Four documents on the implied powers argument the founders could not resolve. Jefferson's opinion against. Hamilton's counter. Maclay's diary on what the Senate was doing. The Senate Journal recording the vote in a chamber that left no record of what was said.
Alexander Hamilton submitted his Report on a National Bank to Congress on December 13, 1790. He proposed a bank chartered by the federal government, capitalized at ten million dollars, owned four-fifths by private investors and one-fifth by the United States government, authorized to issue banknotes and make loans. The bank would serve as the government's fiscal agent, stabilize the currency, and mobilize capital for economic development.
The proposal immediately raised a constitutional question that the framers had not resolved: did Congress have the authority to charter a corporation? The Constitution listed specific powers of Congress. It said nothing about incorporating a bank. Hamilton argued that the power was implied. His opponents argued that if the power was not enumerated, Congress did not have it.
The Senate took up the bank bill in January 1791 in closed session. No record of the Senate floor debate was kept. What is known of the Senate deliberations comes from two sources: the Senate Journal, which records the vote, and Maclay's diary, which documents his opposition.
I have been down ever since the Bank bill came in. Much reading and consultation on this business. In short, I consider the Bank as a machine for the purpose of corrupting the legislature, and have said so in the Senate.
Washington asked his cabinet for written opinions on the bank's constitutionality before deciding whether to sign. Jefferson submitted his opinion on February 15, 1791. He argued that the Necessary and Proper Clause authorized only those means that were strictly necessary, truly indispensable, to the execution of an enumerated power. Chartering a bank was not strictly necessary to collect taxes, borrow money, or regulate commerce. It was merely convenient. Jefferson concluded the bill was unconstitutional.
Hamilton submitted his counter-opinion on February 23, 1791. He argued for a broad construction of the Necessary and Proper Clause: if the end is legitimate and the means are not prohibited, Congress may use them. The power to charter a corporation was implied by the enumerated powers to collect taxes, borrow money, and regulate commerce. Hamilton's argument prevailed with Washington. The First Bank of the United States was signed into law on February 25, 1791, chartered for twenty years.
To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.
The First Bank of the United States operated from 1791 to 1811, when Congress refused to renew its charter. The constitutional question Hamilton and Jefferson had argued in 1791 was revisited when the Second Bank was chartered in 1816. When Maryland taxed the Second Bank and the bank refused to pay, the case went to the Supreme Court. In McCulloch v. Maryland (1819), Chief Justice John Marshall adopted Hamilton's broad construction argument nearly verbatim. The power to charter a corporation is implied in the Constitution. Maryland could not tax the bank.
The argument Hamilton made in February 1791 became the constitutional law of the United States in 1819. Jefferson's strict construction argument did not prevail in the courts. The debate between them is one of the most consequential constitutional exchanges in American history. Both opinions are at Founders Online.