PRINCIPLES OF TAXATION. 469 



of any compact of union. But how to divide this power the 

 badge and symbol of sovereignty between two distinct sov- 

 ereignties of the same nation, namely, the Federal Congress and 

 the Legislatures of the several States, and impose limitations in 

 both cases on the exercise of a function so vast in its sweep and 

 so imperative in its action, was one of the most difficult prob- 

 lems that confronted the framers of the Federal Constitution, 

 and one without precedent in the world's history. The problem 

 occasioned much discussion, and was really left unsettled a gen- 

 eral power being given to the national legislature, or Congress, 

 " to lay and collect taxes, duties, imposts, and excises," with the 

 limitation that " all duties, imposts, and excises shall be uniform 

 throughout the United States " ; that " no capitation or other 

 direct tax shall be laid unless in proportion to the census " ; that 

 " no State shall, without the consent of Congress, lay any im- 

 posts or duties on imports or exports," and that no tax or duty 

 shall under any circumstances be laid on articles exported from 

 any State. Under such a loose and indefinite condition of things, 

 a conflict of laws and of jurisdictions was inevitable, giving rise 

 to controversies whose determination was really vital to the 

 integrity and efficiency of the Federal Constitution. But hap- 

 pily, owing to the firmness and wisdom of the national tribunal 

 (United States Supreme Court) before which these questions 

 have been brought for adjudication, most of the difficulties 

 which once seemed so formidable have been overcome, and are 

 now mainly interesting as matters of history. 



One of the earliest and most celebrated of these controversies 

 culminated, as it were, in a case or suit known as McCulloch vs. 

 Maryland, which came before the Supreme Court of the United 

 States and was decided in 1819, under the following circum- 

 stances : Congress in 1815 chartered a national (United States) 

 bank, which as a legitimate and authorized feature of its organ- 

 ization established branches in the States, with power to issue 

 circulating notes. This measure proved unpopular in many of 

 the States, and attempts were made by them to resist the various 

 operations of this banking institution within their territory. 

 Foremost among these was the State of Maryland, which, through 

 an enactment of its Legislature, required every bank doing busi- 

 ness in the State, and not chartered by the State, either to pay a 

 stamp duty on every note issued, or pay a tax of $1,500 in gross 

 per annum, and in addition imposed certain penalties on all the 

 officers of a bank violating the law, and upon every person who 

 had any agency in circulating such notes. Contemporaneously, 

 also, the State of Ohio imposed an annual tax of $50,000 upon 

 the branch bank of the United States established in that State. 



The validity of the Maryland statute having been affirmed 



