The act to incorporate the Bank of the United States is a law made in pursuance of the Constitution, and is a part of the supreme law of the land.
Congress chartered the Bank of the United States and established branches in several states. In response, the Maryland Legislature passed an act to impose a tax on all banks and their branches within the state that were not chartered by the state legislature. A cashier at the Baltimore branch of the Bank of the United States refused to pay the tax. The State brought suit to recover penalties under the state act.
Does Congress have the power to incorporate a bank, and, if so, may a state tax that bank?
Congress has the power to incorporate a bank, and the states have no power, by taxation or otherwise, to burden that bank because to do so would be repugnant to the supremacy of the laws enacted by Congress. The federal government, although limited in its powers, is supreme within its sphere of action, and its laws form the supreme law of the land when made in pursuance of the Constitution. Although there is no enumerated power within the Constitution allowing for the creation of a bank, the Constitution grants Congress the power to make laws that it deems necessary and proper to carry out its enumerated powers. A bank is a convenient, useful, and essential instrument in Congress’s prosecution of its fiscal operations. Thus, the act to incorporate the Bank of the United States is a law made in pursuance of the Constitution and is a part of the supreme law of the land. The branches of the bank are equally constitutional. The duties of the bank are prescribed, and those duties require branches. The states have no power to burden the operations of the constitutional laws enacted by Congress to carry into effect the powers vested in the national government. Thus, a state may not tax a branch of the Bank of the United States located within that state without violating the Constitution. The Maryland bank tax law was therefore unconstitutional and void.