Commentaries on the Constitution of the United States (1833)

by Joseph L. Story


Incidental Powers – National Bank

§ 1254. ONE of the earliest and most important measures, which gave rise to a question of constitutional power, was the act chartering the bank of the United States in 1791. That question has often since been discussed; and though the measure has been repeatedly sanctioned by congress, by the executive, and by the judiciary, and has obtained the like favour in a great majority of the states, yet it is, up to this very hour, still debated upon constitutional grounds, as if it were still new, and untried. It is impossible, at this time, to treat it, as an open question, unless the constitution is for ever to remain an unsettled text, possessing no permanent attributes, and incapable of having any ascertained sense; varying with every change of doctrine, and of party; and delivered over to interminable doubts. If the constitution is to be only, what the administration of the day may wish it to be; and is to assume any, and all shapes, which may suit the opinions and theories of public men, as they successively direct the public councils, it will be difficult, indeed, to ascertain, what its real value is. It cannot possess either certainty, or uniformity, or safety. It will be one thing today, and another thing tomorrow, and again another thing on each succeeding day. The past will furnish no guide, and the future no security. It will be the reverse of a law; and entail upon the country the curse of that miserable servitude, so much abhorred and denounced, where all is vague and uncertain in the fundamentals of government.

§ 1255. The reasoning, upon which the constitutionality of a national bank is denied, has been already in some degree stated in the preceding remarks. It turns upon the strict interpretation of the clause, giving the auxiliary powers necessary, and proper to execute the other enumerated powers. It is to the following effect: The power to incorporate a bank is not among those enumerated in the constitution. It is known, that the very power, thus proposed, as a means, was rejected, as an end, by the convention, which formed the constitution. A proposition was made in that body, to authorize congress to open canals, and an amendatory one to empower them to create corporations. But the whole was rejected; and one of the reasons of the rejection urged in debate was, that they then would have a power to create a bank, which would render the great cities, where there were prejudices and jealousies on that subject, adverse to the adoption of the constitution.1 In the next place, all the enumerated powers can be carried into execution without a bank. A bank, therefore, is not necessary, and consequently not authorized by this clause of the constitution. It is urged, that a bank will give great facility, or convenience to the collection of taxes. If this were true, yet the constitution allows only the means, which are necessary, and not merely those, which are convenient for effecting the enumerated powers. If such a latitude of construction were allowed, as to consider convenience, as justifying the use of such means, it would swallow up all the enumerated powers.2 Therefore, the constitution restrains congress to those means, without which the power would be nugatory.3

§ 1256. Nor can its convenience be satisfactorily established. Bank-bills may be a more convenient vehicle, than treasury orders, for the purposes of that department. But a little difference in the degree of convenience cannot constitute the necessity contemplated by the constitution. Besides; the local and state banks now in existence are competent, and would be willing to undertake all the agency required for those very purposes by the government. And if they are able and willing, this establishes clearly, that there can be no necessity for establishing a national bank.4 If there would ever be a superior conveniency in a national bank, it does not follow, that there exists a power to establish it, or that the business of the country cannot go on very well without it. Can it be thought, that the constitution intended, that for a shade or two of convenience, more or less, congress should be authorized to break down the most ancient and fundamental laws of the states, such as those against mortmain, the laws of alienage, the rules of descent, the acts of distribution, the laws of escheat and forfeiture, and the laws of monopoly? Nothing but a necessity, invincible by any other means, can justify such a prostration of laws, which constitute the pillars of our whole system of jurisprudence.5 If congress have the power to create one corporation, they may create all sorts; for the power is no where limited; and may even establish monopolies.6 Indeed this very charter is a monopoly.7

§ 1257. The reasoning, by which the constitutionality of the national bank has been sustained, is contained in the following summary. The powers confided to the national government are unquestionably, so far as they exist, sovereign and supreme.8 It is not, and cannot be disputed, that the power of creating a corporation is one belonging to sovereignty. But so are all other legislative powers; for the original power of giving the law on any subject whatever is a sovereign power. If the national government cannot create a corporation, because it is an exercise of sovereign power, neither can it, for the same reason, exercise any other legislative power.9 This consideration alone ought to put an end to the abstract inquiry, whether the national government has power to erect a corporation, that is, to give a legal or artificial capacity to one or more persons, distinct from the natural capacity.10 For, if it be an incident to sovereignty, and it is not prohibited, it must belong to the national government in relation to the objects entrusted to it. The true difference is this; where the authority of a government is general, it can create corporations in all cases; where it is confined to certain branches of legislation, it can create corporations only as to those cases.11 It cannot be denied, that implied powers may be delegated, as well as express. It follows, that a power to erect corporations may as well be implied, as any other thing, if it be an instrument or means of carrying into execution any specified power. The only question in any case must be, whether it be such an instrument or means, and have a natural relation to any of the acknowledged objects of government. Thus, congress may not erect a corporation for superintending the police of the city of Philadelphia, because they have no authority to regulate the police of that city. But if they possessed the authority to regulate the police of such city, they might, unquestionably, create a corporation for that purpose; because it is incident to the sovereign legislative power to regulate a thing, to employ all the means, which relate to its regulation, to the best and greatest advantage.12

§ 1258. A strange fallacy has crept into the reasoning on this subject. It has been supposed, that a corporation is some great, independent thing; and that the power to erect it is a great, substantive, independent power; whereas, in truth, a corporation is but a legal capacity, quality, or means to an end; and the power to erect it is, or may be, an implied and incidental power. A corporation is never the end, for which other powers are exercised; but a means, by which other objects are accomplished. No contributions are made to charity for the sake of an incorporation; but a corporation is created to administer the charity. No seminary of learning is instituted in order to be incorporated; but the corporate character is conferred to subserve the purposes of education. No city was ever built with the sole object of being incorporated; but it is incorporated as affording the best means of being well governed. So a mercantile company is formed with a certain capital for carrying on a particular branch of business. Here, the business to be prosecuted is the end. The association, in order to form the requisite capital, is the primary means. If an incorporation is added to the association, it only gives it a new quality, an artificial capacity, by which it is enabled to prosecute the business with more convenience and safety. In truth, the power of creating a corporation is never used for its own sake; but for the purpose of effecting something else. So that there is not a shadow of reason to say, that it may not pass as an incident to powers expressly given, as a mode of executing them.13

§ 1259. It is true, that among the enumerated powers we do not find that of establishing a bank, or creating a corporation. But we do find there the great powers to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct war; and to raise and support armies and navies. Now, if a bank be a fit means to execute any or all of these powers, it is just as much implied, as any other means. If it be “necessary and proper” for any of them, how is it possible to deny the authority to create it for such purposes?14 There is no more propriety in giving this power in express terms, than in giving any other incidental powers or means in express terms. If it had been intended to grant this power generally, and to make it a distinct and independent power, having no relation to, but reaching beyond the other enumerated powers, there would then have been a propriety in giving it in express terms, for otherwise it would not exist. Thus, it was proposed in the convention, to give a general power “to grant charters of incorporation;” — to “grant charters of incorporation in cases, where the public good may require them, and the authority of a single state may be incompetent;”15 — and “to grant letters of incorporation for canals, etc.”16 If either of these propositions had been adopted, there would have been an obvious propriety in giving the power in express terms; because, as to the two former, the power was general and unlimited, and reaching far beyond any of the other enumerated powers; and as to the latter, it might be far more extensive than any incident to the other enumerated powers.17 But the rejection of these propositions does not prove, that congress in no case, as an incident to the enumerated powers, should erect a corporation; but only, that they should not have a substantive, independent power to erect corporations beyond those powers.

§ 1260. Indeed, it is most manifest, that it never could have been contemplated by the convention, that congress should, in no case, possess the power to erect a corporation. What otherwise would become of the territorial governments, all of which are corporations created by congress? There is no where an express power given to congress to erect them. But under the confederation, congress did provide for their erection, as a resulting and implied right of sovereignty, by the celebrated ordinance of 1787; and congress, under the constitution, have ever since, without question, and with the universal approbation of the nation, from time to time created territorial governments. Yet congress derive this power only by implication, or as necessary and proper, to carry into effect the express power to regulate the territories of the United States.18 In the convention, two propositions were made and referred to a committee at the same time with the propositions already stated respecting granting of charters, “to dispose of the unappropriated lands of the United States,” and “to institute temporary governments for new states arising therein.” Both these propositions shared the same fate, as those respecting charters of incorporation. But what would be thought of the argument, built upon this foundation, that congress did not possess the power to erect territorial governments, because these propositions were silently abandoned, or annulled in the convention?

§ 1261. This is not the only case, in which congress may erect corporations. Under the power to accept a cession of territory for the seat of government, and to exercise exclusive legislation therein; no one can doubt, that congress may erect corporations therein, not only public, but private corporations.19 They have constantly exercised the power; and it has never yet been breathed, that it was unconstitutional. Yet it can be exercised only as an incident to the power of general legislation. And if so, why may it not be exercised, as an incident to any specific power of legislation, if it be a means to attain the objects of such power?

§ 1262. That a national bank is an appropriate means to carry into effect some of the enumerated powers of the government, and that this can be best done by erecting it into a corporation, may be established by the most satisfactory reasoning. 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.20 And it may be added, that it has a most important bearing upon the regulation of currency between the states. It is an instrument, which has been usually applied by governments in the administration of their fiscal and financial operations.21 And in the present times it can hardly require argument to prove, that it is a convenient, a useful, and an essential instrument in the fiscal operations of the government of the United States.22 This is so generally admitted by sound and intelligent statesmen, that it would be a waste of time to endeavour to establish the truth by an elaborate survey of the mode, in which it touches the administration of all the various branches of the powers of the government.23

§ 1263. In regard to the suggestion, that a proposition was made, and rejected in the convention to confer this very power, what was the precise nature or extent of this proposition, or what were the reasons for refusing it, cannot now be ascertained by any authentic document, or even by any accurate recollection of the members. As far as any document exists, it specifies only canals.24 If this proves any thing, it proves no more, than that it was thought inexpedient to give a power to incorporate for the purpose of opening canals generally. But very different accounts are given of the import of the proposition, and of the motives for rejecting it. Some affirm, that it was confined to the opening of canals and obstructions of rivers; others, that it embraced banks; and others, that it extended to the power of incorporations generally. Some, again, allege, that it was disagreed to, because it was thought improper to vest in congress a power of erecting corporations; others, because they thought it unnecessary to specify the power; and inexpedient to furnish an additional topic of objection to the constitution. In this state of the matter, no inference whatever can be drawn from it.25 But, whatever may have been the private intentions of the framers of the constitution, which can rarely be established by the mere fact of their votes, it is certain, that the true rule of interpretation is to ascertain the public and just intention from the language of the instrument itself, according to the common rules applied to all laws. The people, who adopted the constitution, could know nothing of the private intentions of the framers. They adopted it upon its own clear import, upon its own naked text. Nothing is more common, than for a law to effect more or less, than the intention of the persons, who framed it; and it must be judged of by its words and sense, and not by any private intentions of members of the legislature.26

§ 1264. In regard to the faculties of the bank, if congress could constitutionally create it, they might confer on it such faculties and powers, as were fit to make it an appropriate means for fiscal operations. They had a right to adapt it in the best manner to its end. No one can pretend, that its having the faculty of holding a capital; of lending and dealing in money; of issuing bank notes; of receiving deposits; and of appointing suitable officers to manage its affairs; are not highly useful and expedient, and appropriate to the purposes of a bank. They are just such, as are usually granted to state banks; and just such, as give increased facilities to all its operations. To say, that the bank might have gone on without this or that faculty, is nothing. Who, but congress, shall say, how few, or how many it shall have, if all are still appropriate to it, as an instrument of government, and may make it more convenient, and more useful in its operations? No man can say, that a single faculty in any national charter is useless, or irrelevant, or strictly improper, that is conducive to its end, as a national instrument. Deprive a bank of its trade and business, and its vital principles are destroyed. Its form may remain, but its substance is gone. All the powers given to the bank are to give efficacy to its functions of trade and business.27

§ 1265. As to another suggestion, that the same objects might have been accomplished through the state banks, it is sufficient to say, that no trace can be found in the constitution of any intention to create a dependence on the states, or state institutions, for the execution of its great powers. Its own means are adequate to its end; and on those means it was expected to rely for their accomplishment. It would be utterly absurd to make the powers of the constitution wholly dependent on state institutions. But if state banks might be employed, as congress have a choice of means, they had a right to choose a national bank, in preference to state banks, for the financial operations of the government.28 Proof, that they might use one means, is no proof, that they cannot constitutionally use another means.

§ 1266. After all, the subject has been settled repeatedly by every department of the government, legislative, executive, and judicial. The states have acquiesced; and a majority have constantly sustained the power. If it is not now settled, it never can be. If it is settled, it would be too much to expect a re-argument, whenever any person may choose to question it.29


     1.    4 Jefferson’s Correspondence, 523, 526; Id. 506.
     2.    Ibid; 4 Elliot’s Debates, 219.
     3.    4 Jefferson’s Correspondence, 523, 525, 526; 5 Marsh. Wash. App. Note 3.
     4.    Ibid; 4 Elliot’s Debates, 220.
     5.    4 Jefferson’s Correspondence, 523, 526, 527; 5 Marsh. Wash. App. Note 3; 1 Hamilton’s Works, 130.
     6.    4 Elliot’s Debates, 217, 219, 224, 225.
     7.    4 Elliot’s Debates, 219, 220, 223.
     8.    Hamilton on Bank, 1 Hamilton’s Works, 113; 4 Wheat. R. 405, 406, 409, 410.
     9.    M’Culloch v. Maryland, 4 Wheat. R. 409.
     10.    Hamilton on Bank, 1 Hamilton’s Works, 113, 114, 124.
     11.    Hamilton on Bank, 1 Hamilton’s Works, 113, 114, 131.
     12.    Hamilton on Bank, 1 Hamilton’s Works, 115, 116, 130, 131, 136.
     13.    M’Culloch v. Maryland, 4 Wheat. R. 411; Hamilton on Bank, 1 Hamilton’s Works, 116, 117, 136.
     14.    M’Culloch v. Maryland, 4 Wheat. R. 406, 407, 408, 409, 410, 411.
     15.    Journ. of Convention, p. 200.
     16.    Journ. of Convention, p. 376. — In the first congress of 1789, when the amendments proposed by congress were before the House of Representatives for consideration, Mr. Gerry moved to add a clause, “That congress erect no company of merchants with exclusive advantages of commerce.” The proposition was negatived. 2 Lloyd’s Deb. 257.
     17.    M’Culloch v. Maryland, 4 Wheat. R. 421, 422.
     18.    M’Culloch v. Maryland, 4 Wheat. R. 422; Hamilton on Bank, 1 Hamilton’s Works, 135, 136.
     19.    Hamilton on Bank, 1 Hamilton’s Works, 128, 129, 135.
     20.    Hamilton on Bank, 1 Hamilton’s Works, p. 138.
     21.    Hamilton on Bank, 1 Hamilton’s Works, p. 152, 153.
     22.    M’Culloch v. Maryland, 4 Wheat. R. 422, 423.
     23.    In Mr. Hamilton’s celebrated Argument on the Constitutionality of the Bank of the United States, in Feb. 1791, there is an admirable exposition of the whole of this branch of the subject. As the document is rare, the following passages are inserted:

    “It is presumed to have been satisfactorily shown, in the course of the preceding observations, 1. That the power of the government, as to the objects intrusted to its management, is, in its nature, sovereign 2. That the right of erecting corporations, is one, inherent in, and inseparable from, the idea of sovereign power. 3. That the position, that the government of the United States can exercise no power, but such as is delegated to it by its constitution, does not militate against this principle. 4. That the word necessary, in the general clause, can have no restrictive operation, derogating from the force of this principle; indeed, that the degree, in which a measure is, or is not necessary, cannot be a test of constitutional right, but of expediency only. 5. That the power to erect corporations is not to be considered, as an independent and substantive power, but as an incidental and auxiliary one; and was, therefore, more properly left to implication, than expressly granted. 6. That the principle in question does not extend the power of the government beyond the prescribed limits, because it only affirms a power to incorporate for purposes within the sphere of the specified powers. And lastly, that the right to exercise such a power, in certain cases, is unequivocally granted in the most positive and comprehensive terms. To all which it only remains to be added, that such a power has actually been exercised in two very eminent instances, namely, in the erection of two governments; one northwest of the river Ohio, and the other southwest; the last, independent of any antecedent compact. And there results a full and complete demonstration, that the secretary of state and attorney-general are mistaken, when they deny generally the power of the national government to erect corporations.

    “It shall now be endeavoured to be shown, that there is a power to erect one of the kind proposed by the bill. This will be done by tracing a natural and obvious relation between the institution of a bank, and the objects of several of the enumerated powers of the government; and by showing, that, politically speaking, it is necessary to the effectual execution of one or more of those powers. In the course of this investigation various instances will be stated, by way of illustration, of a right to erect corporations under those powers. Some preliminary observations may be proper. 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.

    “A bank relates to the collection of taxes in two ways. Indirectly, by increasing the quantity of circulating medium, and quickening circulation, which facilitates the means of paying; directly, by creating a convenient species of medium , in which they are to be paid. To designate or appoint the money or thing, in which taxes are to be paid, is not only a proper, but a necessary, exercise of the power of collecting them. Accordingly, congress, in the law concerning the collection of the duties on imposts and tonnage, have provided, that they shall be payable in gold and silver. But while it was an indispensable part of the work to say in what they should be paid, the choice of the specific thing was mere matter of discretion. The payment might have been required in the commodities themselves. Taxes in kind, however ill-judged, are not without precedents even in the United states; or it might have been in the paper money of the several states, or in the bills of the bank of North-America, New-York, and Massachusetts, all or either of them; or it might have been in bills issued under the authority of the United States. No part of this can, it is presumed, be disputed. The appointment, then, of the money or thing, in which the taxes are to be paid, is an incident to the power of collection. And among the expedients, which may be adopted, is that of bills issued under the authority of the United States. Now the manner of issuing these bills is again matter of discretion. The government might, doubtless, proceed in the following manner: It might provide that they should be issued under the direction of certain officers, payable on demand; and in order to support their credit, and give them a ready circulation, it might, besides giving them a currency in its taxes, set apart, out of any monies in its treasury a given sum, and appropriate it, under the direction of those officers, as a fund for answering the bills, as presented for payment.

    “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 monies 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 this ingredient to the plan, would be to refine away all government. A further process will still more clearly illustrate the point. Suppose, when the species of bank, which has been described, was about to be instituted it were to be urged, that in order to secure to it a due degree of confidence, the fund ought not only to be set apart and appropriated generally, but ought to be specifically vested in the officers, who were to have the direction of it, and in their successors in office, to the end, that it might acquire the character of private property, incapable of being resumed without a violation of the sanction, by which the rights of property are protected; and occasioning more serious and general alarm: the apprehension of which might operate as a check upon the government. Such a proposition might be opposed by arguments against the expediency of it, or the solidity of the reason assigned for it; but it is not conceivable, what could be urged against its constitutionality. And yet such a disposition of the thing would amount to the erection of a corporation; for the true definition of a corporation seems to be this: It is a legal person, or a person created by act of law; consisting of one or more natural persons, authorized to hold property or a franchise in succession, in a legal, as contradistinguished from a natural capacity. Let the illustration proceed a step further. Suppose a bank, of the nature, which has been described, without or with incorporation, had been instituted, and that experience had evinced, as it probably would, that being wholly under a public direction, it possessed not the confidence requisite to the credit of its bills. Suppose also, that by some of those adverse conjunctures, which occasionally attend nations, there had been a very great drain of the specie of the country, so as not only to cause general distress for want of an adequate medium of circulation; but to produce, in consequence of that circumstance, considerable defalcations in the public revenues. Suppose, also, that there was no bank instituted in any state; in such a posture of things, would it not be most manifest, that the incorporation of a bank, like that proposed by the bill, would be a measure immediately relative to the effectual collection of the taxes, and completely within the province of a sovereign power of providing, by all laws necessary and proper, for that collection.

    “If it be said, that such a state of things would render that necessary, and therefore constitutional, which is not so now; the answer to this, (and a solid one it doubtless is,) must still be, that which has been already stated; circumstances may affect the expediency of the measure, but they can neither add to, nor diminish its constitutionality. A bank has a direct relation to the power of borrowing money, because it is an usual, and in sudden emergencies, an essential instrument, in the obtaining of loans to government. A nation is threatened with a war; large sums are wanted on a sudden to make the requisite preparations; taxes are laid for the purpose; but it requires time to obtain the benefit of them; anticipation is indispensable. If there be a bank, the supply can at once be had; if there be none, loans from individuals must be sought. The progress of these is often too slow for the exigency; in some situations they are not practicable at all. Frequently when they are, it is of great consequence to be able to anticipate the product of them by advances from a bank. The essentiality of such an institution, as an instrument of loans, is exemplified at this very moment. An Indian expedition is to be prosecuted. The only fund, out of which the money can arise consistently with the public engagements, is a tax, which only begins to be collected in July next. The preparations, however, are instantly to be made. The money must, therefore, be borrowed; and of whom could it be borrowed, if there were no public banks? It happens, that there are institutions of this kind; but if there were none, it would be indispensable to create one. Let it then be supposed, that the necessity existed, (as but for a casualty would be the case,) that proposals were made for obtaining a loan; that a number of individuals came forward and said, we are willing to accommodate the government with this money; with what we have in hand, and the credit we can raise upon it, we doubt not of being able to furnish the sum required. But in order to this, it is indispensable, that we should be incorporated as a bank. This is essential towards putting it in our power to do what is desired, and we are obliged, on that account, to make it the consideration or condition of the loan. Can it be believed, that a compliance with this proposition would be unconstitutional? Does not this alone evince the contrary? It is a necessary part of a power to borrow, to be able to stipulate the considerations or conditions of a loan. It is evident, as has been remarked elsewhere, that this is not confined to the mere stipulation of a franchise. If it may, (and it is not perceived why it may not,) then the grant of a corporate capacity may be stipulated, as a consideration of the loan. There seems to be nothing unfit, or foreign from the nature of the thing, in giving individuality, or a corporate capacity, to a number of persons, who are willing to lend a sum of money to the government, the better to enable them to do it, and make them an ordinary instrument of loans in future emergencies of state.

    “But the more general view of the subject is still more satisfactory. The legislative power of borrowing money, and of making all laws necessary and proper for carrying into execution that power, seems obviously competent to the appointment of the organ, through which the abilities and wills of individuals may be most efficaciously exerted, for the accommodation of the government by loans. The attorney-general opposes to this reasoning the following observation. Borrowing money presupposes the accumulation of a fund to be lent; and is secondary to the creation of an ability to lend. This is plausible in theory, but it is not true in fact. In a great number of cases, a previous accumulation of a fund, equal to the whole sum required, does not exist; and nothing more can be actually presupposed, than that there exists resources, which, put into activity to the greatest advantage, by the nature of the operation with the government, will be equal to the effect desired to be produced. All the provisions and operations of government must be presumed to contemplate things as they really are. The institution of a bank has also a natural relation to the regulation of trade between the states, in so far as it is conducive to the creation of a convenient medium of exchange between them, and to the keeping up a full circulation, by preventing the frequent displacement of the metals in reciprocal remittances. Money is the very hinge on which commerce turns. And this does not mean merely gold and silver; many other things have served the purpose with different degrees of utility. Paper has been extensively employed. It cannot, therefore, be admitted with the attorney-general, that the regulation of trade between the states, as it concerns the medium of circulation and exchange, ought to be considered as confined to coin. It is even supposable, that the whole, or the greatest part, of the coin of the country, might be carried out of it. The secretary of state objects to the relation here insisted upon, by the following mode of reasoning: To erect a bank, says he, and to regulate commerce, are very different acts. He who erects a bank, creates a subject of commerce. So does he, who raises a bushel of wheat, or digs a dollar out of the mines; yet neither of these persons regulates commerce thereby. To make a thing, which may be bought and sold, is not to prescribe regulations for buying and selling. This is making the regulation of commerce to consist in prescribing rules for buying and selling. This, indeed, is a species of regulation of trade, but it is one, which falls more aptly within the province of the local jurisdictions, than within that of the general government, whose care they must have presumed to have been intended to be directed to those general political arrangement concerning trade, on which its aggregate interests depend, rather than to the details of buying and selling. Accordingly, such only are the regulations to be found in the laws of the United States; whose objects are to give encouragement to the enterprise of our own merchants, and to advance our navigation and manufactures. And it is in reference to these general relations of commerce, that an establishment, which furnishes facilities to circulation, and a convenient medium of exchange and alienation, is to be regarded as a regulation of trade.

    “The secretary of state further urges, that if this was a regulation of commerce, it would be void, as extending as much to the internal part of every state, as to its external. But what regulation of commerce does not extend to the internal commerce of every state? What are all the duties upon imported articles, amounting, in some cases, to prohibitions, but so many bounties upon domestic manufactures, affecting the interest of different classes of citizens in different ways? What are all the provisions in the coasting act, which relate to the trade between district and district of the same state? In short, what regulation of trade between the states, but must affect the internal trade of each state? What can operate upon the whole, but must extend to every part? The relation of a bank to the execution of the powers, that concern the common defence, has been anticipated. It has been noted, that at this very moment, the aid of such an institution is essential to the measure to be pursued for the protection of our frontiers.

    “It now remains to show, that the incorporation of a bank is within the operation of the provision, which authorizes congress to make all needful rules and regulations concerning the property of the United States. But it is previously necessary to advert to a distinction, which has been taken up by the attorney-general. He admits, that the word property may signify personal property, however acquired; and yet asserts, that it cannot signify money arising from the sources of revenue pointed out in the constitution, ‘because,’ says he, ‘the disposal and regulation of money is the final cause for raising it by taxes.’ But it would be more accurate, to say, that the object to which money is intended to be applied, is the final cause for raising it, than that the disposal and regulation of it, is such. The support of a government, the support of troops for the common defence, the payment of the public debt, are the true final causes for raising money. The disposition and regulation of it, when raised. are the steps, by which it is applied to the ends, for which it was raised, not the ends themselves. Hence, therefore the money to be raised by taxes, as well as any other personal property, must be supposed to come within the meaning, as they certainly do within the letter, of authority to make all needful rules and regulations concerning the property of the United States. A case will make this plainer. Suppose the public debt discharged, and the funds now pledged for it, liberated. In some instances it would be found expedient to repeal the taxes; in others, the repeal might injure our own industry, our agriculture, and manufactures. In these cases, they would, of course, be retained. Here, then, would be monies arising from the authorized sources of revenue, which would not fall within the rule, by which the attorney-general endeavours to except them from other personal property, and from the operation of the clause in question. The monies being in the coffers of government, what is to hinder such a disposition to be made of them, as is contemplated in the bill; or what an incorporation of the parties concerned, under the clause, which has been cited.

    “It is admitted, that, with regard to the western territory, they give a power to erect a corporation; that is, to constitute a government. And by what rule of construction can it be maintained, that the same words, in a constitution of government, will not have the same effect, when applied to one species of property as to another, as far as the subject is capable of it? Or that a legislative power to make all needful rules and regulations, or to pass all laws necessary and proper concerning the public property, which is admitted to authorize an incorporation, in one case, will not authorize it in another? Will justify the institution of a government over the Western Territory, and will not justify the incorporation of a bank, for the more useful management of the money of the nation? If it will do the last as well as the first, then, under this provision alone, the bill is constitutional, because it contemplates, that the United States shall be joint proprietors of the stock of the bank. There is an observation of the secretary of state, to this effect, which may require notice in this place. — Congress, says he, are not to lay taxes ad libitum, for any purpose they please, but only to pay the debts, or provide for the welfare of the Union. Certainly, no inference can be drawn from this, against the power of applying their money for the institution of a bank. It is true, that they cannot, without breach of trust, lay taxes for any other purpose, than the general welfare; but so neither can any other government. The welfare of the community is the only legitimate end, for which money can be raised on the community. Congress can be considered as only under one restriction, which does not apply to other governments. They cannot rightfully apply the money they raise to any purpose, merely or purely local, But with this exception, they have as large a discretion, in relation to the application of money, as any legislature whatever.

    “The constitutional test of a right application, must always be, whether it be for a purpose of general or local nature. If the former, there can be no want of constitutional power. The quality of the object as how far it will really promote, or not, the welfare of the Union, must be matter of conscientious discretion; and the arguments for or against a measure, in this light, must be arguments concerning expediency or inexpediency, not constitutional right; whatever relates to the general order of the finances, to the general interests of trade, etc., being general objects, are constitutional ones, for the application of money. A bank, then, whose bills are to circulate in all the revenues of the country, is evidently a general object; and for that very reason, a constitutional one, as far as regards the appropriation of money to it, whether it will really be a beneficial one or not, is worthy of careful examination; but is no more a constitutional point, in the particular referred to, than the question, whether the western lands shall be sold for twenty or thirty cents per acre? A hope is entertained, that, by this time, it has been made to appear to the satisfaction of the President, that the bank has a natural relation to the power of collecting taxes; to that of regulating trade; to that of providing for the common defence; and that, as the bill under consideration contemplates the government in the light of a joint proprietor of the stock of the bank, it brings the case within the provision of the clause of the constitution, which immediately respects the property of the United States. Under a conviction, that such a relation subsists, the secretary of the treasury, with all deference, conceives, that it will result, as a necessary consequence from the position, that all the specified powers of government are sovereign, as to the proper objects, that the incorporation of a bank is a constitutional measure: and that the objections, taken to the bill in this respect, are ill-founded.

    “But, from an earnest desire to give the utmost possible satisfaction to the mind of the president, on so delicate and important a subject, the secretary of the treasury will ask his indulgence, while he gives some additional illustrations of cases, in which a power of erecting corporations may be exercised, under some of those heads of the specified powers of the government, which are alleged to include the right of incorporating a bank. 1. It does not appear susceptible of a doubt, that if congress had thought proper to provide in the collection law, that the bonds, to be given for the duties, should be given to the collector of the district A. or B. as the case might require, to inure to him and his successors in office, in trust for the United States; that it would have been consistent with the constitution to make such an arrangement. And yet this, it is conceived, would amount to an incorporation. 2. It is not an unusual expedient of taxation, to farm particular branches of revenue; that is, to sell or mortgage the product of them for certain definite sums, leaving the collection to the parties, to whom they are mortgaged or sold. There are even examples of this in the United States. Suppose that there was any particular branch of revenue, which it was manifestly expedient to place on this footing, and there were a number of persons willing to engage with the government, upon condition that they should be incorporated, and the funds vested in them, as well for their greater safety, as for the more convenient recovery and management of the taxes; is it supposable that there could be any constitutional obstacle to the measure? It is presumed, that there could be none. It is certainly a mode of collection, which it would be in the discretion of the government to adopt; though the circumstances must be very extraordinary, that would induce the secretary to think it expedient. 3. Suppose a new and unexplored branch of trade should present itself with some foreign country. Suppose it was manifest, that to undertake it with advantage, required a union of the capitals of a number of individuals, and that those individuals would not be disposed to embark without an incorporation, as well to obviate the consequences of a private partnership, which makes every individual liable in his whole estate for the debts of the company to their utmost extent, as for the more convenient management of the business; what reason can there be to doubt, that the national government would have a constitutional right to institute and incorporate such a company? None. They possess a general authority to regulate trade with foreign countries. This is a mean, which has been practiced to that end by all the principal commercial nations, who have trading companies to this day, which have subsisted for centuries. Why may not the United States constitutionally employ the means usual in other countries for attaining the ends intrusted to them? A power to make all needful rules and regulations concerning territory, has been construed to mean a power to erect a government. A power to regulate trade is a power to make all needful rules and regulations concerning trade. Why may it not, then, include that of erecting a trading company, as well as in other cases to erect a government?

    “It is remarkable, that the state conventions, who have proposed amendments in relation to this point, have most, if not all of them, ex pressed themselves nearly thus: Congress shall not grant monopolies, nor erect any company with exclusive advantages of commerce! Thus at the same time expressing their sense, that the power to erect trading companies, or corporations, was inherent in congress, and objecting to it no further, than as to the grant of exclusive privileges. The secretary entertains all the doubts, which prevail concerning the utility of such companies; but he cannot fashion to his own mind a reason to induce a doubt, that there is a constitutional authority in the United States to establish them. If such a reason were demanded, none could be given, unless it were this — that congress cannot erect a corporation; which would be no better, than to say, they cannot do it, because they cannot do it. First, presuming an inability without reason, and then assigning that inability, as the cause of itself. Illustrations of this kind might be multiplied without end. They will, however, be pursued no further.

    “There is a sort of evidence on this point, arising from an aggregate view of the constitution, which is of no inconsiderable weight. The very general power of laying and collecting taxes, and appropriating their proceeds; that of borrowing money indefinitely; that of coining money and regulating foreign coins; that of making all needful rules and regulations respecting the property of the United States; — these powers combined, as well as the reason and nature of the thing, speak strongly this language; that it is the manifest design and scope of the constitution to vest in congress all the powers requisite to the effectual administration of the finances of the United States. As far as concerns this object, there appears to be no parsimony of power. To suppose, then, that the government is precluded from the employment of so usual, and so important an instrument for the administration of its finances, as that of a bank, is to suppose, what does not coincide with the general tenour and complexion of the constitution, and what is not agreeable to impressions, that any mere spectator would entertain concerning it. Little less, than a prohibitory clause, can destroy the strong presumptions, which result from the general aspect of the government. Nothing but demonstration should exclude the idea, that the power exists.

    “In all questions of this nature, the practice of mankind ought to have great weight against the theories of individuals. The fact, for instance, that all the principal commercial nations have made use of trading corporations or companies, for the purpose of external commerce, is a satisfactory proof, that the establishment of them is an incident to the regulation of commerce. This other fact, that banks are an usual engine in the administration of national finances, and an ordinary, and the most effectual instrument of loans, and one, which, in this country, has been found essential, pleads strongly against the supposition, that a government clothed with most of the important prerogatives of sovereignty, in relation to its revenues, its debt, its credit, its defence, its trade, its intercourse with foreign nations, is forbidden to make use of that instrument, as an appendage to its own authority. It has been usual, as an auxiliary test of constitutional authority, to try, whether it abridges any pre-existing right of my state, or any individual. The proposed measure will stand the most severe examination on this point. Each state may still erect as many banks, as it pleases; every individual may still carry on the banking business to any extent he pleases. Another criterion may be this; whether the institution or thing has a more direct relation, as to its uses, to the objects of the reserved powers of the state government, than to those of the powers delegated by the United States? This rule, indeed, is less precise, than the former; but it may still serve as some guide. Surely, a bank has more reference to the objects, intrusted to the national government, than to those left to the care of the state governments. The common defence is decisive in this comparison.” 1 Hamilton’s Works, 138 to 154.

     24.    Journal of Convention, p. 376.
     25.    Hamilton on Bank, 1 Hamilton’s Works, 127.
     26.    Hamilton on Bank, 1 Hamilton’s Works, 127, 128.
     27.    Osborn v. Bank of United States, 9 Wheat. R. 861, 862 to 865.
     28.    M’Culloch v. Maryland, 4 Wheat. R. 424.
     29.    See 4 Elliot’s Debates, 216 to 229; M’Culloch v. Maryland, 4 Wheat. R. 316; Osborn v. Bank of United States, 9 Wheat. R. 738, 859; 1 Kent’s Comm. Lect. 12, p. 233 to 239; Sergeant on Constitution, ch. 28, [ch. 30;] 5 Marsh. Wash. App. Note 3.