Final answer:
The federal government has the power to charter national banks and corporations, a power reaffirmed by the landmark case McCulloch v. Maryland. States also have the authority to charter banks and corporations within their respective jurisdictions.
Step-by-step explanation:
The level of government that can charter (grant rights and privileges) banks and corporations is primarily the federal government, although states also have the authority to issue charters. Historically, charters served as the legal basis for the establishment and operation of colonies, towns, and corporations. For example, during the Revolutionary Era, colonial charters defined the relationship between the colony and the Crown. Later, the Virginia and Massachusetts charters were granted to business corporations. The Second Bank of the United States, also known as the BUS, was chartered in 1816 as a result of a proposal by James Madison, demonstrating the federal government's ability to establish national banks.
State governments have their own authority to charter banks and corporations within their jurisdiction. This is seen in the various proprietary charters that gave governing authority to proprietors within the colonies. However, when it comes to national banks, such as the Second Bank of the United States, it is Congress under the necessary and proper clause of Article I, Section 8 of the Constitution that has the power to charter and establish these banks. This was affirmed in the landmark Supreme Court case McCulloch v. Maryland, where it was stated that states could not tax federal property, indicating that the federal government holds the power to create institutions like national banks without impedance from individual states.