In the case of Lynch et al. v. New York ex rel. Pierson, 1934, the U.S Supreme Court was tasked with deciding whether a state could tax federal securities held by a national bank located within its jurisdiction without violating the Supremacy Clause of the Constitution which states that federal law is supreme over state law. The court ruled in favor of New York State, holding that it had not violated any constitutional provisions by imposing such taxes on banks operating within its borders and owning U.S government bonds as part of their assets. This decision upheld an earlier ruling from Owensboro National Bank v. Owensboro where it was established that states have rights to tax national banks based on their shares' value including those represented by ownership in Federal obligations.

In the dissenting opinion for Lynch et al. v. New York ex rel. Pierson, Justice McReynolds expressed his concern that the majority's decision would lead to a dangerous expansion of federal power at the expense of state sovereignty and individual rights. He argued that by allowing Congress to regulate intrastate activities under its commerce clause powers, it was effectively granting them unlimited authority over all aspects of life in America - something he believed was not intended by the framers of Constitution nor consistent with principles of limited government and federalism. Furthermore, he contended that this interpretation could potentially undermine property rights as well as other fundamental liberties protected under Bill Rights if left unchecked or unchallenged in future cases.