A Strict or Loose Interpretation of the Constitution: Jefferson v. Hamilton--February 1791
The development and ratification of the 1787 Constitution was a polarizing event. The document itself was a hard-fought compromise in the Convention with some notable attendees refusing to sign it. Then, upon its promulgation to the several States, factions arose to support and oppose its ratification. Opponents of the Constitution primarily pointed to the absence of a bill of rights and the presence of a lot of vague language. For instance, what does "necessary & proper" actually mean? To whom does "we the people" refer? What is the "general welfare"? And, integral to the whole process, who gets to decide what all of this means?
The ratification and implementation of the Constitution didn't assuage the foregoing arguments much as functionaries and partisans (increasingly becoming demarcated by sectionalism) continued to argue meanings and interpretations into the Washington administration, the turbulent 1830s, and eventually erupting into open conflict in the 1860s.
This is an oversimplification of a complex event; however, this brief accounting conveys the essence of the difficulties and controversies in the formative period of the Republic.
This selection focuses on the arguments of two great rivals in Washington's administration: Thomas Jefferson v. Alexander Hamilton. Jefferson was Washington's Secretary of State and Hamilton served as the Secretary of the Treasury. On the issue of the formation of a national bank, the two luminaries of the era had vastly different ideas about how to interpret the Constitution.
My comments are bold-faced and italicized. The italics in the primary source are those of Hamilton and Jefferson. This is a lengthy post, but worth the read for those who want to ruminate on the issue.
August Glen-James, editor
The formation of a national bank as a matter of constitutionality was controversial. Washington asked for opinions about the subject: Jefferson and Hamilton responded. Jefferson, as Secretary of State, was opposed and Hamilton, as Secretary of Treasury, was in favor. Washington eventually accepted Hamilton’s opinion about the matter.
Apart from his views of a national bank, Jefferson expressed some other broad opinions about the nature of the Union that are quite interesting and instructive about his thoughts on government under the Constitution of 1787. These opinions vis-à-vis Hamilton’s positions are the subject of this post.
First, I will excerpt Jefferson’s thoughts. He was opposed to the national banking scheme as being unconstitutional, i.e., not authorized by the Constitution. If granted, he surmised, it would render the government the sole judge of the extent of its own power thus nullifying the concept of “enumerated powers.”
Before moving to Jefferson’s most salient points, it’s important to highlight a position that will not be covered but is central to understanding part of Hamilton’s opposition to Jefferson’s position. Jefferson determined that this banking bill would “form the subscribers into a corporation” and “enable them in their corporate capacities to receive grants of land.” Simply, Jefferson did not believe that the “incorporation of a bank, and the powers assumed by this bill” had been, as previously observed, delegated to the United States by the Constitution.
Jefferson further demurred as follows:
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” [quoting what became the 10th 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. . . . The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the Unites States by the Constitution.
I. They are not among the powers specially enumerated: for these are: 1st. A power to lay taxes for the purpose of paying the debts of the United states; but no debt is paid by this bill, nor any tax laid. Were it a bill to raise money, its origination in the Senate would condemn it by the Constitution.
2nd. “To borrow money.” But this bill neither borrows money nor ensures the borrowing it.
3. To “regulate commerce with foreign nations, and among the States, and with the Indian tribes.” To erect a bank, and to regulate commerce, are very different acts. He who erects a bank, creates a subject of commerce in its bills; so does he who makes a bushel of wheat, or digs a dollar out of the mines; yet neither of these persons regulates commerce thereby. To make things which may be bought and sold, is not to prescribe regulations for buying and selling. Besides, if this was an exercise of the power of regulating commerce, it would be void, as extending as much to the internal commerce of every State as to its external. For the power given to Congress by the Constitution does not extend to the internal regulation of the commerce of a state (that is to say of the commerce between citizen and citizen), which remain exclusively with its own legislature; but to its external commerce only, that is to say, its commerce with another state, or with foreign nations, or with the Indian tribes. Accordingly the bill does not propose the measure as a regulation of trade, but as “productive of considerable advantage to trade.” Still less are these powers covered by any other of the special enumerations.
II. Nor are they [i.e., the powers to tax and regulate commerce] within either of the general phrases, which are the two following: --
1. To lay taxes to provide for the general welfare of the United States, that is to say, “to lay taxes for the purpose of providing for the general welfare.” For the laying of taxes is the power and the general welfare the purpose for which the power is to be exercised. They 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. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose. To consider the latter phrase, not as describing the purpose of the first, but as giving a distinct and independent power to do any act they please, which might be for the good of the Union, would render all the preceding and subsequent enumerations of power completely useless.
It would reduce the whole instrument to a single phrase, that of instituting a Congress with power to do whatever would be for the good of the United States; and, as they would be the sole judges of the good or evil, it would be also a power to do whatever evil they please.
It is an established rule of construction where a phrase will bear either of two meanings, to give it that which will allow some meaning to the other parts of the instrument, and not that which would render all the others useless. Certainly no such universal power was meant to be give n them. It was intended to lace them up straitly within the enumerated powers, and those without which, as means, these powers could not be carried into effect. It is known that the very power now proposed as a means was rejected as an end by the Convention which formed the Constitution. A proposition was made to them to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected, and one of the reasons for rejection urged in debate was, that then they would have a power to erect a bank, which would render the great cities, where there were prejudices and jealousies on the subject, adverse to the reception of the Constitution.
2. The second general phrase is “to make all laws 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 has been urged that a bank will 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 merely “convenient” for effecting enumerated powers. If such a latitude of construction be allowed to this phrase as to give any non-enumerated power, it will go to every one, for there is not one which ingenuity may not torture into convenience in some instance or other to some one of so long a list of enumerated powers. It would swallow up all the delegated powers, and reduce the whole to one power, as before observed. Therefore it was that the Constitution restrained them to the necessary means, that is to say, to those means without which the grant of power would be nugatory.
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 anywhere a power to establish such a bank; or that the world may not 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 several states, such as those against Mortmain, the laws of Alienage, the rules of descent, the acts of distribution, the laws of escheat and forfeiture, the laws of monopoly? Nothing but a necessity invincible by any other means, can justify such a prostitution of laws which constitute the pillars of our whole system of jurisprudence. Will Congress be too straight-laced to carry the Constitution into honest effect, unless they may pass over the foundation-laws of the state governments for the slightest convenience of theirs?
The negative of the President is the shield provided by the Constitution to protect against the invasion of the legislature: 1. The right of the Executive. 2. Of the Judiciary. 3. Of the States and state legislatures. The present is the case of a right remaining exclusively with the states, and consequently one of those intended by the Constitution to be placed under its protection.
Hamilton supported the banking bill thusly:
In entering upon the argument it ought to be premised that the objections of the Secretary of State and Attorney General are founded on a general denial of the authority of the United states to erect corporations. The latter indeed expressly admits that if there be anything in the bill which is not warranted by the Constitution, it is the clause of incorporation.
Hamilton subsequently opined that the ability to form corporations was a “general principle” and “inherent in the very definition of Government” and was, furthermore, “essential to every step of the progress to be made by the United States.” Moreover, every power vested in government was, in its nature, sovereign and included by the force of that term the right to employ all necessary means not prohibited by the Constitution or the dictates of morality to accomplish the “ends of political society.”
Hamilton went on at some length about sovereignty. Of course, his argument was complex, but he concluded that the Federal government, though an entity of delegated powers, had all the entitlements of sovereignty within its realm of delegations and could, therefore, form corporations.
With the sovereignty issue and its attendant relevance to the argument as a basis, Hamilton then went on to counter Jefferson’s arguments thusly:
Express, Implied, and Resulting Powers
The first of these arguments is that the foundation of the Constitution is laid on this ground “that all powers not delegated to the United States by the Constitution nor prohibited to it by the States are reserved to the States or to the people,” whence it is meant to be inferred that Congress can in no case exercise any power not included in those enumerated in the Constitution. And it is affirmed that the power of erecting a corporation is not included in any of the enumerated powers.
The main proposition here laid down, in its true signification, is not to be questioned. It is nothing more than a consequence of this republican maxim, that all government is a delegation of power. But how much is delegated in each case is a question of fact to be made out by fair reasoning & construction upon the particular provisions of the Constitution—taking as guides the general principles & general ends of government.
It is not denied that there are implied as well as express powers, and that the former are as effectually delegated as the latter. And for the sake of accuracy it shall be mentioned that there is another class of powers which may be properly denominated resulting powers. It will not be doubted that if the United States should make a conquest of any of the territories of its neighbors, they would possess sovereign jurisdiction over the conquered territory. This would rather be a result from the whole mass of the powers of the government & from the nature of political society, than a consequence of either of the powers specially enumerated.
But be this as it may, it furnishes a striking illustration of the general doctrine contended for. It shews an extensive case in which a power of erecting corporations is either implied in or would result from some or all of the powers vested in the National Government. The jurisdiction acquired over such conquered territory would certainly be competent to every species of legislation.
To return—It is conceded, that implied powers are to be considered as delegated equally with express ones.
Then 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 an instrument or means of carrying into execution any of the specified powers as any other instrument or mean whatever. The only question must be, in this as in every other case, whether the mean to be employed, or in this instance the corporation to be erected, has a natural relation to any of the acknowledged objects or lawful ends of the government. Thus a corporation may not be erected 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 erected in relation to the collection of the taxes, or to the trade with foreign countries, or to the trade between the states, or with the Indian Tribes, because it is a province of the federal government to regulate those objects & 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 & greatest advantage.
Necessary & Proper vis-à-vis Incorporation
A strange fallacy seems to have crept into the manner of thinking & reasoning upon the subject. . . . An incorporation seems to have been regarded as some great, independent, substantive thing—as a political end of peculiar magnitude & moment; whereas it is truly to be considered a quality, capacity, or means to an end. Thus a mercantile company if formed with a certain capital for the purpose of 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 mean. Suppose that an incorporation were added to this; it would only be to add a new quality to that association; to give it an artificial capacity by which it would be enabled to prosecute the business with more safety & convenience.
To this mode of reasoning respecting the right of employing all the means requisite to the execution of the specified powers of the government, it is objected that none by necessary & proper means are to be employed, & the Secretary of State maintains that no means are to be considered necessary but those without which the grant of the power would be nugatory. Nay so far does he go in his restrictive interpretation of the word as even to make the case of necessity which shall warrant the constitutional exercise of the power depend on casual & temporary circumstances, an idea which alone refutes the construction. The expediency of exercising a particular power, at a particular time, must indeed depend on circumstances; but the constitutional right of exercising it must be uniform & invariable—the same today as tomorrow.
It is essential to the being of the national government that so erroneous a conception of the meaning of the word necessary should be exploded.
It is certain that neither the grammatical nor popular sense of the term requires that construction. According to both, necessary often means no more than needful, requisite, incidental, useful, or conducive. 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 when nothing more is intended or understood than that the interests of the government or person require, or will be promoted, by the doing of this or that thing. The imagination can be at no loss for exemplification of the use of the word in this sense.
And it is the true one in which it is to be understood as used in the Constitution. The whole turn of the clause containing it indicates that it was the intent of the convention by that clause to give a liberal latitude to the exercise of the specified powers. The expressions have peculiar comprehensiveness. They are—“to make all laws, necessary and proper for carrying into execution the foregoing powers & all other powers vested by the constitution in the government of the United States, or in any department or officer thereof.” To understand the word as the Secretary of State does would be to depart from its obvious & popular sense, and to give it a restrictive operation; an idea never before entertained. It would be to give it the same force as if the word absolutely or indispensably had been prefixed to it.
Such a construction would beget endless uncertainty & embarrassment. The cases must be palpable & extreme in which it could be pronounced with certainty that a measure was absolutely necessary, or one without which the exercise of 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 any implied power a case of extreme necessity; which is rather a rule to justify the overleaping of the bounds of constitutional authority than to govern the ordinary exercise of it.
[At this point, Hamilton multiplies examples inherent in the principles he just laid down. Consequently, the rest of this post will highlight the most interesting ideas.]
• It may be truly said of every government, as well as of that of the United States, that it has only a right to pass such laws as are necessary & proper to accomplish the objects intrusted [sic] to it. For no government has a right to do merely what it pleases. Hence by a process of reasoning similar to that of the Secretary of State, it might be proved that neither of the state governments has a right to incorporate a bank.
• The degree in which a measure is necessary can never be a test of the legal right to adopt it. That must ever be a matter of opinion; and can only be a test of expediency. The relation between the measure and the end, between the nature of the mean employed towards the execution of a power and the object of that power, must be the criterion of constitutionality, not the more or less of necessity or utility.
• The restrictive interpretation of the word necessary is also contrary to this sound maxim of construction: namely, that the powers contained in a constitution of government, especially those which concern the general administration of the affairs of a country, its finances, trade, defence, etc. ought to be construed liberally in advancement of the public good. This rule does not depend on the particular form of a government or on the particular demarcation of the boundaries of its powers, but on the nature and objects of government itself. The means by which national exigencies are to be provided for, national inconveniences obviated, national prosperity promoted, are of such infinite variety, extent and complexity, that there must, of necessity, be great latitude of discretion in the selection & application of those means. Hence, consequently, the necessity & propriety of exercising the authorities intrusted [sic] to a government on principles of liberal construction. . . .
• But while, on the one hand, the construction of the Secretary of State is deemed inadmissible, it will not be contended on the other that the clause in question gives any new or 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 & sovereign authority, in some cases paramount to that of the states, in other coordinate with it. For such is the plain import of the declaration that it may pass all laws necessary & proper to carry into execution those powers.
• It is no valid objection to the doctrine to say that it is calculated to extend the powers of the general government throughout the entire sphere of state legislation. The same thing has been said and may be said with regard to every exercise of power by implication or construction. . . . The truth is that difficulties on this point are inherent in the nature of the federal constitution. The consequence of this division is that there will be cases clearly within the power of the National Government; others clearly without its power; and a third class, which will leave room for controversy & difference of opinion, & concerning which a reasonable latitude of judgement must be allowed.
• But this doctrine which is contended for is not charged with the consequence imputed to it. It does not affirm that the national government is sovereign in all respects, but that it is sovereign to a certain extent: that is, to the extent of the objects of its specified powers. It leaves therefore a criterion of what is constitutional and what is not so. This criterion is the end to which the measure relates as a mean. If the end be clearly comprehended within any of the specified powers, & if the measure have an obvious relation to that end, and is not forbidden by any particular provision of the constitution—it may safely be deemed to come within the compass of the national authority.
• The Secretary of State will not deny that whatever may have been the intention of the framers of a constitution, or of a law, that intention is to be sought for in the instrument itself, according to the usual & established rules of construction. Nothing is more common than for laws to express and effect more or less than was intended. If then a power to erect a corporation, in any case, be deducible by fair inference from the whole or any part of the numerous provisions of the Constitution of the United States, arguments drawn from extrinsic circumstances, regarding the intention of the convention, must be rejected. . . .
[Hamilton then summarizes his position, which will bring this excerpted summary to an end.]
It is presumed to have been satisfactorily shewn in the course of the preceding observations
1. That the power of the government as to the objects intrusted [sic] to its management is in its nature sovereign.
2. That the right of erecting corporations is one inherent in & 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 & substantive power but as an incidental & 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 purposed 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 & comprehensive terms.