McCulloch v. Maryland

views updated May 09 2018

McCULLOCH V. MARYLAND

U.S. Supreme Court chief justice John Marshall's opinion in McCulloch v. Maryland (1819) ranks, along with his opinion in Marbury v. Madison (1803), as one of his two most important opinions. It is the most important and persuasive assertion of the supremacy of the Constitution and Congress in the period before the Civil War. The case involved the constitutionality of the federal legislation creating the Second Bank of the United States. Marshall wrote an opinion that resembles a state paper or an essay on constitutional and political theory. It is a magisterial essay on the powers of the national government and the meaning of the Constitution. In it he upheld the constitutionality of the bank.

In 1791 Congress had given the Bank of the United States a twenty-year charter over the objections of Secretary of State Thomas Jefferson and U.S. Representative James Madison. The charter expired in 1811, when Madison was president and his allies firmly in control of Congress and just as firmly opposed to the bank. Thus, the first Bank of the United States ceased to exist. However, the War of 1812 (1812–1815) forced Madison and his party to rethink their position. Without a central bank it was difficult for the government to function, especially in a time of crisis. Thus, in 1816 Congress chartered a new bank and Madison happily signed the legislation creating the Second Bank of the United States. The bank was initially popular, but public support diminished as a growing financial crisis led to the Panic of 1819. In 1818 Maryland passed a law to tax notes of all banks "not chartered by the legislature." The only bank that fit this description was the Baltimore branch of the Bank of the United States. James W. McCulloch, the head of the Baltimore branch, refused to pay the tax and was subsequently sued by the state. He appealed his conviction to the U.S. Supreme Court.

Arguments in the case lasted nine days as Daniel Webster, Attorney General William Wirt, and William Pinkney, one of the most prominent lawyers in the nation, defended the bank's interests. Maryland's legal team was led by Luther Martin, who had been a delegate to the Constitutional Convention in 1787.

Marshall, speaking for a unanimous Court, based his opinion on the "necessary and proper" clause of the U.S. Constitution. He established that the bank was necessary for the smooth operation of the national government. He showed that it was proper for the government to control its finances and have a place to deposit tax revenues. He demonstrated that nothing in the Constitution prohibited Congress from establishing a bank. Thus, he concluded: "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." He noted that the Tenth Amendment declared that the "powers not delegated to the United States by the Constitution" were reserved to the states or the people. But he pointed out that the amendment, unlike the language in the Articles of Confederation, did not use the term "expressly delegated." He rejected the idea that the Constitution was like a legal code, spelling out all the powers of Congress. Such a document "could scarcely be embraced by the human mind." He reminded readers they must "never forget that it is a constitution we are expounding," and that it was "a constitution intended to endure for ages to come." Thus, it had to be "adapted to the various crises of human affairs." This flexible approach to the Constitution allowed Congress to pass all laws and create all institutions that were necessary and proper for implementing the functions of government, as long as the Constitution did not specifically prohibit such actions.

He then turned to Maryland's attempt to tax the bank. He noted that the "power to tax involves the power to destroy," and that if Maryland could tax the bank created by Congress, it could destroy that bank. But no state could destroy what Congress legally and constitutionally created, because "the great principle" of the American nation was "that the constitution and the laws made in pursuance thereof are supreme." If Maryland could tax the bank, it could tax the customhouse, the mails, military installations, and in effect destroy the national government. "This," Marshall was certain, "was not intended by the American people."

Marshall's opinion deeply angered states' rights advocates, especially those in Virginia who feared a strong national government. Judge Spencer Roane, Judge William Brockenbrough, and former U.S. senator John Taylor (known as John Taylor of Caroline) attacked the decision in Virginia's newspapers. Marshall replied to these attacks on his opinion, first under the nom de plume "A Friend of the Union," but the Philadelphia paper that published these essays gnarled them and left out complete paragraphs. Thus, he republished corrected versions in an Alexandria, Virginia, paper under the name "A Friend of the Constitution." The newspaper debate did not settle the issue, and in 1832 Andrew Jackson would dismantle the bank. But Marshall's opinion endured as the Supreme Court's most powerful and authoritative analysis of the inherent flexibility in the Constitution and the supremacy of both the Constitution and Congress.

See alsoBank of the United States; Marshall, John; Panic of 1819; Presidency, The: James Madison; States' Rights .

bibliography

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

Newmyer, R. Kent. John Marshall and the Heroic Age of the Supreme Court. Baton Rouge: Louisiana State University Press, 2001.

Paul Finkelman

Encyclopedia of the New American Nation

McCulloch v. Maryland

views updated May 21 2018

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.

cross-references

Constitution of the United States; Federalism; Federalist Papers.

West's Encyclopedia of American Law

McCulloch v. Maryland

views updated May 08 2018

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.