HISET Social Studies Practice

Which case determined that federal law is stronger than state law in regards to banking?

1. Miranda v. Arizona

2. McCulloch v Maryland

3. New Jersey v. T.L.O

4. Mapp v. Ohio

The correct answer is: McCulloch v Maryland

The case that established the principle that federal law takes precedence over state law in matters relating to banking is McCulloch v. Maryland. This landmark Supreme Court case, decided in 1819, involved the state of Maryland attempting to impose a tax on the Second Bank of the United States. The Supreme Court ruled that while states have the power to tax, they cannot tax federal entities in a way that interferes with federal operations. This case reinforced the supremacy of federal law as outlined in the Supremacy Clause of the Constitution, which asserts that federal laws take precedence over conflicting state laws when both are valid. Specifically regarding banking, the decision affirmed the federal government's authority to create and maintain a national banking system, establishing the principle that federal law governs such financial institutions.