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hey this is Kim from Khan Academy and today we're learning about McCulloch versus Maryland a Supreme Court case decided in 1819 that helped to define the relationship between the federal government in the States the question at issue in this case was whether the state of Maryland could tax the Baltimore branch of the Bank of the United States and whether Congress even had the power to create a Bank of the United States in the first place to learn more I sought out the help of two experts Randy Barnett is the Carmack waterhouse professor of legal theory at the Georgetown University Law Center and director of the Georgetown Center for the Constitution Neal Segal is the David W ichael professor of law and professor of political science at Duke Law School so professor Barnett could you kind of set the stage for us what was happening in this case what was the overall context well McCulloch versus Maryland was a culmination of a 30-year old constitutional controversy in fact it was the culmination of one of the earliest controversies that we had in the country and that is over whether Congress had the power to establish a National Bank a bank that would be a corporation formed by Congress and which would have certain privileges that Congress granted it this was a proposal that had been made by Alexander Hamilton when he was secretary of the Treasury and the Washington ministration in the very first year of the Washington administration and it went to Congress and there was a very very robust debate in Congress as to whether this measure was within the powers of Congress to enact eventually it Congress voted that it was and then before he signed the bill President Washington asked some of his cabinet members to give him their opinion on whether it was constitutional and he heard from several of his cabinet members he heard from his Attorney General Edmund Randolph he said it was unconstitutional he heard from a Secretary of State Thomas Jefferson Jefferson said it was unconstitutional and finally he heard from his Secretary of Treasury who had proposed it Alexander Hamilton who said it was constitutional and Washington signed the bill and it became law and it established the the First National Bank of the United States this case arose in May of 1818 when Maryland sued McCulloch and he was the cashier of the Baltimore branch of the Bank and Maryland sued him in state court to recover a tax assessed by Maryland on the bank and this was a time of intense hostility toward the National Bank in a number of states the state banks competed with the National Bank and there had been an economic panic in 1818 when the US bank called in its loans and state banks that had loans from the federal bank were crippled and in response a number of states passed nearly annihilated taxes on the federal bank and that's the environment in which in 1819 McCulloch against Maryland came before the Supreme Court I'm is very interesting because this is something that we talked a lot about in the early 19th century the Bank of the United States and what was good about it and what was bad about it and there are certain people who were certainly enemies of the Bank like Thomas Jefferson and then later Andrew Jackson why did people object to the Bank of the United States so much yeah there were a variety of objections there was a real political policy disagreement about whether it was a good idea Hamilton had had a nation-building economy building objective as the first secretary of the Treasury he wanted to pay off both the national debt and the state debts from the Revolutionary War which remained unpaid he was emphasizing manufacturing in commerce and a National Bank was a key part of his plan the bank would make it easier for the national government to raise taxes to pay off debts to make payments to obtain short-term loans the notes issued by the bank could function as a national currency it could also provide a source of capital for financing businesses but the opponents had different ideas one of the leading opponents in Congress was James Madison who at the time was a representative from Orange County Virginia and what concerned him and I think what's concerned many people was that there was no expressed enumerated power in the Constitution for Congress to make a bank there was an enumerated power to create a post office but there was no enumerated power to create a bank so the question is whether the failure or the Silence of the Constitution on whether there was this power should be construed in favor of having such a power or not having such a power and Madison's concern was that to imply such a power especially when the way in which it was being applied was very remotely connected to one of the enumerated powers that were in the Constitution was very dangerous because by that form of reasoning Congress could essentially do whatever it wished and that would violate the basic pledge that this was going to be a national government of limited and enumerated powers so in Congress what was the power that proponents of the bank used to justify passing it the principal power that they used was is called the Necessary and Proper Clause and Necessary and Proper Clause says Congress shall have power to make all laws which shall be necessary and proper for carrying into execution its foregoing powers those powers on the list and all other powers vested by the Constitution in the government of the United States or any department or officer thereof this is called the Necessary and Proper Clause it allows for Congress to make laws incidental to the enumerated powers to effectuate or carry into execution those powers and supporters of the bill said that the bank carried in execution a number of powers it carried into execution the taxing power carry into execution the commerce power the opponents of the bank said well it may do that but it only does that in a very attenuated way and therefore if it can do this in order to effectuate that power then it pretty much can do anything to effect your way to power and therefore it can pretty much do anything and at a big problem so Maryland sues McCullough and then what happens right Maryland sues McCulloch because Maryland didn't pass on an eyelet of tax it was a tax of around 2% of the banknotes issued by the National Bank and Maryland won in the state trial court and Maryland won in the state Supreme Court and this was really not a surprise at the work let's just say solicitous of the views of the state and after the state Supreme Court decided the case went to the US Supreme Court on appeal so even though Maryland sues McCulloch by the time it gets to the Supreme Court is called McCulloch against Maryland because McCulloch the cashier the Baltimore branch is now the petitioner he's requesting the US Supreme Court review of the decision of the Maryland High Court and McCulloch is asking the Supreme Court to intervene and in essence side with the federal government over the state interesting so what are the constitutional issues at stake once the McCulloch case gets to the Supreme Court well the Supreme Court in a very lengthy opinion has to consider a couple of different matters first it has to consider whether the states have the power to tax a federal entity like a bank and that's where you have the famous statement by John Marshall that says the power to tax can be the power to destroy but he's talking about is the power of states to tax a federal entity like a bank might be the power of states to destroy a federal entity and he he ruled against that claim and he basically argued that states couldn't have that kind of power and a threshold question before the supreme court decides that question of state authority to tax the national government is whether the national bank can exist to begin with is there federal power to create a National Bank part of what Maryland is arguing is that there's no federal power to create the bank and so in fact this taxation that it's engaging in is unproblematic the first question is whether the federal government can create the bank and if the answer is then the case is over if the answer is yes then you get to the second question of whether the states can tax this part of the federal government the National Bank so at this time the Chief Justice of the Supreme Court is John Marshall very well known as being kind of the Chief Justice that brought the Supreme Court to be a major player in the u.s. governmental system how did he interpret what was going on what did he and the other justices decide he borrowed extensively from Hamilton's arguments and so Marshall adopted Hamilton's arguments in defense of the constitutionality of the bank that Hamilton originally articulated back in 1790 1791 and so the court held an opinion by the great Chief Justice first that Congress does possess the authority to create the bank and secondly that states have no authority to tax the bank and that is what Marshall concluded was within Congress's power under the Necessary and Proper Clause to enact and in fact when it got to the court in McCulloch versus Maryland it was the state of Maryland who basically adopted the Jeffersonian approach and said that a bit measure must be in its words indispensably requisite or what you might call absolutely necessary in order for it to be constitutional and whereas the defenders of the bill of the bank bill said that it could be a lot less than that so I think that there's basically three positions that you can have it has to be indispensably requisite or logically necessary that's the Jefferson and Maryland view it could be merely a matter of convenience or expediency meaning basically Congress can do whatever it wants that's the liberal view that sometimes attributed to John Marshall in McCulloch versus Maryland but he denied it and there's the in-between position that I think both Madison and Hamilton were favoring and that is the requirement of some degree of means-ends fit so that a measure really is aimed at a particular end and it's not really trying to accomplish something that Congress isn't given the power over what I think is less well-known about this case is that the case was that this part of the case was over and the court had already decided that this federal power to create the bank before it even got to the Necessary and Proper Clause this case is a great example of what's called structural constitutional interpretation Hamilton articulated two structural principles first that the federal government is supreme within its sphere of action and second if some kind of end is within federal power is listed in the Constitution then any convenient or useful means to accomplishing that end is with also within the scope and so Marshall decides that drawing inferences from his understanding of the theory and structure of government created by the Constitution and only after he does that does he then turn to the Necessary and Proper Clause to confirm what he has already deduced through what he calls general reasoning so McCulloch versus Maryland is frequently paired with Marbury vs. Madison as being two cases that really decide the extent of federal power in this early era do you think these two cases are related what do they tell us about the ideas at this time period about federal power well they're very important I don't think they are quite as extreme as they've come to be read after the New Deal when the New Deal court and advocates the progressive advocates for a new deal were going back into the past and seeking justifications for what they wanted to do they read McCulloch versus Maryland very broadly they also read Marbury vs. Madison actually they read vari vari vs. Madison in some respects very narrowly because they didn't want courts invalidating their New Deal legislations Marbury vs. Madison was not a huge deal at the time it was decided the idea that judges had a duty to follow the higher law when it was in conflict with the mere statute was widely accepted at the time of the founding and Marbury was not announcing a new policy McCulloch versus Maryland on the other hand was extremely controversial when it was decided and in fact quite oddly James Madison who had signed the bill authorizing the second Bank into law greatly strenuously objected to John Marshall's opinion in McCulloch versus Maryland upholding the bill that Madison had signed into law so Madison still maintained that Marshall had a latitudinarian or bra an overly broad interpretation of federal power even in upholding the bill that Madison by this time had come to believe was constitutional so what ultimately happened with the Bank of the United States what ultimately happened is both the first bag the bill creating the first bank and the second bank had what's called a sunset provision which means after a certain amount of time and it was 20 years it expires and so to reauthorize it it puts the burden of inertia on those who want the thing to continue and so Congress had to passed another bill reauthorizing the bank and President Andrew Jackson opposed reauthorization President Andrew Jackson vetoed the reauthorization of the bank and it was very interesting because he vetoed it on constitutional grounds he said it was unconstitutional and yet what happened to mark McCulloch versus Maryland if McCulloch versus Maryland said the bank was constitutional how could President Jackson say that it was unconstitutional well it was interesting because what McCulloch said was that the bank was constitutional as an exercise of Congress's power to make laws that are necessary and proper that Congress believed was necessary and proper and because Congress believed it was necessary and because the measure was plainly adapted to a legitimate end in the Constitution then it was constitutional what Jackson said was hey look the court said that it's up to Congress to decide whether something is necessary and therefore constitutional and I as president exercised a veto power as part of the legislative process therefore it is up to me to decide whether the measure is necessary and therefore is constitutional so as president have decided that a bank is not necessary and therefore because the bank is not necessary it is unconstitutional and McCulloch versus Maryland allows me as a participant in the legislative process to make that call Congress did not override Jackson's veto and the bank expired in the story ended in 1836 and I think this speaks to one of many morals of the story of the Bank of the United States the Supreme Court doesn't have the last word on constitutional questions when it upholds exercises of federal power it then left to the political process to decide whether or not it wants to continue whatever controversial action or legislation was at issue so is there any aspect of McCulloch versus Maryland that still affects us today one reading of McCulloch is that it gives Congress a broad a power so broad that allows Congress to exercise any power that it deems convenient to the exercise of one of its enumerated powers that's that is how a McCulloch has come to be interpreted I think that is an overeating of McCulloch and it also overlooks one of the key passages of McCulloch versus Maryland that nowadays has given no legal effect by the Supreme Court this is what John Marshall said should Congress under the pretext of executing its powers passed laws for the accomplishment of objects not entrusted to the government it would become the painful duty of this Tribunal should a case requiring such a decision come before it to say that such an act was not the law of the land so what Marshall is saying there is that just because Congress says it a law is necessary to one of its numerator powers doesn't make it so and if there is a lack of fit between means and ends suggesting that in fact Congress is trying to pursue one of the powers that was not given to it under the Constitution it really would be the painful duty of the tribunal to say it was not the law of the land and that's connects this case back up with Marbury versus Madison in which it the painful duty of the Supreme Court to say that a statute is not the law of the land if it's unconstitutional that that aspect of McCulloch versus Maryland is no longer followed in part because during the New Deal the Supreme Court said that it would not inquire into the motives of Congress in enacting laws and in fact what McCulloch is saying here is to inquire into the motives it's to say hey look it's really it purports to be doing one thing but it's really doing something else and that is pretextual you know there has been irreconcilable disagreement on basic constitutional questions from the very beginning of the cops Madison and Hamilton who come together and write the Federalist Papers they disagree about this fundamental question of strict versus loose construction of Congress's enumerated powers they also disagree about Congress's spending powers they disagree about inherent executive power so sometimes originalist constitutional arguments presuppose a greater degree of consensus about what the Constitution means at the start of the country that I don't see when I study the history we have always disagreed we've always managed to find some kind of community in disagreement it's the conflicts and disagreements that have binded us together as much if not more than the agreements we've had about what the Constitution means so we've learned that McCulloch versus Maryland was about far more than just a tax on a bank it bolstered the power of the federal government by broadly defining the Necessary and Proper Clause and by confirming that federal law is supreme to state law to learn more about McCulloch versus Maryland visit the National Constitution Center's interactive Constitution and Khan Academy's resources on US government and politics
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