The Story of McCulloch: Banking on National Power

Article excerpt

There is no denying the importance of McCulloch v. Maryland. (1) As of April 14, 2004, it had received a total of 7,307 cites in the Westlaw computer base. Many scholars consider it the single most important opinion in the Court's history. Later national leaders "have not hesitated to make recourse to Marshall's image whenever they needed authority to confirm the legitimacy of the national government deriving from the people of the United States, to defend the independence of the federal judiciary, to support broad constructions of Congress's Commerce Clause and Necessary and Proper Clause Powers, and to justify judicial construction of the Constitution to meet the pressing issues of the day." (2) And a number of lines from the opinion are second-nature to any constitutional lawyer, such as Marshall's definition of the "necessary and proper" clause and his dictum that "we must never forget that it is a Constitution we are expounding." (3)

But much less familiar is the historical setting of the decision. Chief Justice Marshall did not write on a clean slate in McCulloch. The constitutionality of a national bank had been disputed since the early days of the Republic and involved deep questions of constitutional theory. To fully understand Marshall's opinion, we need to place it firmly into historical context. Only by doing so can we understand why McCulloch was such a controversial decision at the time. We may also be able to see how the Court's current debates over federalism relate to the vision Marshall articulated in McCulloch. (4)


Often, the interesting part of the development of a case relates to the lives and conduct of the parties, the litigation tactics of the lawyers, and the way that lower court proceedings contributed to the appellate decisions. With respect to McCulloch, however, the interesting background relates not to the earlier stages of the litigation but to prior controversies. When Marshall ruled on the constitutionality of the Bank of the United States, he was continuing a debate that had begun even before the Constitution went into effect. He was also contributing to a discussion of the nature of the Union and the scope of federal power that had begun with Hamilton, Madison, and Jefferson. The extensive oral arguments in McCulloch were primarily concerned with linking the case to the broad constitutional themes of this ongoing debate, setting the stage for Marshall's historic opinion. Thus, Marshall was adding a chapter to a constitutional debate begun by others.


Controversy about a national bank arose even before the Constitution was adopted. The country emerged from the American Revolution with serious inflation, along with over $450 million in debt and little prospect of paying it off. (5) Between 1779 and 1781, congressional interest in chartering a bank rose, with the goal of stabilizing the currency on the basis of the bank's notes. (6) Robert Morris, the mastermind behind the bank plan, intended to keep the bank's notes in circulation indefinitely as a form of paper money. (7) After the Bank of North America was chartered by Congress, (8) Morris tried unsuccessfully to push through Congress his scheme to convert the existing national debt into circulating bank notes, but he was unable to secure adequate funding. (9) But the Bank of North America was not a complete failure. Franklin, Jefferson, and Hamilton were among its investors and depositors, and the bank handled payments for the Continental Army. (10)

Even at this early stage, the legality of a national bank was disputed. James Wilson, soon to be an important participant in the adoption of the new Constitution, made the case in favor of the bank. (11) He argued that "[w]henever an object occurs, to the direction of which no particular state is competent, the management of it must, of necessity, belong to the United States in congress assembled. …