Contrary to the idealized wrong-wing myth of the U.S. economy being founded on the principles of laissez-faire, the framers of the Constitution deliberately set out to create a central government strong enough to force the thirteen states into one national economy. To do this, the national government undertook a number of programs and policies to build and strengthen the national economy by encouraging and protecting manufactures and commerce, establishing a national banking system, and promoting and directly assisting the development of transportation.
The first Act of Congress established the administering of oaths of office for federal officials, but the second Act was the imposition of the Hamilton Tariff to protect domestic industry and raise revenue. In 1791, Congress chartered the First Bank of the United States. The Patent Office was created in 1802. Direct federal involvement in the building of transportation infrastructure included projects authorized under the 1807 Coast and Geodetic Survey, and other measures to improve river and harbor navigation, which were formalized and put on a more permanent footing by the 1824 Rivers and Harbors Act. Various Army expeditions to the west, beginning with Lewis and Clark's Corps of Discovery in 1804 and continuing into the 1870s, gathered and disseminated geographical and scientific knowledge that was crucial to opening the West to settlement (see for example, the careers of Major Stephen Harriman Long, Major General John C. Frémont, and Brigadier General Randolph B. Marcy). These expeditions were almost always under the direction of an officer from the Army Corps of Topographical Engineers, an organization that has been almost completely written out of American history, but which comprised the elite of U.S. Army officers. Pursuant to the General Survey Act of 1824, Army officers were assigned to assist or direct the surveying and construction of the early roads, railroads and canals -- whether they were private or state projects did not matter.
Our national government has also played a crucial role in the development of metal-cutting and metal-forming machine tools and mass mechanical assembly, which form the basis of modern industrial economies; the building of a trans-continental railroad system; the application of science to agriculture, and the mechanization of farming; improvements of steam propulsion for maritime transport; development of radio; creation of a nation-wide electricity power grid; creation of a national system of paved roads; development of aviation; development of frozen foods; development of electronics; creation of nuclear power; and development of the internet.
It is no accident that our national government has played this role of nurturing and facilitating the development of the economy. Such a role was clearly the intent and desire of the Founders – contrary to all the wrong-wing lies about small government and free enterprise. I have promised before to blog about many of the government programs I listed above (and I intend to do so this winter), but today I want to review the creation of the Constitution and show that an activist role for government was clearly intended all along. The Republicans and conservatives (I prefer to call them the wrong-wing because so little of what they believe and proclaim about American history is correct) have a directly contrary view of this history.
This is extremely important history and information you need to know and master, because it determines what a person believes is the meaning and purpose of government. The wrong-wingers actually have a coherent philosophy of government by which they are steered to rejecting government programs such as Social Security or national health care as unconstitutional and dangerous to individual liberties. They continue to believe in this philosophy of government, even though the conservative legal challenges to Social Security and other programs have been repeatedly struck down in the courts. (This is a major reason why the Federalist Society was organized: to try and get more judges who believe in this philosophy of limited government on the bench, so that eventually Social Security and other programs can be challenged and found “unconstitutional.”) The thing is, this wrong-wing philosophy of government is the Anti-Federalist philosophy that was defeated in the Constitutional Convention, defeated again with the ratification of the Constitution, defeated a third time in the Civil War, and defeated for a fourth time with the adoption and popular acceptance of the New Deal programs that are about to be sacrificed by President Obama and the national Democratic Party leadership in their misguided and dangerous search for a bipartisan solution to the “deficit problem.”
In short, in recounting the actual history of how the United States developed economically, we repeatedly disprove the historical mythology of the wrong wing, which underlies their seemingly crazy ideas, such as “Social Security is unconstitutional.” So, this is history we better know, and know well.
Bringing order out of chaos
By 1787, the men and women who had fought and sacrificed for independence from the British empire had come to realize that the political independence won with so much blood and suffering was in danger of being lost by economic and financial dependence on the powers and princes of Europe. How to make the new nation strong enough to survive the repeated attempts of British, and other European oligarchs to destroy by intrigue, subterfuge, or outright force of arms (as in 1812) the "silly experiment in self-government"? It is difficult to realize today, but at the time there was great concern and despair that the Revolutionary War had been fought in vain. The inability of the states to cooperate under the Articles of Confederation had led to a condition of national financial and monetary paralysis. “Labouring parties, differing views and jarring Interests were the sum of our politicks,” Massachusetts attorney general and later governor James Sullivan wrote to Rufus King in June 1787. (King would soon be a delegate to the Constitutional Convention, and one of the signers).
From Mount Vernon, George Washington, with mounting unease, monitored the rampaging discord and chaos through a wide-flung correspondence with former Continental Army officers and other public leaders. Reluctantly, Washington came to realize that he would not be able to live the life of a private citizen at Mount Vernon – his country needed him once again to reach out a steady and determined hand, and wring order out of chaos. Drawn reluctantly into public affairs again, Washington began to help set in motion the Constitutional Convention to correct the Confederation’s failure to erect and maintain a strong central government able to overcome the centrifugal forces of the various states and sections, but most especially its failure to create a functioning national economy that would make the United States truly master of their own destiny, economic as well as political.
Washington was president of a company working on a pet project of his: the design and construction of a canal around the Great Falls of the Potomac River. Even with Washington’s enormous influence, his Patowmack Company had been unable to get the governments of Maryland and Virginia to cooperate on the canal. As Washington and his allies saw it, the country clearly would benefit by improving the navigability of the rivers and harbors of the country, Nay, more: such internal improvements were absolutely necessary for the development and expansion of the country’s economic interests. Improved river navigation, improved harbors, and improved roads all were needed to bring the produce of the farms and the output of the manufactories to markets, foreign and domestic. More important, improved communications would tie together the country by tamping down local and regional narrow interests with a more widespread national outlook and self-identity. (One of Washington's most important reforms of the army during the War had been to dilute the local outlook of the of the state regiments by stressing the national character of the Continental Army.) But in the chaos of states competing against each other for their own commercial interests, projects of national importance were repeatedly underfunded, or not funded at all, or even politically sabotaged.
This state of affairs sorely vexed Washington. His experiences in command of the Continental Army had taught him, painfully and repeatedly, that seemingly super-human exertions were required to achieve any level of cooperation and active support from the states on matters of national importance. The first few years in command, Washington had at least found sympathetic ears in Congress, but eventually he found not even that much. The inability of the Continental Congress to force the states to cooperate or even address national needs resulted in such discord and rancor that Washington had practically given up asking the Congress for anything by the end of the war. Instead, he came to rely almost entirely on the support brilliantly engineered by financier Robert Morris, who went into debt many times over, advancing funds he raised in his own name to pay the troops and procure supplies. Washington also came to depend on the alliance with France, carefully and adroitly managed by the American minister in Paris, Benjamin Franklin. The Continental Army was never larger than 17,000 men, and was sometimes as few as 4,000. French support would eventually result in 9,000 French troops on American soil. In addition, France supplied Washington’s army, and navy, with immeasurable amounts of weapons and ammunition, naval supplies, and even entire warships (such as John Paul Jones’ Bon Homme Richard). The cost to France has been estimated to be over one billion livre.
Simply put, his experience as commander of the Continental Army had taught Washington that the states could not be trusted to keep the national picture in view. As the Articles of Confederation proved over and over again to be wholly inadequate to framing that national picture, Washington and his correspondents came to feel ever more strongly that some sort of union of the states was needed. Almost every single officer that had served under him during the War shared Washington’s views on these matters. (Historical side-note: Opponents of the Constitution would later twist this fact in an attempt to portray the Society of the Cincinnati, a formal organization of Washington’s officers (somewhat like today’s American Legion) as an aristocratically inclined secret society intent on using the Constitution as a subterfuge to create a military dictatorship with Washington at its head as Commander in Chief.)
Here, for example, is a letter Washington wrote to Benjamin Harrison, (a Virginia delegate to the Continental Congress from 1774 to 1777 and a signer of the Declaration of Independence, whose great grandson of the same name would become President, in 1889) dated 18 January 1784:
The disinclination of the individual States to yield competent powers to Congress for the Fœderal Government--their unreasonable jealousy of that body & of one another--& the disposition which seems to pervade each, of being all-wise & all-powerful within itself, will, if there is not a change in the system, be our downfall as a Nation. This is as clear to me as the A, B.C.; & I think we have opposed Great Britain, & have arrived at the present state of peace & independency, to very little purpose, if we cannot conquer our own prejudices. The powers of Europe begin to see this, & our newly acquired friends the British, are already & professedly acting upon this ground; & wisely too, if we are determined to persevere in our folly. They know that individual opposition to their measures is futile, & boast that we are not sufficiently united as a Nation to give a general one! Is not the indignity alone, of this declaration, while we are in the very act of peace-making & conciliation, sufficient to stimulate us to vest more extensive & adequate powers in the sovereign of these United States? For my own part, altho' I am returned to, & am now mingled with the class of private citizens, & like them must suffer all the evils of a Tyranny, or of too great an extension of fœderal powers; I have no fears arising from this source; in my mind, but I have many, & powerful ones indeed which predict the worst consequences from a half starved, limping Government, that appears to be always moving upon crutches, & tottering at every step.How was the call for the Constitutional Convention issued? An often overlooked fact is that the Constitutional Convention was called from a September, 1786 convention in Annapolis which had in turn been called to find a way to get the states to cooperate in furthering Washington’s Potomac canal project, and other issues crossing state boundaries. The Annapolis convention concluded a stronger central government than that provided in the Articles of Confederation was needed in order to provide a national impulse and direction to the economic and transportation development of the continent's resources, and so directed all the states to select delegates for a convention in Philadelphia the following year.
The Constitutional Framework
Thus, the very formation of the government of the United States was directly the result of the need for imposing a strong national direction to economic development. But, today, many people operate under the mistaken impression that the Constitution and the Federalist Papers (the 85 editorials written by Alexander Hamilton, James Madison, and John Jay in their effort to win popular support in New York for ratification) provide little or no direction for national economic policy. Therefore, one of the most important books I think everyone should read at this time, as widespread discontent with the political and economic systems spills into the streets, is The Great Challenge: The Myth of Laissez-Faire in the Early Republic, by Frank Bourgin (1989, George Braziller Inc., New York, NY; 1990, Harper & Row, New York, NY).
Bourgin shows that the Constitution was carefully crafted to give the national government the authority and the power to intervene forcefully in the economic life of the new nation. In the Foreword, Arthur Schlesinger wrote that Bourgin’s dissertation,
represents an act of intellectual liberation from the laissez-faire myth so long cherished and propagated by those who profit from laissez-faire policies. It enriches our national traditions by reminding us of the long established role of government as an instrument to promote the welfare of the people.Laissez-faire is an idea developed by the French physiocrats in the late 1600s and later picked up and more fully explicated by Adam Smith in the 1770s (yes, we were fighting for independence from the ideas of Adam Smith, among other things British). Laissez-faire economic theory posits that the workings of private individuals in a free market better allocates society’s resources than top-down government direction. Therefore, the markets should be free of state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies. (Note that organized labor unions are regarded by these economic ideologues as a monopolistic impediment to the free workings of the market. So you see that the wrong-wing hatred of organized labor today arises directly from the wrong-wing clinging to economic doctrines that are actually contrary to the actual origins of the American economy. They are trying to prevent reality from interfering with their theory!) Today, economists also call this body of thinking “neo-liberalism” (and the use of the term has almost always incited confusion and even hostility on progressive and liberal forums such as this, by a few people who simply are not familiar with the meaning of the term, and erroneously believe it is disparaging political liberalism.)
As Bourgin writes on pages 34-35:
Laissez-faire did not fit the purposes of the Constitution makers, for it was against the laissez-faire policy of the confederation that the Constitution was struck. In the words of James Wilson, one of the leaders of the convention, “The great fault of the existing Confederacy is its inactivity. It has never been a complaint against Congress that they have governed overmuch. The complaint has been that they have governed too little. To remedy this defect, we were sent here.” The manner in which the detailed powers of the national government were written into the Constitution, their number, their phrasing, and the circumstances attending thereto—all this indicates that the convention members were fairly of one mind to create a vigorous instrument of government capable of standing beside any foreign power in unity, stability, and power.As Bourgin relates, there was indeed debate in the Convention over whether or not to give explicit powers to the new government bearing on the economy. Franklin wanted to have an explicit clause on building post roads and canals. Madison wanted to add to Franklin’s clause an express power to grant charters of incorporation to accomplish such projects. Unlike today, it was common at the beginning of the republic to hold corporations strictly accountable to very narrow objectives embodied in their charters. A corporation established to build a road was expected to build a road, and not also undertake cotton cloth manufacturing. Today, of course, corporate conglomerates having interests in many different economic activities is the norm. General Electric is still thought of as a manufacturer of industrial and consumer electrical goods, but it also builds jet engines, and over half its revenues and profits come from financial activities, not manufacturing. Such a company in the early 1800s would have met with widespread public suspicion and hostility.
Up until the Civil War, corporate charters were issued for very specific purposes -- such as to build roads, canals, bridges, ports, railroads. And often, the purposes had to be accomplished in very specific time frames or the charter of incorporation would lapse and the corporation would cease having a legal existence. It was not unusual for a state to revoke a corporate charter if the corporation did not fulfill the purpose for which it was incorporated. For example, the Sunbury and Erie Railroad, chartered by Pennsylvania in 1837, was never able to actually begin construction, and after the state had given it an extension of time, the company was dissolved by state government fiat and its property given to the Pennsylvania Railroad. (Sunbury is located near the confluence of the north and west branches of the Susquehanna River.) As another example, the Franklin Railroad received an unusual dual charter from Maryland and Pennsylvania in 1832, to construct a railroad from Chambersburg, Penn., 27 miles south to Hagerstown, Maryland. The company went bankrupt within a couple years, but was operated by the bankruptcy receiver until 1852, when the Commonwealth of Pennsylvania determined that the thin-flat, bar-rail on which the horse-drawn cars rode had become unsafe to operate on, and ordered that the company either disband, or relay the road with heavy T-rail to allow the running of steam locomotives. A very direct and heavy-handed interference of the government in the market!
Implied versus enumerated powers
But I get ahead of myself. At this point, we need consider a complex Constitutional issue. Specifically, we here will deal with the issue of whether the Constitution limits the powers of the national government by a strict enumeration of powers (the wrong-wing view) or. alternatively, the Constitution only provides a listing of general powers, each of which implies further powers the government can use to carry out the enumerated powers. Historically, the wrong-wing position of enumerated powers has been a minority position that has been repeatedly but narrowly rejected in a number of Supreme Court decisions. The enumerated powers interpretation would cripple the national government and return us to the chaos and discord of the Articles of Confederation.
The importance of this issue - of implied versus enumerated powers - is that the entirety of our modern social welfare net, and much of the regulatory state, erected in the New Deal and since, including environmental protection and consumer safety regulations, rests on the foundation of implied powers. We need to understand what is at stake when wrong-wingers are talking about enumerated powers: it is a direct attack on the very structure and purpose of the national government. Let the wrong-wingers win this argument of implied versus enumerated powers, and the entire legal basis of Social Security, environmental protections, business regulations, and much more, is swept away. This is why the creation of the conservative Federalist Society was such a master-stroke: it is subversion of the framework of government through judicial reinterpretation. If wrong-wingers today are allowed to win this debate, it will usurp over two centuries of American legislation and jurisprudence and destroy the idea of majority rule.
Bourgin shows that the Convention spent little time considering the enumerated powers list: it was left up to the Committee on Detail, and accepted by the Convention with little discussion and only one change. “If it were intended,” Bourgin writes, “that we regard the enumerated powers as the courts have since interpreted them, as a deliberate attempt to fix the federal authority within carefully defined limits, it seems hardly likely that so little care and debate would have been allotted to their construction.”
Bourgin’s conclusion is that the delegates thought the list of powers was sufficiently wide that it was unnecessary to try to think of every single activity the government might need to undertake in the future and list it. This view is bolstered, Bourgin notes, by the work of Walton H. Hamilton and Douglas Adair, in their book The Power to Govern (New York, NY: Norton, 1937). Bourgin writes:
Some light on the question of the intended scope of federal authority may be revealed by examining the meaning of the term commerce, included within the enumerated powers… In their careful study of the contemporary uses of the term commerce, Hamilton and Adair come to the conclusion that commerce was chosen advisedly as having the most comprehensive meaning of any of the alternative terms; commerce served the catholicity of uses that would be forced on it.Bourgin then proceeds to quote Adair and Hamilton:
… there is everywhere in evidence an intent to endow the general government with the power to formulate a policy for the national economy, a power which is to extend to trade, manufactures, the staples of agriculture, internal improvements, and the creation of corporations. A broad grant of power was to be given to Congress in a clean-cut clause of the utmost brevity. If possible, a single key word must here—as elsewhere in the Constitution—be made to tell the story. It was of no avail to bother with manufacture or production, words of such narrow confine, even if set down in clusters, could only have made up an irregular verbal fragment. A more comprehensive term—such as business or industry—was not for many decades to become available. The choice was narrowed to traffic, trade and commerce. Traffic would not do; it was lowly in origin and clearly headed for vulgar verbal company. Trade was too specialized in meaning and too barren in larger implications to serve the occasion. Commerce excelled in the larger breadth and range, the greater dignity and prestige which attached to it. And commerce alone had competency for so high a verbal duty.…On this issue, Bourgin explains that a comparison of the Constitution with the Articles of Confederation,
is important in evaluating the commonly held but erroneous view that the framers of the Constitution was limiting the powers of the federal government rather than extending them.The fight over incorporating a national bank
Enough powers were granted the new government to fashion a new national economy out of the thirteen separate economies. The government was given the authority to establish uniform commercial regulations, in effect to create a single unobstructed national area of free trade. Power was given in the most general terms “to coin money” and “regulate the value thereof”—a grant as broad as the contemporary knowledge of pecuniary exchange allowed.
The first major battle over the enumerated versus implied powers began over the question: did this particular phrase of the Constitution about money give the national government the power to charter a bank?
Washington had selected as his Secretary of the Treasury Alexander Hamilton, who had served as Washington’s most trusted and most important aide during the War. Only if you have read a good biography of either man can you form any idea of the close bond and high esteem between the two. One biographer of Hamilton went so far as to summarize Hamilton’s role in the Washington administration as that of prime minister. But Hamilton’s place in the history of American economic development places him above all the other Founders. As Ron Chernow writes in his 2004 biography of Hamilton:
The American Revolution and its aftermath coincided with two great transformations in the late eighteenth century. In the political sphere, there had been a repudiation of royal rule, fired by a new respect for individual freedom, majority rule and limited government [here note the mention of limited government in the context of a repudiation of royal (autocratic) rule]. If Hamilton made distinguished contributions in this sphere, so did Franklin, Adams, Jefferson, and Madison. In contrast, when it came to the parallel economic upheavals of the period—the industrial revolution, the expansion of global trade, the growth of banks and stock exchanges—Hamilton was an American prophet without peer. No other founding father straddled both of these revolutions—only Franklin even came close—and therein lay Hamilton’s novelty and greatness. He was the clear-eyed apostle of America’s economic future, setting forth a vision that many found enthralling, others unsettling, but that would ultimately prevail. He stood squarely on the modern side of a historical divide [of economic history] that seemed to separate him from the other founders.There was never any doubt as to Hamilton’s views on the roles of the central government versus the states and their relatives strengths: in the Constitutional Convention, Hamilton was so strongly for so robust a national government, arguing for a life term for the President, and state governors to be appointed by the national government, that Jefferson, Madison, and others came out of the deliberations convinced that Hamilton was a closet monarchist. As our first Secretary of the Treasury, it was Hamilton who designed and set in place the basic building blocks for the American economy under the new system of government: a customs service; a system of government revenues based on various tariffs and taxes; a revenue service that included the creation of the Coast Guard (not so much to guard against foreign invaders, as to crack down on smugglers and tax evaders); and the establishment of public credit. These, and other measures discussed below, were outlined in five reports Treasury Secretary Hamilton wrote for the Congress. These reports formulated the basic structure of the U.S. economy, a structure which has been modified, especially during the New Deal, but which remains largely intact.
- First Report on the Public Credit: Communicated to the House of Representatives, January 14, 1790.
- Operations of the Act Laying Duties on Imports: Communicated to the House of Representatives, April 23, 1790.
- Second Report on Public Credit: Report on a National Bank. Communicated to the House of Representatives, December 14, 1790.
- Report on the Establishment of a Mint: Communicated to the House of Representatives, January 28, 1791.
- Report on Manufactures: Communicated to the House of Representatives, December 5, 1791.
President Washington therefore requested Attorney General Edmund Randolph, who sided with Jefferson, and Hamilton to write reports explaining and justifying their respective positions regarding the government’s power to create the bank. The details of this historic pivot point are given by Ron Chernow on pages 350 to 355 in his excellent biography of Hamilton. Chernow writes that Hamilton
told Washington that, if adopted, "principles of construction like those espoused by the Secretary of State and the Attorney General would be fatal to the just and indispensable authority of the United States." Then, in blazing italics, Hamilton trumpeted his main theme: "Now it appears to the Secretary of the Treasury that this general principle is inherent in the very definition of government and essential to every step of the progress to be made by that of the United States: namely that every power vested in a government is in its nature sovereign and includes by force of the term a right to employ all the means requisite and fairly applicable to the attainment of the ends of such power." If Jefferson's and Randolph's views were upheld, "the United States would furnish the singular spectacle of a political society without sovereignty or of a people governed without government."
Hamilton waved away complaints that the Constitution did not explicitly mention a bank: "It is not denied that there are implied as well as express powers and that the former are as effectually delegated as the latter." To argue, as did Jefferson, that all government policies had to pass a strict test of being "absolutely necessary" to the performance of specified duties would paralyze government. How could one say with certainty what was absolutely necessary? Hamilton pointed out that, in setting up the Customs Service, he had overseen construction of lighthouses, beacons, and buoys, things not strictly necessary, but useful for society all the same. He was drafting a rationale for the future exercise of numerous forms of federal power.
The Bank of the United States would enable the government to make good on four powers cited explicitly in the Constitution: the rights to collect taxes, borrow money, regulate trade among states, and support fleets and armies. Jefferson wanted to deprive the federal government of the power to create any corporations, which Hamilton thought could cripple American business in the future. At the time, few corporations existed, and those mostly to build turnpikes. The farseeing Hamilton perceived the immense utility of this business form and patiently explained to Washington how corporations, with limited liability, were superior to private partnerships. In the end, his bank argument was predicated not only on interpretation of the Constitution but on his reading of history: "In all questions of this nature, the practice of mankind ought to have great weight against the theories of individuals."Washington, as James Flexnor’s 1994 biography is entitled, was the indispensable man. More than anyone else except Benjamin Franklin, Washington embodied the critical civic trait of public virtue that two scholars of the Revolutionary period, Bernard Bailyn and Gordon Wood, have identified as one of the keystones of the republican theory of government. (There are other scholars, but Bailyn and Wood I have read, and heartily recommend them.) That this was no mere hagiography is shown that in 1793, by which time Jefferson and Hamilton were the bitterest enemies, they both agreed that Washington must serve a second term as President, and both beseeched him accordingly. The conclusion was never foregone: Washington was heartily sick and tired of public life, and wanted more than anything to retire with Martha to the peace and solitude of Mount Vernon. Yet Washington consciously realized, as did the men closest to him, including both Hamilton and Jefferson, that the first two administrations of the new government would cast it almost beyond remolding. The actions Washington took now, the decisions he made now, the precedents he established now, would set the course of the republic for untold generations to come.
After writing this magisterial defense, Hamilton packed it off to Washington before noon on Wednesday, February 23. The next day, Washington studied the opinion and, despite lingering doubts, was sufficiently impressed that he did not bother to send it to Jefferson. The day after that, he signed the bank bill.
Washington was fully conscious of this solemn historic stage and his crucial role on it. So, as far as I’m concerned, what Washington decided regarding this issue of enumerated powers versus implied powers is by far the best guide to what the Founders intended. Not the squawking of the Anti-Federalists so vogue among the wrong-wing now. Not the denunciations, peregrinations, and machinations of Jefferson and Madison, who both later became President themselves and found the enumerated powers doctrine not just embarrassing but downright unworkable. Here is the simple fact that wrong-wingers simply cannot get around, and will desperately avoid unless you shove it in their face: the most important of the Founders, the Founder who was the indispensable man, George Washington, decided in favor of Hamilton’s doctrine of implied powers.
Reverberating through history
The decision by Washington to adopt and support Hamilton’s interpretation of implied powers has reverberated down to this day. Without Hamilton’s interpretation of implied powers, the U.S. government would look significantly different than it does today. Chernow explains that
Hamilton's plea for the bank had a continuing life in American history, partly from the influence it exerted upon Chief Justice John Marshall. When Daniel Webster made oral arguments for the Second Bank of the United States in the landmark case of McCulloch v. Maryland in 1819, he quoted Hamilton's 1791 memo to Washington on the necessary-and-proper clause. In words that distinctly echoed Hamilton's, Marshall said that necessary didn't mean indispensable so much as appropriate. Repeatedly in American history, Hamilton's flexible definition of the word necessary was to free government to handle unforeseen emergencies. Henry Cabot Lodge later referred to the doctrine of implied powers enunciated by Hamilton as "the most formidable weapon in the armory of the Constitution ... capable of conferring on the federal government powers of almost any extent." Hamilton was not the master builder of the Constitution: the laurels surely go to James Madison. He was, however, its foremost interpreter, starting with The Federalist and continuing with his Treasury tenure, when he had to expound constitutional doctrines to accomplish his goals. He lived, in theory and practice, every syllable of the Constitution. For that reason, historian Clinton Rossiter insisted that Hamilton's "works and words have been more consequential than those of any other American in shaping the Constitution under which we live.”As another lawyer, William Pinkney, argued before the Supreme Court, also in McCulloch v. Maryland:
It was impossible for the framers of the constitution to specify prospectively all these means, both because it would have involved an immense variety of details, and because it would have been impossible for them to foresee the infinite variety of circumstances in such an unexampled state of political society as ours, forever changing and forever improving. How unwise would it have been to legislate immutably for exigencies which had not then occurred, and which must have been forseen but dimly and imperfectly. The security against abuse is to be found in the constitution and nature of the government, in its popular character and structure. The statute book of the United States is filled with powers derived from implication.The decision in the case was unanimous, and it was written by Chief Justice Marshall:
A Constitution, to contain an accurate detail of all the subdivisions of which its great powers will admit, and of all the means by which they may be carried into execution, would partake of the prolixity of a legal code, and could scarcely be embraced by the human mind.Marshall was not content to merely render the decision. He felt it necessary to directly discuss and dismiss the arguments in favor of the enumerated powers interpretation, noting “the baneful influence of this narrow construction” which would render “the Government incompetent to its great objects…”
One of the Associate Justices that sat on the Marshall court was Joseph Story. A little over two decades after the McCulloch decision, in 1833, Justice Story published a three volume work, Commentaries on the Constitution, that remains the single most important legal guide to interpreting the Constitution. In Sections 1,238 to 1,289, Story dealt with the issue of implied powers, and it is well worth reading the entirety of Story’s discussion on the subject. In the interest of brevity, I will here quote only two key sentences:
§ 1238. The plain import of the clause is, that congress shall have all the incidental and instrumental powers, necessary and proper to carry into execution all the express powers.…For the next two centuries, the Supreme Court would make limited and narrow applications of the implied powers doctrine. Not until 1936, when it was deciding the constitutionality of the various programs and measures of the New Deal, did the Court finally issue a clear, unambiguous declaration in support of Hamilton’s and Story’s interpretation. Ironically, the Court, in United States v. Butler, 297 U.S. 1, 65 (1936), struck down the Agricultural Adjustment Act of 1933. But by inserting into its decision a clear endorsement of the implied powers doctrine, the Court was signaling a major shift: it had become more willing to accept that the First Great Depression required more robust interventions into the economy by the national government than ever before.
§ 1250. The motive for its insertion doubtless was, the desire to remove all possible doubt respecting the right to legislate on that vast mass of incidental powers, which must be involved in the constitution, if that instrument be not a splendid pageant, or a delusive phantom of sovereignty.
Since the foundation of the Nation, sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view, the phrase is mere tautology, for taxation and appropriation are, or may be, necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. Each contention has had the support of those whose views are entitled to weight. This court has noticed the question, but has never found it necessary to decide which is the true construction. Mr. Justice Story, in his Commentaries, espouses the Hamiltonian position. We shall not review the writings of public men and commentators or discuss the legislative practice. Study of all these leads us to conclude that the reading advocated by Mr. Justice Story is the correct one.