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McCulloch v. Maryland

MCCULLOCH V. MARYLAND

McCulloch v. Maryland is a keynote case, 17 U.S. (4 Wheat.) 316, 4 L.Ed. 579 (1819), decided by the U.S. Supreme Court that established the principles that the federal government possesses broad powers to pass a number of types of laws, and that the states cannot interfere with any federal agency by imposing a direct tax upon it.

This case represents another illustrative example of the ongoing debate among the founders of the U.S. constitutional government regarding the balance of powers between the states and the federal government. The Federalists were in favor of a strong central government, whereas the Republicans wanted the states to retain most powers. Those who wrote and ratified the U.S. Constitution ultimately agreed to grant the federal government certain specific powers known as the enumerated powers—listed in the Constitution—and concluded with a general provision that permitted Congress to make all laws that are necessary and proper for the carrying out of the foregoing powers, as well as all other powers vested in the U.S. government by the Constitution. Some people were fearful that such a provision, which is called the necessary and proper clause of the Constitution, was a blanket authorization for the federal government to regulate the states.

Subsequently, a series of articles—which came to be called the Federalist Papers—were published in New York newspapers. These articles defended the clause on the basis that any power only constitutes that ability to do something, and that the power to do something is the power to utilize a means of doing it. It is necessary for a legislature to have the power to make laws; therefore, the proper means of exercising that power is by making "necessary and proper" laws. The Constitution was, therefore, ratified in 1789 with the Necessary and Proper Clause.

In exercise of the power conferred by that clause, the first Congress enacted a law in 1791 that incorporated a national bank called the bank of the united states, which operated as a private bank, took deposits of private funds, made private loans, and issued bank notes that could be used like money. In addition, wherever branches were established, it operated as a place for the federal government to deposit its funds. The legislation that incorporated the bank stated in its preamble that it would be extremely conducive to the successful operation of the national finances, would aid in the obtaining of loans for the use of the government in sudden emergencies, and would produce considerable advantages to trade and industry in general.

That bank charter was allowed to expire in 1811; however, a second Bank of the United States was incorporated in 1816 with one-fifth of its stock owned by the United States, and it became extremely unpopular. This was particularly true in the South and West, where it first overexpanded credits and then drastically limited them, thereby contributing to the failure of many state-chartered banks. A number of states attempted to keep branches of the national bank out of their states by passing laws proscribing any banks not chartered by the state or by imposing heavy taxes on them. The only bank affected by these laws was the Bank of the United States. The tremendous dispute that subsequently arose between the federal and state governments required resolution by the Supreme Court.

Maryland had one of the least stringent rules against the bank, which required that any bank or branch that was not established subject to the authority of the state must use special stamped paper for its bank notes and, in effect, pay 2 percent of the value of the notes as a tax or pay a general tax of $15,000 a year. Maryland brought suit against McCulloch, cashier of the Bank of the United States, for not paying the tax and won a judgment for the amount of the penalties. An appeal was brought to the Supreme Court by McCulloch.

Chief Justice john marshall wrote the majority opinion of the Court, which reversed the Maryland judgment. The Court held that the federal government has the power to do what is necessary and proper, which included the grant of authority to establish a national bank. Maryland, therefore, had no right to tax the bank, a conclusion which was based upon the theory that "the power to tax is the power to destroy." A state cannot have authority under the Constitution to destroy or tax any agency that has been properly set up by the federal government. On that basis, the law that was passed by the legislature of Maryland that imposed a tax on the Bank of the United States was unconstitutional and void.

further readings

Killenbeck, Mark R. 2003. "Madison, M'Culloch, and Matters of Judicial Cognizance: Some Thoughts on the Nature and Scope of Judicial Review." Arkansas Law Review 55 (winter): 901–32.

Newmyer, R. Kent. 2000."John Marshall, McCulloch v. Maryland, and the Southern States' Rights Tradition." John Marshall Law Review 33 (summer): 875–934.

Pettifor, Bonnie, and Charles E. Petit. 2003. McCulloch v.Maryland: When State and Federal Powers Conflict. Berkeley Heights, N.J.: Enslow.

Rakove, Jack N. 1997. "The Origins of Judicial Review: A Plea for New Contexts. Stanford Law Review 49 (May): 1031–64.

cross-references

Constitution of the United States; Federalism; Federalist Papers.

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McCulloch v. Maryland

McCULLOCH V. MARYLAND

McCULLOCH V. MARYLAND, 4 Wheaton 316 (1819), was decided by the Supreme Court of the United States on 6 March 1819. Congress had incorporated the second Bank of the United States, a branch of which was established in Baltimore. The state of Maryland required all banks not chartered by the state to pay a tax on each issuance of bank notes. When James W. McCulloch, the cashier of the Baltimore branch of the bank, issued notes without paying the tax, Maryland brought suit. Two questions were at issue: first, whether Congress had power under the Constitution to establish a bank and, second, whether Maryland could impose a tax on this bank.

Chief Justice John Marshall wrote the opinion for a unanimous court upholding the power of Congress to charter a bank as a government agency and denying the power of a state to tax the agency. Marshall's discussion, broadly interpreting the powers of Congress, is still a classic statement of the implied powers of the federal government. Since the Constitution empowers the government to tax, borrow, and engage in war, Congress, by incorporating a bank, was creating the means to attain the goals of these powers. The chief justice phrased the basic point as follows: "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." Along with this principle, Marshall expounded the notion of federal supremacy, noting that the national government, "though limited in its powers, is supreme within its sphere of action."

Having reaffirmed the principle of federal supremacy, Marshall responded to the second question, which was whether the state of Maryland could legally tax a branch of the U.S. bank located in that state. The power of the federal government to incorporate a bank had been established; the supremacy of the federal government in legal conflicts with state authority had likewise been set forth; and there was agreement that "the power to tax involves the power to destroy." It followed from all of this that an admittedly legal function of the federal government could not be subjected to possible destruction by an inferior government through taxation. The state tax was void.

BIBLIOGRAPHY

Gunther, Gerald, ed. John Marshall's Defense of McCulloch v. Maryland. Stanford, Calif.: Stanford University Press, 1969.

Kelly, Alfred H., Winfred A. Harbison, and Herman Belz. The American Constitution: Its Origins and Development. 7th ed. New York: Norton, 1991.

White, G. Edward. The Marshall Court and Cultural Change, 1815 1835. New York, 1988.

Paul C. Bartholomew / a. r.

See also Banking ; Cohens v. Virginia ; Judiciary Act of 1789 ; Osborn v. Bank of the United States .

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McCulloch v. Maryland

McCulloch v. Maryland, case decided in 1819 by the U.S. Supreme Court, dealing specifically with the constitutionality of a Congress-chartered corporation, and more generally with the dispersion of power between state and federal governments. After the First Bank of the United States (1791) had folded in 1811 due to a lack of congressional support, inflation in the years following the War of 1812 compelled Congress to establish (1816) a new national bank. The Second Bank of the United States was authorized by Congress to help control the unregulated issuance of currency by state banks. Many continued to oppose the bank's constitutionality, and Maryland set an example by imposing a tax on all banks not chartered by the state. When the U.S. branch bank in Baltimore refused to pay taxes, Maryland brought suit for collection from the bank. Chief Justice John Marshall, who wrote the uncontested opinion, gave trenchant expression to the doctrine of implied powers: "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." The chartering of a bank, according to the Court, was a power implied from the power over federal fiscal operations. Because the state cannot impede constitutional federal laws, the tax was voted unconstitutional. One of the most important decisions in the history of the U.S. Supreme Court, Marshall's opinion called for a broad interpretation of the powers of the federal government. The case became the legal cornerstone of subsequent expansions of federal power.

See study by Gerald Gunther, ed. (1969).

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