Which part of the Constitution was fundamental to the decision in McCulloch v. Maryland quizlet?

Constitutional interpretations of federalism

A quick guide to the background, decision, and impact of McCulloch v. Maryland. 

Constitutional interpretations of federalism

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Introduction

McCulloch v. Maryland (1819) is one of the first and most important Supreme Court cases on federal power. In this case, the Supreme Court held that Congress has implied powers derived from those listed in Article I, Section 8. The “Necessary and Proper” Clause gave Congress the power to establish a national bank.

On this page you will find two different tools for teaching McCulloch v. Maryland (1819). There is a short eLesson activity featuring the case, as well as a more robust document-based question (DBQ) unit that includes classroom-friendly excerpts of the following documents:

• United States Constitution, Article I, Section 8, Clause 18
• Letter from An Old Whig, 1787
• Brutus No. 1, 1787
• Federalist No. 33, 1788
• Federalist No. 39, 1788
• Thomas Jefferson, Opinion on the Constitutionality of the Bill for Establishing a National Bank, 1791
• Memorandum No. 1, Edmund Randolph to George Washington, 1791
• Alexander Hamilton’s Opinion on the National Bank, 1791
• McCulloch v. Maryland Unanimous Decision, 1819
• President Andrew Jackson’s Veto Message, 1832
• King Andrew the First Cartoon, 1833
• U.S. v. Comstock Majority Opinion, 2010
• U.S. v. Comstock Dissent, 2010

Download the McCulloch v. Maryland DBQ

Resources

• McCulloch v. Maryland at the Oyez Project

Summary

It was 1819 and the United States had been a nation under the Constitution for barely a generation when an important case about federal power reached the Court. After a first attempt in 1791, Congress established the second National Bank of the United States in 1816. Many states opposed branches of the National Bank within their borders. They did not want the National Bank competing with their own banks, and objected to the establishment of a National Bank as an unconstitutional exercise of Congress’s power.

The state of Maryland imposed a tax on the bank of $15,000/year, which cashier James McCulloch of the Baltimore branch refused to pay. The case went to the Supreme Court. Maryland argued that as a sovereign state, it had the power to tax any business within its borders. McCulloch’s attorneys argued that a national bank was “necessary and proper” for Congress to establish in order to carry out its enumerated powers.

Chief Justice John Marshall wrote, “Although, among the enumerated powers of government, we do not find the word ‘bank,’ we find the great powers to lay and collect taxes; to borrow money; to regulate commerce 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.”

Further, the Court ruled that Maryland could not tax the national bank: “That the power to tax involves the power to destroy.  If the states may tax one instrument, employed by the [federal] government in the execution of its powers, they may tax any and every other instrument This was not intended by the American people. They did not design to make their government dependent on the states.”

Marshall also noted an important difference between the Constitution and the Articles of Confederation (the United States’ first governing document that had been replaced by the Constitution). The Articles said that the states retained all powers not “expressly” given to the federal government. The Tenth Amendment, Marshall noted, did not include the word “expressly.” This was further evidence, he argued, that the Constitution did not limit Congress to doing only those things specifically listed in Article I.

Questions

1. What happened to bring McCulloch v. Maryland to the Supreme Court?
2. Read Article I, Section 8 (link above) and underline the express powers of Congress that might be dependent on the operation of a bank. Can Congress effectively carry out its powers without establishing a national bank?
3. How did the Supreme Court rule?
4. To what extent did the ruling in McCulloch v. Maryland expand federal power?

On March 6, 1819, the U.S. Supreme Court ruled in McCulloch v. Maryland that Congress had the authority to establish a federal bank, and that the financial institution could not be taxed by the states. But the decision carried a much larger significance, because it helped establish that the Constitution gave Congress powers that weren’t explicitly spelled out in the document.

That decision made it possible for the federal government to expand dramatically over the next two centuries, and to take on responsibilities that the nation’s founders couldn’t have envisioned. Without McCulloch v. Maryland, Congress wouldn’t have been able to create the New Deal or Social Security in the 1930s, or enact legislation such as the Civil Rights Act of 1964 and the Patient Protection and Affordable Care Act in 2010. 

Conflict Over a National Bank

The controversy that led to the Supreme Court decision actually began several decades before the lawsuit was even filed. As the Federal Reserve History website details, in 1790, the new nation’s first-ever Secretary of the Treasury, Alexander Hamilton, wrote a report for Congress in which he advocated creation of a federal bank. Hamilton argued that a central, government-controlled financial institution, similar to the Bank of England, was important for stabilizing the young nation’s economy. He envisioned the bank issuing paper money, providing a safe place to keep public funds, collecting tax revenues, and paying government debts. He also thought it could handle private-sector commercial transactions as well.

Hamilton’s idea faced strong opposition from critics such as Thomas Jefferson, who were afraid that a federal bank would become a financial monopoly that undermined state banks. They also feared that it would favor financiers and merchants over farmers, who usually were debtors. Jefferson argued that the Constitution didn’t give the federal government the authority to form corporations such as banks. But in the end, Hamilton’s argument persuaded enough members of Congress to gain passage, and President George Washington signed the bill creating a national bank into law in 1791.

That same year, the first Bank of the United States opened in Philadelphia, and branches subsequently were established in Boston, New York, Baltimore, Charleston, Norfolk, Savannah, Washington, D.C. and New Orleans. The new bank was a public-private institution, with the federal government initially owning $2 million of its stock and private investors holding the other $8 million. But the controversy over the bank continued, and when its charter came up for renewal in 1811, it was narrowly defeated in Congress.

After the War of 1812, however, the U.S. government again found itself heavily in debt, and private-sector financiers such as John Jacob Astor joined with politicians such as Rep. John C. Calhoun to advocate for creation of another federal bank.

In 1816, Congress finally gave in, and the following year, the second Bank of the United States reopened in Philadelphia. The new bank was much more far-reaching in scope than its predecessor, providing extensive credit to farmers and businesses and financing the shipping of goods and agricultural crops both to domestic and foreign markets. The new bank was one of the biggest companies in the nation, and its clout enabled it to control the interest rates that other banks could charge to borrowers.

Maryland Attempts to Tax the Second Bank of the United States

But there was still a lot of opposition. In 1818, Maryland legislators passed a law imposing a stamp tax on currency issued by second Bank of the United States, in an effort to hinder it from doing business. In response, a cashier at the bank’s Baltimore branch, James W. McCulloch, refused to pay the tax. The state then sued McCulloch for $110, the penalty in the law for circulating unstamped banknotes in Maryland.

State officials won their case in the Maryland courts, which led the bank to appeal to the U.S. Supreme Court, which began to hear arguments in the case on Feb. 22, 1819, in a courtroom in the basement of the U.S. Capitol.

Presiding over then-seven-member court was the nation’s fourth Chief Justice, John Marshall. Marshall was a Revolutionary War veteran who had served as President John Adams’ envoy to France and Secretary of State before Adams appointed him to head the court in 1801. Marshall joined the court just weeks before Adams’ successor Thomas Jefferson was set to take over.

Both sides had high-powered lawyers to represent them. Representing Maryland was Luther Martin, the state’s Attorney General, who had served as a delegate to the Constitutional Convention in 1787. Martin had famously walked out of the Constitutional Convention proceedings because he opposed the creation of a strong central government. 

Speaking on behalf of the bank was Daniel Webster, an attorney and skilled orator who served in both the U.S. House and the Senate in his career, and was an advocate of a strong, activist federal government.

Martin argued that because the Constitution didn’t explicitly say that Congress could create a bank, it didn’t have authority. He cited the 10th Amendment, which says that any powers that the Constitution doesn’t delegate to the federal government, or prohibit the states from using, are reserved for the states or the American people. “We insist that the only safe rule is the plain letter of the Constitution,” he said, according to a transcript of the hearing.

Webster, in turn, argued that Article I, Section 8 of the U.S. Constitution, which gave Congress the power “to make all laws which shall be necessary and proper” for carrying out some power that the Constitution does spell out, was sufficient authority. Creating the Bank of the United States, Webster argued, was necessary and proper for the purpose of levying and collecting taxes, borrowing money, supporting armed forces, regulating commerce, and other crucial functions of the government.

On the question of whether or not Maryland or another state could tax the federal bank, Webster said cited the Constitution’s Article VI, which states that laws enacted by Congress “shall be the supreme law of the land,” and said it prohibited states from passing any legislation “which shall be repugnant to a law of the United States.” 

The Marshall Court Verdict

WATCH: The Legislative Branch

After the oral arguments were completed, Marshall and his fellow justices took only a few days to render their unanimous ruling, in which they adopted Webster’s position and rejected Martin’s reasoning. Marshall wrote the court’s opinion himself, as he usually did, and read it aloud to a packed courtroom.

“The subject is the execution of those great powers on which the welfare of a nation essentially depends,” Marshall said. “It must have been the intention of those who gave these powers, to insure, as far as human prudence could insure, their beneficial execution. This could not be done by confiding the choice of means to such narrow limits as not to leave it in the power of Congress to adopt any which might be appropriate, and which were conducive to the end.”

Additionally, Marshall wrote, 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 to carry into execution the powers vested in the general government. This is, we think, the unavoidable consequence of that supremacy which the constitution has declared.”

Significance of McCulloch v. Maryland

Although McCulloch v. Maryland gave the federal government wide-ranging authority, even the ruling wasn’t enough to protect the second Bank of the United States from its political opposition. In 1832, President Andrew Jackson, a vehement opponent of the bank, ordered that the federal government’s deposits be withdrawn and deposited in state banks. This order caused the national bank to lose a lot of its power and influence.

In 1834, the U.S. House of Representatives voted against renewing the bank’s charter, and it faded from existence. However, in the early 1900s, a succession of banking crises prompted Congress to revise the idea of a national bank, and in 1913, the Federal Reserve System was created.

Ultimately, McCulloch v. Maryland made possible the rise of what some have labeled “the administrative state,” in which the government employs officials to oversee many aspects of American life, from environmental issues to labor disputes.

Sources

U.S. Supreme Court, Opinion in McCulloch v. Maryland (1819)

“McCulloch v. Maryland (1819),” Constitutional Rights Foundation.

Reports of Cases Argued and Adjudged in the Supreme Court of the United States, February Term, 1819, Henry Wheaton,

The Spirit of the Constitution: John Marshall and the 200-year Odyssey of McCulloch v. Maryland, by David S. Schwartz, Oxford University Press, 2019.

“John Marshall, the Great Chief Justice,” William & Mary University Law School.

“Luther Martin,” Teaching American History.

“McCulloch v. Maryland Case Summary: What You Need to Know” by Laura Temme, FindLaw.com.

What part of the Constitution did the Supreme Court reinforce when in McCulloch v Maryland it upheld the right of Congress to create a bank?

What amendment does McCulloch v Maryland deal with?