"This provision is made in a constitution intended to endure for ages to come, and, consequently, to be adapted to the various crises of human affairs." — Chief Justice John Marshall
In 1790 Alexander Hamilton, the first Secretary of the Treasury, recommended that Congress charter a Bank of the United States, and in 1791 Congress did so. Hamilton argued that Congress' constitutional power to create the bank resulted from certain powers delegated to Congress in Article I, Section 8, such as the power "to coin money and regulate the value thereof," when combined with the power given Congress in the 18th paragraph of Section 8 "to make all laws necessary and proper for carrying into execution the foregoing powers." Secretary of State Thomas Jefferson argued, on the other hand, that Congress did not have the power under the Constitution to create a bank since nowhere in Article I, Section 8 is such a power granted Congress. Therefore, Jefferson said, under the Tenth Amendment, that power belongs only to the states.
The charter of the First Bank of the United States was allowed to expire, but in 1816 Congress chartered the Second Bank of the United States. The largest branch of this bank was located in Baltimore, Maryland. Like Thomas Jefferson at an earlier time, the state of Maryland did not believe that the U.S. Congress had the power under the Constitution to create a bank, and therefore, Maryland decided to drive the Baltimore branch of the Bank of the United States out of business. In 1818 the Maryland Legislature passed a statute that taxed all banks operating in the state that were not chartered by the state, namely the branch of the Second Bank of the United States in Baltimore. The statute levied a tax of approximately 2 percent on the value of all notes issued by the Bank, or a flat annual fee of $15,000. James McCulloch, the Chief Cashier of the Baltimore branch, refused to pay the tax. The state of Maryland brought suit against McCulloch. After the highest state court in Maryland ruled that McCulloch had to pay the tax, McCulloch appealed to the U.S. Supreme Court.
The Court considered the following questions:
- Under the U.S. Constitution, does the U.S. Congress have the power to create a bank?
- May a state tax an agency of the U.S. government?
Chief Justice John Marshall wrote the opinion for a unanimous Court, which ruled that Congress did have the power under the Constitution to charter the bank. Marshall began by noting: "This government is acknowledged by all to be one of enumerated powers. The principle, that it can exercise only the powers granted to it … is now universally admitted. But the question respecting the extent of the powers actually granted is perpetually arising, and will probably continue to arise, as long as our system shall exist." He then acknowledges that "among the enumerated powers, we do not find that of establishing a bank or creating a corporation. But there is no phrase in the instrument which … excludes incidental or implied powers and which requires that everything granted shall be expressly and minutely described."
Speaking next of what a constitution should do, he writes: "A constitution, to contain an accurate detail of all the subdivisions of which its great powers will admit, and of all the means by which they may be carried into execution, … could scarcely be embraced by the human mind. … Its nature, therefore, requires that only its great outlines should be marked, its important objects designated, and the minor ingredients which compose those objects be deduced from the nature of the objects themselves. … We must never forget that it is a Constitution we are expounding."
Marshall then addresses specifically the question of whether the Constitution authorizes Congress to create a bank. He writes: "Although, among the enumerated powers of government, we do not find the word 'bank' or 'incorporation,' we find the great powers to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct a war; and to raise and support armies and navies." He quickly adds: "… It may with great reason be contended, that a government, entrusted with such ample powers, on the due execution of which the happiness and prosperity of the nation so vitally depends, must also be entrusted with ample means for their execution." He also accurately points out that "the Constitution of the United States has not left the right of Congress to employ the necessary means for the execution of the powers conferred on the government to general reasoning" because, as he notes, "to its enumeration of powers is added that of making 'all laws which shall be necessary and proper, for carrying into execution the foregoing powers …' " Still speaking of this language of the Constitution, Marshall writes: "This provision is made in a Constitution intended to endure for ages to come, and consequently to be adapted to the various crises of human affairs. To have prescribed the means by which government should, in all future time, execute its powers would have been to change, entirely, the character of the instrument and give it the properties of a legal code."
Marshall concludes the Court's reasoning relative to the first question the Court has answered with the following: "We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the Constitution must allow to the national legislature that discretion, with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it in the manner most beneficial to the people. Let 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."
Having outlined the Court's reasons for its decision, Marshall now announces: "After the most deliberate consideration, it is the unanimous and decided opinion of this Court that the act to incorporate the Bank of the United States is a law made in pursuance of the Constitution, and is a part of the supreme law of the land."
In the last part of his opinion, Marshall addresses the second question: whether a state can tax an institution of the national government. He begins with this reminder: "[T]he Constitution and the laws made in pursuance thereof are supreme; that they control the Constitution and laws of the respective states and cannot be controlled by them." He then makes very clear the Court's position relative to this second question: "That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create … are propositions not to be denied. … If the states may tax one instrument, employed by the government in the execution of its powers, they may tax any and every other instrument. … The states have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government. … We are unanimously of opinion that the law passed by the Legislature of Maryland, imposing a tax on the Bank of the United States, is unconstitutional and void."
Check out these extra resources on McCulloch v. Maryland. Read the full opinion or learn more about the Marshall Court.
- The Oyez Project at IIT Chicago-Kent College of Law, McCulloch v. Maryland (1819)
- StreetLaw.org. Landmark Cases of the U.S. Supreme Court: McCulloch v. Maryland
- Bill of Rights Institute: The Constitution of the United State of America (download the full text as a PDF)
- Our Documents: McCulloch v. Maryland (1819)
- PBS.org: "The Supreme Court"
Landmark Cases: McCulloch v. Maryland (1819)
PBS.org: “The Supreme Court”
Lesson Plans: Balancing Federal and State Authority (includes media components)