McCulloch v Maryland (1819)

Summary:

After the Second Bank of the United States was chartered, the state of Maryland passed a law to tax it. James McCulloch of the bank's Baltimore branch refused to pay the tax and eventually, the state court ruled that the federal government did not have the authority to charter a bank

Historical Context:

(1819) Current President: James Monroe
-> last president from the founding fathers
-> Panic of 1819 occurred concurrently

Constitutional Issue:

-> Did Congress have the implied power to create a bank?
-> could states tax a federal entity?

Final Ruling and Constitutional Principle:

-> based on the Necessary and Proper Clause (Article 1, Section 8), Congress had the power to create a bank or perform other actions deemed necessary and proper
-> based on the Supremacy Clause (Article 5, paragraph 2), Sates could not tax federal entities

Second Bank of the United States

This institution was chartered in 1816 under President Madison and became a depository for federal funds and a creditor for (loaning money to) state banks.

Necessary and Proper Clause

Clause of the Constitution (Article I, Section 8, Clause 3) setting forth the implied powers of Congress. It states that Congress, in addition to its express powers, has the right to make all laws necessary and proper to carry out all powers the Constitution vests in the national government

Supremacy Clause

Clause of the Constitution (Article VI, Paragraph 2) which makes the Constitution, national law, and treaties supreme over state laws when the national government is acting within its constitutional limits.