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Fedzilla vs. the Constitution
Fedzilla vs. the Constitution
Fedzilla vs. the Constitution
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Fedzilla vs. the Constitution

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Fedzilla vs. the Constitution traces the largely successful effort to turn a federal government given limited, enumerated tasks by the Constitution into a large and powerful monolith. Issue by issue, the book shows how it was done, starting with the administration of George Washington and continuing through the Obama Administration. The book argues that Washington's Secretary of the Treasury, Alexander Hamilton, was disingenuous in supporting ratification of the Constitution as setting limits on federal power, then turning around once in office to expand the federal government. Hamilton is called the Father of Crony Capitalism for creating the first Bank of the United States and the Father of Bailouts for his role in the Panic of 1792. The author challenges prevailing legal thinking with criticisms of venerable Supreme Court decisions, starting with those of Chief Justice John Marshall, and continuing up to those of Chief Justice John Roberts.

After tracing the "tricks of the trade" that federal power players have used to expand the government, the book offers arguments for why we need to put Fedzilla on a constitutional weight-loss diet. Its remoteness from the people and undemocratic composition, as compared to the states, and its ability to damage the entire nation with its bungling, as compared to initiatives by only one state, are among the reasons for shrinking Fedzilla back into its constitutional britches. The third part of the book offers "recipes" for a constitutional weight-loss diet.
LanguageEnglish
PublisherBookBaby
Release dateDec 20, 2014
ISBN9781483548548
Fedzilla vs. the Constitution

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    Fedzilla vs. the Constitution - John P. Krill, Jr.

    book.

    Part I: How a Limited Federal Government Mutated into Fedzilla.

    Chapter 1. Limited Government Before the Constitution

    The federal government was founded by the first thirteen states in an agreement called the Articles of Confederation and Perpetual Union. It was drafted and submitted to the states by the Second Continental Congress in 1777 and was finally ratified by all thirteen states in 1781. The Articles could be amended only by an unanimous vote of the states.

    Under the Articles, there were no executive or judicial branches of the federal government. The only instrument of federal authority was Congress, which had few powers. Congress could not tax. It could merely request the states to fund federal expenses. In the event of war, the federal government would have to rely on the militias of the states.

    The Articles addressed the important issue of interstate commercial relations. Article IV said that

    the people of each State shall have free ingress and regress to and from any other State, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions, and restrictions as the inhabitants thereof respectively, provided that such restrictions shall not extend so far as to prevent the removal of property imported into any State, to any other State, of which the owner is an inhabitant; provided also that no imposition, duties or restriction shall be laid by any State, on the property of the United States, or either of them.

    This provision protected and promoted interstate commerce. In comparison, its successor, the Interstate Commerce Clause of the United States Constitution, merely delegated to Congress the regulation of interstate and foreign commerce without stating any goals or prohibitions. Congress therefore can now promote or prohibit types of interstate commerce as it sees fit. The current Interstate Commerce Clause, as interpreted by the federal courts, also merely implies a prohibition on the states’ discriminating against interstate commerce.¹¹ The commerce clause in the Articles seems to have been respected by many states all the time and by most states some of the time.¹² In 1787, when the Constitutional Convention convened, there does not seem to have been a national crisis in interstate commerce.

    However, the manufacturing, agricultural and shipping interests of that era wanted more. They were being denied access to foreign markets. They wanted a national government that could impose tariffs on foreign imports and negotiate trade agreements with foreign powers.¹³ Great Britain and other European countries discriminated against American commerce in favor of their own and the United States were unable to respond in kind, because the Articles did not give Congress the power to impose tariffs.¹⁴ The states could and did impose tariffs on imports, but foreign imports could shift from a higher-tariff state to a lower one. The goods could then be conveyed from the port of entry across state lines. The net effect was that the state in which the port of entry was located enjoyed the revenue from tariffs, while neighboring states paid the higher prices caused by the tariffs without getting any upside in state revenue.

    Congress did have some major achievements under the Articles. For example, its representatives, John Adams, Benjamin Franklin and John Jay, negotiated the Treaty of Paris of 1783, which officially ended the Revolutionary War. The Treaty was generous to the United States in setting boundaries and in granting American fishermen perpetual access to the rich fishing grounds of the Grand Banks off the coast of Newfoundland. Another great achievement of Congress under the Articles was enacting the Northwest Ordinance, which resolved competing state claims to the territory north of the Ohio River, created territorial governments, provided for the creation of new states (which later became Ohio, Indiana, Illinois, Michigan and Wisconsin) and prohibited slavery in that vast area.

    The Constitutional Convention of 1787 was called by Congress merely to consider amendments to the Articles of Confederation. The Convention met in Philadelphia, in secret proceedings closed to the public. The delegates swore themselves to secrecy about their debates. Although the Convention’s secretary kept a journal and other delegates made notes of the proceedings (James Madison’s notes being the most detailed), the public did not have access to these materials until many years later.

    James Madison prepared for the Convention diligently. He sent his friend Thomas Jefferson, then serving as Ambassador to France, a list of books he wanted but could not get in America. The list included works in ancient Greek and Latin, by Aristotle, Cicero and Plato on the topic of government. Fluent in classical languages, Madison studied ancient federations and constitutions to discern their strengths and weaknesses.

    The delegates convened in May of 1787. Their first act was to elect George Washington unanimously to be the president of the Convention. The delegates soon decided to disregard their instructions from Congress to consider amendments to the Articles of Confederation. Instead, they decided to draft a whole new constitution. In September of 1787, after a hot summer, the Convention produced the proposed Constitution of the United States.

    Under the Articles of Confederation, the draft Constitution could have become operative only if unanimously adopted by the states. The Framers of the Constitution, ignoring the Articles, proposed that the Constitution become effective upon ratification by only nine of the thirteen original states. The Framers also, contrary to the Articles, bypassed the legislatures of the states and provided for ratification by conventions that would be held in each state. The Framers even bypassed the people, rejecting the option of submitting the issue of ratification to a popular referendum. Instead, the people of each state were asked to elect delegates to a state convention who would have full power to decide.

    Holding state conventions helped the Federalists, who favored ratification. They were concentrated in the cities and correctly expected low turnout in the remote settlements. This canny political calculation by the Framers paid off. In Pennsylvania, for example, the Anti-federalists objected to the snap election for delegates that the Federalists wanted, because their rural constituents would be at a disadvantage in getting the word and going to the polls. On September 29, 1787, Anti-federalists absented themselves from the Pennsylvania Assembly to deprive it of a quorum to conduct business. This tactic delayed a vote on calling a ratification convention, until the Federalist members had the sergeant at arms forcibly bring the absentees into the chamber. ¹⁵ We the People would likely have rejected the Constitution in a direct, popular referendum. ¹⁶

    How did the Framers get away with all this? In my opinion, it was the immense prestige of George Washington that legitimized their proceedings. If Washington had refused to chair the Convention, or if he had refused to put his signature on its final product, I do not believe we would have the Constitution today. The hero of the War of Independence and the modern Cincinnatus, who gave up power to return to his farm, Washington held neither civil nor military office in 1788. But, although he did not wield governmental power, he had something greater. He had moral authority with the public. Washington’s support gave legitimacy to the process of proposing and ratifying the Constitution, despite what the law at the time, i.e. the Articles of Confederation, provided. Washington’s support for the ratification of the Constitution is one of the greatest demonstrations in history of the superiority of moral authority over mere laws on paper.¹⁷ In my opinion, the legitimacy of the Constitution in large part still depends, generations later, on the continued high prestige with the American public of George Washington and, to a lesser extent, his fellow Founders.¹⁸

    The proposed Constitution of the United States was not a total victory for those Federalists in the Convention, like Alexander Hamilton, who wanted a central government that would be sovereign over the states in all things. Hamilton was opposed in the Convention by many delegates, including his colleagues from New York, who feared an all-powerful central government. Delegates from small states did not want to create a government whose powers could be used by the large states to dominate the smaller ones.

    The Convention ultimately compromised and created a novel system of dual sovereignty. There would be no central government. Instead, a federal government would be supreme in exercising a limited number of powers delegated to it, while each state would be supreme within its borders on everything else. The federal government would not have to depend on the states to implement its programs, because it could directly tax the citizens of the United States, within certain limits. The fears of the smaller states about domination by large, populous states were addressed by creating a Congress of two chambers: a popularly elected House and a Senate, composed of two senators from each state, selected by their legislatures. The limited nature of federal powers would protect the institution of slavery in the southern states, yet southern representation in the House would be augmented by counting a slave as three-fifths of a person.¹⁹ The delegates compromised on many issues, including, for many of them, on the distasteful issue of human bondage, because their overriding goal was to form a more perfect union.²⁰ Not a perfect union. Just one with fewer flaws.

    Despite the Convention’s brilliant compromises, the debate over ratification of the Constitution was heated, with the pro-Constitution Federalists opposed vigorously by Anti-federalists, who feared that, regardless of what the words of the Constitution said, it would create a central power that would swallow up the state governments.

    In the public debate over ratification, Americans were assured by the Federalists that the Constitution could not possibly lead to a central government that overwhelmed the states or intruded into their internal affairs. Three of the leading Federalists, James Madison, Alexander Hamilton and John Jay, published a series of what we would now call op-ed essays in the newspapers under the pseudonym Publius. Their essays attempted to calm fears about the Constitution by explaining how it would work and why it was needed. Their collected essays have become known as The Federalist Papers and are still influential for their insights into the role foreseen for the national government.

    According to James Madison, the Constitution formed a happy combination, in that the great and aggregate interests were the responsibility of Congress and the local and particular interests belonged to the state legislatures.²¹ Alexander Hamilton opposed having a bill of rights attached to the Constitution, because he maintained that the federal government would be one of enumerated powers, set forth in the Constitution. Therefore, he argued, a bill of rights was not only unnecessary but dangerous, because it could be misconstrued to imply that there were un-enumerated federal powers, which had to be restricted:

    They [the bill of rights] would contain various exceptions to powers which are not granted; and on this very account, would afford a colorable pretext to claim more than were granted. For why declare that things shall not be done which there is no power to do? Why for instance, should it be said, that the liberty of the press shall not be restrained, when no power is given by which restrictions may be imposed? I will not contend that such a provision would confer a regulating power; but it is evident that it would furnish, to men disposed to usurp, a plausible pretense for claiming that power.²²

    Hamilton assured Americans that the Constitution,

    so far from implying an abolition of the State Governments, makes them a constituent part of the national sovereignty by allowing them a direct representation in the Senate, and leaves in their possession certain exclusive and very important portions of sovereign power.²³

    James Wilson, who was a delegate both to the Constitutional Convention and to the Pennsylvania ratifying convention, opposed adding a bill of rights for the same reason.²⁴ Wilson said that the difference between the powers of state legislatures and those of the proposed Congress was that, under state constitutions, every thing which is not reserved is given, whereas under the Constitution, every thing which is not given, is reserved. Wilson concluded that adding a bill of rights to the Constitution was unnecessary, because it would be superfluous to prohibit Congress from doing something that the Constitution gave it no power to do.²⁵

    In Virginia’s ratifying convention, Edmund Randolph refuted the Anti-federalist argument that the federal government would have implied powers.²⁶ The opponents of ratification had pointed to the restrictions on Congress in Article I, section 9, as proof that there were implied powers beyond the enumeration in section 8. Otherwise, they argued, why would section 9 have a peculiar list of prohibitions? Randolph, who would become our first Attorney General, addressed each prohibition in section 9 and showed that it was a restriction on how one or more of the enumerated powers could be exercised.

    Anti-federalists remained skeptical. A leading opponent of the Constitution, writing under the pseudonym Brutus, argued that the federal judiciary would eventually undermine the written words of the Constitution. He predicted that the judges would not feel bound by the text, but would mould the government into almost any shape they please.²⁷ He believed federal court decisions would extend the reach of Congress and preempt the actions of state legislatures, so that, in time, the states would become so trifling and unimportant as not to be worth having.²⁸

    Getting at least nine state conventions to ratify the Constitution was far from a sure thing. Smaller states were generally in favor of it. In Pennsylvania, a large and critical state, the Federalist tactic of holding a snap convention paid off with a quick ratification. But elsewhere it was a cliffhanger that kept Madison and Hamilton on the edge of their seats. Massachusetts ratified by a vote of 187-168; a switch of ten votes would have killed ratification. New Hampshire voted in favor by 57-47; a change in six votes would have sunk it. Virginia, a large and essential state to have on board, approved the Constitution by a vote of 89-79; a shift of six votes would have been fatal. In New York it was ratified by only 30-27. North Carolina’s convention voted no 184-84 and the state did not reverse itself until after the first federal elections had been held without it. Rhode Island didn’t even call a ratifying convention. ²⁹

    After nine states held conventions that ratified the Constitution, the first federal elections were held in 1788. Washington was unanimously chosen President by the Electoral College. Congress was divided between Federalists and Jeffersonian Republicans, but the Federalists had the upper hand for a time. The Federalist Party lost the election of 1800. Thomas Jefferson’s Republicans took Congress and the Presidency. The Jeffersonians were philosophically opposed to an all-supreme central power, but in the long run it didn’t matter.

    Two centuries later, the federal government has become a dominating presence in the daily life of every American. It has so many functions that it would astound even the cynical Brutus. Why, after 225 years, do the predictions of Brutus seem to have come true and the assurances of Madison, Hamilton and other Founders about limited federal powers seem empty? Hamilton and Madison were brilliant men, not fools. Nor do I believe that Madison, at least, was disingenuous. So why hasn’t the Constitution constrained the federal government within its supposedly limited, specified powers? Why does Brutus seem like a prophet and the Founding Fathers seem naïve at best? The following chapters explore these questions.

    Chapter 2. Limited Government As Defined in the Constitution

    Article I of the Constitution creates a federal legislature, our Congress, consisting of two chambers: a House of Representatives and a Senate. Each state is apportioned a number of representatives according to its population. The Senate consists of two senators from each state, regardless of population.³⁰

    The powers of Congress are defined in Article I, Section 8 of the Constitution,³¹ which says Congress shall have Power to do the following:

    To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    To borrow Money on the credit of the United States;

    To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

    To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

    To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

    To establish Post Offices and post Roads;

    To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

    To constitute Tribunals inferior to the supreme Court;

    To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations;

    To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

    To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

    To provide and maintain a Navy;

    To make Rules for the Government and Regulation of the land and naval Forces;

    To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

    To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

    To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;--And

    To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

    That’s it: seventeen specific powers, plus the power to make laws that are necessary and proper for executing the seventeen and certain ancillary powers.³²

    Six of the enumerated powers deal solely with military and naval matters. The Taxation Clause lists the common defense as one of the three purposes for which Congress may tax. Article II, section 2, makes the President the Commander in Chief of the army, navy and, when called up into actual Service of the United States, the state militias.

    The emphasis on defense is consistent with the Preamble to the Constitution, which includes in its purposes, provide for the common defense. However, the Preamble is not an operative provision. It does not give any power to the federal government. It just explains why the Constitution was proposed.

    For a bill to become law, it must pass both the House and the Senate and be presented to the President for his approval.

    Article II of the Constitution vests executive power in the President. He is Commander in Chief of the armed forces. He has veto power over laws passed by Congress, although Congress may override a veto with a supermajority vote. He can make treaties with the advice and consent of the Senate. The President appoints all important federal officials in the executive and judicial branches.

    Article III of the Constitution creates the Supreme Court and authorizes Congress to create inferior federal courts. Congress did not have to create any other federal courts and could have relied on state courts of general jurisdiction to hear cases involving federal questions. In fact, state courts still have concurrent jurisdiction with federal courts over federal questions, except in those cases where Congress gives exclusive jurisdiction to the federal courts. Congress chose to create inferior federal courts in the Judiciary Act of 1789.

    The Constitution thus divides federal power between three branches. Just as important for freedom, the Constitution also divides governmental power between the federal government and the states. No single branch of government nor any one level of government is supposed to be able to totally dominate the others.

    The flaw in this plan is that the federal government can dominate state governments, whenever the three federal branches agree that it should be done. Then the Supremacy Clause of the Constitution kicks in and the states are bound by the consensus of the federal branches.³³ Although the Supremacy Clause cannot make what is unconstitutional constitutional, the federal government (through the Supreme Court) has the last word, not the states.

    The first ten amendments to the Constitution were proposed in 1789. Although Federalists like Alexander Hamilton had said that the amendments were unnecessary, because the grant of enumerated powers was a sufficient limitation of the government, many people were mistrustful. To get their support, the Federalists promised that amendments protecting certain rights would be adopted soon after ratification. They kept their promise. The amendments, known as the Bill of Rights, were ratified by the states by 1791. The Bill of Rights did not increase the power of the federal government. Instead, it made certain actions off limits for the federal government. Even if such actions were felt to be necessary for the exercise of an enumerated power, they would not be proper, because the Bill of Rights prohibits them. So, for example, even if Congress felt that having a national established church was necessary for maintaining the morale of an army and navy, the First Amendment would make it improper.

    The Ninth and Tenth Amendments made it clear that the federal government was one of limited, enumerated powers. The Ninth says:

    The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

    The Tenth Amendment says:

    The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

    Justice Joseph Story said of the Tenth Amendment that it is a mere affirmation of what, upon any just reasoning, is a necessary rule of interpreting the Constitution.³⁴ In other words, Story, an advocate of a strong central government, said that the Tenth Amendment was meaningless, because it merely affirmed a principle that was already embedded in the Constitution, namely, Being an instrument of limited and enumerated powers, it follows irresistibly, that what is not conferred, is withheld, and belongs to the state authorities.³⁵ The justices of the Supreme Court have been almost unanimous in accepting this basic tenet of the Constitution, although many of their decisions have deviated from it.

    I disagree with Story as to the Tenth Amendment being a tautology. The Tenth Amendment should be construed as precluding interpretations of the Constitution that attribute implied, inherent or dormant powers to the federal government. The Tenth Amendment is the American people saying to the federal government, We really mean it. Your powers are limited to what is in the text of the Constitution. But, as we will see, Story and other judges preferred to see the Tenth Amendment as meaningless, which then enabled them to expand the government’s reach by clothing it with powers that they said were embedded in the Constitution, although such powers were not visible on the face of the document.

    Having reviewed the constitutional framework, let’s see how the federal government kept within the bounds of its authority or not. Mostly not. The next chapters of this book will examine federal expansion, issue by issue, starting with the administration of our first President, George Washington.

    Chapter 3. Necessary and Proper: The Slippery Slope of Sophistry.

    There was an early contest between the Constitution as advertised to the American people for ratification and, on the other side, the federal government as the advocates of central power wished it to be. It happened in the administration of our first president, George Washington. The Constitution lost.

    President Washington’s Secretary of the Treasury, Alexander Hamilton, had been a delegate to the Constitutional Convention, where he had argued unsuccessfully for a powerful central government that could override state legislatures. However, he supported the ratification of the Constitution in the New York convention and as co-author of The Federalist Papers. Before ratification he assured Americans that the federal government would have limited powers. After ratification, he changed his tune.

    Hamilton was brilliant. When he applied to Princeton, he taught himself ancient Greek in three weeks, so that he could pass the college’s entrance exam. He became a successful lawyer and banker in New York. During the Revolution, he was the most trusted aide de camp of Commander in Chief George Washington. As the first head of the Treasury, Hamilton did many good things: he established our system of currency, paid off the public debt from the War of Independence and established the credit of the United States government.

    However, once he obtained high federal office, he tried to turn the federal government into the instrument of general, unrestricted powers that he had unsuccessfully sought in the Convention of 1787. From his position in Washington’s cabinet, Hamilton worked to establish an expansive reading of the Constitution that made the list of eighteen enumerated powers in Article I, Section 8 of the Constitution superfluous.

    The First Bank of the United States

    As Secretary of the Treasury, Hamilton advocated the creation of a national bank, which would receive a charter of incorporation from Congress, and be known as The Bank of the United States. It would be funded by private capital, although the bank would loan the federal government funds to purchase a twenty percent interest in the bank.

    In 1791, Congressman James Madison opposed the bill creating the Bank. Known as the Father of the Constitution, for his role in the Philadelphia Convention, Madison:

    took notice of the peculiar manner in which the federal government is limited. It is not a general grant, out of which particular powers are excepted--it is a grant of particular powers only, leaving the general mass in other hands. So it had been understood by its friends and its foes, and so it was to be interpreted.³⁶

    Madison demonstrated that none of these particular powers authorized Congress to create the Bank. Additionally, creating the Bank was not necessary and proper for executing any of those powers. Madison denounced the premise of the bill:

    The essential characteristic of the government, as composed of limited and enumerated powers, would be destroyed: if instead of direct and incidental means, any means could be used, which in the language of the preamble to the bill "might be conceived to be conducive to the successful conducting of the finances; or might be conceived to tend to give facility to the obtaining of loans."³⁷

    The bill passed, despite Madison’s opposition.³⁸ However, when Congress sent the bill chartering the Bank to his desk, President Washington doubted its constitutionality. He asked for written opinions from Attorney General Edmond Randolph and Secretary of State Thomas Jefferson.

    In separate opinions, Randolph and Jefferson advised Washington that the bill was unconstitutional, because Congress did not have the power to charter corporations, as state governments did. Jefferson did not see a connection to any of the enumerated powers. Referring to the view that the bill was generally authorized by the Constitution, he said:

    It would reduce the whole instrument to a single phrase, that of instituting a Congress with power to do whatever would be for the good of the United States; and as they would be the sole judges of the good or evil, it would be also a power to do whatever evil they please. Certainly no such universal power was meant to be given them. It (the Constitution) was intended to lace them up straightly within the enumerated powers and those without which, as means, these powers could not be carried into effect.³⁹

    Attorney General Randolph found no constitutional basis for incorporating a Bank.⁴⁰ He said that the power of incorporation cannot be inherent in the nature of the federal government, because such an implication would beget a doctrine so indefinite, as to grasp every power.⁴¹ Randolph noted the essential difference between Congress and state legislatures. The former’s powers are circumscribed by a just interpretation of the words contained in the Constitution, whereas the latter are presumed to have all powers not denied them.⁴² Having established that predicate, Randolph did not see the incorporation of the Bank as rationally flowing from any of the enumerated powers. He saw the arguments in favor of the Bank as based on a construction of the Constitution that, if applied to every enumerated power, will stretch the arm of Congress into the whole circle of state legislation.⁴³ Nor did Randolph see the Necessary and Proper clause as expanding Congress’s power. He warned, let it be propounded as an eternal question to those who build new powers on this clause, whether the latitude of construction which they arrogate will not terminate in an unlimited power in Congress?⁴⁴

    Asked by Washington to respond to the opinions of Randolph and Jefferson, Hamilton argued that the necessary and proper clause of the Constitution provided the authority for Congress to enact legislation to implement its delegated powers.⁴⁵ Hamilton was correct in observing that the necessary and proper clause gave Congress some latitude in exercising its enumerated powers. But what enumerated power authorized the establishment of the Bank?

    Can the power to create corporations be lurking in the power to make laws for the District of Columbia and U.S. territories? Our first Secretary of the Treasury argued that it was, although confined to those federal areas.⁴⁶ He conceded that it remained to be shown that the power to create a corporation of national scope was necessary to implementing a specific national power.⁴⁷

    To address this deficiency in his argument, Hamilton posited four enumerated powers to which the national bank had a relation more or less.⁴⁸ These were the powers of collecting taxes, of borrowing money, regulating commerce between the states and raising and supporting fleets and armies.⁴⁹

    Hamilton argued that the Bank related to the collection of taxes "indirectly by increasing the quantity of circulating medium & quickening circulation."⁵⁰

    This indirect effects argument is nothing more than a Butterfly Effect rationalization.⁵¹ It starts from the premise that everything under the sun affects everything, indirectly if not directly, and that even small indirect effects have significant cumulative impacts. Therefore, the federal government can do anything, because any of its purported limited, enumerated powers is affected at least indirectly by everything. When you use Butterfly Effect thinking, no power is limited. Therefore, any enumeration of powers is ridiculous, because plenary power is conferred by any power.

    Once you start along a line of Butterfly Effect reasoning, it can take you anywhere you want to go. Jefferson saw that clearly. When he was Vice-President, Jefferson criticized using a chain of inferences to satisfy the Necessary and Proper Clause. When Congress passed a bill for incorporating a company to work copper mines in New Jersey, he said:

    Congress are authorised to defend the nation: ships are necessary for defence: copper is necessary for ships: mines necessary for copper: a company necessary to work mines: and who can distrust this reasoning who has ever played at ‘this is the house that Jack built?’ under such a process of filiation of necessities the sweeping clause makes clean work.⁵²

    Hamilton chose not to acknowledge the impact of his argument on the concept of limited government. Hamilton’s invocation of indirect effects was the first effort to undermine the limitations imposed on government by the written text of the Constitution. It was also the first instance of someone arguing that federal action is justified by the indirect, cumulative effects related to the exercise of a constitutional power. Hamilton was the intellectual father of the New Deal, which, as we shall see, adopted the indirect effects test to justify using the Interstate Commerce Power to regulate every aspect of American life.

    Hamilton also argued that the Bank would facilitate the collection of taxes by creating "a convenient species of medium in which they are to be paid."⁵³ This argument implicitly expands the concept of Necessary and Proper to include things that are convenient, that is, nice to have. Hamilton was forced to argue for a very relaxed interpretation of necessary, because creating the Bank was not necessary in the ordinary meaning of the term. The Bank’s notes were not indispensable to the collection of taxes. There were other media of exchange by which taxes were being paid. State banks were issuing notes, just as the Bank of the United States would. The new U.S. Mint would be coining money. Foreign specie was also in circulation. The Treasury Department would soon be issuing its own notes, which would circulate as currency. The Bank of the United

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