reignty which will extend over them. As the right never existed, the question whether it has been surrendered cannot arise. He then says: "If the States may tax one instrument employed by the government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax the mint; they may tax patent rights; they may tax the papers of the custom-house; they may tax judicial process," &c., p. 432. After explaining some passages in the Federalist, which some had supposed conflicted with these views, and showing that they had been misapprehended, he closed by distinctly holding that the United States Bank was an instrument of the government, and the tax was unconstitutional.

It is impossible to read this case with attention without being convinced that the Court intended to place this decision upon the broad ground that the notes of the United States Bank could not be taxed by a State. The fact that the tax was a special one, was subordinate and incidental, and in nowise affected the principle. It is not even alluded to in the opinion. The case also decided that a note of the United States Bank was an instrument of the United States government.

A dictum occurring at the close of the opinion, has caused some confusion upon this subject. It is remarked by the Court that the opinion does not extend to a tax imposed on the interest which citizens of Maryland may hold in this institution in common with other property of the same description through out the State. This point was wholly foreign to the case before the Court. If it be good law, the purchase of stock in such a corporation by private persons for private purposes bears no analogy to the issue of notes by the bank, or of bonds and notes by the United States

government. The bank stock is issued purely and simply as evidence of property; the notes and bonds are evidences of contracts with third parties, and are the instruments by means of which such contracts are made. For a like reason no tax could be laid upon the bank as such, because its efficiency as an instrument of the government might be impaired.

In Osburn vs. United States Bank, 9 Wheaton 738, the Court were asked to review their decision previously made in McCullough vs. Maryland. No attempt is made by counsel to impugn the argument of the Court in that case. They expressly admit it in all its bearings. They only assail the premises. They urge that the bank is a private corporation, not the instrument of government. If it were, it could not be taxed at all. Mr. Hammond, in this connection, makes the statement in regard to government securities already noticed. The Court affirms the previous decision upon the same principles. It however discusses, somewhat more fully, the doctrine of implied exemption from State authority. It says, “If the sound construction of the Act be that it exempts the trade of the bank as being essential to the character of a machine, necessary to the fiscal operations of the government from the control of the States, Courts are as much bound to give it that construction as if the exemption had been established in express terms." P. 366.

The only question which remains after these decisions, is, to inquire whether the securities of the United States are embraced within the same principle as notes of the United States Bank. If not, we arrive at the conclusion that

"notes" of the bank-an instrument of government-cannot be taxed, while "notes" of the government which em

ploys that instrument may be. But if notes of the bank-the instrument of an instrument-were part of the financial machinery of the general government, and thus not taxable, a fortiori the notes and bonds of the general government itself are a part of its machinery as being the direct instruments of finance. (We purposely abstain from calling government securities "stock." They are contracts, and nothing more.) It may, however, be said, that the tax in McCullough vs. Maryland was levied at the time when the notes were issued by the bank, and that there would be no objection to a tax after the note had come into the hands of a private holder. For a like reason a tax might be laid upon government notes and bonds. It would then be simply a tax upon the property of the owner in the note or bond, and not a tax upon the security itself. The "instrument" of government (the note or bond) would then have spent its force, as such, and it would simply be an evidence of property. This question came up before the Court in Weston vs. City of Charleston, 2 Peters 449. The City of Charleston, by a local ordinance, had laid a tax of one quarter of one per cent. upon the following species of property: All personal estate, consisting of bonds, notes, insurance stock, six and seven per cent. stock of the United States, or other obligations, upon which interest has been or will be received during the year, over and above the interest which has been paid (funded stock of this State, and stock of the incorporated banks of this State, and the United States Bank excepted.)

It appears, from Mr. Justice THOMPSON's dissenting opinion, that the ordinance in question was not in full before the Court, but only one clause in it. The fair inference from his statement

is, that there were many other articles specified in the ordinance. He objects to the assertion made by a dissenting Judge in the State Court, to which the writ of error was issued, that the tax was upon the United States stock co nomine. This could only mean, he says, that it was enumerated as one description in a long list of specified property subject to taxation. The Supreme Court of the United States, however, paid no attention to this incidental point, any more than it did in McCullough vs. Maryland, but grappled with the main question, Can the United States securities be taxed by the States at all? The line of argument is, that the right to tax the securities of the United States is the right to tax an instrument used by the government in carrying into effect its acknowledged power to borrow money. Say the Court, "We retain the opinions expressed in McCullough vs. Maryland. A contract made by the government, in the exercise of its power to borrow money, &c., is undoubtedly independent of the will of any State in which the individual who lends it may reside, and is undoubtedly an operation essential to the important objects for which the government was created." Nor did it make any difference that the stock had been issued before the tax was laid. Mr. Legarè had urged upon the Court, in his argument, that the case came within the exception assumed in McCullough vs. Maryland, and that the government securities might be taxed in common with all other private property in the State. P. 462. The Court expressly denied this proposition, and held that the tax on government securities was a tax on the

contract-A TAX ON THE POWER TO BORROW MONEY ON THE CREDIT OF THE UNITED STATES. P. 469.

These three cases appear to be in

complete harmony, and are to be regarded as instances of the application of a single principle, which is, that the instruments by which the general government exercises its powers are not subject to State taxation.

was held that these were the machinery or instruments by which the general government exercised its financial functions through the medium of a bank, and that they could not be taxed any more than the bank itself. At another

1. It must be regarded as well settled upon principle, that the instruments, or machinery by which the United States government exercises its acknowledged powers, are not subject, in any form, to be taxed by the State authorities. They cannot be included in the mass of property which may be taxed, but are altogether exempt, for the reason that that which is created by all the States for the benefit of all, is not subject to the control of any one of them. The right to tax these instruments was never surrendered by the States, for it never existed in their favor.

2. The bonds and notes issued by the United States are the instruments or machinery by which the power to borrow is exercised. A tax upon them is "a tax upon the power to borrow money on the credit of the United States."

3. These principles are sustained by the authorities. The first case presented itself simply as a power to tax the notes of the United States Bank, and it

United States bonds or securities, after they were issued, came before the Court, and they were also held to be the machinery by which the general government exercised its financial powers. It was not necessary for Congress to exempt them from taxation, for the exemption is implied. They can no more be taxed in the hand of the holder than at the time they are issued. They are issued by the general government for the benefit of all, and cannot be subject to the control of any particular State.

In reaching these conclusions, we regret that they come in conflict with the judgment of the able and enlightened Court which pronounced the opinion in The People vs. Commissioners of Taxes, 23 N. Y. 192; S. C. 1 Am. Law Reg. N. S. 81. This case might have caused us to distrust our own reasoning, had it not appeared to us to have the support of the Supreme Court of the United States, the ultimate arbiter of the question. T. W. D.