Commentary by Jon Roland



This case can be considered one of the first major departures from strict 

Jeffersonian construction of the Constitution, and it laid the basis for a 

long train of further departures that continues to plague constitutional 

jurisprudence to this day. However, it is also an example of how bad cases 

badly argued produce bad precedents. Although we might consider CJ Marshall 

to have wrongly decided the case, a large part of the problem is that 

neither side argued competently in support of a correct interpretation of 

the Constitution. 



First, governments can but usually do not create corporations. Their 

incorporators do, although a government or another corporation can in 

principle be an incorporator like any individual. And the limited liability 

of their shareholders arises from public notice that they are dealing with a 

limited liability corporation, which public notice is delivered by calling 

themselves a "corporation" or some name with the same meaning. What a 

government does is grant a monopoly for the use of the name of the 

corporation, which would otherwise have to identify itself in ways that 

could distinguish it from other corporations with the same name, as by 

specifying the incorporators, date and place of incorporation, etc. (Yes, I 

know this doctrine flies in the face of much jurisprudence, but that 

conflicting jurisprudence is wrong.)



As to whether the federal government had and has the power to incorporate a 

bank or other corporation, I would say that it does -- on federal territory 

to which Congress has been ceded exclusive jurisdiction under I.8.17. That 

is, some group of persons could incorporate a bank on such territory and the 

federal government, being the only government available, could grant a 

monopoly on the use of the name.



But the federal government did not and does not have the power to create a 

private monopoly, or to empower a private organization to act as a federal 

agency. Executive power must be delegated only to individuals under a chain 

of command that culminates in the presidency. In other words, they must be 

public employees, executing federal laws. Not a bank performing banking 

functions. 



So a bank could be incorporated in the District of Columbia, but it could 

not be granted monopoly powers, or the status of a federal agency. Could it 

open branches in other states? Yes, if banks incorporated in one state could 

open branches in other states, then so could a bank incorporated in the 

District of Columbia.



Now to the issue of the case. Could the State of Maryland tax the bank 

incorporated in the District of Columbia? Yes, but only on the same basis as 

it could tax any bank incorporated in Maryland or in another state. Equal 

protection of the laws. No state taxation of interstate commerce.



So CJ Marshall got it mostly wrong in his opinion, but the State of Maryland 

was wrong, too. The proper decision was to reduce the tax on the bank to the 

same rate it would have been if it had been incorporated in Maryland, 

applied only to its assets and operations within Maryland, and to refund to 

the bank any taxes paid in excess of that. Maryland demanded it all, and got 

nothing, and in doing so created a terrible precedent.



Now to another question. Whether a power delegated to government has as 

necessary and proper implied powers the power to impose penalties for 

violations. The answer is that in the absence of a specific delegation of 

criminal powers, that is, the powers to disable the rights of life, limb, or 

liberty, the only powers that are implied to enforce a power are civil, that 

is disablement of the right to property. In other words, it might impose 

fines, and confiscate property to pay them, but not throw anyone in prison, 

or flog them, or hang them. Civil and criminal penalties are distinct 

powers, and the one cannot be inferred from the other.



So the only powers to disable life, limb, or liberty for offenses against 

its law on state territory were for (1) counterfeiting [I:8:6], (1) treason 

[III:3:2], (3) piracy and felonies on the high seas [I:8:10], and (4) 

offenses against the laws of nations [I:8:10], (These last two are sometimes 

combined into one, but they are distinct.) and (5) violation of lawful 

military or militia orders, including the call-up [I:8:14]. Subsequent 

amendments have added a few subjects: (6) enslavement [Amd. 13], (7) 

violation of civil rights by a state agent [Amd. 14], (8) abridgement of 

someone's right to vote based on race, color, or previous servitude [Amd. 

15], (9) abridgement of someone's right to vote based on sex [Amd. 19], (10) 

abridgement of someone's right to vote based on nonpayment of a tax [Amd. 

24], and (11) abridgement of someone's right to vote based on his or her age 

if he or she is age 18 or over [Amd. 26]. 



That still leaves federal territory under I.8.17, where the federal 

government has broad police powers, similar to those of a state, although as 

in a state, not unlimited powers. It also has broad powers under IV.3 to 

organize a (non-state-ceded) territory, but not to exercise police powers 

there. That is, it can create jurisdictions which can then make their own 

laws, but the powers thus exercised would derive from the people of those 

jurisdictions, not from Congress. (Yes, I know this is also against 

established jurisprudence, but once again, established jurisprudence is 

wrong on a great many matters.)



So does the federal government have the power to impose criminal penalties 

for, say, perjury or obstruction of justice on state territory? Only if it 

is essential to prosecution for violation of a violation of a statute 

authorized under one of the delegated penal powers above. In other words, 

one could be prosecuted for perjury in connection with a violation for 

counterfeiting, but not in connection with some other violation which was 

not itself punishable with a criminal penalty, such as a firearms violation.



The most pernicious and wrong statement in this opinion, which is really just dictum, is this:

Is it true that this is the sense in which the word "necessary" is always used? Does it always import an absolute physical necessity so strong that one thing to which another may be termed necessary cannot exist without that other? We think it does not. If reference be had to its use in the common affairs of the world or in approved authors, we find that it frequently imports no more than that one thing is convenient, or useful, or essential to another. To employ the means necessary to an end is generally understood as employing any means calculated to produce the end, and not as being confined to those single means without which the end would be entirely unattainable.

CJ Marshall may have been correct that in common parlance "necessary" does not always mean essential. But it does in law, and in the common law tradition that provided the language of the Constitution, and the rule of construction that powers always be construed as narrowly as possible. This was the basis for both the wrong expansion of the meaning of "necessary" and for expansion of "carry into execution" from making an effort to getting a desired result. It is perhaps the single greatest error in constitutional construction in the history of the Supreme Court.

And CJ Marshall was clearly wrong about the federal government being supreme within its "sphere of action". The Constitution does not contain delegations of spheres of action. It contain delegations of powers, and powers that are only to make certain kinds of efforts, not to get desired results, limited even within their spheres of action, as well as prohibited outside of them.