McCulloch v. Maryland stands for the proposition that (1) the Necessary and Proper Clause of the U.S. Constitution gives the U.S. federal government certain implied powers that are not explicitly enumerated in the Constitution, and (2) the American federal government is supreme over the states, and so the ability of the states to interfere with the federal government is limited.
In 1816, Congress chartered the second national bank of the United States. In 1818, the State of Maryland imposed taxes on the bank. When asked to pay, James W. McCulloch, a cashier at the bank’s Baltimore, Maryland branch, refused. Maryland brought this suit against McCulloch to claim the unpaid taxes.
In deciding this case, the Court focused on two main questions: (1) does Congress have the power to incorporate a bank, and (2) can the State of Maryland tax a branch of the bank without violating the Constitution?
First, the Court found that the Constitution grants Congress the power to incorporate a bank under the necessary and proper clause (Article 1, Section 8, Clause 18). This clause gives Congress the power to enact “all laws which shall be necessary and proper, for carrying into execution the foregoing powers, and all other powers vested by this constitution, in the government of the United States, or in any department thereof.” Although the Constitution does not affirmatively grant Congress the power to establish a bank, it does provide a wide array of powers relating to monetary ends, such as the powers of laying and collecting taxes, borrowing money, and regulating commerce. The Court found that a national bank, and branches of such a bank, are necessary and proper to allow the government to perform these powers.
Second, the Court held that the State of Maryland did not have the authority to tax the national bank. The Court stated that “[a]n unlimited power to tax involves, necessarily, a power to destroy.” Id. at 327.
In regard to that question, Chief Justice Marshall wrote, “[t]he 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,” referring to the operation and maintenance of the national bank.
Authorities Cited:
Sturges v. Crowninshield (1819)
Citation(s): 17 U.S. 122 (4 Wheaton 122)
Sturges sued Crowninshield to recover the value of two promissory notes issued and dated in New York in March 1811. In his defense, Crowninshield argued that he was discharged from this debt obligation under a New York state law that relieved debtors of their liability upon surrendering their property. The U.S. Supreme Court ultimately rejected this defense on grounds that the New York act was unconstitutional under the Contracts Clause. [1]
The McCulloch Court cited Sturges to explain that unenumerated powers not only exist but also that they may change in character or entirely subside with time. These implied powers may be utilized as necessary to respond to the nation’s current dilemmas that fall under the purview of Congress’s explicit powers. Ultimately, the McCulloch court concluded that Congress is allowed to use any necessary means to meet the legitimate ends enumerated in the Constitution–the only limitations are prohibitions written in the Constitution.
The Schooner Exch. v. McFaddon (1812)
Citation(s): 11 U.S. 116 (7 Cranch 116)
John McFaddon and William Greetham brought suit to claim ownership of a ship, the Schooner Exchange. The Exchange was sailing from Baltimore, bound for Spain, when the ship was taken by Frenchmen under the orders of Napoleon Bonaparte. [2] The French renamed the ship the Balaou and outfitted it as a warship.
Later, the Balaou was sailing from France to the West Indies when poor weather conditions forced the ship to dock in Philadelphia. When docked, McFaddon seized control of the ship with the assertion that it remained his and Greetham’s property because it was illegally taken. The French argued that because the ship was the property of France, and France and the U.S. were friendly powers, they were free to dock and depart from U.S. ports without issue under the traditional principle known as the “law of the flag.”
The Schooner Exchange Court wrestled with the question of which jurisdiction — the U.S. or France — should preside over the case. Recognizing the U.S. and France as equally sovereign nations, the court held that the dispute fell under French jurisdiction. The decision was based on the longstanding international law custom of foreign vessels retaining their sovereignty when docked on friendly shores, despite the absence of an explicit rule.
The McCulloch Court cited the Schooner Exchange decision to bolster their assertion that Congress’s constitutionally explicit taxing power trumped the state’s implied taxing power. Although concurrent state and federal powers were “equally supreme” in most contexts, the states’ implied taxing power is superseded in instances of conflicting actions. If Congress has the authority to carry out a particular action, the state cannot “impede…or burden it,” even if an explicit prohibition on the state is absent.
The Federalist (Federalist Papers) – Nos. 31 - 36 (1788)
Citation(s): Federalist, nos. 31 - 36
In their series of 85 newspaper essays, Alexander Hamilton, John Jay, and James Madison beseeched the state of New York to ratify the Constitution. The influence of this series of articles, published together as The Federalist in 1788, would live beyond the 1789 ratification of the Constitution. In McCulloch and later Supreme Court opinions, the Federalist Papers are referenced to gain insight into the intentions, rationale, and justifications behind the provisions of the Constitution at the time of ratification. By responding to arguments made against the Constitution, the Federalist Papers are useful for understanding the factors that influenced acceptance of the Constitution.
In McCulloch, Chief Justice Marshall looked to the Federalist Papers to get a sense of how the Framers envisioned the operation of Congress’s taxing power. [3] While Chief Justice Marshall explicitly maintained the right to evaluate the “correctness” of these powers in application to the case before him, he acknowledged that “the opinions expressed…have been justly supposed to be entitled to great respect in expounding the constitution.”
In Papers 31-36, Hamilton responded to the concerns that the federal taxing power would be a nearly limitless one. He admitted that an unlimited federal taxing power would eventually deprive the state governments of resources needed to run effectively, and “would subject them entirely to the mercy of the national legislature.”
However, Hamilton assured that this concern would be remedied by Constitutional design. By explicitly tying the taxing power to the Constitution, the federal government would only be authorized to tax as was necessary and proper to execute its enumerated powers. To Hamilton, this structure would avert a devastating blow to the state governments’ efficacy and enable both state and federal governments to maintain the resources necessary to carry out their duties.
- The Federalist Papers
Library of Congress Research Guides
More Resources:
Blackstone’s Commentaries (1765-69)
Citation(s): 1 Blackstone's Commentaries 471 & 474
Written as an overview of English law in the late eighteenth century, Blackstone’s Commentaries have retained their influence on the American judiciary, such as in the 2022 landmark decision, New York State Rifle & Pistol Assoc. v. Bruen. [4] The Commentaries were written as a comprehensive summary of English common law, much of which influenced Anglo-American jurisprudence.
The first volume of Blackstone’s Commentaries focused on the interplay between people and government regarding individual freedoms and corresponding legal protections. Chapter 18 of Volume 1, cited in McCulloch, expressed that although corporations exist as a voluntary association of individuals, they are governed by common law which “aris[es] from the universal agreement of the whole community.” Another institution that acts as a representative of the “whole community,” England’s Parliament is likewise empowered to create corporations.
The McCulloch Court cited Blackstone’s Commentaries to support their ultimate conclusion of federal supremacy. Although neither the federal nor state governments were explicitly barred by the federal constitution to “erect corporations,” neither was the absence of explicit authority a signal to the states that this power belonged to them under the Tenth Amendment. [5] On the contrary, the power to erect corporations, like the national bank, was a necessary means to accomplish national sovereignty – a governmental end bestowed solely upon Congress, not the state legislature.
Photos [McCulloch v. Maryland]
