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sovereign power, should, at least, have the sanction of the sovereign legislature to vouch that the good of the whole requires it, that the necessity exists which justifies it. But will it be tolerated, that twenty directors of a trading corporation, having no object but profit, shall, in the pursuit of it, tread upon the sovereignty of the State; enter it without condescending to ask its leave; disregard, perhaps, the whole system of its policy; overthrow its institutions, and sacrifice its interests?

3. If, however, the States of this Union have surrendered themselves in this manner, by implication, to the Congress of the United States, and to such corporations as the Congress, from time to time, may find it "necessary and proper" to create; if a State may no longer decide, whether a trading association, with independent powers and immunities, shall plant itself in its territory, carry on its business, make a currency and trade on its credit, raising capitals for individuals as fictitious as its own; if all this must be granted, the third and great question in this cause presents itself for consideration; that is, shall this association come there with rights of sovereignty, paramount to the sovereignty of the State, and with privileges possessed by no other persons, corporations or property in the State? in other words, can the bank and its branches, thus established, claim to be exempt from the ordinary and equal taxation of property, as assessed in the States in which they are placed? As this overwhelming invasion of State sovereignty is not warranted by any express clause or grant in the constitution, and never was

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1819.

McCulloch

V.

State of Ma

ryland.

imagined by any State that adopted and ratified that constitution, it will be conceded, that it must be found to be necessarily and indissolubly connected with the power to establish the bank, or it must be repelled. The Court has always shown a just anxiety to prevent any conflict between the federal and State powers; to construe both so as to avoid an interference if possible, and to preserve that harmony of action in both, on which the prosperity and happiness of all depend. If, therefore, the right to incorporate a national bank may exist, and be exercised consistently with the right of the State, to tax the property of such bank within its territory, the Court will maintain both rights; although some inconvenience or diminution of advantage may be the consequence. It is not for the directors of the bank to say, you will lessen our profits by permitting us to be taxed; if such taxation will not deprive the government of the uses it derives from the agency and operations of the bank. The necessity of the government is the foundation of the charter; and beyond that necessity it can claim nothing in derogation of State authority. If the power to erect this corporation were expressly given in the constitution, still it would not be construed to be an exclusion of any State right, not absolutely incompatible and repugnant. The States need no reservation or acknowledgment of their right; all remain that are not expressly prohibited, or necessarily excluded; and this gives our opponents the broadest ground they can ask. The right now assailed by the bank, is the right of taxing property within the territory of

V.

State of Ma

ryland.

the State. This is the highest attribute of sove- 1819. riegnty, the right to raise revenue; in fact, the right M'Culloch to exist; without which no other right can be held or enjoyed. The general power to tax is not denied to the States, but the bank claims to be exempted from the operation of this power. If this claim is valid, and to be supported by the Court, it must be, either, 1. From the nature of the property. 2. Because it is a bank of the United States. 3. From some express provision of the constitution; or, 4. Because the exemption is indispensably necessary to the exercise of some power granted by the constitution.

First. There is nothing in the nature of the property of bank stock that exonerates it from taxation. It has been taxed, in some form, by every State in which a bank has been incorporated; either annually and directly, or by a gross sum paid for the charter. The United States have not only taxed the capital or stock of the State banks, but their business also, by imposing a duty on all notes discounted by them. The bank paid a tax for its capital; and every man who deals with the bank, by borrowing, paid another tax for the portion of the same capital he borrowed. This species of property, then, so far from having enjoyed any exemption from the calls of the revenue, has been particularly burthened; and been thought a fair subject of taxation both by the Federal and State governments.

Second. Is it then exempt, as being a bank of the United States? How is it such? In name only. Just as the Bank of Pennsylvania, or the Bank of Mary

1819.

M'Culloch

V.

State of Maryland.

land, are banks of those States. The property of
the bank, real or personal, does not belong to the
United States only as a stockholder, and as any
other stockholders. The United States might have
the same interest in any other bank, turnpike, or
canal company. So far as they hold stock, they have
a property in the institution, and no further; so long
and no longer. Nor is the direction and manage-
ment of the bank under the control of the United
States. They are represented in the board by the
directors appointed by them, as the other stockholders
are represented by the directors they elect. A di-
rector of the government has no more power or right
than any other director. As to the control the go-
vernment may have over the conduct of the bank,
by its patronage and deposits, it is precisely the same
it might have over any other bank, to which that pa-
tronage would be equally important. Strip it of its
name, and we find it to be a mere association of in-
dividuals, putting their money into a common stock,
to be loaned for profit, and to divide the gains. The
government is a partner in the firm, for gain also;
for, except a participation of the profits of the busi-
ness, the government could have every other use of
the bank without owning a dollar in it. It is not,
then, a bank of the United States, if by that we
mean an institution belonging to the government,
directed by it, or in which it has a permanent, in-
dissoluble interest. The convenience it affords in
the collection and distribution of the revenue, is col-
lateral, secondary, and may be transferred at pleasure
to any other bank. It forms no part of the construc-

tion or character of this bank; which, as to all its rights and powers, would be exactly what it now is if the government was to seek and obtain all this convenience from some other source; if the government were to withdraw its patronage, and sell out its stock. How, then, can such an institution claim the immunities of sovereignty; nay, that sovereignty does not possess? for a sovereign, who places his property in the territory of another sovereign, submits it to the demands of the revenue, which are but justly paid, in return for the protection afforded to the property. General Hamilton, in his report on this subject, so far from considering the bank a public institution, connected with, or controlled by the government, holds it to be indispensable that it should not be so. It must be, says he, under private, not public, direction; under the guidance of individual interest, not public policy. Still, he adds, the state may be holder of part of its stock; and, consequently, (what! it becomes public property? no!) a sharer of the profits. He traces no other consequence to that circumstance. No rights are founded on it; no part of its utility or necessity arises from it. Can an institution, then, purely private, and which disclaims any public character, be clothed with the power and rights of the government, and demand subordination from the State government, in virtue of the federal authority, which it undertakes to wield at its own will and pleasure? Shall it be private in its direction and interests; public in its rights and privileges: a trading money-lender in its business; an uncontrolled sovereign in its powers? If the whole bank, with all its property and business,

1819.

M'Culloch

V.

State of Maryland.

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