The Constitution of the United States of America

Analysis and Interpretation

Prepared by the Legislative Reference Servine, Library of Congress

Washington, 1964, pps. 359-360

Article. I—LEGISLATIVE DEPARTMENT 359
Sec. 8—Powers of Congress CI. l8—Incidental Powers

Chartering of Banks

As an appropriate means for executing “the great powers, to lay and collect taxes; to borrow money; to regulate commerce; to declare
and conduct a war; and to raise and support armies * * ~“ Congress may incorporate banks and kindred jflstjtutjofls.66 Moreover, it
may confer upon them private powers which, standing alone, have no relation to the functions of the Federa1 Government, if those privileges are essential to the effective operation of such corporations.~~ Where necessary to meet the competition of State banks, Congress may authorize national banks to perform fiduciary functions, even though, apart from the competitive situation, federal instrumentalities might not be permitted to enga.ge in such business.~~ The Court will not undertake to assess the relative importance of the public and private functions of a. financial institution which Congress has seen fit to create.

 It sustained the act setting up the Federal Farm Loan Banks to provide funds for mortgage loans on agricultural land against the contention that the right of the Secretary of the Treasury, which he had not exercised, to use these banks as depositories of public funds, was merely a pretext for chartering these banks for private purposes.69

Currency Regulations

Reinforced by the necessary and proper clause, the powers “to lay and collect taxes, to pay the debts and provide for the common defence and general welfare of the United States,’ and ‘to borrow money on the credit of the United States and to coin money and regulate the value thereof * * *~ ~,to have been held to give Congress virtually complete control over money and currency. A prohibitive tax on the notes of State banks; ‘~ the issuance of treasury notes impressed with the quality of legal tender in payment of private debts 72 and the abrogation of clauses in private contracts which called for payment in gold coin, ~ were sustained as appropriate measures for carrying into effect some or all of the foregoing powers.

Power to Charter Corporations

In addition to the creation of banks, Congress has been held to have authority to charter a railroad corporation...