How did McCulloch ruling contribute to the strength of the national government?

This Supreme Court Case addressed the issue of Federal power and commerce.

In the landmark Supreme Court case McCulloch v. Maryland, Chief Justice John Marshall handed down one of his most important decisions regarding the expansion of Federal power. This case involved the power of Congress to charter a bank, which sparked the even broader issue of the division of powers between state and the Federal Government.

In 1816 Congress established the Second National Bank to help control the amount of unregulated currency issued by state banks. Many states questioned the constitutionality of the national bank, and Maryland set a precedent by requiring taxes on all banks not chartered by the state. In 1818 the State of Maryland approved legislation to impose taxes on the Second National Bank chartered by Congress.

James W. McCulloch, a Federal cashier at the Baltimore branch of the U.S. bank, refused to pay the taxes imposed by the state. Maryland filed a suit against McCulloch in an effort to collect the taxes. The Supreme Court, however, decided that the chartering of a bank was an implied power of the Constitution, under the “elastic clause,” which granted Congress the authority to “make all laws which shall be necessary and proper for carrying into execution” the work of the Federal Government.

This case presented a major issue that challenged the Constitution: Does the Federal Government hold sovereign power over states? The proceedings posed two questions: Does the Constitution give Congress power to create a bank? And could individual states ban or tax the bank? The court decided that the Federal Government had the right and power to set up a Federal bank and that states did not have the power to tax the Federal Government. Marshall ruled in favor of the Federal Government and concluded, “the power to tax involves the power to destroy."

1) What constitutional principle did the Supreme Court establish in theMcCullochcase?

2) What is the objective of the "necessary and proper" clause?Gives the power tocongress, not written just implied.

3) What was the basis for the Court's ruling that Maryland could not tax the Second

4) How did the fact the Justice Marshall was a federalist influence his ruling in theMcCullochIt

6)WHAT ARE THE FACTS OF THE CASE?

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On March 6, 1819, the U.S. Supreme Court ruled in McCulloch v. Maryland that Congress had the authority to establish a federal bank, and that the financial institution could not be taxed by the states. But the decision carried a much larger significance, because it helped establish that the Constitution gave Congress powers that weren’t explicitly spelled out in the document.

That decision made it possible for the federal government to expand dramatically over the next two centuries, and to take on responsibilities that the nation’s founders couldn’t have envisioned. Without McCulloch v. Maryland, Congress wouldn’t have been able to create the New Deal or Social Security in the 1930s, or enact legislation such as the Civil Rights Act of 1964 and the Patient Protection and Affordable Care Act in 2010. 

Conflict Over a National Bank

The controversy that led to the Supreme Court decision actually began several decades before the lawsuit was even filed. As the Federal Reserve History website details, in 1790, the new nation’s first-ever Secretary of the Treasury, Alexander Hamilton, wrote a report for Congress in which he advocated creation of a federal bank. Hamilton argued that a central, government-controlled financial institution, similar to the Bank of England, was important for stabilizing the young nation’s economy. He envisioned the bank issuing paper money, providing a safe place to keep public funds, collecting tax revenues, and paying government debts. He also thought it could handle private-sector commercial transactions as well.

Hamilton’s idea faced strong opposition from critics such as Thomas Jefferson, who were afraid that a federal bank would become a financial monopoly that undermined state banks. They also feared that it would favor financiers and merchants over farmers, who usually were debtors. Jefferson argued that the Constitution didn’t give the federal government the authority to form corporations such as banks. But in the end, Hamilton’s argument persuaded enough members of Congress to gain passage, and President George Washington signed the bill creating a national bank into law in 1791.

That same year, the first Bank of the United States opened in Philadelphia, and branches subsequently were established in Boston, New York, Baltimore, Charleston, Norfolk, Savannah, Washington, D.C. and New Orleans. The new bank was a public-private institution, with the federal government initially owning $2 million of its stock and private investors holding the other $8 million. But the controversy over the bank continued, and when its charter came up for renewal in 1811, it was narrowly defeated in Congress.

After the War of 1812, however, the U.S. government again found itself heavily in debt, and private-sector financiers such as John Jacob Astor joined with politicians such as Rep. John C. Calhoun to advocate for creation of another federal bank.

In 1816, Congress finally gave in, and the following year, the second Bank of the United States reopened in Philadelphia. The new bank was much more far-reaching in scope than its predecessor, providing extensive credit to farmers and businesses and financing the shipping of goods and agricultural crops both to domestic and foreign markets. The new bank was one of the biggest companies in the nation, and its clout enabled it to control the interest rates that other banks could charge to borrowers.

Maryland Attempts to Tax the Second Bank of the United States

But there was still a lot of opposition. In 1818, Maryland legislators passed a law imposing a stamp tax on currency issued by second Bank of the United States, in an effort to hinder it from doing business. In response, a cashier at the bank’s Baltimore branch, James W. McCulloch, refused to pay the tax. The state then sued McCulloch for $110, the penalty in the law for circulating unstamped banknotes in Maryland.

State officials won their case in the Maryland courts, which led the bank to appeal to the U.S. Supreme Court, which began to hear arguments in the case on Feb. 22, 1819, in a courtroom in the basement of the U.S. Capitol.

Presiding over then-seven-member court was the nation’s fourth Chief Justice, John Marshall. Marshall was a Revolutionary War veteran who had served as President John Adams’ envoy to France and Secretary of State before Adams appointed him to head the court in 1801. Marshall joined the court just weeks before Adams’ successor Thomas Jefferson was set to take over.

Both sides had high-powered lawyers to represent them. Representing Maryland was Luther Martin, the state’s Attorney General, who had served as a delegate to the Constitutional Convention in 1787. Martin had famously walked out of the Constitutional Convention proceedings because he opposed the creation of a strong central government. 

Speaking on behalf of the bank was Daniel Webster, an attorney and skilled orator who served in both the U.S. House and the Senate in his career, and was an advocate of a strong, activist federal government.

Martin argued that because the Constitution didn’t explicitly say that Congress could create a bank, it didn’t have authority. He cited the 10th Amendment, which says that any powers that the Constitution doesn’t delegate to the federal government, or prohibit the states from using, are reserved for the states or the American people. “We insist that the only safe rule is the plain letter of the Constitution,” he said, according to a transcript of the hearing.

Webster, in turn, argued that Article I, Section 8 of the U.S. Constitution, which gave Congress the power “to make all laws which shall be necessary and proper” for carrying out some power that the Constitution does spell out, was sufficient authority. Creating the Bank of the United States, Webster argued, was necessary and proper for the purpose of levying and collecting taxes, borrowing money, supporting armed forces, regulating commerce, and other crucial functions of the government.

On the question of whether or not Maryland or another state could tax the federal bank, Webster said cited the Constitution’s Article VI, which states that laws enacted by Congress “shall be the supreme law of the land,” and said it prohibited states from passing any legislation “which shall be repugnant to a law of the United States.” 

The Marshall Court Verdict

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After the oral arguments were completed, Marshall and his fellow justices took only a few days to render their unanimous ruling, in which they adopted Webster’s position and rejected Martin’s reasoning. Marshall wrote the court’s opinion himself, as he usually did, and read it aloud to a packed courtroom.

“The subject is the execution of those great powers on which the welfare of a nation essentially depends,” Marshall said. “It must have been the intention of those who gave these powers, to insure, as far as human prudence could insure, their beneficial execution. This could not be done by confiding the choice of means to such narrow limits as not to leave it in the power of Congress to adopt any which might be appropriate, and which were conducive to the end.”

Additionally, Marshall wrote, states “have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government. This is, we think, the unavoidable consequence of that supremacy which the constitution has declared.”

Significance of McCulloch v. Maryland

Although McCulloch v. Maryland gave the federal government wide-ranging authority, even the ruling wasn’t enough to protect the second Bank of the United States from its political opposition. In 1832, President Andrew Jackson, a vehement opponent of the bank, ordered that the federal government’s deposits be withdrawn and deposited in state banks. This order caused the national bank to lose a lot of its power and influence.

In 1834, the U.S. House of Representatives voted against renewing the bank’s charter, and it faded from existence. However, in the early 1900s, a succession of banking crises prompted Congress to revise the idea of a national bank, and in 1913, the Federal Reserve System was created.

Ultimately, McCulloch v. Maryland made possible the rise of what some have labeled “the administrative state,” in which the government employs officials to oversee many aspects of American life, from environmental issues to labor disputes.

Sources

U.S. Supreme Court, Opinion in McCulloch v. Maryland (1819)

“McCulloch v. Maryland (1819),” Constitutional Rights Foundation.

Reports of Cases Argued and Adjudged in the Supreme Court of the United States, February Term, 1819, Henry Wheaton,

The Spirit of the Constitution: John Marshall and the 200-year Odyssey of McCulloch v. Maryland, by David S. Schwartz, Oxford University Press, 2019.

“John Marshall, the Great Chief Justice,” William & Mary University Law School.

“Luther Martin,” Teaching American History.

“McCulloch v. Maryland Case Summary: What You Need to Know” by Laura Temme, FindLaw.com.

How does McCulloch v. Maryland increase the power of the national government?

McCulloch v. Maryland (1819) is one of the first and most important Supreme Court cases on federal power. In this case, the Supreme Court held that Congress has implied powers derived from those listed in Article I, Section 8. The “Necessary and Proper” Clause gave Congress the power to establish a national bank.

How did McCulloch v. Maryland impact the powers of the national government quizlet?

The Supreme Court case McCulloch v. Maryland established that Congress had the power to establish a national bank and that a state (in this case, Maryland) did not have the power to tax branches of the federal government that are carrying out powers legal in the Constitution.

Why is the ruling in McCulloch v. Maryland so important?

The decision in McCulloch had a profound effect on cases involving state vs. federal power. The doctrine of implied powers created by the court became a powerful tool for the federal government. The case established, once and for all, that when state and federal laws are in conflict, the federal law always wins.

How did McCulloch vs Maryland contribute to nationalism?

Although this ruling was in favor of the Federal Government, it did ultimately promote nationalism. Not only did it demonstrate the influence and importance of the Constitution, the defining aspect of America, but it also suggested a change in the relationship between local and national government.