18 MISC. PUBLICATION 218, U. 8S. DEPT. OF AGRICULTURE 
The United States is a federation of sovereign States, united under 
a written constitution, which defines the respective spheres of the 
Federal Government and of the several States. To the Federal 
Government belong such powers and functions as are granted (either 
explicitly or by implication) by the Constitution of the United States. 
The States and the people are the residual claimants of sovereignty, 
retaining all powers and functions not thus granted to the Federal 
Government. Subject to the limits thus laid down, each grade of 
government is supreme. 
The Constitution of the United States imposes a certain separation 
of governmental functions between the National Government and 
the States. Provision for national defense, diplomatic relations with 
other nations, control of immigration and naturalization, regulation 
of foreign and interstate trade, and control of the monetary system 
are among the important functions assigned of necessity to the Fed- 
eral Government. By such assignment the powers of the States are 
definitely limited. Otherwise the States perform all the functions 
of government, either directly or through delegation to their subor- 
dinate political units. There is a wide area in which both the Nation 
and the States operate, from which condition there arises a con- 
siderable amount of overlapping as well as some jurisdictional 
dispute. 
Somewhat similar differentiation appears on the revenue side of 
governmental operation. To the National Government belongs, of 
necessity, the exclusive right to impose taxes upon imports and inter- 
state commerce. On the other hand, its power to tax property er to 
employ other ‘‘direct”’ taxes, with the single exception of the income 
tax, is seriously restricted—indeed, to all practical intents, denied— 
by the constitutional rule of apportionment among the States accord- 
ing to their population. The States retain all sovereign revenue 
powers except as limited by the Federal Constitution. Most im- 
portant is their practically exclusive right to the taxation of prop- 
erty. Here again there is a considerable common ground, represented 
especially by the taxation of incomes and including excise taxes which 
do not burden interstate commerce. In general the States are not 
permitted to levy taxes upon the property or activities of the Federal 
Government without its consent, nor is it the policy of the Federal 
Government to levy taxes upon the property or activities of any 
State government. 
The States are divided into numerous local jurisdictions, first into 
counties, and then into townships or towns, incorporated cities, 
school districts, road districts, and other local units. The relations 
between the States and their local governments are not those of a 
federation but those of a centralized government. The local sub- 
divisions have no sovereignty but are the creatures of the State and 
subject to its complete control. Local governmental units are 
created for two main purposes; (1) for the performance of local func- 
tions and the satisfaction of local needs, and (2) as the agents of the 
State for carrying out its functions in the particular localities. 
New England the county is unimportant as a unit of local self- 
government; it is little more than an administrative district of the 
State government, chiefly concerned with the judiciary and to a 
