nThe national government first experimented with a
central bank when Congress
chartered the first Bank of the United States in 1791.
nIn McCulloch v.
Maryland (1819), the Supreme Court
upheld Congress’ authority to
establish the bank despite the fact that
the Constitution did not expressly authorize this action.
nThe Court said that establishment of a national bank was
necessary and proper in light of
Congress’ enumerated powers to
coin money, regulate the value thereof, borrow, tax and spend, and regulate interstate commerce.
nThis decision created a constitutional foundation for
the Federal Reserve System,
the Federal Deposit Insurance Corporation,
and the elaborate federal regulation of the banking industry that would come about in the 20th century.