McCulloch v. Maryland

Summary

Congress chartered the Second Bank of the United States in 1816, five years after the charter of the first national bank, created in 1791 on Alexander Hamilton's plan, had lapsed. The new bank opened a branch in Baltimore. In February 1818 the Maryland legislature imposed a tax on any bank operating in the state without a state charter, payable either as a stamp duty on each note issued or as an annual fee of $15,000. James W. McCulloch, cashier of the Baltimore branch, issued notes without the stamps. Maryland sued him in the Baltimore County Court and won, the Maryland Court of Appeals affirmed, and McCulloch brought the case to the Supreme Court. The argument lasted nine days. Luther Martin, Joseph Hopkinson and Walter Jones spoke for Maryland. They held that the Constitution was a compact of sovereign states, that the powers it delegated must be read strictly, that the word necessary in the Necessary and Proper Clause meant indispensable, and that a bank was a convenience Congress could do without. They also stressed that the power to tax was retained by the states and limited only by express prohibitions such as the ban on duties on imports. Daniel Webster, Attorney General William Wirt and William Pinkney answered for the bank: the national government derived from the people, Congress had long used the bank to collect revenue and pay its debts, necessary meant useful or conducive, and a state tax on a federal instrument could cripple it. On 6 March 1819 the Court ruled for McCulloch, 7-0, in an opinion by Chief Justice Marshall. He addressed two questions. First, Congress may incorporate a bank. The Constitution emanates from the people, not the state governments, and the national government, though one of enumerated powers, is supreme within its sphere. Because a constitution can mark only great outlines, the power to choose means is implied; the Necessary and Proper Clause, placed among the powers of Congress, enlarges rather than restricts that choice, and any appropriate means plainly adapted to a legitimate end is constitutional. Second, Maryland may not tax the bank's operations, because the power to tax involves the power to destroy, and a state cannot control the lawful measures of the government that the Constitution makes supreme. The opinion leaves untouched state taxes on the bank's real estate and on Maryland citizens' shares. The library text gives the full Opinion of the Court and the judgment; the arguments of counsel and notes are omitted. In Virginia, Spencer Roane and others attacked the decision in newspaper essays, and Marshall answered them anonymously. Andrew Jackson vetoed the bank's recharter in 1832, and its federal charter expired in 1836. The broad reading of the Necessary and Proper Clause has remained a fixed point of constitutional law, while the doctrine of tax immunity was narrowed in Graves v. New York ex rel. O'Keefe (1939).

Top Lessons

• A constitution, not a legal code

  Marshall argues that a constitution which tried to list every means of carrying out its powers would be as long as a code of laws and never understood by the public. Its nature requires that only great outlines be marked. That view of what kind of document the Constitution is drives the rest of the opinion.

• What does necessary mean?

  Maryland read necessary as indispensable; Marshall read it as useful, conducive or appropriate, pointing out that Article I, Section 10 uses the stronger phrase absolutely necessary. The disagreement over a single word divided strict and broad constructionists from the 1791 debate between Hamilton and Jefferson onward.

• The power to destroy

  If a state could tax the bank, it could tax the mail, the mint or the courts, and do so to any degree. Marshall concludes that the people of one state cannot, through their legislature, control an institution created by the people of all the states. He carefully preserves ordinary state taxes on property.

• Sovereignty divided

  Both sides agreed that the national government was one of enumerated powers and that the states remained sovereign in their own sphere. The question was where the line ran and who would draw it. Maryland's counsel defended the states as the original parties to the Union; Marshall defended the people as the source of national authority.

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Medical Lens

The case concerns the national bank, implied congressional powers and state taxation, with no medical content.