much of a mere political character, that their place of discussion is rather the legislature, or the popular assembly, than the college class-room, the law school, or the court. Under the general grant of power to lay and collect duties and imposts, may Congress lawfully pass a protective tariff? Under the general provision that taxes may be laid to provide for the common defence and promote the general welfare, may Congress raise moneys to carry out schemes of local internal improvement, repair harbors, build piers, dredge out rivers, construct roads and the like?

§ 295. The dispute upon these questions has been long and violent. It has been urged on the one side that a protective tariff is not a measure for the general welfare, but for the aid of particular classes; that schemes of local improvement do not benefit the whole nation, but only special portions. On the other hand these propositions are denied, and it is claimed that the fostering of one department of industry promotes the welfare of all; that the improvement of New York harbor, for example, produces a beneficial effect throughout the entire Union. It is plain, therefore, that the controversy reduces itself finally to a question of policy, and not of power. If these systems of legislation, which directly and immediately assist a part, do really and substantially aid the whole, the power evidently exists; and whether or not they do in fact promote the general welfare is purely a question of political economy, upon which statesmen have differed, and doubtless will continue to differ.

I may remark, however, that so far as a course of legislative action can settle any thing, the power of Congress to pass such measures may be considered as established.

Second.

What Powers of Taxation are held by the Several
States.

§ 296. We are now brought to the consideration of a subject which is as important as it is interesting, and which has repeatedly come before the Supreme Court of the United States for decision.

What are the relations of the nation and

the several states, in the exercise of the taxing power by each? Is either subject to the other, and if so to how great an extent? It is evident that the Constitution expressly places some limits upon the capacity of the states to tax. They may not lay duties on imports and exports, except such as shall be absolutely necessary for the execution of their inspection laws, or lay any tonnage duties, without the consent of Congress. In addition to these express, are there any implied restrictions upon the taxing power of the state? The whole subject may, therefore, be separated into two divisions: (1) the implied limitations, and (2) the express limitations.

I. Implied Limitations upon the Power of the States to Tax.

§ 297. The United States government, within its sphere of action, is paramount, and the states are subordinate. This proposition is contained in the express language of the Constitution, and has been fully illustrated in Part I. of this work. Because the nation is thus paramount, its taxing power is supreme; it may be applied to all subjects; it may be exerted upon all individuals and upon every species of property; and its demands must first be satisfied before the states can resort to the exercise of their function.

On the other hand, the states, because they are bodies politic, have also the power to tax, which they may exert in all instances, upon all subjects, and in all methods, except so far as they are restrained by the national Constitution. In addition to the express restrictions upon it referred to in § 271, this power of the states is limited by the very nature of the entire political society; by the dual division of governmental attributes; by the supremacy of the nation, and the subordination of the local commonwealths. This implied limitation consists in two separate and distinct features. (1.) The state power to tax must be exercised second to that of the general government; or, in other words, the claims of the nation upon persons and property have priority and must be satisfied even to the exclusion of those of the states. This feature is involved in the very idea of supremacy. (2.) The state power cannot be exerted

upon the property of the general government, or upon means which that government has adopted to carry on its public affairs. § 298. These propositions are fully sustained by the following decisions of the Supreme Court. Congress had chartered the Bank of the United States, a branch of which was established in Baltimore. The legislature of Maryland passed an act which had the effect to lay a tax upon this branch. The question as to the validity of this tax was presented in McCulloch v. The State of Maryland,1 and decided in the negative. The state law, as it applied to the bank, was held to be unconstitutional and void. The opinion of the court, given by C. J. Marshall, is so long and elaborate that it cannot be quoted here; but it should be carefully read by all students, professional or general, who desire to understand the nature of our government. It is reported that William Pinckney said of this opinion, that in it he saw a pledge of the immortality of the Union. The argument is, that, as the United States is paramount, all the means which it may lawfully adopt for carrying on public affairs, are supreme, and free from state legislation. As the state could not repeal or alter the charter of the bank, so it could not do any thing which tends to hinder or impair the efficiency of that institution. But the right to tax, implies the right to destroy; for if the state may tax at all, it may tax to such a degree as to prevent the operation of the bank; and any amount of taxation has that tendency.

The same question was afterwards again brought up in Osborn v. The Bank of the United States.2 The State of Ohio had laid a special tax of $50,000 a year upon a branch of the bank, for the express purpose of destroying it. The case showed the results which might be apprehended from the exercise by the states of a power to tax the means of carrying on the general government. The Supreme Court adhered to their former view.

§ 299. The doctrine was applied under very different circumstances in the case of Dobbins v. The Commissioners of Erie County. A captain of a United States Revenue Cut1 4 Wheaton's R. 316. 29 Wheaton's R. 738. 3 16 Peters' R. 435.

ter had been taxed in Pennsylvania upon his salary as a national officer. The sole question was as to the validity of the state tax; and the court unanimously held that it was void, as being beyond the power of the state to impose. This occurred under the presidency of C. J. Taney; so that the court had plainly not receded from the high position assumed under the leadership of C. J. Marshall. The opinion delivered by Mr. Justice Wayne is so concise and accurate a statement of the rule and its reasons, that I will quote its language: "Taxation is a sacred right essential to the existence of a government, an incident of sovereignty. The right of legislation is co-extensive with the incident, to attach it to all persons and, property within the jurisdiction of a state. But in our system there are limitations upon that right. There is a concurrent right of legislation in the states and in the United States, except as both are restrained by the Constitution of the United States. Both are restrained by express prohibitions; and the states are restrained by such prohibitions as are implied when the exercise of the right by a state conflicts with the perfect execution of another sovereign power delegated to the United States. That occurs when taxation by a state acts upon the instruments, and emoluments, and persons which the United States may use and employ as necessary and proper means to execute their sovereign powers. The government of the United States is supreme within its sphere of action." The court applied this principle to the salaries of officers under the general government.

§300. The same construction of the Constitution has also been affirmed in a series of decisions, commencing in the year 1829, and extending to the present time, and applied to the stock and other public securities of the United States. In Weston v. The City Council of Charleston,1 the facts were briefly as follows. The city council of Charleston, by virtue of an act of the 'South Carolina legislature, laid a tax upon all personal estate, enumerating the different kinds of personal property, and including stocks of the United States in terms. The plaintiff was assessed for certain of these stocks, and com

1 2 Peters' R. 449.

menced proceedings to annul the assessment on the ground that the law, so far as it applied to such securities, was unconstitutional and void. The Supreme Court sustained the plaintiff's contention, and annulled the assessment. The case actually decided that stocks of the United States, owned by private persons or by corporations, cannot be taxed as such by the separate states. The grounds of the judgment were, that the general government possesses the power to borrow money; that this power is supreme and paramount; that the states may not prevent, or do any thing to interfere with, its execution; that taxing the evidences of debt in the hands of owners would tend to have this effect by diminishing their value, and thus making persons less willing to loan money to the government.

301. The question arose again in 1862, under a somewhat different form, and the Supreme Court took a further step in the direction of limiting the taxing powers of the states, in The Bank of Commerce v. The City of New York. The statute of New York State provided for taxing banks upon the amount of their capitals. The Bank of Commerce had a capital of several millions of dollars, and the largest proportion thereof was invested in United States securities. The bank claimed that this portion was exempt from state taxation. The assessors, however, fixed the taxable property of the bank at the whole value of the capital stock without regard to the fact of its being chiefly invested in the public debt of the United States, but added that this was not made as an assessment upon the public debt, but upon the bank capital. The Court of Appeals of New York held the assessment valid, distinguishing the case from that of Weston v. The City Council of Charleston.2 The distinction insisted upon was that in the latter case the tax was laid upon United States stock eo nomine, while, in the New York case, the public securities were included in the mass of property owned by the corporation, and were taxable with that aggregate. The Supreme Court of the United States repudiated this distinction and reversed

1 2 Black's R. 620.

2 2 Peters' R. 449.

3 The People v. The Commissioners of Taxes. 9 Smith's R. (23 N. Y.)

192.