Alexander Hamilton (72 page)

On February 8, the House passed the bank bill by a one-sided thirty-nine to twenty, giving Hamilton a particularly sweet triumph. For a fleeting moment, his mastery of the government seemed complete, but the victory raised troublesome questions. Almost all congressmen from north of the Potomac had stood four-square behind him, while their southern counterparts had almost all opposed him. As philosophical views increasingly dovetailed with geographic interests, one could begin to glimpse the contours of two parties taking shape. Individual issues were coalescing into clusters, with the same people lining up each time on opposite sides. In his
Life of Washington,
Chief Justice John Marshall traced the genesis of American political parties to the rancorous dispute over the Bank of the United States. That debate, he said, led “to the complete organization of those distinct and visible parties which in their long and dubious conflict for power have…shaken the United States to their center.”
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Hamilton’s seeming omnipotence unnerved Madison because it further skewed what the latter deemed the proper balance between executive and legislative power.

For many delegates at Philadelphia in 1787, Congress was supposed to be the leading branch of government, the guardian of popular liberty that would prevent the restoration of British tyranny. That was why legislative duties were spelled out in article 1 of the Constitution. Consistent with this view, Madison thought the treasury secretary should serve as an adjunct to Congress, providing legislators with reports from which they would shape bills. Jefferson likewise balked at the way Hamilton both submitted reports and drafted bills based on them. Hamilton, in contrast, envisioned the executive branch as the main engine of government, the sole branch that could give force and direction to its policies, and time has abundantly vindicated his view.

Hamilton had not foreseen the looming constitutional crisis that his bank bill was to instigate. Jefferson and Madison grew fearful that Hamilton was not simply building a structure that dashed their principles but sculpting his creations in stone. His expansive vision of federal power filled them with foreboding. Precedents were being set that would be very hard to revoke later on. Hamilton admitted in retrospect that the new central bank represented his greatest stretch of federal power. The new government had reached a defining moment.

Madison wanted Washington to spike Hamilton’s bank bill and cast the first veto in American history. To figure out whether the bill squared with the Constitution, Washington canvassed the members of his compact cabinet. First, he solicited the opinion of Attorney General Edmund Randolph, who wrote a weakly reasoned piece contending that the bank was unconstitutional. Washington then turned to Jefferson, who had long detested monopolies and chartered companies as privileges conferred by British kings; he could not reconcile a central bank with true republicanism. Jefferson was also increasingly irked by his relative impotence in Washington’s cabinet and worried that the mercantile north, under Hamilton’s auspices, was gaining the upper hand over the rural south. He told George Mason: “The only corrective of what is corrupt in our present form of government will be the augmentation of the numbers in the lower house so as to get a more agricultural representation, which may put that interest above that of the stock-jobbers.”
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In a concise opinion, Jefferson blasted the Bank of the United States as unconstitutional on the grounds that Hamilton was perverting the necessary-and-proper clause. To pass the constitutional test, Jefferson said, a measure had to be more than just
convenient
in executing powers granted to the federal government: it had to be truly
necessary
—that is, indispensable. Taking literally the Constitution’s recitation of congressional powers, he prophesied that “to take a single step beyond the boundaries thus specifically drawn…is to take possession of a boundless field of power, no longer susceptible of any definition.”
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Just how vehemently Jefferson opposed the new bank can be inferred from a fire-breathing letter he sent to Madison the following year. Governor Henry Lee wished to open a local bank in Virginia that would act as a counterweight to a branch of Hamilton’s national bank. Jefferson worried about any measure that might confer legitimacy upon the central bank. From his letter, it is clear that he did not recognize the supremacy of federal over state law, a cardinal tenet of the Constitution:

The power of erecting banks and corporations was not given to the general government; it remains then with the state itself. For any person to recognize a foreign legislature [Jefferson was talking about the U.S. Congress] in a case belonging to the state itself is an act of
treason
against the state. And whosoever shall do any act under color of the authority of a foreign legislature—whether by signing notes, issuing or passing them, acting as director, cashier or in any other office relating to it, shall be
adjudged guilty of high treason and suffer death accordingly
by the judgment of the state courts. This is the only opposition worthy of our state and the only kind which can be effectual…. I really wish that this or nothing should be done.
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[Italics added.]

In other words, the principal author of the Declaration of Independence was recommending to the chief architect of the U.S. Constitution that any Virginia bank functionary who cooperated with Hamilton’s bank should be found guilty of treason and executed.

Though inclined to support the bank, Washington was shaken by the negative verdicts rendered by Jefferson and Randolph, and on February 16 he rushed them to Hamilton for comment. Washington had ten days to sign or veto the measure. The document that Hamilton wrote in response, says one of his editors, is “the most brilliant argument for a broad interpretation of the Constitution in American political literature.”
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As always, Hamilton wanted to bury his foes beneath an avalanche of arguments. After gathering his thoughts, he consulted William Lewis, one of Philadelphia’s foremost lawyers, and the two men spent an afternoon pacing Lewis’s garden and reviewing Hamilton’s arguments. In slightly more than a week, Hamilton, the human dynamo, elaborated a treatise of nearly fifteen thousand words that covers almost forty printed pages in his collected papers. On Monday the twenty-first, he reported back to Washington that he had “been ever since sedulously engaged” in preparing his defense and would send the results on Tuesday evening or Wednesday morning. With comical understatement, he said that he wanted to give the issue “a
thorough examination.
”
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He went right down to the deadline with his treatise. Upon delivering it to Washington on Wednesday morning, a frazzled Hamilton noted that the final draft had “occupied him the greatest part of last night.”
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Eliza Hamilton remembered the sleepless night when her husband gave immortal expression to a durable principle of constitutional law. As an ancient lady garbed in widow’s weeds, she told the story to a young man who recorded it this way in his journal:

Old Mrs. Hamilton…active in body, clear in mind…talks familiarly of Washington, Jefferson, and the fathers. I told her how greatly I was interested…on account of her husband’s connection with the government. “He made your government,” said she. “He made your bank. I sat up all night with him to help him do it. Jefferson thought we ought not to have a bank and President Washington thought so. But my husband said, ‘We must have a Bank.’ I sat up all night, copied out his writing, and the next morning, he carried it to President Washington and we had a bank.”
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Hamilton’s own allusion to staying up “the greatest part” of that night also attests to some electrifying finish, some final, brilliant burst of inspiration that completed his stupendous feat. As with many of his intellectual exploits, they were almost feats of athletic prowess as well.

Hamilton lent his opinion the erudition of a treatise and the warmth of a manifesto. The essence of it was that government must possess the means to attain ends for which it was established or the bonds of society would dissolve. To liberate the government from a restrictive reading of the Constitution, Hamilton refined the doctrine of “implied powers”—that is, that the government had the right to employ all means necessary to carry out powers mentioned in the Constitution.

In drafting his opinion, Hamilton claimed that minutes of the Constitutional Convention could provide “ample confirmation” of his liberal interpretation of the necessary-and-proper clause. Reluctant to break the convention’s confidentiality oath—or perhaps afraid that Madison might play the same game—he then expunged the passage and let the Constitution speak for itself. He told Washington that, if adopted, “principles of construction like those espoused by the Secretary of State and the Attorney General would be fatal to the just and indispensable authority of the United States.”
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Then, in blazing italics, Hamilton trumpeted his main theme: “Now it appears to the Secretary of the Treasury that this
general principle
is
inherent
in the very
definition
of
government
and
essential
to every step of the progress to be made by that of the United States: namely that every power vested in a government is in its nature
sovereign
and includes by
force
of the
term
a right to employ all the
means
requisite and fairly
applicable
to the attainment of the
ends
of such power.” If Jefferson’s and Randolph’s views were upheld, “the United States would furnish the singular spectacle of a
political society
without
sovereignty
or of a people
governed
without
government.
”
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Hamilton waved away complaints that the Constitution did not explicitly mention a bank: “It is not denied that there are
implied
as well as
express
powers and that the former are as effectually delegated as the latter.”
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To argue, as did Jefferson, that all government policies had to pass a strict test of being “absolutely necessary” to the performance of specified duties would paralyze government. How could one say with certainty what was absolutely necessary? Hamilton pointed out that, in setting up the Customs Service, he had overseen construction of lighthouses, beacons, and buoys, things not strictly necessary, but useful for society all the same. He was crafting a rationale for the future exercise of numerous forms of federal power.

The Bank of the United States would enable the government to make good on four powers cited explicitly in the Constitution: the rights to collect taxes, borrow money, regulate trade among states, and support fleets and armies. Jefferson wanted to deprive the federal government of the power to create
any
corporations, which Hamilton thought could cripple American business in the future. At the time, few corporations existed, and those mostly to build turnpikes. The farseeing Hamilton perceived the immense utility of this business form and patiently explained to Washington how corporations, with limited liability, were superior to private partnerships. In the end, his bank argument was predicated not only on his interpretation of the Constitution but on his reading of history: “In all questions of this nature, the practice of mankind ought to have great weight against the theories of individuals.”
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After writing this magisterial defense, Hamilton packed it off to Washington before noon on Wednesday, February 23. The next day, Washington studied the opinion and, despite lingering doubts, was sufficiently impressed that he did not bother to send it to Jefferson. The day after that, he signed the bank bill.

Hamilton’s plea for the bank had a continuing life in American history, partly from the influence it exerted upon Chief Justice John Marshall. When Daniel Webster made oral arguments for the Second Bank of the United States in the landmark case of
McCulloch v. Maryland
in 1819, he quoted Hamilton’s 1791 memo to Washington on the necessary-and-proper clause. In words that distinctly echoed Hamilton’s, Marshall said that
necessary
didn’t mean
indispensable
so much as
appropriate.
Repeatedly in American history, Hamilton’s flexible definition of the word
necessary
was to free government to handle unforeseen emergencies. Henry Cabot Lodge later referred to the doctrine of implied powers enunciated by Hamilton as “the most formidable weapon in the armory of the Constitution…capable of conferring on the federal government powers of almost any extent.”
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Hamilton was not the master builder of the Constitution: the laurels surely go to James Madison. He was, however, its foremost interpreter, starting with
The Federalist
and continuing with his Treasury tenure, when he had to expound constitutional doctrines to accomplish his goals. He lived, in theory and practice, every syllable of the Constitution. For that reason, historian Clinton Rossiter insisted that Hamilton’s “works and words have been more consequential than those of any other American in shaping the Constitution under which we live.”
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Among many arcane subjects that Hamilton had to master was the minting of coins. So laggard was America in this regard that after Washington took office, his daily expenses were still quoted in British pounds, shillings, and pence, even though the Confederation Congress had adopted the dollar as the currency unit. Businessmen in different states continued to assign differing values to the foreign coins that still circulated freely. So many gold and silver coins were adulterated with base metals that many merchants hesitated to do business for fear of being shortchanged. Counterfeiting was also widespread, and when Hamilton became treasury secretary it was still a crime punishable by death in New York State.