Despite pro-Constitution writers’ arguments that the new government’s powers were limited, those limits were tested very quickly. George Washington, the first President under the new Constitution, inherited a financial disaster of debt. His treasury secretary, Alexander Hamilton, proposed a central banking system–the Bank of the United States–to manage the national debt and issue currency. Nowhere did the new Constitution define “creating a bank” as one of the federal governments powers.
The argument over the bank’s constitutionality was one of the first issues which divided leaders into what would become the US’s first political parties–Republicans (led by Thomas Jefferson) and Federalists (led by Alexander Hamilton). Below are their arguments on whether or not the proposed Bank was within the bounds of the Constitution.
Arguments aside, Congress would establish the bank for a 20 year period in 1791. A second B.U.S. would be chartered (again for 20 years) in 1816. It, also, would be the focus of political debate.
Questions to consider:
- Using specific examples from the text, briefly summarize Jefferson’s reasons why the Bank of the US is not constitutional.
- Using specific examples from the text, briefly summarize Hamilton’s reasons why the Bank of the US is within the bounds of the government’s powers under the Constitution.
- The word “necessary” seems like a simple one. How do Jefferson and Hamilton disagree on its meaning?