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McCulloch v. Maryland
Facts of the Case
In 1816, Congress chartered The Second Bank of the United States. In 1818, the state of
Maryland passed legislation to impose taxes on the bank. James W. McCulloch, the cashier of
the Baltimore branch of the bank, refused to pay the tax.
Questions Presented
The case presented two questions: Did Congress have the authority to establish the bank? Did
the Maryland law unconstitutionally interfere with congressional powers?
Conclusion
In a unanimous decision, the Court held that Congress had the power to incorporate the bank
and that Maryland could not tax instruments of the national government employed in the
execution of constitutional powers. Writing for the Court, Chief Justice Marshall noted that
Congress possessed un-enumerated powers not explicitly outlined in the Constitution.
Marshall also held that while the states retained the power of taxation, "the constitution and the
laws made in pursuance thereof are supreme. . .they control the constitution and laws of the
respective states, and cannot be controlled by them."
Background:
One of the most significant constitutional disputes arose during the Madison Administration,
this time over the establishment of a national bank, and once again the Supreme Court was
called on to interpret the Constitution. In a continuation of a seemingly endless debate about
the necessity of having a national bank, the Bank of the United States was re-chartered in
1816 (its charter had been allowed to expire in 1811). By that time, the idea of a national bank
had become a symbol of animosity between creditors and debtors and between the national
government and the state governments. In response to the Bank's re-chartering, several states
attempted to eliminate local branches of the bank in their states. In Maryland, the state
government tried to tax the state's only branch of the national bank out of existence by
imposing a tax of $100 per bank note issued by it. The cashier at the bank refused to pay the
tax and was subsequently sued in Maryland state court. Not surprisingly, the state court ruled
in Maryland's favor.
After the Maryland Court of Appeals upheld the original decision, it was appealed to the
Supreme Court. Once again it was Chief Justice Marshall who penned the Court's decision. In
the decision, Marshall wrote that the dispute hinged on two questions. First, does the
Congress have power to create a national bank? Second, if the answer to the first question be
in the affirmative, does the state of Maryland have the authority to tax that bank?
In response to the first question, whether the Congress had the authority to charter the Bank,
Marshal referred to the "necessary and proper” clause in the Constitution, declaring that not
every power of the Congress is spelled out in painstaking detail in the Constitution. The
"necessary and proper" clause was not intended to strictly limit the power of the national
government, Marshall argued, but it is a provision "made in a Constitution intended to endure
for ages to come, and consequently to be adapted to the various crises of human affairs." So
long as the aims of the Congress be "legitimate [and] within the scope of the Constitution," all
of its actions "which are not prohibited, but consist with the letter and spirit of the Constitution,
are Constitutional."
Having concluded that the creation of the Bank of the United States was within the
Constitutional authority of the Congress, Marshall then turned to the question of whether
Maryland had the authority to tax the bank. Declaring that the "great principle" of the
Constitution is that "laws made in pursuance thereof are supreme; that they control the
Constitution and laws of the respective States, and cannot be controlled by them." If a state
were allowed to ignore the laws passed by the national government consistent with the
Constitution, it would be, in effect, controlling the national government. Moreover, if a state
could tax an activity of the national government, in this case the national bank, it had the power
to destroy the national government. Such would clearly be a violation of the supremacy clause
of the Constitution. Maryland's tax on the Bank, therefore, was unconstitutional.