One of the core problems that Hamilton realized
having lived through the Revolutionary War
with George Washington on the battlefield
was the inability of the Continental Congress
to raise the requisite amount of funds to
help feed and fund the army in battle, and
he never wanted to go back to that.
And so, Washington as well realized that and
so they wanted a central government that will
at least be able to have taxing power and
the power to do those very things.
The Constitutional Convention debated whether
or not there should be a national bank, a
bank run by the government, and they rejected
the idea.
But Hamilton as treasury secretary under George
Washington, uh, wanted to revive the idea
and his nemesis Jefferson thought that was
a horrible idea because he thought it would
create too much centralized governmental power.
Alexander Hamilton becomes secretary of the
treasury on September 11th, 1789 with a strong
vision of where the nation should go, and
he produced several monumental state papers
of which the Bank Report is just one of four.
He basically made the case that, uh, it would
be convenient, uh, to have a national bank
as a depository of tax revenues, eliminate
the middleman of a private bank in doing that,
and he wanted the, uh, the government to be
able to make selective loans.
He spends a lot of time explaining how the
great European powers all have access to a
quasi-national or a state bank for operations
that enhance the government.
He points out many advantages that banks have
for governments, and also for regulating trade
and commerce for private individuals.
And he spends a lot of time also getting ready,
'cause he anticipates that there's going to
be a lot of blow back and a lot of anti-bank
forces.
And so he spends a lot of time in the Bank
Report trying to address these.
The Jeffersonians warned that it could be
corrupting of politics because there would
be the incentive of the government to use
this bank as a way of subsidizing politically
favored businesses and other special interest
groups, and his followers warned that a bank
that could print paper money was a danger
and it could create not only inflation, but
also could create, uh, what we today call
boom and bust cycles in the economy.
It makes us think we can get something for
nothing, but of course, the chickens always
come home to roost in the form of price inflation,
economic destabilization, recessions, depressions,
et cetera.
Hamilton knew that a national bank would be
the heartbeat of a free enterprise capitalist
system.
It would be where savers of capital and users
of capital would come together.
It would be of primary importance to the government.
It would be a ready source of loans.
It would be a place where they could deposit
their money.
And imperatively, what he really cared about
was the credit of the United States.
The Bank Bill is gonna pass fairly quickly
in the Senate, but it's gonna meet resistance
in the House of Representatives.
But it will eventually be passed there by
a vote of 39 to 20 and then submitted to President
George Washington who's going to have to decide
whether or not to sign this bill to create
a national bank.
He turns to two cabinet members, Secretary
of State Thomas Jefferson and Attorney General
Edmund Randolph to offer opinions, and they
both say that the bank is unconstitutional.
Jefferson, uh, made the obvious case that
it was not a part of the delegated powers
in the Constitution in Article 1, Section
8, and therefore it's blatantly unconstitutional.
If Jefferson and Randolph argued that it was
unconstitutional because it was not explicitly
written or allowed by the US Constitution,
Hamilton turned that argument on its head.
This is Article 1, Section 8 of the US Constitution,
which has enumerated many powers to the government.
The power to raise an army and a navy, the
power to declare war.
But at the end is something known as the Sweeping
Clause, and that is that the government can
create whatever is necessary and proper to
achieve its ends.
He said, "Because of the necessary and proper
clause, uh, there is an implied power to have
a national bank," and once you get on that
road, then, uh, the Constitution is no longer,
uh, a limit on any governmental power.
Hamilton with his wife assisting stays up
all night to copy out his opinion on the constitutionality
of a bank and is submitted the next morning
to George Washington, who then ponders it
and decides to enact this legislation.
So at the heart of it is really the great
debate over centralized governmental power
versus decentralized power.
Often the left looks at Hamilton and say,
"He's too pro-business."
And the right will look at Hamilton and be
against him because they say he's too big
government.
If any of the founding fathers came back and
stood at the corner of Wall and Broad Street
in New York and looked at the economic miracle
that America has turned into, it would be
Alexander Hamilton who would understand it
better than all of them.
