the McCulloch vs Maryland decision of 1819 is a landmark decision by the United States Supreme Court that helped to define the scope the power and the authority of the new federal government as it related to the sovereignty of the individual states it's been described by Leading constitutional historians as quote the most important Supreme Court decision in American history defining the scope of congress's powers and delineating the relationship between the federal government and the states this decision established two fundamental principles as it pertains to constitutional law first that the United States contains within it implied powers delegated to Congress in order to implement and perform its expressed Constitutional Powers and responsibilities and two the Constitutional Powers and actions of the federal government cannot be obstructed impeded or prevented by the individual state governments this decision had huge implications for the longevity the stability and the prosperity of the United States political system and the background to the case begins with the ratification of the u.scon almost as soon as the U.S Constitution was ratified in 1788-89 a national disagreement arose concerning the scope and the power of the federal government as it pertains to the chartering of a National Bank in 1790 President George Washington's Secretary of the Treasury a gentleman we've seen before already and talked about Alexander Hamilton proposed a robust economic plan that included among other things the creation of a national bank that would regulate American currency and provide the new federal government with a tool by which to stimulate economic growth in the manufacturing and industrial areas of the national economy the latter of which was sorely lacking in the United States now Hamilton asserted at the time that a national bank and the creation of a National Bank was an implied power of the new federal government on account it was necessary and proper action in order to fulfill the government's obligation to quote promote the general welfare Hamilton based his defense of the bank on what was known as the necessary and proper clause of the U.S Constitution which you see here on the screen now this necessary and proper clause uh was going to be the basis of Hamilton's economic plan and specifically the creation of his National Bank but not all Americans agreed with Hamilton's uh interpretation of this clause for example Washington's Secretary of State Thomas Jefferson as well as his friend James Madison of course strongly opposed the creation of this Bank on the grounds of the United States Constitution did not Grant the express or specified or enumerated power to the new government to Charter a national bank now in spite of Jefferson's objections to the chartering of the First Bank it was chartered and he did support its chartering in 1790 for a period of 20 years now Jefferson had ultimately supported Hamilton's economic plans including this National Bank in exchange for an agreement that the new national capital would be constructed in the southern half of the United States and this is why the capital moved from Philadelphia Pennsylvania to a swamp along the Potomac River in Maryland which today is of course Washington D.C this is known as the compromise of 1790 if you're interested however the issue of whether or not a National Bank was constitutional continued to fester and divide the American people for the next two decades in fact those that supported Hamilton's vision of a strong and active national government as well as a National Bank eventually formed the Federalist Party as we learned in the 1790s and those that supported Jefferson and Madison's vision of a limited national government that was confined only to its expressed or enumerated powers well they eventually of course formed the Democratic Republican Party in the 1790s um and in 1811 uh the bank of the United States uh its Charter expired and was not renewed uh by the federal government which in 1811 was dominated by the Democratic Republican party James Madison was president at the time and Democratic Republicans controlled a majority in both houses of the Congress and so in 1811 the First Bank of the United States ceased to exist but then we had the War of 1812 and in the aftermath of the War of 1812 it became apparent that an economic transformation was underway in the United States that historians have come to regard as the market Revolution which we covered in the last lecture now the war had shown that so long as the United States relied on finished products from foreign imports the nation was vulnerable Whenever there was conflict in Europe um which was our principal trading partner at the time and so British and the French when they had blockaded the United States this had dragged us into the conflict if you remember and so in order to truly become independent the United States needed to gain economic independence which meant it needed to bolster and expand its manufacturing and Industrial capabilities and so a new National Bank could do exactly that could facilitate this but growth and so as we learned in 1816 as part of the American system a second Bank of the United States was chartered for a period of 20 years the bank would be headquartered in Philadelphia Pennsylvania with smaller branches of the bank in some of the larger cities of the Northeast and the Chesapeake regions of the country but not everyone during the Era of Good Feelings was enthused about the chartering of a new National Bank there were some states that had well-established State Banks that would now have to compete with the new National Bank and its branches for capital investment loans in other words if you were under the start a business and you needed an investment loan to do so you weren't now going to go to a State Bank you would go to the closest branch of the bank of the United States because the bank of the United States is the U.S treasury it has deeper Pockets you're going to get a bigger loan at probably a better interest rate and so this really isn't then a competition as you see and so some states were jealous of their State Banks now having to compete with the Second Bank of the United States within their borders and one of these such States was state of Maryland in 1818 the state of Maryland passed laws that were designed to nullify the business actions and the business dealings of a branch of the Second Bank of the United States that was located in Baltimore in Maryland's biggest city Baltimore Maryland now these laws that were passed by the Maryland state house in 1818 they were going to require that the branch of the United States Bank in Baltimore pay a tax to the state of Maryland for every note and every bill of money they loaned out you can imagine that this is going to be a lot of taxes a lot of money in taxes and that was the point what the Maryland state government was trying to do here in 1818 was essentially tax the bank of the United States in Baltimore out of existence now before I tell you the rest of the story interesting side note about this building the Maryland state house if you're ever in Annapolis Maryland which is where the Maryland state legislature is go visit the State House the Maryland State House in Annapolis has been in continuous legislative actions since its construction in 1772. it makes it the longest uh continuously active legislative building in the United States it's incredible and if you go to the Maryland State House you go to the old Senate chamber in that room or in that building because in the old Senate chamber uh is where the very famous event of George Washington resigning his commission as commander-in-chief took place this was where the Confederation congress met uh in 1783 and so this was where George Washington still commander-in-chief of the military came to uh the Confederation Congress and resigned his commission you can go in there there's a statue of Washington right there in the Middle with his resignation papers they have of course up in the gallery you have uh Martha and uh you know it's set up exactly where he stood where she stood so it's I don't know it's kind of neat from a historian standpoint this is pretty cool scene is also uh immortalizing John trumbull's painting from 1826 and again you can see Washington in the middle of the room there uh there's Martha right up there up in the gallery okay I I digress I just had to throw that in because I've spent a lot of time in Maryland uh I've been there in this room it's really cool we really get a sense of the history but you know maybe you don't care all right back to what we were talking about so the state of Maryland has now imposed a series of taxes on all the bills and notes that the bank of the United States branch in Baltimore was going to produce so oddly enough it's a stamp tax right they got it's a show they paid the tax they have to fix all of their money with stamps so you know the irony is here is hilarious um so that's where Maryland comes from right in this case right Maryland is going to be involved as one of the uh plaintiffs in this case so that's where Maryland comes from now who is McCulloch well oddly enough he's a rather insecure or insignificant figure he may have been insecure I don't know um he's an insignificant person from American history he's really only famous because of this case but James mccolick well he was a cashier he's he was the head cashier at the Baltimore branch Bank of the United States and he was the one that was routinely issuing the notes and bills and so he he ended up refusing to pay these taxes and so an Informer uh working at the bank informed the state of Maryland that McCulloch was not paying these taxes and was ignoring these state laws uh and so the state of Maryland brought a lawsuit against James McCulloch there is not a painting of James McCulloch by the way I apologize the one that simply not does not exist again that's how insignificant he is uh so the way this case came about is that the state of Maryland ended up bringing a lawsuit against against James McCulloch on the grounds that he owed the state of Maryland some back taxes and that's how the case came about a case was first of course heard in the Maryland state court system at the state district court system uh and it began in 1818. um and mcculloch's lawyer the person that would defend the bank of the United States in this case uh was the fire brand Daniel Webster he and the he was a just a fantastic lawyer he's a he ends up becoming a very influential person in American politics but at this time he was just a young but brilliant lawyer that had a thunderous voice and spoke with and and spoke of the theatrical Flair now I just want to talk for a second about what the State of Maryland's uh arguments were in this case because McCall you know McCulloch was claiming that these laws imposed upon the bank of the United States by the state of Maryland were not possible like the state could not do what it was doing uh because the bank was part of the federal government so let's talk for a second about what the the State of Maryland's arguments were uh as to why they weren't imposing these taxes and why they thought they could uh the State of Maryland's lawyers essentially argued that the bank of the United States was not warranted by the U.S Constitution because in the Constitution there was no specific or expressed power that could be defined to authorize the creation of the bank Maryland's lawyers then were essentially arguing a strict interpretation of the U.S Constitution gave no power to the federal government to employ and create a bank of the United States and so in order to uh remedy themselves of what the state of Maryland is considering then an unconstitutional action the state of Maryland uh used the arguments of Thomas Jefferson and James Madison uh who authored the Kentucky and Virginia resolutions and just for a second to review what those were in the Kentucky Virginia resolutions of 1798-99 Jefferson famously said that whenever the federal government assumed undelegated Powers not warranted or not given to it in the Constitution that a state then had the right to declare that action or that law or that power to be null and void within its borders this was known as of course the compact Theory which we've already covered and Maryland's lawyers were essentially arguing that they could tax the bank of the United States out of existence through these really high stamp taxes because they had the right to nullify its actions within its borders on account that it was unconstitutional and of course here's James Madison he wrote the Virginia resolution position witchy echoed Jefferson's sentiment about the idea that states possess the right to nullify Federal actions they believe to be unconstitutional and so in this case the State of Maryland's arguments revolved around the ideas of the compact Theory the ideas of Thomas Jefferson and James Madison um now the case was decided at the state district level in favor of the state of Maryland but Webster of course appealed the ruling to the Maryland court of appeals which upheld the ruling but uh Webster was then able to appeal the case to the U.S Supreme Court which heard oral arguments in this case in 1819 and issued its famous decision in the case in March of that year now let's talk about the decision just for a second by first talking about the court the Supreme Court was of course still under the leadership of Chief Justice John Marshall who we've already seen in the Marbury versus Madison Case just to remember just to review this guy is a hardcore Federalist okay hardcore federalist now Marshall's Court identified in this case two important questions um that warranted the involvement of the Supreme Court meaning they saw within this case some questions of constitutionality that warranted the Supreme Court giving a decision and issuing a ruling so let's talk about the decision real quick because the decision really came down two key questions the first was is the Second Bank of the United States constitutional now of course McCulloch says yes and Maryland says no well in this case Marshall's Court ruled that the National Bank was in fact constitutional and he supported his decision that the bank was constitutional really on four principles four principal arguments and I just want to kind of roll through them briefly to get a sense of just how brilliant this decision was number one Marshall said that the bank of the United States was constitutional on the grounds that precedent was involved here meaning that Congress had already chartered a bank in 1791. that was the first bank of the United States and when they had chartered that bank in 1791 they did so after a great debate about it right but ultimately the bank had been signed into law but not just that he argued or he said in his decision that the bank of the United States had been signed into law by a president of the United States with quote 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 the president he's talking about of course was George Washington nothing like invoking George Washington to silence your opponents right so one uh way he defended his decision that the bank was constitutional and he said was there was precedent involved here okay number two the compact theory he argued was false uh Marshall argued that the arguments of Jefferson and Madison in the Kentucky Virginia resolutions that the states had created the Constitution and thus were entitled to judge the federal government whenever it overstepped its Authority Marshall ruled in this case that that's false the states had not been the creator of the U.S Constitution instead he said the people were the true creators of the U.S Constitution and thus Marshall said the people were Sovereign and the people were entitled to judging the actions of the federal government not the states the second area that he defended his decision that the bank was constitutional involved the powers of congress now Marshall admitted right Marshall admitted very improper Clause that we talked about earlier was vague and that the constitution did not Grant a delegate expressly the power to create a National Bank to Congress however however okay he was quick to point out that the U.S Constitution did not expressly prohibit the creation of a bank and in his decision he famously wrote quote in considering the question then we must never forget that it is a constitution we are expounding so he argued in this case that the necessary and proper clause and Marshall supported the idea that Congress had the implied powers to create this bank so long as that bank or as so long as the implied power helped the government and supported the government in its enumerated or its expressed powers and in this decision he famously said these words I want to read to you said let the end be legitimate meaning the implied power the action that's being uh uh disagreed upon here he said 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 the spirit of the Constitution he said they are constitutional now this was interesting because this part of the decision was almost exactly the way Alexander Hamilton had framed his argument in support of the First Bank of the United States so decision then dealt with whether or not the bank of the United States was constitutional and based upon the principal arguments I just gave you Marshall's Court ruled that the bank was now this is why that matters if the bank is constitutional and Falls within the scope of the federal government then it means the bank of the United States is an extension of the federal government it is the federal government itself so that raises another constitutional question the question now raises if the bank is constitutional can a state legally impede its actions right can the state of Maryland Tax the bank of the United States out of existence right and to this part the case Marshall's Court said uh no uh a state could not uh so this question is asking whether a state can obstruct then the Constitutional actions of the federal government Marshall's Court asserted that this was simply not possible uh if the bank was constitutional which his court declares that it is by the way this is unanimous decision 9-0 okay if the bank is constitutional it's an extension of the federal government and if the federal government can be obstructed uh whenever it acts within its constitutional uh Powers this would then challenge the supremacy of the federal government and that's simply not possible uh and to back up his decision here he looked at article 6 uh Clause 2 which is known as the supremacy clause now for all my constitutional lawyers out there this is a big one uh this Clause you can see it says this constitution the laws of the United States shall be the supreme law of the land uh hence the the name of the supremacy clause so what this meant then is that if the National Bank is constitutional then it is an extension of the federal government right and if it's an extension of the federal government then the state of Maryland stamp taxes are obstructing the actions of the federal government from exercising its constitutional Authority and if that is the case and that's what Marshall's Court ruled here in McCulloch vs Maryland and it said that Maryland state stamp tax laws are unconstitutional because they violate the supremacy clause of the U.S Constitution he famously said in this decision that the power to tax involved the power to destroy and the state governments do not have the power to destroy the federal government so I know it was a complicated decision I know there's a lot of legal jargon I know there's a lot of legal back and forth here I hope you understanding why this is a significant decision if you haven't let me sum it up for you this decision was a seminal moment in the entrenchment of the United States federal system of government it really was it affirmed the idea that the U.S Constitution contains implied powers remember that's something we'd been arguing about since the 1790s and this helped right this decision then helped to settle political political disagreements during the early National ERA this period of time we're looking at uh and it settled these National these political disagreements among the American people concerning the authority of Congress in certain matters like National Banks protective tariffs Etc right it affirmed the idea that the constitution grants the federal government implied powers and the second reason this case is important is that it affirmed the supremacy of the federal government over that of the states but only and this is important but only in such cases in which the federal government acts constitutionally okay meaning if the federal government is acting within its Constitutional Powers the states cannot impede it that would then violate the supremacy clause of the U.S Constitution now this was obviously as you can imagine a devastating blow to the ideas of Jefferson and Madison's compact Theory but remember John Marshall was an Uber Federalist and absolutely despised Jefferson and Madison so he had no problem taking them down a peg or two so just to review this court case was significant because it affirmed the idea the U.S Constitution contains implied powers and that was going to help settle political disagreements in the early National era but it also affirmed the supremacy of the federal government over that of the states whenever the federal government exercises its constitutional power and authority and the last thing I'll say about the McCulloch vs Maryland decision is that it came at a time during the Era of Good Feelings that helped to sustain right and really Manifest this era of nationalism because this decision really did help to politically stabilize a Young Nation as the nation grew