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John Taylor.

Construction construed, and constitutions vindicated online

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meaning, have taken a ground so comprehensive, and so ade-
quate to the defence of any acquisition of unconstitutional
powers by congress, that if it be solid, every thing hitherto said/
is immaterial. They add to the last extract, as conclusively
responsive to its doctrine, "that banking is a convenient, a use^,
^ful, and essential inatrument in the prosecution of fiscal ope-



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^rtti<m8» is not now & sutject of controyersy." Of coarse a
syllogtsm bounces unexepectedly upon us, out of the two ex-
tracts. Fiscal operations are within the powers of congress*
and all means appropriate to that end are constitutional ; bank-
ing is a means convenient, useful and essential to iscal ope-
rations ; the conclusion is inevitable. But this interpolation
Df the words, '* convenient, useful and essential," into the
constitution, is in my view not even a plausiUe argument.
It is merely a tautology of the phrase ^ necessary and proper,"
but excluding the restriction attached to the latter. If the tau-
tology may be fairly used, it can only be as an illustration, unce
the word "proper" is equivalent to ''convenient and useful"
so far as they are applicable, and " necessary" to <* essential."
" Proper" indeed has a reference to the impropriety of swerving
from the constitution, and the substitution of w<Nrds otherwise
equivalent may be so far ingenious. The substitution, however,
is not a correct illustration of the constitution without the
restriction. To reason from it, the court ought to have stated
it thus. Congress may pass all laws, which shall be '< conve-
nient, useful and essential" for cairying into execution the /ore*
goirtg pawers. Thus stated, all the arguments, used in r^er-
euce to ** necessary and proper," plainly apply to the substitu-
ted words. And if no power, expressed or implied, be given to
congress by the words used, to abrogate constitutional state
lawsr or to travel out of its delegated orbit into the reserved
orbit, I think I may assert, that it cannot derive this power
from the substituted words.

But whatever use can be made of these substituted words, it
surely cannot appertain exclusively to the delegated powers^
and must extend also to those reserved. These would be quite
nugatory, under a prohibition to resort to that which was con-
venient, useful and essential for their execution or preserva-
tion. And the constitution having divided and balanced the
powers between the federal and state governments, has united
itself with common sense in dividing and balancing me&ns^
words, phrases and implications, by not investing either de-
partment with an exclusive use of these implements necessary
to its existence ; foreseeing that powers in either case divested
of means, would be inefficient ; but it did not intend that either
X



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irs

should destroy the other with its means, thou^ prohibited from
doing it with its powers.

It is easy to see, that the court have erected a climax by the
words ''conyenient, useful and essential/' to unite an extensioft
of power with an apparent adherence to the words of the con-
stitution. We are gently led along from convenient to e^en*
tial, as if all the three words were legitimate, because of the
resemblance in the last to the word ** necessary.'' Considering
all three as restricted by the words •* foregoing powers," this is
not very material ; but yet, as the incorporating power of con-
gress IS deduced from these substituted words, the expediency
of banking thus asserted by the court cannot be wholly passed
over. I shall, therefore, Subjoin a short catalogue of its incon-
veniences.

The court, with candour and justice, has limited the power
of congress to create banks, to the circumstance of their being
•* convenient, useful and essential to fiscal operations," and for-
borne to urge their general u^lity as a reason for the exercise of
that power, because it was conscious that the country was not
ripe for tiiat doctrine ; or that the constitution did not authorise
the extension of federal power, upon the ground of internal social
expediency ; and therefore, it was necessary to hook every im-
plied, to some delegated power. Banking is of course suspended
to fiscal operations. As to these, the eulogy is consequently
wholly pecuniary; and can have no other meaning, than that
banking will save publick money, by the facility with which it
can be transmitted. And I admit that pecuniary frugality is
convenient, useful and even essential to republican governments.
This solitary argument for investing congress with the right to
incorporate banks, if it can overthrow all those I have advanced,
depends yet upon the fact, to which I shall therefore call Hke
reader's attention.

The depreciation of money caused by bankings has been
repeatedly and successfully ui^ed both under the state and
federal governments, as a reason, for an increase of wages and
expenditure ; and has considerably aggravated taxation, botii
state and federal. Whatever increase of wages or expenditure
has been produced by banking, has been nearly a total loss to
the nation, unless it can be proved, that an increase of taxa-



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17^,

iifmv$ & puUick b^i^fit ; a doctrine, which all goTeramenti
have inculcated, and no nation has yet believed. The reader
must compute the extent of this increased taxation, both state
and federal, for himself. I can only furnish him with two facts.
lCb» federal expenditure in the time of Washington amounted
to about three millionsr annually, and in that of JeSerson to
about six. < At the first epoch, the United States were paying
the interest of their debt ; at the second, both the interest
and a portion of the principal. Now, the expenditure of the
federal government exceeds twetity-five millions. The same
candour which will admit, that only a portion of this rapid
inprease of taxation is attributable to banking, must also allow
that much of h is so. I compute the additional taxation, state
and federal, thus derived, at not less than five millions annu*
ally ; paid for the facility of transmitting the publick money
fr^mi one place to another. Neither our army, nor our navy costs
so much. Whatever is the amount, it undoubtedly is directly
the reverse of fiscal convenience or utility ; that is, in regard to
th^ nation ; for I know that it is not rare for governments
to consider an increase of taxation as ''a convenient, useful
^ and essential instrummi in the prosecution of fiscal opera-
<< tions," and that banking has therefore been very much of a
&vourite with those of the old world. I acquit, however, aU
our governments of this design, because I believe they never
thought of it, however extensively their laws may have brouglit
it about It only happened from the circumstance, that similar
causes, either in the west or east, will generally produce simi-
lar eflfects. In the east, exclusive privileges have invariably
turned out to be publick grievances; and aggravated taxation^
legal extravagance and pauperism^ have r^ularly brought up
tiie rear of blinking. But our l^islatures have fondly hoped*
that exclusive privile^, granted by good republicans, would
be puUick blessings.

It was once asserted, that banking would reimburse the loss
it caused to the nation in a^ravating wages, expense and taxa^
tion,by enhancing the price of our commodities ; and the argu-
ment kept its grouEid, so long as these brought a high price in
Europe ; but woful experience had detected the delusion. It
is at length demonstrated, that the price of our exports is fixed
in foreign markets, and that banking does not, by enhancing



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it, rambirfe the natien for the iacreue of tazatieQ it <
The ftrguiaeiit of the coort can derire no beneit firmn uxf
mSXxij in banking* except in Jiaeal op^nrtionty at it does not
pretend a right to extend the powers of congress firon any
general considerations of national good; bvt only as meara
appurtenant to an actual delegated power, which in this cue
it supposes to be the power of taxation, thongh called ** fiscal
operations." Bnt, whilst the court, in sustaining this argwnent
is limited to the conYenience of banking for the execution irf'a
delq;ated power, in refoting it, all the national inconreniences
it causes are foir counterpoises against its solitary confentence
of transmitting pnUick money. This is, apparently, a pecu-
niary conTenience ; bat if we pay for it more than it saves, by
the increase of taxation arising from the depreciation of bank
currency, it is clearly a pecuniary inconrenience ; and it is not
yet contended, that the powers of congress may be extended
by implication to rights inconvenient and oppressive to the na-
tion. No one, who computes impartially, will hesitate to con-
clude, that the increase of taxation, caused by the depreeiation
of bank currency, infinitely exceeds the saving of transmitting
taxes by bank instrumentality. Waving the facilities arising
from bills or orders, which would be considerable* I will ven-
ture to assert, that if it was removed under a militarj escort,
tte expense would be comparatively trifling.

To the increase of taxation by banking, another great item of
pecuniary loss is to be added. The local depreciation of its
currency causes us to pay &n additional price for our imports.
Sellers will reimburse themselves for this deinreciation, to our
excessive injury when the balance of trade happens to be
against us, by asking a price sufficient to enable them to make
remittances in specie. And exclusively of the diminution of
the precious metils thus caused, the difference between their
value and the value of bank paper is a large item of national
pecuniary loss, independentiy of the pecuniary individual lost
arising from the same cause.

FUcal operations are the means, by which civilized natimis
are oppressed and enslaved. If a government may do whatever
it pleases to think "convenient, useful or essential in the pro-
<«secution of fiscal operations," however inconvenient, usdess
and injurious to a nation, and however detriukental to the



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rnnnds^ inteteftty and hairiness of individuals, il is dtficoH t*
conceive any limitations by which it can be restraitked. The
iiramers of the constitution, aware of the necessity for restrain-
iDg this dangerous instrument, confided to the federal govem-
ment a fiscal power, defined and limited. In the division of
powers between the federal and state governments, the care
of the morals; interest and happiness of individuals is confided
to the latter ; nor is any power over perscms given to the
former, except for the carrying into execution the delega*
ted powers, which were not intended to absorb a right to
take out of the hands of the states their national and original
right to provide for the morals, interest and happiness of the
individuals composing each state. Suppose experience should
disclose mischiefs and inconveniences to the people from the
drculalion of notes payal^e to the bearer. Is the federal or
state governments to apply the remedy? The limited power of
the federal government over persons does not reach the object
The state governments have endeavoured to prevent it, by pro-
Ubiting individuals or unincorporated banks from issuing such
notes. They might have sufibred this, but congress could not.
It is merely an internal local regulation, like the transfer of
bonds, bills or notes, within the power of the state govern-
ments, and without the power of congress. The right of prohi-
bition is consecutive to the right of permission ; and congress
have no power to prohibit, because they have none to permit
Whilst the care of the morals, interest and happiness of the
people internally, is confided to the states, it can hardly be
imagined that congress was invested with a power of legisla-
ting, so as to afflict all three in a mode, which they had no
power to prevent They could not, constitutionally, even con-
sider the inconveniences of banking under any power given to
tiiem by the federal constitution, as to the morals, interest and
happiness of fhe people, because the care of these is reserved
to the states ; and oug^t to have confined themselves to the
meagre point of its afibrding a facility in transmitting money,
as all its other effects belonged to the state orbit In this view,
the decision of the court allows that congress may cause great
and general internal inconveniences, <^ a character beyond its
power to prohibit or even to consider ; and that the states, who
csm only consider these inconveniences, and cannot apply a



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ranedjr under their internal power of forbidding the eircnbitioit
«f notes payable to order, often exercised and ne^er rdin*
qnished.

Congress were never expected to consider those local frauds
by which life is embittered and society cormpted ; even. the
manners of the individuals who conduct its banks, are without
its province and beyond its correction ; and although the idea
of correcting the frauds of institution^ shrouded in secrecy, is
only a theory, yet this unfortunate fact, is an unanswerable
argument for a power of suppression in a government. Being
of an internal nature, congress cannot exercise this power f yet
evils ought to be supj^ressed. Is there a single case of a stock*
holder, defrauded by the management of these secret insti-^
tutions, having been able to obtain justice? Whilst widows
and orphans are pining in silence, under the distress of the spo*
liations they have suffered, the newspapers roar with the
dolours of the patriots who have employed their property in
unsuccessful speculations. Legislatures are invoked by arts
and wailings from bankrupts of borrowed property, to have
compassion on their aversion to the payment of their debts^ to
sequester a poor remnant which their unfortunate creditors
may recover, and confiscate this remnant, by devising some de«»
predated currency with which to balance accounts.

Under our form of government, fiscal operations ought not to
be considered in reference to the convenience or benefit of a
government, as they are considered under European monar«
chies, but in relation to the convenience or benefit of the peo-
ple. Kow, though the government may suffer no inconvenience
or injury from the increase of salaries and expenses produced
by the depreciation of bank currency, the people from oar-
peculiar situation may sustain both. Their funds arise chiefly
from the exportation of agricultural or marine producti(ms, by
which they are enabled to pay their taxes. The price of these •
productions being limited by their trans-atlantick value, the
people cannot be reimbursed by the depreciation of a local cur-
rency, for an increase of taxation chiefly paid out of this re*
stricted price.

Again. The fiscal operations of a government may be nur-
tured by a corruption of manners, and a violation of justice
among individuals. Unhappily, the revolutionary patriots



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1S3

were driven into the latter evil bj necessity. Bat we hate
voluntarily introduced both without any. The United Statea
have ascertained the effects of paper money by two experi-
laents, and its character under a free government has been
•scuttled by both* By the first it is ascertained, that the meet
solemn national promises of redemption, without equivalent
funds, cannot sustain its value, or prevent its fraudulent ope-
ration upon individuals : By the second, that a promise of re-
demption by the payment of specie will sustain its value, or
delay its fraudulent operation upon individuals, so long only
as the nation believes in the falsehood^ that the banks are able
to pay it. In a free country, the detection, sooner or later, is
inevitable, and a heavy shock of factitious misfortunes ensues.
Banks, managed by Che power of despotism or of aristocracy,
live long either upon delusion, or upon supplies extracted from
the peoples The same motives unite these parties in these
means, for conducting their fiscal i^perations* Exposed to the
scrutinizing eye of liberty, a detection of fraud will come at
last. Under the iron rod of despotick governments, these insti-
tutions are deterred from committing any frauds, but in con-
cert with their accomplices, both by the fear of punishment^
and the influence of patronage; but under our mild policy,
neither expiation nor bribery is practicable in the case ot
banks. Their crimes may possibly be numbered, but no figures
can rec(H^ their punishments, because they are never punish-
ed. Had the bank of the United States commenced its very
career, by committing the most enormous frauds, congress
might have been deterred by the magnitude of its offences, or
an inability to do justice to the injured, even* from making
them publick.

A catalogue of the immoral tendencies of banking ought to
be awful to a republican government, which many great writers
assert to be incapable of subsisting long, except by the preserva-
tion of virtuous principles. Can these be preserved* by invest-
ing corporate bodies with the privileges of committing remediless
frauds, of laughing at detection, and of retaining the pillage ?
By nurturing and then ruining, pride, extravagance, specula-
tion, folly, rapaciousness and dishonesty, as the arch fiend
entices into guilt, and punishes those whom he has deluded ?
By corrupting l^slative bodies, the temporary representatives



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1S4

of the people, into ftn ojHnion, that ibej may prolong their
power and establish tiieir speculations, howeyer detriroen*
tal to their constituents, for unlimited periods P By deluging
a whole nation with foods of depreciation usury, having first
banished the only cheek by which it could be restrained ? By
enlisting in the cause of this overwhelming system of usury,
from which even those who never borrow cannot escape, a great
portion of the talents of the country ; and teaching them to be
satisfied with its intellectual pleasures, without salaries ? By
rewarding atrocious frauds, sometimes with wealth, and always
with impunity ? By first expelling specie, and then subjecting
the nation to the alternative of suffering a great loss in getting
it back, or of submitting for ever to banking prescription ? By
briUng corporations with an absolute power of acquiring wealth
by frauds with impunity, for the sake of a trivial political con-
venience ? By committing the national safety and prosperity
to the care of individual character, without responsibility or
controul, for indefinite periods ; except such as may be fixedT
by the will of temporary representatives ? By thus regenera-
rating the hereditary principle of subjecting mankind to the
chance of being governed by knaves in the aifair of money (so
important to social happiness,) under an interest to do wron^
and under no compulsion to do right ? By substituting an arro-
gant divination for actual experience (the true source of human
knowledge,) in usurping a right to pass irrepealable laws ? By
staking the national prosperity oh the maxim, that it may
safely be intrusted to unchecked avarice? By arranging
society into debtors and creditors, bribing usury to lend,
tempting indiscretion to borrow, protecting the former against
the payment of its own debts, and producing by law a state of
things, calculated for destroying a good government, or subject-
ing it to the clamours and threats of dishonesty ? And by
making it improvident to be prudent ; as by endeavouring to
provide for old age or misfortune, we should probably lose the
whole, and certainly a portion of our labours ?

The facts, to justify these inconveniences produced by bank-
ing, are left to the recollection of the reader; but the ex-
pression "depreciation usury, "requires a short explanation.
It refers to the loss sustained by the nation, from the depreci-
ation of bank currency, beyond the interest paid for it hj the



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18S

borrower. This itepi of pectmiary ioss^ frequently rqieaied in
the circulatioQ of the paper, may possiUy amount to as mack.
%s the additional^ taxatfon caused by the same depreciation.
The two items and the interest paid to banks chiefly constitute
the price paid by the nation for the convenience of transferrii^^
tbe taxes from place to place. It b probable that it amonnts
to thirty or forty per centum per annam» on a larger sum than
the amount of taxes ; and equally so, that these taxes could be
transmitted in the most inponrenient mode, which could be
devised, a^ess than one.

^ Wherein consists the difficulty on this suligect ? may the truth
be permitted to answer the question P Men incline to acquire
wealth, without encountering the labours of industry ; as they
incline to get to heaTen, ¥rithout dischargmg the duties of
morality. Speculators for both objects are therefore greedily
attended to, and often infuse tenets into nations so stubborn^
as to divide society for ages into jugglers and dupes. (Govern-
ments have repeatedly aggrandized themselves and enriched
the initiated* under intricate and plausible . schemes for en-
riching the nation ; and labour is induced cheerfully to exchange
its earnings, for a dogma or a charm. When these schemes
or incantations are directed against a foreign nation, the im-
position is easy ; and governments generally cajole nations out
of their property to a great amount, by ingenious lectures to
prove that they will be reimbursed ten fold in heaven, or by
other nations. Once taught that we may be enriched by the
speculations of our , government at the expence of foreigners,
a transition from a dc^ma having a glimmering of truth, to one
having none, becomes easy; and we rashly believe that a pa-
triotick magician can instruct a nation to enrich itself, by spec-
ulations upon itself; that exclusive privileges conferred on an
incorporated section of the national wealth will produce a
greater degree of national prosperity, than equal privileges
retained by the whole.

Congress, in rejecting lord North's insidious proposal for rais-
ing a revenue by colonial laws, observed, ^< that all history shews
*' that a power over the jfurse is the be^ intercessor for aredress
" o^ grievances, and a re-establishment of rightsJ^ Banking
has gotten into its possession that which the national purse can-
toned; intolerable grievances have ensued; the right to pri-

^ y ^



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IM

hu been fwodaced. The TeTolutioMry <)<«grM9, tkat higbeit
fSBOrien ef wiBdom mA rirttte^ with which Providence ha* tm^
dowed man ; the fiitheni of our liberty, uninflaenced by aviriee
ar ambition ; the revolutionary congresi decided, "* that a
power over the purse it the best interoessor for a redress of
grieTanoesandare-eatablishmaitofrights." The power mm
the fftne has escaped from the people and their govenunaila
This best security against grievancea and wrwip has bee«
transferred by legislatures to corporations. If the^iad m right
to transfer the best, they mi^ transfer all other aeeuiities to the
custody of chartered bodies. Dazzled by a spurious lustre, we
have violated this sound nuudm; we have worshipped a deBM«
instead of a Deity; and now that we are awakened bj sensa«
tion from tiie infiituatioii, we are told that the altars of fraud
are sacred. Grievances and violated rights abound ; the prin*
ciples of justice are prostrated; but the hurricane of evili
daias a power founded in the impesition of callinga law a
charter, to molest an entire generation during its whote life
without redress; and the ising^Ms of censtruction is its ally
against the diamond of justice. Money governs tiie world* Is a
corporate despotism over the money or currency of a nation no
political power? That which is aUe to do good or harm to na^*
tions. is power. All our constitutions have provided represent
tation. checks and responsibilities^ to frevewi grievtmees md
preserve rights* Can representation invest corporations with
a power of dwng good or harm to the nation for long terms,
without being sul^ect to the constitutiiMud provisions for fare-
venting grievances and preserving rights ? No l^;islature is it-
self -invested with any power, unsubjected to these ppovisiena.
If le^slatures can create a power beyond their own. the coetv
ticin of which is without the reach even of election, they may
thus overthrow every principle of our constitutions. Our con*
stitutions unite in deciding, th^ political power ought to be



Online LibraryJohn TaylorConstruction construed, and constitutions vindicated → online text (page 18 of 34)