Soon after George Washington's inauguration as the first President of the United States in 1789, his Secretary of the Treasury, Alexander Hamilton, proposed creating a national bank to regulate American currency and deal with national economic problems. The establishment of a national bank for the United States was a major public controversy from the moment of the U.S. Second, state action may not impede valid constitutional exercises of power by the federal government.Ī handwritten bank draft from the Second Bank of the United States, dated July 24, 1824, from Daniel Webster, who argued on behalf of McCulloch and the U.S. Prior to the Supreme Court's decision in McCulloch, the scope of the U.S. First, the Constitution grants to Congress implied powers to implement the Constitution's express powers to create a functional national government. McCulloch has been described as 'the most important Supreme Court decision in American history defining the scope of Congress's powers and delineating the relationship between the federal government and the states.' The case established two important principles in constitutional law. The Court invoked the Necessary and Proper Clause of the Constitution, which allows the federal government to pass laws not expressly provided for in the Constitution's list of enumerated powers of Congress if such laws are necessary and proper to further the powers expressly authorized. Though the law, by its language, was generally applicable to all banks not chartered in Maryland, the Second Bank of the United States was the only out-of-state bank then existing in Maryland, and the law was thus recognized in the court's opinion as having specifically targeted the Bank of the United States. The state of Maryland had attempted to impede an operation by the Second Bank of the United States through a tax on all notes of banks not chartered in Maryland. federal government certain implied powers that are not explicitly enumerated in the Constitution, and secondly that the American federal government is supreme over the states, and so states' ability to interfere with the federal government is restricted. In its ruling, the Supreme Court established firstly that the 'Necessary and Proper' Clause of the U.S. The dispute in McCulloch involved the legality of the national bank and a tax that the state of Maryland imposed on it. Congress's legislative power and how it relates to the powers of American state legislatures. Supreme Court decision that defined the scope of the U.S. Maryland Court of Appeals reversed.Ĭhief Justice John Marshall Associate Justices Bushrod Washington Since a bank is a proper and suitable instrument to assist the operations of the government in the collection and disbursement of the revenue, and federal laws have supremacy over state laws, Maryland had no power to interfere with the bank's operation by taxing it. Judgment for John James, Baltimore County Court affirmed, Maryland Court of AppealsĪlthough the Constitution does not specifically give Congress the power to establish a bank, it delegates the ability to tax and spend.

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