In 1791, Treasurer Alexander Hamilton proposed the First Bank of the United States, also called the First Bank, which, with the necessary-and-proper clause, allowed the government to act on the four rights stated in the Constitution: “the rights to collect taxes, borrow money, regulate trade among states, and support fleets and armies.” The charter of the First Bank caused a debate that Secretary of State, Thomas Jefferson, a large opponent of a central banking system, later described as “the most bitter and angry contest ever known in Congress before or since the union of the states.” The intensity of it is conveyed in “Cabinet Battle #1” in Hamilton: An American Musical, in which the debate between Hamilton and Jefferson is recreated in
Alexander Hamilton was present at the Constitutional Convention, where he had made claims, that ultimately failed, for a National Bank to be included in the Constitution. After the United States was born, Hamilton believed that the U.S. was headed towards an industrial and commercial society. Where the housing of its money should be by the federal government. Thus, the creation of a bank would be necessary to allow for Congress to borrow and lend money with other countries. An industrial nation would need outside funds to be successful.
Thomas Jefferson and James Madison claimed that a national bank was unconstitutional
Thomas Jefferson and the other politicians who agreed with his views (Democratic-Republicans), were inclined to believe that the American Revolution was an act of pure rebellion, only unifying with the other colonies for a common goal of independence. Such a view, if strictly followed, would mean there would have been no reason for the colonies to stay unified, and this scenario would have surely been the end of an established powerful nation. Alexander Hamilton and the Federalists on the other hand, tended toward the view of advancing the current American experiment with a few sacrifices that would cause great turmoil amongst the states but ultimately unify them. One of these great sacrifices would be to establish a national bank in which state debt would become a total sum known as a national debt. His view was that unless each state felt indebted and/or dependent toward a federal government, that the union would eventually fall apart, and what made the United States powerful and capable of claiming their own independence would fade away.
The creation of the first bank in the United States prompted a political debate which started in 1791, and went on in the following years. Hamilton’s plan foresaw a bank provided with special powers and privileges, which gave birth to a wide opposition. Although Hamilton 's idea continues to exist in today’s economic environment, at that time his proposal was met with widespread resistance from individuals such as James Madison and Thomas Jefferson, who considered the creation of a federal bank as unconstitutional. Following to a broad interpretation of the Constitution, Hamilton argued that in order to have an effective bank, Congress should be provided with all the powers required. Jefferson disagreed with Hamilton, and claimed that the establishment of such a bank was not consistent with the powers that the Constitution granted to Congress.
Jefferson believed the Constitution did not give the national government the power to establish a National Bank. Another argument for Jefferson was if the national government did establish a National Bank it would leave the power in the hands of a few people
Alexander Hamilton, a late 18th-century politician, was a major supporter of the National Bank. The National Bank is a bank that facilitates daily transactions and collects tax revenue for the federal government. In the 1790s, there were two distinct sides to this debate: the Hamiltonians and the Jeffersonians. The Hamiltonians, in alignment with Hamilton’s beliefs, believed in a looser interpretation of the Constitution, while the Jeffersonians believed the opposite, in alignment with Thomas Jefferson’s beliefs. Ultimately, this debate ended in 1819 when the Supreme Court ruled the National Bank constitutional in the McCulloch v Maryland case.
The problems America faced were whether or not to establish a national bank or state banks, whether to focus on an agricultural economy or an industrial economy, and finally, how to deal with state debt. On his cabinet, Washington had the best federalist, Alexander Hamilton, and democratic-republican, Thomas Jefferson. In 1791, whether or not to install a national bank was a topic. Thomas Jefferson believed in the strict interpretation of the Constitution and argued that instilling a national bank was unconstitutional. The power to choose should have belonged to the state governments (Doc C).
Hamilton interpreted it loosely while Jefferson was strict. This led to an argument about whether the creation of a national bank was constitutional; Hamilton stated it was while Jefferson claimed it wasn’t. Another issue that they clashed
Hamilton 's monetary course of action for the nation included working up a national bank like that in England to keep up open credit; cementing the states ' commitments under the focal government; and initiating guarded tolls and government enrichments to empower American makes. These measures fortified the administration 's vitality to the hindrance of the states. Jefferson and his political accomplices limited these progressions. Francophile Jefferson expected that the Bank of the United States addressed an inordinate measure of English effect, and he battled that the Constitution did not give Congress the capacity to set up a bank. He didn 't assume that propelling produces was as basic as supporting the authoritatively settled agrarian base.
The National Bank also helped fund infrastructure projects, facilitating more westward expansion and significant economic growth. Using this National Bank, we could put out a 15-year bond and purchase Louisiana Territory. Under Thomas Jefferson’s rule, they expired the National Bank in 1811, before the bond reached its end, and now they have little funds for the bond and no funds for the military. The Jeffersonian-Republicans expired the National Bank because they believed that it gave the government too much power and that it was taking away the rights of the states. To Thomas Jefferson, this went against his belief in a less involved government and autonomy for the common people and their states.
Hamilton wanted to create public credit with a treasury system, a national bank, a mint, and increase manufacturing which would help unify the country. On the other hand, there was Jefferson, who opposed a strong central government. He argued that the “wealthy would gain at the expense of ordinary Americans and that Hamilton’s political economy would corrupt the morality of citizens and undermine the social conditions essential to republican government”(Powerpoint). The country would opt for an approach closer to Hamilton’s views. One of the first acts was the National Banking Act.
The need for a national bank was very much so necessary. Hamilton also convinced president Washington to sign the bank bill by his lengthy report that stated: “This criterion is the end, to which the measure relates as a mean. If the end be clearly comprehended withan any specified powers, collecting taxes and regulating the currency, and if the measure have an obvious relation to that end, and is not forbidden by any particular provision of the constitution, it may safely be deemed to come with the compass of national authority.”
This was part of Hamiltons, secretary of treasury financial plan to help pay back war debts from the Revolutionary war because the bank would collect taxes and revenues. This idea was supported by Washington and Hamiltion but the challenge was people like Jefferson or farmers who opposed the idea of a national bank because they feared the great power of the bank. In the first line of the primary document (doc#2), Jefferson firmly opposed the creation of a national bank and believed in strict construction of the Constitution which means only going by what the constitution is saying word for word. This caused Jefferson to say it was unconstitutional and against the laws of monopoly. He also thought it would take away the rights of the states.
Jefferson and the Democratic-Republicans were strict constructionists who believed that if the Constitution didn’t allow something, it was forbidden. Hamilton and the Federalists were loose constructionists who believed that if the Constitution didn’t forbid it, it was allowed. He explained his loose constructionist views in “Hamilton’s Opinion as to the Constitutionality of the Bank of the United States,” saying, “If the end is clearly found within any of the specific powers, and if the law has an obvious relation to the end, and it is not forbidden by any particular provision of the Constitution, it may safely be deemed to come within the compass of the national authority.” The National Bank held money for the nation, funded the government, and put private and public money together for a capital pool. Hamilton liked the National Bank because it loaned money to
