Ohio v. The Bank: An Historical Examination of Osborn v. The Bank of the United States

Abstract

Ohio v. The Bank: An Historical Examination of Osborn v. The Bank of the United States Patricia L. Franz I. Introduction On September 17, 1819, approximately six months after the Supreme Court of the United States had declared state taxation ofbranches ofthe Bank ofthe United States unconstitutional in McCulloch v. Maryland,' agents for the state ofOhio forcefully “collected” over $100,000 in state taxes from the vault ofthe Bank’s Chillicothe, Ohio, branch. The culmination ofthe resulting litigation was the Supreme Court’s decision in Osborn v. Bank ofthe UnitedStates.2 The consti­ tutional issues presented in the case were 1) whether the Eleventh Amendment3 barred a suit brought by officials ofthe Bank ofthe United States against state officers acting in their official capacities4; 2) whether the provision in the Bank’s charter allowing it ‘“to sue and be sued ... in any Circuit Court of the United States’” was permissible under Article III, Section 25; and 3) whether Ohio’s law requiring the payment of taxes by the branches ofthe Bank doing business within the state was contrary to the Constitution and therefore void.6 In The Marshall Court & Cultural Change 1815-1835, intellectual historian7 G. Edward White argues that the significance of Osborn lies in the fact that Chief Justice Marshall used the case as an opportunity to fashion another “link in the chain ofexpanded federaljurisdictionthatthe Court was forging.”8 In his argument White characterizes the gen­ esis ofOsborn as an attempt by lawyers in Ohio to secure Supreme Court revisitation of the Eleventh Amendment interpretation announced in Cohens v. Virginia9 and McCulloch v. Mary­ land. 10While an examination ofthe opinion and a review ofrecent secondary legal literature cit­ ing Osborn" does not call into question White’s interpretation ofthe doctrinal signifi­ cance of the case, a review of the historical accounts of the events leading up to Ohio’s OHIO v. THE BANK 113 taxation of the Bank points to an alternative motivation for the Ohioans involved.12 As historian John A. Garraty reminds us in his essay collection, Quarrels That Have Shaped The Constitution, our Supreme Court can expound upon the Constitution only when specific cases (growing out ofconflicts between particular parties) are brought before it.13 As a result, decisions deemed by scholars to be of constitutional significance often begin not with the actions of political activists seeking to change the course of constitutional jurispru­ dence, but with people acting out of self-inter­ est, coming into conflict with other such people.14 It cannot be argued plausibly that the Ohio Legislature that enacted the taxing stat­ ute and stood behind the case against the Bank was wholly unconcerned with the constitutional jurisprudence of the day or the ever-increas­ ing power of the federal legislature and judi­ ciary. But it can be argued that in taxing the Bank and pursuing the legal conflict that en­ sued, the primary concern of state legislators was the negative impact that the Bank was per­ ceived to have had on the state’s young economy. In other words, the primary desire of those opposing the Bank in Osborn was not, as White argues, a reassessment of the Elev­ enth Amendment. The goal was the removal ofthe Bank from Ohio, or at the very least, the Bank’s agreement to play by rules that would put it on an equal footing with the state-char­ tered banks against which it was competing— and often winning. II. Economic Conditions in Ohio 1803-1820 The quarrel that became Osborn v. Bank of the United States had its roots in the economic instability that plagued Ohio during the years following the War of 1812. Ohio, comprising the portion of the Northwest Territory that lay between Lake Erie and the Ohio River, was recognized as a state by the U.S. Congress on April 15, 1803. Prior to the War of 1812, Ohioans were literally “getting out of the woods.”15 Villages were separated by dense forests and the Allegheny mountains cut off most trade with markets in the East, The greatest amount of manufacturing and trade in Ohio's formative years took place in the river towns such as Zanesville, Cincinnati, and Marietta...