In 1791, the U.S. government created the first national bank. At this
time, a national bank was controversial. Some people believed that the
national government had the power to create a national bank. Others
believed that the national government did not have this power. When
Thomas Jefferson was president, he did not renew the national bank's charter.
Jefferson believed in placing greater limits on the power of the
national government. However, when James Madison became president he
asked Congress to create a Second Bank of the United States in 1816.
Many branches of the Bank of the United States were opened
throughout the country. Some states did not like these branches. The
national banks competed with state banks and people thought that the
national banks were corrupt. In addition, states were worried about the increasing power of the national government.
The State of Maryland tried to close a branch of the Bank of the
United States by making that branch pay $15,000 in taxes. James
McCulloch, who worked at the Baltimore branch of the Bank of the United
States, did not pay the tax. The State of Maryland took him to court.
The State of Maryland argued that if the national government could regulate
state banks, the state could make rules for the national bank. The
State of Maryland also said that there was no permission in the
Constitution for the national government to create a national bank. Article I, Section 8, Clause 18 of the Constitution lists the powers of Congress. It says nothing about creating a national bank.
On the other hand, McCulloch's attorney argued that the power to
create a national bank was a "necessary and proper" power of Congress.
It is true that there is nothing in the Constitution about a national
bank; however, there are many things that the government must do that
would be helped by a national bank. Therefore, creating a national bank
is an implied power of Congress.
McCulloch was convicted of violating Maryland's tax law. McCulloch
then appealed the lower court's decision to the Maryland Court of
Appeals. After the Maryland Court of Appeals agreed with the lower
court's decision, McCulloch appealed to the Supreme Court of the United States, which was led by Chief Justice John Marshall.
Questions to Consider
In your opinion, why did states not like the idea of a national bank?
What are the advantages of having a national bank? Review Article I, Section 8, Clause 18 of the Constitution. Which powers of Congress could be helped by a national bank?
Do the powers listed in Article I, Section 8 of the U.S. Constitution allow the government to create a national bank?
Should a state be able to tax a national bank? Why or why not?
Why do you think the Supreme Court of the United States heard the case? What made the case important?