Opinion on the Constitutionality of the Bank
February 12th 1791
The Attorney General of the United States in obedience to the order of the President of the United States, has had under consideration the Bill, entitled ‘An Act to incorporate the subscribers to the Bank of the United States,” and reports on it, in point of Constitutionality as follows:
It must be acknowledged, that, if any part of the bill does either encounter the Constitution, or is not warranted by it, the clause of incorporation is the only one.
The legal properties of this Corporation would be,
1st To have succession untill the 4th of March 1811.
2d to purchase, receive, & retain, real and personal property to an amount not exceeding, fifteen millions of Dollars, including the Capitol Stock.
3d To sell & dispose of the property.
4. To sue & be sued.
5. To have a Common seal; and
6. to make by-Laws, and do all Acts, appertaining to the Corporation, under certain restrictions prescribed in the act.
These properties with different modifications in some instances, belong to all Corporations: their importance strikes the eye.
That the power of creating Corporations is not expressly given to Congress, is obvious.
If it can be exercised by them, it must be;
1st because the nature of the Federal government implies it; or
2d because it is involved in some of the specified powers of Legislation: or
3. because it is necessary and proper to carry into execution some of the specified powers:
1. To be implied in the nature of the Fœderal government would beget a doctrine so indefinite, as to grasp every power.
Governments, having no written Constitution, may perhaps claim a latitude of power, not always easy to be determined. Those, which have written Constitutions, are circumscribed by a just interpretation of the words contained in them—nay farther; a legislature instituted even by a written constitution, but without a special demarkation of powers, may perhaps be presumed to be left at large, as to all authority, which is communicable by the people, and does not affect any of those paramount rights, which a free people cannot be supposed to confide even to their representatives. Essentially otherwise is the condition is the condition of a legislature, whose powers are described. An example of the former is in the State Legislatures; of the latter, in the Legislature of the foederal government, the characteristic of which has been confessed by Congress in the twelfth amendment, to be, that it claims no powers which are not delegated to it.
This last observation straitens the federal powers, and opposes an opinion, not unpatronized, that, Congress may exercise all authority, to which the states are individually incompetent.
But what, if such a subject should really exist? Is the argument less conclusive to say, that the states must retain it, because it is not given to the federal government, than that the latter although limitted in itself possesses it, because it is not within the verge of a state-constitution? While, on the one hand it ought not to be denied that the federal government superintends the general welfare of the states, it ought not to be forgotten, on the other, that it superintends it according to the dictates of the constitution.
The opinion, above alluded to, can have only one other object, namely, that every institution, to which a single State can give efficacy, only within its own boundaries, devolves on congress. But the extravagance of such a position is manifested by a single circumstance, that the cutting of canals thro’ two or more States, at the will of Congress, is one of its least consequences.
2. We ask then, in the second place, whether upon any principle of fair construction, the specified powers of legislation involve the power of granting charters of incorporation? We say charters of incorporation, without confining the question to the Bank; because the admission of it in that instance, is an admission of it in every other, in which Congress may think the use of it equally expedient.
There is a real difference between the rule of interpretation, applied to a law & a Constitution. The one comprises a summary of matter, for the detail of which numberless Laws will be necessary; the other is the very detail. The one is therefore to be construed with a discreet liberality; the other with a closer adherence to the literal meaning.
But when we compare the modes of construing a state, and the federal, constitution, we are admonished to be stricter with regard to the latter, because there is a greater danger of Error in defining partial than general powers.
The rule therefore for interpreting the specified powers seem to be, that, as each of them includes those details which properly constitute the whole of the subject, to which the power relates, the details themselves must be fixed by reasoning. And the appeal may on this occasion be made to common sense & common language.
Those powers, then, which bear any analogy to that of incorporation, shall be examined separately in their constituent parts; and afterwards in those parts, which are urged to have the strongest resemblance to the favorite power.
1. Congress have power to lay & collect taxes &c:—the heads of this power are,
1. to ascertain the Subject of taxation &c.
2. to declare the quantum of taxation &c.
3. to prescribe the mode of Collection; &c.
4. to ordain the manner of accounting for the Taxes &c: 2dly Congress have also power to borrow money on the credit of the United States.
the heads of this power are,
1. to Stipulate a sum to be lent
2. —“an interest, or no interest to be paid, &
3. —“the time & manner of repayment, unless the Loan be placed on an irredeemable fund.
3. Congress have also power to regulate commerce with foreign Nations, among the several states, and with the Indian tribes.
The heads of this power with respect to foreign nations, are;
1. to prohibit them or their commodities from our ports.
2. to impose duties on them, where none existed before, or to increase existing Duties on them.
3. to subject them to any species of Custom house regulations: or
4. to grant them any exemptions or privilages which policy may suggest.
The heads of this power with respect to the several States, are little more, than to establish the forms of commercial intercourse between them, & to keep the prohibitions, which the Constitution imposes on that intercourse, undiminished in their operation: that is, to prevent taxes on imports or Exports; preferences to one port over another by any regulation of commerce or revenue; and duties upon the entering or clearing of the vessels of one State in the ports of another.
The heads of this power with respect to the Indian Tribes are
1.to prohibit the Indians from coming into, or trading within, the United States.
2. to admit them with or without restrictions.
3. to prohibit citizens of the United States from trading with them; or
4. to permit with or without restrictions.
4. Congress have also power to dispose of, & make all needful rules and regulations, respecting the territory or other property belonging to the United States: the heads of this power are.
1. to exert an ownership over the territory of the United States, which may be properly called the property of the United States, as is the western Territory; and to institute a government therein; or
2. to exert an ownership over the other property of the United States.
This property may signify,
1. Personal property of the United States howsoever acquired, or
2. real property, not aptly denominated territory, acquired by cession or otherwise.
It cannot signify
1. Debts due from the United States.
2. Nor money arising from the sources of revenue, pointed out in the Constitution. The disposal and regulation of money is the final cause for raising it by taxes &.
5. The preamble to the constitution has also been relied on, as a source of power.
To this it will be here remarked, once for all, that the preamble, if it be operative is a full constitution of itself; and the body of the Constitution is useless; but that it is declarative only of the views of the convention, which they supposed would be left fulfilled by the powers delineated; and that such is the legitimate nature of preambles.
With this analysis of the foregoing specified powers, compare each of the corporate powers: and where is the similitude? It lies, say the advocates of the Bill; in the power to lay & collect taxes &c.; because it facilitates the payment of them: in that of borrowing money; because it creates an ability to lend: in that of regulating commerce; because it increases the medium of circulation; and thus encourages activity & industry. In that of disposing and regulating property; because the contributions, and the interest of the United States in the Banks, are property of the United States. Of each of these reasons something will be said in their order.
The incorporation of a Bank can facilitate the payment of taxes, only by createing a faculty to pay, or by supplying a deficient medium, or by rendering the transportation of money to the Seat of government more convenient. But to lay and collect taxes is in fact to demand & recieve a public Debt, resting the mode of procuring the money on the resources of the debtors; and as to its transportations, surely there are many other vehicles besides bank-bills.
To borrow money presupposes the accumulation of a fund to be lent; and is secondary to the creation of an ability to lend.
By regulating commerce, in order to increase the medium of circulation cannot be intended [by] any of the commercial powers, designated above; these being very remote from the incorporation of a bank. Nor can it be imagined, that it is intended to reach the emission of paper money. What construction remains, by which to regulate commerce can increase the medium? Only the emission of coin, which is licenced in terms by another clause.
To dispose of, or to regulate property, even bank stock itself, is utterly distinct from the incorporation of a bank; for the contributions on which the bank-stock arises, go upon the principle, that a bank already exists; how else can contributions be made to it?
But, in truth, the serious alarm is in the concentered force of these sentiments—If the laying and collecting of taxes brings with it every thing, which in the opinion of Congress, may facilitate the payment of taxes: if to borrow money sets political speculation loose, to conceive what may create an ability to lend: if to regulate commerce, is to range in the boundless mazes of projects for the apparently best scheme to invite from abroad, or to diffuse at home the precious metals—if to dispose of, or to regulate property of the United States, is to incorporate a bank, that stock may be subscribed to it by them; it may without exaggeration be affirmed, that a similar construction on every specified fœderal power will stretch the arm of Congress into the whole circle of State Legislation.
The general qualities of the foederal government, independent of the Constitution, and the specified powers, being thus insufficient to uphold the incorporation of a bank; we come to the last enquiry, which has been already anticipated, whether it be sanctified by the power to make all Laws which shall be necessary and proper for carrying into execution the powers, vested by the Constitution. To be necessary is to be incidental, or in other words may be denominated the natural means of executing a power.
The phrase, “and proper”, if it has my meaning, does not enlarge the powers of Congress, but rather restricts them. For no power is to be assumed under the general clause, but such as is not only necessary but proper, or perhaps expedient also; but, as the friends to the bill ought not to claim any advantage from this clause, so ought not the Enemies to it, to quote the clause as having a restrictive effect: both ought to consider it, as among the surplusage, which as often proceeds from inattention, as caution.
However, let it be propounded as an eternal question to those, who build new powers on this clause, whether the latitude of construction which they arrogate, will not terminate in an unlimitted power in Congress?
In every aspect therefore under which the attorney general can view the act, so far as it incorporates the bank, he is bound to declare his opinion to be against its constitutionality.