to divulge the legislative intention to prohibit banking on their part, but lie argued elaborately that for another and stronger reason 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 original admitted necessity for the exercise of war powers, the currency of the country, but whether, having regard to the limitations 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 equivalent to an assertion that the Federal Government has the constitutional right to exercise the taxing power not for revenue and not by reason of any necessity that can justify it.[1]
During the recent discussion of the silver problem, an eminent American writer on economic questions recommend 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 common 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 therefrom. 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 conferred by the Constitution."
