- [Narrator] McCulloch versus Maryland
may appear to be an old esoteric case about
bank charters and taxes.
But it's really about a power struggle of
constitutional proportions between the States
and the Federal Government.
The consequences of that struggle
continue to reverberate today.
In 1816, Congress passed an act
that created the Bank of the United States.
A year later, the bank opened a branch in Maryland.
To take a shot at the new, all-powerful
federal government, Maryland passed an act in 1818
that imposed a $15,000 annual tax
on all out-of-state banks operating in the State.
The act appeared neutral on the service,
but it practically targeted the Bank of the United States
which was the only out-of-state bank
in Maryland at the time.
James McCulloch, the cashier
of the Bank of the United States,
refused to succumb to Maryland's pressures
and refused to pay the tax.
In response, Maryland sued McCulloch
in Baltimore County Court.
The trial court sided with Maryland,
and ordered McCulloch to pay the tax.
The court of appeals affirmed,
and McCulloch petitioned for review
in the United States Supreme Court.
The Court was faced with two questions.
First, does Congress have an implied
constitutional power to create a bank?
Second, if Congress does have that power
can states tax a federally created bank?
The court held that Congress
has the constitutional authority
to charter the federal bank,
and that the states are prohibited from taxing it.
Chief Justice John Marshall authored the court's
unanimous decision.
Marshall was one of the most influential
Chief Justices in United States' history.
Before his career on the court,
a young Marshall had fought in the Revolutionary War.
At the time, Americans instinctively thought of themselves
as citizens of their state,
rather than as United States citizens.
But following Marshall's military service,
Marshall came to think of himself as an American first,
and a Virginian second.
This hierarchy is evident in his McCulloch opinion,
which elevates the national government over the states.
Marshall acknowledged that the Federal Government
is one of limited powers,
and that the authority to charter a bank
does not expressly appear in the Constitutional text.
Nevertheless, Marshall concluded that Congress' powers
extend beyond those that are expressly enumerated
in the Constitution.
Congress has implied powers as well as enumerated powers.
According to Marshall,
when the Constitution authorizes
a particular end, Congress must also be given
the implied means to accomplish that end.
In support, Marshall cited The Necessary and Proper Clause,
which authorizes Congress to make all laws
necessary and proper to execute its express powers.
Maryland argued that the phrase necessary and proper
means that Congress can create only those laws
that are absolutely essential
to carry out its express powers.
Marshall disagreed with this interpretation,
and held that the word necessary
refers to anything that is useful or convenient
for carrying out Congress' express powers.
Applying this interpretation, Marshall held that
a federal bank was useful for raising
and distributing money, which related to Congress'
express authorities under Article One, Section Eight.
Under this Section, Congress can tax and spend
for the general welfare, borrow money,
regulate commerce, and raise and support armies,
among other things.
All of these duties were aided by the Federal Bank.
Marshall next went on to discuss
whether the State of Maryland could tax the Federal Bank.
Marshall famously declared,
"The power to tax "involves the power to destroy."
Further, Marshall noted that federal laws
are supreme over state laws.
Reading these two principles together,
Marshall held that a state law
cannot inhibit a federally created institution.
He concluded that it would be inappropriate
for a federal bank, created to serve the entire nation,
to be subject to the taxes of a single state like Maryland.
The Court reversed the judgment of the Maryland court,
but the conflict wasn't over yet.
After the opinion was announced,
Maryland's attorney general instigated an indictment
against McCulloch, the bank's cashier,
for conspiracy to defraud the Federal Bank.
In one fell swoop, Chief Justice Marshall
announced a landmark decision,
that gave Congress broad, implied powers
to implement its express Constitutional authorities.
By doing so, Marshall shut down the State's rights argument
brought by Maryland, and set the stage
for the continued expansion of the young federal government.
(pencil writing)