McCulloch v. Maryland
McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819), was a U.S. Supreme Court decision that established that the "Necessary and Proper" Clause of the U.S. Constitution gives the federal U.S. government certain implied powers that are not explicitly enumerated in the Constitution. The state of Maryland had 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 to all banks not chartered in Maryland, the Second Bank of the United States was the only out-of-state bank then existing in Maryland, and the law was thus recognized in the court's opinion as having specifically targeted the Bank of the United States. The Court invoked the Necessary and Proper Clause of the Constitution, which allows the federal government to pass laws not expressly provided for in the Constitution's list of express powers if the laws are useful to further the express powers of Congress under the Constitution.
|McCulloch v. Maryland|
|Argued February 21 – March 3, 1819|
Decided March 6, 1819
|Full case name||James McCulloch v. The State of Maryland, John James|
|Citations||17 U.S. 316 (more)|
|Prior history||Judgment for John James, Baltimore County Court; affirmed, Maryland Court of Appeals|
|Although the Constitution does not specifically give Congress the power to establish a bank, it delegates the ability to tax and spend. Since a bank is a proper and suitable instrument to assist the operations of the government in the collection and disbursement of the revenue, and 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.|
|Majority||Marshall, joined by unanimous|
|U.S. Const. art. I, § 8, cl. 1, 18|
The case established two important principles in constitutional law. First, the Constitution grants to Congress implied powers to implement the Constitution's express powers to create a functional national government. Prior to the Supreme Court's decision in McCulloch, the scope of the U.S. government's authority was unclear. Second, state action may not impede valid constitutional exercises of power by the federal government.
The establishment of a national "Bank of the United States" was a source of great public controversy from the time of the United States government's creation in 1788 with the ratification of the U.S. Constitution. Soon after George Washington's unanimous election and inauguration as the first President of the United States in 1789, his Secretary of the Treasury, Alexander Hamilton, proposed creating a national bank to regulate American currency and deal with national economic problems. However, Washington's Secretary of State, Thomas Jefferson, strongly opposed the bank's creation, fearing that it would usurp the power of the various States and concentrate it to a dangerous degree in the central federal government. Although Congress created the First Bank of the United States in 1791 with a 20-year charter, the issue continued to provoke controversy – those who supported Hamilton's vision of a stronger central government eventually formed the Federalist Party, while those who opposed him and supported Jefferson's vision of a decentralized government that focused on States' rights formed the Democratic-Republican Party.
On April 10, 1816, the Congress of the United States passed "An Act to Incorporate the Subscribers to the Bank of the United States" to provide for the incorporation of the Second Bank of the United States. The Bank first went into full operation in Philadelphia, Pennsylvania. In 1817, the Bank opened a branch in Baltimore, Maryland, and transacted and carried on business as a branch of the Bank of the United States by issuing bank notes, discounting promissory notes, and performing other operations usual and customary for banks to do and perform. Both sides of the litigation admitted that the president, directors, and company of the Bank had no authority to establish the Baltimore branch or office of discount and deposit, other than the fact that Maryland had adopted the Constitution of the United States.
On February 11, 1818, the General Assembly of Maryland passed "an act to impose a tax on all banks, or branches thereof, in the State of Maryland, not chartered by the legislature:"
Be it enacted by the General Assembly of Maryland that if any bank has established or shall, without authority from the State first had and obtained establish any branch, office of discount and deposit, or office of pay and receipt in any part of this State, it shall not be lawful for the said branch, office of discount and deposit, or office of pay and receipt to issue notes, in any manner, of any other denomination than five, ten, twenty, fifty, one hundred, five hundred and one thousand dollars, and no note shall be issued except upon stamped paper of the following denominations; that is to say, every five dollar note shall be upon a stamp of ten cents; every ten dollar note, upon a stamp of twenty cents; every twenty dollar note, upon a stamp of thirty cents; every fifty dollar note, upon a stamp of fifty cents; every one hundred dollar note, upon a stamp of one dollar; every five hundred dollar note, upon a stamp of ten dollars; and every thousand dollar note, upon a stamp of twenty dollars; which paper shall be furnished by the Treasurer of the Western Shore, under the direction of the Governor and Council, to be paid for upon delivery; provided always that any institution of the above description may relieve itself from the operation of the provisions aforesaid by paying annually, in advance, to the Treasurer of the Western Shore, for the use of State, the sum of $15,000.
And be it enacted that the President, cashier, each of the directors and officers of every institution established or to be established as aforesaid, offending against the provisions aforesaid shall forfeit a sum of $500 for each and every offence, and every person having any agency in circulating any note aforesaid, not stamped as aforesaid directed, shall forfeit a sum not exceeding $100, every penalty aforesaid to be recovered by indictment or action of debt in the county court of the county where the offence shall be committed, one-half to the informer and the other half to the use of the State...
James William McCulloch, the head of the Baltimore Branch of the Second Bank of the United States, refused to pay the tax. The Bank was represented by Daniel Webster. The lawsuit was filed by John James, an informer who sought to collect half of the fine, as provided for by the statute. The case was appealed to the Maryland Court of Appeals, where the state of Maryland argued that "the Constitution is silent on the subject of banks." It was Maryland's contention that because the Constitution failed to state specifically that the federal government was authorized to charter a bank, that made Bank of the United States unconstitutional.
The court upheld Maryland. The case was then appealed to the Supreme Court.
The Court determined that Congress had the power to create the Bank. Chief Justice Marshall supported his conclusion with four main arguments:
Firstly, he argued that historical practice established Congress's power to create the bank. Marshall invoked the first Bank of the United States history as authority for the constitutionality of the second bank. The first Congress had enacted the bank after great debate, and it was approved by an executive "with as much persevering talent as any measure has ever experienced, and being supported by arguments which convinced minds as pure and as intelligent as this country can boast."
Secondly, Marshall refuted the argument that states retain ultimate sovereignty because they ratified the constitution: "The powers of the general government, it has been said, are delegated by the states, who alone are truly sovereign; and must be exercised in subordination to the states, who alone possess supreme dominion." Marshall contended that it was the people who ratified the Constitution and thus the people, not the states, who are sovereign.
Thirdly, Marshall addressed the scope of congressional powers under Article I. The Court broadly described Congress's authority before it addressed the Necessary and Proper Clause. Marshall admitted that the Constitution does not enumerate a power to create a central Bank but said that is not dispositive as to Congress's power to establish such an institution: "In considering this question, then, we must never forget, that it is a constitution we are expounding."
Fourthly, Marshall supported his opinion textually by invoking the Necessary and Proper Clause, which permits Congress to seek an objective while it exercised its enumerated powers as long as that objective is not forbidden by the Constitution. In liberally interpreting the Necessary and Proper Clause, the Court rejected Maryland's narrow interpretation of the clause that the word "necessary" in the clause meant that Congress could pass only laws that were absolutely essential in the execution of its enumerated powers. The Court rejected that argument, on the grounds that many of the enumerated powers of Congress under the Constitution would be useless if only laws deemed essential to a power's execution could be passed. Marshall also noted that the Necessary and Proper Clause is listed within the powers of Congress, not its limitations.
The Court held that the word "necessary" in the Necessary and Proper Clause does not refer therefore to the only way of doing something but applies to various procedures for implementing all constitutionally-established powers: "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."
[A] criterion of what is constitutional, and of what is not so... is the end, to which the measure relates as a mean. If the end be clearly comprehended within any of the specified powers, and if the measure have an obvious relation to that end, and is not forbidden by any particular provision of the Constitution, it may safely be deemed to come within the compass of the national authority. There is also this further criterion which may materially assist the decision: Does the proposed measure abridge a pre-existing right of any State, or of any individual? If it does not, there is a strong presumption in favour of its constitutionality....
Chief Marshall also determined that Maryland could not tax the bank without violating the constitution since, as Marshall commented, "the power to tax involves the power to destroy". The Court thus struck down the tax as an unconstitutional attempt by a state to interfere with a federal institution, in violation of the Supremacy Clause.
The opinion stated that Congress has implied powers, which must be related to the text of the Constitution but do not need to be enumerated within the text.
The case was a seminal moment in federalism: the formation of a balance between federal powers and state powers. Marshall also explained in the case that the Necessary and Proper Clause does not require all federal laws to be necessary and proper and that federal laws that are enacted directly pursuant to one of the express, enumerated powers granted by the Constitution does not need to comply with the Necessary and Proper Clause, which "purport[s] to enlarge, not to diminish the powers vested in the government. It purports to be an additional power, not a restriction on those already granted."
Though Marshall rejected the Tenth Amendment's provision of states rights arguing that it did not include the word "expressly," unlike the Articles of Confederation, which the Constitution replaced, controversy over the authority of the amendment being violated by the decision has existed. Compact theory also argues that the federal government is a creation of the states and that the states maintain superiority. Unlike Marshall, his successor, Roger B. Taney, established dual federalism by which separate-but-equal branches of government are believed to be a better option.
McCulloch v. Maryland was cited in the first substantial constitutional case presented before the High Court of Australia in D'Emden v Pedder (1904), which dealt with similar issues in the Australian Federation. While recognizing American law as not binding on them, the Australian Court nevertheless determined that the McCulloch decision provided the best guideline for the relationship between the Commonwealth federal government, and the Australian States, owing in large part to strong similarities between the American and Australian constitutions.
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- Works related to McCulloch v. Maryland at Wikisource
- Text of McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819) is available from: Cornell CourtListener Findlaw Google Scholar Justia Library of Congress OpenJurist
- Minutes from the Court's Discussion of the Case
- "McCulloch v. Maryland - Case Brief". Lawnix.com. Archived from the original on January 22, 2009.
- The short film McCulloch v. Maryland (1977) is available for free download at the Internet Archive
- "Supreme Court Landmark Case McCulloch v. Maryland" from C-SPAN's Landmark Cases: Historic Supreme Court Decisions