Vol. 31 No. 5 (May 2021) pp. 94-97

RECONSTRUCTING THE NATIONAL BANK CONTROVERSY: POLITICS AND LAW IN THE EARLY AMERICAN REPUBLIC, by Eric Lomazoff. Chicago: The University of Chicago Press, 2018. 253pp. Cloth $90. ISBN: 0-226-57931-X. Paper $30. ISBN: 0-226-57945-X.

Reviewed by George Thomas, Department of Government, Claremont McKenna College. Email:

MCCULLOCH V. MARYLAND (1819) may well be the most prominent opinion ever handed down by the Supreme Court. Even if it takes second to MARBURY V. MADISON (1803), it remains in the eyes of many the great opinion delivered by the great chief justice. There is a whole narrative around the national bank debate that informs debates about what the Constitution is, how to interpret it, and who gets to do the interpreting. Not only does the controversy over the national bank reach many other important constitutional issues, but it also informs contemporary debates on these issues (Barber 2013, p. 55; Barnett 2004, pp. 170-71). HAMILTON: AN AMERICAN MUSICAL brought the debate over the establishment of the first national bank into popular discourse with “Cabinet Battle #1”, a rap battle between Alexander Hamilton and Thomas Jefferson. The track engages with the constitutional arguments surrounding the creation of the first Bank of the United States and its broader political implications. Alexander Hamilton defends the bank as part of “running a real nation,” while Thomas Jefferson complains that his opponent just wants “to move our money around” (Miranda 2015).

The basics of the history are well known. Hamilton defended the bank as a proper exercise of Congress’s power under the Necessary and Proper Clause whereas Jefferson argued that such an understanding undoes the logic of the written Constitution. James Madison echoed themes from Jefferson’s argument in Congress, though his arguments were more subtle and complex. But, even with Madison opposed in Congress, the Hamiltonian take ultimately prevailed and was signed into law by President Washington. Under President Jefferson, the first national bank expired, but Republicans came to realize its importance during the War of 1812. Led by Madison, they conceded to its constitutionality as a matter of precedent (or what Madison elsewhere called “constitutional liquidation”). When the second bank’s constitutionality was challenged by Maryland in MCCULLOCH V. MARYLAND, Marshall upheld Congress’s constitutional power to establish a bank largely on the grounds that Hamilton laid out in his arguments with Jefferson. Despite the Court’s holding in MCCULLOCH that the bank was constitutional, President Andrew Jackson vetoed its renewal on constitutional grounds in the early 1830s—echoing Jefferson’s argument that it was “un-necessary” and “improper.”

This set piece, as Eric Lomazoff dubs it, does not capture the constitutional politics around the bank. Lomazoff’s engaging and persuasive RECONSTRUCTING THE NATIONAL BANK CONTROVERSY: POLITICS AND LAW IN THE EARLY REPUBLIC, offers a more complicated picture. It is not simply that Lomazoff gives us a more rounded and detailed picture—which he does—it is that he shows the inadequacy of the standard narrative. Lomazoff highlights the complex politics of economics that are behind the constitutional issues of the first four decades of [*95] the new republic, which are too often left out of the traditional (constitutional) narrative around the national bank. He also reveals that the constitutional arguments are more complicated than they are traditionally made out to be—and have been from the beginning. These two parts come together in one Lomazoff’s more insightful arguments—defending the national bank as part of Congress’s power to “coin money” and “regulate the value thereof.” Part of the story, which I will only mention in passing, is a difference between the nation’s fiscal policy and its monetary policy. Focusing on this difference, Lomazoff’s detailed historical research illustrates how the bank’s initial institutional mission changed over the years as it experienced institutional drift. He also explains that part of that change led to different constitutional arguments to justify the bank because of an altered understanding of the bank’s purpose. The change in the bank’s purpose led Republicans to defend the constitutionality of the bank by way of the coinage clause.

Lomazoff’s telling is compelling. He weaves together complex arguments about money and finance in understandable ways. If he can occasionally get too bogged down in detail the author nevertheless provides an insightful analysis of how these issues informed the broader controversy over the national bank. He contends that in the end, ordinary politics about economics drove political development and arguments about constitutionality. One of the virtues of Lomazoff’s analysis is bringing “economic facts” into the mix (p. 168).

Independent of this point, which is especially important in noting the institutional drift of the bank, Lomazzof offers a detailed analysis of the constitutional arguments at play. He shows, for instance, that the objections to the national bank on constitutional grounds, which usually seem to rely on “strict” or “broad” readings of the Necessary and Proper Clause, were more varied and nuanced in the first debate over the bank than is ordinarily understood. One of the interesting things to come out of this analysis is the argument that the national bank could not be deemed “necessary” because “loans could be provided by state-chartered banks” (p. 24). Focusing on existing avenues for Congress to reach its purposes reflected a strand of Republican thinking regarding “constitutional necessity” that would become vitally important to future bank debates.

While most extant accounts of the Bank’s constitutional history skip the debates in 1811 and 1816, Lomazoff demonstrates how the proliferation of state banks actually shaped the arguments of Republicans. This argument focused on the fact that even accepting that a national bank might be seen as a plain and direct way to execute an enumerated power, it could not be deemed necessary because state banks were a viable alternative to a national bank. Thus, much of the debate in 1811 focused on that year specifically rather than simply rehashing the debates of 1791. As Senator Henry Clay insisted in his argument against a national bank, “I will now proceed to show, by fact, actual experience, not theoretic reasoning, but by the records themselves of the treasury, that the operations of that department may be as well conducted without, as with this bank” (p. 83). Simply put, the bank was not necessary given the viable alternative of using state banks.

Yet Clay would change his opinion in 1816. It was not a complete reversal, so much as a shifting of constitutional ground. As Lomazoff details, the key shift was [*96] partly due to the bank’s institutional drift. The bank’s central purpose in 1815-16 was related to monetary policy, not fiscal policy. This opened up a different constitutional justification for the bank. Secretary of the Treasury George Dallas, for instance, argued that establishing a bank was part of Congress’s power to “coin money” and “regulate the value thereof.” This was the central justification Republicans used to charter the second bank of the United States. And the fact that state banks were stepping into this void, essentially regulating the value of money, underscored the importance of national control. As Clay put it this time around, “the subject of the general currency was intended to be submitted exclusively to the General Government (p. 115).

Understanding this long-overlooked argument and justification for the constitutional foundations of the national bank also sets Marshall’s MCCULLOCH opinion in a new light. Marshall altogether ignored the Republican justification for the bank’s constitutionality. Indeed, MCCULLOCH could even be read to silently reject the arguments that mattered to Congress and President Madison since the Court did not even take them up, resting its constitutional logic on the very grounds that Congress sought to avoid—the Necessary and Proper Clause. In this, Marshall’s opinion could be situated as an under-appreciated exercise of departmentalism: while it upheld the constitutionality of the second bank, it offered its own independent reasons for doing so, rather than following Congress’s. This also puts President Andrew Jackson’s more famous departmentalist veto of the national bank’s recharter in a somewhat different perspective. Jackson not only rejected Marshall’s argument, which turned on the Necessary and Proper Clause, but also rejected arguments rooted in the Coinage Clause that Republicans drew on to justify its recharter. Jefferson’s former treasury secretary, Albert Gallatin argued in the AMERICAN QUARTELRY REVIEW that the bank had been established “for the express purpose of regulating the currency” rooting its constitutional justifications in “Congress’s monetary power under the Coinage Clause” (p. 149). Daniel Webster, who famously argued MCCULLOCH before the Marshall Court, also justified the bank on these narrower grounds in the 1830s. But Jackson rejected even this narrower reading.

The focus on the bank makes for a tight and lucid analysis, but it also neglects deeper debates on the national bank from this period about the very nature of the Constitution. Jonathan Gienapp’s THE SECOND CREATION: FIXING THE AMERICAN CONSTITUTION IN THE FOUNDING ERA reveals how the debates over the national bank that Lomazoff mines and parses in his book were crucial in shaping how we came to see American constitutional identity (Gienapp 2018). How participants treated particular clauses, such as the Necessary and Proper Clause and the Coinage Clause, were often rooted in competing conceptions of the Constitution as well as how this generation saw other institutions and developments as necessary to bring the Constitution to life. This is true of constitutional debates that took place alongside debates about the bank—especially around the national university and internal improvements (Thomas 2015)—that often focused on the broad purpose of the Constitution even while attempting to draw on specific clauses to illuminate these broader understandings. The split in the Republican mind that Lomazoff so powerfully details existed on issues such as the national university as well. [*97]

Lomazoff’s RECONSTRUCTING THE NATIONAL BANK CONTROVERSY brings to life these long buried constitutional arguments. He also shows how these arguments were related to economic policies that we tend to overlook in thinking about the national bank with implications for thinking about constitutional questions around monetary policy today. Most importantly, this work offers a retelling of one of our more entrenched, but essential, constitutional controversies.


MARBURY V. MADISON, 5 U.S. 137(1803)

MCCULLOCH V. MARYLAND, 17 U.S. 316 (1819).


Barber, Sotirios A. 2013. THE FALLACIES OF STATES’ RIGHTS. Cambridge: Harvard University Press.

Barnett, Randy E. 2004. RESTORING THE LOST CONSTITUTION: THE PRESUMPTION OF LIBERTY. Princeton: Princeton University Press.

Gienapp, Jonathan. 2018. THE SECOND CREATION: FIXING THE AMERICAN CONSTITUITON IN THE FOUNDING ERA. Cambridge: Harvard University Press.

Miranda, Lin-Manuel. 2015. HAMILTON: AN AMERICAN MUSICAL [MP3]. New York: Atlantic Records.


© Copyright 2021 by author, George Thomas.