Madison To Obama: You Don’t Have Power To Fund Community Colleges

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Mandeville, LA – In December of 1790, Alexander Hamilton introduced his “Second Report on The Public Credit” which was the plan for Congress to charter the first National Bank. That December, Congressman James Madison insisted that the scheme to create a bank was unconstitutional and began preparing his defense of the statement. Madison would get his chance to instruct his colleagues on the unconstitutionality of the bank in a near day-long speech of 3 February, 1791 when the bank bill came back to the House for a vote.

Because this record that I digitized from photo copies of the journal of Congress available at the Library of Congress archives, is the transcriptionist/secretary’s account and not from the pen of the verbose Madison, the style is much more conversational and easy to follow.

In this speech, Madison, in warning against the bank, predicts what Congress will do with implied powers, like chartering a corporation, in precisely the manner it has occurred. As we shall see, Madison’ s unwavering and repetitive statement that unless a power was SPECIFICALLY enumerated then it could not be claimed thus decimates the doctrine that Congress’s powers are expansive and unlimited but instead are specific and limited.

This obviously applies to nearly every ABC agency, bureau and program including Pell, Stafford and now Obama “student loans”, put another way, if Madison contended, correctly, that Congress could not charter a bank so it could create a need to loan itself money then it certainly could not create an entity to loan money for any other purpose.

Every student of the Constitution as ratified should read and then voice aloud these arguments because they are irrefutable when applied to the subject. I have highlighted in bold the more important ones.


 

FEBRUARY 2nd, 1791

Mr. MADISON observed, that at this moment it was not of importance to determine how it has happened that the objections which several gentlemen now say they have to offer against the bill were not made at the proper time. It is sufficient for them, if the candor of the House should lead them now to recommit the bill, that in a Committee of the whole they may have an opportunity to offer their objections.

If, again, Congress by virtue of the power to borrow money, can create the ability to lend, they may, by virtue of the power to levy money, create the ability to pay it. The ability to pay taxes depends on the general wealth of the society, and this, on the general prosperity of agriculture, manufactures, and commerce. Congress then may give bounties and make regulations on all of these objects.

Mr. Ames replied to Mr. Madison. He said, he did not conceive that the appeal now made to the candor of the House was in point. The gentlemen who object to the bill had an opportunity to offer their objections; the customary forms have been attended to; and the whole question for the recommitment turns on the force of the objections which are now offered to the general principles of the bill altogether. The candor of the House, he conceived, was entirely out of the question, and therefore not to be appealed to; but the justice due to their constituents in the proper discharge of the duty reposed in them. He said it appeared to him absurd to go into a Committee of the whole to determine whether the bill is constitutional or not. If it is unconstitutional, that amounts to a rejection of it altogether.

Mr. Madison thought there was the greatest propriety in discussing a constitutional question in the Committee of the whole.

Mr. STONE and Mr. GILES were in favor of the recommitment. They objected to the unconstitutionality of the bill, and to several of its particular clauses.

Mr. VINING said, he thought it was a subject of congratulation, that the bill was in its present situation; it had happily passed to the third reading without that tedious discussion which bills usually receive. The subject has been a considerable time before the House, and gentlemen have, had time to contemplate it. The bill is now in the stage to which gentlemen very usually reserve themselves to state their objections at large, and he hoped they would now do it. He was not perfectly satisfied as to the constitutional point. He therefore hoped gentlemen would state their objections, that those who are satisfied on that point may offer their reasons.

Mr. BOUDINOT stated the process of business yesterday. He observed, that he had then the honor to be in the chair. He had read the bill very distinctly and deliberately, with proper pauses; he thought that the fullest opportunity had been offered for gentlemen to come forward with their objections. He was opposed to the recommitment, as it would, he feared, issue in a defeat of the bill this session. He had one difficulty however respecting the unconstitutionality of the bill, which he hoped to have removed; and he hoped that a full discussion of its general principles would take place.

The motion for a recommitment was lost, as follows;

Ayes: Ams.–Messrs. Ashe, Baldwin, Bloodworth, Bourne, Brown, Burke, Carroll, Contee, Gale Grout, Giles, Jackson, Lee, Madison, Matthews, Moore, Parker, Smith, of Maryland, Smith, of S. C., Stone, Tucker, White, and Williamson.—23.

NAYSMessrs. Ames, Benson, Boudinot, Cad- walader, Clymer, Fitzsimons, Floyd, Foster, Gerry, Gilman, Goodhue, Hartley, Hathorn, Heister, Huntington, Lawrence, Leonard, Livermore, Muhlenberg, Partridge, Rensselaer, Schuremau, Scott, Seney, Sherman, Sylvester, Sinnickson, Steele, Sturges, Thatcher, Trumbull, Vining, Wadsworth, and Wynkoop.—34

 

Wednesday February, 3 

The engrossed bill making appropriations for the support of Government for the year 1791, was read the third time, and passed. A message from the Senate informed the House, that they have passed the bill declaring the assent of Congress to a certain act of the State of Maryland.

BANK OF THE UNITED STATES. 

The House resumed the consideration of the bill sent from the Senate to incorporate the subscribers to the Bank of the United States. The bill being on its passage, Mr. Madison began with a general review of the advantages,  and disadvantages of Banks. The former, he stated, to consist in, first, the aid they afford to merchants, who can thereby push their mercantile operations further with the same capital. Second. The aids to merchants in paying punctually the customs. 3d. Aids to the Government in complying punctually with its engagements, when deficiencies or delays happen in the revenue.  It diminishes usury. 5th. In saving the wear of gold and silver kept in the vaults, and represented by notes. 6th. In facilitating occasional remittances from different places where notes happen to circulate. The effect of the proposed Bank, in raising the value of stock, he thought had been greatly overrated. It would no doubt raise that of the stock subscribed into the Bank; but could have little effect on stock in general, as the interest on it would remain the same, and the quantity taken out of the market would be replaced by Bank stock. The principal disadvantages consisted in, 1st, banishing the precious metals, by substituting another medium to perform their office. This effect was inevitable. It was admitted by the most enlightened patrons of Banks, particularly by Smith on the Wealth of Nations. The common answer to the objection was, that the money banished was only an exchange for something equally valuable that would be imported in return. He admitted the weight of this observation in general; but doubted whether, in the present habits of this country, the returns would not be in articles of no permanent use to it. 2d. Exposing the public and individuals to all the evils of a run on the Bank, which would be particularly calamitous in so great a country as this, and might happen from various causes, as false rumors, bad management of the institution, an unfavorable balance of trade from short crops, & co.. It was proper to be considered also, that the most important of the advantages would be better obtained by several Banks properly distributed than by a single one. The aids to commerce could only be afforded at or very near the seat of the Bank. The same was true  of aids to merchants in the payment of customs. Anticipations of the Government would also be most convenient at the different places where the interest of the debt was to be paid. The case in America was different from that in England: the interest there was all due at one place, and the genius of the Monarchy favored the concentration of wealth and influence at the metropolis. He thought the plan liable to other objections. It did not make so good a bargain for the public as was due to its interests, The charter to the Bank of England had been granted for eleven years only, and was paid for by a loan to the Government on terms better than could be elsewhere got, Every renewal of the charter had, in like manner, been purchased; in some instances, at a very been high done by  the Banks of Genoa, Naples, and other like banks of circulation. The plan was unequal to the public  creditors; it gave an undue preference to the  holders of a particular denomination of the public debt, and to those at and within reach of the seat of Government. If the subscriptions should be rapid, the distant holders of evidences of debt would be excluded altogether.

In making these remarks on the merits of the bill, he had reserved to himself the right to deny the authority of Congress to pass it. He had entertained this opinion from the date of the Constitution. His impression might, per- haps, be the stronger, because he well recollected that a power to grant charters of incorporation had been proposed in the General Convention and rejected.

Is the power of establishing an incorporated Bank among the powers vested by the Constitution in the Legislature of the United States? This is the question to be examined.

After some general remarks on the limitations of all political power, he took notice of the peculiar manner in which the Federal Government is limited. It is not a general grant, out of which particular powers are excepted; it is a grant of particular powers only, leaving the general mass in other hands. So it had been understood by its friends and its foes, and so it was to be interpreted.

As preliminaries to a right interpretation, he laid down the following rules: An interpretation that destroys the very characteristic of the Government cannot be just.

Where a meaning is clear, the consequences, whatever they may be, are to be admitted—where doubtful, it is fairly triable by its consequences.

In controverted cases, the meaning of the parties to the instrument, if to be collected by reasonable evidence, is a proper guide.

Contemporary and concurrent expositions are a reasonable evidence of the meaning of the parties.

In admitting or rejecting a constructive authority, not only the degree of its incidentality to an express authority is to be regarded, but the degree of its importance also; since on this will depend the probability or improbability of its being left to construction.

Reviewing the Constitution with an eye to these positions, it was not possible to discover in it the power to incorporate a Bank. The only clauses under which such a power could be pretended, are either:

1. The power to lay and collect taxes to pay the debts, and provide for the common defence and general welfare: Or,

2. The power to borrow money on the credit of the United States: Or,

3. The power to pass all laws necessary and proper to carry into execution those powers.

The bill did not come within the first power. It laid no tax to pay the debts, or provide for the general welfare. It laid no tax whatever. It was altogether foreign to the subject.

No argument could be drawn from the terms “common defence, and general welfare.” The power as to these general purposes was limited to acts laying taxes for them; and the general purposes themselves were limited and explained by the particular enumeration subjoined. To understand these terms in any sense, that would justify the power in question, would give to Congress an unlimited power; would render nugatory the enumeration of particular powers; would supersede all the powers reserved to the State Governments. These terms are copied from the articles of Confederation; had it ever been pretended, that they were to be under- stood otherwise than as here explained?

It had been said, that “general welfare” meant cases in which a general power might be exercised by Congress, without interfering with the powers of the States; and that the establishment of’ a National Bank was of this sort. There were, he said, several answers to this novel doctrine.

1. The proposed bank would interfere so as indirectly  to defeat a State Bank at the same place.

2. It would directly interfere with the rights of the States, to prohibit as well as to establish Banks,  and the circulation of Bank notes. He mentioned.  a law in Virginia actually prohibiting the circulation of notes payable to bearer.

3.  Interference with the power of the States was no constitutional criterion of the power of Congress. If the power was not given, Congress could not exercise it; if given, they might exercise it, although it should interfere with the laws, or even the Constitution of the States.

4. If Congress could incorporate a Bank, merely because the act would leave the States free to establish Banks also, any other incorporations might be made by Congress. They could incorporate companies of manufacturers, or companies for cutting canals, or even religious societies, leaving similar incorporations by the States, like State Banks to themselves. Congress might even establish religious teachers in every parish, and pay them out of the Treasury of the United States, leaving other teachers unmolested in their functions. These inadmissible consequences condemned the controverted principle.

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The case of the Bank established by the former Congress had been cited as a precedent. This was known, he said, to have been the child of necessity. It never could be justified by the regular powers of the articles of Confederation (listen to my “Fame of Our Fathers” for the complete story of The Bank of North America.) Congress betrayed a consciousness of this lit recommending to the States to incorporate the Bank also. They did not attempt to protect the Bank notes by penalties against counterfeiters. These were reserved wholly to the authority of the States.

The second clause to be examined is that which empowers Congress to borrow money. Is this a bill to borrow money?

It does not borrow a shilling. Is there any fair construction by which the bill can be deemed an exercise of the power to borrow money? The obvious meaning of the power to borrow money, is that or accepting it from, and stipulating payment to those who are able and willing to lend.

To say that the power to borrow involves a power of creating the ability, where there may be the will, to lend is not only establishing dangerous a principle, as will be immediately shown, but is as forced a construction as to say that it involves the power of compelling will, that where there may be the ability, to lend.

The third clause is that which gives the power to pass all laws necessary and proper to execute the specified powers.

Whatever meaning this clause may have, none can be admitted, that would give an unlimited discretion to Congress.

Its meaning must, according to the natural and obvious force of the terms and the context, be limited to means necessary to the end, and incident to the nature of the specified powers.

The clause is in fact merely declaratory of what would have resulted by unavoidable implication, as the appropriate, and, as it were, technical means of executing those powers. In this sense it has been explained by the friends of the Constitution, and ratified by the State Conventions.

The essential characteristic of the Government, as composed of limited and enumerated powers, would be destroyed, if instead of direct and incidental means, any means could be used which, in the language of the preamble to the bill, “might be conceived to be conducive to the successful conducting of the finances, or might be conceived to tend to give facility to the obtaining of loans.” He urged an attention to the diffuse and ductile terms which had been found requisite to Cover the stretch of power contained in the bill.  He compared them with the terms necessary and proper, used in the Constitution, and asked whether it was possible to view the two descriptions as synonimous, or the one as a fair and safe commentary on the other.

If, proceeded he, Congress, by virtue of the power to borrow, can create the means of lending, and, in pursuance of these means, can incorporate a Bank, they may do any thing whatever creative of like means.

The East India Company has been a lender to the British Government, as well as the Bank, and the South Sea Company is a greater creditor than either. Congress, then. may incorporate similar companies in the United States, and that too not under the idea of regulating trade, but under that of borrowing money.

Private capitals are the chief resources for loans to the British Government. Whatever then may be conceived to favor the accumulation of capitals may be done by Congress. They may incorporate manufacturers. They may give monopolies in every branch of domestic industry.

If, again, Congress by virtue of the power to borrow money, can create the ability to lend, they may, by virtue of the power to levy money, create the ability to pay it. The ability to pay taxes depends on the general wealth of the society, and this, on the general prosperity of agriculture, manufactures, and commerce. Congress then may give bounties and make regulations on all of these objects.

The States have, it is allowed on all hands,  a concurrent right to lay and collect taxes. This power is secured to them, not by its being expressly being reserved, but by its not being ceded by the Constitution. The reasons for the bill cannot be admitted, because they would invalidate that right; why may it not be conceived by Congress, that a uniform and exclusive imposition of taxes, would not less than the proposed Banks ” be conducive to the successful conducting of the national finances, and tend to give facility to the obtaining of revenue, for the use of the Government?”

The doctrine of implication is always a tender one. The danger of it has been felt in other Governments. The delicacy was felt in the adoption of our own; the danger may also be felt, if we do not keep close to our chartered authorities.

Mark the reasoning on which the validity of the bill depends. To borrow money is made the end, and the accumulation of capitals implied as the Means. The accumulation of capitals is then the end, and a Bank implied as the means. The Bank is then the end, and a charter of incorporation, a monopoly, capital  punishments, &c. implied as the means.

If implications, thus remote and thus multiplied, can be linked together, a chain may be formed that will reach every object of legislation, every object within the whole compass of political economy.

The latitude of interpretation required by the bill is condemned by the rule furnished by the Constitution itself.

Congress have power “to regulate the value of money;” yet it is expressly added, not left to be implied, that counterfeiters may be punished.

They have the power0 “to declare war,” to which armies are more incident, than incorporated banks to borrowing; yet the power ” to raise and support armies” is expressly added; and to this again, the express power  “to make rules and regulations for the government of armies;” a like remark is applicable to the powers as to the navy.

The regulation and calling out of the militia are more appurtenant to war than the proposed Bank to borrowing; yet the former is not left to construction.

The very power to borrow money is a less remote implication from the power of war, than an incorporated monopoly Bank from the power of borrowing; yet, the power to borrow is not left to implication.

It is not pretended that every insertion or omission in the Constitution is the effect of systematic attention. This is not the character of any human work, particularly the work of a body of men. The examples cited, with others that might be added, sufficiently inculcate, nevertheless, a rule of interpretation very different from that on which the bill rests. They condemn the exercise of any power, particularly a great and important power, which is not evidently anti necessarily involved in an express power.

It cannot be denied that the power proposed to be exercised is an important power.

As a charter of incorporation, the bill creates an artificial person previously not existing in law. It confers important civil rights and attributes, which could not otherwise be claimed. It is, though not precisely similar, at least equivalent, to the naturalization of an alien, by which certain new civil characters are acquired by him. Would Congress have had the power to naturalize, if it had not been expressly given?

In the power to make by-laws, the, bill delegated a sort of Legislative power, which is unquestionably an act of a high and important nature. He took notice of the only restraint on the by-laws, that they were not to be contrary to the law and the constitution of the Bank, and asked what law was intended; if the law of the United States, the scantiness of their code would give a power never before given to a corporation; and obnoxious to the States, whose laws would then be superseded, not only by the laws of Congress, but by the by-laws of a corporation within their own jurisdiction. If the law intended was the law of the State, then the State might make laws that would destroy an institution of the United States.

The bill gives a power to purchase and hold lands; Congress themselves could not purchase lands within a State “without the consent of its Legislature.” How could they delegate a power to others which they did not possess themselves?

It takes from our successors, who have equal rights with ourselves, and with the aid of experience will be more, capable of deciding on the subject, an opportunity of exercising that right for an immoderate term.

It takes from our constituents the opportunity of deliberating on the untried measure, although their hands are also to be tied by it for the same term.

It involves a monopoly, which affects the equal rights of every citizen.

It leads to a penal regulation, perhaps capital punishments, one of the must solemn acts of sovereign authority.

From this view of’ the power of incorporation exercised in the bill, it could never be deemed an accessory or subaltern power, to be deduced by implication, as a means of executing another power; it was in its nature a distinct, an independent arid substantive prerogative, which not being enumerated in the Constitution,  could never have been meant to be included in it, and not being included, could never be rightfully exercised.

He here adverted to a distinction, which he said had not been sufficiently kept in view, between a power necessary and proper for the Government or Union, and a power necessary and proper for executing the enumerated powers. In the latter case, the powers included in each of the enumerated powers were not expressed, but to be drawn from the nature of each. In the former, the powers composing the Government were expressly enumerated. This constituted the peculiar nature of the Government, no power, therefore, not enumerated could be inferred from the general nature of Government. Had the power of making treaties, for example, been omitted, however necessary it might have been, the defect could only have been lamented, or supplied by an amendment of the Constitution.

But the proposed Bank could not even be called necessary to the Government; at most it could be but convenient. Its uses to the Government could be supplied by keeping the taxes a little in advance; by loans from individuals; by the other Banks, over which the Government would have equal command; nay greater, as it might grant or refuse to these the privilege (a tree and irrevocable gift to the proposed Bank) of using their notes in the Federal revenue.

He proceeded next to the contemporary expositions given to the Constitution.

The defence against the charge founded on the want of a bill of rights pre-supposed, he said, that the powers not given were retained; and that those given were not to be extended by remote implications. On any other supposition, the power of Congress to abridge the freedom of the press, or the rights of conscience, & co. could not have been disproved.

The explanations in the State Conventions all turned on the same fundamental principle, and on the principle that the terms necessary and proper gave no additional powers to those enumerated.

[Here he read sundry passages from the Debates of the Pennsylvania, Virginia, and North Carolina Conventions, showing the grounds on which the Constitution had been vindicated by its principal advocates, against a dangerous latitude of its powers, charged on it by its opponents.]

He did not undertake to vouch for the accuracy or authenticity of the publications which he quoted. He thought it probable that the sentiments delivered might, in many instances, have been mistaken, or imperfectly noted; but the complexion of the whole, with what he himself and many others must recollect, fully justified the use he had made of them.

The explanatory declarations and amendments accompanying the ratifications of the several States formed a striking evidence, wearing the same complexion. He referred those who might doubt on the subject, to the several acts of ratification.

The explanatory amendments proposed by Congress themselves, at least, would be good authority with them; all these renunciations of power proceeded on a rule of construction, excluding all the latitude now contended for. These explanations were the more to be respected, as they had  not only been proposed by Congress, but ratified by nearly three-fourths of the States. He read several of the articles proposed, remarking particularly on the 11th and 12th, the former, as guarding against a latitude of interpretation; the latter, as excluding every source of power not within the Constitution itself.

With all this evidence of the sense in which the Constitution was understood and adopted, will it not be said, if the bill should pass, that its adoption was brought about by one set of arguments, and that it is now administered under the influence of another set; and this reproach will have the keener sting, because it is applicable to so many individuals concerned in both the adoption and administration.

In fine, if the power were in the Constitution, the immediate exercise of it cannot be essential; if not there, the exercise of it involves the guilt of usurpation, and establishes a precedent of interpretation, levelling all the barriers which limit the powers of the General Government, and protect those of the State Governments. If the point be doubtful only, respect for ourselves, who ought to shun the appearance of precipitancy and ambition; respect for our successors, who ought not lightly to be deprived of the opportunity of exercising the rights of legislation; respect for our constituents, who have had no opportunity of making known their sentiments, and who are themselves to be bound down to the measure for so long a period; all these considerations require that the irrevocable decision should at least be suspended until another session.

CONCLUSION

It appeared on the whole, he concluded, that the power exercised by the bill was condemned by the silence of the Constitution; was condemned by the rule of interpretation arising out of the Constitution; was condemned by its tendency to destroy the main characteristic of the Constitution; was condemned by the expositions of the friends of the Constitution, whilst depending before the public; was condemned by the apparent intention of the parties which ratified the Constitution; was condemned by the explanatory amendments proposed by Congress themselves to the Constitution; and he hoped it would receive its final condemnation, by the vote of this House.

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