tion discussed in these two cases has recently assumed such great importance that a review of them may not be out of place.

I. It will be admitted by all that the powers granted to Congress in the United States Constitution can only be executed by means, or, as it is sometimes termed, by "instruments" or "machinery." None of the great powers conferred in that instrument execute themselves. The power to coin money confers the power to establish a mint as a proper instrument; the power to regulate commerce, the right to establish light-houses, the power to lay taxes, confers the right to provide custom-houses and to appoint collectors and tax gatherers. All these are the instruments and the machinery by which the substantial power is vivified; without them the power is inert; in fact they are a component part of the power granted. For greater caution a clause was inserted in the Constitution that Congress shall have power to make all laws which shall be necessary and proper for carrying into execution the powers previously granted; but the better opinion is that no new authority was conferred by this provision. The power to borrow money is no exception to this principle. This can only be exercised by instruments—such as government bonds or treasury notes. government could no more borrow money without them than commerce could be carried on without bills of lading. Such bonds and notes are just as truly the instruments of borrowing or of finance as a mint is the instrument by which the power to coin money is exercised, or custom-houses are the means by which the power to collect taxes is carried into effect. It is a mistake then to regard government securities merely as evidences of debt. They are also the means by which the indebtedness is contracted.

The

II. It is a well settled rule that no instrument or machinery of the general government can be interfered with by the States. No one has been hardy enough to claim that the mint or customhouses could be taxed by State authorities, or that munitions of war could be taxed even though within the territorial jurisdiction of the State. The early lawyers seem to have been of the same opinion as to evidences of debt issued by the general government. Thus Mr. Hammond of Ohio, in Osburn vs. United States Bank, 9 Wheaton 738, arguing against the claims of the general government, and insisting that the State authorities could tax the bank, pitched upon this as the best illustration of the class of cases where the States could not interfere. He says: "If the nation borrow money, it is competent for the nation to decide upon the evidence to be given of the debt. It would be absurd to subject this national measure to the municipal regulations of one of its parts, and thus permit a part to assess a tax upon the whole." P. 777.

This concession, after the case of McCullough vs. Maryland, 4 Wheat. 116, is remarkable as showing that at that time any assertion on the part of the States of the power to tax United States securities was deemed to be untenable. It is believed that a critical examination of the three great cases upon this subject will lead to the same conclusion. They are McCullough vs. Maryland, supra, Osburn vs. United States Bank, and Weston vs. City of Charleston, 2 Peters 449. In the first case the facts were, that the Legislature of Maryland enacted that no bank established in that State by any authority other than the State Legislature, should issue any notes except upon stamped paper, to be furnished by the executive of the State at certain specified rates

A commutation might be made on the part of the bank by paying to the State treasurer a sum mentioned in the act. This law, which embraced the Branch of the United States Bank, situated in Maryland, was alleged by that institution to be unconstitutional. It will be noticed that the tax was laid upon the notes of the bank, which were the means by which the bank exercised its powers in behalf of the United States government. It is true that the tax was a special one-that these notes were singled out from other subjects of taxation-but the reasoning of the counsel and of the Court did not proceed upon that ground. It is not easy to perceive why, if the power to tax resides in a State government, it may not select the special objects for taxation at its own discretion, unless hampered by some provision in the State Constitution. The power to tax involves the power to discriminate between subjects of taxation. The principles of political economy teach that absolute equality of taxation is often the greatest injustice, and rules are laid down by means of which a proper discrimination may be made. If a discretion exists, the Courts cannot determine whether it is wisely or unwisely exercised. If the Legislature have the power to deliberate and to decide, the conclusion which it reaches is wholly beyond the scope of judicial action The question, therefore, was discussed upon the broad principle that a State cannot tax the property of the United States, or the instruments employed in executing its powers. Thus Mr. Webster cites the clause in the Articles of Confederation which provided "that no impositions, duties, or restrictions should be laid by any State on the property of the United States." He adds: " Is it supposed that property of the United States is now subject to the power of the State governments in a greater

degree than under the Confederation?' 4 Wheaton 328. Mr. Hopkinson, one of the counsel for the State, asserted the question before the Court to be whether the bank and its branches could claim to be exempt from the ordinary and equal taxation of property as assessed in the States in which they are placed. P. 337. Mr. Pinkney remarked that there must be in this case an implied exception to the general taxing power of the States, because it is a tax upon the legislative faculty of Congress, upon the national property, upon the national institutions. P. 394. And again: "the Bank of the United States is as much an instrument of the government for fiscal purposes as the Courts are its instruments for judicial purposes. Though every State may impose a stamp tax, yet no State can lay a stamp tax upon the judicial proceedings or custom-house papers of the United States. But there is no such express exception to the general taxing power of the States contained in the Constitution. It arises from the general nature of the government, and from the principle of the supremacy of the national powers and the laws made to execute them over the State authorities and State laws." p. 396. MARSHALL, C. J., in delivering the opinion of the Court, lays no stress upon the point that this tax was special in its nature. but his opinion proceeds upon the theory that the bank was an instrument by which the general government exercised its functions. He stated that the sovereignty of the State in the article of taxtation may be controlled by the Constitution of the United States, and that the question became purely one of construction as to the meaning of the Constitution. He added that the means employed by the United States government were given by the people of all the States, and that therefore the people of a single State could not confer a sove

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 re gard to government securities already noticed. The Court affirms the previ ous decision upon the same principles It however discusses, somewhat more fully, the doctrine of implied exemption from State authority. It says, 66 '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

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 THOмPBON'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 eo 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