McCulloch vs. Maryland: Law Case Analysis

Hook: The Mcculoch V Maryland case of 1819 was an astounding matter, as the state of Maryland was going against the government itself, more specifically Congress. The case was caused by a disagreement between the two, Maryland believed it had the right to impose a tax on the national bank established within it’s state borders and Congress believed it had the power to establish the national bank. From this disagreement, two questions arised, did congress actually have the power to establish the national bank? Does the federal government hold sovereign power over states? Although the case presented questions, The court ruled in favor of Congress stating they derived their power from the Constitution, The ruling of the Mcculloch V Maryland case was a controverisal but necessary decision. The statement in the constitution from which they derived their power from was rather vague, thus leading many of the people from that time to be confused.

History of the case 1: The U.S economy had been steadily increasing up until the the war of 1812. The war with Britain had disrupted the positive momentum that the nation garnered. Britain was the greatest naval force in the world at the time. Naturally, they utilized their gargantuan naval power to blockade U.S trade with other countries (federal). This would prevent many from exporting merchandise, sailing, and diminished federal government revenue. By 1815, the United States was left insolvent, a very similar situation to the state it was left in at the end of the Revolutionary War, nearly half a century ago. The United States had been without a bank for four years and many people believed that a sucessor to the first bank would alleviate the country’s financial predicament. Six men in particular: John Jacob Astor, David Parish, Stephen Girand, Jacob Barker, Alexander Dallas, John C. Calhoun unanimously expressed a prominent desire to establish the second bank of the United States (federal). Thus, the second bank was born. 

History of the case 2:  The Nation had rejoiced in the second bank as it greatly executed it’s intended purpose of regulating public credit issued by private banking institutions. This prosperity came to an abrupt end when the Baltimore branch came under fire in 1819 when the state of Maryland attempted to tax the establishment. However, James W. Mculloch, a a Federal Cashier at the Bank, refused to pay the taxes imposed by the state. The state responded to this by filing a lawsuit against Mculloch in an effort to collect the taxes. The state of Maryland displayed their reasoning for the tax, stating that their status as a sovereign state made it possible to tax any business within it’s state borders and their previously established precedent required a tax on all banks not chartered by the state. In 1818, the state of Maryland approved legislation to impose a tax on the second national bank chartered by Congress.The case eventually escalated and found itself in the presence of the Supreme Court.

Court’s decision: The Supreme court ruled in favor of Mculloch and by extension Congress. The court ruled that Maryland did not have the power to tax the national bank. The court’s decision was on the premise that Congress was within it’s rights to establish the second bank, stating that Congress derived it’s power from section 1 article 8, “For the necessary and proper clause”(Khan). This decision depicted to us that Congress was always within it’s Constitutionally granted powers. With this recent revelation, Congress’ power was upheld and the smooth current that is government power was not halted. Additionally,  Chief Justice John Marshall decided to rule in favor of Congress on the argument that “the power to tax means the power to destroy”(pubs). John Marshall’s statement signifies that if Maryland believes it has the power to tax the federal government then it also believes that it has the power to destroy the federal government. Although resembling a barbaric reasoning for this day and age, it was a necessary step in order to preserve federal power as a whole and prevent any gaps which can be exploited. 

Opposing opinion: The main threat to the second national bank was Andrew Jackson as he proposed many arguments in opposition to the creation of the bank. One of his arguments entailed that no constitutional authority existed for the creation of the federal bank. His second argument suggested that the bank’s distribution of paper money was inimical to the economy’s well being. His arguments seem to have destroyed themselves as they clashed with none other than his previous statements. He had always been someone who believed that all liquid assets required a backing by specie such as gold and silver. Jackson’s financial perspective placed him against the Western and Southern working class who advocated for currency to be liberally dispensed without any requirements of specie. 

Impact of ruling at the time: The Mculloch V Maryland case brewed a significant impact that engulfed the entire nation, however, the benefits from this ruling were as grand as its impact. The ruling of the case amplified federal power and bestowed the federal government with ways to achieve the responsibilities granted to it in the Constitution (Khan). The ruling aided the government’s ability to create laws which would have posed the same question as this case. The case made it abundantly clear that the nation had a strong central government and that federal laws has authority over state laws. Additionally,  The case restated that the original intention of the Consitution was to devise a powerful central government and that states cannot obstruct the powers granted to the federal government (Khan). The statements made, logically deduce the reasoning behind the ruling, which benefits the nation’s balance of power, and subsequently, the nation itself. The previously stated information expounds the Constitution’s role and duty to the nation, one that, if obstructed by mere state laws, diminishes it’s power and overall effectiveness.

Impact of ruling today/future: The case had an insurmountable positive effect on the nation following its ruling. The ruling allowed the federal government to drastically increase it’s power and withstand burdens that the nation’s founding fathers could never fathom (History). The landmark decision established the doctrine of implied powers, which signifies that the federal government can create policy instruments in order to fulfill their Constitutional responsibilities. The term “Implied powers” refers to powers utilized by Congress not explicitly stated in the Constitution but deemed “necessary and proper” to efficiently carry out any and all Constitutional Obligations (Brittanica). This implication would prove useful for without this clarification, Congress would lack the power to create the “New deal”, “Social Security”, “Civil Rights act of 1964”, all of which had a profound effect on our nation, indirectly caused by this case. These laws were indriectly birthed by the clarification that stemmed from the landmark case of Mculloch V Maryland, which further proves that the ruling’s impact is all but negative. 

Response to objections: The aforementioned opposition to the second national bank, Andrew Jackson, attempted to disrupt the bank even after it was ruled in court. In his first annual message to Congress, he requested that Congress renew the bank’s charter. The ways and Means committee of the house was tasked to address his request. Their argument included a reiteration of the economic and Constitutional arguments in favor of the continuation of the Bank. The arguments consisted of logical reasoning as the committee deduced the alleviation that the bank provided to the nation in the many years it was in service. The committee also addressed the repercussions of the first bank’s figurative death, which included the deterioration of the nation’s economy, severe damage caused to private and public credit due to the country’s lack of a national bank, and an almost complete suspension of government actvities. All of which occured in merely a fraction of the time that the first national bank was in operation. 

Conclusion: In conclusion, The second national bank was created with overwhelming support, seemingly almost necessary in order for the country to even survive and escape it’s impoverished fate. The bank was enjoying it’s momentous opening, until the state of Maryland decided to tax the bank due to it’s power as a sovereign state and previously precedent of all banks not chartered by the state to be taxed. The bank’s refusal to pay resulted in a lawsuit which eventually escalated to the supreme court, where the justices ruled in favor of the bank. Although the points that Maryland presented appeared as a rational argument that should have resulted in it’s victory, the declaration made by Congress benefitted the nation by enforcing and strengthening the federal government’s power, this enforcement went on to create laws and prevent any issues, all at the expense of Maryland and other sovereign states.