McCulloch v. Maryland | National Constitution Center | Khan Academy
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McCulloch v. Maryland | National Constitution Center | Khan Academy

October 11, 2019

– [Kim] Hey, this is
Kim from Khan Academy. And today we’re learning
about McCulloch V. Maryland. A Supreme Court case
decided in 1819 that helped to define the relationship between the federal
government and the states. The question at issue
in this case was whether the state of Maryland could
tax the Baltimore branch of the Bank of the United States, and whether Congress even had the power to create a Bank of the United
States in the first place. To learn more, I sought out
the help of two experts. Randy Barnett is the
Carmack Waterhouse Professor of Legal Theory at the
Georgetown University Law Center and Director of the Georgetown
Center for the Constitution. Neil Siegel is the David
W Ichel Professor of law and Professor of Political
Science at Duke Law School. So, Professor Barnett, could you kind of set the stage for us? What was happening in this case? What was the overall context? – [Randy] Well, McCulloch V. Maryland was a culmination of a 30-year-old
constitutional controversy. In fact, it was the culmination of one of the earliest controversies that we had in the country. And that is over whether Congress had the power to establish a National Bank. A bank that would be a
corporation formed by Congress, which would have certain privileges that Congress granted it. This was a proposal that had
been made by Alexander Hamilton when he was Secretary of the Treasury in the Washington Administration in the very first year of the
Washington Administration. And it went to Congress and there was a very, very
robust debate in Congress as to whether this measure was within the powers
of Congress to enact. Eventually Congress voted that it was, and then before he signed the bill, President Washington asked
some of his cabinet members to give him their opinion on
whether it was constitutional and he heard from several
of his cabinet members. He heard from his Attorney
General Edmund Randolph, he said it was unconstitutional. He heard from his Secretary
of State, Thomas Jefferson, Jefferson said it was unconstitutional. Finally he heard from his
Secretary of Treasury, who had proposed it, Alexander Hamilton, who said it was constitutional, and Washington signed the bill. And it became law and it established the First National Bank
of the United States. – [Neil] This case arose in May of 1818 when Maryland sued McCulloch. And he was the cashier at the
Baltimore branch of the bank. Maryland sued him in state court to recover a tax assessed
by Maryland on the bank. And this was a time of intense hostility toward the National Bank
in a number of states. The state banks competed
with the National Bank and there had been an
economic panic in 1818 when the US Bank called in
its loans and state banks that had loans from the
Federal Bank were crippled. And in response, a number of states passed nearly annihilative
taxes on the Federal Bank and that’s the environment
in which in 1819 McCulloch against Maryland came
before the Supreme Court. – [Kim] And that’s very interesting because this is something
that we talk a lot about in the early 19th Century. The Bank of the United States
and what was good about it and what was bad about it. There’s certain people
who were certainly enemies of the Bank like Thomas Jefferson, and then later, Andrew Jackson. Why did people object to the Bank of the United States so much? – [Neil] Yeah, there were
variety of objections. There was a real political
policy disagreement about whether it was a good idea. Hamilton had a Nation-Building,
economy building objective, as the first Secretary of the Treasury. He wanted to pay off
both the national debt and the state debts from
the Revolutionary War which remained unpaid. He was emphasizing
manufacturing in commerce. And the National Bank was
a key part of his plan. The bank would make it easier
for the national government to raise taxes, to pay off
debts, to make payments, to obtain short term loans. The notes issued by
the bank could function as a national currency. It could also provide a source of capital for financing businesses. But the opponents had different ideas. – [Randy] One of the leading opponents in Congress was James Madison, who at the time was a representative from Orange County, Virginia. What concerned him, and I think
what’s concerned many people was that there was no
expressed enumerative power in the Constitution for
Congress to make a bank. There was an enumerative
power to create a post office, but there was no enumerated
power to create a bank. So the question is whether
the failure, or the silence, of the constitution on
whether there was this power, should be construed in favor
of having such a power, or not having such a power. And Madison’s concern was
that to imply such a power especially when the way in
which it was being applied was very remotely connected to
one of the enumerated powers that were in the Constitution,
was very dangerous, because by that form of reasoning, Congress could essentially
do whatever it wished and that would violate the
basic pledge that this was going to be a national government of limited and enumerated powers. – [Kim] So, in Congress,
what was the power that proponents of the bank
used to justify passing it? – [Randy] The principal
power that they used is called the Necessary and Proper Clause. The Necessary and Proper Clause says, “Congress shall have
Power to make all Laws “which shall be necessary
and proper for carrying “into Execution its foregoing Powers,” those powers on the list, “and all other Powers
vested by the Constitution “in the Government of the United States, “or in any Department of Officer thereof.” This is called the
Necessary and Proper Clause. It allows for Congress
to make laws incidental to the enumerated powers to effectuate, or carry into execution
those powers and supporters of the bill said that the bank carried into execution a number of powers. It carried into execution
the taxing power, it carried into execution
the commerce power. The opponents of the bank
said, well, it may do that, but it only does that in
a very attenuated way. And therefore if it can do
this in order to effectuate that power, then it pretty
much can do anything to effectuate a power, and therefore it can pretty much do anything
and that’s a big problem. – [Kim] So, Maryland sues
McCulloch, and then what happens? – [Neil] Right, Maryland sues McCulloch because Maryland didn’t
pass an annihilative tax, it was a tax of around 2% of the banknotes issued by the National Bank. And Maryland won in the state trial court, and Maryland won in
the state Supreme Court and this was really not
a surprise at the time. – [Kim] (laughs) Right. – [Neil] They were, let’s just say solicitous of the views of the state and after the state Supreme Court decided, the case went to the US
Supreme Court on appeal. So, even though Maryland sues McCulloch, by the time it gets to the Supreme Court, it’s called McCulloch against
Maryland because McCulloch, the cashier of the Baltimore
branch is now the petitioner. He is requesting the
US Supreme court review of the decision of the
Maryland high court. And McCulloch is asking the
Supreme Court to intervene and in essence side with
the Federal Government over the state. – [Kim] Interesting, so what
are the constitutional issues at stake once the McCulloch
case gets to the Supreme Court? – [Randy] Well, the Supreme Court in a very lengthy opinion has to consider a couple
of different matters. First, it has to consider
whether the states have the power to tax a federal entity, like a bank, and that’s where you
have the famous statement by John Marshal that says, “The power to tax can be
the power to destroy.” What he’s talking about
is the power of states to tax a federal entity,
like a bank, might be the power of states to
destroy a federal entity and he ruled against that claim. He basically argued that states couldn’t have that kind of power. – [Neil] And a threshold question before the Supreme Court decides that question of state authority to tax the National Government, is whether the National Bank
can exist to begin with. Is there federal power to
create a national bank? Part of what Maryland is arguing is that there’s no federal
power to create the bank. And so, in fact, this taxation that it’s engaging in is unproblematic. The first question is whether
the federal government can create the bank,
and if the answer is no, then the case is over,
if the answer is yes, then you get to the second question of whether the states can tax this part of the federal
government, the national bank. – [Kim] So at this time the Chief Justice of the Supreme Court is John Marshal, very well known as being
kind of the Chief Justice that brought the Supreme
court to be a major player in the US Governmental system. How did he interpret what was going on? What did he and the other justices decide? – [Neil] He borrowed extensively
from Hamilton’s arguments. And so Marshal adopted
Hamilton’s arguments in defense of the
constitutionality of the bank that Hamilton originally
articulated back in 1790, 1791. And so the court held, entered opinion by the great Chief Justice
first that Congress does possess the authority to create
the bank and secondly that states have no
authority to tax the bank. – [Randy] And that is
what Marshall concluded was within Congresses power under the Necessary and
Proper Clause to enact. And in fact, when it got to the court in McCulloch V. Maryland,
it was the state of Maryland who basically adopted
the Jeffersonian approach and said that a measure
must be, in its words, indispensably requisite
or what you might call absolutely necessary in order
for it to be constitutional. And whereas the defenders
of the bank bill said that it could be a lot less than that. So, I think that there’s
basically three positions that you can have. It has to be indispensably
requisite or logically necessary, that’s the Jefferson and Maryland view. It could be merely a matter
of convenience or expediency, meaning basically Congress
can do whatever it wants. That’s the liberal view
that sometimes attributed to John Marshal in McCulloch
V. Maryland, but he denied it. And there’s the in-between position that I think both Madison
and Hamilton were favoring, and that is the requirement of
some degree of means ends fit so that a measure really is
aimed at a particular end, and it’s not really trying
to accomplish something that Congress isn’t given the power over. – [Neil] What I think is less well known about this case is that this
part of the case was over and the court had already
decided that this federal power to create the bank before it even got to the Necessary and Proper Clause. This case is a great
example of what’s called structural Constitutional Interpretation. Hamilton articulated two
structural principles, first that the federal
government is supreme within its sphere of action. And second if some kind of
end is within federal power is listed in the Constitution, then any convenient or
useful means to accomplishing that end is also within the scope. And so, Marshal decides
that drawing inferences from his understanding of
the theory and structure of government created by the Constitution and only after he does
that, does he then turn to the Necessary and
Proper clause to confirm what he has already deduced through what he calls general reasoning. – [Kim] So, McCulloch V.
Maryland is frequently paired with Marbury V. Madison as being two cases that really decide the
extent of Federal Power in this early era. Do you think that these
two cases are related? What do they tell us about the ideas at this time period about federal power? – [Randy] Well, they’re very important. I don’t think they are quite as extreme as they’ve come to
be read after the New Deal. When the New Deal Court
and progressive advocates for a New Deal were going back into the past and seeking justifications for what they wanted to do, they read McCulloch V.
Maryland very broadly. They also read Marbury V. Madison. Actually they read Marbury V. Madison in some respects very narrowly because they didn’t
want courts invalidating their New Deal legislations. Marbury V. Madison was not a huge deal at the time it was decided. The idea that judges had a
duty to follow the higher law when it was in conflict
with the mere statute, was widely accepted at
the time of the founding. And so Marbury was not
announcing a new policy. McCulloch V. Maryland on the other hand was extremely controversial
when it was decided, and in fact quite oddly James Madison, who had signed the bill authorizing the second
bank into law, greatly, strenuously objected to
John Marshall’s opinion in McCulloch V. Maryland
upholding the bill that Madison had signed into law. So, Madison still maintained that Marshall had a latitudinarian or
overly broad interpretation of federal power, even
in upholding the bill that Madison by this time had come to believe was constitutional. – [Kim] So, what ultimately happened with the Bank of the United States? – [Neil] What ultimately happened is both the first bank, the
bill creating the first bank and the second bank had what’s
called a sunset provision, which means after a
certain amount of time, and it was 20 years, it expires. And so to reauthorize it, it
puts the burden of inertia on those who want the thing to continue. And so Congress had to pass another bill reauthorizing the bank. And president Andrew Jackson
opposed reauthorization. – [Randy] President Andrew Jackson vetoed the reauthorization of the bank. And it was very interesting because he vetoed it on
constitutional grounds. He said it was unconstitutional and yet, what happened to Mark
McCulloch V. Maryland? If McCulloch V. Maryland said
the bank was constitutional, how could President Jackson say that it was unconstitutional? Well, it was interesting
because what McCulloch said was that the bank was
constitutional as an exercise of Congress’ power to make laws that are Necessary and Proper, that Congress believed
was Necessary and Proper. And because Congress
believed it was necessary and because the measure
was plainly adapted to a legitimate end in the Constitution, then it was constitutional. What Jackson said was,
hey, look, the court said that it’s up to Congress to decide whether something is necessary
and therefore constitutional, and I as President, exercise a veto power as part of the legislative process, therefore it is up to me to decide whether the measure is necessary and therefore is constitutional,
so I as President, have decided that a bank is
not necessary and therefore, because the bank is not
necessary it is unconstitutional, and McCulloch V. Maryland
allows me, as a participant in the legislative
process, to make that call. – [Neil] Congress did not override Jackson’s veto and the bank expired, and the story ended in 1836. And I think this speaks
to one of many morals of the story of the Bank
of the United States. The Supreme Court doesn’t
have the last word on constitutional questions
when it upholds exercises of federal power, it’s then
left to the political process to decide whether or
not it wants to continue whatever controversial action
or legislation was at issue. – [Kim] So, is there any
aspect of McCulloch V. Maryland that still affects us today? – [Randy] One reading of McCulloch
is that it gives Congress a power so broad that it allows Congress to exercise any power
that it deems convenient, to the exercise of one of
it’s enumerative powers. That is how McCulloch has
come to be interpreted. I think that is an over
reading of McCulloch. And it also overlooks
one of the key passages of McCulloch V. Maryland that nowadays is given no legal effect
by the Supreme Court. This is what John Marshal
said, “Should Congress, “under the pretext of
executing its powers, “pass laws for the
accomplishment of objects “not entrusted to the
government, it would become “the painful duty of this tribunal, “should a case requiring such
a decision come before it, “to say that such an act was
not the law of the land.” So what Marshall is saying there is that just because Congress
says a law is necessary to one of it’s enumerative
powers, doesn’t make it so, and if there is a lack of fit between means and ends suggesting that in fact Congress is trying
to pursue one of the powers that was not given to it
under the Constitution, it really would be the
painful duty of the tribunal to say it was not the law of the land, and that connects this case
back up with Marbury V. Madison in which it is the painful duty
of the Supreme court to say that a statute is not the law of the land if it is unconstitutional. That aspect of McCulloch V.
Maryland is no longer followed in part because during the New Deal, the Supreme Court said
that it would not inquire into the motives of
Congress in enacting laws. And in fact, what McCulloch
is saying here is to inquire into the motives is to say, hey, look, it’s really, it purports
to be doing one thing, but it’s really doing something else and that is pre textual. – [Neil] Yeah, there
has been irreconcilable disagreement on basic
constitutional questions from the very beginning of the constitution.
(Kim Laughs) Madison and Hamilton, who
come together and write the federalist papers, they disagree about this fundamental question of strict versus loose construction of Congress’s numerated powers. They also disagree about
Congress’s spending powers. They disagree about
inherent executive powers. So sometimes originalist
constitutional arguments presuppose a greater degree of consensus about what the constitution means at the start of the
country that I don’t see when I study the history. We have always disagreed,
we’ve always managed to find some kind of
community in disagreement. It’s the conflicts and disagreements that have binded us together
as much, if not more, than agreements we’ve had about
what the Constitution means. – [Kim] So, we’ve learned
that McCulloch V. Maryland was about far more than
just a tax on a bank. It bolstered the power
of the federal government by broadly defining the
Necessary and Proper Clause, and by confirming that federal
law is supreme to state law. To learn more about McCulloch V. Maryland, visit the National Constitution Center’s interactive constitution
and Khan Academy’s resources on US Government and politics.

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