James Madison: The Second National Bank—Powers Not Specified in the Constitution

Lesson Two of the Curriculum Unit: James Madison: From Father of the Constitution to President

Guiding Questions

• What events during Madison's presidency raised constitutional questions?
• What were the constitutional issues?
• Where did Madison stand?

Learning Objectives

• Summarize at least one event during Madison's presidency that raised constitutional questions.
• Explain the constitutional questions raised by the event.
• Discuss Madison's opinions on the constitutional questions.

1. What Was the Problem?

Give your class background on the First and Second National Banks from the class text or another source, such as:

• U.S.History.Org, a link from the EDSITEment-reviewed website Internet Public Library, which offers a very basic introduction to the issues and events connected with the First National Bank and the Second National Bank.
• The EDSITEment resource Links to the Past, which offers a brief but more in-depth analysis of the constitutional issues surrounding the First Bank of the United States (starting with the paragraph before the section entitled "Background" and ending at "Architectural Significance") and the Second Bank of the United States (the section "Constitutional History").
• The Madison's Presidency: Domestic Affairs section of the EDSITEment-reviewed website The American President, which adds the following information on the political situation, with some background on the development of the two-party system and the policies of Alexander Hamilton:

  Among the domestic issues that did stand somewhat apart from the war itself was the struggle over the rechartering of the Bank of the United States, whose charter was scheduled to terminate in 1812. The move to recharter the Bank met stiff opposition from three sources: "old" Republicans who viewed the Bank as unconstitutional and a stronghold of Hamiltonian power, anti-British Republicans who objected to the substantial holdings of Bank stock by Britons, and state banking interests opposed to the U.S. Bank's power to control the nation's financial business. When the anti-Bank forces killed the recharter drive, the U.S. confronted the British without the means to support war loans or to easily obtain government credit. In 1816, with Madison's support, the Second Bank was chartered with a twenty-year term. Madison's critics claimed that his support for the Bank revealed his pro-Federalist sympathies.

2. What Does the Constitution Say?

• The Preamble
• Article 1, Section 7 (especially #1)
• Article 1, Section 8 (especially #1, 2, 7, 8, and 18)
• Article 1, Section 9 (especially #6)
• Article 6, Section 2
• Tenth Amendment

Does the Constitution say anything specific that would relate to the incorporation of a national bank? (No). Does the power to raise revenue (Article 1, Section 7, #1) imply the ability to incorporate a bank? Does the ability to borrow money (Article 1, Section 8, #2) imply the ability to incorporate a bank? Does a national bank promote the "general welfare" (Article 1, Section 8)? Would a national bank tend to benefit one state or region more than another, such as a state with many businesses dealing in finance as opposed to an agricultural state (Article 1, Section 9)? Should incorporating banks be the responsibility of the states (Article 6, Section 2, Tenth Amendment)? Some opponents argued that a national bank would infringe on state banks, making them ineffective. Students should think about this issue as they learn more.

3. A Brief Look at the Documentary Record

Discuss the debate. To what parts of the Constitution do the speeches refer? What arguments are used to oppose the bank? What arguments are used in support of the bank? What is mentioned in the debate about the usefulness of a national bank? What do students think about the constitutionality of a national bank? Remind students that a law that produces a positive result is not necessarily constitutional.

4. What Did Madison Have to Say about the First National Bank?

If students want to read a brief modern analysis, The James Madison Center, a link from the EDSITEment resource The American President, offers commentary on Madison's speech in the House on the national bank in the introduction to James Madison Debates the Constitutionality of a National Bank.

5. What Did Madison Have to Say about the Second National Bank?

The charge of inconsistency between my objection to the constitutionality of such a bank in 1791, and my assent in 1817, turns on the question, how far legislative precedents, expounding the Constitution, ought to guide succeeding legislatures, and to overrule individual opinions.

…It was in conformity with the view here taken of the respect due to deliberate and reiterated precedent, that the Bank of the United States, though on the original question held to be unconstitutional, received the executive signature in the year 1817. The act originally establishing a bank had undergone ample discussions in its passage through the several branches of the government. It had been carried into execution through a period of twenty years, with annual legislative recognition,--in one instance, indeed, with a positive ramification of it into a new state,--and with the entire acquiescence of all the local authorities, as well as of the nation at large; to all of which maybe added, a decreasing prospect of any change in the public opinion adverse to the constitutionality of such an institution. A veto from the executive, under these circumstances, with an admission of the expediency, and almost necessity, of the measure, would have been a defiance of all the obligations derived from a course of precedents amounting to the requisite evidence of the national judgment and intention…
—From Madison Letter of June 25, 1831 on the website of The James Madison Center, a link from the EDSITEment resource The American President

Interested students can read a more complete text of the Madison Letter of June 25, 1831 on the website of The James Madison Center, a link from the EDSITEment resource The American President.

Assessment

• How did supporters believe a national bank could benefit the nation?
• How did detractors believe a national bank could hurt the nation?
• What were the constitutional arguments in favor of and against a national bank?
• What was Madison's position on the Second National Bank?
• Is Madison's position on the Second National Bank reconcilable with his position on the First National Bank? Or do students agree with critics who suggested that Madison had been inconsistent?

The power now contested was exercised by the first Congress elected under the present constitution. The bill for incorporating the bank of the United States did not steal upon an unsuspecting legislature, and pass unobserved. Its principle was completely understood, and was opposed with equal zeal and ability. After being resisted, first in the fair and open field of debate, and afterwards in the executive cabinet, with as much persevering talent as any measure has ever experienced, and being supported by arguments which convinced minds as pure and as intelligent as this country can boast, it became a law. The original act was permitted to expire; but a short experience of the embarrassments to which the refusal to revive it exposed the government, convinced those who were most prejudiced against the measure of its necessity, and induced the passage of the present law. It would require no ordinary share of intrepidity to assert that a measure adopted under these circumstances was a bold and plain usurpation, to which the constitution gave no countenance.
—From McCulloch v. Maryland (1819) on U.S. Info / Department of State, a link from the EDSITEment resource Internet Public Library

Return to curriculum unit overview

Previous lesson

Next lesson

Selected EDSITEment Websites

• American Memory
  [http://memory.loc.gov/]
• Elliot's Debates -- On the Establishment of a National Bank
  [http://memory.loc.gov/cgi-bin/query/r?ammem/
  hlaw:@field(DOCID+@lit(ed00416))]
• Elliot's Debates
  [http://memory.loc.gov/ammem/amlaw/lwed.html]
• Renewal of the Bank Charter, Debates in the House of Representatives, April 13, 1810
  [http://memory.loc.gov/cgi-bin/query/r?ammem/hlaw:
  @field(DOCID+@lit(ed00450))]
• The American President
  [http://www.americanpresident.org/]
• James Madison
  [http://www.americanpresident.org/history/jamesmadison/]
• The James Madison Center
  [http://www.jmu.edu/madison/center/]
• Brief Biography
  [http://www.jmu.edu/madison/gpos225-madison2/youth.htm]
• James Madison Debates the Constitutionality of a National Bank
  [http://www.jmu.edu/madison/center/main_pages/
  madison_archives/era/parties/power/bank.htm]
• James Madison on the Constitutionality of the Second National Bank
  [http://www.jmu.edu/madison/center/main_pages/madison_archives/
  life/presidency/domestic.htm]
• Madison Letter of June 25, 1831
  [http://www.jmu.edu/madison/center/main_pages/madison_archives/
  life/presidency/domestic.htm]
• The Avalon Project
  [http://www.yale.edu/lawweb/avalon/avalon.htm]
  • United States Constitution
    [http://www.yale.edu/lawweb/avalon/usconst.htm]
    • Article 1, Section 7
      [http://www.yale.edu/lawweb/avalon/art1.htm - 1sec7]
    • Article 1, Section 8
      [http://www.yale.edu/lawweb/avalon/art1.htm - 1sec8]
    • Article 1, Section 9
      [http://www.yale.edu/lawweb/avalon/art1.htm - 1sec9]
    • Article 1, Section 10
      [http://www.yale.edu/lawweb/avalon/art1.htm - 1sec10]
    • Article 2, Section 2
      [http://www.yale.edu/lawweb/avalon/art2.htm - 2sec2]
    • Article 6, Section 2
      [http://www.yale.edu/lawweb/avalon/art6.htm]
    • Tenth Amendment
      [http://www.yale.edu/lawweb/avalon/rights1.htm - 10
• Internet Public Library
  [http://www.ipl.org]
  • U.S.History.Org
    [http://www.ushistory.org/]
• U.S. Info / Department of State
  [http://usinfo.state.gov/]
• McCulloch v. Maryland (1819)
  [http://usinfo.state.gov/usa/infousa/facts/democrac/10.htm]