History leading up to ratification
According to the Articles of Confederation, "each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated" (emphasis added). Thus, the Continental Congress had no powers incidental to those "expressly delegated" by the Articles of Confederation. By contrast, the Necessary and Proper Clause expressly confers incidental powers upon Congress, while no other clauses in the Constitution do so by themselves.
The draft Necessary and Proper Clause provoked controversy during discussions of the proposed constitution, and its inclusion became a focal point of criticism for those opposed to the Constitution's ratification. While Anti-Federalists expressed concern that the clause would grant the federal government boundless power, Federalists argued that the clause would only permit execution of power already granted by the Constitution. Alexander Hamilton spoke vigorously for this second interpretation in Federalist No. 33. At this time James Madison concurred with Hamilton, arguing in Federalist No. 44 that without this clause, the constitution would be a "dead letter". At the Virginia Ratifying Convention, Patrick Henry took the opposing view, saying that the clause would lead to limitless federal power that would inevitably menace individual liberty.
For several decades after the Constitution was ratified, the interpretation of the Necessary and Proper Clause continued to be a powerful bone of contention between the Democratic-Republican Party and the Federalist Party, and several other political parties in the United States. The first practical example of this contention came in 1791, when Hamilton used the clause to defend the constitutionality of the creation of the First Bank of the United States, the first federal bank in the new nation's history. Concerned that monied Northern aristocrats would take advantage of the bank to exploit the South, Madison argued that Congress lacked the constitutional authority to charter a bank. Hamilton countered that the bank was a reasonable means of carrying out powers related to taxation and the borrowing of funds, claiming the clause applied to activities reasonably related to constitutional powers, not just those that were absolutely necessary to carry out said powers. To embarrass Madison, Hamilton's contrary claims from The Federalist Papers were read aloud in Congress:
Eventually, Southern opposition to the bank and to Hamilton's plan to have the federal government assume the war debts of the states was mollified by the transfer of the nation's capital from its temporary seat in Philadelphia to a more southerly permanent seat on the Potomac, and the bill, along with the establishment of a national mint, was passed by Congress and signed by President Washington.
Landmark decision by Chief Justice Marshall
This clause, as justification for the creation of a national bank, was put to the test in 1819 in the case of McCulloch v. Maryland, wherein the state of Maryland had attempted to impede the operations of the Second Bank of the United States by imposing a tax on out-of-state banks, of which the Second Bank of the United States was the only one. The court ruled against Maryland, and Chief Justice John Marshall (chief justice of the Marshall Court era), Hamilton's longtime Federalist ally, wrote the opinion, which stated that while the Constitution did not explicitly give permission to create a federal bank, it conferred upon Congress an implied power to do so under the Necessary and Proper Clause so that Congress could realize or fulfill its express taxing and spending powers. The case reaffirmed Hamilton's view that legislation reasonably related to express powers was constitutional. Marshall wrote:
The court in McCulloch v. Maryland held that federal laws could be necessary without being "absolutely necessary," and noted that, "The clause is placed among the powers of Congress, not among the limitations on those powers." At the same time, the court retained the power of judicial review established in Marbury v. Madison, declaring that it had the power to strike down laws that departed from those powers: "Should Congress, in the execution of its powers, adopt measures which are prohibited by the Constitution, or should Congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted [sic] to the Government, it would become the painful duty of this tribunal, should a case requiring such a decision come before it, to say that such an act was not the law of the land."
As Chief Justice Marshall put it, the Necessary and Proper Clause "purport[s] to enlarge, not to diminish the powers vested in the government. It purports to be an additional power, not a restriction on those already granted." Without this clause in the Constitution, there would have been a dispute about whether the express powers imply incidental powers, whereas this clause resolved that dispute by making the incidental powers to be expressed instead of implied.
The clause has been paired with the Commerce Clause to provide the constitutional basis for a wide variety of federal laws. For instance, various reforms involved in the New Deal were found to be necessary and proper enactments of the objective of regulating interstate commerce.
Indeed, the influence of the Necessary and Proper Clause and its broader interpretation under McCulloch v. Maryland (1819) in American jurisprudence can be seen in cases generally thought to simply involve the Commerce Clause.
In Wickard v. Filburn (1942), the Supreme Court upheld a federal statute making it a crime for a farmer to produce more wheat than was allowed under price controls and production controls, even if the excess production was for the farmer's own personal consumption. The Necessary and Proper Clause was used to justify the regulation of production and consumption.
Also, in addition to this combination of clauses being used to uphold federal laws affecting economic activity, they also were used to justify federal criminal laws. For example, Congress in the Federal Kidnapping Act (1932) made it a federal crime to transport a kidnapped person across state lines, because the transportation would be an act of interstate activity over which the Congress has power. It has also provided justification for a wide range of criminal laws relating to interference with the federal government's rightful operation, including federal laws against assaulting or murdering federal employees.
In National Federation of Independent Business v. Sebelius (2012), the Supreme Court ruled that the individual mandate of the Patient Protection and Affordable Care Act cannot be upheld under the Necessary and Proper Clause. Chief Justice John Roberts wrote in his ruling that the mandate cannot "be sustained under the Necessary and Proper Clause as an integral part of the Affordable Care Act's other reforms. Each of this Court's prior cases upholding laws under that Clause involved exercises of authority derivative of, and in service to, a granted power. ... The individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power and draw within its regulatory scope those who would otherwise be outside of it. Even if the individual mandate is "necessary" to the Affordable Care Act's other reforms, such an expansion of federal power is not a "proper" means for making those reforms effective."
According to its proponents, this ruling in NFIB v. Sebelius returns the Necessary and Proper clause to its original interpretation outlined by John Marshall in McCulloch v. Maryland. According to David Kopel, the clause "simply restates the background principle that Congress can exercise powers which are merely 'incidental' to Congress's enumerated powers."
Name of the clause
The specific term "Necessary and Proper Clause" was coined in 1926 by Associate Justice Louis Brandeis, writing for the majority in the Supreme Court decision in Lambert v. Yellowley, 272 U.S. 581 (1926)  , wherein the court upheld a law restricting medicinal use of alcohol as a necessary and proper exercise of power under the 18th Amendment establishing Prohibition in the United States.
This phrase has become the label of choice for this constitutional clause, and it was universally adopted by the courts, and it received Congress's imprimatur in Title 50 of the United States Code, section 1541(b) (1994), in the purpose and policy of the War Powers Resolution.