Financial History Issue 113 (Spring 2015) | Page 20

a crucial way to concentrate a nation’s
economic strength. During the darkest
years of the Revolution, 1780–81, when the
nation’s currency collapsed and the Continental Army faced starvation, Philadelphia’s Bank of North America had issued
notes which retained their face value and
were used to purchase vital supplies and
equipment for the Army.
The Bank of the United States was a
great deal more complex than the Bank of
North America, or the Bank of New York,
which Hamilton had helped to found in
his home city. In his proposal to Congress,
the Secretary of the Treasury called it “a
great engine of state.” President Washington’s tacit approval was well known, and
this may have had much to do with the
way the proposal passed the Senate almost
casually, with a voice vote.
In the House of Representatives, a very
different scene transpired. James Madison, still the acknowledged leader of this
branch of the legislature, took the floor
and shocked President Washington and
Secretary Hamilton by opposing — and
then denouncing — the idea. For a whole
day, Madison lectured his fellow congressmen on what was wrong with the
proposal. In essence, he argued that the
absence of any mention of a bank in the
Constitution meant that the framers of
the national charter never intended to give
the federal government the right to create
such an entity.
No one was more astonished by this
denunciation than Alexander Hamilton.
During the Constitutional Convention,
Madison had proposed giving Congress the
power to charter banks and other corporations. The delegates had rejected the proposal. Now he cited this rejection but coolly
neglected to mention that he had been the
author of the proposal. In his Federalist
Papers essays, Madison had ignored this
earlier disapproval and repeatedly insisted
there were implied powers in the Constitution that gave Congress the ability to deal
with many aspects of federal governance.
Congressman Elias Boudinot of New
Jersey was among a number of listeners
who did not hesitate to remind Madison of
his previous stance. Boudinot read aloud
the words from Madison’s essay, Federalist number 44: “There must necessarily be

admitted powers by implication unless the
Constitution descended to every minutia… No axiom is more clearly established
in law or in reason that whenever the
end is required, the means are authorized; whenever a general power to do a
thing is given, every particular power for
doing it is included.” Thus the Constitution gave Congress the power to regulate
the nation’s commerce. Secretary Hamilton saw the Bank of the United States as an
essential tool in this crucial task.
The House of Representatives agreed
with Boudinot and Madison’s other critics, who openly mocked his sudden transformation to a “strict” or literal interpreter
of the Constitution he had done so much
to create. The bill chartering the Bank of
the United States passed the House by
almost a two-to-one margin: 39 to 20. But
this victory, immensely pleasing to Hamilton, soon became only the first act in a
drama that would alter America’s history.
President Washington, with his acute
concern for the nation’s unity, was alarmed
to note that almost all the congressmen
from states north of the Potomac Rive