You're raising one of the most important constitutional issues that this country has ever faced. When selecting a means by which to accomplish a constitutionally permissible end, is the Congress restricted to only those means which are indispensable to accomplishing that end or is the Congress entitled to select any means so long as the means selected is not prohibited by the constitution?
President Washington had been in office less than two years when he had to confront this issue regarding formation of a national bank. Secretary of State Thomas Jefferson argued that the Federal Government had no constitutional authority to create a bank, whereas Secretary of the Treasury Alexander Hamilton argued in favor of the plan.
Jefferson argued that the “necessary and proper” clause only authorizes Congress to pursue its express constitutional objectives with means that are indispensable to achieving the objective:
“If has been urged that a bank will give great facility or convenience in the collection of taxes, Suppose this were true: yet the Constitution allows only the means which are "necessary," not those which are merely "convenient" for effecting the enumerated powers. If such a latitude of construction be allowed to this phrase as to give any non-enumerated power, it will go to everyone, for there is not one which ingenuity may not torture into a convenience in some instance or other, to some one of so long a list of enumerated powers. It would swallow up all the delegated powers, and reduce the whole to one power, as before observed. Therefore it was that the Constitution restrained them to the necessary means, that is to say, to those means without which the grant of power would be nugatory.”
In response, Hamilton argued that the “necessary and proper” clause should be read less restrictively:
"In entering upon the argument, it ought to be premised that the objections of the Secretary of State and Attorney General are founded on a general denial of the authority of the United States to erect corporations. The latter, indeed, expressly admits, that if there be anything in the bill which is not warranted by the Constitution, it is the clause of incorporation.
Now it appears to the Secretary of the Treasury that this general principle is inherent in the very definition of government, and essential to every step of progress to be made by that of the United States, namely: That every power vested in a government is in its nature sovereign, and includes, by force of the term, a right to employ all the means requisite and fairly applicable to the attainment of the ends of such power, and which are not precluded by restrictions and exceptions specified in the Constitution, or not immoral, or not contrary to the essential ends of political society."
After considering these arguments, President Washington agreed with Hamilton and approved the national bank. In McCulloch v. Maryland (1819), Chief Justice Marshall sided with President Washington and Hamilton on this issue:
”We admit, as all must admit, that the powers of the Government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional.”
Who do you think was right about all this?
First of all, if you were to say to me, there was a certain unspecified constitutional question that Alexander Hamilton and Thomas Jefferson - or Hamilton and just about anyone else - were arguing over, and were to ask me which one is right, without even knowing what the question was, I'd say that it's most likely that Hamilton was wrong, simply because he stood out time and time again as the most statist and authoritarian of the Founding Fathers. Further, I find it interesting to contrast the quote from him that you cited, with his remarks in the Federalist No. 33, concerning that very clause of the Constitution:
Though a law therefore for laying a tax for the use of the United States would be supreme in its nature, and could not legally be opposed or controuled; yet a law for abrogating or preventing the collection of a tax laid by the authority of a State (unless upon imports and exports) would not be the supreme law of the land, but an usurpation of power not granted by the constitution. As far as an improper accumulation of taxes on the same object might tend to render the collection difficult or precarious, this would be a mutual inconvenience not arising from a superiority or defect of power on either side, but from an injudicious exercise of power by one or the other, in a manner equally disadvantageous to both.
So in the passage you quoted, he seems to be saying that the N&P clause refers to anything that might be useful in exercising a particular delegated power, but here in the Federalist, the series of essays designed to convince people to vote for the Constitution in the first place, he's saying that even when a state engages in a practice that renders it difficult for Congress to do its job (in this case, taxing the same object Congress is trying to tax), Congress nonetheless has no power to restrain that state.
Having said that, I do think that Hamilton seems to make some reasonable points, after perusing the link you posted. Although I'd have a little trouble swallowing his idea that a central bank would be necessary to the regulation of interstate commerce, I do generally agree that Congress has the power to create entities and programs designed to support government operations, particularly when it's doing things (such as establishing a bank) that any private entity has the right to do. Unfortunately, I don't know enough about the specific controversy surrounding the bank to make a specific commentary, and I'm a bit suspicious of it, because I really don't know what a bank could do for government that government can't do for itself using less involved means. But generally speaking, the case is of an entirely different order than the one we've been talking about, where we're talking about Congress' right to restrict a state activity that it hasn't been given the express power to restrict.
This is how I understand necessity and propriety: I'm assuming first, that the whole point of listing the powers of Congress, was that Congress would be generally limited to only those powers, which the 10th amendment seems to confirm. Therefore, as I said in my last post, the clause can not be understood to mean giving Congress new categories of power over society. In other words, Congress can't just change the "landscape" out there in order to make it easier for them to drive around - as Hamilton seemed to agree in Fed 33. That is not necessary and proper. Necessary and proper acts include doing things that private entities would be allowed to do, in order to provide support for constitutional operations; and they also include passing laws that are of the most basic nature that any government would be able to pass and still be able to call itself a government, such as, as I mentioned in the last post, providing for the punishment of acts of violence against federal officers doing their job. It should not involve much of anything else.