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McCulloch v. Maryland

McCulloch v. Maryland is a landmark U.S. Supreme Court case from 1819.

In this case, the state of Maryland attempted to destroy a branch of the Bank of the United States by imposing a tax on its notes. The Court invoked the doctrine of implied powers in the Constitution, specifically, those of the Federal government to preserve the Bank as an institution, against state infringement.

The fundamental case, McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819), lay the foundation that States may not impede the Constitution or constitutional acts of federal authority. The opinion was written by Chief Justice John Marshall, a man whose many opinions shape modern constitutional law. This case contemplates the ongoing balance of power between the States and the National Government.

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 McCulloch, 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 convention. The government proceeds from the people and bound the state sovereignties. Therefore, the federal government is supreme based upon 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. Simply, 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, art.I, sec.8, cl.18. This clause 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 rejects 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, art. VI, cl. 2, dictates that State laws comply with the Constitution and succumb when there is a conflict. The court concluded that the power to tax was a step to destroy and the Maryland tax could not be held 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, therefore voiding that tax. The opinion mandated that Congress has implied power that needs to be related to text of constitution, but not all powers need to be within the text. Furthermore, this case was an essential element in the struggle of creation of federalism, the undying balance between federal and state rights.

See also: List of United States Supreme Court cases