This Supreme Court Case addressed the issue of Federal power and commerce.
In the landmark Supreme Court case McCulloch v. Maryland, Chief Justice
John Marshall handed down one of his most important decisions regarding the expansion
of Federal power. This case involved the power of Congress to charter a bank,
which sparked the even broader issue of the division of powers between state and
the Federal Government.
In 1816 Congress established the Second National Bank to help control the amount
of unregulated currency issued by state banks. Many states questioned the constitutionality
of the national bank, and Maryland set a precedent by requiring taxes on all
banks not chartered by the state. In 1818 the State of Maryland approved legislation
to impose taxes on the Second National Bank chartered by Congress.
James W. McCulloch, a Federal cashier at the Baltimore branch of the U.S. bank,
refused to pay the taxes imposed by the state. Maryland filed a suit against
McCulloch in an effort to collect the taxes. The Supreme Court, however, decided
that the chartering of a bank was an implied power of the Constitution, under
the “elastic clause,” which granted Congress the authority to “make
all laws which shall be necessary and proper for carrying into execution”
the work of the Federal Government.
This case presented a major issue that challenged the Constitution: Does the
Federal Government hold sovereign power over states? The proceedings posed two
questions: Does the Constitution give Congress power to create a bank? And could
individual states ban or tax the bank? The court decided that the Federal Government
had the right and power to set up a Federal bank and that states did not have
the power to tax the Federal Government. Marshall ruled in favor of the Federal
Government and concluded, “the power to tax involves the power to destroy."
