Necessary and Proper Clause - National Bank

National Bank

For several decades after the Constitution was ratified, the interpretation of the Necessary and Proper Clause continued to be a powerful bone of contention between the Democratic-Republican Party and the Federalist Party, and several other political parties in the United States. The first practical example of this contention came in 1791, when Hamilton used the clause to defend the constitutionality of the creation of the First Bank of the United States, the first federal bank in the new nation's history. Concerned that monied Northern aristocrats would take advantage of the bank to exploit the South, Madison now argued that congress lacked the constitutional authority to charter a bank. Hamilton argued that the bank was a reasonable means of carrying out powers related to taxation and the borrowing of funds, claiming the clause applied to activities reasonably related to constitutional powers, not just those that were absolutely necessary to carry out said powers. To embarrass Madison, his contrary claims from the Federalist Papers were read aloud in Congress:

"No axiom is more clearly established in law or in reason than wherever the end is required, the means are authorized; wherever a general power to do a thing is given, every particular power for doing it is included."

Eventually Southern opposition both to the bank and to Hamilton's plan to have the federal government assume the war debts of the states was mollified by the transfer of the nation's capital from its temporary seat in Philadelphia to a more southerly permanent seat on the Potomac, and the bill, along with the establishment of a national mint, was passed by Congress and signed by President Washington. The power of the clause to justify the creation of a national bank was put to the test in 1819 in McCulloch v. Maryland, wherein the state of Maryland had attempted to impede the operations of the Second Bank of the United States by imposing a tax on out-of-state banks, of which the Second Bank of the United States was the only one. The court ruled against Maryland, and Chief Justice John Marshall, Hamilton's long time Federalist ally, wrote the opinion, which stated that while the Constitution did not explicitly give permission to create a federal bank, it had the implied power to do so under the Necessary and Proper Clause in order to realize or fulfill its express taxing and spending powers. The case reaffirmed Hamilton's view that legislation reasonably related to express powers was constitutional.

"We admit, as all must admit, that the powers of the Government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the Constitution, are constitutional."

In addition to these powers to charter and operate federal banks, the clause was linked to the General Welfare clause and the constitutional powers of tax collection and the ability to borrow money to give the federal government virtually complete control over currency.