1301.10b - American System and McCulloch v. Maryland (1819)

Problems and Significance of the American System00:06:43

Problems: Old Democratic-Republicans thought it was unconstitutional; it increased national power; and it was seen as benefiting the Northeast, losing support in the South and West. Significance: It was a nationalist approach for the public good; its three parts worked together to bolster the entire economy and promote cooperation; it exemplified the strict vs. loose construction debate; and Clay's unwavering support cost him the presidency three times.

Introduction to Henry Clay and the American System00:00:00

Henry Clay, a new Republican and former warhawk, rises to leadership in the Democratic-Republican Party, becoming Speaker of the House by 1816. He advocates for a loose construction view of the Constitution to allow government action for economic growth. His American System has three main points: high tariffs, internal improvements, and supporting a national bank.

High Tariffs00:00:44

High tariffs are taxes on imports designed to make foreign goods more expensive and promote domestic products. Clay believed the US was too reliant on foreign industry, so he pushed for protective tariffs. One tariff was passed in 1816, but tariffs became a major issue in the late 1820s and early 1830s.

Internal Improvements00:01:29

Internal improvements refer to government funding for infrastructure like roads and canals to connect the nation and aid commerce. Clay argued the national government should pay for these using proceeds from western land sales, encouraging westward expansion. However, states wanted control over projects within their borders, and strict constructionists argued the Constitution did not authorize such spending. President Monroe often blocked these projects, leading to states handling infrastructure for the next century.

The National Bank00:04:36

The First Bank was eliminated in 1811, making it hard to finance the War of 1812. State banks proliferated, printing their own currencies, causing economic chaos. In 1816, President Madison and Congress brought back a national bank (the Second Bank of the United States). Madison, once a strict constructionist, now supported loose construction, showing how positions change with power.

McCulloch v. Maryland: Background and Lower Court Ruling00:11:34

When the Second Bank returned in 1816, Maryland taxed only the Baltimore branch of the National Bank to protect its state banks. James McCulloch, a cashier, refused to pay the tax, leading to a lawsuit. Maryland courts ruled the Bank unconstitutional based on compact theory, which claims states created and can interpret the Constitution.

Supreme Court Ruling in McCulloch v. Maryland00:14:30

Chief Justice John Marshall and the Supreme Court ruled: 1) The national government had authority to create the Bank, citing precedent of the First Bank. 2) Compact theory and nullification were struck down; the people, not states, created the Constitution. 3) The Bank was constitutional under the necessary and proper clause (loose construction). 4) Maryland's tax was unconstitutional.

Significance of McCulloch v. Maryland00:16:19

The case significance: 1) Approved the Second Bank as constitutional. 2) Struck down compact theory and nullification. 3) Reasserted judicial review. 4) Reaffirmed national authority over states (supremacy clause). 5) Supported loose construction. The case brought together many themes: the Bank, strict vs. loose construction, compact theory, supremacy clause, and necessary and proper clause.