In 1816, Congress chartered the Second Bank of the United States. (A first bank had been established in 1791 during the administration of George Washington but had been allowed to lapse.) The bank adopted strict credit policies leading to an economic depression. Several states strongly opposed the creation of the Second Bank and its tight money policies. Six states, including Maryland, imposed taxes on the operations of the bank within their jurisdictions. James McCulloch, the cashier of the Baltimore branch of the bank, refused to pay the tax. Maryland filed suit for the collection of the debt, and the case was eventually appealed to the U.S. Supreme Court.
In his 1819 opinion, Chief Justice John Marshall addressed two issues. First, since the authority to charter such a bank was not listed among the powers granted to Congress by the Constitution, did Congress have the constitutional authority to establish the bank? Second, if Congress had the constitutional authority to charter the bank, could Maryland impose a tax on its operations?
Marshall agreed that the power to create the bank was not among the enumerated powers of the national government, but according to Marshall, if the Constitution were to list all of the powers of Congress, it would have the “prolixity of a legal code.” Instead, the Constitution could mark only the “great outlines” of federal authority, leading Marshall to turn to the doctrine of implied powers. For Marshall, the chartering of the bank was only a means to accomplish the great ends of government—levying and collecting taxes, borrowing money, supporting armies, and conducting war—all powers that the Constitution specifically delegates to Congress. Furthermore, Article I, Section 8, of the Constitution, after enumerating the specific powers of Congress, empowers Congress to “Make all laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” For Marshall, “necessary and proper” did not mean “indispensable,” but rather “useful,” “needful,” or “conducive to.” In upholding the power of Congress to charter the bank, Marshall concluded, “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.”
After upholding the power of Congress to create the bank, Marshall then turned to Maryland’s power to tax it. Citing the Supremacy Clause of the Constitution (Article VI, Section 2), Marshall concluded that no state could ever have the power to disable an instrument of the national government. And since “the power to tax is the power to destroy,” Maryland’s taxation of the bank was unconstitutional.
The advocates of states’ rights vigorously criticized Marshall’s opinion in McCulloch v. Maryland. John Taylor, for example, wrote that “as ends may be made to beget means, so means may be made to beget ends,” leading ultimately to a government of unlimited powers. In the long run, however, Marshall’s broad construction of federal power has won out. Albert Beveridge wrote that Marshall’s opinion in McCulloch is “among the very first of the great judicial utterances of all time.” Certainly Marshall’s opinion shaped future thinking about the nature of federal authority and is widely accepted among scholars today.
Gerald Gunther, ed., John Marshall’s Defense of McCulloch v. Maryland (Stanford, CA: Stanford University Press, 1969); Mark R. Killenbeck, McCulloch V. Maryland: Securing a Nation (Lawrence, KS: University Press of Kansas, 2006); Richard E. Ellis, Aggressive Nationalism: McCulloch v. Maryland and the Foundation of Federal Authority in the Young Republic (New York: Oxford University Press, 2007); and C-Span, http://landmarkcases.c-span.org/Case/16/McCulloch-v-Maryland.