-Mail The History of America 
Chapter V - The National Bank
The National Bank
In December of 1790 Hamilton introduced a second report on public credit which recommended the chartering of a national bank. Using the Bank of England as a model, he proposed a Bank of the United States supported by ten million dollars. Only two million dollars would come from public funds, while the remaining eight million would be supplied by wealthy, private investors. The charter would run for twenty years, with one-fifth of its directors selected by the government. Bank notes would circulate as the national currency, and the bank would also lend money to the government.
Even though the majority of Americans believed that a national bank would solve nagging problems of money shortages, certain political leaders such as James Madison and Thomas Jefferson questioned whether or not the Constitution empowered Congress to establish such a bank. Jefferson referred to Article l, Section 8, which gave Congress the power "to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers." For Jefferson, "necessary" was the key term. In other words, Congress could do what was needed, but it could not do what was merely desired. In response, Hamilton argued that Congress could choose any means not specifically prohibited by the Constitution to achieve a "constitutional end." Thus, even unconstitutional means became acceptable if justified by constitutional ends. When President Washington and Congress were convinced by Hamilton's logic, a Bank of the United States quickly became chartered.
|