1. McCulloch V. Maryland 1819

2. Background Info/Facts  April 1816 Congress chartered the Second National Bank  Some people felt that the National Bank harmed State economies and businesses  Maryland Passed a Stamp tax on paper used to make money – only for Federal Banks affecting the National Bank  James McCulloch refused to pay the tax and the state of Maryland brought a suit against him.

3. Background Info/Facts - Second National Bank established in Maryland - Many people opposed the bank being established in the state of Maryland so… - Maryland placed a tax on the bank since it was residing in the state of MD - James McCulloch (bank clerk) wasn’t obeying the tax - McCulloch taken to court by the state of Maryland and was ruled against for breaking state law of NOT imposing the tax * Case appealed to the highest court level in MD and went to Supreme Court

4. Questions: National Law V. State Law Does congress have the power to establish a bank in the state of Maryland? Does congress have the power to establish a bank in the state of Maryland? Does the state of MD have the power to tax the bank for being established? Does the state of MD have the power to tax the bank for being established?  Does any state have the right to tax the United States Government (Federal)?  Is the National Bank legal – underlying question?

5. Arguments for Both Sides  Maryland Did have the right to tax because it was not forbidden by the Constitution! Did have the right to tax because it was not forbidden by the Constitution! The National Bank is not even legal! The National Bank is not even legal!  McCulloch States forbidden to tax anything of the National government beyond real property! States forbidden to tax anything of the National government beyond real property! Necessary for Congress to create and coin money, collect taxes and borrow money! Necessary for Congress to create and coin money, collect taxes and borrow money! Necessary and Proper Clause – Elastic Clause! Necessary and Proper Clause – Elastic Clause! Article 1 Section 8 Clause 18 (Toma!) Article 1 Section 8 Clause 18 (Toma!)

6. Ruling 1. Congress HAS the power to establish a national bank in the state of Maryland! 2. Maryland DOES NOT have the power to tax the bank! taxing a national institution is an indirect tax on citizens of other states  UNCONSTITUTIONAL! taxing a national institution is an indirect tax on citizens of other states  UNCONSTITUTIONAL! Since the bank is legal the tax is a violation of the principle of National Supremacy! Since the bank is legal the tax is a violation of the principle of National Supremacy!

7. Significance * States are bound to obey the Constitution under the Supremacy Clause (Supreme Law of Land) * Necessary and Proper Clause – establishing banks is not listed in Const., but to do what is “necessary and proper” to carry out commerce and monetary issues is!