MCchulloh V maryland

1. By : Adv Hina Shahid(LLM Semester 1) Page 1
McCulloch V Maryland And the scope of congressional
powers
McCullochv Maryland is the seminal case defining the scope of the federal
powerlegislative powerand its relationship to state government authority.
The specific issue posedin McCullochis whether the State of Maryland could
collecta tax from the Bank of the United States. Chief Justice JohnMarshall
used the case as anoccasionto broadly construe Congress’s powersand
narrowly limit the authority of state governments to impede the federal
government.
The controversy overthe Bank of the United States beganalmost30 years
before McCullochin 1790, whenthere was a major dispute in both congress
and the executive branch as to whether congresshad the authority to create
such a bank. Secretaryofthe TreasuryAlexander Hamilton strongly favored
creating a bank of the United States but he was opposedby Secretaryof State
Thomas Jeffersonand Attorney GeneralEdmund Randolph. Both Jefferson
and Randolph argued that Congress lackedthe authority under the
Constitution to create sucha bank and that doing so would usurp state
government prerogatives. Ultimately, Hamilton persuadedPresident George
Washingtonto support creating the bank but the debate continued in
congress. James Madisonand then in the House of Representativesechoedthe
views of Jeffersonand Randolph and opposedthe bank. Despite these
oppositions the Federalistwho then solidly controlled Congress successfully
enactedlegislationto create the bank of the United States.

2. By : Adv Hina Shahid(LLM Semester 1) Page 2
The bank existedfor 21 years until its charterexpired in 1811. Howeverafter
the War of 1812, the country experiencedserious economic problems and the
Bank of the United States was re-establishedin 1816. In factalthough James
Madisonas president endorsedits recreation. The United States government
actually owned only 20 percent of the new bank.
The bank of United States did not solve the country’s economic problems and
indeed many blamed the bank’s monetary policies for aggravating a serious
depression. State governments were particularly angry at the bank especially
because the bank calledin loans owned by the states. Thus many states
adopted laws designedto limit the operationof the bank. Some states adopted
laws prohibiting its operation within their borders. Others such as Maryland
taxed it. The Maryland law required that any bank not charteredby the state
pay either an annual tax of $ 15000 ora tax of 2 percent on all of its notes
which needed to be on specialstamped paper.
The bank refusedto pay the Maryland tax and John James suedfor himself
and the state of Maryland in the country Court of Baltimore to recoverthe
money ownedunder the tax. The defendant, McCullochwas cashierof that
branch of the Bank of the United Stated. The trial court rendered judgment in
favor of the plaintiff and the Maryland Court of Appeals affirmed.
The Supreme Court in a famous opinion by Chief Justice John Marshall
reversed. Marshall’s opinion consideredtwo major questions firstly does
congresshave the authority to create the bank of the United States and
secondlyis the state tax on the bank constitutional? It is notable that Marshall
posedthe first question because technically the sole issue before the court was
whether Maryland constitutionally could collectits tax. It is establishedthat
Congress has the powerto create the bank and the states cannottax or
regulate it. John Marshallrecognizedthis case as anideal opportunity to
articulate a broad vision of federal power.