In this lesson I learned about the First Bank of the United States. The idea to have a privately owned central bank was brought up by Hamilton, of course, who drew influence from the Bank of England. The government would hold 20% ownership over the Bank, leaving 80% to be owned privately. Of that 80%, 70% was taken up by nonvoting foreign ownership. The Bank guaranteed 8% on bank stock, which was a tremendous deal, and it would loan to individuals, national government, as well as states with congressional approval.
While trying to get the act through Congress, Hamilton faced some opposition. Attorney General Edmund Randolph challenged the Bank’s constitutionality, as did Jefferson and Madison. Washington however gave Hamilton one week to be persuaded. What ensued was a letter called the Doctrine of Implied Powers, which Hamilton crammed with any argument he could think of. Despite the fact that most of it is made up of incoherent nonsense, they triumphed because the Constitution’s language lends itself to an expansion of national government power.
Dr. North then brought up some arguments that the critics missed. The First Bank of the United States was a privately owned profit seeking business that was created by the government and given a monopoly by the government. In fact, the bank would have the same authority as a government agency. However it was used to line the pockets of investors, including some members of congress, and many unnamed foreign investors.
Ultimately, it was the Constitution that did not protect against this monopoly. The gibberish that was the doctrine of implied powers became dominant in American constitutional history. And from then on the government would never get smaller.
Connor's corner 