McCulluch v Maryland
What two questions were asked when the State of Maryland appealed the decision to the US Supreme Court?
Did the Constitution allow Congress to start a bank? And if so, was a state allowed to tax a bank that was part of the federal government?
What did the Supreme Court rule?
In a unanimous decision, the Supreme Court said yes. First, a bank is "necessary and proper" for carrying out the powers related to commerce, borrowing, and taxes. But even without the power to do what is "necessary and proper," Congress would still be able to start a bank. Why? Because sometimes in order to be able to do one thing, you have to be able to do something else.
Why was the State of Maryland unhappy about the US government placing a new bank in Maryland?
Maryland's state banks weren't very happy about having a new competitor in town where people could do their banking. And they didn't like that the Bank of the U.S. had a privileged relationship with the U.S. government. In response, Maryland's government passed a law of its own: Any bank that had not been chartered, or organized, in the state of Maryland had to pay a special tax. The Bank of the U.S. refused to pay, so the state of Maryland sued the bank in state court.
What did the Supreme Court consider regarding regulation in the Maryland case?
Supreme Court decided the case by looking at what the Constitution says. The Constitution gives Congress the power "to regulate Commerce . . . among the several States." Regulate means to make rules about something. Commerce is another word for business or trade. The Constitution also gives Congress the power to borrow money and collect taxes. But the Constitution does not say Congress has the power to start a bank. Could Congress start one anyway?
What did the decision say about the US Government being SUPREME over the state government?
The Court said that if Maryland were allowed to tax the Bank of the U.S., it would have the power to tax the bank so heavily that the bank would be forced to leave the state. The court said that states are not allowed to interfere with the business of the U.S. government. This decision affirmed that the national United States government is "supreme" over state governments, just like the Constitution says. Maryland could not try to force the bank out by making it pay taxes.
WHAT WAS THE KEY POINT OF THE RULING ON CONGRESS POWERS?
This decision expanded the powers of the national government. It did this by saying the government could take any action that was appropriate for carrying out its powers—even if that action was not specifically mentioned in the Constitution, like starting a bank. Congress was only prohibited from doing things the Constitution specifically said it could not do.
What happened with the Bank of United States in 18816? What was its purpose?
in 1816 Congress passed a law creating a national bank. The Bank of the United States was just like any other bank, except it was where the federal government did its banking business. In those days, state banks issued bank notes that functioned like money. The Bank of the U.S. was also allowed to issue bank notes. In exchange for this special treatment, it agreed to loan money to the U.S. government.