Jefferson followed a more literal interpretation of the Constitution. Hamilton believed in the “broader reading of implied powers” or in other words, reading between the lines. The Constitution left a lot of room for interpretation and debate. Hamilton’s interpretations would lead to the creation of many federal programs, especially those that would bring the United States out of debt.
Jefferson’s literal interpretation did not support such programs. He saw the Constitution as essentially a set of strict guidelines to follow, much as the Articles of Confederation before it had been. He felt that Hamilton’s “broader reading” of the Constitution would allow the government to overstep the jurisdiction that Jefferson felt that it had. The feud between Hamilton and Jefferson, and this disagreement in particular, would inevitably cause the formation of the first political parties. President George Washington hoped that factions within the government would not happen, but inevitably it became obvious that not everyone can agree on the same interpretations.
Jefferson was a man who feared big government. He did not want the government getting too involved with people’s affairs; he already felt that the Constitution was a larger government than he felt was necessary. He was an anti-Federalist who believed in the ideas of “public vigilance” and “suspicion of government power.” Jefferson believed that the federal government was allotted only the powers that were strictly enumerated in the Constitution and nothing more. He felt that if the government expanded past these listed powers, the states’ power would be endangered.
Hamilton, on the other hand, was very pro-Federalist. It is also true that he caught the eye of General Washington in the War for Independence. Later, Hamilton worked closely with him as an aide, and the two of them became close acquaintances. It would not be hard to assume that Washington favored him over Jefferson; Hamilton was a military person like himself, while Jefferson was not. Both were progressive thinkers for their time, but Washington seemed to favor Hamilton’s forward, liberal thinking over Jefferson’s more conservative beliefs.
It is also true that Hamilton would help establish the power of the executive branch over the other two branches; he was a close adviser to Washington, just as he had been as an aide in the War. Hamilton was also one of the first advocates of government’s “responsibility” to the people of the nation. Jefferson feared that the government would become too involved in the affairs of the people, and felt that the states were more so “responsible” for their citizens in knowing what they really wanted.
Jefferson, the first Secretary of State of the United States, argued that clearly nowhere in the Constitution was the government expressly allowed to create a national bank. He said, “I consider the foundation of the Constitution as laid on this ground that ‘all powers not delegated to the U.S. by the Constitution, not prohibited by it to the states, are reserved to the states or to the people,’” citing the Twelfth Amendment. “To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.” He felt that the incorporation of a national bank along with other powers assumed in the same bill had not been among the powers enumerated.
The three enumerated rights that Jefferson cites for the government’s role in commerce in the Constitution are: “a power to lay taxes for the purpose of paying the debts of the U.S.,” “to borrow money,” and “to regulate commerce with foreign nations, and among the states, and with the Indian tribes.” Firstly, Jefferson says that the bill itself pays no debts directly. He felt that it was a bill simply to raise money, with no promise that the money would directly pay off debts or oversee the nation’s general welfare. Secondly, he points out that the “bill neither borrows money, nor ensures the borrowing it. The proprietors of the bank will be just as free as any other money holders, to lend or not to lend their money to the public.” He brought up a fine point; under the bill, tax money could be collected in this Bank, be held onto and not free to be lent, just as any bank would. Jefferson found that to be outside of the government’s jurisdiction. Lastly, Jefferson said that “to erect a bank, and to regulate commerce, are very different acts.” The bank was not proposed to be a “regulation of trade,” but rather as a “considerable advantage to trade.” 7 Jefferson’s major argument was that the government’s place was to lay taxes for only the payment of debts and for the common welfare of the nation, and not to form any sort of general fund that could be bought or sold.
Jefferson lists not only these enumerated rights directly related to commerce, but also defends his position with a couple of general phrases as well. He gives his interpretation of the phrase ‘to lay taxes to provide for the general welfare of the U.S.” “In like manner,” he writes, “they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose…” The second general phrase which he quotes is, “to make all laws necessary and proper for carrying into execution the enumerated powers.” He was sure that a bank was unnecessary to the execution of the laws.
Secretary of the Treasury Alexander Hamilton felt that the bank was indeed a “constitutional measure,” seeing the Constitution from a more philosophical viewpoint rather than literal. He disagreed with Jefferson, feeling that the incorporation of a national bank into the government was in fact a necessary part of building the American economy. Hamilton argued that a sovereign nation should be allowed to establish any sort of corporation, including a bank, which will serve the needs of the government.
Hamilton argued that a government had “a right to employ all the means requisite and fairly applicable to the attainment of the ends of [sovereign] power, and which are not precluded by restrictions and exceptions specified in the Constitution, or not immoral, or not contrary to the essential ends of political society.” Hamilton saw a national bank as a necessary means to run the government, and saw nothing expressly stated that was against its formation.
A national bank was a very good idea according to Hamilton. He explains “that a bank has a natural relation to the power of collecting taxes – to that of regulating trade – to that of providing for the common defence – and that, as the bill under consideration contemplates the government in the light of a joint proprietor of the stock of the bank, it brings the case within the provision of the clause of the Constitution which immediately respects the property of the United States.”1
The idea of the bank was for the federal government to take on the states’ debts as well as its own and use the bank as a way to gain income through interest on loans. He says that “the circumstance that the powers of sovereignty are in this country divided between the National and State governments, does not afford the distinction required.” Hamilton believed that the federal government should help out the states in any way possible and the bank would provide a way for them to better organize the money, possibly putting it aside for future uses. Washington would inevitably side with his old friend Hamilton, convinced that his ideas would indeed help the economy of the United States as a nation, and the National Bank would be created. It would be successful, and for the next twenty years, as it was chartered, would indeed bring the country out of debt.
However, Jefferson’s fears were well-founded. The Second Bank of the United States, the bank immediately following the 20-year First Bank, fell into corruption, as it became poorly operated. The second bank would be dissolved in the 1830’s. It would be some time before America again had a central national bank. In 1913, President Woodrow Wilson signed into law the bill that would create the Federal Reserve that we have today. Therefore, Hamilton’s idea of a national bank has survived today and has found success.
The Federal Reserve, however, only came to be after a great many years. Jefferson was correct originally with the initial bill proposing the national bank bill. The eventual Federal Reserve would be set up a great deal differently than Hamilton’s national bank. But, the idea remains the same. Jefferson’s skepticism was well-placed, however.
It is true that not everything that a nation will need to run smoothly can ever be completely foreseen and written into a document. To read the Constitution literally as Jefferson did would have left it a static document. Hamilton, however, saw it as a living document and a code to be followed for future laws to be built around. He was the first of what we would call today a “democratic interpreter.” Such people would argue “that the Constitution is not designed to be a set of specific principles and guidelines, but that it was designed to be a general principle, a basic skeleton on which contemporary vision would build upon.”
However, it is also important that those who interpret the Constitution literally and others who read it as a set of both enumerated powers and implied powers must both have a voice. However, even between them there are greater numbers of disparate interpretations. The national bank was the first major dispute over the Constitution, and this would plant the seeds for the first political factions. The differing opinions of how the Constitution was interpreted proved how flexible the document really would prove to be. Hamilton was the only first of many more to stretch its bounds.