What were the two issues in McCulloch v. Maryland?
There were two main issues in the McCulloch v Maryland case. The federal government had created a national banking system in order to have a more orderly and stable financial system. This case was really a test regarding the power of the federal government. Many people believed that the federal government didn’t have the power to create the national bank. In Maryland, the state government taxed the national bank, which the bank refused to pay. As a result, this case went to court and eventually ended up in the Supreme Court.
There were two questions that the Supreme Court needed to review. Was the national bank legal and could a state levy taxes on a federal institution such as the national bank? The Supreme Court issued a ruling in 1819 that stated several things. First, it said that the federal government was within its powers to create a national bank. It also said that the states could not tax the federal government or its institutions. This ruling basically stated that a loose interpretation of the Constitution was legal.
This case clearly showed the differences between the Federalists, who favored a loose view of the Constitution, and the Democratic-Republicans, who believed in a strict interpretation of the Constitution.
The landmark Supreme Court decision in McCulloch v Maryland (1819) represented a significant expansion in the powers of the Federal government, in keeping with the Federalist tenor of the Marshall Court. In doing so, it dramatically shifted the balance of power between the Federal government and the states, in favor of the former.
The substantive issue at hand was whether the Constitution had given Congress the power to charter a bank. Federalists strongly believed that the establishment of a national banking system was an essential foundation for the United States' prosperity as a successful trading, commercial nation. Opponents, however, felt that such a measure would undermine the economic interests of agriculture, and place too much political and economic power in the hands of banking and commercial elites.
In giving its ruling, the Court held that the power to charter a bank was implied in the Constitution, even if not explicitly set out. This creative interpretation of the relevant constitutional provisions helped pave the way for other clauses of the Constitution to be construed in such a way as to validate the expansion of Federal power.
The second question decided by the Court was whether states had the right to levy taxes on banks or ban them altogether. The Court held that they did not. The Federal government had the right and the power to create Federal banks. Thus, the states were not entitled to tax the Federal government. For as Chief Justice Marshall himself stated "The power to tax involves the power to destroy." The Court believed that state governments should not be in a position to tax, and by extension potentially destroy, the Federal government.
There were two main issues in this case.
First, there was the issue of whether the bank itself was constitutional. The Constitution does not explicitly give Congress the authority to create a bank. Therefore, one issue was whether there was something in the Constitution that at least implied that the Congress had the authority to create a bank.
Second, there was the issue of whether a state could tax an activity of the federal government. The bank was an activity of the federal government and Maryland wanted to tax it. Was that legal, or would that violate the supremacy of the federal government.