After the conclusion of the war it was provided by the constitution of the United States, that no state should coin money, emit bills of credit, make any thing but gold and silver coin a tender in payment of debts, or pass any law impairing the obligation of contracts; and the power to coin money, and to regulate the value thereof, was vested exclusively in Congress.

This article of the constitution has given rise to considerable discussion, as it involves the question whether Congress has the power to constitute a national bank. The following summary of the arguments on both sides is taken from Mr. Justice Story's "Commentaries on the Constitution of the United States."

"One of the earliest and most important measures, which gave rise to a question of constitutional power, was the act chartering the Bank of the United States in 1791. That question has often since been discussed; and though the measure has been repeatedly sanctioned by Congress, by the executive, and by the judiciary, and has obtained the like favour in the great majority of the States, yet it is, up to this very hour, still debated upon constitutional grounds, as if it were still new and untried. It is impossible, at this time, to treat it as an open question, unless the constitution is for ever to remain an unsettled text, possessing no permanent attributes, and incapable of having any ascertained sense; varying with every change of doctrine and of party, and delivered over to interminable doubts.

"The reasoning, upon which the constitutionality of a national bank is denied, turns upon the strict interpretation of the clause, giving auxiliary powers necessary and proper to execute the other enumerated powers. It is to the following effect. The power to incorporate a bank is not among those enumerated in the constitution. In the next place, all the enumerated powers can be carried into execution without a bank. A bank therefore is not necessary, and consequently not authorized by this clause of the constitution. It is urged that a bank will give great facility or convenience to the collection of taxes. If this were true,

yet the constitution allows only the means which are necessary, and not merely those which are convenient for effecting the enumerated powers. If such a latitude of construction were allowed, as to consider convenience as justifying the use of such means, it would swallow up all the enumerated powers. Therefore, the constitution restrains Congress to those means, without which the power would be nugatory.

The

"The reasoning by which the constitutionality of the national bank is sustained is, in part, contained in the following summary. powers confided to the national government are unquestionably, so far as they exist, sovereign and supreme. It is not, and cannot be disputed, that the power of creating a corporation is one belonging to sovereignty. But so are all other legislative powers; for the original power of giving

the law on any subject whatever is a sovereign power. If the erecting of a corporation be an incident to sovereignty, and it is not prohibited, it must belong to the national government in relation to the objects entrusted to it. The true difference is this: where the authority of a government is general, it can create corporations in all cases; when it is confined to certain branches of legislation, it can create corporations only as to those cases. It cannot be denied, that implied powers may be delegated as well as express. It follows that a power to erect corporations may as well be implied, as any other thing, if it be an instrument, or means of carrying into execution any specified power.

“It is true, that among the enumerated powers we do not find that of establishing a bank or creating a corporation. But we do find there the great powers to lay and collect taxes, to borrow money, to regulate commerce, to declare and conduct war, and to raise and support navies. Now if a bank be a fit means to execute any or all of these powers, it is just as much implied as any other means. If it be 'necessary and proper' for any of them, how is it possible to deny the authority to create it for such purposes? There is no more propriety in giving this power in express terms, than in giving any other incidental power or means in express terms.

"That a national bank is an appropriate means to carry into effect some of the enumerated powers of the government, and that this can be best done by erecting it into a corporation, may be established by the most satisfactory reasoning. It has a relation, more or less direct, to the power of collecting taxes, to that of borrowing money, to that of regulating trade between states, and to those of raising and maintaining fleets and armies. And it may be added, that it has a most important bearing upon the regulation of currency between the States. It is an instrument, which has been applied by governments, in the administration of their fiscal and financial operations; and in the present times it can hardly require argument to prove, that it is a convenient, a useful, and an essential instrument in the fiscal operations of the United States."

The constitution of the United States was adopted in 1789, and shortly after the government was organized. On the 14th of December, 1790, the then secretary of the treasury, (General Hamilton) reported to Congress the plan of a bank. In February, 1791, the bill passed, and was presented to General Washington for his approval. In the progress of the bill it was opposed by Mr. Madison, (subsequently president) Mr. Giles, and others, on the ground that the States had not delegated the power to create such an institution, and therefore that it was unconstitutional. It was supported by Mr. Ames, Mr. Boudinot, &c., who were members of what was termed, in those days, the high-toned federal party.

The president, (General Washington) previous to signing the bill, consulted his cabinet ministers. Thomas Jefferson, secretary of state, and Edmund Randolph, attorney-general of the United States, were opposed to his signing it. Alexander Hamilton, secretary of the treasury, and General Knox, secretary of war, were in favour of it. At that time there was no secretary of the Navy. On the 25th of February, 1791, the president approved of the bill, and it became a law.

The following account of this bank is taken from the American almanack of 1835.

"The idea of this institution was conceived immediately after the adoption of the constitution, by Alexander Hamilton, the founder of the American system of finance, when secretary of the treasury; the plan of it was submitted to Congress Dec. 13, 1790; and it was incorporated by act of Congress, and approved Feb. 1791, in the first term of Washington's administration. Its continuance was limited by the charter to the 4th of March, 1811, at which time it expired, as Congress refused to renew the charter.

"The capital was limited to $10,000,000, divided into 25,000 shares, of $400 each, payable one-fourth in gold and silver, and three-fourths in public securities bearing an interest of six and three per cent. The corporation were restricted from contracting debts beyond the amount of their capital, and from holding property, exceeding the value of $15,000,000, or real estate more than necessary for the convenient transacting of their business. The affairs of the bank were to be managed by twenty-four directors, to be elected by the stockholders, without any interference on the part of the government in the election; but the government reserved the right of inspecting of the affairs of the bank; and for this purpose the secretary of the treasury was authorized to demand of the president and directors a statement of its concerns as often as he might see fit.

"The subscriptions were filled as soon as opened.

The government, conformably to the right reserved in the charter, subscribed for 5,000 shares, equal to $2,000,000; and the bank went into immediate operation. Its stock, a great portion of which was held n Europe, soon rose considerably above par; and the institution proved always convenient, on some occasions eminently useful to the government, and not less beneficial to the public at large. The dividends were made semi-annually; and, during the twenty years' continuance of the charter, the average annual dividend amounted to 83 per cent.

"The bank was not merely or principally a commercial establishment, but was essentially and mainly of a finanical and political character; and it was on this ground that its constitutionality was defended; the right of Congress to grant such a charter being maintained chiefly upon the strength of that clause of the constitution, which gives to it the power necessary for carrying into execution the powers enumerated, and expressly invested in that body. At the time of its establishment, it was opposed on the ground of its presumed unconstitutionality, by the political party, then in the minority, of which Mr. Jefferson was regarded as the leader; and before the termination of the charter, this party having come into power, the renewal of the charter was refused, and the institution. was dissolved."

In June, 1812, war was declared against England; and by August and Sept. 1814, all the banks south and west of New England, had suspended their specie payments. This suspension of cash payments in America is ascribed by Mr. Gallatin to the following causes :

"It has always been found difficult to ascertain with precision the causes which, in each special case, produce an extraordinary drain of specie, and compel a bank to suspend its payments.

Although it clearly appears, that very large and unforeseen advances to government were the immediate cause of the suspension of the payments of the Bank of England in the year 1797, it would seem, at this distance of time, to have been easy to prevent that occurrence. The bills of exchange from abroad on government, or any other floating debt, from the payment of which the bank was required to make those advances, might with facility have been converted into funded debt.

And when we find that in less than seven months after the suspension, the bank declared, by a solemn resolution, that it was enabled to issue specie, and could with safety resume its accustomed functions, if the political circumstances of the country did not render it inexpedient, it is hardly possible to doubt that the suspension, in its origin, as in its continuance, was a voluntary act on the part of the government. Opinions are however divided to this day on that subject; and some distinguished English writers ascribe that event to some unaccountable panic. There can be no doubt that there was a great and continued run on the bank for specie prior to the suspension; and what renders the transaction still more inexplicable is, that almost immediately, and during some years after the suspension had actually taken place, the bank notes, though no longer convertible into specie, were at par.

"The question is not free of difficulty as respects the similar event in the United States.

"The following reasons were assigned by the directors of the chartered banks of Philadelphia, in an address to their fellow-citizens, dated the 30th of August, 1813.

"From the moment when the rigorous blockade of the ports of the United States prevented the exportation of our produce, foreign supplies could be paid for in specie only; and as the importation of foreign goods in the eastern states has been very large, it has for many months past occasioned a continual drain from the banks. This drain has been much increased by a trade in British government bills of exchange, which has been extensively carried on, and has caused very large sums to be exported from the United States.

"To meet this great demand for specie, the course of trade did, for a considerable time, enable us to draw large supplies from the Southern States, but the unhappy situation of affairs there, having deprived us of that resource, and circumstances having occurred, which have in a considerable degree occasioned alarm and distrust; it became a serious consideration, whether the banks should continue their exertions to draw within their vaults the specie capital of the country, and thus facilitate the means of exporting it from the United States; or whether they should suspend the payment of specie, before their means were exhausted.'

"The great drain from the east, alluded to by the Philadelphia banks, is proved by the comparative view of the specie in the vaults of the banks of Massachusetts, in June 1814, immediately before the suspension of payments, and on the same days of the preceding and. succeeding years.

This amounted on June 1, 1811 to $1,709,000

1812

3,915,000

And the fact that a large amount of British government bills was sent to this country from Canada in the years 1812-1814, and sold at