over, the classification given by Turgot does not at all carry out the contentions of the counsel in the income-tax cases. Turgot, we remember, spoke of a direct tax as being one sur les fonds. The counsel in the income-tax case innocently translated this as "a tax on the funds," thus hoping to bolster up their contention that according to Turgot a tax on personal property was also a direct tax. Of course fonds or bien fonds means lands, not funds, and Turgot's contention was that the only direct tax was a tax on lands—just the opposite of what the counsel thought it meant. If the counsel, however, had gone a little farther and stated the fuller and subsequent classification made by Turgot, they would have found small comfort in their conclusion that Turgot's idea of direct tax included an income tax. The only country in the

Tucker's Important Questions on Trade in 1755; and the Reflections on the Formation of the Distribution of Wealth, which appeared in the Éphémérides du Citoyen in 1767. In none of these works is there the slightest reference to taxation. All of Turgot's writings on taxation consisted of official memoirs preserved in manuscript in the French archives, until they were published by Du Pont de Nemours in 1809.

This glaring misstatement of Mr. Seward has been widely copied. So Mr. Morrow says: "They [the counsel] went to the extent of showing that a work on taxation written by Turgot, with a certain definition of direct taxes' was in America in 1787 and therefore might have been consulted by the framers of the Constitution." Dwight W. Morrow, "The Income Tax Amendment," in Columbia Law Review, vol. x (1910), p. 407.

It was perhaps Mr. Seward who is responsible for the passage in Mr. Guthrie's argument in the income tax cases: "Were the members of the Convention likely to use terms they did not understand: Had they never seen the term 'direct tax' before; and if so, where? In the books that were in every man's hand. Many had studied Turgot in the original or in translations of particular passages and they knew his clear definition of 'les impôts directs.' – Opening Argument by W. D. Guthrie, on behalf of Appellants in the Income Tax Cases. 1895, p. 7.

Equally unfounded is Mr. Guthrie's statement that "Turgot to-day is still the great work put in the hands of French students of the Science of Finance and Government." We should be glad to learn to which "work of Turgot" Mr. Guthrie refers.

All this would not have been so deplorable had it not been blindly accepted by the court. Chief Justice Fuller calls special attention to the fact that "Turgot had published in 1764 his work on taxation, and in 1766 his essay on 'The Formation and Distribution of Wealth.'" Unfortunately, the first statement is incorrect; and the second utterly devoid of the significance attached to it.

world which at that time possessed a general income tax was France, and it so happened that the income tax was known under the name of "capitation."1 In this other and fuller passage, written several years later, Turgot distinctly states that if the capitation comprises what are called all forms of faculty, industry, commerce, wages or profits, the tax is an indirect tax.2 According to Turgot, an income tax is an indirect tax.

So far, therefore, as any of the framers of the constitution may have been acquainted with the views of Turgot and accepted them, their understanding of a direct tax must have been entirely different from that of Adam Smith. We are forced to confess that for the counsel to jumble together such conflicting views and for the court to follow them, does not reflect the greatest credit on their economic acumen, their historical learning or their knowledge of finance.

If, then, we proceed to discuss the sense in which the framers of the constitution use the term, we must abstract entirely from Adam Smith and Turgot, with their completely contradictory opinions, and seek to ascertain what the members themselves thought.

§ 7. The Use of the Term in the Constitutional Convention The words "direct taxes" and "indirect taxes were used only a very few times in the convention. In some cases there is no doubt that the phrase refers to the mode of assessment. The old plan of supporting the general government was by a system of requisitions on the states. The new method was to be that of direct action of the federal government upon the individual. Direct taxes would therefore simply mean taxes imposed not by the states, but by the federal government

1 See supra, p. 50.

2 See the passage quoted above, p. 536. It may be added that these passages from Turgot were supplied by the present writer to the opposing counsel in the income tax cases, but the second passage was handed in by the government counsel too late to produce any effect in the course of the argument.

upon the individual. Thus, for instance, on July 13, 1787, Gerry moved that "all moneys to be raised for supplying the public treasury by direct taxation shall be assessed on the inhabitants of the several states according to the number of their representatives." When this motion was lost, Gerry stated that he had ascertained that the failure "had proceeded from an objection, with some, to the proposed assessment of direct taxes on the inhabitants of the states." He thereupon varied his motion, so "as to authorize the assessment on the states, which leaves the mode to the legislature"; and he accordingly put his motion in the form that "all moneys for supplying the public treasury by direct taxation shall be raised from the several states, according to the number of their representatives." The motion, so amended, was accepted.1 Again, on August 21, when the matter was taken up by Martin, he stated that "direct taxation should not be used but in cases of absolute necessity; and then the states will be the best judges of the mode."2 In the debates in the separate states also we find this use of the term, as, for instance, by Dana in Massachusetts, and by Randolph in Virginia. It is, however, a well established fact that in some of the states, like New York, where state taxes were apportioned to the counties instead of being levied upon the individuals as such, this method was termed "indirect taxation," and the words "direct taxes" were limited to taxes directly levied upon the individual. So that the term denoted in some states just the opposite of what it denoted in others.

In a number of other cases, however, the term "direct taxes" was used in the convention, irrespective of the question whether the tax was to be levied on the state or other political body, or on the individual. Thus the term "direct tax" was employed in some cases as opposed to "taxes in trade," and in other cases as opposed to "exports, imports and excises";5 and both there, as well as in the case

1 Elliot, vol. v, pp. 306–307.

2 Ibid., p. 453.

3 Ibid., vol. ii, p. 43; vol. iii, p. 122. 4 Ibid., vol. v, p. 320.

5 Ibid., p. 393.

of the phrase "no capitation or direct tax," the term evidently refers to a particular category of taxes.

When we consider the use of the term " 'direct tax" in the different legislatures that ratified the constitution, we find no less than five different uses of the term. In the first place, as just explained, it is sometimes used to signify a tax on the states. Secondly, it is employed to mean only a land tax.1 Thirdly, it is used to signify a land and a poll tax.2 Fourthly, it is employed to mean a poll tax, together with a general assessment on property. In the fifth place, it is used in the sense of a tax on land, together with the specific articles of personal property. Thus Livingston, in New York, said, "They must have recourse to direct taxes, that is, taxes on land and specific duties"; and Jay, of New York, stated that "It ought to be considered that direct taxes are of two kinds - general and specific" and he instanced, as an example of the latter, a tax on coaches. So also Marshall, in Virginia, said: "The objects of direct taxes are well understood; they are but few; what are they? Lands, slaves, stock of all kinds, and a few other articles of domestic property."

The only conclusion from the above survey is that almost every speaker used the term "direct taxes" in a different way. It is particularly to be noticed that the very tax which was afterwards to form the subject of the first decision of the

1 Cf. the speech of Dana in the Massachusetts convention, Elliot, vol. ii, p. 42. 2 Cf. the speech of Mason in the Virginia convention, Elliot, vol. iii, p. 264. 8 Cf. the speech of Williams in the Massachusetts convention, Elliot, vol. iii, p. 330. "Under this clause may be imposed a poll tax, a tax on houses, and buildings, on windows and fireplaces, on cattle, and on all kinds of personal property." See also the speech of Spencer, in the North Carolina convention. Elliot, vol. iv, p. 76: "How are direct taxes to be laid? By a poll tax, assessment on land or other property?" See also Monroe in Virginia, who says: "What are the objects of direct taxation? Will the taxes be laid on land?... How then will it be laid? On all

Will the taxes be laid on polls only? ...

property?" Elliot, vol. iii, pp. 215-216.

4 Elliot, vol. ii, p. 341.

5 Ibid., p. 381. Cf. the statement of Smith, ibid., p. 393. 6 Ibid., vol. iii, p. 229.

Supreme Court, namely, the carriage tax, which existed both in Virginia and in Massachusetts, was in 1787 called a direct tax in Virginia, where it was comprised among the other articles of property mentioned by Marshall, and yet was at the same time, in Massachusetts, as we have seen above, officially called an excise, and especially distinguished from the direct

taxes.

Nor is any further light thrown upon the subject by the use of the term "indirect taxes." In the debates in the convention we find in one place the term "indirect taxes" used by King simply in opposition to the old land tax of the confederation. In another place Gouveneur Morris opposes direct taxation to indirect taxes on exports and imports, and on consumption. This was, however, not an exclusive definition, because it allows no room for such taxes as stamp duties, which are certainly not taxes on exports or imports or on consumption, and which at the same time presumably would not have been called direct taxes by Morris. Finally, in the Connecticut convention, Elsworth used "indirect taxation" in the sense of taxes on consumption, but he did not indicate what constituted direct taxation.3

1 Elliot, vol. v, p. 312.

2 Ibid., p. 302.

3" Direct taxation can go but little way towards raising a revenue. To raise money in this way, people must be provident; they must constantly be laying up money to answer the demands of the collector. But you cannot make people thus provident. If you would do anything to the purpose, you must come in when they are spending, and take a part with them. This does not take away the tools of a man's business, or the necessary utensils of his family; it only comes in when he is taking his pleasure, and feels generous. . . I will instance two facts which show how easily and insensibly a revenue is raised by indirect taxation. . . . In England and Holland prodigious taxes. are levied chiefly upon articles of consumption." - Elliot, vol. ii, pp. 191–192.

In a brief submitted in the income tax cases of 1895 this quotation from Elsworth is followed by the interpolation of counsel, "This was the income tax pure and simple, and brought within the phrase direct taxation.'" - Extracts from the Evidence proving the Historic Facts. . . bearing upon the question whether the words Direct Tax'. . . embrace a Tax upon Incomes, etc., p. 42. As the income tax was not in existence at this time in Connecticut or anywhere else, the pertinency of the interpolation is not obvious. But perhaps it served its purpose in impressing the court.