The Great Chief Justice

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Furthermore, Marshall’s new doctrines, once proclaimed as the law of the land, could scarcely be limited—and were not meant to be limited—to corporations that ran colleges. Many types of business corporations, especially transportation companies with their canals and turnpikes and ferries and bridges, operated under government-granted charters, which now became inviolable contracts. As Marshall’s biographer, Beveridge, put it, the decision in the Dartmouth College case gave new hope and confidence to “investors in corporate securities” and to the whole of “the business world.” And so did McCulloch v. Maryland, decided at the same Supreme Court term.

The Bank of the United States, set up by Congress (for the second time) just after the War of 1812 to try to bring financial order out of the chaos of state-run banks, had been loaning money high-wide-and-handsomely to favored businesses and businessmen and then, as a depression came on, acting tough with smaller borrowers. Annoyed at this uneven-handedness, several states slapped heavy taxes on the branches of the U.S. Bank within their borders—taxes meant to drive the branches out, or out of business—and among these states was Maryland. The U.S. Bank’s Baltimore branch, with a cashier named McCulloch, refused to pay the tax and Maryland sued to collect it. (McCulloch’s name, like Marbury’s, was thus legally immortalized; forgotten is the incidental fact that Mr. McCulloch was later convicted of misappropriating over $3,000,000 of the branch’s funds.)

With Daniel Webster again arguing the right-wing side of the case (as chief counsel for the U.S. Bank over a long period of years, he never lost them a decision before the Supreme Court), Marshall and his colleagues backed the Bank, and branded the Maryland tax—and all other similar state taxes—unconstitutional. To do this, Marshall had to write into the Constitution two separate and reaching-beyond-the-horizon political principles that the Founding Fathers never saw fit, or dared, to put in the words of the document. Before calling the tax un constitutional, he had to make the Bank constitutional —for the list of Congress’ powers nowhere includes the power to set up banks. What he did was to infer this unspecified power from Congress’ specified control of U.S. currency, plus a couple of other clauses of the Constitution. He thus gave to the nation’s charter of government a so-called “broad” interpretation and gave to the Congress a far-flung and flexible judicial benediction to go ahead with whatever extras it deemed necessary to supplement its narrowly listed powers—a slant toward the Constitution and toward Congress which men of Marshall’s political stripe were to bitterly denounce when the New Deal rolled around more than a century later.

 

But granted the U.S. Bank was proper, what was improper about state taxes on its branches—inasmuch as the Constitution, though forbidding some kinds of state taxes, says nothing about these? Here Marshall pulled out of his judicial hat a fat new rule of government which was not even hung from some other rule written in the Constitution. He said, in effect, that since the Constitution creates a dual sovereignty—federal and state—it must mean that neither sovereign may destroy the legitimate activities of the other; and since, in the tricky key phrase of the whole decision, “the power to tax involves the power to destroy,” therefore any state tax on any legitimate U.S. activity was unconstitutional. It is that same flat Marshallian logic that, even today, exempts the interest on state and city bonds from federal income taxes, and so makes those bonds a favorite investing refuge for the really rich. By saying far more than he had to say to decide the case, Marshall made of McCulloch v. Maryland the birthplace of two major principles of American law and government, both of them politically inspired and both of them full of political vitality ever since.

As in McCulloch v . Maryland, so too in Gibbons v. Ogden, five years later, Marshall expanded the powers of the federal government by reading what he wanted to read into the Constitution—and he did it again at the expense of the states.

Gibbons v . Ogden is also called the steamboat case: Ogden had bought an interest in Robert Fulton’s old steamboat company, which years before had been given by the New York legislature a monopoly to run steamboats in the state, and Gibbons was ignoring this state grant and running a rival service in and out of New York City. Ogden sued to have Gibbons’ boats permanently beached. (The names of Supreme Court cases always list first the man who took the case to the Court, meaning the one who lost in the lower court, regardless of whether he started the case originally.) By the logic of the Dartmouth College decision, it might seem that Marshall would have called the state-granted monopoly a contract, like Dartmouth’s charter, and upheld Ogden’s plea. But among other factors here was the poor and quite inadequate service provided by the monopoly, so that the commercial growth of New York City was being hindered, and not only the general public but almost all business interests wanted more and competitive steamboat lines.