McCulloch v. Maryland
Does Congress have the constitutional authority to establish a national bank, and if so, does a state have the power to tax that bank?
The Decision
7-0 decision · Opinion by John Marshall · 1819
Majority Opinion— John Marshallconcurring ↓
In a unanimous decision authored by Chief Justice John Marshall, the Supreme Court ruled in favor of McCulloch and the Bank of the United States on both questions presented. The Court held that Congress did have the constitutional power to create the bank and that Maryland's tax on the bank was unconstitutional. The decision, handed down on March 6, 1819, stands as one of the most consequential rulings in American constitutional history.
On the first question — whether Congress could charter a bank — Marshall acknowledged that the Constitution does not explicitly grant this power. However, he reasoned that the Constitution grants Congress a broad set of enumerated powers (such as the power to tax, borrow money, regulate commerce, and raise armies) and that the Necessary and Proper Clause gives Congress the flexibility to choose the means by which it carries out those powers. Marshall famously rejected Maryland's narrow reading of the word 'necessary,' writing that it does not mean 'absolutely indispensable' but rather 'useful' or 'conducive to' achieving a legitimate constitutional end. He articulated a lasting principle: 'Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional.' A national bank, Marshall concluded, was a reasonable and appropriate instrument for managing the nation's finances.
On the second question — whether Maryland could tax the bank — Marshall ruled emphatically that it could not. He grounded this conclusion in the Supremacy Clause of the Constitution, which establishes that federal law is the supreme law of the land. Marshall reasoned that the power to tax is the power to destroy, and if Maryland could tax the bank, it could set the tax so high as to destroy it entirely. This would allow a single state to override the will of the entire nation as expressed through Congress. Since the federal government derives its authority from all the people of the United States, no single state can use its taxing power to impede, burden, or control the operations of the federal government.
The decision established two foundational constitutional doctrines that continue to shape American law: first, the doctrine of implied powers, which holds that Congress possesses not only the powers explicitly listed in the Constitution but also broad authority to select the means of executing those powers; and second, the doctrine of federal supremacy, which holds that when state and federal law conflict, or when a state attempts to interfere with legitimate federal operations, the federal government prevails. The ruling was delivered by all seven justices sitting on the Court at the time, with no dissenting opinions filed.
Concurring Opinions
There were no separate concurring opinions filed; the Court spoke with a single, unanimous voice through Chief Justice Marshall's opinion.
Background & Facts
In 1816, the United States Congress chartered the Second Bank of the United States, a national financial institution designed to stabilize the country's currency, manage government funds, and facilitate economic growth following the War of 1812. The bank was deeply controversial. Many Americans — and many state governments — viewed it as an overreach of federal power that threatened state sovereignty and enriched wealthy elites at the expense of ordinary citizens. Several states took aggressive action to undermine or destroy the bank's operations within their borders.
Maryland was one such state. In 1818, the Maryland legislature passed a law imposing a hefty tax on all banks operating within the state that were not chartered by the state itself. Since the only bank fitting that description was the Baltimore branch of the Bank of the United States, the law was effectively a targeted strike at the federal institution. The tax required the bank to either pay an annual fee of $15,000 or affix expensive revenue stamps to every banknote it issued — a crippling financial burden designed to drive it out of business.
James William McCulloch was the cashier — essentially the chief operating officer — of the Baltimore branch. He refused to pay the tax or comply with the stamping requirement. Maryland promptly sued McCulloch in state court to collect the penalties. The case moved through the Maryland state court system, where the county court and then the Maryland Court of Appeals both ruled in Maryland's favor, holding that the state had the right to tax the bank and, implicitly, that Congress may not have had the authority to create it in the first place.
McCulloch, backed by the federal government and the bank's supporters, appealed the case to the United States Supreme Court. The stakes were enormous: the case would determine not just the fate of the national bank but the fundamental nature of the relationship between the federal government and the states. The Supreme Court heard oral arguments over nine days in February and March of 1819, with some of the most prominent lawyers in the country — including Daniel Webster arguing for the bank and Luther Martin arguing for Maryland — presenting their cases before Chief Justice John Marshall and his colleagues.
The Arguments
McCulloch argued that Congress had the constitutional authority to charter the Bank of the United States under its broad implied powers, even though the Constitution does not explicitly mention the creation of a bank. He further argued that Maryland's tax on the bank was unconstitutional because a state cannot tax or impede the lawful operations of the federal government.
- The Necessary and Proper Clause of the Constitution (Article I, Section 8) grants Congress the power to pass all laws 'necessary and proper' for carrying out its enumerated powers, including taxing, borrowing, regulating commerce, and managing the nation's finances — and a national bank is a reasonable means to accomplish those ends.
- The Constitution derives its authority from the people of the United States, not from the states as sovereign entities, meaning the federal government is not subordinate to the states when acting within its constitutional authority.
- If a single state could tax a federal institution, it could effectively destroy it, giving one state a veto over policies enacted by the national government on behalf of all the people — a result the Constitution was designed to prevent.
Maryland argued that the Constitution does not explicitly grant Congress the power to create a bank, and that the Tenth Amendment reserves all powers not specifically delegated to the federal government to the states. Maryland further asserted that as a sovereign state, it had the inherent right to tax any entity operating within its borders, including a federal bank.
- The Constitution nowhere mentions the power to incorporate a bank, and the word 'necessary' in the Necessary and Proper Clause should be read strictly to mean only those laws that are absolutely indispensable — not merely convenient — to carrying out enumerated powers.
- The Tenth Amendment confirms that powers not expressly granted to the federal government are reserved to the states, and chartering corporations has traditionally been a state function.
- The power to tax is one of the most fundamental attributes of state sovereignty, and Maryland has the right to tax all businesses and institutions operating within its territory without exception.