McCulloch V. Maryland 1819

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McCulloch V. Maryland1819
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Background Info/Facts

• April 1816 Congress chartered the Second National
  Bank
• Some people felt that the National Bank harmed
  State economies and businesses
• Maryland Passed a Stamp tax on paper used to make
  money only for Federal Banks affecting the
  National Bank
• James McCulloch refused to pay the tax and the
  state of Maryland brought a suit against him.

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Background Info/Facts

• Second National Bank established in Maryland
• Many people opposed the bank being established in
  the state of Maryland so
• Maryland placed a tax on the bank since it was
  residing in the state of MD
• James McCulloch (bank clerk) wasnt obeying the
  tax
• McCulloch taken to court by the state of Maryland
  and was ruled against for breaking state law of
  NOT imposing the tax
• Case appealed to the highest court level in MD
  and went to Supreme Court

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Questions National Law V. State Law

• Does congress have the power to establish a bank
  in the state of Maryland?
• Does the state of MD have the power to tax the
  bank for being established?
• Does any state have the right to tax the United
  States Government (Federal)?
• Is the National Bank legal underlying question?

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Arguments for Both Sides

• Maryland
• Did have the right to tax because it was not
  forbidden by the Constitution!
• The National Bank is not even legal!
• McCulloch
• States forbidden to tax anything of the National
  government beyond real property!
• Necessary for Congress to create and coin money,
  collect taxes and borrow money!
• Necessary and Proper Clause Elastic Clause!
• Article 1 Section 8 Clause 18
  (Toma!)

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Ruling

• Congress HAS the power to establish a national
  bank in the state of Maryland!
• Maryland DOES NOT have the power to tax the bank!
• taxing a national institution is an indirect tax
  on citizens of other states ? UNCONSTITUTIONAL!
• Since the bank is legal the tax is a violation of
  the principle of National Supremacy!

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Significance

• States are bound to obey the Constitution
  under the Supremacy Clause (Supreme Law of Land)
• Necessary and Proper Clause establishing
  banks is not listed in Const., but to do what is
  necessary and proper to carry out commerce and
  monetary issues is!