In McCulloch v. Maryland, the Supreme Court ruled that the Constitution gave Congress the right to create a national bank that was free from taxation by the states. The 1819 ruling was one of the earliest and most important Court decisions regarding the division of power between the national government and individual state governments in the United States.

Conflict Over a National Bank

As the 13 former British colonies joined together to form a single country in the years following the Revolutionary War, Federalists like Alexander Hamilton argued that the new nation needed a strong central government. Anti-Federalists like Thomas Jefferson disagreed, and believed the Constitution ratified in 1789 took too much power away from the individual states. The Bill of Rights sought to limit the federal government’s powers to those expressly laid out in the Constitution, and to reserve all other powers to the states.

As the first U.S. Treasury secretary, Hamilton created the first Bank of the United States in 1791 to provide the nation with a stable monetary system. As a concession to Anti-Federalists, the Bank was chartered for only 20 years. Though President James Madison (a leading Anti-Federalist who had written the Bill of Rights) let the charter expire in 1811, financial struggles during the War of 1812 convinced him and others of the need for a national bank.

In 1816, Congress created the Second Bank of the United States, and Madison signed it into law. Still, many states viewed the Bank as a competitor to their own state banks, and did not want it within their borders.

Maryland Attempts to Tax the Second Bank of the United States

Maryland was one of several states who decided to tax the Bank as a way of making money from its operations. In 1818, Maryland imposed a $15,000 annual tax on “any bank not chartered within the state,” a description that only applied to the Second Bank of the United States. When James McCulloh (later misspelled “McCulloch” by the Court clerk), head cashier at the Bank’s branch in Baltimore, refused to pay the tax, Maryland sued him for the unpaid taxes.

Famed orator Daniel Webster and the rest of McCulloh’s legal team argued that the tax was unconstitutional, and that Maryland didn’t have the right to impose a tax on a bank chartered by the federal government. But the state court ruled in Maryland’s favor, and a court of appeals affirmed the verdict.

The Marshall Court Verdict

In a unanimous decision delivered on March 6, 1819, the Supreme Court reversed the lower courts’ verdict and upheld the constitutionality of the Second Bank of the United States. Chief Justice John Marshall wrote the Court’s opinion, which held that the “necessary and proper clause” in Article I, Section 8 of the U.S. Constitution gave Congress certain implied powers beyond those specifically enumerated in the document—including the creation of a national bank,

Because the chartering of the Second Bank of the United States related to Congress’s power to tax, borrow and regulate interstate commerce, the Court ruled, the Bank was constitutional under the “necessary and proper” argument. Moreover, the Court affirmed, neither Maryland nor any other state had the right to tax the Second Bank of the United States, a federally chartered institution. The states lacked this right due to the “supremacy clause” in Article VI of the Constitution, which stated that the laws of the United States (and the Constitution itself) take precedence over laws made by the states.

“The government of the Union, though limited in its powers, is supreme within its sphere of action,” wrote Marshall. “[I]ts laws, when made in pursuance of the constitution, form the supreme law of the land."

Significance of McCulloch v. Maryland

The Second Bank of the United States would endure fewer than 20 more years before states’ rights champion Andrew Jackson vetoed an attempt by Congress to renew its charter in 1832. But the impact of McCulloch v. Maryland has endured, and the case remains a foundational part of American constitutional law.

By using the supremacy clause to assert the precedence of federal laws and the Constitution over state laws and state constitutions, Marshall’s decision played a pivotal role in setting up the power structure between federal and state government in the United States. Indeed, the McCulloch precedent would be cited in a wide-ranging array of legal battles in the centuries to come, including those over the Social Security Act and other New Deal legislation in the 1930s, the Civil Rights Act in 1964 and the Affordable Care Act in 2012.

The legacy of McCulloch v. Maryland would not have been a surprise to Marshall himself, who had predicted that the debate over this distribution of powers would continue. Such questions, he wrote in his 1819 opinion, were “perpetually arising, and will probably continue to arise, as long as our system should exist.”


The Supremacy Clause: McCulloch v. Maryland. Annenberg Classroom, The Annenberg Public Policy Center.

McCulloch v. Maryland (1819). Supreme Court History: The First 100 Years, Thirteen/WNET New York.

David S. Schwartz, The Spirit of the Constitution: John Marshall and the 200-year Odyssey of McCulloch V. Maryland. (Oxford University Press, 2019)

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