by Diane Rufino, September 21, 2017
In Honor of the 230th Anniversary of the US Constitution, and also to help promote Brion McClanahan’s latest book, HOW ALEXANDER HAMILTON SCREWED UP AMERICA, I wanted to post this important History Lesson —
The history surrounding the first Bank Bill (to charter a national bank), proposed to President Washington by his Secretary of the Treasury, Alexander Hamilton shows us exactly why the Federal Judiciary has become the greatest usurper of powers belonging to the States and to the People. It is an important lesson on constitutional interpretation.
Why is it important that we pay close attention to constitutional interpretation? Because when the courts don’t bother to consult the proper original documents and commentary as authority on the meaning and intent of the provisions of the Constitution, and/or when they make the decision to disregard that history and that critical information (any student of contract laws knows the strict laws of construction that guide a contract’s interpretation), then any opinion in contradiction to that history and such commentary necessarily means that the judiciary has assumed power for the federal government that it was not intended to have. And where do those additional powers come from? From the original depositories of government power, the People and then the States.
In 1788, the US Constitution was adopted by the requisite number of states and hence, the government it created would go into effect. Later that year, elections were held, George Washington was elected our first president (and men like James Madison elected to the first US Congress), and the following year, 1789, the Union’s new government was assembled and inaugurated. One of the first decisions of the first Congress was to fund the debts that the individual states incurred in fighting the Revolutionary War. The question, of course, was how would it do that. Washington’s Treasury Secretary, Alexander Hamilton, long holding true to a belief that a large, powerful national government of centralized functions is the proper form of government for the new Union (although he conceded to the federal form that the majority of delegates at the Philadelphia Convention voted for), urged that Congress should charter a National Bank, after the British model. He took his suggestion to Washington and agreeing with Hamilton, a Bank Bill was introduced in Congress. But powerful state and government leaders, including Thomas Jefferson, Washington’s Secretary of State, James Madison, Congressman from Virginia, and several state leaders, particularly from Virginia, objected, characterizing such a bank as being “repugnant to the Constitution,” and assuming powers not expressly delegated to Congress in Article I. Washington then asked both Hamilton and Jefferson to provide him with memoranda outlining their arguments regarding the creation of such a National Bank.
(The Following section, as noted, is taken, in its entirety, from Kevin Gutzman’s book THOMAS JEFFERSON – REVOLUTIONARY (St. Martin’s Press, NY, 2017):
Jefferson began by describing the Bank Bill’s provisions, saying that he understood the underlying principle of the Constitution to be 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.” (here is quoted the Tenth Amendment, which at the time lay before the state legislatures for their ratification). Power to pass the bill had not been delegated to the United States, he insisted. It did not fall under the power to tax for the purpose of paying debts because the bill neither paid debts nor taxed. It did not fall under the power to borrow money because the bill neither borrowed nor ensured that there would be borrowing. It did not fall under the Commerce Clause for it did not regulate commerce. Jefferson understood ‘regulating commerce’ to mean “prescribing regulations for buying and selling,” which the Bank Bill did not do. If it did that, he continued, the bill “would be void” due to its equal effects on internal and external commerce of the states. “For the power given to Congress by the Constitution,” Jefferson continues, “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 remain 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.” No other enumerated power (Article I, Section 8) gave Congress ground for passing this bill either, he concluded.
Besides the enumerated powers, the General Welfare Clause and the Necessary and Proper Clause had also been invoked by the bill’s proponents. Jefferson disposed of those clauses deftly as well. First, the General Welfare Clause said that Congress had power “to lay taxes for the purpose of providing for the General Welfare (emphasis Jefferson’s). The reference to the general welfare, he insisted, was bound to the power to tax. It did not create a separate power “to do any act they please which might be for the good of the Union, which Jefferson thought the preceding and following enumerations of powers rendered entirely obvious. To read the General Welfare Clause any other way would make the enumerations “completely useless. It would reduce the whole instrument to a single phrase, that of instituting a Congress to do whatever would be good for the United States, and as they would be the sole judges of the good or evil, it would also be a power to do whatever evil they please.”
Jefferson, the skilled lawyer that he was, noted that one of the most basic rules of construction (contract law) cut strongly in favor of his argument. That rule states that “where a phrase will bear either of two meanings, to give it that which will allow some meaning to the other parts of the instrument, and not that which would render all the others useless.” Besides that, the Philadelphia Convention had considered and expressly rejected a proposal to empower Congress to create corporations. The rejection, he noted, was based partly on the fact that with such a power, Congress would be able to create a bank.
As for the Necessary and Proper Clause, Jefferson noted that it said that the Congress could “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 (emphasis Jefferson’s).” The Bank Bill’s proponents had argued for the great convenience of having a bank, which might aid in exercising powers enumerated in the Constitution, but Jefferson would have none of the idea that “necessary” could be twisted to mean “convenient.”
Jefferson concluded his memorandum with a brief statement on the president’s veto power, which he called “the shield provided by the Constitution to protect against the invasions of the legislature: (1) The right of the Executive. (2) Of the Judiciary. (3) Of the States and State legislatures.” To his mind, the Bank Bill presented “the case of a right remaining exclusively with the States” – that of chartering a corporation. Congress’ attempt to take this right to itself violated the Constitution and Washington should veto the bill.
Washington did not agree. Instead, perhaps on the basis of Hamilton’s argument that Congress could adopt whatever kind of legislation it judged helpful in supervising the national economy, he signed the Bank Bill. [Gutzman, Thomas Jefferson – Revolutionary, pp. 40-42]
THE IMPACT –
When a subsequent Bank Bill was challenged by the state of Maryland, in McCulloch v. Maryland (1819), Chief Justice John Marshall would revisit the arguments submitted to President Washington and as expected, he would side with Hamilton. Hamilton’s position, after all, would give the federal government a broad pen with which to write legislation, in contrast to the limits imposed on it by the very wording of the Constitution and the listing of the only powers that the States had delegated to the federal government. McCulloch was another in a series of cases written by Marshall usurping powers from other depositories and concentrating them in the federal government. The Supreme Court, a branch of the very federal government that it presides over, has consistently used its powers not to interpret the Constitution and offer opinions to other branches, but rather to secure a monopoly over the scope and intent of the government’s powers.
Marshall’s opinion in McCulloch gave Congress power that the States intentionally tried to prevent; he read a meaning and intent in the Constitution, in Article I, that was expressly rejected by the States when they debated and then signed the document on September 17, 1787. Marshall’s reading of Article I, in particular the “Necessary and Proper” Clause, gave Congress power “to which no practical limit can be assigned,” as James Madison put it.
With McCulloch, the Supreme Court committed a grave injustice to the system established by our founding fathers and our founding states. Marshall’s opinion directly contradicted an essential element of the states’ understating of the Constitution when they ratified it, and that understanding was that the Constitution created a federal government of express and limited powers so that the residuary of government power would remain reserved to the states and hence the sovereignty they long cherished would not be overly diminished by organizing into a Union.
And the history of judicial activism continued and still does ….
Reference: Kevin Gutzman, Thomas Jefferson – Revolutionary, St. Martin’s Press, NY (2017).