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The Supreme Court Case That Handed America Over to the Bankers

By: Gary North, Mises on Money

 -- Published: Wednesday, 22 January 2014 | Print  | Disqus 

The case was McCulloch v. Maryland (1819).

The legal issue: Could the state of Maryland tax the Second Bank of the United States? It was a private bank.

The issue, as stated by Chief Justice Marshall in a long, detailed decision, was this: Does the Constitution allow Congress to charter a bank? That was what Congress did in 1791: the [First] Bank of the United States. It was a central bank. Its charter lapsed in 1811.

The Second Bank of the United States was chartered by Congress in 1816.

In 1818, Maryland voted to tax the Bank. The Bank refused to pay. The Supreme Court decided in favor of McCulloch, an agent of the Bank.

Here is the standard version: “The case presented two questions: Did Congress have the authority to establish the bank? Did the Maryland law unconstitutionally interfere with congressional powers?” (http://www.oyez.org/cases/1792-1850/1819/1819_0) This is the textbook account. It is Marshall’s account.

The historical record does not support this limited description.

Marshall deliberately refused to deal with the central legal issue raised by the state of Maryland. That issue was not whether the Congress had the authority to charter a corporation. Rather, it was this:

Does the United States Constitution authorize Congress to delegate federal sovereignty to a private corporation?

In Marshall’s long decision, he summarized the position of the state of Maryland.

In truth, the directors have exercised the power, and they hold it, without any control from the government of the United States; and, as is now contended, without any control of the state governments. A most extravagant power to be vested in a body of men, chosen annually by a very small portion of our citizens, for the purpose of loaning and trading with their money to the best advantage! . . .If this power belongs to congress, it cannot be delegated to the directors of a bank, any more than any other legislative power may be transferred to any other body of citizens: if this doctrine of necessity is without any known limits, but such as those who defend themselves by it, may choose, for the time, to give it; and if the powers derived from it, are assignable by the congress to the directors of a bank; and by the directors of the bank to anybody else; we have really spent a great deal of labor and learning to very little purpose, in our attempt to establish a form of government in which the powers of those who govern shall be strictly defined and controlled; and the rights of the government secured from the usurpations of unlimited or unknown powers.

Marshall never responded to this crucial issue. Instead, he asserted federal sovereignty in general, but never again mentioned the issue of a transfer of this sovereignty to a privately owned central bank. I have outlined his strategy here: http://www.garynorth.com/public/12008.cfm.

What did the State of Maryland actually say? No one knows. This is revealing. There was an exchange in 2006 on a site where legal students chatted.

I hope somebody can help me. This case was argued before the Supreme court. The decision — which is significant — is posted in many places on the web. But I have not been able to find any listings of the arguments for either side. The attorneys for the bank and the state had to present clear concise legal arguments to the court for a decision to be made. They had to present oposing arguments — not wrong arguments. Maryland argued a view which was considered valid by lower courts. The bank’s arguments were struck down by the lower courts. I am wondering what those arguments were. Does anybody know of a site where the texts of the arguments in this case can be found? –Jason Palpatine 05:03, 25 August 2006 (UTC)

can’t really answer your question per sé, but in general it is much more difficult to find things like full argument transcripts than the decisions. This is even more true for a case that likely took place before consistant court stenographing (a word?). It probably exists somewhere, but you most likely need a access to some sort of specialized print resources. –Ec- 03:52, 26 August 2006 (UTC)

It may be better to see if any historians have written on the subject and summarize what they say–surely since it’s such a well-known case, there is at least one scholarly book that discusses the various arguments that were made. –Delirium 18:02, 5 September 2006 (UTC)

It was useless to see what the historians said in 2006, because you could not find one of them who had read the full transcripts. They all summarized Marshall. This had been true since 1819.

Finally, in 2007, a major revisionist book was published. It challenged almost two centuries of deception. The author, who was a well-respected historian, choose a relevant title for his book: Aggressive Nationalism: McCulloch v. Maryland and the Foundation of Federal Authority in the Young Republic. It was published by Oxford University Press, a major academic publisher. This is from the book’s official Amazon summary.

Placing the decision and the public reaction to it in their proper historical context, Richard E. Ellis finds that Maryland, though unopposed to the Bank, helped to bring the case before the Court and a sympathetic Chief Justice, who worked behind the scenes to save the embattled institution. Almost all treatments of the case consider it solely from Marshall’s perspective, yet a careful examination reveals other, even more important issues that the Chief Justice chose to ignore. Ellis demonstrates that the points which mattered most to the States were not treated by the Court’s decision: the private, profit-making nature of the Second Bank, its right to establish branches wherever it wanted with immunity from state taxation, and the right of the States to tax the Bank simply for revenue purposes. Addressing these issues would have undercut Marshall’s nationalist view of the Constitution, and his unwillingness to adequately deal with them produced immediate, widespread, and varied dissatisfaction among the States.

Ellis died in 2010. Sadly, his thesis has not gotten into the textbooks.

We also read this:

Ellis argues that Marshall’s “aggressive nationalism” was ultimately counter-productive: his overreaching led to Jackson’s democratic rejection of the decision and failed to reconcile states’ rights to the effective operation of the institutions of federal governance.

Andrew Jackson’s legacy survived until December 23, 1913. On that day, the Federal Reserve Act became law.


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 -- Published: Wednesday, 22 January 2014 | E-Mail  | Print  | Source: GoldSeek.com

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