Marshall’s Supreme Court Affirms American System

by Edward Spannaus

 First of a series

March 26, 2018–Next year will mark the 200th anniversary of a series of decisions by the United States Supreme Court which cemented the principles of Alexander Hamilton  and the American System  into U.S. constitutional law.

It was in the Court’s 1819 term–sometimes called the “Great Term”–that Chief Justice John Marshall and his associates issued a number of monumental judicial opinions which laid the basis for the implementation of the American System of Hamilton, Henry Clay, and others.  These rulings laid the basis for the flourishing of the U.S. economy and the rapid expansion of infrastructure which commenced during the administration of President John Quincy Adams (1825-1829).

Statue of John Marshall in Philadelphia,

The emergence of the United States as an industrial and agricultural power required a number of political and legal conditions:  a national government empowered to establish and banking and credit system capable of fueling industrial and agricultural growth; government promotion and support for internal improvements (“infrastructure”); legal protection of contracts and corporations; and a uniform system of commercial law and regulation.

Although all of this was foreseen and advocated by Hamilton in the earliest days of the Republic, these principles were not explicitly consolidated into our constitutional law and legal system until the 1819-1824 period.

The one figure, above all others, who was responsible for this, was John Marshall, Chief Justice of the United States from 1801 to 1835.

Hamilton and Marshall

Alexander Hamilton and John Marshall were only two years apart in age:  Marshall having been born in 1755, Hamilton in 1757.  The two first crossed paths as young men in George Washington’s army. The 19-year old Marshall was appointed a lieutenant in the Culpeper Minutemen in 1775, and he was put in charge of a company of the 11th Virginia Infantry, under the command of the legendary Daniel Morgan, when the Continental Army was created in 1776.

Along with Hamilton, then an aide-de-camp to General Washington, Marshall spent the cruel winter of 1777-78 at Valley Forge, when the Continental Army, dependent upon the states for sustenance, came perilously close to dissolving. This experience indelibly imprinted on both Hamilton’s and Marshall’s minds the necessity of establishing a strong national government if the American republic were to ever to come into being and survive.

At Valley Forge, Washington appointed Marshall his Deputy Judge Advocate General–his chief legal officer, responsible for prosecuting violations of military law.  Marshall spent much of his time as a staff officer at Washington’s headquarters, along with Hamilton, James Monroe, Lafayette, and von Steuben. After Valley Forge, he returned to his company, for which he was promoted to Captain later in 1778.


Washington and Lafayette at Valley Forge (wikimedia commons)

A decade later, John Marshall emerged as the leading Federalist in Virginia, in opposition to Thomas Jefferson and most of the Virginia political elite.  During this time he was in regular contact with Hamilton, often through George Washington.

While often accused during those days of being a tool of Hamilton, this, Marshall was not.  Other than George Washington, there was no one for whose ideas Marshall had more respect, yet he developed his own nationalist principles independently of Hamilton.

In an Autobiographical Sketch written in 1827, Marshall recalled the origins of his devotion to the Union as follows:

I had grown up at a time when love of union and resistance to the claims of Great Britain were the inseparable inmates of the same bosom;–when patriotism and a strong fellow feeling with our suffering fellow citizens of Boston were identical;–when the maxim “united we stand, divided we fall” was the maxim of every orthodox American; and I had imbibed these sentiments so thoroughly that they constituted part of my being.  I carried them with me into the army where I found myself associated with brave men from different states who were risking life and everything valuable in a common cause believed by all to be most precious; and where I was confirmed in the habit of considering America as my country, and congress as my government. I partook largely of the sufferings and feelings of the army, and brought with me into civilian life an ardent devotion to its interests. My immediate entrance into the state legislature opened to my view the causes which had been chiefly instrumental in augmenting these sufferings, and the general tendency of state politics convinced me that no safe and permanent remedy could be found but in a more efficient and better organized general [national] government.

(This would have been recognized at the time as a not-so-subtle dig at Jefferson, who not only sat out the Revolution, but who was often heard to declare that Virginia, not the United States, was his “country.”)

In the years after Hamilton’s murder by Aaron Burr, Marshall did more than anyone else to embed Hamilton’s political and economic principles into American law.

The mid-20th century academic and commentator Max Lerner declared that “much of Marshall’s career may be viewed as a process of reading Hamilton’s state papers into the Constitution.” But even doing this would not have meant much, had not Marshall transformed the Supreme Court from a weak and distant-third branch of government, into a co-equal department of the Federal government, exercising its power to override actions of the other two departments by ruling on their constitutionality.  This process, known as judicial review, was foreseen and advocated by a small minority of the Founders, prominently including both Hamilton and Marshall; but it was by no means foreordained that this doctrine would become part of our Constitutional law.

The National Bank

It is widely acknowledged that John Marshall’s most important ruling was that upholding the constitutionality of the Bank of the United States, in the case styled McCulloch vs. Maryland.

Biographer Alfred Beveridge, writing his four-volume biography of Marshall one hundred years ago, proclaimed that, “in this case [McCulloch], John Marshall rose to the loftiest heights of judicial statesmanship;” he added, “If his fame rested solely on this one effort, it would be secure.”

Although the national bank was a matter of bitter conflict from the first days of the Washington Administration, it took almost four decades for the question of its constitutionality to come before the U.S. Supreme Court.

As early as 1780, Hamilton had proposed the creation of a Bank of the United States.  In letters written in 1780-81, Hamilton contended that achieving national independence depended as much on establishing a sound system of finance and credit, as winning on the battlefield. Such a system would not only provide important support for the Army, but it would lay the basis for economic growth and would be a spur to industry.  Already then, Hamilton argued for an expansive view of the powers of the (Continental) Congress.

Ten years later, as Secretary of the Treasury, Hamilton was asked by the House of Representatives to prepare a report on his plan for the federal government to assume the states’ war debt, and for funding of that debt. In his first Report on Public Credit, submitted in January 1790, Hamilton promised that he would soon submit a proposal for a national bank.  He did so in his Report on a National Bank submitted to Congress in December of that year.

A vigorous and lengthy debate ensued in the Congress, over the question of whether Congress possessed the constitutional authority to establish a national bank, with James Madison leading the opposition in the House.  When the bill authorizing the bank was passed and sent to President Washington, he solicited opinions from his Cabinet on the question.  Attorney General Edmund Randolph and Secretary of State Thomas Jefferson both weighed in opposing the bank, and the Secretary of the Treasury wrote one of his great State Papers arguing for its constitutionality.

The first Bank of the United States (Nancy Spannaus)

Jefferson and Randolph denied that the Federal government had the authority to create a corporation, because such a power was not expressly set forth, i.e. enumerated,  in the Constitution.  This is a “strange fallacy,” Hamilton pointed out in response: incorporation is not some great, independent thing; it is but a means of carrying out those substantive, sovereign powers which are granted to the national government.  He considered it an elementary principle that there are implied powers in the Constitution as well as express powers.

Hamilton went after Jefferson’s tortured constriction of the Constitution’s “necessary and proper” clause, in which, after laying out the substantive powers of Congress in Article I, Section 8 (to lay and collect taxes, duties, to borrow money, to regulate commerce, to coin money, etc.), the Constitution then grants Congress the power “to make all Laws which shall be necessary and proper for carrying into Execution, the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States.”

“[T]he powers contained in a constitution of government, especially those which concern the general administration of the affairs of a country, its finances, trade, defense etc. ought to be construed liberally, in advancement of the public good,” Hamilton contended.

In an argument which presaged that which would be made by Marshall decades later, Hamilton said that the criterion for what is constitutional, is the end to which the measure to be taken is a means:

If the end be clearly comprehended within any of the specified powers, and if the measure have an obvious relation to that end, and is not forbidden by any particular provision of the Constitution—it may safely be deemed to come within the compass of the national authority.

Constitutional Powers

Later in his report, in the course of dissecting the sophistical arguments raised against the bank by Jefferson and Randolph, Hamilton shows how the proposed national bank stands in relation to some of the powers of the government specified in the Constitution:

It has an immediate relation to the power of collecting taxes, which Hamilton demonstrates in great detail;

  • It has a direct relation to the power of borrowing money, particularly in times of emergency, such as when the nation is threatened by war – which also relates to the power to provide for the common defense.
  • It has a natural relation to the regulation of trade between the states, by providing a medium of exchange. Hamilton ridicules Jefferson’s reduction of commerce to mere buying and selling; the objects of our commercial law “are to give encouragement to the enterprises of our own merchants, and to advance our navigations and manufactures.”

Hamilton takes up Jefferson’s attempt to argue against the bank, by observing that Congress can’t lay taxes for anything it wants, but only to pay the debts, or provide for the welfare, of the Union.  Of course, Hamilton says, but this is no argument against the bank.  The general welfare, the welfare of the community, is the only legitimate reason for raising money; no government, state or federal, can raise money for something that is strictly local.  This is the test of its constitutionality, and if the purpose is general, there is no want of constitutional authority.

(In his Report on Manufactures, submitted a year later, Hamilton elaborated his view of the general welfare, arguing that the only restriction upon the power of the Congress to raise and spend revenue, is that the purposes be general – be it the general interests of learning, of agriculture, of manufactures, and of commerce – and not confined to a particular locality.)

Alexander Hamilton, in a painting commissioned by New York merchants in 1791. (New York Historical Society)

Summing up his argument for President Washington, Hamilton states:

A hope is entertained, that it has by this time been made clear to appear, to the satisfaction of the President, that a bank has a natural relation to the power of collecting taxes; to that of borrowing money; to that of regulating trade; to that of providing for the common defense: and that as the bill under consideration contemplates the government in the light of a joint proprietor of the stock of the bank, it brings the case within the provision of the clause of the Constitution which immediately respects the property of the United States.

As one of the principal drafters of the Constitution, Hamilton feels confident in asserting that, looking at the Constitution as a whole, it is designed to vest in Congress all the powers necessary for the competent administration of the finances of the United States. In this respect, “there is no parsimony of power.”

Hamilton’s arguments for the constitutionality of the national bank prevailed. The bill to charter the Bank of the United States for a twenty-year period was approved by Congress and signed by Washington on February 25, 1791.

McCulloch vs. Maryland

As the 20-year expiration date for the charter of the Bank approached, bitter fights arose in Congress, and its charter was allowed to expire in 1811—an act which unleashed a wave of speculation and inflationary issues of near-worthless currencies.  By 1814, without a national bank, the government had trouble paying for the War of 1812.  Finally, in 1816, a bill chartering the Second Bank of the United States was enacted by Congress. The new bank had the same powers as the first one; the major difference was that its Directors were Republicans rather than Federalists. It was nonetheless confronted by enormous opposition and attacks from the state banks, and its internal mismanagement and corruption didn’t help matters. Thus it was blamed for the Panic of 1819.

In an effort to undermine, if not cripple, the Bank, the State of Maryland attempted to levy punitive taxes upon the Baltimore branch unless it complied with onerous requirements for the issuing of bank notes.  When the Bank refused, the State of Maryland sued the cashier of the Baltimore branch, one James McCulloch, in the Baltimore County Court, in March of 1818. The case went to the Maryland Court of Appeals, and was then taken to the United States Supreme Court.

Great excitement surrounded the case when it came to be argued in the Supreme Court on      February 22, 1819.  Never were the Court’s chambers, in the basement of the Senate side of the Capitol, as crowded with spectators.

Daniel Webster, the lead attorney for the Bank of the United States

Daniel Webster opened the Bank’s case, stating that the first question to be considered–the question of whether the Congress possessed the power under the Constitution to charter a bank– had been settled by the First Congress in 1791.  The arguments in favor of this power, drawn from the Constitution, were stated “with characteristic perspicuity and force,” by the Secretary of the Treasury, Alexander Hamilton, so that the question should be considered exhausted and settled.  Nonetheless, in the manner of the times, Webster set forth Hamilton’s arguments at great length.

The second question under consideration, Webster continued, is: if the Bank be constitutionally created, can state governments tax it?  “An unlimited power to tax involves, necessarily, a power to destroy,” which would mean that an institution created under the Constitution by Congress, is dependent upon the discretion of the state governments for its very existence.  Nothing could be plainer, Webster argued, that if Congress acts constitutionally, its operation cannot be defeated or impeded by the states.

Maryland’s Attorney General Luther Martin and his team responded by advocating what is usually called a “strict construction” of the Constitution, denying the idea of implied powers.  But the grounds on which they argued this, are far more insidious than mere “strict construction:”  it was that the Constitution is but a compact between the states; that the powers granted to the national government are powers bestowed by the states; and therefore such powers must be narrowly construed.  The power of Congress to create corporations cannot be assumed by implication. “If it might be assumed for this purpose, it might also be exercised to create corporations for the purpose of constructing roads and canals,” Martin argued revealingly.

Oral arguments, involving some of the country’s most famous and renowned lawyers, went on for nine days, until March 3.

“A government of the people”

It was only three days later, that Chief Justice Marshall delivered the opinion of a unanimous court.  To obtain unanimity was quite a feat in itself, for an opinion that is considered one of the most controversial that the Marshall Court ever delivered.

But equally remarkable was the fact that Marshall was able to write and deliver the opinion within three days of the end of oral argument. (Today, it usually takes many months.)  Moreover, it was the longest opinion that Marshall ever wrote.

How did he do it?  Most biographers and historians believe that he had written most of it in advance.  After all, he was directly and intimately familiar with Hamilton’s views on the matter, going back decades, and he had studied closely the Hamilton-Jefferson-Randolph arguments on the question of the bank’s constitutionality written at Washington’s request in 1791. We know this, because Marshall wrote about it in his five-volume Life of George Washington, published between 1805 and 1807—in which he left no doubt as to where he stood on the issue.

Marshall began the opinion by noting the profound importance of the issue before the Court, and the “awful responsibility” involved in the Court’s decision.  Foreseeing that the fate of the Union might well depend upon the Court’s decision, he wrote; “But it must be decided peacefully, or remain a source of hostile legislation, perhaps of hostility of a still more serious nature.”

The first question, Marshall stated, is whether Congress has the power under the Constitution to incorporate a bank; he noted immediately that this can hardly still be considered an open question, having arisen very early in the nation’s history, and being decided by the First Congress after zealous and able debate in Congress, and also within the President’s Cabinet.

Then, getting right to the heart of the matter, he takes on Maryland’s argument that the Constitution did not emanate from the people, but was an act of sovereign and independent states, and that therefore the powers of the national government must be exercised in subordination to the states. This is a tough argument to swallow, Marshall says in effect. The Constitutional Convention issued a mere proposal, without any obligation inhering in it.  They asked that it be submitted to conventions in the states, that is, to the people, not to the state legislatures.  The adoption of the Constitution was an act of the people themselves, not of the state governments.

The announcement of the Massachusetts convention’s ratification of the U.S. Constitution

In words that would echo throughout the ages, the Chief Justice wrote:

“From these conventions, the Constitution derives its whole authority. The government proceeds directly from the people; is ‘ordained and established’ in the name of the people, in order to form a more perfect Union, establish justice.”

Yes, Marshall acknowledged, the people had already given their powers to the state governments, but they can also modify these powers.  Yes, the states were competent to form a mere league, such as the Confederation.

But when, “in order to form a more perfect Union,” it was deemed necessary to change this alliance into an effective government, possessing great and sovereign powers, and acting directly on the people, the necessity of referring it to the people, and of deriving its powers directly from them, was felt and acknowledged by all. The government of the Union then … is, emphatically and truly, a government of the people. In form, and in substance, it emanates from them. Its powers are granted by them, and are to be exercised directly on them, and for their benefit.

The federal government is a government of enumerated powers: all can acknowledge that, Marshall continues.  But although the federal government may be limited in its powers, it is supreme within its sphere of authority.

This would seem to result, necessarily, from its nature. It is the government of all; its powers are delegated by all; it represents all, and acts for all. (emphasis added)

If that sounds familiar, it should. Abraham Lincoln was a diligent student of John Marshall’s opinions, to the extent of memorizing many of them.

And it should be obvious from the foregoing, that the Gettysburg Address’s “of the people, by the people, and for the people” is not just a paean to democracy:  it goes to the essence of our Republic, and was intended to bury, for all time, the pernicious idea of states’ rights and state sovereignty.

“It is a Constitution we are expounding”

Having again, settled the issue of the nature of the Union, Marshall then takes up the question of enumerated and implied powers.  True, he says, among the enumerated powers, we don’t find that of establishing a bank, or creating a corporation. But on the other hand, there is nothing in the Constitution, as there was in the Articles of Confederation, that excludes incidental or implied powers.  Nor does the Constitution require “that everything granted shall be expressly and minutely described.” The men who drafted the Constitution understood the danger of getting too detailed and specific:

A constitution, to contain an accurate detail of all the subdivisions of which its great powers will admit, and of all the means by which it may be carried into execution, would partake of the prolixity of a legal code, and could scarcely be embraced by the human mind. It would, probably, never be understood by the public. Its nature, therefore, requires, that only its great outlines should be marked, its important objects designated, and the minor ingredients which compose these objects, be deduced from the nature of the objects themselves.  That this idea was entertained by the framers of the American Constitution, is not only to be inferred from the nature of the instrument, but from the language…. In considering this question, then, we must never forget that it is a constitution we are expounding.

Second Bank of the United States

Having made clear the nature of the Constitution, Marshall then observes that while we do not find the word “bank” or the word “incorporation” among the enumerated powers of the government, we do find the “great powers” to lay and collect taxes, to borrow money, to regulate commerce, to declare and conduct war, and to raise and support armies and navies. He then lays out a stunningly powerful argument for utilizing whatever means are appropriate, to exercise the powers which will ensure the prosperity and happiness of the nation, from sea to shining sea:

But it may with great reason be contended, that a government, intrusted with such ample powers, on the due execution of which the happiness and prosperity of the nation so vitally depends, must also be intrusted with ample means for their execution. The power being given, it is in the interest of the nation to facilitate its execution.  It can never be their interest, and cannot be presumed to have been their intention, to clog and embarrass its execution, by withholding the most appropriate means. Throughout this vast republic, from the St. Croix to the Gulf of Mexico, from the Atlantic to the Pacific, revenue is to be collected and expended, armies are to be marched and supported. The exigencies of the nation may require, that the treasure raised in the north should be transported to the south, that raised in the east, conveyed to the west, or that this order should be reversed. Is that construction of the Constitution to be preferred, which would render these operations difficult, hazardous and expensive?  Can we adopt that construction (unless the words imperiously require it), which would impute to the framers of that instrument, when granting these powers for the public good, the intention of impeding their exercise, by withholding a choice of means?  If, indeed, such be the mandate of the Constitution, we have only to obey; but that instrument does not profess to enumerate the means by which the powers it confers may be executed; nor does it prohibit the creation of a corporation, if the existence of such a being be essential, to the beneficial exercise of those powers.

How could the framers of the Constitution have granted to the government the powers on which the welfare of the nation depends, without authorizing the means of their execution?  The framers certainly did not intend to confine the choice of means to such narrow limits as is being argued, without allowing Congress to adopt any appropriate means. And at this point, Marshall emphasizes that the Constitution is intended to endure for the ages, and to adapt to such crises as the nation might face. His statement should be taken to heart by those today who treat the Constitution as frozen in time, and who nit-pick over the “original intent” of its particular words.

This provision is made in a constitution, intended to endure for ages to come, and consequently, to be adapted to the various crises of human affairs. To have prescribed the means by which a government should, in all future time, execute its powers, would have been to change, entirely, the character of the instrument, and give it the properties of a legal code. It would have been an unwise attempt to provide, by immutable rules, for exigencies which, if foreseen at all, must have been seen dimly….

Having defined what the Constitution is, Marshall then discussed the “necessary and proper” clause of Article I, Section 8, during which he set forth what has become the classic interpretation of that provision:

Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and the spirit of the Constitution, are constitutional.

This of course echoes Hamilton’s argument on the same point, as cited above.

On these grounds, Marshall found:

After the most deliberate consideration, it is the unanimous and decided opinion of this Court, that the act to incorporate the Bank of the United States is a law made in pursuance of the Constitution, and is part of the supreme law of the land.

As to the second issue in the case – whether Maryland could place a tax on a branch of the national bank – Marshall disposed of that fairly rapidly.  Since the Constitution, and the laws made in pursuance thereof, are supreme, no state is entitled to obstruct of impede the execution of those laws.  To those who argued that the states are sovereign, Marshall said that sovereignty only extends to that which exists within its sphere of authority, but it does not extend to those powers conferred on Congress by the people of the United States.  They were given by the people, to a government whose laws made on pursuance of the Constitution are supreme.  The American people did not intend to make the federal government dependent on the states.

Chief Justice John Marshall in a steel engraving by Alonzo Chappel

And thus the Supreme Court found that “the states have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control, the operations of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.”  Therefore, the Maryland law imposing a tax on the Bank of the United States was declared unconstitutional, and void.

Marshall’s ruling, henceforth to be regarded by constitutional scholars and historians as the most important ever issued by the Supreme Court, was, as well, a complete and total vindication of Alexander Hamilton and the principles for which he fought—and a resounding victory for the nation itself. This came some 28 years after Hamilton’s most comprehensive statement on the subject, and some 15 years after his death at the hands of Aaron Burr.

Alexander Hamilton would have been proud.

In future articles in this series, we will examine the violent reaction to Marshall’s ruling by the slavocracy in Virginia and elsewhere, who correctly saw the Hamilton-Marshall view of the Constitution and the Union it established, as a mortal threat to their political-economic system.

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