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McCulloch v. Maryland

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McCulloch v. Maryland

Supreme Court of the United States

Argued February 22, 1819

Decided March 6, 1819

Full case name: James McCulloch v. The State of Maryland, John James
Citations: 17 U.S. 316; 4 L. Ed. 579; 1819 U.S. LEXIS 320; 4 A.F.T.R. (P-H) 4491; 4 Wheat. 316; 42 Cont. Cas. Fed. (CCH) P77,296
Prior history: Judgment for plaintiff, Baltimore County Court; affirmed, Maryland Court of Appeals
Subsequent history: None
Holding
Although the Constitution does not specifically give Congress the power to establish a bank, it does delegate the ability to control national economic policy, which a bank can be considered part of. Because federal laws have supremacy over state laws, Maryland had no power to interfere with the bank's operation by taxing it. Maryland Court of Appeals reversed.
Court membership
Chief Justice John Marshall
Associate Justices Bushrod Washington, William Johnson, Henry B. Livingstone, Thomas Todd, Gabriel Duvall, Joseph Story
Case opinions
Majority by: Marshall
Joined by: unanimous Court
Laws applied
U.S. Const. Art. I, 8, cl. 1, 18

McCulloch v. Maryland, 17 U.S. 316 (1819) was a landmark United States Supreme Court decision.

In this case, the state of Maryland attempted to impede operation of a branch of the Second Bank of the United States by imposing a tax on all notes of banks not chartered in Maryland. Though the law, by its language, was generally applicable, the U.S. Bank was the only out of state bank then existing in Maryland, and the law is generally recognized as specifically targeting the U.S. Bank. The Court invoked the doctrine of implied powers in the Constitution, which allowed the Federal government to pass laws not expressly provided for in the Constitution's list of enumerated powers as long as they are in useful furtherance of those powers.

The fundamental case established the following two principles: (1) that the Constitution grants to Congress implied powers inherent in the nature of the Constitution as a blueprint for a practically functional government, and (2) that state action may not impede validly constitutional exercises of power by the Federal government. The opinion was written by Chief Justice John Marshall, a man whose many opinions shape modern constitutional law.

The dispute that led to McCulloch began in 1790 between Secretary of the Treasury Alexander Hamilton, who favored congressional authority to create a Bank of the United States, and Secretary of State Thomas Jefferson and Attorney General Edmund Randolph, who opposed. Despite the resistance, Congress created the First Bank of the United States in 1791. The bank existed until 1811, when the charter expired. However, the bank was re-instituted as the Second Bank of the United States in 1816 to resolve the serious economic problems of the country. The economic troubles continued, however, and many states opposed the bank because it called for loans owed by the states. The State of Maryland retaliated by creating a law to tax any bank not chartered by the state. The U.S. Bank refused to pay the taxes and Maryland filed suit against James McCullouch, the cashier of the Baltimore branch of the Bank of the United States.

To begin, the court determined that Congress had the power to charter the bank. Marshall supported this conclusion with three arguments. First, the court argued historically that the Constitution was a social contract created by the people at the Constitutional Convention. The government proceeds from the people and bound the state sovereignties. Therefore, the federal government is supreme based on the consent of the people. Second, Congress is bound to act under explicit or implied powers of the Constitution. Pragmatically, if all of the powers were listed, we would not be able to understand or embrace the document; it is not possible to write everything. Although the term "bank" is not included, there are powers such as to lay and collect taxes, to borrow money and to regulate commerce. Although not explicitly stated, Congress has the implied right to create the bank. Third, Marshall supports the opinion textually under the Necessary and Proper Clause, which permits Congress to seek an objective that is within the enumerated powers as long as it is rationally related to the objective and not forbidden by the Constitution. Marshall rejected Maryland's narrow interpretation of the clause because many of the enumerated powers would be useless. Also, the clause is listed within the powers of Congress, not the limitations. For those reasons, "necessary" does not mean the only way to do something and applies to procedures to implement all constitutionally established powers. In conclusion, Congress has the authority to promulgate legislation as long as the result is legitimate under the Constitution and adopted for the objective.

Next, Marshall determined whether Maryland may tax the branch of the bank without violating the Constitution. The Supremacy clause dictates that State laws comply with the Constitution and succumb when there is a conflict. Taking as undeniable the fact that "the power to tax involves the power to destroy", the court concluded that the Maryland tax could not be levied against the government. If states were allowed to continue their acts, they would destroy the institution created by federal government and oppose the principle of federal supremacy which originated in the text of the Constitution.

The court held that Maryland violated the Constitution by taxing the bank, and therefore voided that tax. The opinion mandated that Congress has implied power that needs to be related to the text of the Constitution, but not all powers need to be within the text. This case was an essential element in the struggle of the creation of federalism, and the permanent balance between federal and States' rights.

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