Module 5 Option 1 : National Bank Debate

The creation of the first national bank in the United States was of utmost importance in setting precedence for how much power the constitution actually grants the government. The debate over whether to create a national bank raised many questions over the constitution that hadn’t been tested before. It also raised questions about what the government can do when the constitution has no written clause on a certain subject. In looking at the arguments from Alexander Hamilton, James Madison, and Thomas Jefferson regarding a national bank, people can find out more about how some of the leading founders of the Constitution wanted to see the United States government run.

The Bank of the United States was designed to make money and build an economy. It was designed by men like Alexander Hamilton and Robert Morris, but did not benefit the common citizen as much as wealthy investors. Why did a fledgling government need to borrow millions from overseas in order to invest in a “national” bank, to turn around and then borrow the same money back and pay interest on it? The banking system developed by Alexander Hamilton and Robert Morris was prime pickings for speculators, and laid the groundwork for a history of unscrupulous activity regarding our nation’s money supply that continues to this day. The signatures on the Constitution were barely dry before corruption and

Originally, a supporter of George Washington, James Madison soon found himself at odds with Washington due to financial issues. He and Thomas Jefferson campaigned against the creation of a central federal bank, claiming it was unconstitutional, yet despite all efforts, the measure was passed by 1791. Around this time, they abandoned the Federalist party and created their political entity, the Democratic-Republican party.

Hamilton’s creation of the first bank in the United States continues to exist in today’s economic environment. However, at that time Hamilton’s proposal was met with widespread resistance from individuals such as James Madison and Thomas Jefferson who considered the creation of a federal bank as unconstitutional. The analysis made by Gordon in his book is consistent with arguments made by to have a bank that would be effective in order to implement the powers authorized by the government as it was implied in the constitution

During George Washington’s presidency of our new nation, there was a large disagreement between his Secretary of Treasury, Alexander Hamilton and his Secretary of State, Thomas Jefferson on several economic and political challenges.To get the nation out of extreme debt, Hamilton came up with a financial plan that included the creation of a national bank. This national bank would be a safe place to deposit government funds, a source of loans for the government and businesses, and the creation of a national mint. However, Jefferson was strongly opposed to the idea of a national bank, he believed it was strictly against the Constitution and would give the federal government too much power. Hamilton argued that Article I Section 8 of the Constitution

Out of all the obstacles that the federalists had faced, the economy was, by far, the most problematic and the most difficult to find a solution for all parties. The country was not in a very stable position because of the recent crises like the whisky rebellion, or money-producing ideas such as bonds. Hamilton, Madison, and Jefferson played major roles in establishing the economy of the United States at the time, and also had a large role in the development of today’s government and economy. Without the ideas of these men, the United States economy may have the same problems today that the federalists faced then. And in the end, even though the idea of a national bank was redundant, that is what removed the United States from

I, Thomas Jefferson, am against the bill for the adoption of a national bank designed along the lines of the Bank of England. The U.S. bank would prevent the improvement of state banks as a result of its exceptional powers and benefits. I think states ought to sanction banks that could issue cash. A national bank would be much more help to rich representatives in urban communities than to agriculturists in the nation. The national bank would be controlled by affluent investors and would assist those with privileged class turn out to be more rich and effective. The joining of a bank and the forces accepted by this bill have not, as I would like to think, been designated for the United States by the Constitution. I trust that the Constitution

The national bank, which was established by Alexander Hamilton, helped Americans in many ways. One, the national banks was a way to store money for individuals. Two, it was a place to give out money temporarily. This money lending process was named a loan. The main purpose of the national bank was to supply paper money and handle government funds.

The institution of chartering a Second National Bank also stimulated many controversies. Once again, the Bank, an element of the American System created to strengthen national currency, placed commercial interests of the North over farmers and agriculturalists of the South. In the

Another matter the two men disagreed on was the establishment of a national bank. Hamilton wanted a national bank so he could forge a relationship between business and the federal government. Jefferson, on the other hand, thought that such a bank would encourage people to leave agriculture for guesswork and give business interests too much power in the federal government.

One of Jefferson’s and Hamilton’s first disagreements began with the idea of a National Bank. Hamilton suggested that the government should create the Bank of the United States Jefferson protested because this was not allowed by the Constitution. Hamilton opposed the view of Jefferson and stated that the Constitution’s writers could not have predicted the need of a bank for the United States. Hamilton said that the right to create the Bank of the United States was stated in the “elastic” or the “necessary and proper” clause in which the Constitution gave the government the power to pass laws that were necessary for the welfare of the nation. “This dilemma revisits the ever lasting dispute between the “strict constructionists” (Jefferson) who believed in the strict interpretation of the Constitution by not going an inch beyond its clearly expressed provisions, and the “loose constructionists” (Hamilton) who wished to reason out all sorts of implications from what it said”. Just a few years later, under President Jefferson, the federal government of the United States

The National Bank was established for many reasons. It created a stable currency and provided a strong economic control. It also aided in the growth of the country. Because it was National Bank instead of a state bank, there was more money so bigger loans could be given out to start factories and industries. Jackson did not like the idea of the National Bank. Because

Thomas Jefferson and Alexander Hamilton were two Founding Fathers with contrasting backgrounds that shaped their views and desires for the new nation. Jefferson, an anti-federalist from a wealthy, agricultural background advocated for the protection of states’ rights and the limitation of federal power. Hamilton, a federalist born from a poor family and who established himself through the military, advocated for a strong, central government. Both Jefferson and Hamilton would find themselves at ends with one another on a multitude of issues when it came to how the new nation would be organized. One topic that caused much controversy between the two Founding Fathers was the establishment of federal banking system. After the Revolutionary War, America found itself in near crippling debt and no essential way to bring in income rather than relying upon the states. Hamilton sought to implement a national bank to assist in administrating the nation’s finances and argues that it would create a more efficient, prosperous nation. Conversely, Jefferson saw necessity in having an agrarian economy and argued that not only did a federal bank give the national government too much power, but that it was also unconstitutional. When comparing the strengths of Hamilton and Jefferson’s arguments on the establishment of a national bank, it is evident that Hamilton’s argument for a national bank was superior to the antifederalist opposition.

The Bank of the United States is a symbol of the long held American fear of centralization and government control. The bank was an attempt to bring some stability and control and was successful at doing this. However, both times the bank was chartered, forces within the economy ultimately destroyed it. The fear of centralization and control was ultimately detrimental to the U.S. economy.

INPUT DATA: Amount Needed to Raise Flotation Costs Stock Offer Price Market Value/Book Value Ratio (Dollars in thousands) Assets Cash U.S. Treasuries Mortgage-backed Securities Municipal Bonds Government Agency Securities Total Cash & Securities Residential Mortgage Loans Consumer Loans Business Loans Total Loans Fixed Assets Total Assets Liabilities Passbook Savings Non-interest Checking N.O.W. Accounts Money Market Accounts Certificate of Deposits Total Savings Borrowed Money Other Liabilities Total Liabilities Capital Stock ($100 par value) Retained Earnings Total Equity Total Claims Loan Loss Reserve Allowable Risk Adjustment Weights: No default risk Low default risk Res. loans &