In the case McCulloch v. Maryland, the Supreme Court considered whether Congress had the power to create a national bank and whether the state of Maryland had interfered with congressional powers by taxing the national bank.
The Supreme Court ruled in favor of McCulloch and found that the state of Maryland had interfered with one of Congress’s implied powers.
Background of the case
After the founding of the United States, one of the first things the new government had to address was the debt the nation had incurred fighting the Revolutionary War. Secretary of the Treasury Alexander Hamilton came up with a plan to create the Bank of the United States, a national bank, in order to absorb state debts from the war and to create a national currency. But not everyone agreed that the federal government had the power to create a bank.
One of the bank’s most vocal opponents was Thomas Jefferson, who argued that it was not within the federal government’s explicit powers to create a national bank and that doing so was an overreach of federal power. Despite opposition to the bank, Congress passed the first charter of the Bank of the United States in 1791, granting it the power to operate for twenty years.
But when it came time to renew the bank’s charter in 1811, the measure was defeated in Congress by one vote. It would take another five years for Congress to pass the second charter of the Bank of the United States, but in 1816, the national bank was reestablished. Once again, conflict flared over whether Congress had the power to create a national bank.
The government of Maryland did not want a national bank and did not want a branch in Maryland. Nevertheless, the branch opened in 1817. The state of Maryland decided to tax the Baltimore branch of the Bank of the United States in an effort to run it out of business.
The bank’s cashier, James W. McCulloch, refused to pay the tax. In response, the state of Maryland sued him. Both the state trial court and the state supreme court agreed that McCulloch had to pay the tax. McCulloch appealed to the US Supreme Court, which heard the case in 1819.
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