Tuesday, February 19.
The credentials of John Condit, appointed a Senator by the Legislature of the State of New Jersey, for the term of six years, commencing on the fourth day of March next; and of William B. Giles, appointed a Senator by the Legislature of the State of Virginia, for the term of six years, commencing on the fourth day of March next, were severally read, and ordered to lie on file.
Bank of the United States.
The Senate resumed, as in Committee of the Whole, the bill to amend and continue in force an act, entitled "An act to incorporate the subscribers to the Bank of the United States," passed on the 25th day of February, 1791.
Mr. Taylor.—Mr. President: Although much time has been consumed in the discussion of the subject before us, and the ground completely occupied by those who have gone before me, yet the importance of the subject, the immense magnitude of the unhappy consequences likely to result to the nation from the rejection of the bill on your table, compel me to offer to it all the support in my power. Indeed, sir, to this sense of duty to the nation is superadded a very sacred, and to me indispensable duty—my duty to the State which I have the honor in part to represent, as well as another duty, which from the course the debate has taken, is not to be disregarded; I mean, sir, the duty which I owe to myself.
I cannot, as other gentlemen have boasted they can, put my hand into my drawer and pull out the instructions by which I am to be directed on this important subject.
The State of South Carolina is a very large stockholder in some of her State banks, and if a selfish policy, contracted to the narrow sphere of the unique advantage in dollars and cents of the Government of that State—in contradiction and disregard of the great body of her own citizens, and the citizens of the rest of the States in the Union—could have weighed a moment with her Legislature, I too might have been instructed. Let me not be understood, Mr. President, as drawing any comparison between the conduct of the State of South Carolina and the conduct of the great and leading States who have acted otherwise; but I must and will tell of the things that I do know. I rejoice, sir, that the State which I come from has, in this instance, been actuated by that magnanimity and patriotism which on all former occasions has distinguished her conduct; that neither selfishness, nor party rage, nor a spirit of intolerance, has induced her to counteract or embarrass the National Legislature in its pursuit of the great object of its institution, the good of the whole.
I hope it will not be considered as savoring of egotism when I say that my appointment to the very honorable station I now hold was unsolicited by me. That my sentiments on the subject now under consideration had been by me unequivocally expressed at the last session of Congress, and were well known to those who appointed me. Nay, further, after my venerable and respected predecessor had resigned his seat here, and had declined, also, his appointment for the ensuing six years, pending the election of a successor to him, and when my name was held in nomination, a resolution was offered, similar to those which we have heard so much talk about, proposing to instruct the Senators of that State to oppose the renewal of the charter of the Bank of the United States. This resolution, as I am informed, lay on the Speaker's table when the election was gone into. I was elected, and the proposers of the resolution had not power nor influence enough to raise it from the table on which it lay, and it died stillborn at the end of the session; and if I were to make an inference at all on these transactions, I should suppose I was tacitly instructed to vote for the renewal of the bank charter. But I seek not the avoidance of responsibility. It is here, sir, in my own bosom, I have instructions paramount to all others. My beloved country has rested the matter here, and my gratitude is superadded to all other moral obligations operating on me to perform this trust, and to execute this duty with faithfulness. I find the authority of Congress to grant this charter in the same sections of the constitution which the gentlemen who have gone before me have pointed out to you. In section seven, clause first, power is given to Congress "to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defence and general welfare of the United States; but all duties shall be uniform throughout the United States."
Clause second gives power "to borrow money on the credit of the United States." And, in the last clause of said section, power is also given to make all laws which shall be necessary and proper for carrying into execution the foregoing powers vested by this constitution in the Government of the United States, or any department or officer thereof.
Let us understand the meaning of the words necessary and proper, to the last-quoted clause, for upon a correct knowledge of these depends, in my opinion, the correctness of our conclusions on this subject. The word necessary, in its technical and legal sense, in the meaning affixed to it in common parlance, established by usage, custom, reason, and the common law of the land, is different and distinct from the signification of the same adjective derived from the substantive necessity, as used by Hobbes, Hutchinson, Hume, and the other metaphysicians of the last century. It is well known that they used the substantive necessity as synonymous with the word fate, and which necessity, according to the opinions of one party, controlled omnipotence itself. This necessity was supposed by them co-existent with the Deity itself, not prospective nor discretionary, bending in one way, and in one way only, all substance, all matter, and all spirit. This meaning of the word is only to be found with these metaphysicians and philosophers; but in our law books, in the daily and hourly use of the word in common conversation, it has no such meaning. When the old Congress passed the conditional charter—which I admit they had not a delegated power to grant, but which is fully in point, both as to the signification of the word, and, also, of their opinion of the necessity, and even indispensableness of a bank for the administering the fiscal concerns of the nation—in the conclusion of the preamble they say that the exigencies of the United States render it indispensably necessary to pass the act, &c.; and in the laws passed during that period, when this Government was in the habit of following the English custom of beginning the laws by a preamble, you find the word necessary used as synonymous to expediency—practical expediency, (see Laws of the United States, vol. 1, page 247; idem, page [276],) in fact, among frail mortals with fallible judgments like ours. With any beings endued with less than omniscience, the word necessary must be only applicable to the honest judgment we can make up concerning the subject to which we apply it; in other words, it is resolvable into that sound discretion with which, as moral agents, we are in the first instance intrusted by our Maker, and in the instance now before us, we are intrusted with by the constitution and by the citizens who have sent us here to transact their business. But the rigid necessity which our opponents wish to enforce on us, this metaphysical necessity, must, from its very nature, be immutable; it must be unique, and could not exist in a greater or less degree; and, therefore, the word joined to it in the constitution (proper) could have no meaning at all. The laws, to be passed, must be necessary, is the only one way given under heaven by which you are to effect the end desired; in other words, the law must be imposed by Fate. It is perfect nonsense to say that there is a latitude left with us to judge whether such a law is proper or improper. I have, I think, brought the meaning of the word necessary to the level and within the comprehension of frail human intellect. The signification of the word proper I take to contain the description of the measure or law to which it is applied, in the following respects: whether the law is in conformity to the letter, the spirit, and the meaning of the constitution; whether it will produce the good end desired in the most ready, easy, and convenient mode, that we are acquainted with.
Great stress is laid on that amendment of the constitution which says, that all power not expressly granted shall be retained, &c. Either the general clause I have relied on gives power or it does not; if it did not give power, why was this amendment made? And if it did, and this power was offensive, why was it not stricken out when the amendment was made? But if it expressly gave power, which I contend, its being suffered to remain is proof that it was not the design of the amendment to take away the power given. Could not the Territory of Columbia have been governed without erecting a single corporation in it? I don't mean well governed. But was there that fatal necessity; that command from Jove,
"Ye fates fulfil it, and ye powers approve,"
to erect corporations? This legislation to erect corporations being, according to our opponents, sui generis, not of the ordinary kind, and only to be exercised where the express authority is given by the constitution, I ask gentlemen to show the clause in the constitution which expressly gives us the power to perform this sublimated act of legislation in this Territory any more than in any other part of the United States; and yet at this very session we have sent an armful of these high acts. The shelves of the office of the Secretary groan under the pile of charters we have granted.
I said it was easy to prove that the broad grant given to Congress to legislate for this Territory in all cases whatsoever, was restricted and paled in by the constitution. Congress cannot make the duties here on imports less or greater than elsewhere in the United States—imports and taxes must be equal, &c.—nor deprive the citizens thereof of the right to a trial by jury, nor grant them titles of nobility; and yet the incidents here alluded to would come under the description in the clause "of all cases whatsoever." In truth, sir, there is not a scintilla of the spirit, nor a single word or letter of the constitution, that loses its power and sanction upon our conduct in legislating in this particular. There is no more a power given us to legislate ad libitum on this Territory, nor to derive therefor powers by implication, than is given us in the laws we pass for the whole nation; and if this power, sui generis, of creating corporations, is properly defined by our opponents, they ought to go back to the works of yesterday, as well as to those of twenty years' standing, in order to introduce their new order of things. I might here draw a comparison of the tried scheme of using the United States' Bank, and the untried scheme of using State banks in aid of the operations of the National Treasury; but I should only be saying with less force what has been so fully and so conclusively said by the gentlemen who have preceded me. Suffice it to say, that for safe-keeping, for transmission and payment of the funds to any part of the nation, and for enforcing the punctual payment by the debtors to the customs, by addressing to those debtors the arguments to the sense of honor and shame, and also to their interest, to wit: by denying them credit in the bank on failure in punctuality—all these have been afforded to the Government without its incurring therefor one cent's expense. Are we sure the State banks can or will do this? I beg pardon of the Senate for detaining them on topics not new. As this is made a case of conscience, I deemed it necessary to be thus particular. I have no hesitation in saying, we have the right to act on this subject, inasmuch as I think the bank is both necessary and proper for the purposes above referred to.
To me it appears that this power is expressly granted; we derive it not by implication; but our opponents, in fact, are pressed to the necessity of using implication to come at the denial they set up against the exercise by Congress of this power.
I say, further, that this institution is necessary and proper for carrying into effect another general power, viz: The power to borrow money on the credit of the United States.
It is acknowledged on all hands that there is not specie enough in the nation, if applied solely to that purpose, to pay our annual impost. The operations of the Bank of Columbia in transferring the revenue derived from a part of Virginia (and of the land funds from the westward,) and of the Manhattan Bank in performing the same office in respect to the collections in Connecticut, have been dwelt upon by the honorable Senator from Maryland, (Mr. Smith.) His arguments drawn from the facts would have been more conclusive if he could have instanced the same facilities afforded to the Government between banks disconnected by the effect of that neighborhood circulation and of that course of trade very apparent in the instances he has produced. But it is not conclusive at any rate. There is a neighborhood medium of circulation, (the State bank paper,) and there is a national medium, (the United States paper.) The latter, under the present state of things, corrects the operations of distant banks and renders their transfers easy; but, deprived of this, would any of them, situated at four and five hundred miles, or at one thousand miles' distance, agree to make these transfers for the Government free of expense? Could they, for instance, transfer the solid bullion belonging to the United States from Orleans to Boston or Philadelphia, without our affording compensation for freight, insurance, &c.? I have witnessed the advantages of this national medium in the State I live in; and in the months of autumn, when strangers are fearful of venturing to Charleston, our western friends, rather than carry the hard dollars, are in the habit of giving two or three per cent. for bills of the Bank of the United States. Destroy this national medium, you insulate the State banks, which are so far asunder as not to be within the influence of the neighborhood medium of circulation. The stroke of our dreadful wand disconnects the ligament by which they are bound together in their distant operations.
Mr. Pickering.—I will now, Mr. President, make some observations on the main question under consideration. Whether Congress have the power by the constitution to renew the charter of the Bank of the United States?
It has been said that the power to incorporate a bank for the United States is a substantive and original, and not a derivative or implied power. This has been repeated, but I have heard no arguments in support of the position; it is naked assertion.
It has also been called "act of sovereignty;" as if to alarm and deter us by its awful magnitude. But, sir, the sovereign power of Congress is sometimes exercised on subjects of comparatively little moment. A few days since we passed a bill to authorize the erection of a bridge; and another, to change the name of an individual, to enable him to inherit an estate. The power of Congress is sovereign to all the purposes of the constitution. They can lay and collect taxes, duties, imposts, and excises; borrow money, regulate commerce, and make all needful rules and regulations respecting the territory and other property of the United States. And they have the power to make all laws necessary and proper to carry the foregoing and all other constitutional powers into execution. When proposing to exercise this general power, in any case not expressly mentioned, we have to consider whether it be "necessary and proper." It has been said that "necessary" here means indispensable; something without which a particular power expressly granted cannot be carried into execution. But, sir, I see no ground for this interpretation. In the affairs of a nation, or other community, whatever the public good requires to be done, is necessary and proper to be done. It is a moral, not an absolute necessity. It is necessary for me to be here in my place, because it is my duty to be here. Necessary and proper are opposed to unnecessary and improper. Congress should do no act unnecessary and improper; but, like State Legislatures, do whatever is necessary and proper to attain the objects for which they are respectively constituted.
In determining whether any proposed measure be necessary and proper to carry into execution any power expressly given to Congress, we have to consider whether that measure has a just or useful relation to the end. For instance, the constitution having prescribed no mode of collecting the revenues, it rested in the discretion of Congress to adopt such a mode or such modes as should appear to them best adapted to that object. Instead of appointing custom-house officers in the large commercial cities and towns, where a banking establishment could be supported, Congress might there have erected banks, as the most certain, punctual, and cheap mode of collection. Suitable officers of a bank might have performed all the duties of entering and clearing vessels, and all other duties pertaining to the custom-house, without any charge to the public; the deposits of the public moneys so collected in those banks, upon which the usual banking operations might be carried on, yielding an adequate compensation for all the services so performed.
The public revenues, when collected, must also be safely kept. An experience has demonstrated that, of all depositaries, banks are the safest. And the same experience has shown that, as the public moneys are required to be frequently transferred, for the public expenditures, from one State to another, the Bank of the United States, with its branches, has furnished the best mode of transfer; it being effected with despatch, with certainty, and without any risk or expense to the United States.
The gentleman from Kentucky (Mr. Clay) asked, if banks are necessary for collecting the public revenues, why give them any other power? The answer is, that it is the essential nature of banks, which renders them so peculiarly fit to collect the revenues. The merchants, whose bonds are lodged in the banks for collection, are also borrowers of money from the banks; and if they fail of paying their bonds, as they become due, their credit will fail; they can obtain no more loans until their bonds are paid. This has just been presented to our view, in the most striking manner, by my colleague.
"To borrow money," is another of the great powers expressly vested in Congress. And in this, as in the power first considered, no mode of borrowing being prescribed in the constitution, Congress are to devise and provide the means in their judgment most sure, expeditious, and ample, to obtain loans. And this was one of the great objects for which the Bank of the United States was originally incorporated. The gentleman from Virginia, near me, (Mr. Brent,) and the gentleman from South Carolina, (Mr. Taylor,) have, in very forcible language, displayed the impolicy of depending on State banks or individuals for loans, in public emergencies. At such times, these banks and individuals may be most hardly pressed by their usual customers. To suffer the Bank of the United States to dissolve, and to have recourse to State banks, will be so far going back to the condition of the United States under the articles of Confederation, when our Union was but a rope of sand. When the pressure of the Revolutionary war was over, indeed, while that pressure remained, Congress in vain made requisitions on the individual States; no money, or none in any measure adequate to the public exigencies, could be obtained. After the war, when the public treasury was empty, Congress importuned—implored the States, individually, to grant the power to raise a revenue from commerce, to defray the current expenses of the General Government, and to fulfil the public obligations, but the power could not be obtained. States, deriving large revenues from commerce, chose to retain them for their own treasuries.
It was this helpless, forlorn condition of our country, which forcibly convinced the nation of the necessity of forming a new system of Government; and our present Government was the fruit of that necessity.
"To regulate commerce" is a third great power vested in Congress. And it is conceived that the exercise of any power well adapted to give safety, facility, and prosperity to commerce, must be comprised in the power to regulate it. Hence the erecting of light-houses has been mentioned as an instance in which an implied power, incidental to the regulating of commerce, has been exercised. But it has been said that this power is expressly given in another part of the constitution; that by which Congress is vested with exclusive legislation over the district which is the seat of Government, and over places ceded to the United States "for the erection of forts, magazines, arsenals, dockyards, and other needful buildings." But if we had no commerce, no navigation, light-houses would not be "needful buildings," they would be of no use whatever. Hence it is clear that they have a direct relation to commerce and to nothing else; and, therefore, the erecting of them is properly adduced as an instance of the exercise of a power implied in the general express power to regulate commerce.
The safety and facility of commercial operations was also greatly to be promoted by means of a general currency which should have equal credit throughout the Union. This has been accomplished by the notes issued from the Bank of the United States, under the authority of Congress, exercising the power incidental to that of regulating commerce.
A fourth great power, which I mentioned to have been vested in Congress, is that of "making all needful rules and regulations respecting the territory and other property of the United States." This "other property" consists partly of money. And, as Congress have power to make any regulations concerning it which are needful, that is, which may, in their opinion, best promote the general welfare, this money may be (as some of it has been) vested in bank stock; and with the truest regard to its safety and good management, in the stock of a bank erected by Congress, of which they may have a suitable inspection; and where it may safely deposit the public revenues, there to await the public demand; and, in the mean time, usefully aid those banking operations which give facility to commerce and to public loans.
But as an evidence that the constitutionality of the act to incorporate the Bank of the United States was at least doubtful, we have been told by the gentleman from Maryland, (Mr. Smith,) that President Washington doubted; that his mind was in suspense to the last moment, when the act was to be approved or disapproved. That while the then Secretary of the Treasury, (Mr. Hamilton,) a very great man, maintained the constitutional power of Congress to erect that bank, another man, (Mr. Jefferson,) equally great, then Secretary of State, and the Attorney-General, (Mr. Randolph,) a distinguished lawyer, maintained the contrary doctrine—that Congress had not that power. It is true, sir, that Washington, cautious and circumspect beyond any man I ever knew, did suspend his decision to the last day allowed him by the constitution. The confidence with which the Secretary of State and the Attorney-General supported their opinions on this question, was sufficient to excite in the President the greatest caution. Both were lawyers, and they raised many legal objections. The written opinions of these gentlemen were (as I have been well informed) put into the hands of the Secretary of the Treasury two days before it was necessary for the President to decide. And the reasoning of Mr. Hamilton, in his written argument, enabled the President to decide with satisfaction; with a full conviction of the constitutionality of the act.
The following are some of the objections offered by the Secretary of State: He said—"that the proposed incorporation (of the bank) undertakes to create certain capacities, properties, or attributes, which are against the laws of alienage, descents, escheat, and forfeiture, distribution, and monopoly. And that nothing but a necessity, invincible by other means, can justify such a prostration of laws which constitute the pillars of our whole system of jurisprudence, and are the foundation laws of the State governments." Washington, sir, was not a lawyer, and who can wonder that his fair mind was alarmed by such a solemn declaration? That it was kept in suspense by the assertion, that the act for establishing the bank would overturn the pillars of our whole system of jurisprudence, and the foundation laws of the State governments? But, sir, it required only the knowledge of a lawyer at once to overturn these objections. The following are some of the remarks of the Secretary of the Treasury: "If these are truly the foundation laws of the several States, then have most of them subverted their own foundations. For there is scarcely one of them which has not, since the establishment of its particular constitution, made material alterations in some of those branches of its jurisprudence, especially the law of descents. But it is not conceived how any thing can be called the fundamental law of a State government which is not established in its constitution, unalterable by its ordinary legislature."
"To erect a corporation, is to substitute a legal or artificial for a natural person; and, where a number are concerned, to give them individuality. To that legal or artificial person, once created, the common law of every State, of itself, annexes all those incidents and attributes which are represented as a prostration of the main pillars of their jurisprudence. It is certainly not accurate to say, that the erection of a corporation is against those different heads of the State laws; because it is rather to create a kind of person, or entity, to which they are inapplicable, and to which the general rule of those laws assigns a different regimen. The laws of alienage cannot apply to an artificial person, because it can have no country. Those of descent cannot apply to it, because it can have no heirs. Those of escheat are foreign from it, for the same reason. Those of forfeiture, because it cannot commit a crime. Those of distribution, because, though it may be dissolved, it cannot die." Sir, I beg leave to add a few explanations. By the laws of most, perhaps of all the States, aliens are not permitted to hold real estate; but in all they are free to hold personal property of every kind, and particularly bank stock. The law of escheat relates to the property of a citizen who dies without heirs, near or remote, and without a will. In such case his property falls to the State. But instances of escheat do not occur perhaps twice in a century in any State, and, consequently, is of trifling moment. Although a corporation cannot commit a crime, it may violate the rules prescribed in the law for its establishment, and thus incur an immediate forfeiture of its charter. Or, if for such a violation of its fundamental law, or any mismanagement of the institution to the public injury, its charter be not forthwith taken away, the State may refuse to renew it. As to the law of distribution, that operates when a person dies intestate. But though a corporation cannot die, yet the individuals to whom its property belongs will die; and their bank property, equally with their other property, becomes liable to the law of distribution.
One of the injurious consequences of destroying the Bank of the United States has been stated to be, the withdrawing of seven millions of dollars from the active capital of the United States, and transmitting it to Europe, where that portion of the bank stock is owned. To this it has been answered, by the opposers of the bank, that these millions will not be withdrawn, but transferred from the United States' Bank to banks of the several States. How then, sir, shall we get rid of that dangerous influence of foreign stockholders which the same gentlemen urge as a reason for not renewing the charter of the Bank of the United States? Sir, it is well known that money in Europe is less valuable than in the United States. That moneyed men there are glad to loan their money at an interest of five per cent, or less, while in these States the legal interest is six per cent. And a multitude of our citizens find their account in employing that foreign capital, paying an interest of six per cent., by which, in the course of trade, they gain ten, fifteen, or twenty per cent.; that foreign capital, in the hands of our merchants, has resembled the five and the ten talents, wherewith they have gained other five and other ten talents.
The distresses which will follow the dissolution of the Bank of the United States, especially in the great commercial cities, have been forcibly described in the plain testimonies of the committee of mechanics and manufacturers from Philadelphia—a committee selected wholly from the democratic party; distresses which were sufficient to move a heart of stone. And why should this bank be dissolved? It has been said that the State banks are competent to all the necessary operations of the general bank. If the contrary had not been shown, it might be answered, that the Bank of the United States was incorporated when there were only three banks in the United States; one in Philadelphia, one in New York, and one in Boston. These were inadequate to the necessities and accommodation of the General Government and of the citizens. To supply this deficiency, it was necessary to erect the National Bank; and the dignity, honor, good faith, and credit of the United States stand pledged for the renewal of its charter. The institution having been well conducted, and found in the highest degree useful and beneficial to Government, and to the citizens at large, it ought to be continued. Individual citizens and foreigners became stockholders on a well-grounded expectation of the stability of the Government. It was in this just expectation that foreigners, Englishmen, purchased of our Government, itself, its remaining shares of the public stock in the Bank of the United States, and at an advance of forty-five per cent.; so that, for every hundred dollars laid out by the Government in the purchase of bank shares, the United States received of these foreigners one hundred and forty-five dollars. And how was it possible for these foreigners to conceive the Government capable of destroying the work of its own hands, and of reducing their property to one hundred dollars a share, for which, but eight years before, they had paid the same Government one hundred and forty-five dollars?