WASHINGTON, _July 10, 1832_.
_To the Senate_:
The bill "to modify and continue" the act entitled "An act to
incorporate the subscribers to the Bank of the United States" was
presented to me on the 4th July instant. Having considered it with that
solemn regard to the principles of the Constitution which the day was
calculated to inspire, and come to the conclusion that it ought not to
become a law, I herewith return it to the Senate, in which it
originated, with my objections.
A bank of the United States is in many respects convenient for the
Government and useful to the people. Entertaining this opinion, and
deeply impressed with the belief that some of the powers and privileges
possessed by the existing bank are unauthorized by the Constitution,
subversive of the rights of the States, and dangerous to the liberties
of the people, I felt it my duty at an early period of my Administration
to call the attention of Congress to the practicability of organizing an
institution combining all its advantages and obviating these objections.
I sincerely regret that in the act before me I can perceive none of
those modifications of the bank charter which are necessary, in my
opinion, to make it compatible with justice, with sound policy, or with
the Constitution of our country.
The present corporate body, denominated the president, directors, and
company of the Bank of the United States, will have existed at the time
this act is intended to take effect twenty years. It enjoys an exclusive
privilege of banking under the authority of the General Government, a
monopoly of its favor and support, and, as a necessary consequence,
almost a monopoly of the foreign and domestic exchange. The powers,
privileges, and favors bestowed upon it in the original charter, by
increasing the value of the stock far above its par value, operated as a
gratuity of many millions to the stockholders.
An apology may be found for the failure to guard against this result in
the consideration that the effect of the original act of incorporation
could not be certainly foreseen at the time of its passage. The act
before me proposes another gratuity to the holders of the same stock,
and in many cases to the same men, of at least seven millions more. This
donation finds no apology in any uncertainty as to the effect of the
act. On all hands it is conceded that its passage will increase at least
20 or 30 per cent more the market price of the stock, subject to the
payment of the annuity of $200,000 per year secured by the act, thus
adding in a moment one-fourth to its par value. It is not our own
citizens only who are to receive the bounty of our Government. More than
eight millions of the stock of this bank are held by foreigners. By this
act the American Republic proposes virtually to make them a present of
some millions of dollars. For these gratuities to foreigners and to some
of our own opulent citizens the act secures no equivalent whatever. They
are the certain gains of the present stockholders under the operation of
this act, after making full allowance for the payment of the bonus.
Every monopoly and all exclusive privileges are granted at the expense
of the public, which ought to receive a fair equivalent. The many
millions which this act proposes to bestow on the stockholders of the
existing bank must come directly or indirectly out of the earnings of
the American people. It is due to them, therefore, if their Government
sell monopolies and exclusive privileges, that they should at least
exact for them as much as they are worth in open market. The value of
the monopoly in this case may be correctly ascertained. The twenty-eight
millions of stock would probably be at an advance of 50 per cent, and
command in market at least $42,000,000, subject to the payment of the
present bonus. The present value of the monopoly, therefore, is
$17,000,000, and this the act proposes to sell for three millions,
payable in fifteen annual installments of $200,000 each.
It is not conceivable how the present stockholders can have any claim to
the special favor of the Government. The present corporation has enjoyed
its monopoly during the period stipulated in the original contract. If
we must have such a corporation, why should not the Government sell out
the whole stock and thus secure to the people the full market value of
the privileges granted? Why should not Congress create and sell
twenty-eight millions of stock, incorporating the purchasers with all
the powers and privileges secured in this act and putting the premium
upon the sales into the Treasury?
But this act does not permit competition in the purchase of this
monopoly. It seems to be predicated on the erroneous idea that the
present stockholders have a prescriptive right not only to the favor but
to the bounty of Government. It appears that more than a fourth part of
the stock is held by foreigners and the residue is held by a few hundred
of our own citizens, chiefly of the richest class. For their benefit
does this act exclude the whole American people from competition in the
purchase of this monopoly and dispose of it for many millions less than
it is worth. This seems the less excusable because some of our citizens
not now stockholders petitioned that the door of competition might be
opened, and offered to take a charter on terms much more favorable to
the Government and country.
But this proposition, although made by men whose aggregate wealth is
believed to be equal to all the private stock in the existing bank, has
been set aside, and the bounty of our Government is proposed to be again
bestowed on the few who have been fortunate enough to secure the stock
and at this moment wield the power of the existing institution. I can
not perceive the justice or policy of this course. If our Government
must sell monopolies, it would seem to be its duty to take nothing less
than their full value, and if gratuities must be made once in fifteen or
twenty years let them not be bestowed on the subjects of a foreign
government nor upon a designated and favored class of men in our own
country. It is but justice and good policy, as far as the nature of the
case will admit, to confine our favors to our own fellow citizens, and
let each in his turn enjoy an opportunity to profit by our bounty. In
the bearings of the act before me upon these points I find ample reasons
why it should not become a law.
It has been urged as an argument in favor of rechartering the present
bank that the calling in its loans will produce great embarrassment and
distress. The time allowed to close its concerns is ample, and if it has
been well managed its pressure will be light, and heavy only in case its
management has been bad. If, therefore, it shall produce distress, the
fault will be its own, and it would furnish a reason against renewing a
power which has been so obviously abused. But will there ever be a time
when this reason will be less powerful? To acknowledge its force is to
admit that the bank ought to be perpetual, and as a consequence the
present stockholders and those inheriting their rights as successors be
established a privileged order, clothed both with great political power
and enjoying immense pecuniary advantages from their connection with the
Government.
The modifications of the existing charter proposed by this act are not
such, in my view, as make it consistent with the rights of the States or
the liberties of the people. The qualification of the right of the bank
to hold real estate, the limitation of its power to establish branches,
and the power reserved to Congress to forbid the circulation of small
notes are restrictions comparatively of little value or importance. All
the objectionable principles of the existing corporation, and most of
its odious features, are retained without alleviation.
The fourth section provides "that the notes or bills of the said
corporation, although the same be, on the faces thereof, respectively
made payable at one place only, shall nevertheless be received by the
said corporation at the bank or at any of the offices of discount and
deposit thereof if tendered in liquidation or payment of any balance or
balances due to said corporation or to such office of discount and
deposit from any other incorporated bank." This provision secures to the
State banks a legal privilege in the Bank of the United States which is
withheld from all private citizens. If a State bank in Philadelphia owe
the Bank of the United States and have notes issued by the St. Louis
branch, it can pay the debt with those notes, but if a merchant,
mechanic, or other private citizen be in like circumstances he can not
by law pay his debt with those notes, but must sell them at a discount
or send them to St. Louis to be cashed. This boon conceded to the State
banks, though not unjust in itself, is most odious because it does not
measure out equal justice to the high and the low, the rich and the
poor. To the extent of its practical effect it is a bond of union among
the banking establishments of the nation, erecting them into an interest
separate from that of the people, and its necessary tendency is to unite
the Bank of the United States and the State banks in any measure which
may be thought conducive to their common interest.
The ninth section of the act recognizes principles of worse tendency
than any provision of the present charter.
It enacts that "the cashier of the bank shall annually report to the
Secretary of the Treasury the names of all stockholders who are not
resident citizens of the United States, and on the application of the
treasurer of any State shall make out and transmit to such treasurer a
list of stockholders residing in or citizens of such State, with the
amount of stock owned by each." Although this provision, taken in
connection with a decision of the Supreme Court, surrenders, by its
silence, the right of the States to tax the banking institutions created
by this corporation under the name of branches throughout the Union, it
is evidently intended to be construed as a concession of their right to
tax that portion of the stock which may be held by their own citizens
and residents. In this light, if the act becomes a law, it will be
understood by the States, who will probably proceed to levy a tax equal
to that paid upon the stock of banks incorporated by themselves. In some
States that tax is now 1 per cent, either on the capital or on the
shares, and that may be assumed as the amount which all citizen or
resident stockholders would be taxed under the operation of this act. As
it is only the stock _held_ in the States and not that _employed_ within
them which would be subject to taxation, and as the names of foreign
stockholders are not to be reported to the treasurers of the States, it
is obvious that the stock held by them will be exempt from this burden.
Their annual profits will therefore be 1 per cent more than the citizen
stockholders, and as the annual dividends of the bank may be safely
estimated at 7 per cent, the stock will be worth 10 or 15 per cent more
to foreigners than to citizens of the United States. To appreciate the
effects which this state of things will produce, we must take a brief
review of the operations and present condition of the Bank of the United
States.
By documents submitted to Congress at the present session it appears
that on the 1st of January, 1832, of the twenty-eight millions of
private stock in the corporation, $8,405,500 were held by foreigners,
mostly of Great Britain. The amount of stock held in the nine Western
and Southwestern States is $140,200, and in the four Southern States is
$5,623,100, and in the Middle and Eastern States is about $13,522,000.
The profits of the bank in 1831, as shown in a statement to Congress,
were about $3,455,598; of this there accrued in the nine Western States
about $1,640,048; in the four Southern States about $352,507, and in the
Middle and Eastern States about $1,463,041. As little stock is held in
the West, it is obvious that the debt of the people in that section to
the bank is principally a debt to the Eastern and foreign stockholders;
that the interest they pay upon it is carried into the Eastern States
and into Europe, and that it is a burden upon their industry and a drain
of their currency, which no country can bear without inconvenience and
occasional distress. To meet this burden and equalize the exchange
operations of the bank, the amount of specie drawn from those States
through its branches within the last two years, as shown by its official
reports, was about $6,000,000. More than half a million of this amount
does not stop in the Eastern States, but passes on to Europe to pay the
dividends of the foreign stockholders. In the principle of taxation
recognized by this act the Western States find no adequate compensation
for this perpetual burden on their industry and drain of their currency.
The branch bank at Mobile made last year $95,140, yet under the
provisions of this act the State of Alabama can raise no revenue from
these profitable operations, because not a share of the stock is held by
any of her citizens. Mississippi and Missouri are in the same condition
in relation to the branches at Natchez and St. Louis, and such, in a
greater or less degree, is the condition of every Western State. The
tendency of the plan of taxation which this act proposes will be to
place the whole United States in the same relation to foreign countries
which the Western States now bear to the Eastern. When by a tax on
resident stockholders the stock of this bank is made worth 10 or 15 per
cent more to foreigners than to residents, most of it will inevitably
leave the country.
Thus will this provision in its practical effect deprive the Eastern as
well as the Southern and Western States of the means of raising a
revenue from the extension of business and great profits of this
institution. It will make the American people debtors to aliens in
nearly the whole amount due to this bank, and send across the Atlantic
from two to five millions of specie every year to pay the bank
dividends.
In another of its bearings this provision is fraught with danger. Of the
twenty-five directors of this bank five are chosen by the Government and
twenty by the citizen stockholders. From all voice in these elections
the foreign stockholders are excluded by the charter. In proportion,
therefore, as the stock is transferred to foreign holders the extent of
suffrage in the choice of directors is curtailed. Already is almost a
third of the stock in foreign hands and not represented in elections. It
is constantly passing out of the country, and this act will accelerate
its departure. The entire control of the institution would necessarily
fall into the hands of a few citizen stockholders, and the ease with
which the object would be accomplished would be a temptation to
designing men to secure that control in their own hands by monopolizing
the remaining stock. There is danger that a president and directors
would then be able to elect themselves from year to year, and without
responsibility or control manage the whole concerns of the bank during
the existence of its charter. It is easy to conceive that great evils to
our country and its institutions might flow from such a concentration of
power in the hands of a few men irresponsible to the people.
Is there no danger to our liberty and independence in a bank that in its
nature has so little to bind it to our country? The president of the
bank has told us that most of the State banks exist by its forbearance.
Should its influence become concentered, as it may under the operation
of such an act as this, in the hands of a self-elected directory whose
interests are identified with those of the foreign stockholders, will
there not be cause to tremble for the purity of our elections in peace
and for the independence of our country in war? Their power would be
great whenever they might choose to exert it; but if this monopoly were
regularly renewed every fifteen or twenty years on terms proposed by
themselves, they might seldom in peace put forth their strength to
influence elections or control the affairs of the nation. But if any
private citizen or public functionary should interpose to curtail its
powers or prevent a renewal of its privileges, it can not be doubted
that he would be made to feel its influence.
Should the stock of the bank principally pass into the hands of the
subjects of a foreign country, and we should unfortunately become
involved in a war with that country, what would be our condition? Of the
course which would be pursued by a bank almost wholly owned by the
subjects of a foreign power, and managed by those whose interests, if
not affections, would run in the same direction there can be no doubt.
All its operations within would be in aid of the hostile fleets and
armies without. Controlling our currency, receiving our public moneys,
and holding thousands of our citizens in dependence, it would be more
formidable and dangerous than the naval and military power of the enemy.
If we must have a bank with private stockholders, every consideration of
sound policy and every impulse of American feeling admonishes that it
should be _purely American_. Its stockholders should be composed
exclusively of our own citizens, who at least ought to be friendly to
our Government and willing to support it in times of difficulty and
danger. So abundant is domestic capital that competition in subscribing
for the stock of local banks has recently led almost to riots. To a bank
exclusively of American stockholders, possessing the powers and
privileges granted by this act, subscriptions for $200,000,000 could be
readily obtained. Instead of sending abroad the stock of the bank in
which the Government must deposit its funds and on which it must rely to
sustain its credit in times of emergency, it would rather seem to be
expedient to prohibit its sale to aliens under penalty of absolute
forfeiture.
It is maintained by the advocates of the bank that its constitutionality
in all its features ought to be considered as settled by precedent and
by the decision of the Supreme Court. To this conclusion I can not
assent. Mere precedent is a dangerous source of authority, and should
not be regarded as deciding questions of constitutional power except
where the acquiescence of the people and the States can be considered as
well settled. So far from this being the case on this subject, an
argument against the bank might be based on precedent. One Congress, in
1791, decided in favor of a bank; another, in 1811, decided against it.
One Congress, in 1815, decided against a bank; another, in 1816, decided
in its favor. Prior to the present Congress, therefore, the precedents
drawn from that source were equal. If we resort to the States, the
expressions of legislative, judicial, and executive opinions against the
bank have been probably to those in its favor as 4 to 1. There is
nothing in precedent, therefore, which, if its authority were admitted,
ought to weigh in favor of the act before me.
If the opinion of the Supreme Court covered the whole ground of this
act, it ought not to control the coordinate authorities of this
Government. The Congress, the Executive, and the Court must each for
itself be guided by its own opinion of the Constitution. Each public
officer who takes an oath to support the Constitution swears that he
will support it as he understands it, and not as it is understood by
others. It is as much the duty of the House of Representatives, of the
Senate, and of the President to decide upon the constitutionality of any
bill or resolution which may be presented to them for passage or
approval as it is of the supreme judges when it may be brought before
them for judicial decision. The opinion of the judges has no more
authority over Congress than the opinion of Congress has over the
judges, and on that point the President is independent of both. The
authority of the Supreme Court must not, therefore, be permitted to
control the Congress or the Executive when acting in their legislative
capacities, but to have only such influence as the force of their
reasoning may deserve.
But in the case relied upon the Supreme Court have not decided that all
the features of this corporation are compatible with the Constitution.
It is true that the court have said that the law incorporating the bank
is a constitutional exercise of power by Congress; but taking into view
the whole opinion of the court and the reasoning by which they have come
to that conclusion, I understand them to have decided that inasmuch as a
bank is an appropriate means for carrying into effect the enumerated
powers of the General Government, therefore the law incorporating it is
in accordance with that provision of the Constitution which declares
that Congress shall have power "to make all laws which shall be
necessary and proper for carrying those powers into execution." Having
satisfied themselves that the word "_necessary_" in the Constitution
means "_needful," "requisite," "essential," "conducive to_," and that "a
bank" is a convenient, a useful, and essential instrument in the
prosecution of the Government's "fiscal operations," they conclude that
to "use one must be within the discretion of Congress" and that "the act
to incorporate the Bank of the United States is a law made in pursuance
of the Constitution;" "but," say they, "_where the law is not prohibited
and is really calculated to effect any of the objects intrusted to the
Government, to undertake here to inquire into the degree of its
necessity would be to pass the line which circumscribes the judicial
department and to tread on legislative ground_."
The principle here affirmed is that the "degree of its necessity,"
involving all the details of a banking institution, is a question
exclusively for legislative consideration. A bank is constitutional, but
it is the province of the Legislature to determine whether this or that
particular power, privilege, or exemption is "necessary and proper" to
enable the bank to discharge its duties to the Government, and from
their decision there is no appeal to the courts of justice. Under the
decision of the Supreme Court, therefore, it is the exclusive province
of Congress and the President to decide whether the particular features
of this act are _necessary_ and _proper_ in order to enable the bank to
perform conveniently and efficiently the public duties assigned to it as
a fiscal agent, and therefore constitutional, or _unnecessary_ and
_improper_, and therefore unconstitutional.
Without commenting on the general principle affirmed by the Supreme
Court, let us examine the details of this act in accordance with the
rule of legislative action which they have laid down. It will be found
that many of the powers and privileges conferred on it can not be
supposed necessary for the purpose for which it is proposed to be
created, and are not, therefore, means necessary to attain the end in
view, and consequently not justified by the Constitution.
The original act of incorporation, section 21, enacts "that no other
bank shall be established by any future law of the United States during
the continuance of the corporation hereby created, for which the faith
of the United States is hereby pledged: _Provided_, Congress may renew
existing charters for banks within the District of Columbia not
increasing the capital thereof, and may also establish any other bank or
banks in said District with capitals not exceeding in the whole
$6,000,000 if they shall deem it expedient." This provision is continued
in force by the act before me fifteen years from the 3d of March, 1836.
If Congress possessed the power to establish one bank, they had power to
establish more than one if in their opinion two or more banks had been
"necessary" to facilitate the execution of the powers delegated to them
in the Constitution. If they possessed the power to establish a second
bank, it was a power derived from the Constitution to be exercised from
time to time, and at any time when the interests of the country or the
emergencies of the Government might make it expedient. It was possessed
by one Congress as well as another, and by all Congresses alike, and
alike at every session. But the Congress of 1816 have taken it away from
their successors for twenty years, and the Congress of 1832 proposes to
abolish it for fifteen years more. It can not be "_necessary_" or
"_proper_" for Congress to barter away or divest themselves of any of
the powers vested in them by the Constitution to be exercised for the
public good. It is not "_necessary_" to the efficiency of the bank, nor
is it "_proper_" in relation to themselves and their successors. They
may _properly_ use the discretion vested in them, but they may not limit
the discretion of their successors. This restriction on themselves and
grant of a monopoly to the bank is therefore unconstitutional.
In another point of view this provision is a palpable attempt to amend
the Constitution by an act of legislation. The Constitution declares
that "the Congress shall have power to exercise exclusive legislation in
all cases whatsoever" over the District of Columbia. Its constitutional
power, therefore, to establish banks in the District of Columbia and
increase their capital at will is unlimited and uncontrollable by any
other power than that which gave authority to the Constitution. Yet this
act declares that Congress shall _not_ increase the capital of existing
banks, nor create other banks with capitals exceeding in the whole
$6,000,000. The Constitution declares that Congress _shall_ have power
to exercise exclusive legislation over this District "_in all cases
whatsoever_," and this act declares they shall not. Which is the supreme
law of the land? This provision can not be "_necessary_" or "_proper_"
or _constitutional_ unless the absurdity be admitted that whenever it be
"necessary and proper" in the opinion of Congress they have a right to
barter away one portion of the powers vested in them by the Constitution
as a means of executing the rest.
On two subjects only does the Constitution recognize in Congress the
power to grant exclusive privileges or monopolies. It declares that
"Congress shall have power to promote the progress of science and useful
arts by securing for limited times to authors and inventors the
exclusive right to their respective writings and discoveries." Out of
this express delegation of power have grown our laws of patents and
copyrights. As the Constitution expressly delegates to Congress the
power to grant exclusive privileges in these cases as the means of
executing the substantive power "to promote the progress of science and
useful arts," it is consistent with the fair rules of construction to
conclude that such a power was not intended to be granted as a means of
accomplishing any other end. On every other subject which comes within
the scope of Congressional power there is an ever-living discretion in
the use of proper means, which can not be restricted or abolished
without an amendment of the Constitution. Every act of Congress,
therefore, which attempts by grants of monopolies or sale of exclusive
privileges for a limited time, or a time without limit, to restrict or
extinguish its own discretion in the choice of means to execute its
delegated powers is equivalent to a legislative amendment of the
Constitution, and palpably unconstitutional.
This act authorizes and encourages transfers of its stock to foreigners
and grants them an exemption from all State and national taxation. So
far from being "_necessary and proper_" that the bank should possess
this power to make it a safe and efficient agent of the Government in
its fiscal operations, it is calculated to convert the Bank of the
United States into a foreign bank, to impoverish our people in time of
peace, to disseminate a foreign influence through every section of the
Republic, and in war to endanger our independence.
The several States reserved the power at the formation of the
Constitution to regulate and control titles and transfers of real
property, and most, if not all, of them have laws disqualifying aliens
from acquiring or holding lands within their limits. But this act, in
disregard of the undoubted right of the States to prescribe such
disqualifications, gives to aliens stockholders in this bank an interest
and title, as members of the corporation, to all the real property it
may acquire within any of the States of this Union. This privilege
granted to aliens is not "_necessary_" to enable the bank to perform its
public duties, nor in any sense "_proper_" because it is vitally
subversive of the rights of the States.
The Government of the United States have no constitutional power to
purchase lands within the States except "for the erection of forts,
magazines, arsenals, dockyards, and other needful buildings," and even
for these objects only "by the consent of the legislature of the State
in which the same shall be." By making themselves stockholders in the
bank and granting to the corporation the power to purchase lands for
other purposes they assume a power not granted in the Constitution and
grant to others what they do not themselves possess. It is not
_necessary_ to the receiving, safe-keeping, or transmission of the funds
of the Government that the bank should possess this power, and it is not
_proper_ that Congress should thus enlarge the powers delegated to them
in the Constitution.
The old Bank of the United States possessed a capital of only
$11,000,000, which was found fully sufficient to enable it with dispatch
and safety to perform all the functions required of it by the
Government. The capital of the present bank is $35,000,000--at least
twenty-four more than experience has proved to be _necessary_ to enable
a bank to perform its public functions. The public debt which existed
during the period of the old bank and on the establishment of the new
has been nearly paid off, and our revenue will soon be reduced. This
increase of capital is therefore not for public but for private
purposes.
The Government is the only "_proper_" judge where its agents should
reside and keep their offices, because it best knows where their
presence will be "_necessary_." It can not, therefore, be "_necessary_"
or "_proper_" to authorize the bank to locate branches where it pleases
to perform the public service, without consulting the Government, and
contrary to its will. The principle laid down by the Supreme Court
concedes that Congress can not establish a bank for purposes of private
speculation and gain, but only as a means of executing the delegated
powers of the General Government. By the same principle a branch bank
can not constitutionally be established for other than public purposes.
The power which this act gives to establish two branches in any State,
without the injunction or request of the Government and for other than
public purposes, is not "_necessary_" to the due _execution_ of the
powers delegated to Congress.
The bonus which is exacted from the bank is a confession upon the face
of the act that the powers granted by it are greater than are
"_necessary_" to its character of a fiscal agent. The Government does
not tax its officers and agents for the privilege of serving it. The
bonus of a million and a half required by the original charter and that
of three millions proposed by this act are not exacted for the privilege
of giving "the necessary facilities for transferring the public funds
from place to place within the United States or the Territories thereof,
and for distributing the same in payment of the public creditors without
charging commission or claiming allowance on account of the difference
of exchange," as required by the act of incorporation, but for something
more beneficial to the stockholders. The original act declares that it
(the bonus) is granted "in consideration of the exclusive privileges and
benefits conferred by this act upon the said bank," and the act before
me declares it to be "in consideration of the exclusive benefits and
privileges continued by this act to the said corporation for fifteen
years, as aforesaid." It is therefore for "exclusive privileges and
benefits" conferred for their own use and emolument, and not for the
advantage of the Government, that a bonus is exacted. These surplus
powers for which the bank is required to pay can not surely be
"_necessary_" to make it the fiscal agent of the Treasury. If they were,
the exaction of a bonus for them would not be "_proper_."
It is maintained by some that the bank is a means of executing the
constitutional power "to coin money and regulate the value thereof."
Congress have established a mint to coin money and passed laws to
regulate the value thereof. The money so coined, with its value so
regulated, and such foreign coins as Congress may adopt are the only
currency known to the Constitution. But if they have other power to
regulate the currency, it was conferred to be exercised by themselves,
and not to be transferred to a corporation. If the bank be established
for that purpose, with a charter unalterable without its consent,
Congress have parted with their power for a term of years, during which
the Constitution is a dead letter. It is neither necessary nor proper to
transfer its legislative power to such a bank, and therefore
unconstitutional.
By its silence, considered in connection with the decision of the
Supreme Court in the case of McCulloch against the State of Maryland,
this act takes from the States the power to tax a portion of the banking
business carried on within their limits, in subversion of one of the
strongest barriers which secured them against Federal encroachments.
Banking, like farming, manufacturing, or any other occupation or
profession, is _a business_, the right to follow which is not originally
derived from the laws. Every citizen and every company of citizens in
all of our States possessed the right until the State legislatures
deemed it good policy to prohibit private banking by law. If the
prohibitory State laws were now repealed, every citizen would again
possess the right. The State banks are a qualified restoration of the
right which has been taken away by the laws against banking, guarded by
such provisions and limitations as in the opinion of the State
legislatures the public interest requires. These corporations, unless
there be an exemption in their charter, are, like private bankers and
banking companies, subject to State taxation. The manner in which these
taxes shall be laid depends wholly on legislative discretion. It may be
upon the bank, upon the stock, upon the profits, or in any other mode
which the sovereign power shall will.
Upon the formation of the Constitution the States guarded their taxing
power with peculiar jealousy. They surrendered it only as it regards
imports and exports. In relation to every other object within their
jurisdiction, whether persons, property, business, or professions, it
was secured in as ample a manner as it was before possessed. All
persons, though United States officers, are liable to a poll tax by the
States within which they reside. The lands of the United States are
liable to the usual land tax, except in the new States, from whom
agreements that they will not tax unsold lands are exacted when they are
admitted into the Union. Horses, wagons, any beasts or vehicles, tools,
or property belonging to private citizens, though employed in the
service of the United States, are subject to State taxation. Every
private business, whether carried on by an officer of the General
Government or not, whether it be mixed with public concerns or not, even
if it be carried on by the Government of the United States itself,
separately or in partnership, falls within the scope of the taxing power
of the State. Nothing comes more fully within it than banks and the
business of banking, by whomsoever instituted and carried on. Over this
whole subject-matter it is just as absolute, unlimited, and
uncontrollable as if the Constitution had never been adopted, because in
the formation of that instrument it was reserved without qualification.
The principle is conceded that the States can not rightfully tax the
operations of the General Government. They can not tax the money of the
Government deposited in the State banks, nor the agency of those banks
in remitting it; but will any man maintain that their mere selection to
perform this public service for the General Government would exempt the
State banks and their ordinary business from State taxation? Had the
United States, instead of establishing a bank at Philadelphia, employed
a private banker to keep and transmit their funds, would it have
deprived Pennsylvania of the right to tax his bank and his usual banking
operations? It will not be pretended. Upon what principle, then, are the
banking establishments of the Bank of the United States and their usual
banking operations to be exempted from taxation? It is not their public
agency or the deposits of the Government which the States claim a right
to tax, but their banks and their banking powers, instituted and
exercised within State jurisdiction for their private emolument--those
powers and privileges for which they pay a bonus, and which the States
tax in their own banks. The exercise of these powers within a State, no
matter by whom or under what authority, whether by private citizens in
their original right, by corporate bodies created by the States, by
foreigners or the agents of foreign governments located within their
limits, forms a legitimate object of State taxation. From this and like
sources, from the persons, property, and business that are found
residing, located, or carried on under their jurisdiction, must the
States, since the surrender of their right to raise a revenue from
imports and exports, draw all the money necessary for the support of
their governments and the maintenance of their independence. There is no
more appropriate subject of taxation than banks, banking, and bank
stocks, and none to which the States ought more pertinaciously to cling.
It can not be _necessary_ to the character of the bank as a fiscal agent
of the Government that its private business should be exempted from that
taxation to which all the State banks are liable, nor can I conceive it
"_proper_" that the substantive and most essential powers reserved by
the States shall be thus attacked and annihilated as a means of
executing the powers delegated to the General Government. It may be
safely assumed that none of those sages who had an agency in forming or
adopting our Constitution ever imagined that any portion of the taxing
power of the States not prohibited to them nor delegated to Congress was
to be swept away and annihilated as a means of executing certain powers
delegated to Congress.
If our power over means is so absolute that the Supreme Court will not
call in question the constitutionality of an act of Congress the subject
of which "is not prohibited, and is really calculated to effect any of
the objects intrusted to the Government," although, as in the case
before me, it takes away powers expressly granted to Congress and rights
scrupulously reserved to the States, it becomes us to proceed in our
legislation with the utmost caution. Though not directly, our own powers
and the rights of the States may be indirectly legislated away in the
use of means to execute substantive powers. We may not enact that
Congress shall not have the power of exclusive legislation over the
District of Columbia, but we may pledge the faith of the United States
that as a means of executing other powers it shall not be exercised for
twenty years or forever. We may not pass an act prohibiting the States
to tax the banking business carried on within their limits, but we may,
as a means of executing our powers over other objects, place that
business in the hands of our agents and then declare it exempt from
State taxation in their hands. Thus may our own powers and the rights of
the States, which we can not directly curtail or invade, be frittered
away and extinguished in the use of means employed by us to execute
other powers. That a bank of the United States, competent to all the
duties which may be required by the Government, might be so organized as
not to infringe on our own delegated powers or the reserved rights of
the States I do not entertain a doubt. Had the Executive been called
upon to furnish the project of such an institution, the duty would have
been cheerfully performed. In the absence of such a call it was
obviously proper that he should confine himself to pointing out those
prominent features in the act; presented which in his opinion make it
incompatible with the Constitution and sound policy. A general
discussion will now take place, eliciting new light and settling
important principles; and a new Congress, elected in the midst of such
discussion, and furnishing an equal representation of the people
according to the last census, will bear to the Capitol the verdict of
public opinion, and, I doubt not, bring this important question to a
satisfactory result.
Under such circumstances the bank comes forward and asks a renewal of
its charter for a term of fifteen years upon conditions which not only
operate as a gratuity to the stockholders of many millions of dollars,
but will sanction any abuses and legalize any encroachments.
Suspicions are entertained and charges are made of gross abuse and
violation of its charter. An investigation unwillingly conceded and so
restricted in time as necessarily to make it incomplete and
unsatisfactory discloses enough to excite suspicion and alarm. In the
practices of the principal bank partially unveiled, in the absence of
important witnesses, and in numerous charges confidently made and as yet
wholly uninvestigated there was enough to induce a majority of the
committee of investigation--a committee which was selected from the most
able and honorable members of the House of Representatives--to recommend
a suspension of further action upon the bill and a prosecution of the
inquiry. As the charter had yet four years to run, and as a renewal now
was not necessary to the successful prosecution of its business, it was
to have been expected that the bank itself, conscious of its purity and
proud of its character, would have withdrawn its application for the
present, and demanded the severest scrutiny into all its transactions.
In their declining to do so there seems to be an additional reason why
the functionaries of the Government should proceed with less haste and
more caution in the renewal of their monopoly.
The bank is professedly established as an agent of the executive branch
of the Government, and its constitutionality is maintained on that
ground. Neither upon the propriety of present action nor upon the
provisions of this act was the Executive consulted. It has had no
opportunity to say that it neither needs nor wants an agent clothed with
such powers and favored by such exemptions. There is nothing in its
legitimate functions which makes it necessary or proper. Whatever
interest or influence, whether public or private, has given birth to
this act, it can not be found either in the wishes or necessities of the
executive department, by which present action is deemed premature, and
the powers conferred upon its agent not only unnecessary, but dangerous
to the Government and country.
It is to be regretted that the rich and powerful too often bend the acts
of government to their selfish purposes. Distinctions in society will
always exist under every just government. Equality of talents, of
education, or of wealth can not be produced by human institutions. In
the full enjoyment of the gifts of Heaven and the fruits of superior
industry, economy, and virtue, every man is equally entitled to
protection by law; but when the laws undertake to add to these natural
and just advantages artificial distinctions, to grant titles,
gratuities, and exclusive privileges, to make the rich richer and the
potent more powerful, the humble members of society--the farmers,
mechanics, and laborers--who have neither the time nor the means of
securing like favors to themselves, have a right to complain of the
injustice of their Government. There are no necessary evils in
government. Its evils exist only in its abuses. If it would confine
itself to equal protection, and, as Heaven does its rains, shower its
favors alike on the high and the low, the rich and the poor, it would be
an unqualified blessing. In the act before me there seems to be a wide
and unnecessary departure from these just principles.
Nor is our Government to be maintained or our Union preserved by
invasions of the rights and powers of the several States. In thus
attempting to make our General Government strong we make it weak. Its
true strength consists in leaving individuals and States as much as
possible to themselves--in making itself felt, not in its power, but in
its beneficence; not in its control, but in its protection; not in
binding the States more closely to the center, but leaving each to move
unobstructed in its proper orbit.
Experience should teach us wisdom. Most of the difficulties our
Government now encounters and most of the dangers which impend over our
Union have sprung from an abandonment of the legitimate objects of
Government by our national legislation, and the adoption of such
principles as are embodied in this act. Many of our rich men have not
been content with equal protection and equal benefits, but have besought
us to make them richer by act of Congress. By attempting to gratify
their desires we have in the results of our legislation arrayed section
against section, interest against interest, and man against man, in a
fearful commotion which threatens to shake the foundations of our Union.
It is time to pause in our career to review our principles, and if
possible revive that devoted patriotism and spirit of compromise which
distinguished the sages of the Revolution and the fathers of our Union.
If we can not at once, in justice to interests vested under improvident
legislation, make our Government what it ought to be, we can at least
take a stand against all new grants of monopolies and exclusive
privileges, against any prostitution of our Government to the
advancement of the few at the expense of the many, and in favor of
compromise and gradual reform in our code of laws and system of
political economy.
I have now done my duty to my country. If sustained by my fellow
citizens, I shall be grateful and happy; if not, I shall find in the
motives which impel me ample grounds for contentment and peace. In the
difficulties which surround us and the dangers which threaten our
institutions there is cause for neither dismay nor alarm. For relief and
deliverance let us firmly rely on that kind Providence which I am sure
watches with peculiar care over the destinies of our Republic, and on
the intelligence and wisdom of our countrymen. Through _His_ abundant
goodness and _their_ patriotic devotion our liberty and Union will be
preserved.