First Bank of the United States:
- The federal government had established the First Bank of the United States in 1791 under the authority granted by Article I, Section 8 of the Constitution, which gave Congress the power "to incorporate all necessary and proper means" for carrying out its powers.
Taxation by State Governments:
- Some state governments, including Maryland, imposed taxes on certain operations of the First Bank of the United States within their borders. This created tension between the federal government and these states, as the federal government asserted that such taxation could undermine its ability to carry out its constitutional functions.
Issues in Dispute:
- The core issue in the McCulloch case was whether states could tax federally chartered institutions like the First Bank of the United States, and whether the Necessary and Proper Clause of the Constitution gave Congress implied powers beyond those explicitly stated.
Maryland's Argument:
- Maryland argued that it had the right to tax the First Bank of the United States because it was an entity operating within its territory. The state claimed that the bank's operations were not essential to the federal government's constitutional powers and therefore did not fall under the protection of the Necessary and Proper Clause.
Federal Government's Position:
- The federal government, represented by Chief Justice John Marshall, maintained that the First Bank of the United States was a legitimate constitutional exercise of Congress' implied powers under the Necessary and Proper Clause.
Significance of the Case:
- The Supreme Court's ruling in McCulloch v. Maryland was groundbreaking because it established the principle of implied powers and affirmed the national supremacy of the federal government.
