Abridgement of the Debates of Congress, from 1789 to 1856 (4 of 16 vol.)

Sir, it may be asked, how did the Congress, whilst acting under the "Articles of Confederation," incorporate the Bank of North America, though their powers were no more extensive than those of the present Congress? We shall not lose by this investigation – they declared that "the exigencies of the United States rendered it indispensably necessary that such an act be immediately passed," and, at that period, the Board of War confessed they had not money sufficient to pay the expense of forwarding an express to the Commander-in-chief of the Army! Notwithstanding such urgent necessities on the part of the General Government, they were too conscious of the rights of the States to attempt a usurpation of authority, or to pretend to force this act without their sanction; accordingly, we find the resolution by which this bank was established followed by another, which recommended to the Legislature of each of the States the necessity to pass such laws as they judged requisite for giving the ordinance, by which the subscribers to the Bank of North America were incorporated, its full operation; every provision in the charter of this bank, to have full effect, was recommended to the Legislatures of the several States for their approbation. (See Journals of Congress for 1781, vol. 7th, pp. 257 and 258.)

It is a well-known and an important fact, that the subscribers to the Bank of North America did not rest satisfied of the authority of Congress to incorporate them; subsequently to the original act of incorporation, they accepted from the Legislature of Pennsylvania a charter by which their privileges were very much abridged.

Some maintain, the States having made it penal to pass counterfeits of the notes of the United States' Bank, is in proof of their recognizing the constitutionality of the institution. No one will pretend that these laws were intended other than to guard the people against fraud. These statutes were enacted without any connection with or reference to the principle upon which the original act was founded. It is but too well known, notwithstanding these salutary provisions, that counterfeit bank notes of every denomination are in daily circulation. I will ask, what would be the case if such laws had not been passed by the States? Sir, if it requires all our care to prevent an inundation from such bank paper as is acknowledged to be genuine, for Heaven's sake do not risk the security of the people, by an indirect sanction of such as is known to be spurious!

Friday, January 18

A motion was made by Mr. Fisk, that the House do now adjourn; and the question being taken thereon, it was determined in the negative – yeas 6, nays 59.

Bank of the United States

The House again resolved itself into a Committee of the Whole on the bill to renew the charter of the Bank of the United States.

Mr. Burwell's motion for striking out the first section being still under consideration.

Mr. P. B. Porter. – Mr. Chairman: As this bank has excited so extraordinary an interest in every part of the United States, and particularly in the State which I have the honor to represent; as I am apprehensive, from what took place yesterday, that I shall be found, on this question, in opposition to a majority of my colleagues; and, (what will always be an imperative motive with me,) as I think this bill aims a deadly blow at some of the best principles of the constitution, I feel it my duty to state to the House the grounds on which I shall be constrained to vote for striking out the section now under consideration.

I acknowledge that I had not, until lately, paid any particular attention to the question of the constitutionality of this institution. I stand, therefore, in this respect, on safer ground than the respectable member from North Carolina (Mr. Macon,) for I have no reason to suspect myself of any long-rooted prejudices on the question. The Bank of the United States was established at a time when I was not in the habit of troubling myself with such questions. I had been accustomed to think of it as an institution, the constitutionality of which was conceded by common consent. But, sir, when the question was again stirred, I felt it my duty to give it a thorough investigation before I should sanction it by my vote. I have given it, if not a thorough, at least a candid and impartial examination; and the result has been, a full conviction that we have no right to incorporate a bank upon the principles of the bill on the table, or rather, upon the principles of the original charter, which this bill proposes to renew. The ground of my objection is, that it assumes the exercise of legislative powers which belong exclusively to the State Governments.

I shall not touch the question of the expediency of this bank, much less the expediency of banking generally. If I were competent, which I confess I am not, to the task, I should think it a very unprofitable one, to follow the gentleman through all the mazes of the banking system – a system, sir, about the various and important operations and effects of which on civil society, aside from a few obvious truths which it furnishes, I have found that those gentlemen who have professed to understand them best, have differed most. As I propose to confine myself to the constitutional question solely, I hope I shall be allowed to take a little broader range on this point, than has been taken by the gentlemen who have preceded me.

I am aware how ungracious constitutional objections to the powers of this House are with those, and there are many such, who believe that the powers of the Federal Government are, at best, too contracted; and who would be glad to see all the State rights merged and sunk into a consolidated government. Whatever may be my speculative opinions on this subject, I can never be influenced, by motives of expediency, to swerve from my allegiance to the constitution. This sentiment is indelibly fixed on my mind, and I trust it is a common one to the members of this committee. That, in adhering strictly to the obligation we have taken to support the Constitution of the United States, we not only perform a sacred duty to ourselves, but we render a better service to the real and permanent interests of our country than we could possibly render by a departure from that obligation; even though that departure were to avert so serious a calamity as a general bankruptcy – a calamity which, in order to alarm the timid, has been held out as the inevitable consequence of a refusal to renew this charter.

I should be surprised at the general acquiescence which seems to have been yielded to the constitutionality of this institution, did I not believe that others had been as superficial in their examination of the subject as I had myself. When objections are made to the constitutionality of the law, the people, in the cursory views which they are accustomed to take of such objects, are apt to adopt, as the tests of its constitutionality, the powers of the State and Federal Governments collectively; and if they find nothing in the law offensive to the principles of civil liberty, nothing uncongenial with the spirit of a Republican Government, they rest satisfied, and do not trouble themselves with nice distinctions between the powers peculiar to the one or the other of these Governments. Such reasoning would, however, ill become the sagacity of this House.

One of the most serious dangers with which our Government is threatened, and it is a danger growing out of the very nature and structure of the Government itself, consists in its tendency to produce collisions between State and Federal authorities. The Federal Government, as was observed by my learned colleague, (Mr. Mitchill,) is imperium in imperio, a government within a government; and the misfortune is, that there exists no friendly third power to decide the controversies which may arise between these two great, independent, and, in many respects, rival authorities. The public peace must be kept, if kept at all, by the conciliatory dispositions of the parties themselves. As then we have a common interest in the preservation of both these Governments – as we are as well the subjects of the imperio as of the imperium, we ought to act with great circumspection and delicacy in the assumption of powers which do not clearly belong to us. It is better to forego the exercise of powers to which we are entitled, if the exercise of them is not very important, rather than hazard the assumption of doubtful ones, the fatal consequences of which my honorable friend from Virginia (Mr. Burwell) has so justly deprecated.

The great line of demarcation between the powers of the State and Federal Governments is well understood. The powers of the State Governments extend to the regulation of all their internal concerns: those of the Federal Government to the management of all our external relations – external as regards the individual States, as well as the States in their collective capacity. The general ideas upon which our Republic is founded, are these: That small territories are better adapted to the successful administration of justice than large ones. In a Republic, where the people are the sovereigns and source of power, it is important that, in order to enable them to execute this power discreetly, they should possess correct information in relation to the character and conduct of their rulers, and in relation also to the character of the measures which they pursue, or ought to pursue; and this information is better attained in a small than in a large territory. The individual States have therefore reserved to themselves the exclusive right of regulating all their internal, and, as I may say, municipal concerns, in relation both to person and property. But a single State may be inadequate to its own protection against foreign violence; it may also be unable to enforce the observance of proper rules and regulations for carrying on its foreign trade and intercourse. The Confederacy of the States is therefore formed for the purpose of attaining these two objects, namely, the regulation and protection of the trade and intercourse of the States with each other and foreign nations, and their security against foreign invasion. It has some other objects in view of minor consequence, and immediately connected with these principal ones. The Constitution of the United States is the basis of this confederacy; and it is only necessary to read the constitution to perceive that it is nothing more than a delegation of specific powers for these specific purposes, and that the general sovereignty of the States over their respective territories is expressly retained by the States.

But, sir, independent of these specific powers and duties of the Federal Government, it has another and distinct set of powers and duties to perform and execute. The national domain, as it has been called, embracing the lands acquired by the Revolutionary conflict; the lands since purchased of foreign nations; and the lands ceded by the several States to the General Government, belong to the United States in their federate capacity; and no individual State, as such, has any claim to or jurisdiction over them. As to these lands the powers of the United States are sovereign, independent, and complete: and the Congress of the United States is the only legitimate authority for the exercise of this sovereignty. The powers of Congress, then, in relation to these territories, include the powers of both the Federal and State governments, in relation to the States. I have adverted to this branch of the powers of the Federal Government as a means of dispelling the obscurity which has been thrown over the constitutional question, to which I shall soon come, by confounding the powers of Congress over the States, with their powers over the territories. Arguments, to which I shall have occasion to advert in the course of my observations, have been used to justify the exercise of particular powers within the limits of the States, from our acknowledged right to and practical exercise of similar powers within the Territories.

In discussing constitutional questions, then, we lay down these axioms: – That in relation to the territories, the powers of Congress are supreme and exclusive; that in relation to the States, they are specifically defined and limited by the constitution – and that we have no right to exercise, within the limits of a State, any power as resulting from the general rights of sovereignty; because that sovereignty belongs to the States and to the people, and not to the Federal Government. To show that these two last positions are correct, I will read the tenth article in the amendment of the constitution: "The powers not delegated to the United States by the constitution, nor prohibited by it to the States, are reserved to the States respectively, or the people."

As, then, the incorporation of this bank involves the exercise of legislative powers within the jurisdiction of the States, in relation to the rights of property between the citizens of those States; and as no power to incorporate a bank, eo nomine, is to be found in the constitution, it would seem sufficient for us to rest the argument here, by a mere denial of the power, and to call on the advocates of the bank to show its constitutionality. An attempt to prove this constitutionality has been made – not, however, sir, by arguments advanced by gentlemen on the other side of the House in their places, (for they have, so far, observed, and I understand that they will continue to observe, a profound silence on this question,) but by arguments which have been gratuitously introduced, by the agent of the bank. I allude to the pamphlet which has within a few days past been printed and distributed among the members, containing the celebrated argument of General Hamilton, "on the constitutionality of a National Bank." As that pamphlet is de facto, if not de jure, before the committee, I will, if the committee will indulge me, attempt to examine some of the principal arguments contained in it, and I will also notice some additional ones, advanced yesterday by my honorable friend and colleague on my left, (Mr. Fisk.) In the course of the observations which I have to submit, I shall, without doubt, repeat arguments and remarks made by the gentlemen who have preceded me, and others which are familiar to the members of the committee. My excuse must rest in the difficulty of taking a connected view of the subject, without such repetitions. If I shall be so fortunate as to throw a single new ray of light on this important question, I shall feel amply remunerated for my trouble, and I shall think the time of the committee not altogether misspent.

The first argument in this pamphlet is founded on the sovereignty of the powers of Congress. The Federal Government is said to be sovereign as to all the objects for which that Government was instituted. A sovereign power includes, by force of the term, a right to all the means applicable to the attainment of the end for which that power is given; and therefore Congress may, in virtue of their sovereign power, create incorporations for attaining the ends or objects of those powers.

This argument is founded on what the logicians call petitio principii, or begging the question. The proposition, that the Government is sovereign, is assumed, to prove that it possesses the attributes of sovereignty: or, in other words, the fact of sovereignty is assumed, to prove that sovereignty. If the position that the powers of this Government are sovereign as to all the objects of them, be proved, I will concede the consequence, to wit: that we have a right to establish corporations to attain these objects – but I deny the fact of sovereignty. The acts of Congress, it is said, are declared by the constitution to be the supreme law of the land: and the power which can make the supreme law of the land, is necessarily a sovereign power. But I deny that this is a correct definition, or exposition of sovereignty. It is not the high nature of an act, nor the authority of the act, that stamps the character of sovereignty on him who performs it. The sheriff of a county who puts a man to death, under the sentence of the law, executes an act of as high import and authority as human power can execute; and yet the sheriff of a county is not therefore a sovereign. His authority is a mere delegated authority – his act is a mere ministerial, mechanical act. The idea of sovereignty imports the exercise of discretion – of judgment – of will. It is of the very essence of sovereign power, that you may execute that power, or not execute it – that you may execute it when you will, and how you will. A sovereign power, as to any object, includes a right to any means, and all the means applicable to the attainment of the object. But, sir, do Congress possess sovereign powers, or, what is the same thing, discretionary means, as to the attainment of the objects of this Government? No, sir. The constitution is not a general authority to Congress to attain the objects for which the Government was established; but it is an enumeration of the particular powers, or means, by which, and by which only, certain objects are to be accomplished. If the powers of Congress were sovereign, they would of necessity comprehend all the means applicable to the attainment of their objects; but inasmuch as they are specific and circumscribed, that very circumstance proves that they are not sovereign. The people of the United States are the true sovereigns of this country. From them all power emanates, and on their will all the authority of this Government depends. The powers of the Federal Government are mere delegated chartered authorities; and in the exercise of them we are tied down to the letter of the constitution. We have, to be sure, a certain latitude of discretion allowed us, within the letter and pale of the constitution; and so far we may be said to possess a sort of limited qualified sovereignty. But the constitution is the standard by which to measure the quantum and extent of our sovereignty. And our sovereignty, which is the result of the powers given in the constitution, is not the standard by which to measure the constitution. The constitution is the true bed of Procrustes – and our sovereignty, however unwillingly we may yield it, must be the victim.

Another argument, which is rather an argument to the favor than to the right of this bank, is, that it is an innocent institution; that, although its erection involves the exercise of legislative powers within the States, it does not abridge or affect the rights of the citizens, as secured to them by the laws of those States. A corporation, it is said, is a fiction of the law, a mere political transformation of a number of individuals from their natural into an artificial character, for the purpose of enabling them to do business to better advantage, and on a more extended scale; but, that when this political association, this legal entity, is once formed, it becomes subject to the laws of the State in which it happens to be placed.

I know, sir, that there is nothing formidable in the abstract idea of a corporation. It is a mere phantom of the imagination, invisible, intangible, and, of course, innocent. But, sir, when the legal effects of this incorporation are to invest the individuals whom it associates with privileges and immunities to which they were not before entitled; when this legal fiction is interposed to shield certain individuals from the liabilities to which they would be subject as ordinary citizens, it then becomes a matter of important and serious consequence. What are some of the legal effects of this incorporation?

One of its most obvious and distinguished characteristics is, that it exempts the private property and persons of the stockholders from all liability for the payment of the debts of the company. By the laws of every State in the Union, every man is, I believe, liable for the payment of his debts, to the full amount of his private fortune; and, in case that fortune prove insufficient, his personal liberty is at the disposal of his creditor; at least to a certain extent. Is not, then, the exemption from these liabilities an important immunity? Is it not an exclusive privilege secured to the stockholders of this bank? Assuredly it is. I know it has been said that a number of individuals may, by a private association, secure to themselves all the advantages of an incorporated company; that, by forming a common fund or stock upon which to do business, and issuing notes chargeable upon that fund, they may exonerate their persons and private property from all liability for the payment of the debts contracted in that business. I am no lawyer, sir; but if the law be what it is said to be, and what I believe it to be, summa ratio, then I pronounce this doctrine not to be law; for nothing can be more preposterous in principle than to say, that a man may, by his own act, avoid the force of an obligation which the law has made universal and unqualified. If a man owes a debt, acknowledges he owes it, and has received a consideration for it, the law has prescribed the nature and extent of his liability to pay it; and it is not for him to say that it shall only be paid out of a certain fund, or particular part of his property, and no other. When men contract a debt jointly, the legal obligation to pay it extends as well to the persons and separate property of the individual partners, as to their joint property.

Another feature of this incorporation is, that it authorizes the stockholders to take usurious interest for their money. By the provisions of the law, the bank may issue notes and make discounts to double the amount of their capital stock; and, in addition to that, to the amount of any moneys which may happen to be deposited in their vaults for safe-keeping; and this, too, independent of the debts created by these deposits. The bank, then, may, and in fact, in many instances, does draw an interest on three or four times its capital. Every State in the Union has laws regulating the rate of interest, and in most of the States this rate is fixed at six per cent. a year. By these laws it is made penal for a man to receive more than six per cent. interest for the use of any sum of money which, by a loan, he puts at hazard, and the use of which he deprives himself of. Now, sir, this bank is permitted, contrary to those laws, to draw an interest on twenty or thirty millions of dollars, when, in truth, the whole extent of its responsibility, the whole sum which it puts at hazard, and the use of which it foregoes, is only its original stock of ten millions. In answer to this, it will be said that an individual may, by issuing notes to an amount greater than his property, legally receive an interest on a capital which he does not possess. But it must be recollected, in case of the individual, that, although he may not at the particular time possess a property adequate to the payment of his debts, yet that all the property which he may subsequently acquire, will be liable for the payment of those debts; and what is more, sir, his personal liberty is always put in jeopardy. In this point of view, the liability and the hazard of the individual may fairly be said to be co-extensive with the whole amount of the capital on which he draws an interest; and which is often the case with the bank.

This bank incorporation possesses other qualities at war with the laws of the several States; one of which is, that it authorizes stockholders, who may be foreigners, to hold real estate. But, sir, I will not detain the committee any longer on this part of the argument, for this institution cannot be said to be innocent, as regards the rights of the States, when its effects on the rights of property are to exonerate the stockholders from some of the most important responsibilities which the laws of the several States have provided for the payment of debts; and when it authorizes the taking of usurious interest. I lay it down, then, as a position which cannot be controverted, that the granting of this charter is not only an interference with the municipal regulations of the several States in relation to the rights of property; but that it is an infraction of the rights of individuals as secured by those regulations.

But it is contended, that a right to incorporate a Bank of the United States is delegated to Congress by the constitution: and five or six different provisions of the constitution are referred to as giving this right. It is said that it is implied in the power to lay and collect taxes, in the power to borrow money, in the power to regulate trade and intercourse between the several States, in the power to provide for the general welfare, and in the power to make all needful rules and regulations respecting the territorial and other property of the United States. The very circumstance of referring this right to many different heads of authority is, in itself, conclusive evidence that it has no very direct relation to any of them. For it can scarcely be imagined, that the single act of incorporating a bank can be at the same time any thing like a direct execution of so many and such distinct and independent powers. But I will examine these provisions separately.