Basically Law

Issue.  Does the state of Maryland have the power to tax the operations of the Second Bank of the United States, a bank incorporated by the United States Congress?

Background.  In 1816, Congress chartered the Second Bank of the United States.  In April 1818, the state of Maryland imposed a tax on the operations of the Bank, specifically the Bank could only issue notes on stamped paper that are furnished by Maryland for a fee.  The Bank refused to follow the Maryland law and the State brought suit against James McCulloch, the Cashier of the Baltimore Branch of the Bank for doing business without authority from Maryland.  McCulloch admitted that the Bank was doing business without authority but that it did not need to.  The lower court found for Maryland and the case was appealed to the Supreme Court.

Court’s Analysis.  The Supreme Court found that this case involved answering two questions:  1.) Does the Federal Government have the power to charter a bank?; and 2.) Can the State of Maryland tax the Bank without violating the Constitution?

With respect to the first question, the Court recognized that even though the Constitution does not specifically give Congress the power to charter a bank, it would be illogical for all powers to be specifically enumerated.  Further, the Constitution gives Congress the power to pass laws that are “necessary and proper” for carrying into execution Congress’s powers.   So, what is “necessary and proper”?  Maryland argued that the law had to be absolutely “necessary”.  However, the Court rejected that argument.  One, another section of the Constitution uses the phrase “absolutely necessary” so if the authors of the Constitution meant that, they would have written it as such.  Two, Constitutions are meant to last for all time, or else they are nothing else than a legal code, so it must be able to adapt to “various crises of human affairs.”  Three, such a strict interpretation of “necessary and proper” would render Congress’s powers as meaningless.  For example, Congress has the power “to establish a post office”.  But, if Congress did not have the power to punish those who robbed the mails or to carry the mail, its power to establish a post office would be meaningless.  Finally, the “necessary and proper” clause is among the powers given to Congress, not the constraints on Congress.  Therefore, it was meant to enlarge and not to diminish the powers of Congress.  Since incorporation of a bank is “necessary and proper” for Congress to execute its powers, it does have such powers.

With respect to Maryland’s right to tax the Bank, the Supreme Court found that it did not have the Constitutional power to do so.  The power to create implies a power to preserve.  A power to destroy, if wielded by a different hand, is hostile to and incompatible with the power to create and to preserve.  Finally, when there is a conflict between the power to create and the power to destroy, the authority which is supreme must control.  Congress has the power to create and preserve a bank.  Maryland, by taxing the Bank, is destroying the bank.  Finally, since the Constitution makes federal action supreme to that of state action, Maryland’s law is unconstitutional.  As the Supreme Court writes:

The states have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.

My analysis.  This is one of those cases we all learn in high school.  Intuitively, the decision is correct even if the reasoning is a little shoddy at times.  It makes sense that Congress should be able to pass lies that are necessary and proper for it to execute those powers that are specifically enumerated, or else its powers are meaningless.