Lesson Plan - Get It!
- What are implied powers, and what role did the Maryland v. McCulloch case play in solidifying them in our Constitution?
During the presidency of George Washington, Secretary of the Treasury Alexander Hamilton sought to create a National Bank of the United States of America.
While every European power already had a national bank, Democrat-Republicans like Thomas Jefferson fiercely opposed the creation of a centralized financial system.
The proposed National Bank would facilitate the collection of taxes, the lending of loans to states and businesses, and the payment of government debt. It was not these procedural actions that Jefferson opposed, but the idea of the bank itself.
As a Federalist, Alexander Hamilton believed in the power of the federal government, while Thomas Jefferson and the Democrat-Republicans were focused on maintaining the state's rights.
Having just won a revolution against a monarchy, Americans at the time wanted to minimize the role of the central government as much as possible. For Democrat-Republicans, this meant interpreting the Constitution as literally as possible and only permitting the federal government the powers that were specifically enumerated (stated) in the document.
Alexander Hamilton looked at the enumerated power of the federal government to both levy taxes and pay debts and saw the ability to establish a National Bank as an implied power based on those two powers.
This Constitutional interpretation was a very new idea. Although heavily opposed, it was finally passed by Congress in 1791. The bank received a 20-year charter. In 1816, the bank was renewed as the Second National Bank of the United States of America.
Politicians in most states were not supportive of this centralization of power. Because the U.S. had existed for over a decade under the Articles of Confederation, states were used to having even more power than the Constitution specifically granted.
Once the explicit power of the document began to be expanded to implied powers, states were wary of the "slippery slope" this might be.
For this reason, the conflict between the states and the National Bank was not specifically about the institution, but whether Congress should be allowed to have ever-increasing authority depending on how the Constitution was interpreted.
This conflict culminated in Maryland when the state passed a law to annually tax $15,000 to each out-of-state bank operating within Maryland. While this may seem reasonable on the surface, the only out-of-state bank in the whole of Maryland was the Baltimore branch of the Second National Bank.
This attempt to tax the federal government may seem surprising now, but the relationship between state and federal powers still had not been strictly defined in 1818.
As the head of the Baltimore branch of the Second National Bank, James McCulloch refused to pay the $15,000 tax to the state of Maryland.
This resulted in a lawsuit between the bank and the state of Maryland, a state which believed, like Jefferson, that the bank had no right to exist at all under the Constitution.
Maryland initially won, but the federal bank appealed the case all the way up to the Supreme Court of the United States of America.
Supreme Court Decision
As the Chief Justice, John Marshall admitted that there was no enumerated power to establish a bank. However, he utilized three key ideas that ultimately justified the bank's existence and made a state's ability to tax the federal government nonexistent:
- The case involved the Second National Bank. For 20 years, a federal bank had already been permitted. This type of justification is called precedent.
While this is not common in early court cases, precedent has become an ever-increasing part of judicial consideration when determining the constitutionality of a law.
If a decision was made in the past, Marshall argued, then that gave more credibility to it.
- Under Article I, Section 8, Clause 18, the Constitution reads:
"To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by the Constitution in the Government of the United States..."
John Marshall utilized this clause, known as the necessary and proper clause, to justify the implication that Hamilton first made. It may not be enumerated, but a bank could be considered "necessary" for effective governance.
- Article VI of the Constitution reads:
"This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land..."
This clause, known as the supremacy clause, puts federal authority above all state authority.
Because a state was conflicting with the already justified bank in points 1 and 2, this third point invalidated the tax placed on the National Bank. If the federal government has the authority to do something, state laws that conflict with this authority are instantly invalidated.
This was not the first time either of these clauses were utilized because their vague nature allows the court and Congress to imply more power than specifically given by the Constitution.
Before exploring the aftermath of this decision, it is important to understand why the Constitution even contained vague clauses.
Watch The Making of the American Constitution - Judy Walton from TED-Ed:
Many states did not participate in the Constitutional Convention at all, and it took two years to complete the document that would become the Constitution.
- If they worked so long on this document, why did they include such vague clauses at times?
The Founding Fathers sought to give enough leeway in the country's principal document to ensure that it would be used for decades to come.
The utilization of implied power was cemented by McCulloch v. Maryland, and it continues into the present. These and other vague clauses still help to decide what can and cannot be done over 200 years later.
Continue on to the Got It? section to apply your knowledge of this court case and John Marshall's decision to explore implied power further.