McCulloch v. Maryland

McCulloch v. Maryland, 4 Wheat. (17 U.S.) 316 (1819), argued 22 Feb.–3 Mar. 1819, decided 6 Mar. 1819 by vote of 7 to 0; Marshall for the Court. McCulloch was one of Chief Justice John Marshall's most important decisions, and among his most eloquent. It settled the meaning of the Necessary and Proper Clause of the United States Constitution and determined the distribution of powers between the federal government and the states. The specific issues involved were Congress's power to incorporate the Second Bank of the United States and the right of a state to tax an instrument of the federal government.

Background

The constitutionality of the power of Congress to charter a corporation had been the source of debate ever since Alexander Hamilton proposed the creation of the First Bank of the United States in 1791. James Madison in Congress and Thomas Jefferson in George Washington's cabinet opposed the measure as unauthorized by the Constitution. But Congress and Washington sided with Hamilton, who justified it by a loose construction of the Constitution, and Congress chartered the Bank for a twenty‐year period. In 1811 a Jeffersonian‐dominated Congress refused to renew the charter, primarily on constitutional grounds, and the First Bank quietly expired. However, following five years of inflation and economic chaos that coincided with the War of 1812, Congress, though still under Jeffersonian control, reversed itself and chartered the Second Bank of the United States in 1816. Despite this, many Jeffersonians continued to oppose the Bank. They viewed it as unconstitutional and denied its economic necessity. Several states, including Ohio, Kentucky, Pennsylvania, Maryland, North Carolina, and Georgia, adopted laws taxing its branches. An 1818 Maryland statute imposed a tax on all banks operating in the state “not chartered by the legislature.” The Baltimore branch of the bank, headed by its cashier, James McCulloch, refused to pay the tax. The Baltimore County Court upheld the state law. This judgment was quickly affirmed by the Court of Appeals of Maryland and was appealed to the United States Supreme Court, on a writ of error. The Supreme Court declared the Maryland tax unconstitutional and void.

Opinion of the Court

In rendering his opinion for the entire Supreme Court, Marshall first considered the question “has Congress power to incorporate a bank?” (p. 401). To answer this, he looked to the origins and nature of the federal union. The Constitution had been submitted to the people and ratified by specially elected conventions. As a consequence, “the government proceeds directly from the people; is ‘ordained and established’ in the name of the people” (p. 403). By asserting this, Marshall offered a nationalist alternative to the theory of the origins of the union propounded by Jeffersonians in the Kentucky and Virginia Resolutions of 1798–1799, which claimed that the federal government was a product of a compact of the states and had only specifically granted and limited power (see State Sovereignty and States' Rights). “The government of the Union,” Marshall argued in clear and strong terms, “ … is, emphatically, and truly, a government of the people. In form and in substance it emanates from them. Its powers are granted by them, and are to be exercised directly on them, and for their benefit” (pp. 404–405).

Like Hamilton before him, Marshall resorted to a loose interpretation of the Constitution to justify Congress's authority to create the Second Bank of the United States. Marshall admitted that the federal government was one of enumerated powers and could only exercise those powers granted to it. But, he added, there could be no doubt “that the government of the Union, though limited in its powers, is supreme within its sphere of action” (p. 405). He observed that although the power to charter a corporation is not a specifically enumerated power, there is nothing in the Constitution that excludes it. This included the Tenth Amendment, which, unlike a predecessor provision in the Articles of Confederation, did not include the word “expressly” and therefore allowed “incidental or implied powers.” Marshall further observed that the federal government was not established by a complex legal code, excessively detailed in a vain attempt to meet every exigency. Rather, the Constitution contained only a general outline of the federal government's structure and powers, in which only its most important objects were designated while the rest of its powers were to “be deduced from the nature of the objects themselves” (p. 407). He concluded, “we must never forget that it is a constitution we are expounding” (p. 407).

From these premises about the origins and nature of the Constitution, Marshall proceeded to justify the creation of the Bank of the United States. The Constitution had delegated certain specified powers to the federal government: to lay and collect taxes (see Taxing and Spending Clause), to borrow money, to regulate commerce, to declare and conduct war (see War Powers), and to raise and support armies and navies. It was in the best interests of the nation, the chief justice observed, that Congress should have the means to exercise these delegated powers. In particular, the bank was a convenient, useful, and essential instrument in the implementation of the nation's fiscal policies. Since the Constitution had given Congress the power to “make all Laws which shall be necessary and proper for carrying into execution the forgoing Powers,” the Bank of the United States was constitutional.

Marshall elaborated on the need for a loose and expansive interpretation of the powers of the federal government. He rejected the idea of a strict interpretation of the Constitution then espoused by states' rights Jeffersonians. Such a reading of the Constitution would make it unworkable. Marshall argued that the Necessary and Proper Clause had been included among the powers of Congress, not among its limitations, and was meant to enlarge, not reduce, the ability of Congress to execute its enumerated powers. Marshall declared:
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. (p. 421)

Marshall next addressed the issue “whether the state of Maryland may, without violating the Constitution,” tax a branch of the Bank of the United States (p. 425). Since the Constitution and federal law were supreme under the Supremacy Clause of Article VI, they took precedence over the laws of the states. The state power to tax, important and vital as it was, is subordinate to the Constitution. A state cannot tax those subjects to which its sovereign powers do not extend. Marshall pointed out “that the power to tax involves the power to destroy” (p. 431). If a state had power to tax the bank, it could also tax other agencies of the federal government: the mail, the mint, patents, the customs houses, and the federal courts. In this manner the states could totally defeat “all the ends of government” determined by the people when they created the United States Constitution (p. 432). “This,” Marshall observed, “was not intended by the American people. They did not design to make their government dependent on the states” (p. 432).

Impact and Reaction

The decision was controversial. Opponents of the bank remained irreconcilable. They did not view the bank primarily as an agency of the federal government. To them it was a profit‐making corporation that performed a few government services. The Second Bank had been capitalized at $35 million. Eighty percent of its stock (on which substantial dividends were paid) was in private hands, and shareholders appointed four‐fifths of the board of directors.

Critics of the decision also denounced Marshall's ringing endorsement of a broad interpretation of the power of the federal government. Most proponents of states' rights in Virginia had doubts about the bank's constitutionality, but in 1816 they had accepted the argument that it was needed to restore financial stability. Unlike the bank's opponents in several other states, the advocates of local government in Virginia never tried to tax the bank out of existence. They were troubled not that the court had upheld the constitutionality of the bank, but that it had justified loose and expansive interpretation of the Constitution. Thomas Jefferson privately encouraged public opposition to the decision. John Taylor published an important book, Construction Construed (1820), denouncing the decision, and Virginia jurists Spencer Roane and William Brockenbrough wrote a series of essays for the Richmond Enquirer condemning the broad implications of the Court's ruling. Marshall personally responded to Roane in a series of anonymous newspaper articles upholding his own handiwork.

Critics of the decision also included James Madison, who as president of the United States (1809–1817) had signed the bill creating the Second Bank of the United States into law, and who generally supported most of the Supreme Court's nationalist rulings during the second decade of the nineteenth century. Despite this, he believed “that the occasion did not call for the general and abstract doctrine interwoven with the decision of the particular case.” The real danger of Marshall's decision, Madison believed, was “the high sanction given to a latitude in expounding the Constitution which seems to break down the landmarks intended by a specification of the powers of Congress, and to substitute for a definite connection between means and ends, a legislative discretion as to the former to which no practical limit can be assigned.” Among other things, the decision seemed to sanction a federal program of internal improvements. Such a program would have involved not only the building of roads, canals, and bridges, but also an assortment of educational, scientific, and literary institutions throughout the country. Both Jefferson and Madison favored such a program on policy grounds, but believed the jurisdictional problems raised by it were so complex and controversial that they could only be clarified through an amendment to the Constitution. In his McCulloch v. Maryland decision, Marshall aligned the U.S. Supreme Court with those aggressive nationalists like Henry Clay, John C. Calhoun, and John Quincy Adams, who argued that a constitutional amendment was not necessary since Congress already had power to enact such a program.

The Bank's victory in McCulloch v. Maryland turned out to be short‐lived. In 1828 states' rights as a political movement triumphed with the election of Andrew Jackson to the presidency. Rejecting the binding quality of McCulloch v. Maryland and building on the lingering resentment that continued toward the bank, Jackson in 1832 vetoed a bill to recharter it, on constitutional grounds. In a series of other vetoes, Jackson also effectively finished off any hope for a federal program of internal improvements. Despite this, Marshall's broad interpretation of the Necessary and Proper Clause as well as his view of the origins and nature of the federal union were ultimately to triumph on a more significant level. The Civil War brought an end to Jacksonian hegemony and discredited states' rights. The constitutional revolution that followed took the country in a strong nationalist direction. In the twentieth century McCulloch v. Maryland quickly became the virtually undisputed constitutional cornerstone for the federal government's broad involvement in the economy, for the New Deal and the Welfare State, and for various other social, scientific, and educational programs.

See also Commerce Power; Implied Powers; Judicial Review.

Bibliography

Gerald Gunther, ed., John Marshall's Defense of McCulloch v. Maryland (1969).
Bray Hammond , Banks and Politics in America from the Revolution to the Civil War (1957).
Harold J. Plous and and Gordon E. Baker , McCulloch v. Maryland: Right Principle, Wrong Case, Stanford Law Review 9 (1957): 710–739.
G. Edward White , History of the Supreme Court of the United States, vols. 3–4, The Marshall Court and Cultural Change, 1815–35 (1988).

Richard E. Ellis