McCulloch v. Maryland

How much power does Congress have?

Can Congress institute a national bank?

In 1816, the U.S. Congress chartered the Second Bank of the United States, a federally authorized national bank. Attempting to impede on the operation of the bank, the state of Maryland passed legislation to impose a tax on all banks not chartered by the state legislation, which at the time was only the Second National Bank. James W. McCulloch, a cashier at the Baltimore branch of the bank, refused to pay the tax, and the courts later determined that Maryland's tax was directly targeting the national bank, thus also attacking the national government.

Ultimately, the questions at hand were if Congress was allowed to establish the bank, and if Maryland unconstitutionally interfered with congressional powers.

Congress has constitutional authority under the Elastic Clause

The Supreme Court under John Marshall unanimously decided that Congress held the constitutional right and authority to institute the Second Bank of the United States under the terms of the Elastic Clause. This allowed them to institute whatever was "necessary and proper" for the nation, which in this case was the bank. Therefore, Maryland could not tax the national bank, since it was established with supreme constitutional powers.

Established the Elastic Clause and Supremacy Clause

This case established two important constitutional principles. First, the U.S. Constitution grants Congress implied powers through the Elastic Clause, so that they may create and maintain a functional national government. Second, states may not interfere with valid, constitutional actions made by the Federal government, which is implied under the Supremacy Clause.