Thomas Jefferson: “Opinion on the Constitutionality of a National Bank”

Explanation and Analysis of the Document

Jefferson's opinion was written prior to Alexander Hamilton's. In fact, Hamilton had the benefit of reading Jefferson's opinion before writing his own. It may seem odd that Jefferson began his opinion by listing eight legal dilemmas posed by the national bank legislation. However, any well-trained lawyer or anyone well versed in land policy in the 1790s understood what was at stake, as these laws related to the ownership of land, its distribution upon the death of the owner, and how states regulated incorporated land companies. In effect, Jefferson argues that the national bank would be a privileged corporation beyond the scope of regulation because of its federal charter. Jefferson appears to be employing a standard states' rights argument, but he is actually attacking Hamilton. James Madison probably told Jefferson that Alexander Hamilton wrote Federalist no. 33 to help secure the ratification of the Constitution in New York. Therein, Hamilton bluntly states that the federal government would not have the power “to vary the law of descent” (one of Jefferson's stated legal dilemmas) and that the ability to do so would constitute a “tyrannical power” (Carey and McClellan, p. 160).

In Jefferson's view, the authority of the states and of the federal government rested on two different types of power. In that the states preceded the national government, they served as the primary basis of political authority in the United States of America. Thus, the states were the proper projections of the people's sovereignty, exercising all aspects of that sovereignty unless the people expressly reserved the exercise of a power for themselves. The federal government possessed no such inherent exercise of sovereignty, being limited to only those powers explicitly given by the people through the state ratifying conventions. Since the Constitution contains no mention of a national bank and, more important, no express delegation of the power to create federally chartered enterprises, the bank bill was unconstitutional. Such a power, Jefferson suggests, is further prohibited by the Tenth Amendment, which he calls the “Twelfth” because it was the twelfth submitted for ratification.

Jefferson offers some economic arguments against the bank, and he also alludes to the framers' voting down an attempt to give chartering power to Congress. He denies that a bank could be created simply to pay the debts of the country, to lend money to the federal government, or help regulate interstate commerce. Indeed, Jefferson argues that a national bank would actually harm business interests by interfering in intrastate commerce, an area most believed to fall outside the jurisdiction of the federal government.

Jefferson's most stinging criticism, however, is aimed against the broad interpretation of powers employed by bank supporters to defend it. He fears that their arguments ultimately opposed the reason for having a constitution in the first place, which in his mind was to limit the power of the national government. Clearly, Jefferson was no ardent nationalist who believed that social order and happiness depended upon the exercise of strong political power by a central government. To his final days, Jefferson insisted that a massive, activist government was a burden for the citizenry. He understood that social order must flow from liberty, not vice versa.

He also believed that the federal government must be a government of limited powers. To Jefferson, this meant that it would be limited in its ends and in its means; the fact that Congress could levy taxes did not mean that it could levy taxes for anything it wanted. (It was still widely considered at the time that “general welfare,” as mentioned in the Constitution, meant those things that fell generally throughout the nation, not those things confined to specific states or interest groups.) Like other bank detractors, Jefferson defines necessary as “essential” rather than as “convenient.” A bank was not essential for any of the government's activities, and congressmen would be wrong to sacrifice constitutional prerogatives for the sake of convenience.

Jefferson concludes his opinion by returning to states' rights, which he believed best guarded against encroachments on liberty. He holds that the president must safeguard these rights, especially when confronted with a concerted effort in Congress to jeopardize popular liberties for the sake of pecuniary interests.