McCulloch v. Maryland

Another significant constitutional dispute arose during the Madison administration, this time over the establishment of a national bank, and once again the Supreme Court was called on to interpret the Constitution. In a continuation of a seemingly endless debate about the necessity of having a national bank, the Bank of the United States was rechartered in 1816 (its charter had been allowed to expire in 1811). By that time, the idea of a national bank had become a symbol of animosity between creditors and debtors and between the national government and the state governments. In response to the bank’s re-chartering, several states attempted to eliminate local branches of the bank in their states. In Maryland, the state government tried to tax the state’s only branch of the national bank out of existence by imposing a tax of $100 per bank note issued by it. The cashier at the bank refused to pay the tax and was subsequently sued in Maryland state court. Not surprisingly, the state court ruled in Maryland’s favor.

After the Maryland Court of Appeals upheld the original decision, it was appealed to the Supreme Court. Once again it was Chief Justice Marshall who penned the Court’s decision (see McCulloch v. Maryland). In the decision, Marshall wrote that the dispute hinged on two questions. First, does the Congress have power to create a national bank? Second, if the answer to the first question be in the affirmative, does the state of Maryland have the authority to tax that bank?