What is a major result of the Supreme Court decisions in McCulloch?

McCulloch v. Maryland was the first, and probably the most important, Supreme Court decision addressing federal power. In this case, the justices held that the federal government has implied or "unenumerated" powers under Article I, Section 8 of the United States Constitution. That section is now known as the "necessary and proper" clause.

The Supreme Court established that congressional power extends beyond the scope of the Constitution and that state governments cannot interfere with the federal government. In doing so, the justices defined the scope of Congressional power and clarified the relationship between state and federal government.

It all started when Alexander Hamilton convinced Congress to establish a national bank.

Background

Shortly after George Washington was inaugurated as the nation's first president in 1789, his Treasury Secretary, Alexander Hamilton, proposed a plan to create a national bank. The idea was controversial from the start. Thomas Jefferson, who was Secretary of State at the time, feared having a central bank to regulate American currency would take too much power away from the states. (Fans of the hit musical Hamilton might recognize this as the conflict from "Cabinet Battle #1.") And the 1787 Constitutional Convention deliberately decided that the Constitution should not give Congress the power to create corporations.

But, Congress opted to try out Hamilton's idea, creating the First Bank of the United States with a 20-year charter. Then, they let the charter lapse in 1811. However, the nation faced significant economic problems after the War of 1812, which prompted Congress to create the Second Bank of the United States in 1816.

Some states passed laws to try and undermine the national bank's operations. Others, like Maryland, decided to tax it. In 1818, Maryland's state legislature passed a $15,000 annual tax on any bank operating within the state that was not charted by the state government. Only one institution fit that description - The Second Bank of the United States.

James W. McCulloch, the head of the bank's Baltimore branch, refused to pay the tax. The state of Maryland argued that because the Constitution was "silent on the subject of banks," the federal government was not authorized to create one. But when the case reached the U.S. Supreme Court in 1819, the court disagreed.

What Are Enumerated Powers? What Are Implied Powers?

In constitutional law, we talk about government power in terms of what is specifically outlined in the Constitution and what isn't. The things the Constitution outlines for Congress to do are "enumerated" powers. Enumerated powers are also sometimes called expressed powers or explicit powers. Most of them are covered in Article I, Section 8 of the Constitution.

The federal government's enumerated powers include:

• Collecting taxes
• Regulating foreign and domestic commerce
• Coining money
• Declaring war
• Supporting the army and navy
• Establishing lower federal courts

But Congress has the power to do many other things, thanks to the part of the Constitution which states it can make all laws "necessary and proper" to carry out its enumerated powers. These are known as the legislature's "unenumerated" or "implied" powers.

In the years that followed McCulloch, Congress used the "necessary and proper" argument to pass laws in many different areas. Later Supreme Court cases concluded that Congress's implied powers include:

• Gun control laws
• Federal minimum wage
• Income taxes
• Military draft
• Regulations on alcohol and narcotics
• Protecting disabled individuals
• Immigration

Some argue this goes against the Constitution's 10th Amendment, which states that "powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

How the Supreme Court Decided McCulloch v. Maryland

In deciding McCulloch v. Maryland, the Supreme Court had two questions to answer:

1. Did Congress have the power to establish a national bank?

2. Did Maryland's law taxing the bank unconstitutionally interfere with Congress's power?

Renowned attorney and orator Daniel Webster, who would later serve as Secretary of State, argued on behalf of the national bank.

Writing the court's unanimous decision, Chief Justice John Marshall stated that the Constitution grants Congress the power to make "all laws necessary and proper" for carrying out the capabilities outlined in Article I, Section 8. A supporter of national government power, Chief Justice Marshall defined "necessary" to mean anything "appropriate and legitimate." This gave Congress broad authority to carry out its constitutional duties, so long as its actions were logically tied to one of its enumerated constitutional powers.

Although the Constitution said nothing about the federal government establishing a bank, the court held that doing so would help Congress carry out its other duties - such as collecting taxes and maintaining armed forces.

Furthermore, Marshall concluded, Article VI establishes the Constitution as the "supreme Law of the Land." Therefore, states have no power to interfere with federal law, and Maryland's tax on the national bank was unconstitutional. They reasoned that if states can tax one facet of the federal government, they can tax them all, defeating the purpose of having a federal government at all. In a now-famous portion of the decision, Justice Marshall wrote, "the power to tax is the power to destroy."

The Impact of McCulloch v. Maryland

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.

McCulloch also paved the way for what some call the "administrative state," a form of government that employs an extensive professional class to oversee government, the economy, and society. Essentially, the federal regulators who oversee many aspects of American life, including environmental agencies and labor regulators. Without the McCulloch decision, some of these agencies might not exist. Whether the administrative state is a good thing or not is generally a matter of political opinion. Still, there's no doubt that debate would look very different if the Supreme Court had come to a different conclusion in McCulloch.

Read the Supreme Court's full opinion in McCulloch v. Maryland on FindLaw's Cases & Codes.

McCulloch v. Maryland is a landmark case in which the Supreme Court of the United States determined that the United States had the authority to establish a federal bank. Furthermore, the Court declared that no state had the right to impose a tax on the federal bank, ruling in favor of McCulloch, who refused to pay Maryland's tax. This case was decided in 1819.[1]

HIGHLIGHTS

Why it matters: The Supreme Court's decision in this case established that the state of Maryland cannot tax the federal bank. Justice Marshall wrote that the power to tax was the power to destroy and that the power to create the bank implied the power to preserve it. Justice Marshall’s decision argued that implied powers, such as the power to create a national bank, were Constitutional under the Necessary and Proper Clause. To read more about the impact of McCulloch v. Maryland click here.

Background

In 1816, Congress chartered The Second Bank of the United States. The bank, controlled by private stockholders, held federal funds. The bank also could issue notes; in exchange, the bank would loan the federal government money that it printed and thus regulated the market value of. The federal bank thus evaded paying the taxes that applied to state banks. With the 1818 depression, tensions grew as some banks began to close.

In 1818 the Maryland General assembly passed a law that required all bank notes in the state to be stamped by the Western Shore Territory, which was the state treasury. James William McCulloch, a cashier of the Baltimore Branch of the Second Bank of the United States, issued federal bank notes without the Western Shore Territory stamp. John James filed suit against McCulloch, arguing that he violated the state law.[2]

The Maryland Court of Appeals the state argued that the Constitution was silent on the subject of banks and therefore did not prohibit the state from taxing it. Furthermore, because the Constitution was silent on the subject of banks, Maryland's representation argued that the Federal government exceeded its authority when it chartered a bank. The Maryland Court of Appeals decided in favor of the state of Maryland.

The case was then appealed to the Supreme Court of the United States. Daniel Webster represented the McCulloch and the Bank of the United States before the Supreme Court.

Oral argument

Oral argument was held from February 8, 1819 through March 3, 1819. The case was decided on March 6, 1819.[1]

Decision

The Supreme Court decided unanimously to reverse the Maryland Court of Appeals decision.[1]

Opinion

The Court unanimously reversed the lower court's decision, determining that Congress had the ability to establish a bank, and that Maryland could not impose taxes on the federal bank. The opinion also espoused the doctrine of judicial review. According to Marshall, who authored the decision, "the constitution and the laws made in pursuance thereof are supreme...they control the constitution and laws of the respective states, and cannot be controlled by them."[1] Lastly, the court ruled that by taxing the bank, Maryland was violating constitutional sovereignty by levying a tax against the United States, when, as a state, it only had the power to tax its own citizens.[2]

Furthermore, Justice Marshall emphasized that the states could not interfere with the federal government’s implied powers under the Constitution. Marshall wrote “The Government of the Union, though limited in its powers, is supreme within its sphere of action.”[1]

Moreover, Justice Marshall argued that the framers of the Constitution intended that the federal government exercise the explicit and implied powers of the Constitution without interference of the states. He wrote, “It must have been the intention of those who gave these powers to insure, so far as human prudence could insure, their beneficial execution.”[1]

Furthermore, Justice Marshall described the nature of limited government in his opinion. He argued that the written Constitution limited power by enumerating and defining it. He wrote, “The government of the United States is of the latter description. The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written. To what purpose are powers limited, and to what purpose is that limitation committed to writing, if these limits may, at any time, be passed by those intended to be restrained? The distinction between a government with limited and unlimited powers is abolished, if those limits do not confine the persons on whom they are imposed, and if acts prohibited and acts allowed, are of equal obligation.”[1]

Finally, Marshall argued that implied powers with legitimate ends not prohibited by the Constitution were Constitutional. He wrote, “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.”[1]

However, Marshall argued that it was the duty of the judiciary to understand the powers granted in the Constitution. Marshall argued that it is the duty of the judiciary to say whether laws were Constitutional by comparing the laws with the grants of power in the Constitution. He wrote, “If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its invalidity, bind the courts, and oblige them to give it effect? Or, in other words, though it be not law, does it constitute a rule as operative as if it was a law? This would be to overthrow in fact what was established in theory; and would seem, at first view, an absurdity too gross to be insisted on. It shall, however, receive a more attentive consideration. It is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases, must of necessity expound and interpret that rule. If two laws conflict with each other, the courts must decide on the operation of each.”[1]

Marshall wrote that the Supreme Court must consider whether the law or the Constitution should be upheld in such conflicts. He wrote, “So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformably to the law, disregarding the constitution; or conformably to the constitution, disregarding the law; the court must determine which of these conflicting rules governs the case. This is of the very essence of judicial duty.”[1]

Marshall proceed to argue that the Constitution was superior to any ordinary act of legislation, and that the Constitution’s superiority should govern a case concerning a conflict between the two. He wrote, “If, then, the courts are to regard the constitution, and the constitution is superior to any ordinary act of the legislature, the constitution, and not such ordinary act, must govern the case to which they both apply.”[1]

Legacy

States' rights advocates were unhappy with Marshall's decision. A series of angered newspaper responses followed from Judge Spencer Roane, Judge William Brockenbrough and former U.S. Senator John Taylor. Marshall did not let the articles go unanswered, however. He responded under the nom de plume "A Friend of the Union," in Philadelphia. Because the paper did not print his responses in their entirety, he republished them in Virginia under the name "A Friend of the Constitution."

Later, in 1832, Andrew Jackson vetoed the bank. Despite this action, the Supreme Court's interpretation of the Constitution was upheld.[3]

This decision extended Congress' authority by recognizing implied powers as a result of the Necessary and Proper Clause of Article I, Section 8 of the Constitution.[2]

• McCulloch v. Maryland Decision