Question/Problem 2: How did individuals and states challenge the power of the federal government in the young nation?

Background

Alexander Hamilton, Secretary of the Treasury under President George Washington, wanted to create a national bank. The bank would be controlled jointly by the federal government and individuals. The bank would hold the government's money and also provid e the paper currency for the United States. The bank would earn interest on money collected and loaned to individuals and states. Some people protested that this bank would favor rich businessmen in the Northeast. Others did not feel that the governmen t should have the power to create such a bank. Still other Americans did support the bank. In spite of these protests the Bank of the United States was approved by Congress in 1791. Secretary of State Thomas Jefferson wrote a formal opinion to President Washington expressing his view of the national bank. The following is an excerpt from that letter.

I consider the foundation of the Constitution as laid on this ground -- that all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states, or to the people (Tenth Amendment). To tak e a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.

The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States by the Constitution.

Henry Steele Commager, Documents of American History (New York: Meredith Press, 1968), p. 159.

Directions: Using all the information shown above answer questions 1-4.

1. What were the reasons for the conflict?

2. How did Thomas Jefferson challenge the power of the federal government?

3. What specific power of the federal government did he challenge?

4. What is Thomas Jefferson's view of the power of the federal government in this conflict?

Use your textbook or other resources to answer the following question.

5. What was the outcome of Jefferson's challenge?