1793
In obedience to this order, the secretary made a report, in which he proposed a plan for the annual redemption of that portion of the debt, the payment of which was warranted by the contract between the United States and their creditors. But the expenses of the Indian war rendering it, in his opinion, unsafe to rest absolutely on the existing revenue, he proposed to extend the internal taxes to pleasure horses, or pleasure carriages, as the legislature might deem most eligible. The consideration of this report was deferred on various pretexts; and a motion was made to reduce the military establishment. The debate on this subject was peculiarly earnest; and, in its progress, the mode of conducting the Indian war, the relative merits and expensiveness of militia and of regular troops, and the danger to liberty from standing armies, were elaborately discussed. It was not until the fourth of January that the motion was rejected. While that question remained undecided, the report of the secretary was unavoidably postponed, because, on its determination would depend, in the opinion of many, the necessity of additional taxes. It would seem not improbable that the opponents of the American system of finances, who constituted rather a minority of the present congress, but who indulged sanguine hopes of becoming the majority in the next, were desirous of referring every question relating to the treasury department to the succeeding legislature, in which there would be a more full representation of the people. Whatever might be the operating motives for delay, neither the extension of the law imposing a duty on spirits distilled within the United States to the territory north-west of the river Ohio, nor the plan for redeeming the public debt, which was earnestly pressed by the administration, could be carried through the present congress. Those who claimed the favour and confidence of the people as a just reward for their general attachment to liberty, and especially for their watchfulness to prevent every augmentation of debt, were found in opposition to a system for its diminution, which was urged by men who were incessantly charged with entertaining designs for its excessive accumulation, in order to render it the corrupt instrument of executive influence. It might be expected that the public attention would be attracted to such a circumstance. But when party passions are highly inflamed, reason itself submits to their control, and becomes the instrument of their will. The assertion that the existing revenues, if not prodigally or corruptly wasted, were sufficient for the objects contemplated by the President in his speech, would constitute an ample apology for the impediments thrown in the way of a system which could not be directly disapproved, and would justify a continuance of the charge that the supporters of the fiscal system were friends to the augmentation of the public debt.
Soon after the motion for the reduction of the military establishment was disposed of, another subject was introduced, which effectually postponed, for the present session, every measure connected with the finances of the nation.
An act of congress, which passed on the fourth of August, 1790, authorized the President to cause to be borrowed any sum not exceeding twelve millions of dollars, to be applied in payment of the foreign debt of the United States.
A subsequent act, which passed on the 12th of the same month, authorized another loan not exceeding two millions, to be applied, in aid of the sinking fund, towards the extinguishment of the domestic debt.
A power to make these loans was delegated by the President to the secretary of the treasury by a general commission referring to the acts. This commission was accompanied by written instructions, directing the payment of such parts of the foreign debt as should become due at the end of the year 1791; but leaving the secretary, with respect to the residue, to be regulated by the interests of the United States.
Under this commission two loans were negotiated in 1790, and others at subsequent periods.
As many considerations of convenience opposed such an arrangement as would appropriate all the monies arising from either of these loans to one object, to the total exclusion of the other; and no motive was perceived for thus unnecessarily fettering the operations of the treasury; each loan was negotiated under both laws; and consequently the monies produced by each were applicable to both objects, in such proportions as the President might direct. It has been already observed that his written instructions had ordered the payment of those instalments of the foreign debt which should become due before the first of January, 1792; but no further sums on that account were to be borrowed until supplemental orders to that effect should be given, unless a loan could be made on such terms as would render it advantageous to the United States to anticipate the payments to their foreign creditors. It being the opinion of both the President and secretary that the official powers of the latter authorized him to draw the monies borrowed for domestic purposes into the treasury, where they would form a part of the sinking fund, and be applicable to the objects of that fund in conformity with the laws of appropriation, no written instructions were given respecting that part of the subject; but in the progress of the business, every material step which was taken was communicated to the President, and his directions obtained upon it. While the chief magistrate remained at the seat of government, these communications were verbal; when absent, they were made by letter.
At this period, the domestic debt bore a low price in the market, and foreign capital was pouring into the United States for its purchase. The immediate application of the sinking fund to this object would consequently acquire a large portion of the debt, and would also accelerate its appreciation. The best interests of the United States, and his own fame, thus impelling the secretary to give the operations of the sinking fund the utmost activity of which it was susceptible, he had, with the approbation of the President, directed a part of the first loan to be paid in discharge of the instalments of the foreign debt which were actually due, and had drawn a part of it into the public treasury in aid of the sinking fund.
In May, 1791, instructions were given to the agent of the United States in Europe, to apply the proceeds of future loans, as they should accrue, in payments to France, except such sums as should be previously and specially reserved. In the execution of these instructions, some delay intervened, which was to be ascribed, among other causes, to representations made by the French minister of marine that a plan would be adopted, to which a decree of the national assembly was requisite, for converting a large sum into supplies for St. Domingo: and to a desire on the part of the agent to settle, previously to further payments, a definitive rule by which the monies paid should be liquidated, and credited to the United States. The disordered state of French affairs protracted both the one and the other of these causes of delay, to a later period than had been expected; and, in the mean time, the secretary continued to draw into the United States such portions of these loans, as were destined to be brought in aid of the sinking fund. Such was the state of this transaction, when the commencement of those calamities, which have finally overwhelmed St. Domingo, induced the American government, on the urgent application of the French minister, to furnish supplies to that ill fated colony, in payment of the debt to France. This being a mode of payment which, to a certain extent, was desired by the creditor, and was advantageous to the debtor, a consequent disposition prevailed to use it so far as might comport with the wish of the French government; and a part of the money designed for foreign purposes, was drawn into the United States. In the course of these operations, a portion of the instalments actually due to France, had been permitted to remain unsatisfied.
A part of the money borrowed in Europe being thus applicable to the extinguishment of the domestic debt, and a part of the domestic revenue being applicable to the payment of interest due on the loans made in Europe, the secretary of the treasury had appropriated a part of the money arising from foreign loans to the payment of interest due abroad, which had been replaced by the application of money in the treasury arising from domestic resources, to the purchase of the domestic debt.
The secretary had not deemed it necessary to communicate these operations in detail to the legislature: but some hints respecting them having been derived either from certain papers which accompanied a report made to the house of representatives early in the session, or from some other source, Mr. Giles, on the 23d of January, moved several resolutions, requiring information, among other things, on the various points growing out of these loans, and the application of the monies arising from them, and respecting the unapplied revenues of the United States, and the places in which the sums so unapplied were deposited. In the speech introducing these resolutions, observations were made which very intelligibly implied charges of a much more serious nature than inattention to the exact letter of an appropriation law. Estimates were made to support the position that a large balance of public money was unaccounted for.
The resolutions were agreed to without debate; and, in a few days, the secretary transmitted a report containing the information that was required.
This report comprehended a full exposition of the views and motives which had regulated the conduct of the department, and a very able justification of the measures which had been adopted; but omitted to state explicitly that part of the money borrowed in Europe had been drawn into the United States with the sanction of the President.—It is also chargeable with some expressions which can not be pronounced unexceptionable, but which may find their apology in the feelings of a mind conscious of its own uprightness, and wounded by the belief that the proceedings against him had originated in a spirit hostile to fair inquiry.
These resolutions, the observations which accompanied them, and the first number of the report, were the signals for a combined attack on the secretary of the treasury, through the medium of the press. Many anonymous writers appeared, who assailed the head of that department with a degree of bitterness indicative of the spirit in which the inquiry was to be conducted.
Resolutions implicating the secretary of the treasury rejected.
On the 27th of February, not many days after the last number of the report was received, Mr. Giles moved sundry resolutions which were founded on the information before the house. The idea of a balance unaccounted for was necessarily relinquished; but the secretary of the treasury was charged with neglect of duty in failing to give congress official information of the monies drawn by him from Europe into the United States; with violating the law of the 4th of August, 1790, by applying a portion of the principal borrowed under it to the payment of interest, and by drawing a part of the same monies into the United States, without instructions from the President; with deviating from the instructions of the President in other respects; with negotiating a loan at the bank, contrary to the public interest, while public monies to a greater amount than were required, lay unemployed in the bank; and with an indecorum to the house, in undertaking to judge of its motives in calling for information which was demandable of him from the constitution of his office; and in failing to give all the necessary information within his knowledge relative to subjects on which certain specified references had been previously made to him.
These resolutions were followed by one, directing that a copy of them should be transmitted to the President of the United States.
Thedebate on this subject, which commenced on the 28th of February, was continued to the 1st of March, and was conducted with a spirit of acrimony towards the secretary, demonstrating the soreness of the wounds that had been given and received in the political and party wars which had been previously waged.[65]It terminated in a rejection of all the resolutions. The highest number voting in favour of any one of them was sixteen.
Congress adjourns.
On the 3d of March, a constitutional period was put to the existence of the present congress. The members separated with obvious symptoms of extreme irritation. Various causes, the most prominent of which have already been noticed, had combined to organize two distinct parties in the United States, which were rapidly taking the form of a ministerial and an opposition party. By that in opposition, the President was not yet openly renounced. His personal influence was too great to be encountered by a direct avowal that he was at the head of their adversaries; and his public conduct did not admit of a suspicion that he could allow himself to rank as the chief of a party. Nor could public opinion be seduced to implicate him in the ambitious plans and dark schemes for the subversion of liberty, which were ascribed to a part of the administration, and to the leading members who had supported the measures of finance adopted by the legislature.
Yet it was becoming apparent that things were taking a course which must inevitably involve him in the political conflicts which were about to take place. It was apparent that the charges against the secretary of the treasury would not be relinquished, and that they were of a nature to affect the chief magistrate materially, should his countenance not be withdrawn from that officer. It was equally apparent that the fervour of democracy, which was perpetually manifesting itself in the papers, in invectives against levees, against the trappings of royalty, and against the marks of peculiar respect[66]which were paid to the President, must soon include him more pointedly in its strictures.
These divisions, which are inherent in the nature of popular governments, by which the chief magistrate, however unexceptionable his conduct, and however exalted his character, must, sooner or later, be more or less affected, were beginning to be essentially influenced by the great events of Europe.
Progress of the French revolution and its effects on parties in the United States.
That revolution which has been the admiration, the wonder, and the terror of the civilized world, had, from its commencement, been viewed in America with the deepest interest. In its first stage, but one sentiment respecting it prevailed; and that was a belief, accompanied with an ardent wish, that it would improve the condition of France, extend the blessings of liberty, and promote the happiness of the human race. When the labours of the convention had terminated in a written constitution, this unanimity of opinion was in some degree impaired. By a few who had thought deeply on the science of government, and who, if not more intelligent, certainly judged more dispassionately than their fellow citizens, that instrument was believed to contain the principles of self destruction. It was feared that a system so ill balanced could not be permanent. A deep impression was made on the same persons by the influence of the galleries over the legislature, and of mobs over the executive; by the tumultuous assemblages of the people, and their licentious excesses during the short and sickly existence of the regal authority. These did not appear to be the symptoms of a healthy constitution, or of genuine freedom. Persuaded that the present state of things could not last, they doubted, and they feared for the future.
In total opposition to this sentiment was that of the public. There seems to be something infectious in the example of a powerful and enlightened nation verging towards democracy, which imposes on the human mind, and leads human reason in fetters. Novelties, introduced by such a nation, are stripped of the objections which had been preconceived against them; and long settled opinions yield to the overwhelming weight of such dazzling authority. It wears the semblance of being the sense of mankind, breaking loose from the shackles which had been imposed by artifice, and asserting the freedom, and the dignity, of his nature.
The constitution of France, therefore, was generally received with unqualified plaudits. The establishment of a legislature consisting of a single body, was defended not only as being adapted to the particular situation of that country, but as being right in itself. Certain anonymous writers, who supported the theory of a balanced government, were branded as the advocates of royalty, and of aristocracy. To question the duration of the present order of things was thought to evidence an attachment to unlimited monarchy, or a blind prejudice in favour of British institutions; and the partiality of America in favour of a senate was visibly declining.
In this stage of the revolution, however, the division of sentiment was not marked with sufficient distinctness, nor the passions of the people agitated with sufficient violence, for any powerful effect to be produced on the two parties in America. But when the monarchy was completely overthrown, and a republic decreed,[67]the people of the United States seemed electrified by the measure, and its influence was felt by the whole society. The war in which the several potentates of Europe were engaged against France, although in almost every instance declared by that power, was pronounced to be a war for the extirpation of human liberty, and for the banishment of free government from the face of the earth. The preservation of the constitution of the United States was supposed to depend on its issue; and the coalition against France was treated as a coalition against America also.
A cordial wish for the success of the French arms, or rather that the war might terminate without any diminution of French power, and in such a manner as to leave the people of that country free to choose their own form of government, was, perhaps, universal; but, respecting the probable issue of their internal conflicts, perfect unanimity of opinion did not prevail. By some few individuals, the practicability of governing by a system formed on the republican model, an immense, populous, and military nation, whose institutions, habits, and morals, were adapted to monarchy, and which was surrounded by armed neighbours, was deemed a problem which time alone could solve. The circumstances under which the abolition of royalty was declared, the massacres which preceded it, the scenes of turbulence and violence which were acted in every part of the nation, appeared to them, to present an awful and doubtful state of things, respecting which no certain calculations could be made; and the idea that a republic was to be introduced and supported by force, was, to them, a paradox in politics. Under the influence of these appearances, the apprehension was entertained that, if the ancient monarchy should not be restored, a military despotism would be established. By the many, these unpopular doubts were deemed unpardonable heresies; and the few to whom they were imputed, were pronounced hostile to liberty. A suspicion that the unsettled state of things in France had contributed to suspend the payment of the debt to that nation, had added to the asperity with which the resolutions on that subject were supported; and the French revolution will be found to have had great influence on the strength of parties, and on the subsequent political transactions of the United States.
Thefollowing is an extract from the orders of the preceding day. "The Commander-in-chief orders the cessation of hostilities between the United States of America and the king of Great Britain to be publicly proclaimed to-morrow at twelve at the new building; and that the proclamation which will be communicated herewith, be read to-morrow evening at the head of every regiment, and corps of the army; after which the chaplains with the several brigades will render thanks to Almighty God for all his mercies, particularly for his overruling the wrath of man to his own glory, and causing the rage of war to cease among the nations.
"Although the proclamation before alluded to, extends only to the prohibition of hostilities and not to the annunciation of a general peace, yet it must afford the most rational and sincere satisfaction to every benevolent mind, as it puts a period to a long and doubtful contest, stops the effusion of human blood, opens the prospect to a more splendid scene, and like another morning star, promises the approach of a brighter day than hath hitherto illuminated the western hemisphere. On such a happy day, which is the harbinger of peace, a day which completes the eighth year of the war, it would be ingratitude not to rejoice; it would be insensibility not to participate in the general felicity.
"The Commander-in-chief, far from endeavouring to stifle the feelings of joy in his own bosom, offers his most cordial congratulations on the occasion to all the officers of every denomination, to all the troops of the United States in general, and in particular to those gallant and persevering men, who had resolved to defend the rights of their invaded country, so long as the war should continue. For these are the men who ought to be considered as the pride and boast of the American Army; and who, crowned with well-earned laurels, may soon withdraw from the field of glory, to the more tranquil walks of civil life.
"While the general recollects the almost infinite variety of scenes through which we have passed with a mixture of pleasure, astonishment and gratitude; while he contemplates the prospect before us with rapture, he can not help wishing that all the brave men (of whatever condition they may be,) who have shared in the toils and dangers of effecting this glorious revolution, of rescuing millions from the hand of oppression, and of laying the foundation of a great empire, might be impressed with a proper idea of the dignified part they have been called to act (under the smiles of Providence) on the stage of human affairs. For happy, thrice happy shall they be pronounced hereafter, who have contributed any thing; who have performed the meanest office in erecting this stupendousfabric of freedomand empire on the broad basis of independency; who have assisted in protecting the rights of human nature, and establishing an asylum for the poor and oppressed of all nations and religions. The glorious task for which we first flew to arms being thus accomplished, the liberties of our country being fully acknowledged and firmly secured by the smiles of heaven, on the purity of our cause, and on the honest exertions of a feeble people determined to be free, against a powerful nation disposed to oppress them, and the character of those who have persevered through every extremity of hardship, suffering, and danger, being immortalized by the illustrious appellation of thepatriot army, nothing now remains but for the actors of this mighty scene to preserve a perfect unvarying consistency of character through the very last act; to close the drama with applause, and to retire from the military theatre with the same approbation of angels and men which has crowned all their former virtuous actions. For this purpose, no disorder or licentiousness must be tolerated: every considerate and well disposed soldier must remember, it will be absolutely necessary to wait with patience until peace shall be declared, or congress shall be enabled to take proper measures for the security of the public stores, &c. As soon as these arrangements shall be made, the general is confident there will be no delay in discharging with every mark of distinction and honour all the men enlisted for the war who will then have faithfully performed their engagements with the public. The general has already interested himself in their behalf, and he thinks he need not repeat the assurances of his disposition to be useful to them on the present and every other proper occasion. In the mean time, he is determined that no military neglects or excesses shall go unpunished while he retains the command of the army."
On his way, he stopped a few days at Philadelphia, for the purpose of settling his accounts with the comptroller. The following account of this part of his duty is extracted from Mr. Gordon; "while in the city he delivered in his accounts to the comptroller, down to December the 13th, all in his own hand writing, and every entry made in the most particular manner, stating the occasion of each charge, so as to give the least trouble in examining and comparing them with the vouchers with which they were attended.
"The heads as follows, copied from the folio manuscript paper book in the file of the treasury office, number 3700, being a black box of tin containing, under lock and key, both that and the vouchers."
"Two hundred guineas advanced to General M'Dougal are not included in thel.1982 10 0 not being yet settled, but included in some of the other charges, and so reckoned in the general sum.
"Note; 104,364, of the dollars were received after March, 1780, and although credited at forty for one, many did not fetch at the rate of a hundred for one; while 27,775 of them are returned without deducting any thing from the above account (and, therefore, actually made a present of to the public)."
The general entered in his book—"I find upon the final adjustment of these accounts, that I am a considerable loser, my disbursements falling a good deal short of my receipts, and the money I had upon hand of my own: for besides the sums I carried with me to Cambridge in 1775, I received monies afterwards on private account in 1777, and since, which (except small sums, that I had occasion now and then to apply to private uses) were all expended in the public service: through hurry, I suppose, and the perplexity of business, (for I know not how else to account for the deficiency) I have omitted to charge the same, whilst every debit against me is here credited."
July 1st, 1783.
The year 1784 had nearly passed away before the determination of the British cabinet not to evacuate the western posts was known to the government of the United States. In the spring of that year, General Knox, who commanded the troops still retained in the service of the United States, was directed to "open a correspondence with the Commander-in-chief of his Britannic majesty's forces in Canada, in order to ascertain the precise time when each of the posts within the territories of the United States then occupied by the British troops should be delivered up." The measures produced by this resolution exhibit a curious specimen of the political opinions on the subject of federal powers, which then prevailed in congress.
It being at that time believed that the British garrisons would certainly be withdrawn, it became necessary to provide for occupying the posts when surrendered, with troops belonging to the United States. A number deemed sufficient for the purpose not having been retained in service, a motion was made for raising seven hundred men, by requisitions on the states for that and other objects specified in the resolution. The power of congress to make these requisitions was seriously contested, and it was gravely urged that such a power, connected with the rights to borrow money, and to emit bills of credit, would be dangerous to liberty, and alarming to the states. The motion for raising this small number of regulars did not prevail; and an order was made that except twenty-five privates to guard the stores at fort Pitt, and fifty-five to guard those at West Point and other magazines, with a proportionable number of officers, no one to exceed the rank of captain, the troops already in service should be discharged, unless congress, before its recess, should dispose of them in some other manner. For the purpose of garrisoning the posts, seven hundred militia were required from Connecticut, New York, New Jersey and Pennsylvania, who should serve twelve months. While the discussions on this subject were pending, instructions from the legislature of New York to their delegates were laid before congress, requesting that body in terms of great strength, in pursuance of the confederation, to declare the number of troops of which the garrisons of those posts which were within the limits of that state should consist. The resolutions asserted a constitutional right to demand from congress a declaration upon this point, and avowed a determination to raise the troops should such declaration be withheld. After the determination of the British government not to surrender the posts was known, the militia ordered to be raised to garrison them, who were not in actual service, were discharged.
In the formation of this treaty, a question came on to be considered and decided which involved a principle that on an after occasion, and in a different case, excited a ferment never to be forgotten by those who took an active part in the politics of the day.
The whole commerce of the Creek nation was in the hands of M'Gillivray, who received his supplies from a company of British merchants, free from duty, through the territories belonging to Spain. This circumstance constituted no inconsiderable impediment to the progress of the negotiation. M'Gillivray derived emoluments from the arrangement which he would not consent to relinquish; and was not without apprehensions, that Spain, disgusted by his new connexions with the United States, might throw embarrassments in the way of this profitable traffic. In addition to this consideration, it was, on the part of the United States, desirable to alter the channel through which the Indians should receive their supplies, and thereby to render them more dependent on the American government. But it would be necessary to exempt the goods designed for the Indian nation from the duties imposed by law on imported articles, and the propriety of such an exemption might well be questioned.
With that cautious circumspection which marked his political course, the president took this point into early consideration, and required the opinion of his constitutional advisers respecting it. The secretary of state was of opinion that the stipulation for importing his goods through the United States, duty free, might safely be made. "A treaty made by the president with the concurrence of two-thirds of the senate, was," he said, "a law of the land," and a law of superior order, because it not only repeals past laws, but can not itself be repealed by future ones. The treaty then will legally control the duty act, and the act for licensing traders in this particular instance. From this opinion there is no reason to suppose that any member of the cabinet dissented. A secret article providing for the case was submitted to the senate, and it has never been understood that in advising and consenting to it, that body was divided.
This question was investigated with great labour, and being one involving principles of the utmost importance to the United States, on which the parties were divided, the subject was presented in all the views of which it was susceptible. A perusal of the arguments used on the occasion would certainly afford much gratification to the curious, and their insertion at full length would perhaps be excused by those who recollect the interest which at the time was taken in the measure to which they related, and the use which was made of it by the opponents of the then administration; but the limits prescribed for this work will not permit the introduction of such voluminous papers. It may, however, be expected that the outline of that train of reasoning with which each opinion was supported, and on which the judgment of the president was most probably formed, should be briefly stated.
To prove that the measure was not sanctioned by the constitution, the general principle was asserted, that the foundation of that instrument was 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." To take a single step beyond the boundaries thus specially drawn around the powers of congress, is to take possession of a boundless field of power, no longer susceptible of definition.
The power in question was said not to be among those which were specially enumerated, nor to be included within either of the general phrases which are to be found in the constitution.
The article which contains this enumeration was reviewed; each specified power was analyzed; and the creation of a corporate body was declared to be distinct from either of them.
The general phrases are,
1st. To lay taxes to provide for the general welfare of the United States. The power here conveyed, it was observed, was "to lay taxes," the purpose was "the general welfare." Congress could not lay taxesad libitum, but could only lay them for the general welfare; nor did this clause authorize that body to provide for the general welfare otherwise than by laying taxes for that purpose.
2dly. To make all laws which shall be 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.
It had been much urged that a bank would give great facility or convenience in the collection of taxes. Suppose this were true; yet the constitution allows only the means which are necessary, not those which are convenient. If such a latitude of construction be allowed this phrase, as to give any non-enumerated power, it will go to every one; for there is no one which ingenuity may not torture into aconvenience, in some way or other, to some oneof so long a list of enumerated powers. It would swallow up all the list of enumerated powers, and reduce the whole to one phrase. Therefore it was that the constitution restrained them tonecessarymeans, that is to say, to those means without which the grant of the power must be nugatory.
The convenience was then examined. This had been stated in the report of the secretary of the treasury to congress, to consist in the augmentation of the circulation medium, and in preventing the transportation and retransportation of money between the states and the treasury.
The first was considered as a demerit. The second, it was said, might be effected by other means. Bills of exchange and treasury drafts would supply the place of bank notes. Perhaps indeed bank bills would be a more convenient vehicle than treasury orders; but a little difference in the degree of convenience can not constitute thenecessitywhich the constitution makes the ground for assuming any non-enumerated power.
Besides, the existing state banks would, without doubt, enter into arrangements for lending their agency. This expedient alone suffices to prevent the existence of thatnecessitywhich may justify the assumption of a non-enumerated power as a means for carrying into effect an enumerated one.
It may be said that a bank whose bills would have a currency all over the states, would be more convenient than one whose currency is limited to a single state. So it would be still more convenient that there should be a bank whose bills should have a currency all over the world; but it does not follow from this superior conveniency, that there exists any where a power to establish such a bank, or that the world may not go on very well without it.
For a shade or two of convenience, more or less, it can not be imagined that the constitution intended to invest congress with a power so important as that of erecting a corporation.
In supporting the constitutionality of the act, it was laid down as a general proposition, "that every power vested in a government is in its naturesovereign," and includes byforceof theterm, a right to employ all themeansrequisite andfairly applicable tothe attainment of theendsof such power; and which are not precluded by restrictions and exceptions specified in the constitution, are not immoral, are 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 would be incumbent on those who might refuse to acknowledge its influence in American affairs toprovea 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 divided between the national and state governments, does not afford the distinction required. It does not follow from this, that each of the portions of power delegated to the one or to the other, is not sovereign with regard to itsproper objects. It will only follow from it, that each has sovereign power as to certain things, and not as to other things. If the government of the United States does not possess sovereign power as to its declared purposes and trusts, because its power does not extend to all cases, neither would the several states possess sovereign power in any case; for their powers do not extend to every case. According to the opinion intended to be combated, the United States would furnish the singular spectacle ofa political societywithoutsovereignty, or a peoplegovernedwithout agovernment.
If it could be necessary to bring proof of 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 in the constitution which is decisive. It is that which declares the constitution of the United States, the laws made in pursuance of it, and the treaties made under its authority to be the supreme law of the land. The power which can create the supreme law in any case, is doubtless sovereign as to such case.
This general and indisputable principle puts an end to the abstract question, whether the United States have power to erect a corporation: 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 corporationsin all cases; where it is confined to certain branches of legislation, it can create corporations onlyin those cases.
That the government of the United States can exercise only those powers which are delegated by the constitution, is a proposition not to be controverted; neither is it to be denied on the other hand, that there are implied as well as express powers, and that the former are as effectually delegated as the latter. For the sake of accuracy it may be observed, that there are alsoresultingpowers. It will not be doubted that if the United States should make a conquest of any of the territories of its neighbours, they would possess sovereign jurisdiction over the conquered territory. This would rather be a result of 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. This is an extensive case in which the power of erecting corporations is either implied in, or would result from some or all of the powers vested in the national government.
Since it must be conceded that implied powers are as completely delegated as those which are expressed, it follows that, as a power of erecting a corporation may as well be implied as any other thing, it may as well be employed as aninstrumentormeanof carrying into execution any of the specified powers as any otherinstrumentormeanwhatever. The question in this as in every other case must be, whether the mean to be employed has a natural relation to any of the acknowledged objects or lawful ends of the government. Thus a corporation may not be created by congress for superintending the police of the city of Philadelphia, because they are not authorized to regulate the police of that city; but one may be created in relation to the collection of the taxes, or to the trade with foreign countries, or between the states, or with the Indian tribes, because it is in the province of the federal government to regulate those objects; and because it is incident to a general sovereign or legislative power to regulate a thing, to employ all the means which relate to its regulation, to the best and greatest advantage.
A strange fallacy seems to have crept into the manner of thinking and reasoning upon this subject. The imagination has presented an incorporation as some great,independent, substantivething—as a political end of peculiar magnitude and moment; whereas it is truly to be considered as a quality, capacity, or mean to an end. Thus a mercantile company is formed with a certain capital for the purpose of carrying on a particular branch of business. The business to be prosecuted is theend. The association in order to form the requisite capital is the primarymean. Let an incorporation be added, and you only add a new quality to that association which enables it to prosecute the business with more safety and convenience. The association when incorporated still remains themean, and can not become theend.
To this reasoning respecting the inherent right of government to employ all the means requisite to the execution of its specified powers, it is objected, that none butnecessaryandpropermeans can be employed; and none can benecessary, but those without which the grant of the power would be nugatory. So far has this restrictive interpretation been pressed as to make the case ofnecessitywhich shall warrant the constitutional exercise of a power, to depend on casual and temporary circumstances; an idea, which alone confutes the construction. The expedience of exercising a particular power, at a particular time, must indeed depend on circumstances, but the constitutional right of exercising it must be uniform and invariable. All the arguments, therefore, drawn from the accidental existence of certain state banks which happen to exist to-day, and for aught that concerns the government of the United States may disappear to-morrow, must not only be rejected as fallacious, but must be viewed as demonstrative that there is a radical source of error in the reasoning.
But it is essential to the being of the government that so erroneous a conception of the meaning of the wordnecessaryshould be exploded.
It is certain that neither the grammatical nor popular sense of the term requires that construction. According to both,necessaryoften means no more thanneedful, requisite, incidental, useful, orconducive to. It is a common mode of expression to say that it is necessary for a government or a person to do this or that thing, where nothing more is intended or understood than that the interests of the government or person require, or will be promoted by doing this or that thing.
This is the true sense in which the word is used in the constitution. The whole turn of the clause containing it indicates an intent to give by it a liberal latitude to the exercise of the specified powers. The expressions have peculiar comprehensiveness. They are "to makeall lawsnecessary and proper for carrying into execution the foregoing powers, andall otherpowers vested by the constitution in the government of the United States, or in anydepartmentorofficethereof." To give the word "necessary" the restrictive operation contended for, would not only depart from its obvious and popular sense, but would give it the same force as if the wordabsolutelyorindispensablyhad been prefixed to it.
Such a construction would beget endless uncertainty and embarrassment. The cases must be palpable and extreme in which it could be pronounced with certainty that a measure was absolutely necessary, or one without which a given power would be nugatory. There are few measures of any government which would stand so severe a test. To insist upon it would be to make the criterion of the exercise of an implied powera case of extreme necessity; which is rather a rule to justify the overleaping the bounds of constitutional authority than to govern the ordinary exercise of it.
The degree in which a measure is necessary can never be a test of the legal right to adopt it. The relation between themeasureand theend; between the nature of themeanemployed towards the execution of a power, and the object of that power must be the criterion of constitutionality, not the more or lessnecessityorutility.
The means by which national exigencies are to be provided for, national inconveniences obviated, and national prosperity promoted, are of such infinite variety, extent, and complexity, that here must of necessity be great latitude of discretion in the selection and application of those means. Hence the necessity and propriety of exercising the authority intrusted to a government on principles of liberal construction.
While on the one hand, the restrictive interpretation of the wordnecessaryis deemed inadmissible, it will not be contended on the other, that the clause in question gives any new and independent power. But it gives an explicit sanction to the doctrine of implied powers, and is equivalent to an admission of the proposition that the government,as to its specified powers and objects, has plenary and sovereign authority.
It is true that the power to create corporations is not granted in terms. Neither is the power to pass any particular law, nor to employ any of the means by which the ends of the government are to be attained. It is not expressly given in cases in which its existence is not controverted. For by the grant of a power to exercise exclusive legislation in the territory which may be ceded by the states to the United States, it is admitted to pass; and in the power "to make all needful rules and regulations respecting the territory or other property of the United States," it is acknowledged to be implied. In virtue of this clause, has been implied the right to create a government; that is, to create a body politic or corporation of the highest nature; one that, in its maturity, will be able itself to create other corporations. Thus has the constitution itself refuted the argument which contends that, had it been designed to grant so important a power as that of erecting corporations, it would have been mentioned. But this argument is founded on an exaggerated and erroneous conception of the nature of the power. It is not of so transcendent a kind as the reasoning supposes. Viewed in a just light, it is ameanwhich ought to have been left to implication, rather than anendwhich ought to have been expressly granted.
The power of the government then to create corporations in certain cases being shown, it remained to inquire into the right to incorporate a banking company, in order to enable it the more effectually to accomplishendswhich were in themselves lawful.
To establish such a right it would be necessary to show the relation of such an institution to one or more of the specified powers of government.
It was then affirmed to have 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, to those of raising, supporting, and maintaining fleets and armies; and in the last place to that which authorizes the making of all needful rules and regulations concerning the property of the United States, as the same had been practised upon by the government.
The secretary of the treasury next proceeded, by a great variety of arguments and illustrations, to prove the position that the measure in question was a proper mean for the execution of the several powers which were enumerated, and also contended that the right to employ it resulted from the whole of them taken together. To detail those arguments would occupy too much space, and is the less necessary, because their correctness obviously depends on the correctness of the principles which have been already stated.
The officer to whom the management of the finances was confided was so repeatedly charged with a desire to increase the public debt and to render it perpetual, and this charge had such important influence in the formation of parties, that an extract from this report can not be improperly introduced.
After stating the sum to be raised, the secretary says, "three expedients occur to the option of the government for providing this:
"One, to dispose of the interest to which the United States are entitled in the bank of the United States. This at the present market price of bank stock would yield a clear gain to the government much more than adequate to the sum required.
"Another, to borrow the money upon an establishment of funds either merely commensurate with the interest to be paid, or affording a surplus which will discharge the principal by instalments within a short term.
"The third is to raise the amount by taxes."
After stating his objections to the first and second expedients, the report proceeds thus, "but the result of mature reflection is, in the mind of the secretary, a strong conviction that the last of the three expedients which have been mentioned, is to be preferred to either of the other two.
"Nothing can more interest the national credit and prosperity than a constant and systematic attention to husband all the means previously possessed for extinguishing the present debt, and to avoid, as much as possible, the incurring of any new debt.
"Necessity alone, therefore, can justify the application of any of the public property, other than the annual revenues, to the current service, or the temporary and casual exigencies; or the contracting of an additional debt by loans, to provide for those exigencies.
"Great emergencies indeed might exist, in which loans would be indispensable. But the occasions which will justify them must be truly of that description.
"The present is not of such a nature. The sum to be provided is not of magnitude enough to furnish the plea of necessity.
"Taxes are never welcome to a community. They seldom fail to excite uneasy sensations more or less extensive. Hence a too strong propensity in the governments of nations, to anticipate and mortgage the resources of posterity, rather than to encounter the inconveniencies of a present increase of taxes.
"But this policy, when not dictated by very peculiar circumstances, is of the worst kind. Its obvious tendency is, by enhancing the permanent burdens of the people, to produce lasting distress, and its natural issue is in national bankruptcy."
It will be happy if the councils of this country, sanctioned by the voice of an enlightened community, shall be able to pursue a different course.