1. Megan James
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McCulloch v. Maryland
17 U.S. 316
FACTS
What we know as the Federal Reserve System did not start out that way. During George
Washington’s presidency, secretary of treasury, Alexander Hamilton wanted Congress to adopt
an economic plan for the new nation. Proposed was a Bank of the United States. Congress
agreed with the proposal, and created a bill authorizing the first federal bank of the United
States. When Washington received the bill, the question to whether or not Congress has
authority to create such an institution due to the Constitution arose. The bank eventually fell to
demise. During the war, the lack of a National Bank for means of borrowing money and
transferring funds became looked at as an embarrassment to the Administration. A second
bank was then created, and Maryland created a tax they would impose on every bank. This was
not approved by legislation, and the defendant, McCulloch wrote notes on unissued, unofficial
paper. The State of Maryland sued McCulloch for the penalties he created under the Maryland
tax act. The lower court found in favor of Maryland and believed they should be reimbursed for
the wrongful taxes imposed.
ISSUES
1. Does the United States Congress have authority under the Constitution to create a National
Bank?
2. Was McCulloch wrong in imposing the taxes on the bank?
3. Was the taxation constitutional?
HOLDING
The United States Supreme Court held that Congress does have authority to create a National
Bank under the Necessary and Proper Clause found in the Constitution. The Court also held that
the tax was unconstitutional and void.
REASONING
The Supreme Court had two major issues to address in this case. The first being whether or not
Congress even possesses the correct authority to even create a National Bank. The Court takes
a look back to before a centralized bank was created and can see the struggles the country
endures due to the lack of a bank. For instance, in the Constitution the word “bank” or
“incorporation” does not exist. However, the severe importance in the enumerated powers in

2. Megan James
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the government to collect taxes, regulate commerce, borrow money, etcetera shows some
significance in the need for a centralized bank. Congress has the ability to use the “Necessary
and Proper Clause” found in the Constitution. This clause ensures Congress’s ability to construct
an institution to better assist themin collecting taxes, borrowing money, and regulating
commerce if it is necessary and proper. The debate over what is “necessary and proper” can go
on for ages. However, the Court found “After deliberate consideration, it is unanimous and
decided opinion of this court that the act to incorporate the bank of the United States is a law
made in pursuance of the constitution, and is a part of the supreme law of the land.” In
deciding whether the Maryland act of imposing taxes on all banks was constitutional or
unconstitutional, the Court decided that the tax was unconstitutional based on the fact States
do not have the authority and power to intervene in Constitutional laws enacted by Congress.
Because states have no power to impose such a tax, the states have “no power to burden
operations of the constitution enacted by Congress.”
IMPORTANCE
The case of McCulloch v. Maryland is a landmark United States Supreme Court case because of
the use of the Necessary and Proper Clause. Marshall’s interpretation of the clause has had
lasting, significant effects. Because of Marshall’s interpretation of the Necessary and Proper
Clause, Congress now exercises many powers that are not specifically named within the
Constitution but are implied by the Constitution instead. Marshall’s objective was to allow for
the Constitution “to endure for ages to come.”