SUMMONING THE GENII OF THE IMPLIED POWERS
Even before the executive part of the new Government had been initiated,
Congress attacked the most serious problem it had received from its
predecessor. All were agreed that the chief difficulty in carrying on
the Revolutionary War had been the lack of sufficient funds. The
administration of the Articles of Confederation had been hampered
constantly by the same need. The nation was even now millions upon
millions of dollars in debt. In order to pay the interest on the French
and Spanish loans it had been the custom for several years to borrow
more money from the Dutch bankers. This was accomplished with no little
difficulty. From the same source John Adams had secured funds with
which to install the Government under the Constitution. The
President-elect had been compelled to borrow money from a neighbour
at Alexandria to meet the expenses of his journey to the capital to
be inaugurated.
Public credit both at home and abroad was in ill-repute. To meet the
foreign interest and installments due in 1789, over four million dollars
must be raised. "Not worth a continental," sighed the merchant as he
turned over a heap of depreciated Continental currency in a corner of
his strong box. "Acknowledgment to pay by the 'untied States,'" said
the owner of a pile of worthless United States certificates of
indebtedness. His patriotic zeal in lending money to the National
Government in her hour of need now bade fair to ruin him. The veteran
of the Revolutionary War carried his half-pay certificate to the
money-lender, glad to get even five shillings in the pound for it.
Holders of various forms of State indebtedness besieged their State
authorities for payment, rapidly approaching a point where they would
welcome any agency which would get them their due.
According to Madison, the Continental Congress had chosen such an
unseasonable date as the first Wednesday in March for beginning the
new Government in the hope of levying a duty at once which would catch
the spring importations of goods from Europe. It was this purpose which
brought him to his feet in the House of Representatives on the eighth
day of the first session to introduce a subject which he declared to
be of the first magnitude, and one that required their first attention
and their united exertions. This was the deficiency in the national
treasury. For a remedy, he had chosen an impost on certain imported
goods.
Fortunately, an impost was not a novelty requiring time and instruction
to secure. Imposts had been instituted generations before to obtain
funds for clearing the seas of pirates and for making safe the merchant
marine. Because of these laudable objects, imposts had come to be
regarded as a legitimate form of external taxation and as a means of
raising a revenue to meet the expenses of government. The American
people had been familiar with imposts from colonial times; they had
been commonly levied by individual States since independence; and they
had been associated in thought with the National Government in the
vain attempts to revise the Articles by giving it this method of raising
a revenue. "To lay and collect imposts" was indisputably stated in the
Constitution as a power of the Federal Government. All that was
necessary to do was to determine what goods should be liable to a duty
and what the amount of duty should be.
Madison submitted for specific duties a fixed list of articles, which
the Congress had determined upon in 1783, at the time it was requesting
the States to allow it to collect a duty. The list was made up of rum,
molasses, wine, tea, pepper, sugar, cocoa, and coffee. These were
regarded at the time as luxuries likely to be consumed by those able
to pay the duty. Other imported articles were to have an ad valorem
duty. Madison had in mind, as he said, a productive tariff to secure
money for the bankrupt national treasury. If more money was needed,
the rates could be raised at any time. But early in the debate a member
from Pennsylvania moved an amendment adding a number of articles to
the specified list. They included beef, butter, candles, soap, boots,
steel, cordage, nails, salt, tobacco, paper, hats, shoes, coaches, and
spices. "Among these," said he, in explaining his motion, "are some
calculated to encourage the productions of our country and protect our
infant manufactures." At once, members from States which did not produce
these articles protested that the addition of an impost would keep out
foreign competition and make them pay higher prices for the goods.
Other members from States which produced articles in neither list were
equally urgent in getting their special products added. The tradesmen,
manufacturers, and others of Baltimore sent in a petition "to the
supreme Legislature of the United States as the guardians of the whole
empire," begging them to impose on all foreign articles, which were
made in America, such duties as would give a just preference to their
labours. The shipwrights of Charleston in a petition pictured their
distress under the present condition of trade and begged relief by
proper legislation. Petitions soon followed from coach-makers,
soap-boilers, snuff-grinders, makers of mathematical instruments,
manufacturers of sheepskin trousers--in fact, nearly every form of
industry wished to take advantage of this opportunity to secure national
where they had formerly been able to get only local protection. The
members of Congress described in their letters to friends the fish
battles, the salt battles, and other manifestations in legislative
halls of the cupidity of mankind when opportunity is once presented.
In this way it came about that the first revenue measure in the first
session of the first efficient National Legislature brought the members
face to face with the question of the purpose for which government
exists. The Declaration of Independence had declared it to be the
securing of certain inalienable rights with which men are endowed by
their Creator. This French conception of certain abstract and general
rights had taken in British and colonial minds the very concrete shape
of property. It is scarcely just to say that even unconsciously the
British people had instituted government for the protection of property
and invested interests; but it is within the bounds of truth to say
that a large part of the legislation of Parliament, in the formative
days of the American colonies, had been inaugurated with this end in
view. With the abuses of the monopolies granted by the mother country,
the colonists were only too familiar. But the principle had been
inherited, and it had been put into practice in the shape of legislative
aid granted by colonial assemblies for the inauguration of various
commercial and manufacturing enterprises. Sometimes this assistance
had taken the form of money; at other times, of a patent or monopoly
granted for a number of years. Petitions for such aid had been presented
to the Continental Congress at various times. It was not strange that
they should appear in the new Congress, as has just been described.
Political parties had not yet been developed, but the debates on this
first tariff bill showed a strong tendency to sectionalism, arising
from the varied interests of an extensive territory. It was a
sectionalism which, if it prevailed, would tend to weaken the Central
Government, but, if overcome by compromise or force, would strengthen
the national authority by the very fact of the victory. At the time
the differences of opinion arising from the various parts seemed so
irreconcilable that Madison frequently confessed his despair of getting
any tariff measure passed at the session; so early did the sectional
interests appear, which were destined later to threaten seriously the
very existence of the Union.
If the distillers of Philadelphia, for example, petitioned for a greater
discrimination in the duties on rum and on molasses, the citizens of
Portland, then in Massachusetts, assured Congress that any duty on the
latter commodity would operate injuriously and be attended with
pernicious consequences to all the New England States. Once entered
upon, this protective policy could not be stopped. By mutually aiding
each other, members could get articles added to the protected list
more easily than the unorganised opposition could keep them out. By
comparing such co-operation with the united efforts by which the first
settlers had cleared their fields, the phrase "log-rolling" was
invented. Thus it happened that the first import bill, intended by
Madison as a measure for raising revenue, was turned virtually into
a protective-tariff measure, and was so called in the preamble. Few
realised the importance of the change at the time. Madison called it
the "collective" bill, and wrote to a friend that it had cost much
trouble to adjust its regulations to the varied geographical and other
circumstances of the States. However unconsciously done, the principle
of protective-tariff legislation by the National Government had been
adopted.
It is prophetic of the future to note that in this first debate a
difference of opinion was shown to exist concerning the proper function
of government. One speaker cited the history of the ancient world to
prove that the protection of industries and the establishment of
manufactures was a very proper aim of government. Others held to a
contrary opinion. Madison was among those who thought that business
should be left to take its natural course without government
interference. He said:
"I own myself the friend to a very free system of commerce and to hold
it as a truth that commercial shackles are generally unjust, oppressive,
and impolitic; it is also a truth that if industry and labour are left
to take their own course, they will generally be directed to those
objects which are the most productive, and this in a more certain and
direct manner than the wisdom of the most enlightened legislature could
point out."
This was the voice of the country member, unaccustomed to the fostering
hand of government. It was also the voice of the minority. The
Constitution had been framed and adopted by the commercial interests
generally, who took quite an opposite view of the duty of government
toward business.
No one at this time seemed to feel the potency of the protective
principle in enlarging the power of the Union. It was unseen until
fully developed some thirty years later. Yet to appreciate the full
force of this tariff bill of July 4, 1789, with its protective preamble,
as a sample of Union-making legislation, one need only consider the
gratitude which the National Government has won through such protective
measures; the attachment of leading men to the Union from guarding
their interests; the accumulated strength of moneyed interests in time
of danger to the Republic; the use made of the tariff in protecting
workingmen; the revenue derived from high tariffs, which has been spent
on public improvements; and the force of public opinion which has been
frequently rallied by both employer and employee to the support of the
execution of a national revenue law.
Above all members of the first administration, Hamilton stood for an
efficient National Government. He saw opportunity in the administration
and interpretation of the written document to correct the weak places
which he had sought in vain to avoid when the frame was being made.
A constructive genius by birth, a financier by study, a leader of men
by nature, Hamilton had, in the Treasury Department, that function of
the new Government which needed the most strengthening, and in its
present condition the necessity which would support the strongest
measures. Called upon by Congress at the time of its first adjournment
to inform them of the exact financial condition of the country, he
drew up an exhaustive report showing that the National and State
governments together owed something like fifty-two millions of dollars.
The national obligation to-day is twenty times that sum. Its proportion
to eighty millions of people is not much less than the fifty-two
millions were to the three and a half millions of people who faced the
debt of Hamilton's time. But the debt now is of fixed form and assured
payment before it is incurred. The debt which Hamilton presented to
Congress was heterogeneous in form and without means of payment. Arguing
that a national debt properly funded had contributed largely to the
prosperity of Great Britain, Hamilton proposed to collect all these
evidences of debt into a national obligation, which would bring interest
to its holders until paid. The faith of the United States toward its
creditors must be redeemed. To secure a revenue with which to pay this
interest and evidently to redeem the principal in addition to meeting
the running expenses of the Government was the first task. Hamilton
proposed to place additional duties on imported goods and to lay a
tonnage on vessels using American ports, the latter of which he
estimated would yield more than a million dollars. He would also put
an excise on distilled spirits manufactured in the United States and
on those imported, both bringing in nearly three million dollars. The
profits of the post-office he estimated at almost a million dollars
annually, to be applied also to the national expenses.
[Illustration: CERTIFICATE OF DEBT AGAINST THE UNITED STATES. From the
Manuscript Division of the Library of Congress. This was one of the
Revolutionary obligations assumed and paid under Hamilton's financial
measures.]
The members of Congress, at the subsequent session, with remarkable
unanimity, concurred in these recommendations of the Secretary of the
Treasury for the redemption of the national obligations, including
both the debt owed to foreign nations and that incurred to domestic
holders during the exigencies of the war. But upon another proposition,
that the United States should assume the debts incurred by the several
States during the war, there was strong opposition. It was said that
such action would lead to speculation and stock-jobbery in buying up
these debts and converting them into new forms. The original holders
had long since disposed of them to brokers, who would be enriched by
national legislation. It was the old clash between the moneyed and the
moneyless classes. Although the action would be a direct interference
of the National Government with State affairs, the debates turned on
economic rather than constitutional grounds. If Hamilton had the
foresight with which he is credited by his admirers, if he saw that
the allegiance of the people would gradually be won away from the
States to the Central Government because the latter was redeeming
promises which the States had long been endeavouring to meet, if he
was taking advantage of the selfishness and cupidity of the deeply
indebted States, there is no evidence to show that the States saw or
appreciated the danger.
Virginia, whose representatives bore the brunt of the opposition, had
a source of revenue in her western lands from which she could easily
discharge her obligations, and naturally had no desire to share the
liabilities of others. But her State Legislature, after Hamilton agreed
with Jefferson to buy off the Virginia opposition in Congress by
locating the national capital on the Potomac, protested in strong and
exact terms against the State-debts-assumption proposition. These
resolutions recited that the people of Virginia had adopted the Federal
Constitution under the impression and upon positive condition that
"every power not granted was retained," and that they had read the
document in vain to find the right given to assume the debts of the
States. Here, within two years after the adoption of the Constitution,
was a State Legislature protesting against the usurpation of power
under it. It was the first of many futile protests.
Hamilton, sending a copy of the Virginia resolutions to Jay, saw "the
first symptom of a spirit which must either be killed or will kill the
Constitution of the United States." He thought the collective weight
of the different parts of the Government ought to be employed in
exploding the principles they contained. Theoretically, the Legislature
of Virginia may have been correct in its attitude; but no theoretical
protest could avail against the worthy sentiment that the entire
national credit must be restored, backed by the practical demands of
the creditors, and by the desires of those who saw an opportunity of
investment or speculation.
Those people, both officials and citizens, who took the stand in these
formative days of political parties that the Federal Government should
be restricted in its workings to the powers expressly given to it in
the Constitution, a "strict construction" of that document, as they
called it, were generally country bred, of the borrowing rather than
the lending class, depending upon individual initiative rather than
mass action, strangers to the paternal aspects and fostering hand of
government, and inexperienced in the intricacies of finance. Gen. Henry
Lee, of Virginia, complained to Madison of the complexity of Hamilton's
plan. "It departs," replied Madison, "from that simplicity which ought
to be preserved in finance more than anything else." Inability to
comprehend naturally breeds suspicion.
Hamilton's followers were, for the most part, from the Northern and
Middle States, city dwellers, money-lenders rather than borrowers,
business men, and manufacturers, who saw no wrong in having the
Government promote the general welfare by legislation. The sudden
revival of business which followed the adoption of Hamilton's plan to
redeem all the debts seemed to them both natural and legitimate. The
other group looked upon the entire matter as a corrupt transaction,
contrived by Hamilton, and a prostitution of government from its
legitimate purposes. Madison wrote that just before the report came
out the value of the various forms of debt rose from a few shillings
to eight or ten shillings in the pound, and that emissaries were still
exploring the interior and distant parts of the Union in order to take
advantage of the ignorance of the holders. To meet the occasion
Jefferson invented the phrases, "corrupt squadron," "stock-jobbing
herd," and "votaries of the treasury," upon which he rang the changes
during a long lifetime.
To this indignation was added dismay when the effects of national
assumption of State obligations began to be appreciated; when creditors
who had besieged the State treasury for years found the Union satisfying
their just demands; when the evidences of national government, which
had heretofore been confined to a wandering Congress, began to appear
at every hearthstone. A realisation of these results brought from
Jefferson the complaint that he had been duped by Hamilton in the
assumption-capital bargain; that he had been "most innocently and most
ignorantly made to hold the candle for a wicked scheme."
A similar aggrandisement of the National Government was the motive,
according to the eulogists of Hamilton, which prompted him to make a
suggestion for another novelty, a United States bank. Ostensibly he
claimed that it would have the effect of bringing immediate financial
relief, as well as safeguarding the future. The arguments presented
by him to Congress for the incorporation of a bank in which the National
Government should be a stockholder were purely utilitarian. The bank
would benefit the public by offering an opportunity for the investment
of capital. It would benefit the Government by lending it money in an
emergency and by collecting its revenues. Its notes would also form
a circulating medium. The bill drawn by Hamilton incorporating such
a bank passed the Senate without material change and without a division.
One Senator from Pennsylvania, suggesting amendments to his colleague,
was informed that Hamilton's father-in-law, a Senator from New York,
had said Hamilton did not wish the bill altered. The hopeless minority
in the Senate claimed that the chances of subscribing to the proposed
bank, guaranteeing an investment at six per cent, for twenty years,
won many to its support. They also saw here another link in the chain
which Hamilton was welding about the States. The debts having been
assumed, the certificates would be accepted as subscriptions to bank
stock. Thus one measure would be made to play into another.
In the House, the right of the Federal Government to found a bank was
attacked by Madison, who here parted from Hamilton, with whom he had
laboured in getting the Constitution adopted. The line-up of parties
had begun. Madison found himself opposed to the way in which the
Government was being perverted by Hamilton under the Constitution. His
speech is the first extensive exposition of the doctrine of strict
construction of the written instrument; that the central power must
be held strictly to the powers numerated in the document. Strict
construction exhibits the vice of a written Constitution--the
impossibility of growth or even continued life within the bonds of the
written word. Stagnation and death must result from binding the limbs
of the body politic. Loosening by interpretation is the remedy. Madison
was correct in saying that the right to incorporate bodies was proposed
in the Philadelphia Convention and abandoned; that the power to
incorporate a bank was nowhere given in the Constitution to the Federal
Government; that banking was presumed to be a matter for State control;
that in all the debates and papers written on the Constitution it was
understood that "the powers not given were retained; and that those
given were not to be extended by remote implications."
In reply, Boudinot did not deny that all powers, vested heretofore in
any individual State, and not granted by this instrument, were still
retained by the people of such State and could not be exercised by
Congress. But he then showed that the power to incorporate the bank
was "drawn by necessary implication" from those expressed. The preamble
declared in general terms the objects of the Constitution; one of the
expressed functions under it was "to borrow money"; and the circle was
completed by the liberal clause to "make all laws necessary and proper
for carrying into execution the foregoing powers." Now to provide for
the general welfare it might be necessary to borrow money; a bank was
essential to the borrowing of money in adequate sums; therefore the
power to establish a bank was deduced by the strongest and most decisive
implication.
Here was the first complete exposition of the doctrine of a loose
construction for the wording of the Constitution. If that be correct
reasoning, said the opposition, the Constitution may as well stop with
the preamble, since there is no power under heaven which could not be
exercised within its limits. It would mean the consolidation of all
powers, and the practical extinction of local government. The attitude
of the two sides in the debate may be shown by one illustration
employed. Suppose the power to make a treaty or to raise an army had
been omitted from the Constitution, asked the Hamiltonians, could the
National Government in an emergency assume such rights from the preamble
and the powers expressed? Must it hesitate and temporise while the
blood of its citizens was being shed? Such an assumption of power,
replied the strict interpreters, might be excusable in an emergency,
but could be warranted as a practice only by an amendment to the
Constitution made in the manner it prescribed.
The present situation and the compelling force which had produced it
were manifest when those who favoured giving the Union such implied
powers as would make it effective pointed out many instances of
implication of which Congress had already been guilty; such as accepting
land for lighthouses, defining crimes under power to establish courts,
and even creating corporations in the shape of the North-West and the
South-West territories. One of these lesions of the written word, that
which interpreted a clause so as to give the President power over
removals from office, Madison himself had favoured.
This first constitutional debate also outlined the geographical
sectionalism which has penetrated and influenced every feature of
American political as well as commercial and social life. The Northern
and Middle States contained the cities, made up of the trading class,
whose capital was chiefly in ready money. The capital of the rural
dwellers of the South was in land and slaves, not easily converted
into cash. The latter became the borrowing, the former the lending
section. The spirit of unionism was engendered in the first by reason
of their urban life, their commercial employment, and their frequent
contact in business. The feeling of individualism was as naturally
bred in the latter by their rural surroundings, their agricultural
occupation, and the self-reliance induced by their solitary environment.
The opposition to the Constitution in Massachusetts, Rhode Island, New
York, and Pennsylvania had been confined almost entirely to the country.
The rural States of Virginia, North Carolina, and South Carolina did
not adopt the new frame without a struggle. Georgia was a Southern
exception; but population dwelt so exclusively along the coast in the
new State of Georgia that it was really a commercial State, settled
largely by New Englanders.
The mercantile class of the Northern and Central States, after Anti-
Federalism had been silenced by the success of the new Government, was
ready to adopt the theory of loose construction or interpretation by
inclusion, which would tend toward the realisation of a more potent
union. At the same time, a bank, supported by the patronage of the
National Government, with no danger of competition for twenty years,
offered not only a security for capital against such dangers as it had
previously known, but also, through its branches, an extended agency
for transacting business. Many details of the bill, such as the
advantages given to holders of national rather than State certificates
in subscribing for stock, contributed to the sectional division. The
national certificates were held in the commercial centres. The influence
of the city of New York, where the Congress met, no doubt contributed
to the passage of the bank and other commercial measures.
Precisely the opposite feelings held in the Southern States. Every
vote cast in the House against the bank came from Maryland or a State
to the south of it. There were a few scattering votes from the Southern
States in favour of the measure, but as a whole political lines were
here unconsciously drawn for a century to come, if not for the entire
existence of the Republic. The "court and country" parties of colonial
days had been born again.
Many of the members were surprised to find sentiment toward these
financial measures assuming such a sectional trend. Sectional interests
had been only too manifest in the convention, but compromises had
settled them, presumably for ever. Compromise is only a relief; it is
never a remedy. After each compromise in American history it has been
a matter of surprise to the participants that others were needed. On
the bank bill, a member wrote to a correspondent: "You may think it
unaccountable, but so it is that the differences in climate seem to
govern the opinions on this bill, and Potomac seems to be near the
dividing line with few exceptions."
Virginia was the leader of the section south of the Potomac, and
Jefferson was the leader of Virginia. Although debarred from the
congressional debates by his Cabinet position, he filled his letters
to his friends with warnings against the dangerous assumptions of the
Hamilton measures. In response to Washington's inquiry to his Cabinet
upon the constitutionality of the bank, Jefferson drew up a paper
setting forth in strong terms his opinion that the Central Government
had no power to engage in business. Hamilton presented an equally
strong argument for the bank in his reply.
Madison, the leader of individualism in the House, could not agree
with Hamilton's interpretation of the "general welfare" clause of the
Constitution. The former co-labourers for efficient government parted
at this point. Madison thought the adoption of such an interpretation
would change the National Government from a limited one, possessing
certain specified powers, to an indefinite one, subject only to
particular exceptions. The phrase concerning "the general welfare" had
been taken from the Articles, he said, where it was understood to be
nothing more than a general caption to specified powers, and had been
retained because it was less liable to misconstruction than any other.
Whatever had been the original intent, the spirit of the implied powers
had been summoned from the vasty deep of uncertainty to aid in making
a confederated republic from confederated States.