Shell Game: How John Marshall Handed Over America to the Bankers
In McCulloch v. Maryland (1819), Chief Justice John Marshall handed America over to the bankers. I have described this transfer of sovereign power here: //www.garynorth.com/public/12007.cfm
The #1 issue was this, according to the state of Maryland: Congress did not have the Constitutional authority to transfer federal sovereignty to a profit-seeking private bank. This was true, despite the fact that the government owned 20% of the Bank. Marshall summarized this position.
In truth, the directors have exercised the power, and they hold it, without any control from the government of the United States; and, as is now contended, without any control of the state governments. A most extravagant power to be vested in a body of men, chosen annually by a very small portion of our citizens, for the purpose of loaning and trading with their money to the best advantage! . . .If this power belongs to congress, it cannot be delegated to the directors of a bank, any more than any other legislative power may be transferred to any other body of citizens: if this doctrine of necessity is without any known limits, but such as those who defend themselves by it, may choose, for the time, to give it; and if the powers derived from it, are assignable by the congress to the directors of a bank; and by the directors of the bank to anybody else; we have really spent a great deal of labor and learning to very little purpose, in our attempt to establish a form of government in which the powers of those who govern shall be strictly defined and controlled; and the rights of the government secured from the usurpations of unlimited or unknown powers.
Marshall never responded to this. As a lawyer, he wrote a long opinion -- the longest in his 35-year career -- but he evaded the central issue.
Here is how he did it. This is masterful. He put the pea of delegated federal sovereignty under the shell. Then he placed lots of the other shells on the table, and began to move them rapidly. No one ever saw that pea again -- surely not historians.
The first question made in the cause is--has congress power to incorporate a bank?
That was not the first question. The question was: Did this bank possess federal sovereignty and therefore immunity from taxation?
The power now contested was exercised by the first congress elected under the present constitution. [17 U.S. 316, 402] The bill for incorporating the Bank of the United States did not steal upon an unsuspecting legislature, and pass unobserved. Its principle was completely understood, and was opposed with equal zeal and ability.
This appeals to precedent: the First Bank of the United States. But this act was equally unconstitutional, if the Constitution did not authorize the transfer of federal sovereignty to a private bank. It just meant that no state had attempted to tax it.
Among the enumerated powers, we do not find that of establishing a bank or creating a corporation.
This was a smoke screen. The issue was the transfer of federal sovereignty. He continued.
Although, among the enumerated powers of government, we do not find the word 'bank' or 'incorporation,' we find the great powers, to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct a war; and to raise and support armies and navies. The sword and the purse, all the external relations, and no inconsiderable portion of the industry of the nation, are intrusted to its government.
More smoke.
He continued.
But all legislative powers appertain to sovereignty. The original power of giving the law on any subject whatever, is a sovereign power; and if the government of the Union is restrained from creating a corporation, as a means for performing its functions, on the single reason that the creation of a corporation is an act of sovereignty; if the sufficiency of this reason be acknowledged, there would be some difficulty in sustaining the authority of congress to pass other laws for the accomplishment of the same objects.
Of course the government can create a corporation. That was not the issue. The issue was: Could Congress transfer federal sovereignty to this corporation?
The creation of a corporation, it is said, appertains to sovereignty. This is admitted. But to what portion of sovereignty does it appertain? Does it belong to one more than to another? In America, the powers of sovereignty are divided between the government of the Union, and those of the states. They are each sovereign, with respect to the objects committed to it, and neither sovereign, with respect to the objects committed to the other.
Notice that he speaks of units of civil government: state and federal. But he ignores the crucial judicial issue: a private corporation. Does it also partake in sovereignty? By exempting it from state taxation, Marshall extended this sovereignty. But he never offered a theory of common law or Constitutional law to justify this extension.
We admit, as all must admit, that the powers of the government are limited, and that its limits are not to be transcended. But we think the sound construction of the constitution must allow to the national legislature that discretion, with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.
Of course it can perform its duties. But this does not deal with the central issue: Can it Constitutionally delegate these duties to a privately owned corporation? Does the money issued by this bank come under the monetary powers possessed by Congress?
If a corporation may be employed, indiscriminately with other means, to carry into execution the powers of the government, no particular reason can be assigned for excluding the use of a bank, if required for its fiscal operations.
The key word is if. This was the central issue of Maryland's case. Such a corporation cannot be so employed in the name of the federal government if it is not a legal entity owned entirely by the federal government and under the rules associated with the federal government.
After the most deliberate consideration, it is the unanimous and decided opinion of this court, that the act to incorporate the Bank of the United States is a law made in pursuance of the constitution, and is a part of the supreme law of the land.The branches, proceeding from the same stock, and being conducive to the complete accomplishment of the object, are equally constitutional. It would have been unwise, to locate them in the charter, and it would be unnecessarily inconvenient, to employ the legislative power in making those subordinate arrangements. The great duties of the bank are prescribed; those duties require branches; and the bank itself [17 U.S. 316, 425] may, we think, be safely trusted with the selection of places where those branches shall be fixed; reserving always to the government the right to require that a branch shall be located where it may be deemed necessary.
This retroactively legitimized the First Bank of the United States, and legitimized the Federal Reserve in advance.
From that day until today, commercial bankers have laid legitimate claim to the powers of federal sovereignty exercised through their agency of protection, the central bank.
From that day until today, America's central banks have been infused with judicial sovereignty.
Lots of people complained in the era of John Marshall, Daniel Webster, and Henry Clay that this transfer of federal sovereignty was illegitimate. But the Supreme Court said it was legitimate in 1819. No branch of the federal government has ever brought it up again. Neither has any history textbook.
Maybe someday Congress will assert its unquestioned Constitutional authority and remove the Federal Reserve System and central banking from the Court's jurisdiction. But the Constitutional doctrine of Congress's jurisdiction over the Supreme Court has not been asserted ever since Ex Parte McCardle (1869). Don't hold your breath.