The War of 1812 convinced many that the national government needed to exert more control over the economy. During the war, the states were largely left in control of their own banking systems. However, many of these state banks did not have enough specie, or coins, in reserve to cover the value of their bank notes. When people tried to cash in their bank notes, they were told there weren't enough coins on hand to pay them, causing many people to question the state banking system. After the war, the national government took steps to strengthen the American economy.
Click on the tabs below to see what happened when the government exerted more control over the economy. Then check your knowledge with the activity on the last tab.
Second Bank of the United States
Maryland
James McCulloch
The Lower Courts
In 1816, with the encouragement of President Madison, Congress passed a law creating the Second Bank of the United States. This bank would handle all of the national government's money. It would also make loans to private citizens. To help facilitate its operations, the Second Bank had 17 branches spread around the United States.
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One of branches of the Second Bank was located in Maryland. The Maryland state government did not think Congress had the power to create a bank, and the state passed a law imposing a tax on the Maryland branch. The Maryland government made the tax so high that the Bank would be forced to shut down if it paid the tax.
James McCulloch was the cashier for the Maryland branch of the Second Bank of the United States, and it was his responsibility to pay the tax. Realizing that paying the tax would cripple the Maryland branch, McCulloch refused to pay. Maryland sued McCulloch for violating the law.
The case began in a Maryland state court, where McCulloch lost. McCulloch appealed the decision to an appeals court, where he lost again. After suffering two defeats, McCulloch appealed once more to the Supreme Court. Because McCulloch had appealed, his name moved to the front of the case, changing it to McCulloch v. Maryland.
Use the activity below to check your knowledge of the Supreme Court's decision in McCulloch v. Maryland.
Which of these statements best describes the Maryland state government's attitude about the Second Bank of the United States?
The government of Maryland opposed the Second Bank of the United States because it didn't think Congress had to power to create such a bank. The state government put a tax on the Maryland branch, hoping to force it to shut down.
The government of Maryland opposed the Second Bank of the United States because it didn't think Congress had to power to create such a bank. The state government put a tax on the Maryland branch, hoping to force it to shut down.
The government of Maryland opposed the Second Bank of the United States because it didn't think Congress had to power to create such a bank. The state government put a tax on the Maryland branch, hoping to force it to shut down.
Which of these statements best describes James McCulloch's role in McCulloch v. Maryland?
McCulloch was the cashier who refused to pay a tax imposed on the Maryland branch of the Second Bank of the United States.
McCulloch was the cashier who refused to pay a tax imposed on the Maryland branch of the Second Bank of the United States.
McCulloch was the cashier who refused to pay a tax imposed on the Maryland branch of the Second Bank of the United States.
Which of these statements best describes the how the lower courts ruled in McCulloch v. Maryland before the case reached the Supreme Court?
Maryland won in both lower courts, prompting McCulloch to appeal to the Supreme Court.
Maryland won in both lower courts, prompting McCulloch to appeal to the Supreme Court.
Maryland won in both lower courts, prompting McCulloch to appeal to the Supreme Court.
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