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The Case of McCulloch v. Maryland: Summary, Decision & Significance

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  • 0:02 Summary of the Case
  • 1:43 Decision
  • 3:08 Significance
  • 3:43 Lesson Summary
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Lesson Transcript
Instructor: Stephen Benz

Stephen has taught history, journalism, sociology, and political science courses at multiple levels, including the middle school, high school and college levels.

One of the landmark cases of the early Supreme Court, McCulloch v. Maryland determined if the United States government had the right to establish a bank in Maryland and if the state had the right to tax the government for doing so. We'll discuss the case's decision and significance.

Summary of the Case

In the early days of the United States, there were a lot of questions lingering in the minds of Americans. One of the most compelling questions facing the young nation was how much power the federal government really held. Were the powers simply limited to the small list of items spelled out in the Constitution? Were the states stronger than the national government?

A landmark case that answered questions of federal power and state power and affected America's development as a nation was McCulloch v. Maryland (1819). In 1816, Congress developed the Second Bank of the United States of America (not to be confused with our modern-day Bank of America!). The Second Bank was to serve the common purpose of any bank, issuing and receiving money from citizens. But when the bank opened a branch in Baltimore, MD, legislators in Maryland became furious. The federal government had not asked for permission to open the bank, and it was competing with other banks established by the state. Consequently, the state legislature of Maryland passed a law taxing all banks in Maryland that were not chartered by the state. Since the Second Bank of the United States of America was the only bank with that situation, everyone recognized that this was essentially a direct tax on the Second Bank.

The director of the Second Bank's Baltimore Branch, James William McCulloch, refused to pay the tax. As a result, the state of Maryland sued, taking the case to the Maryland Court. The Maryland judges upheld the Maryland law, saying that the Constitution of the United States did not grant the federal government the power to enact a bank. The case then went to the Supreme Court.

Decision

The Supreme Court ruled that the United States government did have the right to establish a bank in Maryland and that the state of Maryland could not tax the bank for doing so. Led by John Marshall, one of the most famous Chief Justices of the Supreme Court, the Court ruled that Congress had the right to establish a bank because of the necessary and proper clause of the Constitution.

This clause holds that the Congress can enact any law it deemed necessary and proper to carry out the duties given to it under the Constitution. So, even though the Constitution did not explicitly state that the federal government could establish a bank, Marshall concluded that it would be necessary to have a bank if Congress was going to regulate interstate commerce. These are part of the implied powers that he argued are given to the federal government in the Constitution. Implied powers are powers not specifically defined by the Constitution, but that are necessary to carry out expressed powers.

Similarly, a state government could not tax the federal government because such an action would destroy the federal government's effectiveness, and this was not what the Framers had intended when they drafted the Constitution. Essentially, the Supreme Court ruled that the United States government was not violating the Constitution in establishing a bank branch in Maryland, and the state of Maryland could not do anything about it.

Significance

If McCulloch v. Maryland had the opposite ruling, then the United States federal government would look very different today. The ruling allowed the federal government to greatly expand its powers because of Marshall's liberal interpretation of the 'necessary and proper' clause. Because of this, Congress could expand its federal power and play a stronger and more active role. The McCulloch v. Maryland case also established the federal government's supremacy over state governments because Marshall's court ruled that state governments could not tax the federal government.

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