Lecture Notes: McCulloch vs. Maryland

Introduction

• Case Overview: McCulloch vs. Maryland is a significant case involving a constitutional power struggle between States and the Federal Government.
• Historical Context:
  • In 1816, Congress created the Bank of the United States.
  • 1817: Bank opened a branch in Maryland.
  • 1818: Maryland imposed a $15,000 annual tax on out-of-state banks, targeting the Bank of the United States specifically.

Key Events

• James McCulloch's Role:
  • Cashier of the Bank of the United States.
  • Refused to pay Maryland's tax, leading to a lawsuit.
• Court Decisions:
  • Trial court sided with Maryland, ordering McCulloch to pay the tax.
  • Court of appeals affirmed the decision.
  • McCulloch petitioned for review in the U.S. Supreme Court.

Supreme Court Considerations

• Legal Questions:
  1. Does Congress have the implied constitutional power to create a bank?
  2. Can states tax a federally created bank?

Supreme Court Ruling

• Chief Justice John Marshall's Decision:
  • Congressional Authority:
    • Congress has the constitutional authority to charter a federal bank.
    • States are prohibited from taxing it.
  • Influence of Chief Justice Marshall:
    • A Revolutionary War veteran who prioritized national government over state rights.

Constitutional Implications

• Implied Powers of Congress:
  • Marshall asserted that Congress' powers extend beyond those expressly enumerated in the Constitution.
  • Congress has implied powers as well as enumerated powers, supported by the Necessary and Proper Clause.
• Interpretation of "Necessary and Proper":
  • Maryland's view: Necessary means "absolutely essential."
  • Marshall's view: Necessary means "useful or convenient."

Impact of the Ruling

• Federal Bank's Role:
  • Aids Congress' duties such as taxing, spending for the general welfare, borrowing money, regulating commerce, raising and supporting armies.
• State Taxation and Federal Supremacy:
  • Marshall declared "The power to tax involves the power to destroy."
  • Federal laws are supreme over state laws; states cannot tax federally created institutions.

Aftermath and Legacy

• Supreme Court reversed Maryland court's decision.
• Maryland's attorney general indicted McCulloch for conspiracy to defraud the Federal Bank.
• Significance of the Decision:
  • Landmark decision granting Congress broad, implied powers.
  • Shut down the state's rights argument and paved the way for federal government expansion.

Conclusion

• Long-term Effects:
  • Set a precedent for the broad interpretation of federal powers.
  • Continues to influence the balance of power between states and the federal government today.