How can state governments make national policy directly without Congress ever voting on the matter quizlet?

James W. McCulloch, the cashier for the Baltimore branch of the Bank of the United States, was hardly a loyal servant of the American government. While in charge of managing the Bank, he spent most of his time looting its resources and later was jailed.

McCulloch v. Maryland raises the issue that the ratification of the Constitution did not definitively settle: where does state sovereignty begin and end, and what does it mean when Article VI proclaims that the Constitution and laws of the U.S. are the supreme law of the land? While this question was not resolved with finality in 1819 when McCulloch was decided, Chief Justice John Marshall's opinion established that in a contest between national and state governments, the national government usually wins. The debate itself continued until the end of the Civil war when it was finally, but not conclusively, settled, even though today Americans still hear demands for states' rights.

The McCulloch case focused on the Bank of the United States, a highly controversial institution from the moment it was first incorporated in 1791 during George Washington's first administration. The primary mover behind the Bank was Secretary of the Treasury Alexander Hamilton who, as a nationalist and Federalist, believed in a strong central government and who advocated fiscal soundness in the government's financial dealings. One way he thought that good planning could be achieved was to establish a national bank just as the English had done 100 years earlier when the Bank of England was created. A bank was necessary because: it provided a foundation for the new national government's right, duty, and ability to tax; it was a place to store the revenue; it gave the government credibility to secure loans from foreign countries; and it allowed the Treasury Department to manage the government's finances in a rational, fiscally sound manner.

Hamilton argued that just because a bank was not explicitly listed in the Constitution as one of the new institutions of the United States, the government could establish one anyway because if was only a means for the government to carry out its new administrative functions. In this way, he argued that the creation of a bank was an implied, rather than an express, power of the government. In other words, government had the power to do whatever was necessary within the authority granted to it by the Constitution. The creation of a bank certainly fit into the Necessary and Proper Clause of Article I, Section 8.

Many states opposed this Second Bank because it allowed private citizens to deposit their money in it, thus directly competing with local banks. As a result, many states, including Maryland, figured out a way to levy a tax on it: Maryland required the Bank to issue its notes on special stamped paper that Maryland itself sold to it at an annual cost of $15,000. The state would add an additional amount for each note printed.

James McCulloch, as the Maryland cashier of the Second Bank, refused to pay the tax. Maryland sued him in Baltimore County Court, and he lost, whereupon he then appealed to the State's Court of Appeals, where he lost yet again. At that point, he appealed to the Supreme Court.

Maryland's attorneys argued that Congress did not have the constitutional authority to establish a national bank, noting it was not among the enumerated powers. They also argued that if the Court interpreted the Constitution such that the national government did have the implied power to establish a national bank, then Maryland had the concurrent power to tax the bank. Lawyers for the national government in turn argued that the Constitution did indeed imply federal authority to establish a national bank and that Maryland's levying a tax on the bank was unconstitutional, for it impinged on the national government's ability to fulfill its constitutional responsibilities by take some of its financial resources.

The Supreme Court decided in favor of the national government. The justices based their ruling on their interpretation of the Constitution's necessary and proper clause and the enumerated powers of Congress to "lay and collect taxes, to borrow money...and to regulate commerce among the several states." The Court said that, combined, these enumerated powers implied that the national government had the authority to charter a bank and to locate a branch in Maryland. Moreover, the Court found that Maryland did not have the right to tax that bank, because taxation by the state would interfere with the exercise of national authority.

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