- Hey, this is Kim from Khan Academy
and today we're learning about McCulloch versus Maryland,
a Supreme Court cases decided in 1819
that helped to define the relationship
between the federal government and the states.
The question at issue in this case
was whether the state of Maryland
could tax the Baltimore branch
of the Bank of the United States.
And whether Congress even had the power
to create a Bank of the United States in the first place.
To learn more, I sought out the help of two experts.
Randy Barnett is the Carmack Waterhouse Professor
of Legal Theory at the Georgetown University Law Center
and Director of the Georgetown Center for the Constitution.
Neil Siegel is the David W. Ichel Professor of Law
and Professor of Political Science at Duke Law School.
So, Professor Barnett, could you kind of set the stage
for us, what was happening in this case?
What was the overall context?
- Well, McCulloch versus Maryland was a culmination
of a 30-year old constitutional controversy.
In fact, it was the culmination
of one of the earliest controversies
that we had in the country, and that is over
whether Congress had the power to establish
a national bank, a bank that would be a corporation
formed by Congress and which would have certain privileges
that Congress granted it.
This was a proposal that had been made
by Alexander Hamilton when he was Secretary of the Treasury
in the Washington administration in the very first year
of the Washington administration,
and it went to Congress, and there was a very, very robust
debate in Congress as to whether this measure
was within the powers of Congress to enact.
Eventually, Congress voted that it was,
and then before he signed the bill,
President Washington asked some of his cabinet members
to give him their opinion on whether it was constitutional,
and he heard from several of his cabinet members.
He heard from his Attorney General, Edmund Randolph,
he said it was unconstitutional.
He heard from his Secretary of State, Thomas Jefferson,
Jefferson said it was unconstitutional.
And finally, he heard from his Secretary of Treasury,
who had proposed it, Alexander Hamilton,
who said it was constitutional.
And Washington signed the bill and it became law.
And it established the First National Bank
of the United States.
- [Siegel] This case arose in May of 1818
when Maryland sued McCulloch, and he was the cashier
at the Baltimore branch of the bank.
And Maryland sued him in state court
to recover a tax assessed by Maryland on the bank.
And this was a time of intense hostility
towards the national bank in a number of states.
The state banks competed with the national bank,
and there had been an economic panic in 1818,
when the U.S. bank halted its loans
and state banks that had loans
from the federal bank were crippled.
And in response, a number of states
passed nearly annhilative taxes on the federal bank,
and that's the environment in which, in 1819,
McCulloch against Maryland came before the Supreme Court.
- [Kim] I find this very interesting,
because this is something that we talk a lot about
in the early 19th century, the Bank of the United States.
And what was good about it and what was bad about it.
And there are certain people who were certainly enemies
of the bank, like Thomas Jefferson,
and then later, Andrew Jackson.
Why did people object
to the Bank of the United States so much?
- [Siegel] Yeah, there were a variety of objections.
There was a real political policy disagreement
about whether it was a good idea.
Hamilton had a nation-building, economy-building objective
as the first Secretary of the Treasury.
He wanted to pay off both the national debt
and the state debts from the Revolutionary War,
which remained unpaid.
He was emphasizing manufacturing and commerce
and a national bank was a key part of his plan.
The bank would make it easier for the national government
to raise taxes, to pay off debts,
to make payments, to obtain short-term loans.
The notes issued by the bank could function
as a national currency, it could also provide
a source of capital for financing businesses.
But the opponents had different ideas.
- [Barnett] One of the leading opponents
in Congress was James Madison, who at the time
was a representative from Orange County, Virginia.
And what concerned him, and I think it's what concerned
many people, was no expressed enumerated power
in the Constitution for Congress to make a bank.
There was an enumerated power to create a post office,
but there was no enumerated power to create a bank.
So the question is whether the failure
or the silence of the Constitution
on whether there was this power
should be construed in favor of having such a power,
or not having such a power.
And Madison's concern was that to imply such a power,
especially when the way in which it was being implied
was very remotely connected to one of the enumerated powers
that were in the Constitution,
was very dangerous because by that form of reasoning,
Congress can essentially do whatever it wished,
and that would violate the basic pledge
that this was going to be a national government
of limited and enumerated powers.
- [Kim] So in Congress, what was the power
that proponents of the bank used
to justify passing it?
- [Barnett] The principle power that they used
is called the Necessary and Proper Clause.
The Necessary and Proper Clause says Congress
shall have power to make all laws
which shall be necessary and proper
for carrying into execution its foregoing powers,
those powers on the list, and all other powers
vested by the Constitution in the government
of the United States or any department or officer thereof.
This is called the Necessary and Proper Clause.
It allows for Congress to make laws
incidental to the enumerated powers
to effectuate, or carry into execution, those powers.
And supporters of the bill said
that the bank carried into execution a number of powers,
it carried into execution the taxing power,
it carried into execution the commerce power.
The opponents of the bank said, well,
it may do that, but it only does that
in a very attenuated way.
And therefore, if it can do this
in order to effectuate that power,
then it pretty much can do anything
to effectuate power, and therefore
it can pretty much do anything.
And that's a big problem.
- [Kim] So Maryland sues McCulloch, and then what happens?
- [Siegel] Maryland sues McCulloch,
because Maryland didn't pass the annihilative tax,
it was a tax of around two percent of the banknotes
issued by the National Bank.
And Maryland won in the state trial court,
and Maryland won in the state supreme court,
and this was really not a surprise
at the time, - (laughter)
state courts were, let's just say,
solicitous of the views of the state
and after the state supreme court decided,
the case went to the U.S. Supreme Court on appeal.
So even though Maryland sues McCulloch,
by the time it gets to the Supreme Court,
it's called McCulloch against Maryland
because McCulloch, the cashier at the Baltimore branch,
is now the petitioner, he's requesting
the U.S. Supreme Court review of the decision
of the Maryland high court.
And McCulloch is asking the Supreme Court to intervene
and, in essence, side with the federal government
over the state.
- [Kim] Interesting.
So what are the constitutional issues at stake
once the McCulloch case gets to the Supreme Court?
- [Barnett] Well, the Supreme Court
in a very lengthy opinion has to consider
a couple of different matters.
First it has to consider whether the states
have the power to tax a federal entity like a bank.
And that's where you have the famous statement
by John Marshall that says, "the power to tax
can be the power to destroy."
What he's talking about is the power of states
to tax a federal entity like a bank,
might be the power of states to destroy
a federal entity, and he ruled against that claim.
And he basically argued that states
couldn't have that kind of power.
- [Siegel] And a threshold question
before the Supreme Court decides that question
of state authority to tax the national government,
is whether the national bank can exist to begin with.
Is there federal power to create a national bank?
Part of what Maryland is arguing
is that there's no federal power to create the bank,
and so in fact, this taxation that it's engaging in
is unproblematic.
The first question is whether the federal government
can create the bank, and if the answer is no,
then the case is over.
If the answer is yes, then you get to the second question
of whether the states can tax this part
of the federal government, the national bank.
- [Kim] So at this time, the Chief Justice
of the Supreme Court is John Marshall,
very well-known as being kind of the Chief Justice
that brought the Supreme Court
to be a major player in the U.S. governmental system.
How did he interpret what was going on,
what did he and the other justices decide?
- [Siegel] He borrowed extensively
from Hamilton's arguments.
And so Marshall adopted Hamilton's arguments
in defense of the constitutionality of the bank,
that Hamilton originally articulated back in 1790, 1791.
So the court held an opinion by the great Chief Justice,
first, that Congress does possess the authority
to create the bank and secondly, that states
have no authority to tax the bank.
- [Barnett] And that is what Marshall
concluded was within Congress' power
under the Necessary and Proper Clause to enact.
And in fact, when it got to the court
in McCulloch versus Maryland, it was the state of Maryland
who basically adopted the Jeffersonian approach
and said that a measure must be, in its words,
indispensably requisite, or what you might call
absolutely necessary in order for it to be constitutional.
And whereas the defenders of the bank bill
said that it could be a lot less than that.
So, I think there's basically three positions
that you can have.
It has to be indispensably requisite,
or logically necessary, that's the Jefferson
and Maryland view.
It could be merely a matter of convenience or expediency,
meaning basically Congress can do whatever it wants.
That's the liberal view that's sometimes attributed
to John Marshall in McCulloch versus Maryland,
but he denied it.
And there's the in-between position
that I think both Madison and Hamilton were favoring,
and that is the requirement of some degree
of means-ends fit, so that a measure
really is aimed at a particular end,
and it's not really trying to accomplish something
that Congress isn't given the power over.
- [Siegel] What I think is less well-known
about this case is that this part of the case was over
and the court had already decided,
that this federal power to create the bank,
before it even got to the Necessary and Proper Clause.
This case is a great example of what's called
Structural Constitutional Interpretation.
Hamilton articulated two structural principles.
First, that the federal government
is supreme within it's sphere of action.
And second, if some kind of end
is within federal power, is listed in the Constitution,
then any convenient or useful means
to accomplishing that end is also within the scope.
And so Marshall decides that drawing inferences
from his understanding of the theory and structure
of government created by the Constitution,
and only after he does that, does he then
turn to the Necessary and Proper Clause
to confirm what he has already deduced
through what he calls general reasoning.
- [Kim] So, McCulloch versus Maryland
is frequently paired with Marbury versus Madison
as being two cases that really decide
the extent of federal power in this early era.
Do you think these two cases are related?
What do they tell us about the ideas
at this time period about federal power?
- [Barnett] Well, they're very important.
I don't think they are quite as extreme
as they've come to be read after the New Deal.
When the New Deal Court and the rest of advocates
for a New Deal were going back into the past
and seeking justifications for what they wanted to do,
they read McCulloch versus Maryland very broadly.
They also read Marbury versus Madison,
actually they read Marbury versus Madison,
in some respects, very narrowly
because they didn't want courts invalidating
their New Deal legislations.
Marbury versus Madison was not a huge deal
at the time it was decided.
The idea that judges had a duty
to follow the higher law when it was in conflict
with the mere statute was widely accepted
at the time of the founding.
And so Marbury was not announcing a new policy.
McCulloch versus Maryland, on the other hand,
was extremely controversial when it was decided,
and in fact quite oddly,
James Madison, who had signed the bill
authorizing the second bank into law,
greatly, strenuously objected to John Marshall's opinion
in McCulloch versus Maryland upholding the bill
that Madison had signed into law.
So, Madison still maintained that Marshall
had a latitudinarian or overly-broad interpretation
of federal power even in upholding the bill
that Madison, by this time, had come to believe
was constitutional.
- [Kim] So what ultimately happened
with the Bank of the United States?
- [Siegel] What ultimately happened
is both the bill creating the First Bank
and the Second Bank had what's called a sunset provision,
which means after a certain amount of time,
and it was 20 years, it expires.
And so to reauthorize it, it puts the burden
on inertia on those who want the thing to continue.
And so Congress had to pass another bill
reauthorizing the bank, and President Andrew Jackson
opposed reauthorization.
- [Barnett] President Andrew Jackson vetoed
the reauthorization of the bank,
and it was very interesting because he vetoed it
on constitutional grounds, he said it was unconstitutional.
And yet, what happened in McCulloch versus Maryland,
if McCulloch versus Maryland said the bank
was constitutional, how could President Jackson
say that it was unconstitutional?
Well, it was interesting.
Because what McCulloch said was that the bank
was constitutional as an exercise of Congress' power
to make laws that are necessary and proper,
that Congress believed was necessary and proper,
and because Congress believed it was necessary,
and because the measure was plainly adapted
to a legitimate end in the Constitution,
then it was constitutional.
What Jackson said was, hey look,
the court said that it's up to Congress
to decide whether something is necessary
and therefore constitutional, and I as president
exercise a veto power as part of the legislative process,
therefore, it is up to me to decide
whether the measure is necessary
and therefore is constitutional,
so I as president have decided
that a bank is not necessary and therefore,
because the bank is not necessary, it is unconstitutional,
and McCulloch versus Maryland allows me as a participant
in the legislative process to make that call.
- [Siegel] Congress did not override Jackson's veto
and the bank expired and the story ended in 1836.
And I think this speaks to one of many morals
of the story of the Bank of the United States.
The Supreme Court doesn't have the last word
on Constitutional questions when it upholds
exercises of federal power.
It's then left to the political process
to decide whether or not it wants to continue
whatever controversial action or legislation was at issue.
- [Kim] So is there any aspect
of McCulloch versus Maryland that still affects us today?
- [Barnett] One reading of McCulloch
is that it gives Congress a power so broad,
that allows Congress to exercise any power
that it deems convenient to the exercise
of one of its enumerated powers,
that is how McCulloch has come to be interpreted.
I think that is an over-reading of McCulloch.
And it also overlooks one of the key passages
of McCulloch versus Maryland that nowadays
is given no legal effect by the Supreme Court.
This is what John Marshall said:
should Congress, under the pretext
of executing its powers, pass laws
for the accomplishments of objects
not entrusted to the government,
it would become the painful duty of this tribunal,
should a case requiring such a decision come before it,
to say that such an act was not the law of the land.
So what Marshall is saying there
is that just because Congress says a law is necessary
to one of its enumerated powers, doesn't make it so.
And if there is a lack of fit between means and ends
suggesting that in fact Congress is trying to pursue
one of the powers that was not given to it
under the Constitution, it really would be
the painful duty of the tribunal
to say it was not the law of the land,
and that's what connects this case
back up with Marbury versus Madison,
in which it is the painful duty of the Supreme Court
to say that a statute is not the law of the land
if it's unconstitutional.
That aspect of McCulloch versus Maryland
is no longer followed in part because during the New Deal,
the Supreme Court said it would not inquire into the motives
of Congress in enacting laws.
And in fact, what McCulloch is saying here
is to inquire into the motives,
it's to say, hey look, it purports to be doing one thing
but it's really doing something else
and that is pre-textual.
- [Siegel] There has been irreconcilable disagreement
on basic Constitutional questions
from the very beginning of the Constitution.
Madison and Hamilton, who come together
and write the Federalist Papers,
they disagree about this fundamental question
of strict versus loose construction
of Congress' enumerated powers.
They also disagree about Congress' spending powers,
they disagree about inherent executive power.
So sometimes, originalist constitutional arguments
presuppose a greater degree of consensus
about what the Constitution means
at the start of the country that I don't see
when I study the history.
We have always disagreed.
We've always managed to find some kind
of community in disagreement.
It's the conflicts and disagreements that have binded us
together as much, if not more, than the agreements we've had
about what the Constitution means.
- [Kim] So we've learned that McCulloch versus Maryland
was about far more than just a tax on a bank.
It bolstered the power of the federal government
by broadly defining the Necessary and Proper Clause
and by confirming that federal law
is supreme to state law.
To learn more about McCulloch versus Maryland,
visit the National Constitution Center's
interactive Constitution, and Khan Academy's resources
on U.S. government and politics.