McCulloch v. Maryland

, who argued on behalf of McCulloch and the U.S. government in McCulloch v. Maryland Almost immediately after the ratification of the U.S. Constitution in 1788, a major public debate arose over whether to establish a national bank for the United States. Upon George Washington's inauguration in 1789 as the first President of the United States, his Secretary of the Treasury, Alexander Hamilton, proposed creating a national bank to regulate American currency and deal with national economic problems. Washington's Secretary of State, Thomas Jefferson, strongly opposed the bank's creation, fearing it would usurp power from the individual states and concentrate it to a dangerous degree in the central federal government. Congress created the First Bank of the United States in 1791 with a 20-year charter, but the issue continued to be controversial. Those who supported Hamilton's vision of a stronger central government eventually formed the Federalist Party, while those who opposed him and supported Jefferson's vision of a decentralized government that focused on states' rights formed the Democratic-Republican Party. The First Bank's charter expired in 1811 and was not renewed. However, national economic problems in the aftermath of the War of 1812 prompted Congress to pass similar legislation in 1816 to create the Second Bank of the United States. The U.S. government only owned 20 percent of the bank's equity, and many state governments resented the bank for calling in loans it had made to them. Consequently, some states passed laws designed to hinder the bank's operation, while others simply tried to tax it. In 1818, the Maryland General Assembly—Maryland's state legislature—passed a law levying a $15,000 annual tax on any bank operating in Maryland that was issuing notes and bills that were not properly stamped by Maryland's Treasury, the Western Shore Treasury. James William McCulloh, a cashier of the Baltimore Branch of the Second Bank of the United States, issued unstamped bank notes to Baltimore resident George Williams. The lawsuit was filed by John James, an informer who sought to collect half of the fine, as provided for by the statute. The Bank was represented by Daniel Webster. The case was appealed to the Maryland Court of Appeals, where the state of Maryland argued that "the Constitution is silent on the subject of banks." It was Maryland's contention that without specific constitutional authorization for the federal government to create a bank, any such creation would be rendered unconstitutional. The court upheld Maryland. The case was then appealed to the Supreme Court. ==Decision==

The Court determined that Congress had the power to create the Bank. Chief Justice Marshall supported his conclusion with four main arguments: Firstly, he argued that historical practice established Congress's power to create the bank. Marshall invoked the creation of the First Bank of the United States in 1791 as authority for the constitutionality of the second bank. Secondly, Marshall rebutted the argument that states retain ultimate sovereignty because they ratified the constitution: "The powers of the general government, it has been said, are delegated by the states, who alone are truly sovereign; and must be exercised in subordination to the states, who alone possess supreme dominion." Marshall contended that it was the people who ratified the Constitution and thus the people, not the states, who are sovereign. Fourthly, Marshall supported his opinion textually by invoking the Necessary and Proper Clause, which permits Congress to seek an objective while it exercised its enumerated powers as long as that objective is not forbidden by the Constitution. In liberally interpreting the Necessary and Proper Clause, the Court rejected Maryland's narrow interpretation of the clause that the word "necessary" in the clause meant that Congress could pass only laws that were absolutely essential in the execution of its enumerated powers. The Court rejected that argument, on the grounds that many of the enumerated powers of Congress under the Constitution would be useless if only laws deemed essential to a power's execution could be passed. Marshall also noted that the Necessary and Proper Clause is listed within the powers of Congress, not its limitations. The Court held that the word "necessary" in the Necessary and Proper Clause does not refer therefore to the only way of doing something but applies to various procedures for implementing all constitutionally-established powers: "If 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." That principle had been established many years earlier by Alexander Hamilton: Chief Justice Marshall also determined that Maryland could not tax the bank without violating the constitution since, as Marshall commented, "the power to tax involves the power to destroy". The Court thus struck down the tax as an unconstitutional attempt by a state to interfere with a federal institution, in violation of the Supremacy Clause. The opinion stated that Congress has implied powers, which must be related to the text of the Constitution but do not need to be enumerated within the text. ==Significance==

The case is considered an important moment in the development of federalism in the United States, articulating a balance between federal powers and state powers. Marshall also explained in the case that the Necessary and Proper Clause does not require all federal laws to be necessary and proper and that federal laws that are enacted directly pursuant to one of the expressed, enumerated powers granted by the Constitution do not need to comply with the Necessary and Proper Clause, which "purport[s] to enlarge, not to diminish the powers vested in the government. It purports to be an additional power, not a restriction on those already granted." Although McCullough categorically prevents the federal government from bearing the legal burden of a state tax, this does not mean it is unconstitutional whenever a state tax affects the federal government in any situation. For example, the Supreme Court held in Arizona Department of Revenue v. Blaze Construction Co. that a state can tax the revenue a private government contractor earns by working for the federal government. The economic burden of this tax may fall on the federal government in the form of higher expenses, but the legal burden does not. Therefore, that sort of tax is constitutional. ==Criticism==

Though Marshall rejected the Tenth Amendment's provision of states' rights arguing that it did not include the word "expressly," unlike the Articles of Confederation, which the Constitution replaced, controversy over the decision's impact on federalism has persisted. Legal scholar Raoul Berger argued that Marshall's interpretation marked an "audacious departure" from the original design of the Constitution, undermining the original federal government structure intended by the Founders. Compact theory also argues that the federal government is a creation of the states and that the states maintain superiority. Unlike Marshall, his successor, Roger B. Taney, established dual federalism by which separate-but-equal branches of government are believed to be a better option. Legal scholars such as Gary Lawson have contended that Marshall misinterpreted the Necessary and Proper Clause of the Constitution. Lawson argues that Marshall equated "necessary" with "convenient" or "useful," which permitted an overly broad expansion of congressional power. Legal scholar Nelson Lund has argued that Marshall's ruling, "invited congressional overreach and gave inadequate weight to the powers of the states." Lund and others have argued that the decision set a precedent that gave too much discretion to Congress, expanding its constitutional powers. ==Later history==

McCulloch v. Maryland was cited in the first substantial constitutional case presented before the High Court of Australia in ''D'Emden v Pedder (1904), which dealt with similar issues in the Australian Federation. While recognizing American law as not binding on them, the Australian Court nevertheless determined that the McCulloch'' decision provided the best guideline for the relationship between the Commonwealth federal government, and the Australian states, owing in large part to strong similarities between the American and Australian constitutions. ==See also==