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lature did not believe a bank to be unconstitutional, or that it had formed no opinion on that point. This inference derives additional strength from the fact, that, although the two late senators from this state, as well as the present senators, voted for a national bank, the legislature, which must have been well apprized that such a measure was in contemplation, did not again interpose, either to protest against the measure itself, or to censure the conduct of those senators. From this silence on the part of a body which has ever fixed a watchful eye upon the proceedings of the general government, he had a right to believe, that the legislature of Kentucky saw, without dissatisfaction, the proposal to establish a national bank; and that its opposition to the former one was upon grounds of expediency, applicable to that corporation alone, or no longer existing. But when, at the last session, the question came up as to the establishment of a national bank, being a member of the house of representatives, the point of inquiry with him, was, not so much what was the opinion of the legislature, although undoubtedly the opinion of a body so respectable would have great weight with him under any circumstances, as, what were the sentiments of his immediate constituents. These he believed to be in favor of such an institution, from the following circumstances. In the first place, his predecessor (Mr. Hawkins) voted for a national bank, without the slightest murmur of discontent. Secondly, during the last fall, when he was in his district, he conversed freely with many of his constituents upon that subject, then the most common topic of conversation, and all, without a single exception, as far as he recollected, agreed that it was a desirable if not the only efficient remedy for the alarming evils in the currency of the country. And, lastly, during the session, he received many letters from his constituents, prior to the passage of the bill, all of which concurred, he believed without a solitary exception, in advising the measure. So far then from being instructed by his district to oppose the bank, he had what was perhaps tantamount to an instruction to support it - the acquiescence of his constituents in the vote of their former representative, and the communications, oral and written, of the opinions of many of them in favor of a bank. The next consideration which induced him
the renewal of the old charter, was, that he believed the corporation had, during a portion of the period of its existence, abused its powers, and had sought to subserve the views of a political party. İnstances of its oppression, for that purpose, were asserted to have occurred at Philadelphia and at Charleston; and, although denied in congress by the friends of the institution, during the discussions on the application for the renewal of the charter, they were, in his judgment, satisfactorily made out. This oppression, indeed, was admitted in the house of representatives, in the debate on the present bank, by a distinguished member of that party which had
so warmly espoused the renewal of the old charter. It may be said, what security is there, that the new bank will not imitate this example of oppression ? He answered, the fate of the old bank, warning all similar institutions to shun politics, with which they ought not 10 have any concern; the existence of abundant competition, arising from the great multiplication of banks; and the precautions which are to be found in the details of the present bill.
A third consideration upon which he acted in 1811, was, that as the power to create a corporation, such as was proposed to be continued, was not specifically granted in the constitution, and did not then appear to him to be necessary to carry into effect any of the powers which were specifically granted, congress was not authorized to continue the bank. The constitution, he said, contained powers delegated and prohibitory, powers expressed and constructive. It vesis in congress all powers necessary to give effect to the enumerated powers all that may be necessary to put into motion and activity the machine of government which it constructs. The powers that may be so necessary are deducible by construction. They are not defined in the constitution. They are, from their nature, indefinable. When the question is in relation to one of these powers, the point of inquiry should be, is its exertion necessary to carry into effect any of the enumerated powers and objects of the general government ? With regard to the degree of necessity, various rules have been, at different times, laid down; but, perhaps, at last, there is no other than a sound and honest judgment exercised, under the checks and control which belong to the constitution and to the people.
The constructive powers being auxiliary to the specifically granted powers, and depending for their sanction and existence upon a necessity to give effect to the latter, which necessity is to be sought for and ascertained by a sound and honest discretion, it is manifest that this necessity inay not be perceived, at one time, under one state of things, when it is perceived at another time, under a different state of things. The constitution, it is true, never changes; it is always the same; but the force of circumstances and the lights of experience may evolve to the fallible persons charged with its administration, the fitness and necessity of a particular exercise of constructive power to-day, which they did not see at a former period.
Mr. Clay proceeded to remark, that when the application was made to renew the old charter of the bank of the United States, such an institution did not appear to him to be so necessary to the fulfilment of any of the objects specifically enumerated in the constitution, as to justify congress in assuming, by construction, a power to establish it. It was supported mainly upon the ground that it was indispensable to the treasury operations. But the local institutions in the several states were at that time in prosperous existence, confided in by the community, having a confidence in each other, and maintaining an intercourse and connection the most intimate. Many of them were actually employed by the treasury to aid that department, in a part of its fiscal arrangements; and they appeared to him to be fully capable of affording to it all the facility that it ought to desire in all of them. They superseded, in his judgment, the necessity of a national institution. But how stood the case in 1816, when he was called upon again to examine the power of the general government to incorporate a national bank? A total change of circumstances was presented; events of the utmost magnitude had intervened.
A general suspension of specie payments had taken place, and this had led to a train of consequences of the most alarming nature. He beheld, dispersed over the immense extent of the United States, about three hundred banking institutions, enjoying in different degrees the confidence of the public, shaken as to them all, under no direct control of the general government, and subject to no actual responsibility to the state authorities. These institutions were emitting the actual currency of the United States; a currency consisting of a paper, on which they neither paid interest nor principal, whilst it was exchanged for the paper of the community, on which both were paid. He saw these institutions in fact exercising what had been considered, at all times and in all countries, one of the highest attributes of sovereignty, the regulation of the current medium of the country. They were no longer competent to assist the treasury in either of the great operations of collection, deposit, or distribution, of the public revenues.
In fact, the paper which they emitted, and which the treasury, from the force of events, found itself constrained to receive, was constantly obstructing the operations of that department. For it would accumulate where it was not wanted, and could not be used where it was wanted for the purposes of government, without a ruinous and arbitrary brokerage. Every man who paid or received from the government, paid or received as much less than he ought to have done as was the difference between the medium in which the payment was effected and specie. Taxes were no longer uniform. In New England, where specie payments have not been suspended, the people were called upon to pay larger contributions than where they were suspended. In Kentucky as much more was paid by the people in their taxes than was paid, for example, in the state of Ohio, as Kentucky paper was worth more than Ohio paper.
It appeared to Mr. Clay, that, in this condition of things, the general government could depend no longer upon these local institutions, multiplied and multiplying daily; coming into existence by the breath of eighteen state sovereignties, some of which by a single act of volition had created twenty or thirty at a time. Even if the resumption of specie payments could have been
anticipated, the general government remaining passive, it did not seem to him that the general government ought longer to depend upon these local institutions exclusively for aid in its operations. But he did not believe it could be justly so anticipated. It was not the interest of all of them that the renewal of specie payments should take place, and yet, without concert between all or most of them it could not be effected. With regard to those disposed to return to a regular state of things, great difficulties might arise, as to the time of its commencement.
Considering, then, that the state of the currency was such that no thinking man could contemplate it without the most serious alarm; that it threatened general distress, if it did not ultimately lead to convulsion and subversion of the government; it appeared to him to be the duty of congress to apply a remedy, if a remedy could be devised. A national bank, with other auxiliary measures, was proposed as that remedy. Mr. Clay said, he determined to examine the question with as little prejudice as possible arising from his former opinion. He knew that the safest course to him, if he pursued a cold, calculating prudence, was to adhere to that opinion, right or wrong. He was perfectly aware, that if he changed, or seemed to change it, he should expose himself to some
But, looking at the subject with the light shed upon it by events happening since the commencement of the war, he could no longer doubt. A bank appeared to him not only necessary, but indispensably necessary, in connection with another measure, to remedy the evils of which all were but too sensible. He preferred to the suggestions of the pride of consistency, the evident interests of the community, and determined to throw himself upon their candor and justice. That which appeared to him in 1811, under the state of things then existing, not to be necessary to the general government, seemed now to be necessary, under the present state of things. Had he then foreseen wh now exists, and no objection had lain against the renewal of the charter other than that derived from the constitution, he should have voted for the renewal.
Other provisions of the constitution, but little noticed, if noticed at all, on the discussions in congress in 1811, would seem to urge that body to exert all its powers to restore to a sound state the money of the country. That instrument confers upon congress the power to coin money, and to regulate the value of foreign coins; and the states are prohibited to coin money, to emit bills of credit, or to make any thing but gold and silver coin a tender in payment of debts. The plain inference is, that the subject of the general currency was intended to be submitted exclusively to the general government. In point of fact, however, the regulation of the general currency is in the hands of the state governments, or, which is the same thing, of the banks created by them. Their paper has every quality of money, except that of being made a
tender, and even this is imparted to it by some states, in the law by which a creditor must receive it, or submit to a ruinous suspension of the payment of his debt. It was incumbent upon congress to recover the control which it had lost over the general currency: The remedy called for, was one of caution and moderation, but of firmness. Whether a remedy directly acting upon the banks and their paper thrown into circulation, was in the power of the general government or not, neither congress nor the community were prepared for the application of such a remedy, An indirect remedy, of a milder character, seemed to be furnished by a national bank. Going into operation, with the powerful aid of the treasury of the United States, he believed it would be highly instrumental in the renewal of specie payments. Coupled with the other measure adopted by congress for that object, he believed the remedy effectual. The local banks must follow the example which the national bank would set them, of redeeming their notes by the payment of specie, or their notes will be discredited and put down.
If the constitution, then, warranted the establishment of a bank, other considerations, besides those already mentioned, strongly urged it. The want of a general medium is every where felt. Exchange varies continually, not only between different parts of the union, but between different parts of the same city. the paper of a national bank were not redeemed in specie, it would be much better than the current paper, since, although its value in comparison with specie might fluctuate, it would afford an uniform standard.
If political power be incidental to banking corporations, there ought, perhaps, to be in the general government some counterpoise to that which is exerted by the states. Such a counterpoise might not indeed be so necessary, if the states exercised the power to incorporate banks equally, or in proportion to their respective populations. But that is not the case. A single state has a banking capital equivalent, or nearly so, to one-fifth of the whole banking capital of the United States. Four states combined, have the major part of the banking capital of the United States. In the event of any convulsion, in which the distribution of banking institutions might be important, it may be urged, that the mischief would not be alleviated by the creation of a national bank, since its location must be within one of the states. But in this respect the location of the bank is extremely favorable, being in one of the middle states, not likely from its position, as well as its loyalty, to concur in any scheme for subverting the government. And a sufficiente security against such contingency is to be found in the distribution of branches in different states, acting and reacting upon the parent institution, and upon each other.