President Andrew Jackson's Veto
of the Bank of the United States
July 10, 1832
Veto Message
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 of 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
sells 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 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 of 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 injust 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 percent, 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 percent 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 South-western 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 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 it 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" for 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
itself 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 subjects, 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.
American Heritage Library Table of Contents
|
