The First Bank of the United States was chartered for a period of 20 years by Congress on Feb. 25, 1791. Alexander Hamilton championed the bank, but it wasn’t without its detractors. One of the most vocal opponents of the bank was Thomas Jefferson who argued that it was unconstitutional.

In his Opinion on the Constitutionality of a National Bank, Jefferson rested his argument on what became the Tenth Amendment, writing:

“I consider the foundation of the Constitution as 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.’ [XIIth amendment.] 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 any definition.”

He then went right to the obvious conclusion:

“The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States, by the Constitution.”

But Jefferson’s arguments went much broader. He covered claims of power under the Big three of today – Commerce, General Welfare and Necessary and Proper.

On commerce, for example, Jefferson pointed out that “to erect a bank, and to regulate commerce, are very different acts.”

On general welfare, he noted that “they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose.”

And on necessary and proper – Hamilton’s leading argument – Jefferson pointed out that supporters of the national bank were making the case that it would make things more CONVENIENT to collect taxes.

His response was, in essence, this: It’s the NECESSARY and proper clause, not the CONVENIENCE and proper clause.

Here’s Jefferson’s take:

Suppose this were true: yet the Constitution allows only the means which are ‘necessary,’ not those which are merely ‘convenient’ for effecting the enumerated powers.

Hamilton primarily based his defense of the national bank on the “necessary and proper clause,” citing it as the source of these “implied” powers. While Jefferson relied on a narrow definition of “necessary and proper,” Hamilton used the phrase to milk implied powers out of the Constitution.

There’s a lot more to learn here, and today, I’ve got two options for you that I think you’ll find both interesting and educational.

Mike Maharrey put together a pretty long article covering the entire debate and the arguments from both sides. You can find that here:

Next, in this classic podcast episode from the Path to Liberty archives, I went through Jefferson’s views on commerce, general welfare and necessary and proper – plus an interesting overview of a debate at the Philadelphia Convention. It’s a 15 minute show – video and audio editions here:

At the end of the day, Hamilton won, even though he was wrong. And today we have the biggest, most dangerous national bank – empowering the biggest government in the history of the world.

My view? The only thing today’s national bank – the federal reserve – is authorized to do under the Constitution is disband.

Michael Boldin

The 10th Amendment

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