Landmark Supreme Court Cases : McCulloch V Maryland (1819)
McCulloch V Maryland was a landmark case decided by the Supreme Court in 1819 that affirmed the superior status of the Federal government relative to the states. Supreme Court also affirmed Congress’ role and its powers through the case. It reasserted the implied powers of the Congress governed by the Necessary and Proper Clause of Article 1, Section 8 of the Constitution. Congress had chartered the Second Bank of the United States in 1816. While the bank was controlled by private stockholders, federal funds were deposited there. The bank had the authority to issue notes.
Based on the privileges the bank had been granted it had agreed to loan the Federal government money in place of taxes. Therefore, the Bank of United States was considered a competitor by the other banks who could not like the privileges and the special position it had been provided with. With the depression of 1818, these banks started failing and laid the blame on BUS.
Maryland decided to impose a major tax on any bank that was not chartered within the state. After the Baltimore branch of the bank refused to pay the taxes, the state sued its cashier McCulloch. McCulloch’s claim was that the tax applied by the state of Maryland on the bank was not constitutional. After a state court and court of appeals ruled in the favor of the state, McCulloch appealed to the Supreme Court. Supreme Court reviewed the case in 1819.
The Supreme Court ruled in this case that the while BUS was constitutional, the tax applied by Maryland on it was unconstitutional. In this regard the court referred to the Necessary and Proper Clause of Article 1, section 8 that granted the Congress power to pass laws necessary to execute its enumerated powers. Among the enumerated powers of the Congress are its powers to regulate interstate commerce, collect taxes as well as borrow money.
In its famous statement the court said that if the ends were legitimate and in the scope of the constitution, and if the means used to achieve it proper and consistent with the spirit of the constitution, the act would be considered constitutional. Since the bank’s creation was proper under Congress’ power to collect taxes, borrow funds and regulate interstate commerce, its formation was constitutional as per the Necessary and Proper Clause.
Apart from it, the court in its ruling, also stated that the state did not have the power to tax the bank. It was because the Supremacy Clause of the US constitution lays down clearly that state laws that conflict with the central laws must not be considered enforcable. Justice Marshall clearly sated the supremacy of the Federal government and that the laws that it made in accordance with the constitution were the Supreme laws of the land.
The federal government despite being limited in its power was above the states. Maryland’s act was against the Federal government and therefore unconstitutional. The court also strictly stated against such actions by individual states that the sovereignty of the Union was rested in the people of the United States and not in individual states. The federal government is the government of the people and it exercise its powers on them directly for their benefit. The tax Maryland applied challenged the constitutional sovereignty of the Federal government.