McCulloch v. Maryland
From Judgepedia
McCulloch v. Maryland (1819) is regarded, much like Marbury v. Madison, to be one of the most momentous cases ever tried by the United State's Supreme Court. Presided over by the Marshall Court, the case involves many hot-button issues concerning the extent of judicial power--as interpreted by first and second generation Americans--including: the power of Congress to charter a national bank, constitutional interpretation (specifically as it relates to the expansion of Federal Government), and the delineations between State and Federal powers.
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History
The impetus behind Marshall's (and other consenting Associate Justices) ruling dates back to the late 18th century, when Alexander Hamilton proposed the creation of a Federal Bank (titled the Bank of the United States). Hamilton's opposition was Thomas Jefferson, who argued that the Constitution did not provide Congress with this power.
To reverse this policy would significantly redefine not only the Revolutionary War, but also the course of American history.
Hamilton, though, with the backing of then-President George Washington, got his bank. Having successfully argued that Congress had all powers not explicity granted to states, and that under the elastic clause of Article I of the Constitution, Congress was entitled to a broad reading of designated powers, Washington endorsed a twenty-year charter, and until 1811, the Bank of the United States was in operation.[1]
In 1816, Congress chartered a second bank at the urging of President James Madison. This became commonly referred to as the Second Bank of the United States (SBUS). It was in response to SBUS that McCulloch v. Maryland developed.
Controversy
Under the new charter, national banks were started all across the yet-young nation. Many local banks (state-chartered in nature) resented the change, though, and sought to obtain some sort of remuneration from the competing national banks. "Maryland imposed a tax on the bank's operations, and when James McCulloch, the cashier for the Baltimore branch of the BUS, refused to pay the tax, the issue went to Court."[2]
Important Questions Posed
- Does the Federal Government hold sovereign power over states?
- Does the Constitution give Congress power to create a bank?
- 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 Governement. Marshall ruled in favor of the Federal Government and concluded that "the power to tax involves the power to destroy."[3]
Outcome
McCulloch won his case. The Supreme Court ruled that the State of Maryland was not allowed to impose taxes on a federal institution, since the Constitution gave the Federal Government the implied right to establish banks.(See elastic clause.)
