Notwithstanding the pervading nature of this power, there are some things under our system of government which, by necessary implication, are exempted from its exercise. Thus, the States. cannot tax the agencies of the general government; for, if they could, it would be within their power to impose taxation

to an extent that might cripple, if not wholly defeat, * the [* 481] operations of the national authorities within their proper sphere of action. "That the power to tax," says Chief Justice Marshall, "involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that there is a plain repugnance in conferring on one government a power to control the constitutional measures of another, which other, with respect to those very measures, is declared to be supreme over that which exerts the control, are propositions not to be denied." And referring to the argument that confidence in the good faith of the State governments must forbid our indulging. the anticipation of such consequences, he adds: "But all inconsistencies are to be reconciled by the magic word, confidence. Taxation, it is said, does not necessarily and unavoidably destroy. To carry it to the excess of destruction would be an abuse, to presume which would banish that confidence which is essential to all government. But is this a case of confidence? Would the people of any one State trust those of another with a power to control the most insignificant operations of their State government? We know they would not. Why then should we suppose that the people of any one State would be willing to trust those of another with a power to control the operations of a government to which they have confided their most important and most valuable interests? In the legislature of the Union alone are all represented. The legislature of the Union alone, therefore, can be trusted by the people with the power of controlling measures which concern all, in the confidence that it will not be abused. This, then, is not a case of confidence." 1

1 McCulloch v. Maryland, 4 Wheat. 431. The case involved the right of the State of Maryland to impose taxes upon the operations, within its limits, of the Bank of the United States, created by authority of Congress. "If," continues the Chief Justice," we apply the principle for which the State of Maryland contends to the Constitution generally, we shall find it capable of changing totally the character of that instrument. We shall find it capable of arresting all the measures of the government, and of prostrating it at the foot of the States. The

[* 482]

* It follows as a logical result from this doctrine that if the Congress of the Union may constitutionally create a Bank of the United States, as an agency of the national government in the accomplishment of its constitutional purposes, any power of the States to tax such bank, or its property, or the means of performing its functions, is precluded by necessary implication.1 For the like reasons a State is prohibited from taxing an officer of the general government for his office or its emoluments, since such a tax, having the effect to reduce the compensation for the services provided by the act of Congress, would to that extent conflict with such act, and tend to neutralize its purpose.2 So the States may not impose taxes upon the obligations or evidences of debt issued by the general government upon the loans made to it, unless such taxation is permitted by law of Congress, and then only in the manner such law shall prescribe, -any such tax being an impediment to the operations of the government in negotiating loans, and in greater or less degree, in proportion to its magnitude,

American people have declared their Constitution, and the laws made in pursuance thereof, to be supreme; but this principle would transfer the supremacy in fact to the States. If the States may tax one instrument employed by the gov ernment 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; they may tax all the means employed by the government to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their government dependent on the States." In Veazie Bank v. Fenno, 8 Wall. 533, it was held competent for Congress, in aid of the circulation of the national banks, to impose restraints upon the circulation of the State banks in the form of taxation. Perhaps no other case goes so far as this, in holding that taxation may be imposed for other purposes than the raising of revenue, though the levy of duties upon imports with a view to incidental protection to domestic manufactures is upon a similar principle.

1 McCulloch v. Maryland, 4 Wheat. 316; Osborn v. United States Bank, 9 Wheat. 738; Dobbins v. Commissioners of Erie Co., 16 Pet. 435. But the doctrine which exempts the instrumentalities of the general government from the influence of State taxation, being founded on the implied necessity for the use of such instruments by the government, such legislation as does not impair the usefulness or capability of such instruments to serve the government, is not within the rule of prohibition. National Bank v. Commonwealth, 9 Wall. 353; Thompson v. Pacific R.R. Co., ib. 579.

2 Dobbins v. Commissioners of Erie Co., 16 Pet. 435.

tending to cripple and embarrass the national power.1 The tax upon the national securities is a tax upon the exercise of the power of Congress "to borrow money on the credit of the United States." The exercise of this power is interfered with to the extent of the tax imposed under State authority, and the liability of the certificates of stock or other securities to taxation by a State, in the hands of individuals, would necessarily affect their value in market, and therefore affect the free and unrestrained exercise of the power. "If the right to impose a tax exists, it is a right which, in its nature, acknowledges no limits. It may be carried to any extent within the jurisdiction of the State or corporation which imposes it, which the will of such State or corporation may prescribe." 2

*If the States cannot tax the means by which the [*483] national government performs its functions, neither, on the other hand, and for the same reasons, can the latter tax the agencies of the state governments. "The same supreme power which established the departments of the general government determined that the local governments should also exist for their own purposes, and made it impossible to protect the people in their common interests without them. Each of these several agencies is confined to its own sphere, and all are strictly subordinate to the constitution which limits them, and independent of other agencies, except as thereby made dependent. There is nothing in the Constitution [of the United States] which can be

1 Weston v. Charleston, 2 Pet. 449; Bank of Commerce v. New York City, 2 Black, 620; Bank Tax Case, 2 Wall. 200; Van Allen v. Assessors, 3 Wall. 573; People v. Commissioners, 4 Wall. 244; Bradley v. People, ib. 459; The Banks v. The Mayor, 7 Wall. 16; Bank v. Supervisors, ib. 26. For a kindred doctrine, see State v. Jackson, 33 N. J. 450.

2 Weston v. Charleston, 4 Pet. 449; Bank of Commerce v. New York City, 2 Black, 631. This principle is unquestionably sound, but a great deal of difficulty has been experienced in consequence of it, under the law of Congress establishing the National Banking System, which undertakes to subject the National Banks to State taxation, but at the same time to guard those institutions against unjust discriminations, by providing that their shares shall only be taxed at the place where the bank is located, and in the same manner as shares in the State banks are taxed. The difficulty is in harmonizing the State and national laws on the subject, and it will be illustrated in a measure by some of the cases above cited; though the full extent of the difficulty is only perceived in other cases where the taxation of State banks is fixed by constitutional provisions, which provide modes that cannot be harmonized at all with the law of Congress.

made to admit of any interference by Congress with the secure existence of any State authority within its lawful bounds. And any such interference by the indirect means of taxation is quite as much beyond the power of the national legislature as if the interference were direct and extreme." It has therefore been held that the law of Congress requiring judicial process to be stamped could not constitutionally be applied to the process of the State courts; since otherwise Congress might impose such restrictions upon the State courts as would put an end to their effective action, and be equivalent practically to abolishing them altogether.

And a similar ruling has been made in other cases.

1 Fifield v. Close, 15 Mich. 509. "In respect to the reserved powers, the State is as sovereign and independent as the general government. And if the means and instrumentalities employed by that government to carry into operation the powers granted to it are necessarily, and for the sake of self-preservation, exempt from taxation by the States, why are not those of the States depending upon their reserved powers, for like reasons, equally exempt from Federal taxation? Their unimpaired existence in the one case is as essential as in the other. It is admitted that there is no express provision in the Constitution that prohibits the general government from taxing the means and instrumentalities of the States. nor is there any prohibiting the States from taxing the means and instrumentalities of that government. In both cases the exemption rests upon necessary implication, and is upheld by the great law of self-preservation; as any government, whose means employed in conducting its operations, if subject to the control of another and distinct government, can only exist at the mercy of that government. Of what avail are these means if another power may tax them at discretion?" Per Nelson, J., in Collector v. Day, 11 Wall. 124.

2 Warren v. Paul, 22 Ind. 279; Jones v. Estate of Keep, 19 Wis. 369; Fifield v. Close, 15 Mich. 505; Union Bank v. Hill, 3 Cold. (Tenn.) 325; Smith v. Short, 40 Ala. 796. State governments," it is said in the Indiana case, "are to exist with judicial tribunals of their own. This is manifest all the way through the Constitution. This being so, these tribunals must not be subject to be encroached upon or controlled by Congress. This would be incompatible with their free existence. It was held, when Congress created a United States Bank, and is now decided, when the United States has given bonds for borrowed money, that as Congress had rights to create such fiscal agents, and issue such bonds, it would be incompatible with the full and free enjoyment of those rights to allow that the States might tax the bank or bonds; because, if the right to so tax them was conceded, the States might exercise the right to the destruction of congressional power. The argument applies with full force to the exemption of State governments from Federal legislative interference.

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There must be some limit to the power of Congress to lay stamp taxes. Suppose a State to form a new, or to amend her existing constitution; could Congress declare that it should be void, unless stamped with a Federal stamp? Can Congress require State legislatures to stamp their bills, journals, laws, &c.

* Strong as is the language employed to characterize the [* 484] taxing power in some of the cases which have considered

in order that they shall be valid? Can it require the executive to stamp all commissions? If so, where is he to get the money? Can Congress compel the State legislatures to appropriate it? Can Congress thus subjugate a State by legislation? We think this will scarcely be pretended. Where, then, is the line of dividing power in this particular? Could Congress require voters in State and corporation elections to stamp their tickets to render them valid? Under the old Confederation, Congress legislated upon States, not upon the citizens of the State. The most important change wrought in the government by the Constitution was that legislation operated upon the citizens directly, enforced by Federal tribunals and agencies, not upon the States. Another established constitutional principle is, that the government of the United States, while sovereign within its sphere, is still limited in jurisdiction and power to certain specified subjects. Taking these three propositions then as true, - 1. States are to exist with independent powers and institutions within their spheres; 2. The Federal government is to exist with independent powers and institutions within its sphere; 3. The Federal government operates within its sphere upon the people in their individual capacities, as citizens and subjects of that government, within its sphere of power, and upon its own officers and institutions as a part of itself,— taking these propositions as true, we say, it seems to result as necessary to harmony of operation between the Federal and State governments, that the Federal government must be limited, in its right to lay and collect stamp taxes, to the citizens and their transactions as such, or as acting in the Federal government, officially or otherwise; and cannot be laid upon and collected from individuals or their proceedings when acting, not as citizens transacting business with each other as such, but officially or in the pursuit of rights and duties in and through State official agencies and institutions. When thus acting, they are not acting under the jurisdiction nor within the power of the United States; not acting as subjects of that government, not within its sphere of power over them; and neither they nor their proceedings are subject to interference from the United States. Can Congress regulate or prescribe the taxation of costs in a State court? The Federal government may tax the governor of a State, or the clerk of a State court, and his transactions as an individual, but not as a State officer. This must be so, or the State may be annihilated at the pleasure of the Federal government. The Federal government may perhaps take by taxation most of the property in a State, if exigencies require; but it has not a right, by direct or indirect means, to annihilate the functions of the State government."

The case of Hoyt v. Benner, 22 La. Am. 353, is opposed to those above cited as to the power of the government to tax the process of State courts, but the soundness of those decisions was really conceded by Congress in repealing the provision of law that provided for the tax, and was recognized by Judge Clifford, in Day v. Buffington, Am. Law Rev., Oct., 1870, p. 176.

It has been repeatedly decided that the act of Congress which provided that certain papers not stamped should not be received in evidence must be limited in