population. Randolph therefore now moved that the original motion be amended by striking out the word "wealth." Gouverneur Morris objected strongly to the amendment, but it was adopted by an almost unanimous vote. Thus the matter was settled that representation should be proportioned to direct taxation, and that direct taxation should be proportioned to population, counting a negro as three-fifths of a freeman.1 On July 16 the report of the grand committee, which contained this amendment, was adopted by a bare majority, and thus the great compromise was effected. But Gouverneur Morris was now not satisfied with his own proposition. On July 17 he moved to reconsider the whole compromise resolution, and on July 24 he expressed the hope that at least the committee" would strike out the whole of the clause apportioning direct taxation to representation. He had only meant it as a bridge to assist us over a certain gulf; having passed the gulf, the bridge may be removed. He thought the principle laid down with so much strictness liable to strong objections." 2 But the convention having once settled this most delicate matter, refused to take it up again. The principle having been settled, the matter was referred to the committee of appeal which, on August 6, reported back its first draft of a constitution. This draft gave Congress power" to lay and collect taxes, duties, imposts and excises." The committee reported in favor of separating the resolutions relating to representation and direct taxes. On August 8, when the question of the census came before the convention, Morris made a final effort against the clause for which he himself had been responsible. He delivered a savage attack upon slavery, and concluded that "he would sooner submit himself to a tax for paying for all the negroes in the United States than saddle posterity with such a Constitution." But Sherman contended that the compromise, as adopted, was unexceptionable, for "it was the farmers of the southern states who were, in fact, to be represented, according to the tax paid by them, and the negroes are only included in the 1 Elliot, vol. v, p. 309. 2 Ibid., p. 363. 3 Ibid., pp. 392-393. estimate of the taxes." The arrangement was changed by the committee on style, which reported on September 12. The committee again brought together the two clauses as to representation and taxation, and used the words "direct taxes" instead of "direct taxation." Article I, section 2, was make to read that "representatives and direct taxes shall be apportioned among the several states which may be included within this Union according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to servitude for a term of years, and excluding Indians not taxed, three-fifths of all other persons." When the report came up for discussion on September 13, Dickinson and Wilson moved to strike out the words "direct taxes" as being improperly placed. But after a defence of the point by Gouverneur Morris, the report was adopted by a large majority. The term "direct tax" is used in one other clause of the constitution, where it is put in connection with the capitation tax. On August 6 the committee on detail reported a resolution that "no capitation tax shall be laid unless in proportion to the census herein before provided to be taken." This originated in the contest over the slave-trade and the possible import duty on slaves. The southerners evidently feared that Congress, with its northern majority, might decide to make an arbitrary computation of population, and thus saddle the south with an undue share of taxation through a tax on slaves. It was in order to prevent this that the capitation clause was introduced. It awakened no objection at all, since it was practically a confirmation of the compromise that had been adopted, and it came before the convention for final vote on September 14. In the meantime various suggestions had been made looking toward the securing from the delinquent states payment of the old requisitions for which they had been liable under the Confederacy. Reade, of Delaware, in order to obviate this, or to use his own words, in order to prevent the attempt "to saddle the states with the readjustment by this rule of past requisitions of Congress," moved that the words "or other direct tax" be inserted after the word "capitation." He maintained "that his amendment, by giving another cast to the meaning, would take away the pretext," and his motion was adopted without any discussion.1 § 5. The Purpose of the Direct Tax Clause From the above review of the origin of the direct-tax clause it is clear that it was due simply and solely to the attempt to solve the difficulty connected with the maintenance of slavery. But for that struggle Gouverneur Morris would never have introduced the term "direct tax," and there would have been no reason to introduce it anywhere else. It is true that the counsel in the income tax cases of 1895 advanced a different doctrine. Mr. Choate, in his argument, stated that the clause was the result of a compromise designed to protect, on the one hand, the states in general against the federal government, and on the other hand, the richer states against the poorer. He tells us that "there was a surrender by the States to Congress of the exclusive power to levy taxes on imports. . . . Then, too, the States surrendered forever afterwards the right that they had had of taxing and regulating commerce between the States. . . . Then came the grant to Congress of power to lay indirect taxes, as we now call them." All these were an "essential part of the compromise" whereby the power of the federal government to levy taxes was restricted. Moreover, the rule of apportionment results "in a law of protection for the benefit of the holders of such property as was contemplated as the subject of direct taxes. There had occurred an accumulation of wealth per capita in certain states to a greater extent than in other states. This disproportion existed then, as it exists now, only different in degree. It was just this disproportion that the provi 1 Elliott, vol. v, p. 545. 2 Closing Argument by Mr. Choate in the Pollock Case, 1895, p. 34. The argu ment is summarized in 157 U.S., p. 543. sion as to apportionment was intended to protect. . . . It was then understood perfectly well to be a rule of inequality, on the strength of which was bought the assent of the States then owning such property." Mr. Choate closed by stating: "The question to-day is whether that bargain shall be repudiated. Your Honors know what the seaboard States gave up for it. ... . Now the question is whether the other States, in whose behalf and for whose benefit that was given up, shall take back the price for which it was given.” 1 And to clinch his argument Mr. Choate added that the introduction of the term "direct taxes" in the clause prescribing that no capitation or other direct tax should be levied according to the census was due to the same cause. The framers of the constitution "were fresh from the struggle about representation going hand in hand with taxation, and it was for the protection of this property, this accumulated property in the States, as against the inroad of the vote of mere numbers, that they stipulated and insisted upon the guaranty of apportionment." This argument approved itself to the court. Chief Justice Fuller, in the opinion, stated: "Thus was accomplished one of the great compromises of the Constitution, resting on the doctrine that the right of representation ought to be conceded to every community on which a tax is to be imposed, but crystallizing it in such form as to allay jealousies in respect to the future balance of power.3" In the separate opinion of Justice Field the same view is contained: "The States bordering on the ocean were unwilling to give up their rights to lay duties upon imports, which were their chief source of revenue. The other States, on the other hand, were unwilling to make any agreement for the levying of taxes directly upon real and personal property, the smaller States fearing that they would be overborne by unequal burdens forced upon them by the action of the larger States. But hap. 1 Closing Argument by Mr. Choate in the Pollock Case, 1895, p. 35. 8 Pollock vs. the Farmers Loan & Trust Company, 157 U.S., p. 563. pily a compromise was effected by an agreement that direct taxes should be laid by Congress by apportioning them. . . This compromise protected every State from being controlled in its taxation by the superior numbers of one or more other States." "1 In the second Pollock case the court restated its position as follows: "The reasons for the clauses of the Constitution in respect of direct taxation are not far to seek. The States, respectively, possessed plenary powers of taxation. . . . They gave up the great sources of revenue derived from commerce; . . they retained the power of direct taxation, and to that they look as their chief resource; but even in respect of that they granted the concurrent power. . . . Therefore, they did not grant the power of direct taxation without regard to their own condition and resources as States. . . . If, in the changes of wealth and population in particular States, apportionment produced inequality, it was an inequality stipulated for, just as the equal representation of the States, however small, in the Senate, was stipulated for."2 In the light of actual history, as it has been explained above, all these statements must be characterized as essentially erroneous. It is true that when the constitution was submitted to the different states for ratification, some jealousy of the powers granted to Congress was in a few instances manifested. But there was no difficulty in overcoming this objection. In the convention itself, however, which framed the constitution, there was no trace of any such conflict in connection with the taxation clause, just as we have seen that there was no effort and no disposition on the part of the convention to restrict the general tax powers of the government. The states did not even question the advisability of abandoning their rights to impose import duties, and every one agreed that the old system of requisitions must be done away with. There was no jealousy of large states on the part of small states that manifested itself at all in the discussion over the tax provisions; the sporadic allusions to the future development of the western states were found, as we have seen, only 1 157 U.S., p. 587. 158 U.S., 620-621. 2 |