In 1790, Alexander Hamilton, the Secretary of the Treasury proposed the creation of a national bank. This bank would have branches throughout the United States, which could establish credit, accept deposits, and loan money to the new national government.
The power to incorporate a bank cannot be found in the first 16 clauses of Article I, Section 8. The bill to establish the bank does not directly collect taxes. So that power is out. Nor does the bill borrow money or regulate commerce. All of the other express powers are likewise out. Only Clause #17, the Necessary and Proper Clause, could possibly support the incorporation of the bank.
In a speech to Congress, Representative James Madison argued that, because the power to incorporate a bank was not incident to any of the enumerated powers, it was a great power that needed to be listed among the list of powers that were enumerated in the text.
Thomas Jefferson, the Secretary of State, took an even more stringent view of “necessary” than did Madison.
Hamilton defined “necessary” as “needful, requisite, incidental, useful, or conducive.” In other words, if it is “useful” for Congress to charter a bank in order to collect taxes or borrow money, then Congress has the power to do so.
President Washington either agreed with Hamilton’s opinion on constitutionality, or he agreed with Jefferson that, because the decision was a close one, he should defer to Congress because in 1791, he signed the bill into law chartering the first bank of the United States.
In 1818, the Maryland General Assembly imposed a tax on the branch of the Bank of the United States in Baltimore.
The debate two decades earlier between Jefferson and Madison on one side, and Hamilton on the other, would now be resolved by the Supreme Court in McCulloch v. Maryland.
Hamilton defined Necessary as “Needful,” “Requisite,” “Useful,” and “Conducive.” Chief Justice Marshall used the same four adjectives, but added the word “Convenient” at several junctures in his opinion--a term that Hamilton did not use as a synonym for “necessary.”
“Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”
McCulloch v. Maryland expanded the scope of Congress's implied powers under the Necessary and Proper Clause.
In 1832, President Andrew Jackson vetoed the renewal of the national bank because, unlike Marshall, Jackson found the bank was not “necessary” to the execution of Congress’s enumerated powers, and was therefore unconstitutional.
Following the ratification of the Constitution, our young Republic faced serious financial problems. Alexander Hamilton, the Secretary of the Treasury, proposed a solution to address these problems: The federal government should Charter a national bank. This institution would have branches throughout the United States that could establish credit, accept deposits, and lend money to the new national government.
Article I, Section 1 of the Constitution explains that “All legislative Powers herein granted shall be vested in a Congress of the United States.” In other words, if a legislative power is not enumerated somewhere in the Constitution, then Congress does not have that power.
Most of Congress’s enumerated powers can be found in Article I, Section 8, which lists eighteen separate clauses. The power to incorporate a bank cannot be found in the first seventeen clauses of Article I, Section 8. Hamilton’s proposal does not require the collection of direct taxes. So that power is out. Nor does the bill borrow money or regulate commerce. All of the other express powers are likewise out. Only Clause 18, the Necessary and Proper Clause, could possibly empower Congress to incorporate the bank.