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One Down and Two to Go

September 19, 2018

At the Constitutional Convention, Madison argued that among the national legislature’s enumerated powers should be the authority to “grant charters of incorporation.”  He was voted down.  Because his idea was rejected, he assumed Congress had no right to charter a national bank.  Again he found himself in the minority.

Twenty years later, not wanting to upset the financial applecart, President Madison asked Congress to renew the charter for the Bank of the United States (B.U.S.).  Congress did not concur.  Many in Madison’s own political party voted against him, including his Vice President.

The charter for the Bank of the United States expired in 1811.

Then came the War of 1812.  If the B.U.S. charter had been renewed, or if the war had been preceded by twenty years of banking chartered only by the individual states, perhaps the financial system could have better managed the demands of war, but there had not been enough time to establish a states-centered system.  Congress reneged and created the 2nd Bank of the United States in 1816.

President Madison, who has been nicknamed “The Father of the Constitution,” was not willing to abandon a financial system that was working in order to conform to a strict construction of the U.S. Constitution.  President Jackson, however, was willing to destroy the 2nd Bank of the United States even before its charter expired.  It’s not that Jackson was such a principled Constitutionalist.  This time it was personal.

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