This paper, therefore, consists of a jumble of ill-digested observations, in which correct and incorrect views are entangled with each other. In reading it, as in the case of Hamilton's other economic papers, the reader is constantly forced to think: If this writer had read Adam Smith, he would have been led to just that refinement of analysis and elucidation of his ideas, which would have led them out of crude inaccuracy into exactitude and correctness. That Hamilton had perused Adam Smith's book is unquestionable. This only makes it the more remarkable that a man of his well-proved mental power, should give such evidence that Smith's book had not affected his thinking, to any ascertainable degree.
In the debate upon the charter of the first Bank of the United States, in the House of Representatives, three elements may be distinguished, the constitutionality, the social antagonism, and the sectional antagonism. The first turned upon the question whether the government of the United States, which had been created by the Constitution, was endowed with the power to pass acts of incorporation. Madison was the leader of the negative, and, both by his authority and his arguments, furnished that side with its chief strength. He affirmed that the Constitutional Convention had refused to insert amongst the powers of Congress, that to incorporate, because it had been said that this would give the power to make a bank. Inasmuch as the question of power to incorporate a bank had arisen in respect to the Bank of North America under the Confederation, the non-conferment of this power in the new Constitution was undoubtedly a pregnant omission. The advocates of the bank had no little difficulty to find a clause under which it could be implied. Hamilton, when called on by Washington to submit an argument on the objections which had been raised against the bank, put its constitutionality on the ground that the Constitution had created a sovereign state, endowed with all necessary powers for the functions which it was called upon to perform. The opponents gave to "sovereignty" its most absolute and abstruse meaning. One of their chief reasons for detesting the bank was that they thought that it would help to support the conception of the federal Union as a confederated state with sovereign powers. Thus the bank was placed from the outset in the midst of the battle of State right. They also construed the power to incorporate as an especially majestic and prerogative function of a sovereign. Hamilton met the former issue quite squarely. He construed acts of incorporation as no more awe-inspiring than other acts of legislation, and presented the bank as a pure question of legislative expediency.
The social antagonism reached little other expression than a growl of suspicion and dread that this institution was to be an engine of the money power; that it was contrary to equality; that it would benefit only the rich.[1] This antagonism was but an incident in the great warfare inside of modern society; numbers against capital; democracy against plutocracy;
- ↑ There is no limit to the flexibility of political arguments. The argument against the Bank of England when it was founded was that banks had never existed except in republics and were unfit for monarchies.
