For several decades after the Constitution was ratified, interpretation of the Necessary and Proper Clause continued to be a powerful bone of contention between the
Democratic-Republican Party, the
Federalist Party, and several other political parties. The first practical example of that contention came in 1791, when Hamilton used the clause to defend the constitutionality of the new
First Bank of the United States, the first federal bank in the new nation's history. Concerned that monied aristocrats in the
North would take advantage of the bank to exploit the
South, Madison argued that Congress lacked the constitutional authority to charter a bank. Hamilton countered that the bank was a reasonable means of carrying out powers related to taxation and the borrowing of funds and claimed that the clause applied to activities that were reasonably related to constitutional powers, not only those that were absolutely necessary to carry out said powers. To embarrass Madison, his contrary claims from the
Federalist Papers were read aloud in Congress: Eventually, Southern opposition to the bank and to Hamilton's plan to have the federal government assume the war debts of the states was mollified by the transfer of the nation's capital from its temporary seat in
Philadelphia to Washington, DC, a more southerly permanent seat on the
Potomac, and the bill, along with the establishment of a
national mint, was passed by Congress and signed by President
George Washington.
McCulloch v. Maryland The clause, as justification for the creation of a national bank, was put to the test in 1819 during
McCulloch v. Maryland in which
Maryland had attempted to impede the operations of the
Second Bank of the United States by imposing a prohibitive tax on out-of-state banks, the Second Bank of the United States being the only one. In the case, the Court ruled against Maryland in an opinion written by Chief Justice
John Marshall, Hamilton's longtime Federalist ally. Marshall stated that the Constitution did not explicitly give permission to create a federal bank, but it conferred upon Congress an implied power to do so under the Necessary and Proper Clause so that Congress could realize or fulfill its express taxing and spending powers. The case reaffirmed Hamilton's view that legislation reasonably related to express powers was constitutional. Marshall wrote:
McCulloch v. Maryland Without that clause, there would have been a dispute about whether the express powers imply incidental powers, but the clause resolved that dispute by making those incidental powers be expressed, instead of implied. ==Later history==