1816: An Act To Incorporate the Subscribers to the Bank of the United States. The Second Bank of the United States in incorporated.
The first full-scale operation was in Philadelphia.
1817: A branch is opened in Baltimore.
February, 1818: Maryland passed an act to impose a tax all banks not chartered by Maryland itself.
The tax was $25,000 overall, or $100 for each note.
The only other bank operating in Maryland was the Bank of the United States, making them the target of this legislation .
James McCulloch, the head of the Baltimore branch of the Bank of the United States, refused to pay the tax.
McCulloch Maryland v.
Lower Court Decisions
In the Maryland Court of Appeals, Maryland argued that the Constitution says nothing about a national bank, making a national bank unconstitutional. The Maryland Court agreed with them .
Supreme Court Decision
The court upheld that the the branch of the national bank was constitutionally operating in Maryland.
Chief Justice John Marshall had four main reasons for this decision.
1. Congress historically had the right to create branches of the bank. He cited the first Bank of the United States as proof of this. They had already debated the argument that Maryland was presenting, and had already agreed that the Bank was constitutional.
The states don ’ t have ultimate sovereignty because they chose to ratify the Constitution.
The people are the sovereign, because they were the ones that ratified the Constitution, and not the states.
Congress has the ultimate authority.
Necessary and Proper Clause.
The creation of a national bank is Constitutional because it needs a national bank in order to carry out its objective.
Maryland was wrong because they only took into account the word “ necessary. ”
The Necessary and Proper Clause is a power, not a limitation.
This case dealt with the concept of federalism, which is the federal government ’ s power.
Balance between state ’ s and the federal government tested.