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instrument which prohibits the states from levying any duty of tonnage without the consent of Congress; and it makes no difference whether the ships or vessels taxed belong to the citizens of the state which levies the tax or to the citizens of another state, as the prohibition is general, withdrawing altogether from the states the power to lay any duty of tonnage under any circumstances without the consent of Congress."
3. No state can lay a tax on the property, lawful agencies, and instrumentalities of the federal government or on federal franchises as such. This principle is not expressed in the Constitution, but it was derived, with his usual logic, by Chief Justice Marshall from the nature of the federal system itself. The power to create implies the power to preserve; the power to tax is the power to destroy, and if wielded by a different hand is incompatible with the power to create and preserve; therefore if the states could tax federal instrumentalities, they could destroy a union which was meant to be indestructible. According to this doctrine, states cannot tax branches of a United States bank, federal bonds, federal franchises, or by taxation “retard, impede, burden, or in any manner control the operation of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.
The early doctrine that the states cannot in any way touch a federal instrumentality has been modified more recently to the effect that they cannot interfere with such an instrumentality in such a manner as to impair its efficiency in performing the function which it was designed to serve. A state, for example, cannot tax federal bonds, but it may tax the buildings and other property of a national bank chartered by the federal government. “It is manifest,” said the Supreme Court, "that exemption of federal agencies from state taxation is dependent not upon the nature of the agents or upon the mode of their constitution, or upon the fact that they are agents, but upon the effect of the tax; that is, upon the question whether the tax does in truth deprive them of the power to serve the government as they were intended to serve it, or does hinder the efficient exercise of their power. A tax upon their property has no such necessary effect.
State Tonnage Tax Cases, 12 Wallace, 204.
It leaves them free to discharge the duties they have undertaken to perform. A tax upon their operations is a direct obstruction to the exercise of federal powers.'
4. In the exercise of its police power and power of taxation a state may not seriously interfere with interstate commerce;' but it may pass laws relative to matters which are local in character, even though they do affect in some way such commerce. For example, the Supreme Court sustained a law of Kentucky providing for the inspection of illuminating oils and imposing a penalty upon persons selling oil branded as unsafe by state inspectors — this law being in the interests of public safety – although it certainly interfered with the right of citizens of other states to sell oil freely in that commonwealth. Likewise a quarantine law of the state of Louisiana was sustained, although it incidentally restricted freedom of commerce. States may prohibit the running of freight trains on Sundays; forbid the employment of color-blind engineers on interstate as well as local trains; require the heating of cars; regulate speed within city limits; and compel the guarding of bridges and the protection of crossings even though such provisions affect interstate as well as local business.
State actions which constitute an invasion of federal power may likewise be illustrated by concrete cases. A law of Minnesota requiring the inspection of all meat twenty-four hours before slaughtering, designed in the interests of pure food, was declared invalid, because it necessarily prevented the transportation, into that commonwealth, of meats from animals slaughtered in other states where, of course, no such inspection could be provided." The state of Illinois passed an act regulating the making of railway rates within the state; but when it attempted to apply the rule to a shipment beginning in Illinois and ending in another state, the Supreme Court of the United States by proper process interfered, and declared that the regulation of interstate commerce from the beginning of a shipment to its end was confided exclusively in Congress.
* Railroad Company v. Peniston, 18 Wallace, 5. ? See above, chap. xix. 3 Patterson v. Kentucky, 97 U. S. R., 501. * That is, by Minnesota. Minnesota v. Barber, 136 U. S. R., 313. 6118 U. S. R., 557.
Again, a state cannot impose a tax upon all freight carried by a railway, but it can tax the franchise of a railway company, measuring the extent of its value by the receipts, including the receipts from interstate and foreign commerce.
Another important question relative to interstate commerce has been raised by state laws prohibiting the manufacture and sale of intoxicating liquors. In 1873-88, Iowa passed such laws, and the Supreme Court held them void, in so far as they prohibited the sale, by the importer, of liquor brought in from other states.? In 1890, Congress passed an act providing that fermented and other intoxicating liquors transported into any state or territory should be subject (as to sale) to the operation of the laws of such state or territory to the same extent and in the same manner as though they had been produced there. In other words, the Supreme Court held that prohibiting the importation of intoxicating liquor for sale was an interference with interstate commerce -a subject referred by the Constitution to the federal government; and Congress permitted the state to make a regulation of such commerce. This law was upheld, however, by the Supreme Court in a decision in which it was stated that in so legislating Congress had not attempted to delegate to a commonwealth the power to interfere with interstate commerce, but had simply made a uniform regulation under its power to control this commerce. 3
5. The state has practically no power over the monetary system. It may charter and regulate state banks, but it cannot coin money, emit bills of credit, or make anything but gold and silver coin * legal tender in the payment of debts. It may, however, authorize a state bank or state banking association to issue notes for circulation, but the exercise of this power is practically prohibited by the act of Congress, passed in 1866, laying a tax of ten per cent upon such notes. The effect of this act was to make it impossible, on account of the weight of the tax, for state banks to issue notes at all. The law was upheld by the Supreme Court of the United States for the reason, among others, "that the judicial cannot prescribe to the legislative department of the government limitations upon the exercise of its acknowledged powers. See Readings, p. 348.
2 Leisy v. Hardin, 135 U. S. R., 100. ' In re Rahrer, 140 U. S. R., 545.
4 Coined by the federal government. Veazie Bank v. Fenno, 8 Wallace, 533.
6. The original Constitution also contains some fundamental limitations on the power of states over criminal legislation. It provides that no state shall pass any bill of attainder — that is, a legislative act which inflicts punishment upon some person without ordinary judicial trial. This device had been frequently used for partisan purposes in the British Parliament, and the framers of the Constitution therefore desired to prevent such an abuse of legislative authority in the United States. No state can pass an ex post facto law — that is, one which imposes a punishment for an act which was not punishable when committed; or imposes additional punishment to that prescribed when the act was committed; or changes the rules of evidence so that different or less testimony (to the serious disadvantage of the accused) is sufficient to convict him than was required when the deed in question was committed.' This limitation on the states was designed to protect citizens from punishment by legislative acts having retrospective operation, and applies only to criminal legislation.
7. To protect citizens in their property rights the Constitution provides that no state shall pass any law impairing the obligation of contracts. The obligation of contract is the body of law existing at the time a contract is made, defining and regulating it, and making provision for its due enforcement. For example, one Crowninshield, on March 22, 1811, gave a note to one Sturges; and shortly afterward the state of New York, in which the note was dated, passed a bankruptcy law under which Crowninshield became a bankrupt, and by paying Sturges a portion of what he owed, claimed the right to be discharged from all of the remainder. This law with reference to all debts contracted before its passage was declared invalid by the Supreme Court as impairing the obligation of contract.
The term contract is used in this clause with a far wider meaning than in ordinary private law. It means "a legally binding agreement in respect to property, either expressed or implied, executory or executed, between private parties, or between a commonwealth and a private party or parties; or a grant from one party to another; or a grant, charter, or franchise, from a common
* Cummings v. Missouri, 4 Wallace, 277. · Calder, v. Bull, 3 Dallas, 386. 3 Sturges v. Crowninshield, 4 Wheaton, 117.
wealth to a private party or private parties.”! This wide interpretation of the term has given the clause a particular social and economic significance, because it has been applied to the protection of the franchises, charters, and privileges secured by private
corporations from state legislatures. The Supreme Court, for i example, held that a charter secured by Dartmouth College from
King James constituted a contract with that corporation which the state was bound to respect on securing its independence, and that a law of the state of New Hampshire designed to control the college and its funds was an impairment of the obligation of that contract.? Again in the case of the Bank of Ohio v. Knoop," the Supreme Court held that a charter to a bank in which the state agreed to tax the corporation at the rate of only 6 per cent on its dividends was a contract, and that a subsequent law of the state raising the rates on the bank so chartered was an impairment of the obligation of contract. Under a strict application of this principle, a state legislature having once granted away special privileges to corporations would be bound to maintain them forever if no specific provisions were made in the grant as to times and limitations.
The Supreme Court, however, has refused to extend the term contract to several forms of agreement between a state and its citizens. For example, appointment to a public office for a definite term at a fixed salary is not a contract, and a state impairs no obligation when it abolishes the office. A grant of power to a municipal corporation by a state legislature, a bounty law by which a state agrees to pay so much bounty on certain commodities produced within its borders, or a state license to sell liquor for a certain term of years is not a contract. It should be noted also that the Court will declare a law invalid
а as impairing the obligation of contract only when it is retrospective, that is, when it applies to contracts made before its passage; and if a state provides in its constitution or laws for future revision of charters, franchises, and other forms of contract, it thereby places, in the body of the law, which, as we have seen, constitutes the obligation
Burgess, Political Science and Constitutional Law, Vol. I, p. 235.
• 16 Howard, 369, decided in 1853.