Need help with this question about central banking

[The Dark Knight]

I was having a debate with a friend about Central Banking. I said that a central bank was unconstitutional. My friend responded by saying "then why did the father of the constitution James Madison create a central Bank when he was the president?" I couldn't find a good answer. Need help with this guys.

[BrendenR]

I do not think a central bank is unconstitutional in concept.

What is not constitutional is many of the powers given to that bank.

From here:

http://en.wikipedia.org/wiki/First_Bank_of_the_United_States#One_of_three



There were other, nonnegotiable conditions for the establishment of the Bank of the United States. Among these were:

* That the Bank was to be a private company.
* That the Bank would have a twenty year charter running from 1791 to 1811, after which time it would be up to the Congress to renew or deny renewal of the bank and its charter; however, during that time no other federal bank would be authorized; states, for their part, would be free to charter however many intrastate banks they wished.
* That the Bank, to avoid any appearance of impropriety, would:

1. be forbidden to buy government bonds.
2. have a mandatory rotation of directors.
3. neither issue notes nor incur debts beyond its actual capitalization.


This is the most important part:



Like most Southern members of Congress, both in the Senate and in the House (indeed like most members of Congress in general) neither Secretary of State Thomas Jefferson nor Representative James Madison had any particular interest in two of Hamilton's tripartite recommendations: the establishing of an official government Mint, and the chartering of the Bank of the United States. They believed this centralization of power away from private mints and banks was dangerous to a sound monetary system and was mostly to the benefit of business interests in the commercial north, not southern agricultural interests. They furthermore recognized that the creation of such a bank violated the Constitution, which did not list the creation of a Bank of the United States or of a government mint among the expressed powers allowed to the federal government.[5]