PRINCIPLES OF TAXATION. 



303 



to divulge tlie legislative intention to prohibit banking on tbeir 

 part, but lie argued elaborately that for another and stronger rea- 

 son the tax could be constitutionally imposed because it was a tax 

 levied for a lawful purpose, which lawful purpose was to restrain 

 a State from interfering with the Federal control of the currency 

 and the right of the national Government to emit bills of credit, 

 and it was upon that point that the decision of the Supreme Court 

 was in fact rendered. 



The point of interest in this decision, however, is not the right 

 of the Federal Government to regulate, especially under the origi- 

 nal admitted necessity for the exercise of war powers, the cur- 

 rency of the country, but whether, having regard to the limita- 

 tions on the exercise of the taxing power growing out of the 

 nature of a constitutional government, the Federal authorities 

 were justified in employing it as an instrumentality not to collect 

 revenue but to prevent revenue, and when the desired end could 

 be effectually achieved by other and unobjectionable methods; 

 and on this point the court, following a well-established precedent 

 of avoiding as far as possible all conflict between the judicial and 

 legislative powers of the Federal Government, avoided any direct 

 expression of opinion. As the case now stands, and as Congress 

 has refused to discontinue the tax, it must be regarded as equiva- 

 lent to an assertion that the Federal Government has the consti- 

 tutional right to exercise the taxing power not for revenue and 

 not by reason of any necessity that can justify it.* 



During the recent discussion of the silver problem, an eminent 

 American writer on economic questions recommended that a 



* Concerning the legitimacy and constitutionality of this procedure, a minority of the 

 Finance Committee of the United States Senate, in a report in May, 1892, on a proposition 

 to repeal this tax, expressed themselves as follows : Prior acts imposing taxes of one or two 

 per cent on the notes of State banks, imposed for revenue purposes, the committee regard 

 ' as entirely justifiable; but in respect to the ten-per-cent tax, which neither produced nor was 

 intended to produce revenue, the committee say : 



"This is flagrantly obnoxious in its manifest perversion of the taxing power conferred 

 upon Congress by the Constitution. . . . We think also that a reasonable construction of 

 the taxing power clause in the Constitution, to wit, 'the Congress shall have the power to 

 lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the com- 

 mon defense and general welfare of the United States,' would mean that Congress shall pay 

 the public debt, provide for the common defense, and promote the general welfare with the 

 money arising from such taxation, and not that Congress shall have the power to discharge 

 these public duties by the mere framing of a statute without any revenue resulting there- 

 from. Surely it would be an absurdity for the Constitution to say that Congress shall have 

 the power to discharge the debt of the United States by the mere framing of a statute or 

 the wording of a law. The payment of money or the transfer of things of value is the only 

 way by which a debt can be paid. Therefore the enacting of a law in the name and under 

 the pretense of revenue which is intended to raise no revenue in fact, but which has another 

 and entirely different object, is a gross and fraudulent perversion of the taxing power con- 

 ferred by the Constitution." 



