The McCulloch vs. Maryland case, in 1819, helped define the Necessary and Proper Clause.

In 1816, shortly after the War of 1812, the U.S. Federal Government charted the Second Bank of the United States. Then in 1818, the Maryland state legislator decided to tax all non-state charted banks. This caused a problem because they were then trying to tax a Federal bank, thus taxing the entire country but the people in other states were being taxed without any say in the matter. (Taxation without representation.) The head cashier of the Baltimore branch, James McCulloch, refused to pay the tax and Maryland took him to court.

McCulloch lost in the Maryland court but then brought the case to the U.S. Supreme Court (by order of U.S. Secretary of the Treasury William H. Crawford) and it ruled that (a) under the Necessary and Proper Clause the U.S. Federal Government had the right to charter the bank, as it was supposedly implied by their right to levy/collect taxes, issue currency, and borrow funds, and (b) a state could not tax a federal bank, as the taxes could destroy the bank, thus violating the Supremacy Clause by, in a way, overriding a Federal exercise of power (In this case, chartering a federal bank).

The final decision was made on March 6, 1819.

Sources:
American Government: Continuity and Change, 2000 edition, by Karen O'Conner and Larry J. Sebato.
My notes from POLS1010, taught by William R. Mangum (cool teacher!)
http://www.plhs.esu3.org/hs/student/apspr00/supct2/pages/mcc.htm

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