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once largely contributed to the defeat of one of the great political parties. Yet, as it has several times constituted one of the main issues which have divided the great parties of this country, it deserves consideration.

The report of the secretary was elaborate, embracing a great variety of argument. In favor of banks generally, it stated, that they had existed among the principal and most enlightened commercial nations, and their utility had been tested by an experience of centuries. They had given aid to trade and industry, and, in certain emergencies, to the government itself. Among the advantages of a bank were mentioned the following: First, the augmentation of the active or productive capital of a country. Secondly, the greater facility which it affords to the government in obtaining pecuniary aids, especially in sudden emergencies. Thirdly, the facilitating of the payment of duties; as was proved by the accommodations afforded by banks to those who resided near them, in the payment of duties. The report alluded to the bank of North America, in the city of Philadelphia, incorporated by the old congress, in 1781, and to the aid it afforded the United States during the remaining period of the war, and since the peace. Its capital, however, was now too small for the wants of the government, and it had become a state institution, under a charter from the state of Pennsylvania. The report also gave the plan of a bank, with such restrictions and safeguards as were deemed requisite.

The bill came to the house from the senate, and received no opposition until after its third reading. An effort was made for its recommitment, and lost. The question being on its final passage, Mr. Madison, one of the leading opponents of the bill, opened the debate in a very able speech. He admitted some of the advantages of banks. They were, (1.) The aid they afforded merchants in extending their mercantile operations with the same capital. (2.) The aids to merchants in paying punctually the customs. (3.) Aids to the government in complying punctually with its engagements when deficiencies or delays happen in the revenue. (4.) Diminishing usury. (5.) Saving the wear of gold and

. silver kept in the vaults, and represented by notes. (6.) Facilitating occasional remittances from different places where notes happen to circulate.

The principal disadvantages of banks consisted in, (1.) Banishing the precious metals by substituting another medium to perform their office. (2.) Exposing the public and individuals to the evils of a run on the bank, which might happen from various causes, as false rumors, bad management of the institution, an unfavorable balance of trade, &c. He thought the most important advantages of banks could be better obtained from several banks, properly distributed; as aids to commerce could only be afforded near the seat of banks.

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The main objection to the bill, however, was founded on its unconstitionality. Mr. Madisoc said; a power to grant charters of incorporation had been proposed in the general convention, and rejected. denied that the power claimed was implied in the “power to pass all laws necessary and proper to carry into effect the foregoing powers." The meaning of this clause must be limited to means necessary to the end, and incident to the nature of the specified powers. The clause merely declares what would have resulted by unavoidable implication as the appropriate, and, as it were, technical means of executing those pow

A bank might be useful and convenient for collecting taxes, borrowing money, paying debts, and providing for the general welfare ; but it was not absolutely necessary.

Others, however, did not admit the advantages of a bank to the same extent as Mr. Madison. The facility of borrowing from it would involve the union in irretrievable debts. State banks, it was contended, could render the desired aids to better effect than a single bank like that contemplated ; and the latter would swallow up the former. They opposed the loose construction of the words “

necessary and proper.” A sary means to produce a given end, was the means without which the end could not be produced."

The advocates of the measure relied upon experience and the testimony of the commercial world, to settle the question as to the utility of such an institution. The new capital would invigorate trade and manufactures with new energy. It would furnish a medium for the collection of the revenues; and if government should be pressed by a sudden necessity, it would afford seasonable and effectual aid. It was admitted that congress could exercise those powers only which were granted by the constitution ; but incidental as well as express powers belonged to every government. When power is given to effect particular objects, all the known and usual means of effecting them pass as incidental to such power. A bank was a known and usual means of carrying into cffect several of the powers granted to the government. Most of the laws enacted under the new constitution, bad been enacted by the authority of implied powers. Laws had been made to tax ships, erect light-houses, govern seamen, &c., under the power to regulate commerce. A majority of the laws enacted under the new constitution, had been made by authority of powers incidental to, or implied in, powers expressly delo gated.

The discussion continued, with little intermission, from the 1st to the 9th of February, when the bill passed, 39 to 20. All who voted in the negative, except one, were from the states of Maryland, Virginia, North Carolina, South Carolina, and Georgia. All who were present from the other states, except one from Massachusetts, voted in the affirmative; together with two from Maryland, two from North Carolina, and one from South Carolina.

The president, before signing the bill, required the written opinions of the members of his cabinet as to its constitutionality. The secretaries of the treasury and of war, (Hamilton and Knox,) affirmed the bill to be constitutional; the secretary of state and the attorney-general, (Jefferson and Randolph,) expressed the contrary opinion. After mature deliberation, the president signed the bill.

The capital stock of the bank was limited to $10,000,000; $2,000,000 to be subscribed for the benefit of the United States, the residue by individuals; the whole to be divided into 25,000 shares, of $400 each; and no person, copartnership, or corporation, to subscribe for more than 1000 shares. One-fourth of the sum subscribed, was to be payable in gold and silver, and three-fourths in public debt; one-fourth to be paid on subscribing, and the remainder in three instalments, semi-annually. The corporation was not to own property, including its capital, to a greater amount than $15,000,000; nor were its debts, exclusive of deposits, to exceed $10,000,000. It might sell any part of the public debt composing its stock, but not purchase any public debt, nor trade in anything except bills of exchange, and gold and silver bullion, nor take a higher rate of interest than six per cent. It was to be a bank of deposit and discount; and its bills were to be payable in specie, and receivable in all payments to the United States. No loan was to be made to the United States exceeding $100,000; nor to any particular state exceeding $50,000; nor to a foreign prince or state to any amount, unless previously authorized by an act of congress. The bank was to be located at Philadelphia, with power in the directors to establish offices of discount and deposit only, wherever they should think fit, within the United States. The charter was to continue twenty years; and no other bank was to be established by congress within that period.

The inconveniences arising from the disordered state of the currency, demanded some measure of relief. The balance of trade having always been against the colonies, coin had flowed towards England. This had induced the issue, in some colonies, of government bills, or treasury notes, which were sometimes made a legal tender in payment of debts. In others, they were loaned on interest, thus furnishing a source of revenue to the government, and serving as a medium of trade. These paper issues were carried to such an extreme, that parliament had found it necessary to restrict them. During the war, all restraint being removed and necessity impelling to the measure, paper money was issued more profusely than ever before; so that both continental and state bills bo

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came almost worthless, and ceased to circulate. Such was the depreciation of the former in the hands of the holders, that a debt of two hundred millions of dollars had been reduced by an act of congress to five millions, being at the rate of forty for one. And nearly eighty millions yet outstanding, were, as has been stated, funded at the rate of one hun. dred for one. [Appendix, Note A.]

Sensible relief had been afforded, near the close of the war, by the bank of North America, as has been observed. This institution was originated by Robert Morris, at that time superintendent of the continental finances, and was designed to aid him in the duties of his office. It was the first institution in this country which issued bills of credit payable in cash. The advantages of this redeemable currency, not only to the government, but to trade in general, led to the establishment of a similar bank at New York, and another at Boston, and subsequently the national bank just described. No others were at that time in existence in the United States. The constitutional power of the old congress to charter a bank having been questioned, a new charter was obtained from the state of Pennsylvania ; after which its connection with the national government ceased. Hence, to furnish the government with an institution then deemed necessary as a fiscal agent, and at the same time to increase the amount of banking capital to meet the increased demands of trade, the new bank was established.

A law was passed at this session, admitting the new state of Kentucky, formed from Virginia, into the union; the admission to take place the 1st of June following, (1792.) Vermont also was admitted, to come into the union on the termination of the present session of congress.

The second congress met on the 24th of October, 1791. The condi. tion of the country at this time, presented a marked contrast with that in which it had been found by the first congress. The president, in his speech at the opening of the session, thus congratulated congress on the improved situation of the country:

“ Your own observation in your respective districts, will have satisfied you of the progressive state of agriculture, manufactures, commerce, and navigation. In tracing its causes, you will have remarked with particular pleasure, the happy effects of that revival of confidence, public as well as private, to which the constitution and laws of the United States so obviously contributed. And you will have observed, with no less interest, new and decisive proofs of the increasing reputation and credit of the nation.” The readiness with which the stock of the bank had been taken, he mentioned as "among the striking and pleasing evidences, not only of confidence in the government, but of resources in the community.”

Among the subjects to which the president called the attention of congress, was the hostility of the north-western Indians, whose depredations on the frontiers had made it necessary to send an expedition against them, and with whom farther hostilities were anticipated. With some of the tribes provisional treaties had been negotiated; to others, overtures of peace were still continued.

He also suggested a modification of the act laying duties on distilled spirits, which had caused, in some places, considerable discontent.

Of the members of the former house, about one-third had been reëlected. Although the administration majority had been somewhat reduced, it was yet considerable; and, as before, the opposition members were principally from the five southern-most states. In the senate, a still larger proportional majority were supporters of the administration.

The apportionment of representatives, according to the census of 1790, was made at this session of congress. In order to obtain the largest possible number of representatives, it was determined to adopt the lowest ratio allowed by the constitution. A bill was passed by the house, and sent to the senate, where it was amended by making the apportionment conformable to a ratio of 33,000. The house disagreeing to the amendment, the bill was lost. A second bill, based on a ratio of 30,000, was, after much disagreement, passed by both houses. By this bill, the whole representative population of the United States was divided by the ratio, and the number thus obtained was to be the whole number of representatives, to be apportioned among the several states. But as there would remain in each state a fraction of the population unrepresented ; and as these fractional numbers of the several states amounted in the aggregate to a population entitled to several representatives, these representatives were apportioned to those states having the largest fractions.

This bill was negatived by the president as unconstitutional, for the reason that those states to which a representative was given for their fractional numbers, had more than one representative for every 30,000 inhabitants. According to the president's construction of the constitution [Art. I, sec. 2, clause 3,] each state was restricted to a representative for every 30,000 inhabitants ; consequently the fractional number could have no representative; and the aggregate number of representatives composing the house must be less than the number obtained by dividing the whole population of all the states by the ratio. The president consulted his cabinet on the question, who were equally divided, as on the question of the bank. In the present case, however, he concurred in the opinions of Jefferson and Randolph.

A third bill was then introduced, fixing the ratio at 33,000, and apportioning the representatives in conformity with the views of the president,

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