American System: 1815–1824

McCulloch v. Maryland and Gibbons v. Ogden

McCulloch v. Maryland

In McCulloch v. Maryland, the Supreme Court affirmed the federal government's supremacy over states' rights by establishing the doctrine of implied powers based on the "necessary and proper" constitutional clause.

    The debate over the federal government's power that began at the end of the Revolutionary War continued in the early 1800s. In March 1819 the Supreme Court handed down a decision on a court case, McCulloch v. Maryland, that helped clarify the powers granted to the federal government by the Constitution.

    McCulloch v. Maryland ultimately dealt with whether the federal government had the power to charter a national bank. When Congress created the Second Bank of the United States in 1816, branches opened in several cities, including Baltimore, Maryland. In 1818 the Maryland legislature passed a bill that taxed out-of-state banks. Since the national bank was the only out-of-state bank operating in Maryland, it appeared as if the Second Bank were being targeted by the Maryland law.

    The head cashier of the Baltimore Bank, James W. McCulloch, refused to pay the $15,000 tax required by the state of Maryland. McCulloch said the state of Maryland did not have the right to tax a federally chartered bank. State leaders sued, and the state courts sided with the Maryland legislature. McCulloch's lawyers took the case to the Supreme Court.

    In 1819 the Supreme Court handed down its ruling. It saw the case as questioning whether Congress had the power to establish a federal bank that could be taxed by a state and unanimously ruled in favor of the federal government. According to the Supreme Court, the federal bank could not be taxed by a state. In his opinion, Chief Justice of the Supreme Court John Marshall cited the last paragraph in Article 1, Section 8, of the Constitution. He referred to the implied powers discussed in this paragraph—powers not specifically granted by the Constitution but rather "implied" or indirectly suggested. Congress listed the powers in Article 1, Section 8, known as the enumerated powers, and claimed the government had the right to do what was "necessary and proper" to carry out these powers. This became known as the necessary and proper clause. Since a national bank would help the government achieve its purposes, such as collecting taxes (a listed power), Congress had the power to establish a national bank, which could not be taxed by a state.

    This question of the power of the federal government versus states' rights was an important one in American history. The ruling of 1819 affirmed the supremacy of the federal government over states' rights. The doctrine of implied powers was a significant interpretation of the Constitution that resulted in the continued growth of federal power.
    U.S. Supreme Court Chief Justice John Marshall served from 1801 until his death in 1835. Under his leadership, the Supreme Court became the recognized arbiter of the Constitution.
    Credit: Courtesy of the Library of Congress, LC-DIG-det-4a31386

    Gibbons v. Ogden

    In Gibbons v. Ogden, the Supreme Court ruled that only the federal government had the power to regulate interstate commerce.

    The Supreme Court case Gibbons v. Ogden also revolved around the issue of federal power versus states' rights. In 1798 New York state granted steamboat developers Robert Fulton and Robert Livingston a monopoly on steamboat operations in the state. The condition was they had to develop a steamboat that could travel at least four miles an hour upstream on the Hudson River. In 1807 Fulton and Livingston met the grant requirement. U.S. Senator Aaron Ogden then bought the rights to run steamboats on the Hudson River between New York City and the state of New Jersey from Fulton and Livingston. But at the same time, Thomas Gibbons, a former partner of Ogden, was already operating steamboats on the Hudson River between New York and New Jersey. Gibbons had not purchased rights from Fulton and Livingston, but he had a license from the federal government to carry out coasting trade under an act of Congress passed in February 1793.

    Ogden sued Gibbons in New York state court in 1819 and won. In 1820 Gibbons appealed to the New York Court of Errors, which upheld the lower court's decision. Gibbons then took his case to the U.S. Supreme Court. In 1824 the Supreme Court ruled for Gibbons in a unanimous decision. The ruling meant the federal government had the constitutional right to regulate interstate commerce—the traffic, trade, and transportation between states. In his opinion, Chief Justice John Marshall cited the third paragraph in Article 1, Section 8, which gave Congress the power to regulate commerce "among the several States." He went on to define commerce as more than an exchange of goods and services. Commerce encompassed all kinds of commercial activity, including navigation. He wrote, "In the advancement of society, labor [and] transportation … become commodities, and enter into commerce … and their various operations become the objects of commercial regulation."

    The ruling of 1824 established the federal government's right to regulate interstate commerce and greatly expanded the federal government's jurisdiction. Today the debate over regulating interstate commerce is still part of the question of states' rights versus federal power.