Popular Science Monthly/Volume 50/March 1897/Principles of Taxation: Rules Under a Constitutional Government XV

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By DAVID A. WELLS, LL. D., D. C. L.,



A PRESENTATION and discussion of the rules or maxims of administration which are in conformity with the foregoing exposition and discussion of the origin and sphere of taxation, and the limitations on the exercise of this great power which are essential to the existence and continuance of a constitutional and free government, are next in order for the proper development and understanding of the general subject under consideration. Under such a government—one happily characterized and defined by President Lincoln as "of the people, by the people, and for the people"—the following rules or maxims governing the administration of its lawful taxation would seem to be almost in the nature of economic axioms:

First. No tax should be imposed by a state or government except by the consent of the people from whom it is to be collected, given either directly or by their authorized representatives in Congress, Legislature, or Parliament assembled.

Second. All taxes or enforced contributions levied by the state in virtue of its sovereignty should be solely (singly) and exclusively for public purposes.

Third. The sphere of taxation should be limited to persons, property, and business exclusively within the territorial jurisdiction of the taxing power.

Fourth. Taxes should be reasonable, regular, and not arbitrary as respects method, time, and place of assessment and payment, and, above all, proportional.

Fifth. Taxation should not be employed as an agency or for the purpose of enforcing morality, or as an instrumentality for correction or punishment.

Sixth. No tax should be levied the character and extent of which offer, as human nature is generally constituted, a greater inducement to the taxpayer to evade rather than pay.

With a view of determining whether the above six propositions are so far fundamental and indisputable as to warrant their characterization as "economic axioms," attention is next asked to the following summary of reasons, or evidence to that effect, which may be separately adduced in respect to each one of them, commencing with the first—that no tax should be imposed by a state or government except by the consent of the people from whom it is to be collected, given either directly or by their authorized representatives in Congress, Legislature, or Parliament assembled. "The right is then wedded to the power, and representation and taxation become correlative." (Miller, Justice S. F., on the Constitution.)

It requires no great amount of thought to see that the principle involved in this proposition is not only an essential feature of every just system of taxation, but also the primary and essential condition of the existence of every system of free or popular government. If this is not at once apparent, the following brief historical retrospect ought to make it so:

The first great effort recorded in English history for its recognition and establishment as a fundamental principle of government was made by the English barons in 1215, in their notable struggle with King John, and resulted in the incorporation in the Great Charter (Magna Charta) of England of a provision which substantially forbade the king from imposing any taxes, except by permission of the General Council of the nation, duly summoned under writs regularly issued.[1] And it is interesting to note, as showing the broad spirit of generous patriotism that animated these rough old barons in their contest with King John, that they stipulated in the Magna Charta that they extorted from him that every limitation imposed in it for their protection upon the feudal rights of the king should be also imposed upon their rights as mesne lords (i. e., lords superior in the second degree) in favor of the undertenants who held of them.

In the many confirmations of the Great Charter in the ensuing reigns of Henry III and Edward I, its vital clauses as to taxation and the National Council were, however, invariably and intentionally omitted; and the latter king so reasserted the taxing power of the crown as to alarm the nation and occasion a revolution (Barons' War, 1297), which for many subsequent years prevented any like assumption on the part of Edward's successors. Under the reign of Charles I the authority to levy and collect taxes in England was, however, again claimed—as it was in all the other European states—to be vested exclusively in the king; and on the trial of John Hampden, in 1636, for his refusal to pay a tax known as "ship money," arbitrarily levied by the king for the maintenance of a naval force, this was the position taken by the crown lawyers representing the prosecution and accepted as valid by the judges in their verdict, the attorney general using in his plea language almost identical with that employed by Louis XIV, before cited, in defining his prerogative. (See Popular Science Monthly, No. 2, page 146, December, 1896.)

But when absolutism in government was overthrown in England in 1653, and a constitutional government established, no one principle was recognized as more fundamental than that the executive could levy no taxes except such as had been granted by the people taxed, through their representatives; and one of the very first statutes enacted by Parliament in 1689, under the reign of William and Mary, and accepted by the crown, was that all levying of money for the crown by pretense of prerogative should be hereafter and forever illegal; and next, in the latter third of the next century (1770), the unqualified affirmation and defense of the principle that those who pay the taxes should control the levying of them became the primary cause of the American Revolution, and eventuated in calling the United States into existence. And hence, by reason of such experiences, it has become a part of the common law of all English-speaking people that the taxing power inherent in the state is vested exclusively in the legislative department of its government.

Second. All taxes or enforced contributions levied by a state in virtue of its sovereignty should be solely (singly) and exclusively for public purposes.

Another and perhaps a more popular way of expressing this principle would be, to put it in the form of an affirmation, namely: All taxes that the people pay, the government should receive.

All recognized authorities, judicial and economic, are agreed in regarding the above proposition as in the light of a political axiom from which there can be no rational dissent. From a great number of confirmatory and illustrative legal opinions and decisions the following are especially worthy of attention:

"No State government, nor that of the United States, nor any other authority professing a regard for the rights of the people, is at liberty to take money out of their pockets for any other than a public purpose. "Whenever it can be discovered that a tax is levied for something which properly can not be called such, it may be successfully resisted by all the measures that the law allows in courts of justice."—Miller, Justice S. F., Lectures on the Constitution of the United States, p. 242.

"We have established, we think beyond cavil, that there can be no lawful tax which is not laid for a public purpose."—Loan Association vs. Topeka, United States Supreme Court, 20 Wallace, p. 664.

"Taxation, by the very meaning of the term, implies the raising of money for public uses, and excludes the raising of it for private objects and purposes."—Allen vs. Inhabitants of Jay, 60 Maine (per Appleton, C. J.).

"Taxation is allowable only for public purposes. The name (taxation) is not rightfully applied with reference to objects of a private nature, such as a bridge, manufactory, or foundry owned by individuals. An act of the Legislature authorizing a levy for a mere private purpose, or for a purpose which, though public, is one in which the people from which it is exacted have no interest, would not be a law, but a judicial sentence."—Hillard, Law of Taxation, 1875.

What are public purposes? This question is an embarrassing one, and in attempting to answer it there is opportunity for much latitude of opinion. In the first place, the ordinary or dictionary definition of the term "public," as forming a part of the above question, is certainly infelicitous and ambiguous—namely, "pertaining to a nation, state, or community; extending to the whole people" (Webster). Thus, for example, under a purely despotic form of government any exaction of contributions (taxes) from the people, and expenditures resulting therefrom, which the heads of the state may decree, be it for the expenses of a harem, the amusement or dignity of royalty, the reward or pensions of court favorites, or the maintenance of a military force for the subjugating of the people, would be held to be for a public purpose, and any subject that should undertake to contravene this assumption would be amenable to punishment and perhaps to the charge of treason.

On the other hand, under all popular or constitutional governments it would not probably be disputed, that taxation should have but one object and taxes but one destination—namely, to supply the expenses necessitated by those services which, according to established usage, it is the business of government to provide, and in contradistinction to those which private inclination, interest, or liberality will supply whenever a necessity or demand for such action becomes sufficiently manifest. Any form of levy, therefore, under such a government upon the person or property of its citizens that does not conform to these conditions is not for a public purpose and is not entitled to be called taxation.

The following further amplification of these propositions by the Supreme Court of Massachusetts has probably also the unqualified indorsement of all judicial authorities in the United States:

"The incidental advantage to the public, or the State, which results from the promotion of private interests and the prosperity of private enterprise or business, does not justify their aid by the use of public money raised by taxation, or for which taxation may become necessary. It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax, and not the magnitude of the interest to be affected, nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. The principle of this distinction is fundamental. It underlies all government that is based upon reason rather than upon force."—Lowell vs. Boston, 111 Mass., 454.

"It has become a favorite maxim that it is the duty of government to promote the happiness of the people. The phrase may be interpreted so as to mean well, but it is a very inaccurate and unhappy one. It is the inalienable right of men to pursue their own happiness, each man under such restraint of law as will leave every other man equally free to do the same. The happiness of the people is the happiness of the individuals who compose the mass. Speaking now with reference to those objects only which human laws can reach and influence, he is the happy man who sees his condition in life constantly and gradually, though it may be slowly, improving. Let government keep its hands off, do nothing in the way of creating the subject-matter of speculation, and things naturally fall into this channel."—Sharswood, Legal Ethics.

The distinction between a public and a private purpose in respect to taxation, however, is often a matter of great difficulty and embarrassment; and one eminent jurist and writer on taxation (Cooley) has indeed declared that "there is no such thing as drawing a clear line of distinction between purposes of a public and those of a private nature." But the question at issue has been so often made the subject of definition and illustration by the highest courts of the United States speaking—through jurists of the highest conceded ability—that, although complete unison of opinion does not now and probably never will exist as to whether certain particular purposes, as expenditures by the State for bounties, facilitating transportation, education, charities, amusements, celebrations, and the like, are within the requirements to make them public. The sphere for disagreement has, however, within recent years greatly narrowed. One of the most clear and comprehensive of illustrations on this topic, given by the Supreme Court of Michigan (People vs. Township, 20 Michigan, 452), through Justice Thomas M. Cooley, was as follows:

In respect to "certain things of absolute necessity to civilized society," the State is precluded either by express constitutional provisions or by necessary implications, from providing for at all, and which are thus left wholly to the fostering care of private enterprise and private liberality. We concede, for instance, that religion is essential, and that without it we should degenerate to barbarism and brutality; yet we prohibit the State from burdening the citizen with its support, and we content ourselves with recognizing and protecting its observance on similar grounds. Certain professions and occupations in life are also essential, but we have no authority to employ the public money to induce persons to enter them. The necessity may be pressing and to supply it may be in a certain sense to accomplish a public purpose, but it is not a purpose for which the power of taxation may be employed. The public necessity for an educated, skillful physician in some particular locality may be great and pressing, yet, if the people should be taxed to hire one to locate there, the common voice would exclaim that the public moneys were being devoted to a private purpose. The opening of a new street in a city or village may be of trifling importance as compared with the location within it of some new business or manufacture; but while the right to pay out the public funds for the one would be unquestionable, the other by common consent is classified as a private interest which the public can aid as individuals, if they see fit, while they are not permitted to employ the machinery of government to that end. Indeed, the opening of a new street in the outskirts of a city is generally very much more a matter of private interest than of public concern; yet, even in a case where the public authorities did not regard the street as of sufficient importance to induce their taking the necessary action to secure it, it would not be doubted that the moment they should consent to so accept it as a gift, the street would at once become a public object and purpose upon which the public funds might be expended with no more restraints upon the action of the authorities in that particular than if it were the most prominent and essential thoroughfare in the city. By common consent, also, a large portion of the most urgent needs of society are relegated exclusively to the law of demand and supply. It is this in its natural operation and without the interference of the Government that gives us the proper proportion to tillers of the soil, artisans, manufacturers, merchants, and professional men, and that determines when and where they shall give to society the benefit of their particular services. However great the need in the direction of any particular calling, the interference of Government is not tolerated, because, though it might be sup plying a public want, it is considered as invading the domain that belongs exclusively to private inclination and enterprise. We perceive, therefore, that the term "public purpose," as employed to denote the objects for which taxes may be levied, has no relation to the urgency of the public need or to the extent of the public benefit which is to follow. It is, on the other hand, merely a term of classification to distinguish the objects for which, according to settled usage, the Government is to provide, from those which, by the like usage, are left to private inclination, interest, or liberality.

Under a constitutional and representative form of government the determination of what constitutes a public purpose in respect to taxation rests primarily in the legislative department of such government; but legislative determination on this subject is not absolutely conclusive, for the question ultimately is one of law. If this was not so, a Legislature would possess unlimited power to make anything lawful which it might call taxation, which would be equivalent to an unlimited power to plunder the citizen.

In every case in which the Legislature shall have clearly exceeded its authority in this regard, and levied a tax for a purpose not public, it is competent for any one, who in person or properly is affected by the tax, to appeal to the courts for protection.—Cooley, Law of Taxation, p. 55.

Brief references to certain other court cases, in which the validity of this claim that certain taxes, or acts involving the imposition of taxes, were for public purposes, was the question at issue, will also help to an understanding of the subject.

In 1872 the city of Boston was authorized by the Legislature of Massachusetts to issue bonds to the amount of $20,000,000, the proceeds to be loaned to persons whose property had been destroyed by a recent great fire. The Supreme Court of Massachusetts held that, although such "a promotion of the interests of individuals might result incidentally in the advancement of the public welfare," the measure was, "in its essential character, a private and not a public object," and therefore unconstitutional. (Lowell vs. Boston, 111 Mass.)

A similar statute enacted by the Legislature of South Carolina in aid of sufferers by a fire in Charleston was also declared by the Supreme Court of that State as unconstitutional. (Feldman & Co. vs. City of Charleston, S. C, 57.)

In 1870 the town of Jay, in Maine, voted to loan $10,000 to a firm of manufacturers, on condition that they would move their works to the town and establish and maintain them there for ten years. This vote, although ratified by an act of the Legislature, the Supreme Court of the State declared void. (Allen vs. Jay, 60 Maine, 124.)

In connection with this case the Legislature of the State of Maine officially put the following question to the justices of its Supreme Court: "Has the Legislature authority under the Constitution to pass laws enabling towns by gifts of money to assist individuals or corporations to establish or carry on manufacturing of various kinds within or without the limits of said towns?" The question was answered in the negative. The court used the following language: "There is nothing of a public nature any more entitling the manufacturer to public gifts than the sailor, the mechanic, the lumberman, or the farmer. Our Government is based on an equality of rights. The State can not rightfully discriminate among occupations; for a discrimination in favor of one branch of industry is a discrimination adverse to all other branches. The State is equally bound to protect all, giving no undue advantage or special or exclusive preference to any. Taxation in aid of private enterprise is to load the tables of the few with bounty that the many may partake of the crumbs that fall therefrom."

In 1875 the Legislature of Kansas authorized townships to issue bonds for the purpose of raising money to be applied for the relief of such farmers within their limits as had been deprived, by a failure of crops, of seed with which to plant for a new season. This authorization was held by the court (Justice Brewer) to be unconstitutional, on the ground that the use of public moneys for the accommodation of a certain class was not a public purpose—"not for the benefit of the indigent, but of those who have fields to till and stocks to care for"—and that if the principle involved is once recognized, it may be invoked with equal propriety in aid of other or all classes. (State vs. Osawkee, 14 Kansas, 488.)

In the State of New York its Court of Appeals has held void an act of the Legislature authorizing a village to take stock in a manufacturing corporation, and to issue bonds to raise the money to pay for such subscription, and to levy taxes for the payment of the principal and interest on said bonds. (Weismer vs. Douglas, 64 N. Y., 91.) In a similar case (Sweet vs. Hurlbert, 51 Barber) Justice James expressed himself as follows:

If this can be done, it is legal robbery; less respectable than highway robbery in this, that the perpetrator of the latter assumes the danger and infamy of the act, where this act has the shield of legislative irresponsibility.

In Cole vs. La Grange (113 U. S.), the case turned on an act of the Legislature of Missouri authorizing the city of La Grange, whenever two thirds of the resident taxpayers signified their approval at a special election, to levy a tax not exceeding two per cent per annum on the assessed value of the real and personal property in the city, to pay for a donation or subscription to the stock of a manufacturing company. The court held the act void; the opinion, written by Mr. Justice Gray, embodying the following language:

The general grant of legislative power in the Constitution of the State does not enable the Legislature, in the exercise either of the right of eminent domain or of the right of taxation, to authorize counties, cities, or towns to contract, for private objects, debts which must be paid by taxes.
It can not, therefore, authorize them to issue bonds to assist merchants or manufacturers, whether natural persons or corporations, in their private business. These limits of the legislative power are now too firmly established by judicial decisions to require extended argument upon the subject.

In Burlington vs. Beasley (94 U. S., 310), however, taxation in aid of a public gristmill, the tolls of which the Legislature would have a right to regulate, was sustained; the construction of such a mill in a new country being probably a public necessity, and not possible without public aid.

But perhaps the most weighty opinion on this question is that of the United States Supreme Court in the case of the Loan Association vs. Topeka, 20 Wall, 655 (before referred to on page 153, vol. L., Popular Science Monthly). In 1872 the Legislature of Kansas passed an act authorizing cities and counties to issue bonds for the purpose of encouraging the establishment of manufactures and other like enterprises; and under this act the city of Topeka created and issued its bonds, to the extent of $100,000, and gave the same "as a donation," a majority of voters approving, to an iron-bridge company, as a consideration for establishing and operating their shops within the limits of the city. The interest coupons first due on these bonds were promptly paid by the city out of a fund raised by taxation for that purpose, but subsequently, when the second coupons became due, and the bonds had passed out of the possession of the bridge company by bonafide sale to a loan association, the city meanly repudiated its obligations, on the ground that the Legislature of Kansas had no authority under the Constitution of the State to authorize the issue of bonds, the interest and principal of which were to be paid from the proceeds of taxes, for any such purpose as the encouragement of manufacturing enterprises. Legal proceedings to enforce payment were thereupon commenced by the bondholders in the United States Circuit Court, and judgment having been there given for the city, the case was appealed to the United States Supreme Court, where with only one dissenting voice (Judge Clifford) the judgment of the lower court was affirmed.

The following extracts from the opinion of the court, given by Justice Miller, will forever stand as embodying economic and legal principles of the highest importance:

"Beyond a cavil there can be no lawful tax which is not laid for a public purpose. . . . It may not be easy to draw the line in all cases so as to decide what is a public purpose in this sense and what is not. But in the case before us, in which towns are authorized to contribute aid by way of taxation to any class of manufactures, there is no difficulty in holding that this is not such a public purpose as we have been considering. If it be said that a benefit results to the local public of a town by establishing manufactures, the same may be said of any other business or pursuit which employs capital or labor. The merchant, the mechanic, the innkeeper, the banker, the builder, the steamboat owner, are equally promoters of the public good, and equally deserving the aid of the citizens by forced contributions. No line can be drawn in favor of the manufacturer which would not open the public treasury to the importunities of two thirds of the business men of the city or town."[2]

Twelve years later a similar case was decided by the same United States Court in the same way. Under the authority of a State law, the city of Parkersburg, Virginia, had issued bonds in aid of a private enterprise. The court decided these bonds to be void for the reasons set forth in Loan Association vs. Topeka. The decision was rested wholly upon the decision in the earlier case, and there was no dissent from it, although one justice (Clifford) had dissented in the Topeka case. Justice Blatchford, in rendering the opinion, said: "Taxation to pay the bonds in question is not taxation for a public object. It is taxation which takes the private property of one person for the private use of another person."

Particular care has also been taken by the Courts to close the door against the possibility of making taxation subservient to any private purpose by incorporating it with some public purpose:

Public aid to private purposes can not be secured by yoking them to a public purpose. And where the public and private purposes are attempted to be aided by a single concession, the latter vitiate rather than the former uphold the grant. The entire purpose—or, if there are several, and no rule of apportionment as to the application of the proceeds then all the purposes must be public.—Opinion of Justice Brewer, 23 Kansas, 745.

The cases in which the above conclusions have been apparently antagonized before the courts of the United States have been numerous, and have related mainly to the right of the Legislatures of the several States to levy taxes for purposes in respect to which the paramount object—i. e., for public or private good—was not clearly evident; as for the construction of railroads, the drainage of land, the promotion of sanitary measures, the payment of bounties in aid of educational or charitable institutions whose property is owned by and whose policy is directed by private individuals, religious sects, or corporations, and not by the State, and the like.

The question whether taxation by which aid was afforded by towns or counties to the building of railroads was for a public purpose, has been especially brought to the attention of the courts. State and Federal, in repeated instances; and, although the preponderance of opinion has been in the affirmative when legislative authority has been previously granted, yet the decision of the courts has rarely been unanimous, and in some cases has been adverse. Thus, in People vs. Township (20 Michigan, 452), an act of the Legislature of Michigan authorizing townships to pledge their credit to aid in the construction of a railroad from the city of Detroit to a suburban village was held void in a remarkably able opinion by Justice Cooley. Again, in Whiting vs. Sheboygan (25 Wisconsin, 157), an act of the Legislature of Wisconsin authorizing the county of Fond du Lac to levy a tax, the proceeds of which were to be given to aid the building of a railroad from the city of Fond du Lac to the city of Ripon, was also held by the court to be void.

The argument in favor of the unconstitutionality or wrongfulness of the application of the proceeds of the taxation of the people by States or municipalities for aiding the construction of railroads has been, that they are built by corporations organized mainly for the purpose of gain; that they are under the control of such corporations rather than that of the State; and that the taxes in question went to swell the profits of individuals, and did not result in good to the State or benefit to the public except in a remote collateral way.

On the other hand, it has been urged that roads, canals, bridges, navigable streams, and all other highways, have in all times been matters of public concern; that such channels of travel and of the carrying business have always been established, improved, and regulated by the State; and that a railroad had not lost this character because constructed by individual enterprise, aggregated into a corporation.

In rendering an opinion in the celebrated Loan Association vs. Topeka case, the court took up the question whether the grants of public money or credit which have been made by counties and municipalities in the United States in aid of railroad construction were not by parity of reasoning equally unconstitutional as similar grants for establishing or encouraging manufactures have been held to be; and remarked that in all such cases, which have been numerous before the courts in every State in the Union, "the decision has turned upon the question whether the taxation by which the aid was afforded to the building of railroads was for a public purpose. Those of the judges who came to the conclusion that it was, held the law for that purpose valid. Those who could not reach that conclusion held them void. And it is safe to say that no court has held debts created in aid of railroad companies, by counties or towns, valid on any other ground than that the purpose for which the tax was levied was a public use, a purpose or object which it was the right and the duty of the State governments to assist by money raised from the people by taxation." But, continues the judge, "Of the disastrous consequences which have followed its recognition by the courts, and which were predicted when it was first established, there can be no doubt."

It is interesting to note in this connection that since the decision in this case many States of the Union have been forced to prohibit loans in aid of the construction of railroads and like enterprises in the revision of their Constitutionss.

When the purpose of taxation is evidently to primarily promote the interests of individuals—i. e., to establish a manufactory, a brick company, a hotel, and the like—the courts whose province it is to decide whether the purpose is public or private will as a rule undoubtedly declare it void.

A noted and the almost solitary instance in which the above proposition and precedents have been clearly antagonized by a judicial decision is to be found in a case in Louisiana, where an act of the State Legislature authorizing a municipal subscription to the stock of a company incorporated to build a theater was held valid, on the ground that "it would contribute to the wealth and embellishment of the city, afford a place of relaxation and amusement, and would tend to correct and enlighten the morals of the citizens." (First Municipality vs. New Orleans Theater Company, 2 Rob., Louisiana, 209.)

The Bounty Case of 1891.—A review of this department of the application of taxation would be incomplete that failed to notice a legal contention before the Supreme Court of the United States in 1891, respecting the constitutionality of the tariff act of 1890, which was questioned on several grounds; one of them being a provision requiring the payment of bounties to every producer of sugar of certain saccharine strength[3] from beet, sorghum, sugar cane, or maple sap, grown or produced within the United States. Under this provision of the tariff enactment of 1890, the citizen of Connecticut was taxed for the benefit of the farmer of Nebraska or California, and the farmer of New York for the benefit of the Louisiana planter; the farmer who raised wheat and corn at ten or twelve dollars an acre was taxed for the benefit of a farmer in a distant State who raised sugar cane or sugar beets at fifty or a hundred dollars an acre. There was, moreover, but little doubt that the inclusion of sugar, made from maple sap, in the bounty provision, was not originally contemplated by the originators and promoters of the act; inasmuch as the manufacture of such sugar is one of the most profitable industries of the country, and as a rule readily calls for a fancy or artificial price; but was included in the act, while under consideration by Congress, for the reason that its enactment into law would otherwise have been difficult or impossible. Another interesting and anomalous feature of this case was that it originated in an attempt to obtain the bounty after the enactment (law) offering it was repealed, on the ground that the claimants planted cane in expectation of the continuance of the bounty, and would suffer loss if they did not get it. The question of the validity of the entire tariff act, by reason of the unconstitutionality of the bounty provision contained in it, having been raised, the attorney general of the United States antagonized such assumption before the court as follows:

First, that under the clause of the Federal Constitution (section 8 of Article I) which empowers Congress to levy taxes, duties, etc., "to pay the debts and provide for the general welfare" of the United States, Congress has the power to expend taxes for anything which, in its judgment, is "for the general welfare." Second, that the judicial decisions of the State courts, to the effect that taxation, to be lawful, must be for public purposes, have no application to this controversy, inasmuch as they were all of them cases of municipal taxation, which must be for public municipal purposes; and that it is obvious that the establishment of a particular industry in one place, by a bonus to specified private individuals, is a very different object for taxation than the encouragement by the national Government of a widespread industry in many quarters of the Union for national purposes, with a view of diversifying the industries of the country and making it independent of other countries for its necessities." (Speech of United States Attorney-General Miller.) Third, that the assumption that "public purposes" in respect to taxation by Congress means something different than the same phrase when applied to State taxation is sustained by instances in which Congress has authorized the expenditure of public moneys for bounties or relief to people in this and other countries; some forty cases of this character being cited, in which relief in the form of money or supplies was given to sufferers by fire, grasshoppers, overflow of the Mississippi, yellow fever, earthquakes (one in Venezuela, South America), and for defraying the expense of transporting food to Ireland, France, and Germany. To these instances may perhaps be added the "codfish bounty," which was practically a drawback upon the duty on imported salt used for preserving fish.

In rejoinder it was contended: First, that if Congress has power to expend taxes for anything which in its judgment is "for the general welfare," then there is practically no limitation whatever upon its constitutional power to raise and appropriate taxes; and that its power to treat the public purse as its own, and give away the proceeds of taxation is as unlimited as is the cupidity of congressional lobbyists. It was also ingeniously pointed out that the position of the attorney general was equivalent to saying that when a tax is levied by a State for a given purpose it is not for public use, but when levied by the national Government for the same or a like purpose it is for public use. Again, such an assumption of unlimited power on the part of Congress directly antagonizes the opinions of Chief-Justice Marshall (see page 149, vol. L, Popular Science Monthly) and also the declaration, made in special reference to the taxing power by the United States Supreme Court through Mr. Justice Miller in the Topeka case (page 153, ditto), "That the theory of our governments, State and national, is opposed to the deposit of unlimited power anywhere." Justice Story (on the Constitution, section 990) also asks and answers the precise question at issue: "Has Congress a right to raise and appropriate the public money to any and to every purpose according to their will and pleasure? They certainly have not." The same jurist, in his lectures on the Constitution, thus further amplified his ideas on this subject, and evidently thought that he had in the following brief paragraphs brought the argument in support of the "unlimited" theory to a reductio ad absurdum:

"A power to lay taxes for the common defense and general welfare of the United States is not in common sense a general power." It is "a power exclusively given to raise revenue, and it can constitutionally be applied to no other purpose. The application for other purposes is an abuse of the power; and in fact, however it may be in form disguised, is a premeditated usurpation of authority." A grant under the Constitution to Congress " to do any act they pleased which ought to be for the good of the Union . . . would reduce the whole instrument to a single phase, that of instituting a Congress with power to do whatever would be for the good of the United States; and as they would be the sole judges of good or evil, it would also be a power to do whatever evil they pleased" (1 Story, Constitution, section 926).

Second, to the assumption that the decisions of the State courts in respect to the limitations of the power of taxation do not apply to this controversy, it was replied that the relation of the State courts to their State Constitutions is substantially the same as that existing between the Federal Supreme Court and Congress; that the State decisions (which have not been, as was claimed, "all cases of municipal taxation") frequently treat such legislation, independently of Constitutions, as being in violation of natural right, and that there are limitations imposed upon legislative, power by reason of "general principles" has been recognized by the United States Supreme Court (Bartemeyer vs. Iowa, 12 Wallace). It would further seem that natural rights must be the same, whether against legislation by Congress or by the Legislature of a State. If a State can not levy and expend taxes for other than public purposes, it may be presumed, a fortiori, that the national Government can not, "for the former can do anything which the Constitution (and natural right) do not forbid; while the latter can do nothing which the Constitution does not first sanction." The Federal Government has "no right to raise money by taxation for a thousand things for which the State may impose taxes and collect them of the people" (Miller, Justice, Lectures on the Constitution).

Third, in respect to the instances cited, in which Congress has expended moneys for bounties, or relief of private interests, in this and other countries, it was replied that they were all matters of national charity; were never subjected to judicial scrutiny, or even seriously challenged in debate; were never for large amounts, and did not contemplate any special levy of taxes, but were from funds already in the Treasury. It was also claimed that this was the first case in which the constitutionality of a congressional bounty, whether direct or indirect, for "protection," has ever been before the United States Supreme Court for discussion. And pertinent to the case it should be further noted, that when it was proposed in the Convention that framed the Federal Constitution to incorporate in it a provision for bestowing "rewards" for "the promotion of agriculture," the proposition was rejected.

The facts about the bounty for codfisheries are, that it was given under the first revenue laws (levying duties) of the United States in 1792, and was intended to offset bounties and other measures adopted by England, as was believed, for the purpose of destroying the fisheries, not only of the United States, but also of France. Its enactment was strenuously resisted at the time, on constitutional grounds, and especially by as good a constitutional authority as Madison, who held that the enactment of a bounty was beyond the power of Congress (4 Elliot's Debates, Philadelphia edition, 1875, 525, 526). Its legality was never judicially examined, and the act expired by its own limitation in seven years. Subsequent acts expressing limitation were passed of the same character from time to time; and since their final expiration, many years ago, it is claimed that no Congress, until the Fifty-ninth, 1890, has asserted its right to levy taxation embodying the bounty principle.

The court, in giving an opinion affirming the constitutionality of the tariff act of 1890, evaded the question of the constitutionality of its bounty provision, on the ground that the invalidity of one part of a revenue act does not invalidate the whole act; and when that principle was settled, the objections to the act based on separate clauses really disappeared.[4]

The disbursement of the money voted by Congress for the payment of the sugar bounties having been withheld by the Comptroller of the United States Treasury on the ground that the appropriation was unconstitutional, the court held that if Congress made promises and thereby induced people to incur expenses which they would not otherwise have incurred, and has then appropriated the money to indemnify the parties, the payment can not be stopped by an administrative officer on the ground of the unconstitutionality of the primary bounty enactment.

A question of interest in connection with this case, which may naturally suggest itself, especially to those not learned in the law, is, How happens it that repeated acts of expenditure of money raised by taxation for admittedly private purposes have been authorized by Congress, without any challenge before the proper courts of their constitutionality? The answer is to be found in the legal fact that "the question of the constitutionality of a law can never be presented and determined abstractly. It must always be raised by somebody whose person or property is affected by the execution of the statute the validity of which he impugns.[5] Until the opportunity for raising and the individual who can raise the question of constitutionality present themselves, there can be no presumption from the existence of such legislation upon the statutebook."

In Maine, a law which for more than half a century—almost as long as the State has existed—had been enforced, and reproduced in each revision of the statutes, was declared unconstitutional so soon as challenged; the chief justice meeting the reason for such acquiescence by saying that "the judicial opinion and the public sense were not so much awakened to the principle underlying this then as now." (Brief of Smith and Clarke, averring the unconstitutionality of the tariff act of 1800.)

The nature, definition, and limitations of the service for public purposes, which a free representative government can render or perform by the expenditure of moneys raised by taxation having been once ascertained and enunciated by the supreme judicial authority of the State (as would seem to have been done in the United States), the instant, thereafter, that taxation essays to become anything but taxation—i. e., for an unquestionable public purpose; the instant that it is made an instrumentality for effecting any results other than such as are directly necessary or beneficial to the whole public, that instant it becomes inequitable and antagonistic to the very idea of a just government; and the citizen whose person or property is thereby affected has at least a moral right to demand protection and redress.

[To be continued.]

According to Mr. Meredith Nugent, in Our Animal Friends, elephants like fun. Two little elephants at Bridgeport, he says, take evident pleasure in the tasks that are set them. Even in the stable, when no trainer was about, one of them "would stand on its head just as it was used to do in the circus, and the other would look anxiously on until its own turn came to stand on its head and be admired by its companion."

  1. The exact language of the charter was: "No scutage or aid shall be imposed in our kingdom unless by the general course of the nation, except for ransoming our person [i. e., the king], making our eldest son a knight, and once for marrying our eldest daughter; and for these there shall be taken a reasonable aid"; the barons in turn agreeing that "we will not for the future grant to any one that he may take aid of his own free tenants," other than the aids above stated.
  2. Here, then, we have from the Supreme Court of the United States a decision, as recent as October, 1874, defining the limitation of the power of taxation growing out of "the essential nature of a free government"; and if under such natural limitation there is no power, as the court decided, in a State government (irrespective of anything to the contrary in the Constitution of such State) to levy taxes for the support or encouragement of manufacturers, it is difficult to see under what rule or authority the Federal Government can levy taxes like those now imposed, which, from the circumstance that they yield year after year little or no revenue to the national Treasury, are manifestly levied and maintained for other than public purposes.
    Whether, if a case involving the validity of tariff taxes like those above specified could be brought before the United States Supreme Court, it would apply the same rule of principle to the Federal that it has to a State government, in respect to the limitation of the sphere of taxation, may be regarded as an open question. An opportunity for avoiding a decision on this subject might be found in the assumption that there was no evidence before the court that any particular tariff act was passed by Congress for any other than revenue purposes, and that the court could not take cognizance of a subsequent change in circumstances growing out of changes in the conditions of prices and supply and demand. And in this connection it is curious to note that in the first tariff enactments of the Federal Congress, which embodied the principle of protection, the preambles of the act openly stated and recognized the objects aimed at, viz., "the support of the Government, and the encouragement and protection of manufactures"; while in later years the latter clause, relative to manufactures, has been shrewdly omitted from the tariff act preambles—possibly from a suspicion that there was a constitutional question covered up in this matter of protective duties which some day would not be found able to stand judicial examination.
    But until the contrary is proved, the opinions and judgment of the Supreme Court of the United States, as given in the Topeka case, would seem to admit of no other construction than that taxation for any other purpose than revenue, or taxation for protection, or in aid of private interests engaged in manufacturing, is beyond the province of the legislative power of either our national or State governments, and when imposed—to use the exact language of the court"—is none the less robbery because it is done under the forms of law and is called taxation."
  3. Two cents per pound on sugar testing not less than 90° by the polariscope, and one and three fourths cents per pound on sugar testing less than 90°, but not less than 80°.
  4. One of the best reviews of this celebrated case, one to which the writer has been greatly indebted, is to be found in an article contributed to and published in the Harvard Law Review for February, 1892, by Charles B. Chamberlain, Esq., of Boston.
  5. "It is by facts and instances that the people are taught their Constitutions and their laws. Constitutions are framed; laws established; institutions built up; the processes of society go on, until at length, by some opposing, some competing, some contending forces of the State, an individual is brought into the point of collision, and the clouds surcharged with the great force of the public welfare burst over his head.Speech of Mr. Evarts for the Defense, in the Impeachment of President Johnson.