26 Landmark Cases in Federalism
McCulloch v. Maryland (1819)
- The War of 1812 had just come to a close and the economy was in shambles due to the
usual overspending occurring in times of war. Around this time, the national bank’s
charter was set to expire and due to the economic circumstances of the country, President
Madison renewed the charter in 1816 (Irons 122). - As a result, the national bank, rather than stabilizing the economy, began tightening
credit, calling in loans and foreclosing on thousands of farm mortgages in 1819 (Ibid). - The resulting panic of 1819 led many states to impose taxes on the operations of the
national bank. - The state of Maryland levied a tax of $15,000 on all banks not chartered by the state (an
indirect way of only charging the national bank). - When James McCulloch, cashier of the national bank’s Baltimore branch refused to pay
the tax the state sued him to collect. Judges in Maryland, unsurprisingly, ruled against
McCulloch. - McCulloch then appealed his case to the Supreme Court.
- It was a crowded chamber as the chief advocate for the national bank, Daniel Webster—
the greatest corporate lawyer who ever lived—began opening arguments. The arguments
lasted nine days and Webster’s opponent was Luther Martin, a capable attorney in his
own right; however, afflicted with rampant alcoholism. It was “rumored” that Martin
argued the majority of the case inebriated (Irons 123). - Webster’s argument was largely Hamiltonian, resting on expanded views of
congressional powers. - Martin’s argument was Jeffersonian, resting on restrictive views of congressional
expressed powers. - Constitutional questions:
1) Did Congress have the authority to establish the bank?
2) Did the Maryland law unconstitutionally interfere with congressional powers? - The decision was 7-0.
- John Marshall argued that the power could be implied if one looks at the other specific
powers granted to Congress in Article 1, Section 8, in addition to the final clause enabled
Congress “to make all laws that are necessary and proper for carrying into execution the
foregoing powers. “ From this interpretation the court opened the door for future
increases of Congressional power. - The other issue of the McCulloch case was whether or not the state of Maryland had the
constitutional authority to tax the national bank. Marshall and the court took the national
government’s side, arguing that a legislature representing all of the people could not be
taxed by a state legislature representing a small portion of the people. This decision also
carried the dictum: “The power to tax is the power to destroy.” - If Maryland could not create a national entity, then it could not destroy one. If it was possible to tax something into oblivion, thereby destroying it, then Maryland did not have the power to tax something they did not create.
- And, finally, this case utilized and clarified the supremacy clause wherein: whenever a state law conflicts with a federal law, the st