The financial measures of Hamilton were the chief subject of political controversy under our first administration, and they formed the basis of division for the first political parties under the Constitution.  The funding of the Revolutionary debt, its payment dollar for dollar without discrimination between the holders of the public securities, the assumption of the State debts by the National Government, and the establishment of the First United States Bank, these measures of Hamilton were all stoutly combated by his opponents, but they were all carried to a successful conclusion.  It was the discussion on the establishment of the First United States Bank that brought from Hamilton and Jefferson their differing constructions of the Constitution.  In his argument to Washington in favor of the Bank, Hamilton presented his famous theory of implied powers, while Jefferson contended that the Constitution should be strictly construed, and that the “sweeping clause”—­“words subsidiary to limited powers”—­should not be so construed as to give unlimited powers.  Madison and Giles in the House presented notable arguments in support of the Jeffersonian view.  For twenty years after 1791 our financial questions were chiefly questions of administration, not of legislation.  In 1811 the attempt to recharter the First United States Bank was defeated in the Senate by the casting vote of Vice-President Clinton.  The financial embarrassments of the war of 1812, however, led to the establishment, in 1812, of the second United States Bank,—­by a law very similar in its provisions to the act creating the First Bank in 1791.  The bill chartering the Second United States Bank was signed by Madison, who had strenuously opposed the charter of the First Bank.  The financial difficulties in which the war had involved his administration had convinced Madison that such an institution as the Bank was a “necessary and proper” means of carrying on the fiscal affairs of the Government.  The Second Bank was, however, opposed on constitutional grounds, as the First had been; but in 1819 in the famous case of McCulloch vs.  Maryland, the Supreme Court sustained its constitutionality, Chief-Justice Marshall rendering the decision.  The Court held, in this notable decision, that the Federal Government was a government of limited powers, and these powers are not to be transcended; but wherein a power is specifically conferred Congress might exercise a sovereign and unlimited discretion as to the means necessary in carrying that power into operation.

The next important chapter in our financial history is the war upon the Second United States Bank begun and conducted to a finish by President Jackson.  A bill rechartering the Bank was passed by Congress in 1832, four years before its charter expired.  Jackson vetoed this bill, chiefly on constitutional grounds, in the face of Marshall’s decision of 1819.  The political literature of Jackson’s two administrations is full of the Bank controversy, and this literature contains contributions from Webster, Clay, Calhoun, Benton, and other of the ablest public men of the day.  No subject of public discussion in that day more completely absorbed the attention of the people.