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 institutions.1866 Moreover, it may confer upon them private powers, which, standing alone, have no relation to the functions of the Federal Government, if those privileges are essential to the effective operation of such corporations.1867 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 engage in such business.1868 The Court will not undertake to assess the relative importance of the public and private functions of a financial institution 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 those banks for private purposes.1869

Footnotes

1866
McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 407 (1819). [Back to text]
1867
Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 862 (1824). See also Pittman v. Home Owners’ Corp., 308 U.S. 21 (1939). [Back to text]
1868
First National Bank v. Follows ex rel. Union Trust Co., 244 U.S. 416 (1917); Missouri ex rel. Burnes Nat’l Bank v. Duncan, 265 U.S. 17 (1924). [Back to text]
1869
Smith v. Kansas City Title Co., 255 U.S. 180 (1921). [Back to text]