McCulloch v. Maryland Establishes Federal Supremacy and Implied Powers, Protecting Second Bank from State Accountability

The U.S. Supreme Court decides McCulloch v. Maryland, with Chief Justice John Marshall authoring a landmark opinion establishing that Congress has implied powers under the Constitution’s “Necessary and Proper Clause” and that federal law is supreme over state law, preventing states from interfering with legitimate federal operations. The case arises when Maryland imposes taxes on all banks not chartered by the state, targeting the Baltimore branch of the Second Bank of the United States after the bank’s fraud and speculation had contributed to the Panic of 1819. James W. McCulloch, federal cashier at the Baltimore branch, refuses to pay the taxes imposed by Maryland. The state successfully argues on appeal to the state appellate court that the Second Bank is unconstitutional because the Constitution does not provide textual authorization for the federal government to charter a bank.

Marshall’s opinion addresses two fundamental questions: whether Congress has power to create a national bank, and whether states can tax such an institution. The Court rules that although the Constitution does not specifically enumerate the authority to establish a federal bank, Congress nonetheless has implied power to do so under the Necessary and Proper Clause (Article I, Section 8), which enables Congress to pass all laws necessary to effectively pursue its specified constitutional ends. Marshall declares that the Supremacy Clause makes federal laws supreme to state laws and prohibits states from enacting laws contrary to federal legislation. Consequently, Maryland’s tax is unconstitutional. Marshall famously writes that “the power to tax is the power to destroy,” arguing that allowing states to tax federal institutions would give them power to obstruct or eliminate federal operations.

McCulloch v. Maryland establishes expansive federal power and extensive congressional discretionary authority while simultaneously protecting a demonstrably corrupt institution from state accountability efforts. The decision comes just months after the Second Bank’s fraud and speculation triggered the Panic of 1819, yet Marshall’s opinion shields the bank from state attempts to regulate or constrain it through taxation. The ruling grants Congress sweeping implied powers beyond enumerated constitutional authorities and establishes federal supremacy in ways that concentrate power while limiting state capacity to check federal institutional corruption. The decision paves the way for the modern administrative state and broad interpretations of federal authority, but also demonstrates how judicial interpretation can protect elite institutions from democratic accountability—precedents recurring from Gilded Age court protection of corporations against state regulation through modern Supreme Court decisions limiting state authority to regulate federal contractors, revealing how constitutional doctrines of federal supremacy can serve to shield powerful institutions from popular oversight.