After reading the previews of ‘Gibbons v. Ogden’ and ‘ McCulloch v. Maryland’, choose either case and answer the following questions in a post of around 150-200 words. Please avoid the temptation to Google the cases and reveal the decisions. Some of you may already know the decisions from previous chapters and that is ok, but please answer in terms of what ‘should’ have happened.
Who should the Supreme Court have found in favor of and why? Identify legal the legal principles and political issues at stake and, if possible, the Constitutional clauses which might help guide the Court’s decision.
Class material to read for context:
1.McCulloch v. Maryland (1819)
In 1791, the first Bank of the United States was established to serve as a central bank for the country. It was a place for storing government funds, collecting taxes, and issuing sound currency. At the time it was created, the government was in its infancy and there was a great deal of debate over exactly how much power the national government should have. Some people, such as Alexander Hamilton, argued for the supremacy of the national government and a loose interpretation of its powers, which would include the ability to establish a bank. Others, such as Thomas Jefferson, advocated states’ rights, limited government, and a stricter interpretation of the national government’s powers under the Constitution and, therefore, no bank. While Jefferson was President, the Bank’s charter was not renewed. After the War of 1812, President James Madison determined that the country could utilize the services of a national bank to help fulfill its powers listed in link to Article I, Section 8, Clause 18 of the Constitution. In response to his suggestion, Congress proposed a Second Bank of the United States in 1816.
President Madison approved the charter and branches were established throughout the United States. Many states opposed opening branches of this bank within their boundaries for several reasons. First, the Bank of the United States competed with their own banks. Second, the states found many of the managers of the Bank of the United States to be corrupt. Third, the states felt that the federal government was exerting too much power over them by attempting to curtail the state practice of issuing more paper money than they were able to redeem on demand.
One state opposed to the Bank of the United States was Maryland. In an attempt to drive the Baltimore branch of the Bank of the United States out of business, the Maryland State Legislature required that all banks chartered outside of Maryland pay an annual tax of $15,000. There was a $500 penalty for each violation of this statute. James McCulloch, cashier of the Baltimore branch of the Bank of the United States, refused to pay the tax.
The State of Maryland took him to court, arguing that because Maryland was a sovereign state, it had the authority to tax businesses within its border, and that because the Bank of the United States was one such business, it had to pay the tax. Luther Martin, one of the attorneys for Maryland, reasoned that because the federal government had the authority to regulate state banks, Maryland could do the same to federal banks. Besides, he argued, the Constitution does not give Congress the power to establish a Bank of the United States. McCulloch was convicted by a Maryland court of violating the tax statute and was fined $2,500.
McCulloch appealed the decision to the Maryland Court of Appeals. His attorneys, who included Daniel Webster, asserted that the establishment of a national bank was a “necessary and proper” function of the Congress. Webster stated that many powers of the government are implied rather than specifically stated in the Constitution. Furthermore, he argued, Maryland did not have the authority to levy the tax, because doing so interfered with the workings of the federal government.
After the Maryland Court of Appeals upheld the original decision against McCulloch, he appealed again. The case was heard by the Supreme Court of the United States, then headed by Chief Justice John Marshall.
2.Gibbons v. Ogden (1824)
One of the enduring issues in American government is the proper balance of power between the national government and the state governments. This struggle for power was evident from the earliest days of American government and is the underlying issue in the case of Gibbons v. Ogden.
In 1808, Robert Fulton and Robert Livingston were granted a monopoly from the New York state government to operate steamboats on the state’s waters. This meant that only their steamboats could operate on the waterways of New York, including those bodies of water that stretched between states, called interstate waterways. This monopoly was very important because steamboat traffic, which carried both people and goods, was very profitable.
Aaron Ogden held a Fulton-Livingston license to operate steamboats under this monopoly. He operated steamboats between New Jersey and New York. However, another man named Thomas Gibbons competed with Aaron Ogden on this same route. Gibbons did not have a Fulton-Livingston license, but instead had a federal (national) coasting license, granted under a 1793 act of Congress.
Naturally, Aaron Ogden was upset about this competition because according to New York law, he should be the only person operating steamboats on this route. Ogden filed a complaint in the Court of Chancery of New York asking the court to stop Gibbons from operating his boats. Ogden claimed that the monopoly granted by New York was legal even though he operated on shared, interstate waters between New Jersey and New York. Ogden’s lawyer said that states often passed laws on issues regarding interstate matters and that states should be able to share power with the national government on matters concerning interstate commerce or business. New York’s monopoly, therefore, should be upheld.
Gibbons’ lawyer disagreed. He argued that the U.S. Constitution gave the national government, specifically Congress, the sole power over interstate commerce. Article I, Section 8 of the Constitution states that Congress has the power “[t]o regulate Commerce with foreign Nations, and among the several States. . . .” Gibbons’ lawyer claimed that if the power over interstate commerce were shared between the national government and state governments, the result would be contradictory laws made by both governments that would harm business in the nation as a whole.
The Court of Chancery of New York found in favor of Ogden and issued an order to restrict Gibbons from operating his boats. Gibbons appealed the case to the Court of Errors of New York, which affirmed the lower court’s decision. Gibbons appealed the case to the Supreme Court of the United States.
The key question in this case is who should have power to determine how interstate commerce is conducted: the state governments, the national government, or both. This was no small matter, as the nation’s economic health was at stake. Before the U.S. Constitution was written, the states had most of the power to regulate commerce. Often they passed laws that harmed other states and the economy of the nation as a whole. For instance, many states taxed goods moving across state borders. Though many people acknowledged that these were destructive policies, they were reluctant to give too much power over commerce to the national government. The trick was to find a proper balance.
Chief Justice John Marshall’s decision in this case was a precedent for determining what that balance should be and has far-ranging effects to this day.