- [Narrator] McCulloch versus Maryland may appear to be an
old esoteric case about bank charters and taxes. But it's really about a power struggle of constitutional proportions
between the States and the Federal Government. The consequences of that struggle continue to reverberate today. In 1816, Congress passed an act that created the Bank
of the United States. A year later, the bank
opened a branch in Maryland. To take a shot at the new, all-powerful federal government, Maryland
passed an act in 1818 that imposed a $15,000 annual tax on all out-of-state banks
operating in the State. The act appeared neutral on the service, but it practically targeted
the Bank of the United States which was the only out-of-state bank in Maryland at the time. James McCulloch, the cashier of the Bank of the United States, refused to succumb to Maryland's pressures and refused to pay the tax. In response, Maryland sued McCulloch in Baltimore County Court. The trial court sided with Maryland, and ordered McCulloch to pay the tax. The court of appeals affirmed, and McCulloch petitioned for review in the United States Supreme Court. The Court was faced with two questions. First, does Congress have an implied constitutional power to create a bank? Second, if Congress does have that power can states tax a federally created bank? The court held that Congress has the constitutional authority to charter the federal bank, and that the states are
prohibited from taxing it. Chief Justice John Marshall
authored the court's unanimous decision. Marshall was one of the most influential Chief Justices in United States' history. Before his career on the court, a young Marshall had fought
in the Revolutionary War. At the time, Americans
instinctively thought of themselves as citizens of their state, rather than as United States citizens. But following Marshall's military service, Marshall came to think of
himself as an American first, and a Virginian second. This hierarchy is evident
in his McCulloch opinion, which elevates the national
government over the states. Marshall acknowledged that
the Federal Government is one of limited powers, and that the authority to charter a bank does not expressly appear
in the Constitutional text. Nevertheless, Marshall
concluded that Congress' powers extend beyond those that
are expressly enumerated in the Constitution. Congress has implied powers
as well as enumerated powers. According to Marshall, when the Constitution authorizes a particular end, Congress
must also be given the implied means to accomplish that end. In support, Marshall cited The
Necessary and Proper Clause, which authorizes Congress to make all laws necessary and proper to
execute its express powers. Maryland argued that the
phrase necessary and proper means that Congress can
create only those laws that are absolutely essential to carry out its express powers. Marshall disagreed with
this interpretation, and held that the word necessary refers to anything that
is useful or convenient for carrying out Congress' express powers. Applying this interpretation,
Marshall held that a federal bank was useful for raising and distributing money,
which related to Congress' express authorities under
Article One, Section Eight. Under this Section,
Congress can tax and spend for the general welfare, borrow money, regulate commerce, and
raise and support armies, among other things. All of these duties were
aided by the Federal Bank. Marshall next went on to discuss whether the State of Maryland
could tax the Federal Bank. Marshall famously declared, "The power to tax "involves
the power to destroy." Further, Marshall noted that federal laws are supreme over state laws. Reading these two principles together, Marshall held that a state law cannot inhibit a federally
created institution. He concluded that it
would be inappropriate for a federal bank, created
to serve the entire nation, to be subject to the taxes of
a single state like Maryland. The Court reversed the
judgment of the Maryland court, but the conflict wasn't over yet. After the opinion was announced, Maryland's attorney general
instigated an indictment against McCulloch, the bank's cashier, for conspiracy to
defraud the Federal Bank. In one fell swoop, Chief Justice Marshall announced a landmark decision, that gave Congress broad, implied powers to implement its express
Constitutional authorities. By doing so, Marshall shut down
the State's rights argument brought by Maryland, and set the stage for the continued expansion of
the young federal government. (pencil writing)