New
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The Second Bank of the United States. Located in downtown Philadelphia and
modeled on the Parthenon in classical Athens, the new bank building was intended to be both republican and awesome. It was from here that gentleman-directors attempted to impose their kind of order on the exploding monetary and credit systems of the 1820s and 1830s.
Roads and canals were big public works projects with scores of contractors and
subcontractors—all dependent on government subsidies, with the potential for be-
coming a system of corruption that was impossible to stop. Finally, federally sponsored improvements, however beneficial, were constitutionally doubtful. In the
Constitutional Convention, Benjamin Franklin had proposed that the power to
build roads and cut canals within the states be written into the Constitution, and his proposal had been voted down. National support for internal improvements
could be justified only by the “necessary and proper” and “general welfare”
clauses. The Republicans could charter a Second Bank of the United States because Hamilton’s bank had established the precedent. Roads and canals—extensive local
projects at national expense—would stretch those clauses much further, worrying
many Republicans (most of them southern) that future legislatures would justify
whatever struck them as necessary and proper at any given time.
When Congress agreed to complete the National Road—the one federal internal
improvement already underway—President Madison and his Republican successor
James Monroe vetoed the bills, refusing to support further internal improvements
without a constitutional amendment. In 1822, Monroe even vetoed a bill authorizing repairs on the National Road, stating once again that the Constitution did not
empower the federal government to build roads within the states. As a result, the financing and construction of roads and canals fell to the states, overwhelmingly the northern states. Henry Clay watched his vision of transportation as a nationalizing force turn into southern isolation and northern regionalization, a dangerous trend that continued throughout his long political life.
The American System
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Commerce and
The courts after 1815 played an important nationalizing and
the Law
commercializing role. John Marshall, who presided over the
Supreme Court from 1801 to 1835, took the lead. From the
beginning he saw the Court as a conservative hedge against the excesses of pro-
vincialism and democratic legislatures. His early decisions protected the independence of the courts and their right to review legislation (see Chapter 7). From 1816
onward, his decisions encouraged business and strengthened the national govern-
ment at the expense of the states.
Marshall’s most important decisions protected the sanctity of contracts and
corporate charters against state legislatures. For example, in Dartmouth College v.
Woodward (1816), Dartmouth defended a royal charter granted in the 1760s
against changes introduced by a Republican legislature that wanted to transform
Dartmouth from a privileged bastion of Federalism into a state college. Daniel
Webster, who was a Dartmouth alumnus, the school’s highly paid lawyer, and one
of the few avowed Federalists left in Congress, finished his argument before the
Supreme Court on a histrionic note: “It is, sir, as I have said, a small college. And yet there are those who love it.” Reputedly moved to tears, Marshall ruled that
Dartmouth’s original corporate charter could not be altered by legislation. Though in this case the Supreme Court was protecting Dartmouth’s independence and its
chartered privileges, Marshall and Webster knew that the decision also protected
the hundreds of turnpike and canal companies, manufacturing corporations, and
other ventures that held privileges under corporate charters granted by state governments. Once the charters had been granted, the states could neither regulate the
corporations nor cancel their privileges. Thus corporate charters acquired the legal status of contracts, beyond the reach of democratic politics.
Two weeks after deciding the Dartmouth case, Marshall handed down the
majority decision in McCulloch v. Maryland. The Maryland legislature, nurturing
old Jeffersonian doubts about the constitutionality of the Bank of the United States, had attempted to tax the Bank’s Baltimore branch, which in fact was a corrupt and ruinous institution (see later section). The Bank had challenged the legislature’s right to do so, and the Court decided in favor of the Bank. Marshall stated, first, that the Constitution granted the federal government “implied powers” that
included chartering the Bank, and he denied Maryland’s right to tax the Bank or
any other federal agency: “The power to tax,” he said, “involves the power to
destroy.” It was Marshall’s most explicit blow against Jeffersonian strict construction. Americans, he said, “did not design to make their government dependent on
the states.” And yet there were many, particularly in Marshall’s native South, who remained certain that that was precisely what the Founders had intended.
In Gibbons v. Ogden (1824), the Marshall Court broke a state-granted steam-
ship monopoly in New York harbor. The monopoly, Marshall argued, interfered
with federal jurisdiction over interstate commerce. Like the Dartmouth case and
McCulloch v. Maryland, this decision empowered the national government in rela-
tion to the states, and like them, it encouraged private entrepreneurs. As surely as Congressmen who supported the American System, John Marshall’s Supreme Court
assumed a natural and beneficial link between federal power and market society.
Meanwhile, the state courts were working quieter but equally profound trans-
formations of American law. In the early republic, state courts had often viewed
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