Hamilton proposed congress charter the bank of us for

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Hamilton proposed Congress charter the Bank of US for period of 20 years; capitalize at $10 mil Once chartered, gov would own 20% of bank’s stock Bank would sell 80% to private individuals Investors had to pay 25% of value in specie but remaining 75% could be in gov securities Bank would facilitate payment of fed taxes and tariffs, serve as gov depository and gov creditor, help regulate state banks, and work to create paper money by issuing bank notes in the form short-term loans to merchants Hamilton felt creation of paper money served as bank’s most important function Since bank would exchange notes for specie, notes could change hands without losing value, making them acceptable substitute for coin Since most Americans had little bank experience, Hamilton’s proposal was a novel solution S especially doubted need for any financial institution that might concentrate the nation’s economic power in the hands of only few people When Congress began debate of bank bill in 1791, Madison led opposition He argued against concentration of power, similar to British monarchy Instead,e suggested chartering several regional banks He doubted the constitutionality of the measure Madison promoted a limited interpretation of the Constitution, strict constitution Bank charter did not propose to collect taxes or borrow money for general welfare It was not a neccessary function of gov Madison concluded that the measure “was condemned by the silence of the Constitution” Hamilton’s supporters in congress such as Fisher Ames, Elbridge Gerry, and Theodore Sedgwick negated Madison’s arguments in House and Senate debates
Ames suggested that bank was proper function of gov and much of what congress and pres did in previous two years relied on a broad interpretation of powers granted to gov The “neccessary and proper” clause Article I, Section 8 established “doctrine of implied powers” Bank bill passed through both chambers in Feb, leaving pres to decide whether to sign or veto Washington repsected Madison’s judgement and according to Gordon Wood “was deeply perplexed by the issue of constitutionality.” He asked Sec of State Jefferson, who recently returned from Paris where he served as minister of France, and Attorney General Randolph for advice Both opposed bank and in written responses relied on provisions of Tenth Amendment Pres asked Madison to draft his veto message He also invited Hamilton to respond to criticism leveled by fellow cabinet member Sec of Treasury laid out case for broad construction, arguing bank was vital to economic interest Hamilton convinced Washington the bank was necessary and proper; pres signed bill After Bank of US, in Philly, began selling securities, Washington expressed pleasure at how quickly the value of securities rose It suggested people had confidence in gov and economic resources Report on Manufactures proposed 4 measures to support domestic industry Congress should protect the nation’s infant industries through protective tariff

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