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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/14104-0.txt b/14104-0.txt new file mode 100644 index 0000000..9e41b49 --- /dev/null +++ b/14104-0.txt @@ -0,0 +1,4402 @@ +*** START OF THE PROJECT GUTENBERG EBOOK 14104 *** + +OUR CHANGING CONSTITUTION + +BY + +CHARLES W. PIERSON + + +[Illustration: decorative anchor] + + +GARDEN CITY NEW YORK + +DOUBLEDAY, PAGE & COMPANY + +1922 + + +COPYRIGHT, 1922, BY DOUBLEDAY, PAGE & COMPANY + +ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION INTO FOREIGN +LANGUAGES, INCLUDING THE SCANDINAVIAN + +PRINTED IN THE UNITED STATES AT THE COUNTRY LIFE PRESS, GARDEN CITY, +N.Y. + + + + +PREFACE + + +Citizens of the United States are wont to think of their form of +government, a political system based on a written constitution, as +something fixed and stable. In reality, it is undergoing a profound +change. The idea which constituted its most distinctive feature, and in +the belief of many represents America's most valuable contribution to +the science of government, is being forgotten. Formed to be "an +indestructible Union composed of indestructible states," our dual system +is losing its duality. The states are fading out of the picture. + +The aim of this volume is to point out the change and discuss some of +its aspects. A few chapters have already appeared in print. "Our +Changing Constitution" and "Is the Federal Corporation Tax +Constitutional?" were published in the _Outlook_. "The Corporation Tax +Decision" appeared in the _Yale Law Journal_. "Can Congress Tax the +Income from State and Municipal Bonds?" was printed in the New York +_Evening Post_. All of these have been more or less revised and some new +matter has been added. + + + + +CONTENTS + + +I. THE SALIENT FEATURE OF THE CONSTITUTION 1 + +The American Constitution, its origin and contents. Wherein its novelty +and greatness lay. Importance of maintaining the equilibrium established +between national and state power. View of John Fiske. + +II. THE SUPREME COURT OF THE UNITED STATES 3 + +Place of the Court in the constitutional scheme. Its most important +function. Personnel of the Court. Its power moral rather than physical. +Its chief weapon the power to declare legislative acts unconstitutional. +Limitations on this power--political questions; necessity of an actual +controversy; abuses of legislative power. Erroneous popular impressions. +Impairment of the constitutional conscience. + +III. OUR CHANGING CONSTITUTION 18 + +Change in popular attitude toward the Constitution. Causes of the change +(growth of national consciousness, wars, foreign relations, influence of +later immigrants and their descendants, desire to obtain federal +appropriations, economic development, railroads, free trade among the +states). Methods by which change has been put into effect +(constitutional amendment, treaties, federal legislation under cover of +power to regulate commerce and lay taxes). Attitude of the Supreme +Court. Differences of opinion in the Court. + +IV. THE EIGHTEENTH OR PROHIBITION AMENDMENT 35 + +History and radical character of amendment. Efforts to defeat it in the +courts. Unusual course taken by Supreme Court. Discussion of its true +place in the development of American constitutional law. Less a point of +departure than a spectacular manifestation of a change already under +way. Effect of the change on the principle of local self-government. + +V. THE NINETEENTH OR WOMAN SUFFRAGE AMENDMENT 49 + +Attitude of the Constitution toward question of suffrage qualifications. +Effect of Civil War amendments. Growth of woman suffrage movement and +adoption of Suffrage Amendment. How far the amendment constitutes a +federal encroachment on state power. Effect of woman suffrage on +questions of governmental theory. + +VI. CONGRESS VERSUS THE SUPREME COURT--THE CHILD LABOR LAWS 59 + +The child labor question. Philanthropic and commercial aspects. Attempt +of Congress to legislate under power to regulate commerce. Decision of +Supreme Court holding law unconstitutional. The decision explained. +Reënactment of law by Congress under cover of power to lay taxes. +Arguments for and against constitutionality of new enactment. + +VII. STATE RIGHTS AND THE SUPREME COURT 69 + +The Supreme Court at first a bulwark of national power; to-day the +defender of the states. Explanation of this apparent change. Attitude of +the Court in the first period. The period of Chief Justice Marshall. The +period of Chief Justice Taney. The Reconstruction Period. Attitude of +the Court to-day. Reasons why the Court is unable to prevent federal +encroachment. Attitude of Hamilton and Marshall toward state rights +misunderstood. + +VIII. THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT 85 + +America's embarrassing position if the late war had come before adoption +of Income Tax Amendment. Limitations of federal taxing power under the +Constitution. Meaning of "uniformity." Apportionment of "direct taxes." +The Supreme Court decision in the Income Tax cases in 1894 a reversal of +long settled ideas. The Income Tax Amendment an example of recall of +judicial decisions. Implied limitations on federal taxing power +(compensation of federal judges, due process clause of the Constitution, +no power to tax property or governmental activities of the states). + +IX. CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? 97 + +No express prohibition of such taxation; it lies in an implied +limitation inherent in our dual system of government. Discussion of +doctrine and its development by the Supreme Court. Effect of the Income +Tax Amendment. Present dissatisfaction with doctrine and efforts to +abolish it. + +X. IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL? 106 + +Nature of the tax. An interference with state power to grant corporate +franchises. Nature of our dual government and Supreme Court decisions on +the subject discussed. The debate in Congress. + +XI. THE CORPORATION TAX DECISION 122 + +Importance of the decision likely to be overlooked. Criticism of the +Court's arguments. Effects of the decision. + +XII. THE FEDERAL GOVERNMENT AND THE TRUSTS 129 + +Origin and history of Sherman Act. Its meaning now clear. Earlier +uncertainties owing chiefly to two questions--What is interstate trade +and Does the act enlarge the common-law rule as to what restraints were +unlawful? How these questions have been settled. Statement of the +common-law rule. Incompatibility between the law and present economic +conditions. Suggestions for legal reform. The holding company device, +its abuses and the possibility of abolishing it. Advantages of the +scheme of federal incorporation. + +XIII. WHAT OF THE FUTURE? 143 + +Rapid progress and present extent of federal encroachment on state +power. Growth of federal bureaucracy. A reaction against centralization +inevitable sooner or later. Adequacy of Constitution to deal with +changing conditions. The railroads and the trusts. Dangerous assaults +upon Constitution in field of social welfare legislation. Exercise of +police power a matter for local authority. Elihu Root's view. Outlook +for the future. + +APPENDIX 153 + + + + +OUR CHANGING CONSTITUTION + + + + +I + +THE SALIENT FEATURE OF THE CONSTITUTION + + +Few documents known to history have received as much praise as the +United States Constitution. Gladstone called it "the most wonderful work +ever struck off at a given time by the brain and purpose of man." The +casual reader of the Constitution will be at a loss to account for such +adulation. It will seem to him a businesslike document, outlining a +scheme of government in terse and well-chosen phrases, but he is apt to +look in vain for any earmarks of special inspiration. To understand the +true greatness of the instrument something more is required than a mere +reading of its provisions. + +The Constitution was the work of a convention of delegates from the +states, who met in Philadelphia in May, 1787, and labored together for +nearly four months. They included a large part of the best character +and intellect of the country. George Washington presided over their +deliberations. The delegates had not been called together for the +purpose of organizing a new government. Their instructions were limited +to revising and proposing improvements in the Articles of the existing +Confederation, whose inefficiency and weakness, now that the cohesive +power of common danger in the war of the Revolution was gone, had become +a byword. This task, however, was decided to be hopeless, and with great +boldness the convention proceeded to disregard instructions and prepare +a wholly new Constitution constructed on a plan radically different from +that of the Articles of Confederation. The contents of the Constitution, +as finally drafted and submitted for ratification, may be described in +few words. It created a legislative department consisting of a Senate +and a House of Representatives, an executive department headed by a +President, and a judicial department headed by a Supreme Court, and +prescribed in general terms the qualifications, powers, and functions of +each. It provided for the admission of new states into the Union and +that the United States should guarantee to every state a republican form +of government. It declared that the Constitution and the laws of the +United States made in pursuance thereof, and treaties, should be the +supreme law of the land. It provided a method for its own amendment. +Save for a few other brief clauses, that was all. There was no +proclamation of Democracy; no trumpet blast about the rights of man such +as had sounded in the Declaration of Independence. On the contrary, the +instrument expressly recognized human slavery, though in discreet and +euphemistic phrases. + +Wherein, then, did the novelty and greatness of the Constitution lie? +Its novelty lay in the duality of the form of government which it +created--a nation dealing directly with its citizens and yet composed of +sovereign states--and in its system of checks and balances. The world +had seen confederations of states. It was familiar with nations +subdivided into provinces or other administrative units. It had known +experiments in pure democracy. The constitutional scheme was none of +these. It was something new, and its novel features were relied upon as +a protection from the evils which had developed under the other plans. +The greatness of the Constitution lay in its nice adjustment of the +powers of government, notably the division of powers which it effected +between the National Government and the states. The powers conferred on +the National Government were clearly set forth. All were of a strictly +national character. They covered the field of foreign relations, +interstate and foreign commerce, fiscal and monetary system, post office +and post roads, patents and copyrights, and jurisdiction over certain +specified crimes. All other powers were reserved to the states or the +people. In other words, the theory was (to quote Bryce's "The American +Commonwealth") "local government for local affairs; general government +for general affairs only." + +The Constitution as it left the hands of its framers was not entirely +satisfactory to anybody. Owing to the discordant interests and mutual +jealousies of the states, it was of necessity an instrument of many +compromises. One of the great compromises was that by which the small +states were given as many senators as the large. Another is embalmed in +the provisions recognizing slavery and permitting slaves to count in the +apportionment of representatives. (The number of a state's +representatives was to be determined "by adding to the whole number of +free persons ... three-fifths of all other persons.") Another was the +provision that direct taxes should be apportioned among the states +according to population. With all its compromises, however, the +Constitution embodied a great governmental principle, full of hope for +the future of the country, and the state conventions to which it was +submitted for ratification were wise enough to accept what was offered. +Ratification by certain of the states was facilitated by the publication +of that remarkable series of papers afterward known as the "Federalist." +These were the work of Alexander Hamilton, James Madison, and John Jay, +and first appeared in New York newspapers. + +One of the objections to the new Constitution in the minds of many +people was the absence of a "bill of rights" containing those provisions +for the protection of individual liberty and property (e.g., trial by +jury, freedom of speech, protection from unreasonable searches and +seizures) which had come down from the early charters of English +liberties. In deference to this sentiment a series of ten brief +amendments were proposed and speedily ratified. Another amendment (No. +XI) was soon afterward adopted for the purpose of doing away with the +effect of a Supreme Court decision. Thereafter, save for a change in +the manner of electing the President and Vice-president, the +Constitution was not again amended until after the close of the Civil +War, when Amendments XIII, XIV, and XV, having for their primary object +the protection of the newly enfranchised Negroes, were adopted. The +Constitution was not again amended until the last decade, when the +Income Tax Amendment, the amendment providing for the election of +Senators by popular vote, the Prohibition Amendment, and the Woman +Suffrage Amendment were adopted in rapid succession. Some of these will +be discussed in later chapters. + +It is interesting to note that two of the amendments (No. XI, designed +to prevent suits against a state without its permission by citizens of +another state, and No. XVI, paving the way for the Income Tax) were +called forth by unpopular decisions of the Supreme Court, and virtually +amounted to a recall of those decisions by the people. These instances +demonstrate the possibility of a recall of judicial decisions by +constitutional methods, and tend to refute impatient reformers who +preach the necessity of a more summary procedure. Such questions, +however, lie outside the scope of this book. We emphasize here the fact +that the great achievement of the Constitution was the creation of a +dual system of government and the apportionment of its powers. That was +what made it "one of the longest reaches of constructive statesmanship +ever known in the world."[1] It offered the most promising solution yet +devised for the problem of building a nation without tearing down local +self-government. + +[Footnote 1: Fiske: "The Critical Period of American History," p. 301.] + +John Fiske, the historian, writing of the importance of preserving the +constitutional equilibrium between nation and states, said:[1] + + If the day should ever arrive (which God forbid!) when the + people of the different parts of our country shall allow their + local affairs to be administered by prefects sent from + Washington, and when the self-government of the states shall + have been so far lost as that of the departments of France, or + even so far as that of the counties of England--on that day + the progressive political career of the American people will + have come to an end, and the hopes that have been built upon + it for the future happiness and prosperity of mankind will be + wrecked forever. + +[Footnote 1: Id., p. 238.] + +If allowance be made for certain extravagances of statement, these words +will serve as a fitting introduction to the discussions which follow. + + + + +II + +THE SUPREME COURT OF THE UNITED STATES + + +The Constitution effected an apportionment of the powers of government +between nation and states. The maintenance of the equilibrium thus +established was especially committed to the Supreme Court. This novel +office, the most important of all its great functions, makes the Court +one of the most vital factors of the entire governmental scheme and +gives it a unique preëminence among the judicial tribunals of the world. + +How the office has been performed, and whether the constitutional +equilibrium is actually being maintained, are the questions to be +considered in this book. Before taking them up, however, it will be +useful to glance briefly at the Court itself and inquire how it is +equipped for its difficult task. + +The United States Supreme Court at present is composed of nine judges. +The number originally was six. It now holds its sessions at the Capitol +in Washington, in the old Senate Chamber which once echoed with the +eloquence of the Webster-Hayne debate. The judges are nominated by the +President, and their appointment, like that of ambassadors, must be +confirmed by the Senate. The makers of the Constitution took the utmost +care to insure the independence of the Court. Its members hold office +during good behavior, that is to say for life. They cannot be removed +except by impeachment for misconduct. Only one attempt has ever been +made to impeach a judge of the Supreme Court[1] and that attempt failed. +Still further to insure their freedom from legislative control, the +Constitution provides that the compensation of the judges shall not be +diminished during their continuance in office.[2] + +[Footnote 1: Justice Samuel Chase of Maryland in 1804-5.] + +[Footnote 2: It is interesting to observe that this Court, safeguarded +against popular clamor and composed of judges appointed for life, has +consistently shown itself more progressive and more responsive to modern +ideas than have most of the state Supreme Courts whose members are +elected directly by the people and for limited terms only.] + +From the time of John Jay, the first Chief Justice, down to the present +day the men appointed to membership in the Court have, for the most +part, been lawyers of the highest character and standing, many of whom +had already won distinction in other branches of the public service. +The present Chief Justice (Taft) is an ex-President of the United +States. Among the other members of the Court are a former Secretary of +State of the United States (Justice Day); two former Attorneys General +of the United States (Justices McKenna and McReynolds); a former Chief +Justice of Massachusetts (Justice Oliver Wendell Holmes, the +distinguished son and namesake of an illustrious father); a former Chief +Justice of Wyoming (Justice Van Devanter); and a former Chancellor of +New Jersey (Justice Pitney). + +It is well that the personnel of the Court has been such as to command +respect and deference, for in actual power the judiciary is by far the +weakest of the three coördinate departments (legislative, executive, +judicial) among which the functions of government were distributed by +the Constitution. The power of the purse is vested in Congress: it alone +can levy taxes and make appropriations. The Executive is +Commander-in-Chief of the Army and Navy and wields the appointing power. +The Supreme Court controls neither purse nor sword nor appointments to +office. Its power is moral rather than physical. It has no adequate +means of enforcing its decrees without the coöperation of other +branches of the Government. + +That coöperation has not always been forthcoming. In the year 1802, +Congress, at the instigation of President Jefferson, the inveterate +enemy of Chief Justice Marshall, suspended the sessions of the Court for +more than a year by abolishing the August term. In 1832, when the State +of Georgia defied the decree of the Court in a case involving the status +of the Cherokee Indians, the other departments of the Federal Government +gave no aid and President Andrew Jackson is reported to have remarked: +"John Marshall has made the decision, now let him execute it." In 1868, +Congress, in order to forestall decision in a case pending before the +Court, hastily repealed the statute on which the jurisdiction of the +Court depended.[1] Such instances, however, have been rare. The +law-abiding instinct is strong in the American people, and for the most +part the decisions of the Supreme Court have been received with respect +and unquestioning obedience. + +[Footnote 1: See _ex parte McCardle_, 6 Wall. (Supreme Court Reports), +318; 7 _id._, 506.] + +The chief weapon in the arsenal of the Court is the power to declare +legislative acts void on the ground that they overstep limits +established by the people in the Constitution. This power has been +frequently exercised. It is stated that the congressional statutes thus +nullified have not numbered more than thirty, while at least a thousand +state laws have been nullified.[1] + +[Footnote 1: Brief of Solicitor General James M. Beck in the Child Labor +Tax cases. It is to be borne in mind that there are forty-eight state +legislatures and only one Congress.] + +The assumption of this power in the Court to declare statutes +unconstitutional has been bitterly assailed, and is still denounced in +some quarters, as judicial usurpation originated by John Marshall. + +On the historical side this objection is not well founded. Various state +courts had exercised the power to declare statutes unconstitutional +before the Supreme Court came into existence.[1] The framers of the +Constitution clearly intended that such a power should be exercised by +the Supreme Court.[2] Moreover, a somewhat similar power appears to have +been exercised long before in England,[3] though it gave place later to +the present doctrine of the legal omnipotence of Parliament. + +[Footnote 1: See Bryce: "The American Commonwealth," Vol. I, p. 250.] + +[Footnote 2: See e.g., "Federalist," No. LXXVIII.] + +[Footnote 3: See opinion of Lord Coke in Bonham's Case, 8 Coke's +Reports, 118, decided in 1610.] + +On the side of reason and logic, the argument in favor of the power +formulated more than a century ago by Chief Justice Marshall has never +been adequately answered and is generally accepted as final. He said:[1] + + The powers of the legislature are defined and limited; and + that those limits may not be mistaken or forgotten, the + Constitution is written. To what purpose are powers limited, + and to what purpose is that limitation committed to writing, + if these limits may, at any time, be passed by those intended + to be restrained?... The Constitution is either a superior + paramount law, unchangeable by ordinary means, or it is on a + level with ordinary legislative acts, and, like other acts, is + alterable when the legislature shall please to alter it. If + the former part of the alternative be true, then a legislative + act, contrary to the Constitution, is not law: if the latter + part be true, then written constitutions are absurd attempts, + on the part of the people, to limit a power in its own nature + illimitable. + +[Footnote 1: _Marbury v. Madison_, 1 Cranch, 176.] + +It would seem at first blush that the power in the Court to declare +legislative acts unconstitutional affords a complete safeguard against +congressional encroachment on the prerogatives of the states. Such is +not the fact, however. The veto power of the Court by no means covers +the entire field of legislative activity. In the Convention which +framed the Constitution, attempts were made to give to the judiciary, in +conjunction with the executive, complete power of revision over +legislative acts, but all such propositions were voted down.[1] As +matters stand, there may be violations of the Constitution by Congress +(or for that matter by the executive) of which the Court can take no +cognizance. + +[Footnote 1: See e.g., Farrand: "Records of the Federal Convention," +Vol. I, pp. 138 et seq.; Vol. II, p. 298.] + +For one thing, the Court cannot deal with questions of a political +character. The function of the Court is judicial only. Upon this ground +it was decided that the question which of two rival governments in the +State of Rhode Island was the legitimate one was for the determination +of the political department of government rather than the courts;[1] +that the question, whether the adoption by a state of the initiative and +referendum violated the provision of the Federal Constitution +guaranteeing to every state a republican form of government, was +political and therefore beyond the jurisdiction of the Court.[2] In 1867 +a sovereign state sought to enjoin the President of the United States +from enforcing an act of Congress alleged to be unconstitutional. The +Supreme Court, without determining the constitutionality of the act, +declined to interfere with the exercise of the President's political +discretion.[3] In the famous Dred Scott case[4] the effort of the +Supreme Court to settle a political question accomplished nothing save +to impair the influence and prestige of the Court. + +[Footnote 1: _Luther v. Borden_, 7 Howard, 1.] + +[Footnote 2: _Pacific Telephone Co. v. Oregon_, 223 U.S., 118.] + +[Footnote 3: _State of Mississippi v. Andrew Johnson_, 4 Wall., 475.] + +[Footnote 4: _Dred Scott v. Sandford_, 19 Howard, 393.] + +The power of the Court to declare legislative acts unconstitutional is +subject to another important limitation. The judicial power is limited +by the Constitution to actual cases and controversies between opposing +parties. The Court cannot decide moot questions or act as an adviser for +other departments of the government. A striking illustration is found in +the so-called Muskrat case.[1] Congress having legislated concerning the +distribution of property of the Cherokee Indians, and doubts having +arisen as to the constitutional validity of the legislation, Congress +passed another act empowering one David Muskrat and other Cherokee +citizens to file suit, naming the United States as defendant, to settle +the question. The Supreme Court declined to take jurisdiction and +dismissed the suit, holding that it was not a case or controversy +between opposing parties within the meaning of the Constitution. + +[Footnote 1: _Muskrat v. United States_, 219 U.S., 346.] + +Still another limitation is encountered in cases involving abuse of +legislative power rather than lack of power. If Congress passes an act +within one of the powers expressly conferred upon it by the +Constitution, for example the power to lay taxes or the power to +regulate interstate commerce, the Supreme Court cannot interfere though +the incidental effect and ulterior purpose of the legislation may be to +intrude upon the field of state power. We shall have occasion to refer +to this limitation more than once in later chapters. + +An impression is abroad that the Supreme Court has plenary power to +preserve the Constitution. Hence the tendency of groups to demand, and +of legislators to enact, any kind of a law without regard to its +constitutional aspect, leaving that to be taken care of by the Court. + +Any such impression is erroneous and unfortunate. It puts upon the Court +a burden beyond its real powers. It undermines the sense of +responsibility which should exist among the elected representatives of +the people. It impairs what someone has called the constitutional +conscience, and weakens the vigilance of the people in preserving their +liberties. Men and women need to be reminded that the duty of upholding +the Constitution does not devolve upon the Supreme Court alone. It rests +upon all departments of government and, in the last analysis, upon the +people themselves. + + + + +III + +OUR CHANGING CONSTITUTION + + +In a celebrated case[1] decided a few years ago the Supreme Court of the +United States said: + + The Constitution is a written instrument. As such its meaning + does not alter. That which it meant when adopted it means now. + Being a grant of powers to a government its language is + general, and as changes come in social and political life it + embraces in its grasp all new conditions which are within the + scope of the powers in terms conferred. In other words, while + the powers granted do not change, they apply from generation + to generation to all things to which they are in their nature + applicable. This in no manner abridges the fact of its + changeless nature and meaning. Those things which are within + its grants of power, as those grants were understood when + made, are still within them, and those things not within them + remain still excluded.... + + To determine the extent of the grants of power we must, + therefore, place ourselves in the position of the men who + framed and adopted the Constitution, and inquire what they + must have understood to be the meaning and scope of those + grants. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437.] + +Thus speaks the voice whose word is law. + +Viewed in the sense intended--as the formulation of a legal rule for the +interpretation and construction of a written instrument--the statement +compels assent. As a statement of historical and political fact, +however, it would not be accepted so readily. An acute critic of our +institutions has said that the Constitution "has changed in the spirit +with which men regard it, and therefore in its own spirit."[1] Men +realize that the words of the Constitution, like the words of Holy Writ, +have not always meant the same thing to those who regulate their conduct +by its precepts; that the system of government which those words embody +has in reality changed, is changing to-day. + +[Footnote 1: Bryce: "The American Commonwealth," Vol. I, p. 400.] + +The makers of the Constitution represented the people of distinct and +independent states, jealous of their rights and of each other but +nevertheless impelled by experience of danger lately past and sense of +other perils impending to substitute for their loose and ill-working +confederation a more effective union. The most formidable obstacle, +apart from mutual jealousies, was a fear of loss of liberties, state and +individual, through encroachment of the central power. The instrument, +drawn with this fear uppermost, was designed to limit the National +Government to "the irreducible minimum of functions absolutely needed +for the national welfare."[1] To this end the powers granted were +specifically enumerated. All other powers were by express enactment[2] +"reserved to the States respectively, or to the people." + +[Footnote 1: Bryce, "The American Commonwealth," Vol. I, p. 324.] + +[Footnote 2: Tenth Amendment.] + +The strength of the popular sentiment against any encroachment of +federal power was speedily demonstrated in a striking and dramatic way. +Under the grant of power to determine controversies "between a state and +citizens of another state"[1] the Supreme Court in 1793 proceeded to +entertain a suit by one Chisholm, a citizen of South Carolina, against +the State of Georgia.[2] It had not been supposed that the grant of +power contemplated such a suit against a state without its consent. The +decision aroused an indescribable state of popular fury, not only in +Georgia but throughout the Union, and led to the adoption of a +constitutional amendment[3] prohibiting such suits in future. + +[Footnote 1: Art. III, Sec. 2.] + +[Footnote 2: See 2 Dallas, 419.] + +[Footnote 3: Eleventh Amendment.] + +There is a long step between such an attitude toward the Constitution +and the viewpoint which finds in it authority for the enactment by +Congress of White Slave and Child Labor laws. Obviously there has been a +profound change in what the Constitution means to its adherents. It will +be interesting to consider briefly what has caused the change of view, +and how it has been put into effect. + +To one searching for causes the most striking phenomenon is the growth +of a national consciousness. At the outset it was practically +non-existent. To-day its power has astonished enemy and friend alike. +Its growth has been due to both pressure from without and developments +within. Our foreign wars, especially the war with Germany, have drawn +the people together and enhanced the importance of interests purely +national. Some of our other foreign relations have brought into relief +the advantages of a strong central government as well as certain +inconveniences of our system as it left the hands of the framers. +Witness the embarrassment toward Italy growing out of lack of federal +jurisdiction in respect of the New Orleans riots, and the ever-present +danger to our relations with Japan from acts of the sovereign State of +California which the Federal Government is powerless to control. Among +developments from within was the Civil War, with its triumph for the +idea of national supremacy and an indissoluble union. Another, which has +hardly received the attention it deserves, has been the influence of the +large element of our population composed of immigrants since the +Revolution and their descendants. The state sovereignty doctrine was not +a mere political dogma but had its roots in history. It was an +expression of the pride of the inhabitants of the Thirteen Colonies in +their respective commonwealths. To them it stood for patriotism and +traditions. These feelings the later immigrant neither shared nor +understood. When he gave up his Old World allegiance and emigrated he +came to America, not to New York or Massachusetts. To him the nation was +everything, the state merely an administrative subdivision of the +nation. + +Another cause has been the desire to obtain aid in local matters from +the national treasury. This has proved an exceedingly potent and +insidious influence, leading state officials to surrender voluntarily +state prerogatives in exchange for appropriations of federal money. +Notable examples of this influence may be found in the field of river +and harbor improvements, the creation of various new bureaus in the +Department of Commerce, the enormous extension of the activities of the +Agricultural Department and the Bureau of Education. The temptation in +this direction is particularly strong among the less prosperous states, +for it means the expenditure in those states of federal moneys raised +chiefly from the taxpayers in wealthier states. + +The most potent influence of all, however, has been the matter of +internal economic development, stimulated by free trade among the +states. This development has gone on apace with little regard for state +lines. The invention of railways drew the different sections of the +country together in a common growth, and tended to make the barriers +interposed by state lines and state laws seem artificial and cumbersome. +In fact, they sometimes came to be regarded as intolerable and +destructive of progress. The spectacle of men clamoring for federal +control of their industries to escape the burdens of a diversified state +interference has been a frequent phenomenon of recent years.[1] + +[Footnote 1: See e.g. the efforts of the life insurance interests: _N.Y. +Life Ins. Co. v. Deer Lodge County_, 231 U.S., 495.] + +The foregoing enumeration by no means covers all the forces which have +been at work. In recent years a strong tendency toward centralization +and combination has developed, a tendency pervading all the interests +and activities of men. Moreover, new views have arisen concerning the +functions and scope of government, views challenging the _laissez faire_ +doctrines of earlier days and demanding a greater measure of +governmental interference with the affairs of the individual. These +tendencies, however, are not peculiar to America and lie outside the +scope of the present discussion. + +In considering the methods by which the change of spirit toward the +Constitution has been put into effect, one is struck by the +comparatively small part played by the only method contemplated by the +framers, viz., constitutional amendment. This method is entirely +practicable and fairly expeditious provided a sufficient number favor +the change proposed. In the one hundred years prior to the recent Income +Tax Amendment, however, only three amendments were enacted (Numbers +XIII, XIV, and XV), all of them dealing primarily with the abolition of +slavery and the civil rights of the Negro. The only one which need be +noticed here is Number XIV, which substituted a federal test of +citizenship for state tests and provided that no state should "deprive +any person of life, liberty, or property, without due process of law; +nor deny to any person within its jurisdiction the equal protection of +the laws." There was nothing new in these prohibitions. In substance +they are as old as Magna Charta and were already embodied in most if not +all of the state constitutions. The novelty lay in bringing the +question, whether a state had in fact denied due process of law to an +individual or corporation, within the jurisdiction of the federal +courts. From a legal viewpoint this was a change of great importance. To +the general student of constitutional government, however, it is less +significant than others presently to be mentioned. + +Right here it may be proper to notice a new theory of construction of +the Constitution, not yet accepted but strenuously urged and containing +enormous potentialities. This is the "doctrine of sovereign and inherent +power," i.e., the doctrine that powers of national scope for whose +exercise no express warrant is found in the Constitution are +nevertheless to be implied as inherent in the very fact of sovereignty. +This is a very different thing from the famous doctrine of implied +powers developed by Chief Justice Marshall--that all powers will be +implied which are suitable for carrying into effect any power expressly +granted. It is a favorite theory of what may be termed the Roosevelt +school. They consider that it is rendered necessary by the discovery of +fields suitable for legislative cultivation, lying outside the domain of +state power but not within the scope of any express grant of power to +the nation. As practical men they abhor the existence of such a +constitutional no man's land as nature abhors a vacuum. + +During the presidency of Mr. Roosevelt a determined effort was made by +the representatives of the Administration[1] to secure the recognition +by the Supreme Court of the doctrine of sovereign and inherent power. It +was claimed in the brief filed by the Attorney General and Solicitor +General that the doctrine had already been applied by the Court in the +Legal Tender cases.[2] The effort failed, however, the Court declaring +that any such power, if necessary to the nation, must be conferred +through constitutional amendment by the people, to whom all powers not +granted had been expressly reserved by the Tenth Amendment. + +[Footnote 1: In _Kansas v. Colorado_, 206 U.S., 46.] + +[Footnote 2: Bryce makes a statement to the same effect. "The American +Commonwealth," Vol. I, p. 383.] + +A method by which the federal power and jurisdiction have been much +extended has been the occupation by Congress, through legislation of an +exclusive character, of fields where the states had exercised a +concurrent jurisdiction. A familiar example is found in federal +bankruptcy laws. Another and striking example is the so-called "Carmack +Amendment" of the federal Interstate Commerce law. The question of +liability for loss or damage to goods in the hands of railways and other +carriers had been a fruitful field for state legislatures and state +courts. The Carmack Amendment brushed away at a single stroke whole +systems of state statutes and judicial decisions (in so far as they +affected traffic across state lines) and substituted a uniform system +under the control of the federal courts. + +The federal power has also been extended at the expense of the states +through the use of the treaty-making prerogative. The subjects upon +which Congress may legislate are limited by specific enumeration. The +treaty-making power, however, is not thus limited. Treaties may cover +any subject. It follows that while the Federal Government has no power +(for example) to regulate the descent of real property in the various +states the treaty-making power permits it, by treaties with foreign +nations, to destroy the alienage laws of the states.[1] Another very +recent example is afforded by the Migratory Bird Treaty with Great +Britain.[2] One will search the Constitution in vain for any grant of +power to the Federal Government to enact game laws. Nevertheless, under +this treaty, many state game laws have been practically annulled. + +[Footnote 1: _Hauenstein v. Lynham_, 100 U.S., 483.] + +[Footnote 2: Sustained by the Supreme Court in _Missouri v. Holland_, +252 U.S., 416.] + +But the most far-reaching method by which federal power under the +Constitution has been extended has been the adaptation--some will say +the perversion--by Congress of old grants of power to new ends. Under +the spur of public sentiment Congress has discovered new legislative +possibilities in familiar clauses of the Constitution as one discovers +new beauties in a familiar landscape. The clause offering the greatest +possibilities has been the so-called Commerce Clause, which grants to +Congress power "to regulate commerce with foreign nations, and among the +several states."[1] Under this grant of power Congress has enacted, and +the courts have upheld, a great mass of social and economic legislation +having to do only remotely with commerce. For example, the Sherman Act +and other anti-trust legislation, ostensibly mere regulations of +commerce, but actually designed for the control and suppression of +trusts and monopolies; the federal Pure Food and Drugs Act, designed to +prevent the adulteration or mis-branding of foods and drugs and check +the abuses of the patent-medicine industry;[2] the act for the +suppression of lotteries, making it a crime against the United States to +carry or send lottery tickets or advertisements across state lines;[3] +an act to prevent the importation of prize-fight films.[4] These are +only a few among many similar statutes which might be mentioned. In all +of them the motive is clear. There is no concealment about it. Their +primary object is to suppress or regulate the trusts, lotteries, +patent-medicine frauds. The regulation of commerce is merely a matter of +words and legal form. + +[Footnote 1: Art. I, Sec. 8.] + +[Footnote 2: _Hipolite Egg Company v. United States_, 220 U.S., 45.] + +[Footnote 3: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 4: _Weber v. Freed_, 239 U.S., 325.] + +Especially noteworthy is the rapidly expanding body of social +legislation--federal Employers' Liability Act, Hours of Service acts, +Child Labor Law, White Slave Act and the like, all drawn with an eye to +the commerce clause but designed to accomplish objects quite distinct +from the regulation of commerce. + +As already said, the Commerce Clause has been found most available for +purposes of such legislation. Other clauses have, however, served their +turn. For example, the grant of power to lay taxes was utilized to +destroy an extensive industry obnoxious to the dairy interests--the +manufacture of oleomargarine artificially colored to look like +butter.[1] Also to invade the police power of the States in respect of +the regulation of the sale and use of narcotic drugs.[2] Also to check +speculation and extortion in the sale of theatre tickets![3] The power +to borrow money and create fiscal agencies was utilized to facilitate +the making of loans upon farm security at low rates of interest through +the incorporation of Federal land banks or Joint Stock land banks.[4] + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +[Footnote 2: Narcotic Drug Act. Held constitutional in _United States v. +Doremus_, 249 U.S., 86; _Webb v. United States_, 249 U.S., 96.] + +[Footnote 3: Revenue Act of 1921, Title VIII, subdivisions 2 and 3.] + +[Footnote 4: _Smith v. Kansas City Title Co._, 255 U.S., 180.] + +It would be an insult to intelligence to claim that legislation such as +this, wearing the form of revenue measure or regulation of commerce but +in reality enacted with a different motive, does not involve an enormous +extension of the national power beyond what the makers of the +Constitution supposed they were conferring or intended to confer. What, +then, of the declaration by the Supreme Court with which we began, that +"to determine the extent of the grants of power we must place ourselves +in the position of the men who framed and adopted the Constitution, and +inquire what they must have understood to be the meaning and scope of +these grants." The answer must be that the Court itself has not always +adhered strictly to this test. The Court has taken the position that +when power exists under the Constitution to legislate upon a given +subject--say interstate commerce or taxation--it is not for the +judiciary to seek to correct abuses by Congress of that power, or to +question Congressional motives. As said in the decision sustaining the +constitutionality of the oleomargarine law:[1] + + The judiciary is without authority to avoid an act of Congress + lawfully exerting the taxing power, even in a case where to + the judicial mind it seems that Congress had, in putting such + power in motion, abused its lawful authority by levying a tax + which was unwise or oppressive, or the result of the + enforcement of which might be to indirectly affect subjects + not within the powers delegated to Congress, nor can the + judiciary inquire into the motive or purpose of Congress in + adopting a statute levying an excise tax within its + constitutional power. + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +The Court, however, has had great difficulty with these cases and +developed sharp differences of opinion. For example, the case upholding +the anti-lottery statute as a valid exercise of the power to regulate +commerce[1] was twice ordered for reargument and finally decided by a +bare majority of 5 to 4. The Child Labor Law of 1916 was declared +unconstitutional[2] and the Narcotic Drug Act was sustained[3] by a +similar vote, 5 to 4. In the Narcotic Drug case the four dissenting +justices, speaking through Chief Justice White, characterized portions +of the statute as "beyond the constitutional power of Congress to enact +... a mere attempt by Congress to exert a power not delegated, that is, +the reserved police power of the states." In the Lottery case the +dissenting opinion of the four, written by Chief Justice Fuller, +concludes: + + I regard this decision as inconsistent with the views of the + framers of the Constitution, and of Marshall, its great + expounder. Our form of government may remain notwithstanding + legislation or decision, but, as long ago observed, it is with + governments, as with religions, the form may survive the + substance of the faith. + +[Footnote 1: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86.] + +Whatever view one may hold to-day as to the question of expediency, no +thoughtful mind can escape the conclusion that, in a very real and +practical sense, the Constitution has changed. In a way change is +inevitable to adapt it to the conditions of the new age. There is +danger, however, that in the process of change something may be lost; +that present-day impatience to obtain desired results by the shortest +and most effective method may lead to the sacrifice of a principle of +vital importance. + +The men who framed the Constitution were well advised when they sought +to preserve the integrity of the states as a barrier against the +aggressions and tyranny of the majority acting through a centralized +power. The words "state sovereignty" acquired an odious significance in +the days of our civil struggle, but the idea for which they stand is +nevertheless a precious one and represents what is probably America's +most valuable contribution to the science of government. + +We shall do well not to forget the words of that staunch upholder of +national power and authority, Salmon P. Chase, speaking as Chief Justice +of the Supreme Court in a famous case growing out of the Civil War:[1] + + The preservation of the states, and the maintenance of their + governments, are as much within the design and care of the + Constitution as the preservation of the Union and the + maintenance of the National Government. The Constitution, in + all its provisions, looks to an indestructible Union composed + of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700.] + + + + +IV + +THE EIGHTEENTH AMENDMENT + + +Could Washington, Madison, and the other framers of the Federal +Constitution revisit the earth in this year of grace 1922, it is likely +that nothing would bewilder them more than the recent Prohibition +Amendment. Railways, steamships, the telegraph, the telephone, +automobiles, flying machines, submarines--all these developments of +science, unknown in their day, would fill them with amazement and +admiration. They would marvel at the story of the rise and downfall of +the German Empire; at the growth and present greatness of the Republic +they themselves had founded. None of these things, however, would seem +to them to involve any essential change in the beliefs and purposes of +men as they had known them. The Prohibition Amendment, on the contrary, +would evidence to their minds the breaking down of a principle of +government which they had deemed axiomatic, the abandonment of a purpose +which they had supposed immutable. As students of the science of +government they would realize that the most fundamental change which can +overtake a free people is a change in their frame of mind, for to that +everything else must sooner or later conform. + +The amendment was proposed by Congress in 1917 and proclaimed as having +been ratified in 1919.[1] + +[Footnote 1: 40 Stat. 1050, 1941.] + +The comparative ease and dispatch with which it was put through argue +alike the skill and vigor of its sponsors and the strength of the +sentiment behind them. Legal warfare over the amendment did not end, +however, with its ratification by the legislatures of the requisite +number of states. Passions had been aroused. Vast property interests +were menaced. Moreover, in the minds of students of government the +amendment stirred misgivings which were quite independent of the +sentimental and material considerations involved. Eminent counsel were +retained and a determined effort was made to defeat or nullify the +amendment in the courts. To this end suits were begun in various +jurisdictions to test its validity and enjoin the enforcement of the +Volstead Act, which sought to carry it into effect. Two sovereign +states (Rhode Island and New Jersey) joined in the attack and through +their respective Attorneys General brought original suits in the United +States Supreme Court to have the amendment declared invalid. Seven test +cases were argued together in the Supreme Court, five days in all being +devoted to the argument. It will be of interest to note some of the +reasons advanced against the validity of the amendment, as they are +summarized in the official report.[1] + +[Footnote 1: National Prohibition cases, 253 U.S., 350.] + +The Attorney General of the State of Rhode Island argued[1] that: + + The amendment is an invasion of the sovereignty of the + complaining state and her people, not contemplated by the + amending clause of the Constitution. The amending power ... is + not a substantive power but a precautionary safeguard inserted + incidentally to insure the ends set forth in that instrument + against errors and oversights committed in its formation. + Amendments, as the term indeed implies, are to be limited to + the correction of such errors.... + + It is "This Constitution" that may be amended. "This + Constitution" is not a code of transient laws but a framework + of government and an embodiment of fundamental principles. By + an amendment, the identity or purpose of the instrument is + not to be changed; its defects may be cured, but "This + Constitution" must remain. It would be the greatest absurdity + to contend that there was a purpose to create a limited + government and at the same time to confer upon that government + a power to do away with its own limitations. + +[Footnote 1: Id., pp. 354-356.] + +The Attorney General of the State of New Jersey:[1] + + attacked the amendment as an invasion of state sovereignty not + authorized by the amending clause and as not, properly + speaking, an amendment, but legislation, revolutionary in + character. + +[Footnote 1: 253 U.S., pp. 356-357.] + +The eminent Chicago lawyer, Levy Mayer, and ex-Solicitor General William +Marshall Bullitt, contended,[1] among other things, that + + the power of "amendment" contained in Art. V does not + authorize the invasion of the sovereign powers expressly + reserved to the states and the people by the Ninth and Tenth + Amendments, except with the consent of _all_ the states.... + + If amendment under Art. V were unlimited, three-fourths of the + legislatures would have it in their power to establish a state + religion and prohibit free exercise of other religious + beliefs; to quarter a standing army in the houses of citizens; + to do away with trial by jury and republican form of + government; to repeal the provision for a president; and to + abolish this court and with it the whole judicial power + vested by the Constitution. + +[Footnote 1: Id., pp. 357-361.] + +Elihu Root, preëminent as a constitutional lawyer, appeared as counsel +in one of the test cases. His main contention was summarized in his +brief as follows:[1] + + (a) That the authority to amend the Constitution is a + continuance of the constitution-making power and as such is a + power quite different and altogether distinct from the + law-making power under the Constitution. + + (b) That a grant of the one power does not include or imply a + grant of the other. + + (c) That the natural and ordinary meaning of the words used in + Article V of the Constitution [the article providing for + amendment] limits the power granted to the function of + constitution-making as distinguished from ordinary law-making. + + (d) That the purposes of the grant imply the same limitation. + + (e) That other parts of the Constitution--notably Article + I--express the same limitation. + + (f) That the existence of authority under Article V to enact + ordinary laws regulating the conduct of private citizens under + color of amendment, would be so in conflict with the + fundamental principles and spirit of the Constitution that + such a construction is not permissible. + +[Footnote 1: For the Reporter's Summary see 253 U.S., pp. 361-367.] + +There were other arguments of a more technical character. Article V of +the Constitution provides that the Congress shall propose amendments +"whenever two-thirds of both Houses shall deem it necessary." It was +urged that this required the affirmative vote of two-thirds of the +entire membership of both Houses, and that two-thirds of a quorum was +not sufficient. It was also urged that the proposal was fatally +defective because it did not on its face declare that both Houses deemed +the amendment necessary. It was also argued that the amendment had not +been effectively ratified in certain of the states where it had been +approved by the state legislature (notably Ohio) because under the +constitutions of those states it was subject to a referendum to the +people before becoming effective. The Supreme Court of Ohio had so +decided[1] and a referendum had actually been held in that state, +resulting in a rejection of the amendment by popular vote. Various +arguments were also advanced based on the puzzling phraseology of +Section 2 of the amendment that "the Congress and the several States +shall have _concurrent power_ to enforce this article by appropriate +legislation." The eminent constitutional lawyer, W.D. Guthrie, addressed +himself particularly to this phase of the controversy.[2] It was urged +with much force that the effect of these words was to save the rights of +the states, in respect of intrastate matters, by requiring their +concurrence in any legislation of Congress regulating such matters. + +[Footnote 1: See _Hawke v. Smith_, 253 U.S., 221.] + +[Footnote 2: 253 U.S., pp. 368-380.] + +All the arguments advanced were alike unavailing. The nine members of +the Supreme Court were unanimous in sustaining the validity of the +amendment, holding that it "by lawful proposal and ratification, has +become a part of the Constitution, and must be respected and given +effect the same as other provisions of that instrument."[1] The Court, +however, adopted the very unusual course of deciding the various cases +before it (affirming four, reversing one, and dismissing the original +bills filed by the states of Rhode Island and New Jersey) without any +written opinion. Speaking through Mr. Justice Van Devanter, the Court +merely announced its conclusions. This was an unprecedented procedure in +a case involving constitutional questions of such importance. It drew +criticism from some of the members of the Court itself. Chief Justice +White said:[2] + + I profoundly regret that in a case of this magnitude, + affecting as it does an amendment to the Constitution dealing + with the powers and duties of the national and state + governments, and intimately concerning the welfare of the + whole people, the court has deemed it proper to state only + ultimate conclusions without an exposition of the reasoning by + which they have been reached. + +and proceeded to announce the reasons which had actuated him personally. +Justice McKenna said:[3] + + The court declares conclusions only, without giving any + reasons for them. The instance may be wise--establishing a + precedent now, hereafter wisely to be imitated. It will + undoubtedly decrease the literature of the court if it does + not increase lucidity. + +[Footnote 1: Id., p. 386.] + +[Footnote 2: Id., p. 388.] + +[Footnote 3: 253 U.S., p. 393.] + +Perhaps a hint as to the reasons actuating the majority of the Court may +be found in the brief concurring memorandum of Mr. Justice McReynolds. +He said:[1] + + I do not dissent from the disposition of these causes as + ordered by the Court, but confine my concurrence to that. It + is impossible now to say with fair certainty what construction + should be given to the Eighteenth Amendment. Because of the + bewilderment which it creates, a multitude of questions will + inevitably arise and demand solution here. In the + circumstances, I prefer to remain free to consider these + questions when they arrive. + +[Footnote 1: Id., p. 392.] + +Justices McKenna and Clarke dissented from portions of the decision +dealing with the question of the proper construction of the grant of +"concurrent power" to Congress and the States, and wrote opinions +setting forth the grounds of their dissent. Both Justices, however, +concurred in affirming the validity of the amendment. + +Thus the legal battle was fought and lost. The amendment had withstood +attack and men's minds settled back to the practical question of its +enforcement. + +Upon that question, however difficult and interesting, we do not here +enter. Our present concern is to ascertain as nearly as may be the true +place of the amendment in the development of American constitutional +law. + +That it affords startling evidence of a radical departure from the views +of the founders of the Republic is beyond question. Such a blow at the +prerogatives of the states, such a step toward centralization, would +have been thought impossible by the men of 1787. It would be a mistake, +however, to view the departure as having originated with this amendment. +Rather is the amendment to be regarded as merely a spectacular +manifestation of a change which was already well under way. + +In the early days of the Republic the dominating purpose was the +protection of state prerogatives, so far as that was compatible with the +common safety. The first eleven amendments of the Federal Constitution +were all limitations upon federal power. Not until the people of the +various states had been drawn together and taught to think in terms of +the nation by a great Civil War was there any amendment which enlarged +the powers of the National Government. The three post-war amendments +(Nos. XIII, XIV, and XV) marked a distinct expansion of federal power +but one that seemed to find its justification, as it found its origin, +in the necessity for effectuating the purposes of the war and protecting +the newly enfranchised Negroes. + +A long period of seeming inactivity, more than forty years, elapsed +before another constitutional amendment was adopted.[1] The inaction, +however, was apparent rather than real. As matter of fact, a change was +all the time going on. In a very real sense the Constitution was being +altered almost from year to year. That the alterations did not take the +shape of formal written amendments was largely due to the tradition of +constitutional immobility. The idea had grown up that the machinery of +amendment provided by the Fathers was so slow and cumbersome that it was +impossible as a practical matter to secure a change by that method +except under stress of war or great popular excitement. That idea is now +exploded. We of to-day know better, having seen the Income Tax Amendment +(No. XVI), the Election of Senators by Popular Vote Amendment (No. +XVII), the Prohibition Amendment (No. XVIII), and the Woman Suffrage +Amendment (No. XIX) go through within a period of seven years. For +generations, however, the tradition of constitutional immobility held +sway and the forces of change worked through channels that seemed easier +and less obstructed. + +[Footnote 1: No. XVI, the Income Tax Amendment, ratified in 1913.] + +The principal channel has been congressional legislation. Congress has +found ways of reaching by indirection objects which could not be +approached directly. Under the express grants of power contained in the +Constitution statutes have been enacted which were really designed to +accomplish some ulterior object. A striking example is found in the +child labor laws, discussed more at length in a subsequent chapter. +Congress at first sought to regulate child labor by a statute enacted +ostensibly as a regulation of commerce under the Commerce Clause of the +Constitution. The Supreme Court held the Act unconstitutional as +exceeding the commerce power of Congress and invading the powers +reserved to the states.[1] Thereupon Congress practically reënacted it, +coupled with a provision for a prohibitive tax on the profits of +concerns employing child labor, as part of a revenue act enacted under +the constitutional grant of power to lay taxes.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 2: Revenue Act of 1918, Title XII.] + +The assumption by the National Government of jurisdiction over the +manufacture and sale of intoxicating liquors is no more of an +encroachment on the prerogatives of the states than is its assumption of +jurisdiction over child labor and the use of narcotic drugs. We come +back, therefore, to the proposition that the Prohibition Amendment is to +be regarded less as a departure in American fundamental law than as a +spectacular manifestation of a change already well under way. + +The change, however much students of our institutions may deplore it, is +not difficult to explain. The earlier solicitude for state rights was in +a sense accidental. It was based on sentiment and mutual jealousies +among the colonies rather than on any fundamental differences in race, +beliefs, or material interests. The traditions behind it, while strong, +were of comparatively recent growth. When they entered the Union the +colonies were still new and undeveloped. As men died and their sons +succeeded them prejudices gradually yielded and sentiment changed. +Moreover, various other forces--immigration, free trade among the +states, the growth of railways and other nationwide industries, foreign +wars--have been at work to obliterate state lines. + +Advocates of the old order see in the change a breaking down of the +principle of local self-government. To their minds the danger of +majority tyranny, made possible by a centralization of power in a +republic of such vast extent and varied interests, outweighs all the +advantages of national uniformity and efficiency. Advocates of the new +order think otherwise. They argue, moreover, that the states have become +too great and populous to serve as units for purposes of home rule; +that their boundaries are for the most part artificial and correspond to +no real distinctions in the ordinary life of men. They assert that the +instinct for local self-government remains as strong as it ever was, and +instance the resentment of New York City over interference from Albany. + +The average man gives little thought to the constitutional aspect of the +controversy. His interest in the prohibition movement is focused on +other features which seem to him of more immediate concern. And yet, did +he but realize it, the constitutional aspect transcends all the others +in its importance for the future welfare and happiness of himself, his +children, and his country. + + + + +V + +THE NINETEENTH AMENDMENT + + +A prudent man touches the question of woman suffrage gingerly. Many +fingers have been burnt in that fire and its embers are not yet dead. +Some mention of the Nineteenth Amendment seems necessary, however, in +any discussion of federal encroachment on state power, and it may be +possible to approach the suffrage movement from the standpoint of +constitutional law without getting upon controversial ground. + +The United States Constitution as originally adopted did not prescribe +who should be entitled to vote. That matter was left entirely in the +hands of the states. The Constitution provided[1] that, for the election +of members of the House of Representatives, "the electors in each state +shall have the qualifications requisite for electors of the most +numerous branch of the state legislature." It was further provided that +Senators should be chosen by the legislatures of the states[2] and that +the President and Vice-president should be chosen by presidential +electors appointed in such manner as the state legislatures might +direct.[3] These were the only elective federal officials. + +[Footnote 1: Article I, Section 2.] + +[Footnote 2: Article I, Section 3.] + +[Footnote 3: Article II, Section 1.] + +While the states were thus left in full control, it does not follow that +the matter was deemed wholly outside the proper scope of national +authority. No argument is necessary to demonstrate that the regulation +of the suffrage in national elections is or may be a matter of national +concern. The question of prescribing the qualifications of voters in +such elections was much debated in the Convention which framed the +Constitution.[1] Some members were in favor of prescribing a property +qualification and limiting the suffrage to freeholders. It was finally +decided, however, to accept the qualifications prescribed by state law. +In adopting this plan the Convention followed the line of least +resistance. The qualifications of voters in the various states +differed.[2] Most states required a property qualification, but some +did not. It was felt that to attempt to impose a uniform rule on all the +states would arouse opposition and create one more obstacle to be +overcome in the formidable task of getting the Constitution ratified. + +[Footnote 1: See e.g., Farrand, "Records of the Federal Convention," +Vol. II, p. 201 et seq.] + +[Footnote 2: For a statement of the qualifications in the various states +see _Minor v. Happersett_, 21 Wall., 162.] + +There the matter rested, with suffrage qualifications regulated entirely +by state law, until after the Civil War. Meanwhile, the states had been +abolishing property tests, and universal male suffrage had been written +into state constitutions. The cry for woman suffrage had begun, but as +yet it was only a still small voice, inaudible to legislators. + +After the Civil War the problem of protecting the emancipated slaves had +to be dealt with, and three constitutional amendments (Nos. XIII, XIV, +and XV) were adopted with that end primarily in view. Number XIII, +ratified in 1865, formally abolished slavery. Number XIV, ratified in +1868, extended citizenship to all persons born in the United States and +provided (among other things) that no state should abridge the +privileges or immunities of citizens of the United States. Number XV, +ratified in 1870, provided that "the right of citizens of the United +States to vote shall not be denied or abridged by the United States or +by any State on account of race, color, or previous condition of +servitude." Here was the entering wedge of federal interference. The +amendments did not purport to deal with woman suffrage, but the pioneers +of the suffrage movement thought they discovered in them a means of +advancing their cause and lost no time in putting the matter to the +test. Susan B. Anthony voted at Rochester, N.Y., in an election for a +representative in Congress, claiming that the restriction of voting to +males by the constitution and laws of New York was void as a violation +of the Fourteenth Amendment providing that "no state shall make or +enforce any law which shall abridge the privileges or immunities of +citizens of the United States." She was indicted for voting unlawfully, +and on her trial before Justice Hunt of the United States Supreme Court, +sitting at Circuit, the Court directed the jury to find a verdict of +guilty and imposed a fine of $100 and costs.[1] + +[Footnote 1: _United States v. Anthony_, 11 Blatchford, 200.] + +Mrs. Virginia Minor raised a similar question in the courts of Missouri. +The Missouri constitution limited the right to vote to male citizens. +Mrs. Minor applied for registration as a voter, and on being refused +brought suit against the Registrar of Voters on the ground that this +clause of the Missouri constitution was in violation of the Fourteenth +Amendment. The Missouri state courts decided against her, and the case +was taken to the Supreme Court of the United States where the decision +of the state courts was affirmed.[1] The Supreme Court held in effect +that while Mrs. Minor was a citizen that fact alone did not make her a +voter; that suffrage was not coextensive with citizenship, either when +the Constitution was adopted or at the date of the Fourteenth Amendment, +and was not one of the "privileges and immunities" guaranteed by that +amendment. + +[Footnote 1: _Minor v. Happersett_, 21 Wall., 162.] + +A similar decision was rendered in the matter of Mrs. Myra Bradwell's +application for a license to practise law in Illinois.[1] The Supreme +Court held that the right to practise law in the state courts was not a +privilege or immunity of a citizen of the United States within the +meaning of the Fourteenth Amendment, and affirmed the decision of the +Illinois Court denying Mrs. Bradwell's application. + +[Footnote 1: _Bradwell v. Illinois_, 16 Wall., 130.] + +The failure of these attempts to turn the Fourteenth Amendment to the +advantage of the woman suffrage movement in no wise checked the +movement or discouraged its leaders. They redoubled their efforts among +the separate states, and worked to such good purpose that the opposition +presently began to take on the aspect of a forlorn hope. "Votes for +Women" became an accomplished fact in many states, and appeared on the +verge of accomplishment in most of the others. Some states, however, +were still holding out when the leaders of the movement, impatient of +further delay and determined to coerce the recalcitrants, took the +matter into the national arena and procured the proposal and +ratification of an amendment to the Federal Constitution. The amendment +provides: + + The right of citizens of the United States to vote shall not + be denied or abridged by the United States or by any state on + account of sex. + +In other words, it adopts verbatim the phraseology of the Fifteenth +Amendment, merely substituting the word "sex" for the words "race, +color, or previous condition of servitude." + +So much for the historical background of the so-called Susan B. Anthony +Amendment. It remains to consider just how far the amendment +constitutes an encroachment by the Federal Government on the powers of +the states. + +In so far as it affects the qualifications of voters at national +elections (i.e., for president, senators, representatives) the +encroachment is more apparent than real. As has already been pointed +out, this is essentially a national question, and the Constitution +adopted the suffrage qualifications prescribed by state law, not as a +matter of principle, but for reasons of expediency and convenience. + +In so far, however, as the amendment imposes woman suffrage on the +states in elections of state and local officials the situation is +entirely different. That staunch advocate of national power, Alexander +Hamilton, said in the _Federalist_:[1] + + Suppose an article had been introduced into the Constitution, + empowering the United States to regulate the elections for the + particular states, would any man have hesitated to condemn it, + both as an unwarrantable transposition of power, and as a + premeditated engine for the destruction of the state + governments? + +[Footnote 1: _Federalist_ LIX.] + +What Hamilton scouted as impossible has been accomplished in the +Nineteenth Amendment. It in effect strikes out the word "male" from the +suffrage provisions of state constitutions. It overrides state policy +and interferes with the right of states to manage their own affairs. +From the theoretical standpoint a more serious inroad on state +prerogatives would be hard to find. Control of the suffrage is one of +the fundamental rights of a free state. It belonged to the North +American states before their union, and was not surrendered to the +National Government when the union was effected. Moreover, the +encroachment has a very practical side. To confer the suffrage on the +educated women of Connecticut was one thing; to confer it on the Negro +women of Alabama was quite a different matter, involving different +considerations. The amendment took no heed of such differences but +imposed a uniform rule on all the states, regardless of local prejudices +or conditions. + +It is true that a somewhat similar encroachment on state power had been +made by the Fifteenth Amendment, designed to enfranchise the Negroes. +That amendment, however, had its origin in conditions growing out of the +Civil War, and claimed its justification in the necessity for protecting +the freed slaves against hostile state action. It was avowedly an +emergency measure, and the success with which it has been nullified in +some quarters testifies to the unwisdom of forcing such measures upon +reluctant states. + +The conditions surrounding the adoption of the Nineteenth Amendment were +altogether different. Few people take seriously the alleged analogy +between the women and the slaves. The constitutional method--action +through the separate states--was being pursued with signal success. The +states were rapidly falling in line. Most of them had already granted +woman suffrage or were ready to grant it. There was no overmastering +need for coercing the states that were not yet ready. An impartial +student of the period will be apt to conclude that the Nineteenth +Amendment was the product of impatience rather than necessity. + +Someone may ask, "What effect will the granting of votes to women have +on the problem of preserving the constitutional equilibrium?" The +ultimate power lies with the voters, and the women with votes now equal +or outnumber the men. What is the reaction of women voters likely to be +toward questions of political theory? + +Ours is a governmental scheme of extreme complexity. As with animal +organisms so with political systems, the higher they rise in the scale +of development the more complicated they tend to become. An absolute +monarchy is simplicity itself compared with our dual system. To maintain +the proper adjustment of such a machine requires intelligence of a high +order. The machine will not run itself and male tinkers have abundantly +demonstrated that it is not fool-proof. But something more is required +than mere intelligence. There must be, at least among the leaders, an +instinct for governmental problems as distinguished from those of a +merely social or personal character; an ability to recognize and a +willingness to conform to underlying principles. + +How will the women voters meet this test? Granting (what few will +dispute) that their intelligence at least equals that of the men, will +they be as likely as men to look beyond the immediate social welfare +problem to the governmental principle at stake? Will an abstract +proposition hold its own in their minds against a concrete appeal? + +We do not attempt to answer these questions, but they contain food for +thought. + + + + +VI + +CONGRESS _versus_ THE SUPREME COURT--THE CHILD LABOR LAWS + + +The present Federal Revenue Act is noteworthy in more aspects than its +complexity and the disproportionate burden cast on possessors of great +wealth. To students of our form of government it is particularly +interesting because of provisions[1] purporting to impose a tax on +employers of child labor, for these represent an attempt by Congress to +nullify a decision of the Supreme Court and grasp a power belonging to +the states. The story of these provisions throws a flood of light on a +method by which our Constitution is being changed. + +[Footnote 1: Revenue Act of 1921, Title XII.] + +The evils of child labor have long engaged the attention of +philanthropists and lawmakers. In comparatively recent years child labor +laws are said to have been enacted in every state of the Union. These +statutes, however, lacked uniformity. Some of them were not stringent +enough to satisfy modern sentiment. Moreover, commercial considerations +entered into the reckoning. Industries in states where the laws were +stringent were found to be at a disadvantage in comparison with like +industries in states where the laws were lax, and this came to be +regarded as a species of unfair competition. The advantages of +uniformity and standardization seemed obvious from both the +philanthropic and the commercial viewpoints, and Congress determined to +take a hand in the matter. + +No well-informed person supposed for a moment that the regulation of +child labor was one of the functions of the General Government as those +functions were planned by the makers of the Constitution. The United +States Supreme Court had declared over and over again that such matters +were the province of the states; that "speaking generally, the police +power is reserved to the states and there is no grant thereof to +Congress in the Constitution."[1] For some years, however, Congress had +been finding ways to legislate indirectly upon matters which it had no +power to approach directly. Under the grant of power in the Constitution +"to regulate commerce with foreign nations and among the several +States,"[2] Congress had enacted laws purporting to regulate commerce +but in reality designed for the suppression or regulation of some other +form of activity. These enactments had for the most part been sustained +as constitutional by the Supreme Court (though with misgivings and sharp +differences of opinion), the Court holding that it could not pass on the +motives for congressional action. The enactment of a law regulating +child labor seemed therefore but another step along a trail already +blazed, and Congress determined to take that step. + +[Footnote 1: _Keller v. United States_, 213 U.S., 138.] + +[Footnote 2: Art. I, Sec. 8.] + +The statute enacted by Congress[1] prohibited transportation in +interstate commerce of goods made at a factory in which, within thirty +days prior to their removal therefrom, children under the age of +fourteen years had been employed or permitted to work, or children +between the ages of fourteen and sixteen had been employed or permitted +to work more than eight hours in any day, or more than six days in any +week, or after the hour of 7 P.M. or before the hour of 6 A.M. The +constitutionality of the act was at once challenged and suit brought to +test the question. The Supreme Court held, by a vote of five to +four,[2] that Congress had overstepped its power. The previous decisions +which had upheld somewhat similar inroads on the police power of the +states were distinguished and the act was declared unconstitutional. + +[Footnote 1: Act of September 1, 1916, 39 Stat., 675.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +The distinction drawn by the majority of the Court between this and +previous decisions was a narrow one and its validity has been questioned +by some writers. It has nowhere been more clearly explained than in an +address delivered before a body of lawyers by a former member of the +Court.[1] Mr. Hughes said: + + There has been in late years a series of cases sustaining the + regulation of interstate commerce, although the rules + established by Congress had the quality of police regulation. + This has been decided with respect to the interstate + transportation of lottery tickets, of impure food and drugs, + of misbranded articles, of intoxicating liquors, and of women + for the purpose of debauchery. It was held to be within the + power of Congress to keep "the channels of interstate commerce + free from immoral and injurious uses." But the Court in this + most recent decision has pointed out that in each of these + cases "the use of interstate commerce was necessary to the + accomplishment of harmful results." The Court, finding this + element to be wanting in the Child Labor Case, denied the + validity of the act of Congress. The Court found that the + goods shipped were of themselves harmless. They were permitted + to be freely shipped after thirty days from the time of + removal from the factory. The labor of production, it was + said, had been performed before transportation began and thus + before the goods became the subject of interstate commerce. + + The fundamental proposition thus established is that the power + over interstate commerce is not an absolute power of + prohibition, but only one of regulation, and that the prior + decisions in which prohibitory rules had been sustained rested + upon the character of the particular subjects there involved. + It was held that the authority over interstate commerce was to + regulate such commerce and not to give Congress the power to + control the states in the exercise of their police power over + local trade and manufacture. + +[Footnote 1: Charles E. Hughes, President's Address, Printed in Year +Book of New York State Bar Association, Vol. XLII, p. 227 et seq.] + +Congress did not receive this decision of the Supreme Court +submissively. On the contrary, plans were laid to nullify it. The effort +to legislate on child labor under cover of the power to regulate +commerce having failed, recourse was had to the constitutional grant of +power to lay taxes. Within six months after the decision of the Supreme +Court declaring the act unconstitutional was announced, another statute +similar in purpose and effect was enacted as part of a Federal Revenue +Act.[1] This act provided for an additional tax of ten per cent. of the +net profits received from the sale or distribution of the product of any +establishment in which children under the age of fourteen years had been +employed or permitted to work or children between the ages of fourteen +and sixteen had been employed or permitted to work more than eight hours +in any day or more than six days in any week or after the hour of 7 P.M. +or before the hour of 6 A.M. during any portion of the taxable year. In +other words, the law which had been declared void was substantially +reënacted, with the substitution of a prohibitive tax for the clause +prohibiting transportation in interstate commerce. + +[Footnote 1: Revenue Act of 1918, Title XII.] + +There was no pretense that this act was enacted for the purpose of +raising revenue. The revenue feature was merely legislative camouflage. +To quote the words of Justice Holmes in a recent case,[1] "Congress gave +it the appearance of a taxing measure in order to give it a coating of +constitutionality." + +[Footnote 1: _United States v. Jin Fuey Moy_, 241 U.S., 394.] + +The debate in the Senate was highly illuminating.[1] Its sponsors +admitted that the measure was not expected or intended to produce +revenue but was designed to regulate child labor and nullify the +decision of the Supreme Court. Senators learned in the law conceded that +if this purpose and effect were declared on the face of the act, or were +necessarily inferable from its provisions, it must inevitably be +declared unconstitutional. Reliance was placed, however, on the facts +that the act was entitled "A bill to raise revenue," and that its +provisions did not necessarily, on their face, belie this label. It was +argued that the Supreme Court would be bound, under its own previous +rulings, to treat the act as if it were what it purported on its face to +be--a revenue measure--and to ignore common knowledge and senatorial +admissions to the contrary. The measure passed the Senate by a +substantial majority and was enacted as part of the revenue bill then +under consideration, from which it has been carried forward into the +present revenue law. + +[Footnote 1: See "Congressional Record" of December 18, 1918.] + +There the matter stands at this writing. A District Court judge has +declared the new act unconstitutional but the question has not yet been +passed upon by the Supreme Court. + +It would be venturesome to attempt to predict what the Supreme Court +will do about it. Many constitutional lawyers seem to think that +Congress has succeeded in its attempt and that the act will be +sustained. Certainly there are strong precedents pointing that way. +Three in particular will be relied upon--the Veazie Bank case, the +Oleomargarine case and the Narcotic Drug Act case. + +In the Veazie Bank case[1] the Supreme Court upheld the validity of a +so-called tax law whose purpose and effect were to suppress the +circulation of notes of the state banks. In the Oleomargarine case[2] +the Court upheld a tax whose purpose and effect were to suppress the +manufacture and sale of oleomargarine artificially colored to look like +butter. In the Narcotic Drug case[3] the Court upheld a tax imposed by +the so-called Harrison Act[4] whose purpose was to regulate the sale and +use of narcotic drugs. In each of these cases there could be no doubt in +the mind of any intelligent man as to the motive for the enactment. The +Court has uniformly maintained, however, that + + when Congress acts within the limits of its constitutional + authority, it is not the province of the judicial branch of + the Government to question its motives.[5] + +[Footnote 1: _Veazie Bank v. Fenno_, 8 Wall., 533, decided in 1870.] + +[Footnote 2: _McCray v. United States_, 195 U.S., 27, decided in 1904.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86, decided in 1919.] + +[Footnote 4: 38 Stat., 785.] + +[Footnote 5: _Smith v. Kansas City Title Company_, 255 U.S., 180, 210.] + + +In the Narcotic Drug Act case[1] the Court held + + While Congress may not exert authority which is wholly + reserved to the states, the power conferred by the + Constitution to levy excise taxes, uniform throughout the + United States, is to be exercised at the discretion of + Congress; and, where the provisions of the law enacted have + some reasonable relation to this power, the fact that they may + have been impelled by a motive, or may accomplish a purpose, + other than the raising of revenue, cannot invalidate them; nor + can the fact that they affect the conduct of a business which + is subject to regulation by the state police power. + +[Footnote 1: _United States v. Doremus_, 249 U.S., 86.] + +It is true that, while the Supreme Court may not question congressional +motives, it cannot escape the obligation to construe a statute in the +light of its true nature and effect. The Court has said:[1] + + The direct and necessary result of a statute must be taken + into consideration when deciding as to its validity, even if + that result is not in so many words either enacted or + distinctly provided for. In whatever language a statute may be + framed, its purpose must be determined by its natural and + reasonable effect. + +[Footnote 1: _Collins v. New Hampshire_, 171 U.S., 30.] + +As already indicated, however, the nature and effect of a statute must +ordinarily be determined from the form and contents of the act itself, +rather than from outside sources, and the measure under consideration +purports to be a revenue act. + +In the light of the decisions and principles of interpretation to which +reference has been made, the case against the constitutionality of the +act may seem well-nigh hopeless. The fact remains, however, that +Congress has not met the fundamental objection raised by the Supreme +Court. The Court declared the former act unconstitutional, not only +because it transcended the power of Congress under the particular +provision of the Constitution then invoked, viz., the Commerce Clause, +but also on the broad ground of state rights, because it "exerts a power +as to a purely local matter to which the federal authority does not +extend." It is difficult to see how this objection is obviated by +reënacting the act as a revenue measure. Under the circumstances perhaps +the apprehensive foes of federal encroachment should withhold their +lamentations until the Supreme Court has spoken again.[1] + +[Footnote 1: Since this chapter was put into print the Court has spoken. +In _Bailey v. The Drexel Furniture Co._ (decided May 15, 1922) the Child +Labor Tax Law was pronounced unconstitutional. The Court, while +conceding that it must interpret the intent and meaning of Congress from +the language of the act, held that the act on its face is an attempt to +regulate matters of state concern by the use of a so-called tax as a +penalty. The opinion of the Court, written by Chief Justice Taft, is an +emphatic assertion of the duty and function of the Court to preserve the +constitutional equilibrium between nation and states.] + + + + +VII + +STATE RIGHTS AND THE SUPREME COURT + + +A century ago the United States Supreme Court was the bulwark of +national power against the assaults and pretensions of the states. +To-day it is the defender of the states against the encroachments of +national power. Let no one suppose, however, that this is because the +Court itself has faced about. On our revolving planet a ship may be +sailing toward the sun at sunrise and away from the sun in the afternoon +without having changed its course. The Supreme Court has been the most +consistent factor in our governmental scheme. While there have been +differences of viewpoint between liberal constructionists and strict +constructionists among its members, the Court on the whole has steered a +fairly straight course. What has really altered is the environment in +which the Court moves. The earth has been turning on its axis. The frame +of mind of the people who compose states and nation has changed. + +At the outset (to cling for a moment to our nautical metaphor) the Court +was obliged to put forth on an unknown sea. Its sailing orders under the +new Constitution were unique. Precedents, those charts and lighthouses +of the judicial mariner, were lacking. Progress was tentative and +groping. Little wonder therefore that at first the business of the Court +was meager and membership in its body seemed less attractive than +membership in the judiciary of a state. Robert Hanson Harrison, one of +President Washington's original appointees to the Supreme bench, +declined to serve, preferring to accept a state judicial office. John +Rutledge, another of the original appointees, resigned after a few +months, preferring the position of Chancellor of his native state to +which he had been chosen. John Jay, the first Chief Justice, resigned to +become Governor of New York, and later declined a reappointment as Chief +Justice in words indicating entire lack of faith in the powers and +future of the Court. + +Nevertheless, the first period of the Court was by no means barren of +achievement. A beginning was made. The supremacy of the national +authority under the new Constitution was asserted. So stoutly indeed was +it maintained in the memorable case of _Chisholm v. Georgia_,[1] that +the country was thrown into a ferment. The Court had entertained a suit +against a sovereign state by a private citizen of another state and +rendered a decision in favor of the private citizen. The legislature of +the sovereign state concerned (Georgia) responded by a statute +denouncing the penalty of death against anyone who should presume to +enforce any process upon the judgment within its jurisdiction. The +matter was taken up in Congress and resulted in the proposal, and +subsequent ratification by the states, of a constitutional amendment +designed to prevent such actions in future.[2] It has been the fashion +to speak of this incident as a striking example of the recall of +judicial decisions. Such indeed it was. The decision did not suit the +popular frame of mind and was promptly overruled in the method +prescribed by the Constitution. It went a long way, however, toward +establishing the Supreme Court as a power to be reckoned with on the +side of national supremacy and authority. + +[Footnote 1: 2 Dallas, 419, decided in 1793.] + +[Footnote 2: Amendment XI.] + +Three years later the Court again took occasion to assert the national +supremacy in no uncertain fashion. The case was _Ware v. Hylton_[1] and +the Court laid down the proposition that a treaty of the Federal +Government (in this case the treaty of peace with Great Britain) +nullified previous state laws dealing with the subject matter. It is an +interesting circumstance that one of the counsel on the losing side in +this case was John Marshall of Virginia, and that this was the only case +he ever argued before the tribunal through which he was destined to play +so momentous a part in history. + +[Footnote 1: 3 Dallas, 199, decided in 1796.] + +In the annals of the Supreme Court and the development of American +constitutional law the name of John Marshall stands preëminent. He was +appointed Chief Justice by President John Adams, and took his seat on +the Bench at the beginning of the new century (February 4, 1801). He was +without judicial experience, but his record in other fields of activity +and his well-known Federalist principles pointed him out as a man to be +reckoned with and explain the aversion with which he was viewed by +Thomas Jefferson, the incoming President. The breach between the +President and the Chief Justice was widened by some of the early +decisions of the latter upholding the supremacy of the National +Government and the powers of the Supreme Court, notably the famous case +of _Marbury v. Madison_,[1] in which was asserted the power of the Court +to declare an act of Congress void as in conflict with the Constitution. +Some years elapsed, however, before a case was decided which squarely +involved a conflict between the powers of the Federal Government and the +powers of a state. The issue came up in the case of _United States v. +Judge Peters_.[2] This case involved a conflict of jurisdiction between +the federal courts and the authorities of the State of Pennsylvania over +the distribution of some prize money. Marshall's decision was a strong +assertion of the federal jurisdiction and power. The Governor of +Pennsylvania, under sanction of the state legislature, called out the +state militia to resist enforcement of the judgment of the Court. +Matters were tense for a time and bloodshed seemed imminent but the +state finally backed down. + +[Footnote 1: 1 Cranch, 137.] + +[Footnote 2: 5 Cranch, 115, decided in 1809.] + +In the following year (1810) came the case of _Fletcher v. Peck_,[1] in +which for the first time a statute of a state was held by the Supreme +Court to be void as repugnant to the Federal Constitution. The State of +Georgia had sought by statute to destroy rights in lands acquired under +a previous act. It was held that the statute was unconstitutional as +impairing the obligation of contracts within the meaning of the +Constitution. + +[Footnote 1: 6 Cranch, 87.] + +In _Martin v. Hunter's Lessee_[1] was asserted the right of the Federal +Supreme Court to overrule the judgment of a state court on questions +arising under the Federal Constitution. The State of Virginia had denied +that right and the Supreme Court reversed the judgment of the Virginia +Court of Appeals. + +[Footnote 1: 1 Wheat., 304 (1816.)] + +In _McCulloch v. State of Maryland_,[1] a case involving an attempt by +the State of Maryland to tax the Bank of the United States, Marshall's +doctrine of implied powers was elaborated, and the judgment of the state +court upholding the tax was reversed. + +[Footnote 1: 4 Wheat., 316 (1819).] + +In the _Dartmouth College case_[1] the doctrine of the inviolability of +contracts against attack by state legislation was further developed. An +act of the state legislature of New Hampshire had sought to alter the +charter of Dartmouth College, and the New Hampshire courts had upheld +the legislature. The Supreme Court reversed the state court and declared +the statute unconstitutional under the clause of the Constitution which +declares that no state shall make any law impairing the obligation of +contracts. + +[Footnote 1: _Dartmouth College v. Woodward_, 4 Wheat., 518 (1819).] + +In the great case of _Gibbons v. Ogden_[1] the Court asserted the +paramount jurisdiction of the National Government over interstate +commerce. This was one of the most important and far-reaching of all +Marshall's decisions. An injunction had been granted by Chancellor Kent +and unanimously sustained by the Court of Errors of New York, +restraining Gibbons from navigating the Hudson River by steamboats +licensed by Congress for the coasting trade on the ground that he was +thereby infringing the exclusive right, granted by the legislature of +New York, to Robert R. Livingston and Robert Fulton to navigate the +waters of the state with vessels moved by steam. The Supreme Court +reversed the state courts and held the New York legislation void as an +interference with the right of Congress, under the Constitution, to +regulate interstate commerce. + +[Footnote 1: 9 Wheat., 1 (1824).] + +These were only a few of that series of great decisions which stand out +like mountain peaks on the horizon of our national life. Marshall's +judgments transformed a governmental experiment into something assured +and permanent. They confirmed the national supremacy and made the +Constitution workable. + +Marshall is known to history for his work in vindicating the national +power under the Constitution. That was the need in his day and he met it +with superlative wisdom and skill. It would be a mistake, however, to +suppose that he favored federal encroachment upon the powers reserved to +the states. On the contrary, he rendered decisions in favor of state +rights which would be notable were they not overshadowed by the greater +fame of the decisions which went to the building of the nation. + +With the passing of Marshall and the accession of Taney as Chief Justice +a new chapter opened in the history of the Court. The Federalists had +become extinct. Andrew Jackson had come into power and it had fallen to +his lot to fill a majority of the seats upon the bench by appointments +to vacancies. The result was at once apparent. Two cases[1] involving +important constitutional questions, which had been argued during +Marshall's lifetime but assigned for reargument on account of a division +in the Court, were now decided contrary to Marshall's known views and in +favor of a strict construction of national powers. Justice Story, +Marshall's longtime associate on the bench, dissented strongly in both +cases, lamenting the loss of Marshall's leadership and the change in the +viewpoint of the Court. + +[Footnote 1: _Mayor of New York v. Miln_, 11 Peters, 102; _Briscoe v. +Bank of Kentucky_, 11 Peters, 257, decided in 1837.] + +It would serve no useful purpose to enter upon a detailed consideration +of the various decisions upon constitutional questions made during the +twenty-eight years of Taney's Chief Justiceship. They were marked by +great diversity of views among the members of the Court. In some of +them, notably the famous Passenger cases,[1] the Court fell into a state +reminiscent of the confusion of tongues that arose at the building of +the Tower of Babel. The scope of certain of Marshall's decisions was +limited.[2] Upon the whole, however, the structure of constitutional law +which Marshall had reared was not torn down or greatly impaired. The +national supremacy was upheld. Taney and his associates were for the +most part patriotic men and eminent lawyers, proud of the Court and its +history and anxious to add to its prestige. It is regrettable that the +merits of some of them have been so obscured and their memory so clouded +by a well-meaning but unfortunate excursion into the field of political +passions. In the Dred Scott case[3] they thought to quiet agitation and +contribute to the peace of their country by passing judgment upon +certain angrily mooted questions of a political character. The effort +was a failure and brought upon their heads, and upon Chief Justice Taney +in particular, an avalanche of misrepresentation and obloquy. + +[Footnote 1: 7 Howard, 283 (1849).] + +[Footnote 2: Not always for the worse: vide the Charles River Bridge +case, 11 Peters, 420, imposing salutary restrictions on the doctrine of +the Dartmouth College case.] + +[Footnote 3: _Dred Scott v. Sandford_, 19 Howard, 393 (1857).] + +The suppression of the Great Rebellion brought an enormous increase in +the national power and in the popular will to national power. State +rights did not loom large in the popular or the legislative mind in +reconstruction days. Taney was dead. The Supreme Court had been +practically reconstituted by appointments made by President Lincoln and +his immediate successors and it seems to have been anticipated that the +new Court would take the view of national powers prevailing in Congress +and the country at large. In this the popular expectation was doomed to +disappointment. The Court displayed an unexpected solicitude for the +rights of the states and firmness against federal encroachment. Chief +Justice Salmon P. Chase, who had been President Lincoln's war Secretary +of the Treasury, went so far as to pronounce unconstitutional some of +his own official acts performed under the stress of war. + +In the great case of _State of Texas v. White_[1] the rights of Texas as +a sovereign state were asserted, though Texas had joined in the +Rebellion and was not represented in the national legislature. + +[Footnote 1: 7 Wall., 700 (1869).] + +In _The Collector v. Day_[1] it was held that Congress had no power to +tax the salary of a state official. + +[Footnote 1: 11 Wall., 113 (1871).] + +In the Slaughter House cases[1] an act of the Legislature of Louisiana, +granting to a corporation created by it exclusive rights to maintain +slaughter houses for the City of New Orleans and other territory, was +upheld, as a valid exercise of state police power, against claims that +the legislation violated rights secured under the newly adopted +amendments to the Federal Constitution (Amendments XIII, XIV, XV). The +opinion of the Court delivered by a Northern judge (Miller of Iowa) +stands as one of the bulwarks of state authority. + +[Footnote 1: 16 Wall., 36 (1873).] + +In a series of later cases various reconstruction acts of Congress +involving encroachments upon state rights were either held +unconstitutional or radically limited in their effect. For example, the +decision in _United States v. Cruikshank_[1] greatly limited the effect +of the so-called Federal Enforcement Act. The decision in _United States +v. Harris_[2] declared unconstitutional portions of an act of Congress +designed for the suppression of activities of the Ku-Klux variety. In +the so-called Civil Rights cases[3] certain provisions of the federal +Civil Rights Act, passed in furtherance of the purposes of the new +constitutional amendments and designed to secure to persons of color +equal enjoyment of the privileges of inns, public conveyances, theatres, +etc., were held unconstitutional as an encroachment on the rights of the +states. + +[Footnote 1: 92 U.S., 542 (1875).] + +[Footnote 2: 106 U.S., 629.] + +[Footnote 3: 109 U.S., 3.] + +These are but a few of the many decisions of the Supreme Court in the +reconstruction period upholding the rights of the states against +attempted federal encroachment arising from the conditions of the Civil +War. The nation owes a debt of gratitude to the men who composed the +Court at this time for their courage and firmness in the face of popular +clamor and passion. + +The solicitude of the Court for the rights of the states did not end +with the reconstruction period. It has continued down to the present +day. In the Income Tax cases[1] the Court held that a tax upon income +from bonds of a state municipal corporation was repugnant to the +Constitution as a tax upon the borrowing power of the state. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429 +(1895).] + +In _Keller v. United States_[1] the Court declared unconstitutional, as +an encroachment on the police power of the states, an act of Congress +making it a felony to harbor alien prostitutes, the Court declaring that +"speaking generally, the police power is reserved to the states and +there is no grant thereof to Congress in the Constitution." + +[Footnote 1: 213 U.S., 138 (1909).] + +In the Child Labor case[1] the Court held the federal Child Labor Law +of 1916 unconstitutional as invading the police power reserved to the +states. The Court said: + + This Court has no more important function than that which + devolves upon it the obligation to preserve inviolate the + constitutional limitations upon the exercise of authority, + federal and state, to the end that each may continue to + discharge, harmoniously with the other, the duties entrusted + to it by the Constitution.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251 (1918).] + +[Footnote 2: An even stronger assertion of state rights is found in the +Child Labor Tax Case (_Bailey v. The Drexel Furniture Co._) decided May +15, 1922, after this chapter had been put into print.] + +How is it then, someone may ask, if the Supreme Court is so zealous in +defense of the rights of the states, that those rights are being +encroached upon more and more by the National Government? The answer +must be that there has been a change in the popular frame of mind. The +desire for uniformity, standardization, efficiency, has outgrown the +earlier fears of a centralization of power. Congress has found ways, +under the constitutional grants of power to lay taxes and regulate +interstate commerce, to legislate in furtherance of the popular demands. +The Court is not strong enough (no governmental agency which could be +devised would be strong enough) to hold back the flood or permanently +thwart the popular will. In a government of the people everything has to +yield sooner or later to the deliberate wish of the majority. + +Some profess to view the recent encroachments of federal power as a +triumph of the principles advocated by Alexander Hamilton and John +Marshall over the principles of Thomas Jefferson. Such a claim does +Hamilton and Marshall an injustice. While they both stood for a strong +National Government, neither of them contemplated any encroachment by +that government on the principle of local self-government in local +matters or the police power of the states. + +Marshall in one of his most powerful and far-reaching pronouncements in +support of the national supremacy[1] speaks of + + that immense mass of legislation, which embraces everything + within the territory of a state not surrendered to the General + Government;... inspection laws, quarantine laws, health laws + of every description ... are component parts of this mass. + +[Footnote 1: _Gibbons v. Ogden_, 9 Wheat., 1, 203, 208.] + +Later in the same opinion he refers to + + the acknowledged power of a state to regulate its police, its + domestic trade, and to govern its own citizens. + + ... The power of regulating their own purely internal affairs + whether of trading or police. + +Hamilton devotes an entire number of the _Federalist_[1] to combatting +the idea that the rights of the states are in danger of being invaded by +the General Government. In another place[2] he returns to the idea + + that there is greater probability of encroachments by the + members upon the federal head, than by the federal head upon + the members + +and concludes that it is to be hoped that the people + + will always take care to preserve the constitutional + equilibrium between the general and the state governments. + +[Footnote 1: _Federalist_, Number XVII.] + +[Footnote 2: Id., Number XXXI.] + +That hope has failed of realization. The "constitutional equilibrium" of +which Hamilton wrote is not being preserved. Some will say that this is +an age of progress and we are improving upon Hamilton. Others, however, +think we are forgetting the wisdom of the Fathers. + + + + +VIII + +THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT + + +Had the World War come five years earlier the United States would have +been much handicapped and embarrassed in financing its share of the +struggle. One of the chief sources of national revenue during and since +the war, the income tax, would not have been available. The federal +income tax had been declared unconstitutional by the Supreme Court in +1895, and it was not until eighteen years later that the obstacle +pointed out by that decision was removed through the adoption of an +amendment to the Constitution. The Sixteenth or Income Tax Amendment was +proposed by Congress to the legislatures of the several states in 1909 +and took effect, having been ratified by three-fourths of the states, in +1913. Declared by its sponsors at the outset to be intended merely as a +recourse in case of emergency, the tax authorized by the amendment was +at once put into operation and there seems to be little likelihood that +it will ever be abandoned. + +Without the constitutional amendment no general income tax would be +practicable. And yet the amendment conferred no new power of taxation on +the National Government. To explain this seeming paradox it will be +necessary to consider briefly the scope and limitations of the federal +taxing power. + +One of the chief defects, perhaps the most vital defect of all, in the +Confederation which carried through the Revolutionary War and preceded +the Union, was its inability to raise revenue directly by taxation. The +Confederation was obliged to call upon the several states to furnish +their respective contributions or quotas, and requisitions upon the +states encountered delays and sometimes were ignored altogether. There +were no effective means of compulsion. + +With these facts before them the founders of the Union determined that +the new government should not be wrecked upon this rock at any rate, and +therefore insisted, against great opposition, in conferring upon it +powers of taxation which were practically unlimited in their reach. The +Constitution was made to provide that[1] + + the Congress shall have 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. + +[Footnote 1: Const., Art. I, Sec. 8, Clause 1.] + +The only tax which Congress was expressly forbidden to lay was a tax on +exports.[1] It was, however, provided that indirect taxes (duties, +imposts, and excises) should be uniform throughout the United States,[2] +and that direct taxes should be apportioned among the states according +to population.[3] The last mentioned provision was a concession to the +fears of the wealthier states lest their citizens be taxed unduly for +the benefit of the poorer states, and represented one of the great +compromises by which the ratification of the Constitution as a whole was +secured. + +[Footnote 1: Const., Art. I, Sec. 9, Clause 5.] + +[Footnote 2: Id., Art. I, Sec. 8, Clause 1.] + +[Footnote 3: Id., Art. I, Sec. 2, Clause 3. Sec. 9, Clause 4.] + +The Constitution nowhere specified just what taxes were to be deemed +"direct" (Madison in his notes of the Constitutional Convention records: +"Mr. King asked what was the precise meaning of direct taxation? No one +answd.")[1] or what kind of uniformity was intended by the provision +that indirect taxes should be uniform, and more than a century was to +elapse before either of these fundamental questions was finally +settled. The answer to the latter question (that the term "uniform" +refers purely to a geographical uniformity and is synonymous with the +expression "to operate generally throughout the United States") was +given by the Supreme Court in the year 1900 in the celebrated case of +_Knowlton v. Moore_,[2] and met with general approval. The answer to the +question of what constitutes a direct tax within the meaning of the +Constitution, given by the Supreme Court in 1895 in the Income Tax +cases,[3] met with a different reception. The decision upset +long-settled ideas, disarranged the federal taxing system, aroused +popular resentment, and ultimately led to the enactment of the Sixteenth +Amendment. + +[Footnote 1: Farrand, "Records of the Federal Convention," Vol. II, p. +350.] + +[Footnote 2: 178 U.S., 41.] + +[Footnote 3: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429.] + +The question had arisen early in the life of the Republic in the case of +_Hylton v. United States_, decided in 1796.[1] This litigation involved +the validity of a tax on carriages which had been imposed by Congress +without apportionment among the states. Alexander Hamilton argued the +case before the Supreme Court in support of the tax. The Court adopted +his view and sustained the tax, holding that it was a tax on consumption +and therefore a species of excise or duty. The Justices who wrote +opinions expressed doubt whether anything but poll taxes and taxes on +land were "direct" within the meaning of the Constitution. That point, +however, was not necessarily involved and was not decided, though later +generations came to assume that it had been decided. + +[Footnote 1: 3 Dallas, 171.] + +The tax on carriages was soon repealed and many years elapsed before the +question came up again. After the Civil War broke out, however, the need +of revenue became acute and various statutes taxing income without +apportionment among the states were enacted by Congress. These met with +general acquiescence. It was felt that they were emergency measures +necessitated by the war, and they were in fact abandoned as soon as +practicable after the war. A well-known lawyer, however (William M. +Springer of Illinois), did not acquiesce and refused to pay his income +tax, on the ground that it was a direct tax not levied in accordance +with the Constitution. In the action brought to test the question[1] it +appeared that the income on which Mr. Springer had been taxed was +derived in part from the practice of his profession as an attorney. To +this extent it was clearly an excise or duty, i.e., an indirect tax. As +it was incumbent upon Mr. Springer, by reason of the form of the action, +to demonstrate that the tax was void _in toto_ the Court could not do +otherwise than decide against him. In rendering its decision, however, +the Court took occasion to discuss the question as to what were direct +taxes within the meaning of the Constitution, and expressed the view +that the term included only capitation or poll taxes, and taxes on real +estate. There the matter rested until the year 1894 when Congress +enacted another income tax law. This time the argument from necessity +was lacking. The country was in a state of profound peace. Opposition to +the tax among the moneyed interests was widespread. Test suits were +brought and after most elaborate and exhaustive argument and reargument +the Hylton and Springer cases were distinguished and the act was held +unconstitutional.[2] The decision was by a closely divided Court (five +to four), the majority finally holding that "direct taxes" within the +meaning of the Constitution included taxes on personal property and the +income of personal property, as well as taxes on real estate and the +rents or income of real estate. This conclusion was fatal to the act. It +was conceded that the tax, in so far as it affected income derived from +a business or profession, was an indirect tax and therefore valid +without apportionment among the states, but the provisions for taxing +the income of real and personal property were held to be an essential +part of the taxing scheme invalidating the whole statute. + +[Footnote 1: _Springer v. United States_, 102 U.S., 586.] + +[Footnote 2: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +This momentous decision was almost as unpopular with Congress and the +general public as the decision in _Chisholm v. Georgia_ had been a +hundred years earlier. Many legislators were in favor of enacting +another income tax law forthwith and endeavoring to coerce the Court, +through the force of legislative and popular opinion, to overrule its +decision. Calmer counsels prevailed, however, and plans were initiated +to get over the difficulty by a constitutional amendment. Meanwhile, +steps were taken to eke out the national revenue by various excise +taxes, notably the so-called Federal Corporation Tax. This novel tax, +which was thought by many to involve a very serious encroachment by the +Federal Government on the powers of the states, will be discussed more +at length in later chapters.[1] + +[Footnote 1: See Chapters X and XI, infra.] + +The constitutional amendment as proposed by Congress and ratified by the +states provided: + +"The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several states, +and without regard to any census or enumeration." + +Thus far we have dealt only with such limitations upon the federal +taxing power as are expressly imposed by the Constitution. As has been +seen, the only express limitations are that direct taxes shall be +apportioned among the states, that indirect taxes shall be uniform, and +that exports shall not be taxed at all. There are, however, certain +other limitations which we proceed to notice briefly. + +The Constitution provides[1] that the compensation of federal judges +"shall not be diminished during their continuance in office." There is a +similar provision as to the compensation of the President.[2] No attempt +seems to have been made to tax the compensation of federal judges prior +to 1862. A statute of that year subjected the salaries of all civil +officers of the United States to an income tax and was construed by the +revenue officers as including the compensation of the President and the +judges. Chief Justice Taney, the head of the judiciary, wrote the +Secretary of the Treasury a letter[3] protesting against the tax as a +virtual diminution of judicial compensation in violation of the +constitutional provision. No heed was paid to the protest at the time +but some years later, upon the strength of an opinion by Attorney +General Hoar, the tax on the compensation of the President and the +judges was discontinued and the amounts theretofore collected were +refunded. There the matter rested until after the Income Tax Amendment, +when Congress again sought to impose a tax upon the income of the +President and the judges. A federal judge of a Kentucky district +contested the tax and the question came up before the Supreme Court for +final decision. On behalf of the revenue department it was urged that a +general income tax, operating alike on all classes, did not involve any +violation of the constitutional provision. It was also contended that +such a tax was expressly authorized by the Sixteenth Amendment giving +Congress power to tax incomes "from whatever source derived." The Court +in an exhaustive opinion[4] overruled both these contentions and held +the tax to be a violation of the Constitution. + +[Footnote 1: Art. 3, Sec. 1.] + +[Footnote 2: Art. 2, Sec. 1, Clause 6.] + +[Footnote 3: See 157 U.S., 701.] + +[Footnote 4: _Evans v. Gore_, 253 U.S., 245.] + +It has often been asserted that a limitation of the federal taxing power +is found in the "due process" clause of the Fifth Amendment of the +Constitution, providing that no person shall "be deprived of life, +liberty, or property without due process of law." This amendment relates +to the powers of the General Government. A similar limitation on the +powers of the states is found in the Fourteenth Amendment. Taxing laws +have frequently been attacked in the courts on the ground that, by +reason of some inequality or injustice in their provisions, the taxpayer +was deprived of his property without due process of law. In cases +involving state laws such objections have sometimes been sustained.[1] +There seems, however, to have been no case in which a federal taxing law +was declared invalid on this ground, and the Supreme Court has recently +remarked that it is "well settled that such clause (viz., the due +process clause of the Fifth Amendment) is not a limitation upon the +taxing power conferred upon Congress by the Constitution."[2] +Nevertheless, it is believed that if a federal tax were clearly imposed +for other than a public use, or were imposed on tangible property lying +outside the national jurisdiction, or were so arbitrary and without +basis for classification as to amount to confiscation, relief might be +obtained under the due process clause of the Fifth Amendment. + +[Footnote 1: See, e.g., _Union Tank Line Co. v. Wright_, 249 U.S., 275.] + +[Footnote 2: _Brushaber v. Union Pacific R.R._, 240 U.S., 24.] + +By far the most important and interesting of the implied limitations of +the federal taxing power remains to be noticed. That is the limitation +which prohibits the National Government from burdening by taxation the +property or revenues or obligations of a state, or the emoluments of a +state official, or anything connected with the exercise by a state of +one of its governmental functions. In other words, while the National +Government may tax income from bonds issued by England or France or +their cities, it is powerless to tax the income from bonds of Rhode +Island or the smallest of its towns. + +This implied limitation, nowhere categorically expressed but enunciated +in a series of decisions of the Supreme Court, has not always met with +acquiescence from the executive and legislative branches of the +Government. In fact, Congress is now engaged in an effort to do away +with it, at least in so far as concerns the right to tax the income from +state and municipal bonds. To-day, however, it still stands as one of +the most striking and unique characteristics of our governmental system. +It will be discussed more at length in the next chapter. + + + + +IX + +CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? + + +That is a question which is agitating a good many people just now. +Congress from time to time has seemed disposed to try it, in spite of +misgivings as to the constitutionality of such legislation.[1] A recent +Revenue Bill contained provisions taxing the income of future issues of +such obligations, and a motion for the elimination of those provisions +was defeated in the House 132 to 61. Meanwhile, protests were pouring in +from state and municipal officers assailing the justice and expediency +of such a tax. + +[Footnote 1: See, e.g., H. Report No. 767, 65th Cong., 2d Sess., +accompanying House Revenue Bill of 1918 as reported by Mr. Kitchin from +the Committee on Ways and Means, page 89.] + +It is not the purpose of this chapter to discuss the questions of +justice and expediency (as to which there is much to be said on both +sides) but rather to deal with the strictly legal aspects of the matter +and indicate briefly why such a tax cannot be laid without a change in +our fundamental law. + +Let it be said at the outset that no express provision of the United +States Constitution forbids. On the contrary, that instrument confers on +Congress the power to lay taxes without any restriction or limitation +save that exports shall not be taxed, that duties, imposts, and excises +shall be uniform throughout the United States, and that direct taxes +must be apportioned among the states in proportion to population. The +obstacle lies rather in an implied limitation inherent in our dual +system of government and formulated in decisions of the Supreme Court. + +The founders of this republic established a form of government wherein +the states, though subordinate to the Federal Government in all matters +within its jurisdiction, nevertheless remained distinct bodies politic, +each one supreme in its own sphere. In the famous phrase of Salmon P. +Chase, pronouncing judgment as Chief Justice of the Supreme Court[1]: + + The Constitution in all its provisions looks to an + indestructible Union, composed of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700, 725.] + +In a later case[1] another eminent justice (Samuel Nelson of New York) +put the matter thus: + + The General Government, and the states, although both exist + within the same territorial limits, are separate and distinct + sovereignties, acting separately and independently of each + other, within their respective spheres. The former, in its + appropriate sphere, is supreme; but the states within the + limits of their powers not granted, or, in the language of the + 10th Amendment, "reserved", are as independent of the General + Government as that government within its sphere is independent + of the states. + +[Footnote 1: _The Collector v. Day_, 11 Wall., 113, 124.] + +It follows that the two governments, national and state, must each +exercise its powers so as not to interfere with the free and full +exercise by the other of its powers. To do otherwise would be contrary +to the fundamental compact embodied in the Constitution--in other words, +it would be _unconstitutional_. + +This proposition was affirmed at an early day by Chief Justice John +Marshall in the great case of _McCulloch vs. The State of Maryland_,[1] +which involved the attempt of a state to tax the operations of a +national bank. That case is one of the landmarks of American +constitutional law. While it did not expressly decide that the Federal +Government could not tax a state instrumentality but only the converse, +i.e., that a state could not tax an instrumentality of the nation, the +Court has held in many subsequent decisions that the proposition +enunciated by the great Chief Justice works both ways. For example, it +has declared that a state cannot tax the obligations of the United +States because such a tax operates upon the power of the Federal +Government to borrow money[2] and conversely, that Congress cannot tax +the obligations of a state for the same reason;[3] that a state cannot +tax the emoluments of an official of the United States[4] and +conversely, that the United States cannot tax the salary of a state +official;[5] that a state cannot impose a tax on the property or +revenues of the United States[6] and conversely, that Congress cannot +tax the property or revenues of a state or a municipality thereof.[7] + +[Footnote 1: 4 Wheaton, 316.] + +[Footnote 2: _Weston v. City of Charleston_, 2 Pet., 449.] + +[Footnote 3: _Mercantile Bank v. New York_, 121 U.S., 138, 162.] + +[Footnote 4: _Dobbins v. Commissioner of Erie County_, 16 Pet., 435.] + +[Footnote 5: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 6: _Van Brocklin v. Tennessee_, 117 U.S., 151.] + +[Footnote 7: _United States v. Railroad Co._, 17 Wall., 322.] + +The Supreme Court has said (and many times reiterated in substance) that +the National Government "cannot exercise its power of taxation so as to +destroy the state governments, or embarrass their lawful action."[1] One +of the most distinguished writers on American Constitutional law +(Thomas M. Cooley, Chief Justice of the Supreme Court of Michigan and +afterward Chairman of the federal Interstate Commerce Commission) has +said: + + There is nothing in the Constitution which can be 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.[2] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: _Cooley's Constitutional Limitations_, 7th Ed., 684.] + +The question as to the right of Congress to levy an income tax on +municipal securities came up squarely in the famous Income Tax Cases[1] +involving the constitutionality of the Income Tax Law of 1804. While the +Supreme Court was sharply divided as to the constitutionality of other +features of the law, it was unanimous as to the lack of authority in the +United States to tax the interest on municipal bonds. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +The decision in those cases is the law to-day (except in so far as it +has been changed by the recent Sixteenth Amendment) with one possible +limitation. It has been held that state agencies and instrumentalities, +in order to be exempt from national taxation, must be of a strictly +governmental character; the exemption does not extend to agencies and +instrumentalities used by the state in carrying on an ordinary private +business. This was decided in the South Carolina Dispensary case.[1] The +State of South Carolina had taken over the business of selling liquor +and the case involved a federal tax upon such business. The Court, while +reaffirming the general doctrine, nevertheless upheld the tax on the +ground that the business was not of a strictly governmental character. +This decision suggests the possibility that if an attempt were made to +tax state and municipal bonds the Court might draw a distinction based +on the purpose for which the bonds were issued, and hold that only such +as were issued for strictly governmental purposes were exempt. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437, decided +in 1905.] + +It remains to consider the effect of the Sixteenth Amendment. + +After the Supreme Court had held the Income Tax Law of 1894 +unconstitutional on the ground that it was a direct tax and had not been +apportioned among the states in proportion to population the Sixteenth +Amendment to the Constitution was proposed and ratified. This amendment +provides that + + the Congress shall have power to lay and collect taxes on + incomes, from whatever source derived, without apportionment + among the several states, and without regard to any census or + enumeration. + +When the amendment was submitted to the states for approval some lawyers +apprehended that the words "incomes from whatever source derived" might +open the door to the taxation by the Government of income from state and +municipal bonds. Charles E. Hughes, then Governor of New York, sent a +special message to the Legislature opposing ratification of the +amendment on this ground. + +Other lawyers, notably Senator Elihu Root, took a different view of the +scope of the amendment, holding that it would not enlarge the taxing +power but merely remove the obstacle found by the Supreme Court to the +Income Tax Law of 1894, i.e., the necessity of apportionment among the +states in proportion to population. This latter view has now been +confirmed by the Supreme Court. In a case involving a tax on income from +exports the Court said:[1] + + The Sixteenth Amendment ... does not extend the taxing power + to new or excepted subjects, but merely removes all occasion, + which otherwise might exist, for an apportionment among the + states of taxes laid on income, whether it be derived from one + source or another.... + +[Footnote 1: _Peck v. Lowe_, 247 U.S., 165.] + +In a case decided a little earlier[1] the Court, speaking through Chief +Justice White, had said: + + By the previous ruling (i.e., in _Brushaber v. Union Pacific + Railway Co._, 240 U.S., 1) it was settled that the provisions + of the Sixteenth Amendment conferred no new power of + taxation.... + +[Footnote 1: _Stanton v. Baltic Mining Co._, 240 U.S., 103, 112.] + +From what has been said it will be evident that the doctrine of +exemption of state and municipal bonds from federal taxation is firmly +embedded in our law and has not been affected by the Sixteenth +Amendment. + +Whether it is a doctrine suited to present-day conditions is a question +outside the scope of this paper. + +The fear of federal encroachment, so strong in the minds of the makers +of our Constitution, has become little more than a tradition. To many it +doubtless will seem that any rule of law which operates to prevent the +nation, in the great exigency of war, from taxing a portion of the +property of its citizens is pernicious and should be changed. + +If this be the view of a sufficient number the change can and will be +made. Lawyers think, however, that it will have to be done by the +orderly method of constitutional amendment, not by passing taxing +statutes which a reluctant Court will be obliged to declare +unconstitutional. + +Just now the tide of popular sentiment is setting strongly toward such a +change. It was advocated in a recent Presidential message.[1] The +immunity enjoyed by state bond issues is coming to be regarded less as a +safeguard of state rights than as a means whereby the rich escape +federal income surtaxes. One is tempted to predict that the next formal +amendment of the Constitution will deal with this subject. If so, +another inroad will have been made by the General Government on the +failing powers of the states. + +[Footnote 1: Message of President Harding to Congress, December 6, +1921.] + + + + +X + +IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL?[1] + +[Footnote 1: Since this chapter was first published in 1909 as an +article in the _Outlook_ magazine the specific question propounded in +its title has been settled by the Supreme Court (_Flint v. Stone Tracy +Co._, 220 U.S., 107). The paper is here reproduced, however, in the +belief that its discussion of the principles of our dual system of +Government is as pertinent now as it was before.] + + +The most noteworthy enactment of the sixty-first Congress from a legal +point of view, to say nothing of its economic and political +significance, was the Corporation Tax Act. That Act, forming §38 of the +Tariff Law, provides-- + + That every corporation ... organized for profit and having a + capital stock represented by shares ... shall be subject to + pay annually a special excise tax with respect to the carrying + on or doing business by such corporation ... equivalent to one + per centum upon the entire net income over and above five + thousand dollars received by it from all sources, etc. + +The act goes on to require the corporations to make periodical reports +concerning their business and affairs, and confers on the Commissioner +of Internal Revenue a visitorial power to examine and compel further +returns. + +The genesis of the act is interesting. The growing demand for more +efficient regulation of the corporations, so pronounced during President +Roosevelt's Administration, had foreshadowed such legislation. It +remained, however, for President Taft to take the initiative and mould +the shape which the legislation was to take. + +In the course of the Senate debate on the new Tariff Act it had become +apparent that an influential party in Congress, backed by strong +sympathy outside, was bent upon passing a general income tax act. The +previous Income Tax Law had been pronounced unconstitutional by the +Supreme Court as violating the provision of the Constitution that all +direct taxes must be apportioned among the states in proportion to +population.[1] That decision, however, had been reached by a bare +majority of five to four. It had overruled previous decisions and +overturned doctrines that had been acquiesced in almost from the +foundation of the Government. A strong party was in favor of enacting +another income tax law and bringing the question again before the Court +in the hope that the Court as then constituted might be induced to +overrule or materially modify the doctrine of the Pollock case. The +President and his advisers viewed such a proposal with disfavor. To +their minds the proper way to establish the right of Congress to levy an +income tax was by an amendment to the Constitution, not by an assault +upon the Supreme Court. Accordingly on June 16, 1909, the President +transmitted a message to Congress[2] recommending a constitutional +amendment, and proposing, in order to meet the present need for more +revenue, an excise tax on corporations. The proposal, coupled as it was +with a suggestion that such an act might be made to serve for purposes +of federal supervision and control as well as revenue, met with favor +and was enacted into law. + +[Footnote 1: _Pollock vs. Farmers' Loan & Trust Co._, 157 U.S., 429.] + +[Footnote 2: _Congressional Record_, June 16, 1909, p. 3450.] + +President Taft, himself an eminent constitutional lawyer, in his message +recommending the law expressed full confidence in its constitutionality. +The same view was taken by able lawyers who surrounded him in the +capacity of advisers. The act is understood to have been drafted by Mr. +Wickersham, the Attorney General, and vouched for by Senator Elihu Root +and others of scarcely less authority in the domain of constitutional +law. + +Against opinions from such sources one takes the field with diffidence. +I venture, however, to outline briefly some reasons for doubting the +constitutionality of the act. + +At the outset it is essential to determine the exact nature of the tax. +Obviously it is not a tax upon income _as income_. If it were, it would +be obnoxious to the decision in the Pollock case as imposing a direct +tax without apportionment among the states. The language of the act, as +well as the declarations of its sponsors, clearly indicate that it is +intended, not as a direct tax on property, but as an excise tax on +privilege. The phraseology of the act itself is--"A special excise tax +with respect to the carrying on or doing business by such corporation," +etc. Undoubtedly Congress has power to impose an excise tax upon +occupation or business. This was expressly decided, in the case of the +businesses of refining petroleum and refining sugar, by the Spreckels +case,[1] referred to in President Taft's message. The message says: + + The decision of the Supreme Court in the case of Spreckels + Sugar Refining Company against McClain (192 U.S., 397) seems + clearly to establish the principle that such a tax as this is + an excise tax upon privilege and not a direct tax on property, + and is within the federal power without apportionment + according to population. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_, 192 U.S., 397.] + +What, then, is the privilege with respect to which the tax is imposed? +Is it, like the tax involved in the Spreckels case, the privilege of +doing the various kinds of business (manufacturing, mercantile, and the +rest) in which the corporations subject to the operation of the law are +engaged? Obviously not. No kind or kinds of business are specified in +the act. The tax falls not only on corporations doing every conceivable +kind of business, but also on the corporation that does no specific +business whatever--the corporation which, in the language of an eminent +judge, is merely "an incorporated gentleman of leisure."[1] Moreover, if +the tax were merely upon the privilege of doing business, it would seem +to be obnoxious to the cardinal principle of just taxation that taxes +should be uniform. In other words, if the privilege of doing a +business--say conducting a department store--were the thing taxed and +the only thing taxed, the rule of uniformity would seem to require that +a corporation and a copartnership conducting similar stores on opposite +corners of the street should both be taxed. Nothing inconsistent with +this view will be found in the Spreckels case. The party to that suit +was, to be sure, a corporation, but the act under which the tax was +imposed applied to individuals, firms, and corporations alike. + +[Footnote 1: Vann, J., in _People ex rel. vs. Roberts_, 154 N.Y., 1.] + +It must be concluded, therefore, that the tax is not upon the privilege +of doing the businesses in which the various corporations in the land +are engaged, but is rather a _tax upon the privilege of doing business +in a corporate capacity_, or, in other words, upon the exercise of the +corporate franchise. That this is so appears very clearly from the +message of President Taft. He says: + + This is an excise tax upon the privilege of doing business as + an artificial entity and of freedom from a general partnership + liability enjoyed by those who own the stock. + +Assuming, then, that this is the real nature of the tax, is it +constitutional? + +Unquestionably Congress may tax corporations organized under federal +laws upon their franchises; any sovereignty may tax the creatures of its +creation for the privilege of exercising their franchises; but how about +corporations chartered by the states and doing purely an intrastate +business? A state confers on John Doe and his associates the privilege +or franchise of doing business in a corporate capacity. Can Congress +impose a tax on the exercise of that privilege or franchise? The power +to tax involves the power to destroy.[1] If Congress can impose a tax of +one per cent., it can impose a tax of ten per cent. or fifty per cent., +and thus impair or destroy altogether the value of corporate charters +for business purposes. Does Congress possess such a power? The +Constitution puts no express limitation on the right of Congress to levy +excises except that they shall be "uniform throughout the United +States." But there are certain implied limitations inherent in our dual +system of government. The sovereignty and independence of the separate +states within their spheres are as complete as are the sovereignty and +independence of the General Government within its sphere.[2] Neither may +interfere with or encroach upon the other. + +[Footnote 1: _McCulloch vs. Maryland_, 4 Wheat., 316.] + +[Footnote 2: _The Collector vs. Day_, 11 Wall., 113, 124.] + +The right to grant corporate charters for ordinary business purposes is +an attribute of sovereignty belonging to the states, not to the General +Government. The United States is a government of enumerated powers. The +Constitution nowhere expressly confers upon Congress the right to grant +corporate charters, and it is well settled that this right exists only +in the limited class of cases where the granting of charters becomes +incidental to some power expressly conferred on Congress, e.g., the +power to establish a uniform currency, or the power to regulate +interstate commerce. On the other hand, the right of the separate states +to grant charters of incorporation is unquestionable. By the Tenth +Amendment of the Constitution it is expressly provided: "The powers not +delegated to the United States by the Constitution nor prohibited by it +to the states are reserved to the states respectively or to the people." +The Supreme Court long ago said: "A state may grant acts of +incorporation for the attainment of those objects which are essential to +the interests of society. _This power is incident to sovereignty._"[1] + +[Footnote 1: _Briscoe v. Bank of Kentucky_, 11 Peters, 257, 317.] + +The power to grant the franchise of corporate capacity being therefore +inherent in the sovereignty of the states, will not a tax imposed by +Congress upon the exercise of the franchise constitute an interference +with the power? If so the tax is unconstitutional. + +The Supreme Court has repeatedly held, that the National Government +"cannot exercise its power of taxation so as to destroy the state +governments or embarrass their lawful action."[1] In the case of +_California vs. Central Pacific R.R. Co._[2] the question was whether +franchises granted to the Central Pacific Railroad Company by the United +States were legitimate subjects of taxation by the State of California. +The Supreme Court, in language frequently quoted in subsequent cases, +discusses the nature and origin of franchises, concluding that a +franchise is "a right, privilege, or power of public concern" existing +and exercised by legislative authority. After enumerating various kinds +of franchises, the Court remarks: "No persons can make themselves a body +corporate and politic without legislative authority. Corporate capacity +is a franchise." The Court continues: + + In view of this description of the nature of a franchise, how + can it be possible that a franchise granted by Congress can be + subject to taxation by a state without the consent of + Congress? Taxation is a burden and may be laid so heavily as + to destroy the thing taxed or render it valueless. As Chief + Justice Marshall said in _McCulloch v. Maryland_, "The power + to tax involves the power to destroy."... It seems to us + almost absurd to contend that a power given to a person or + corporation by the United States may be subjected to taxation + by a state. The power conferred emanates from and is a portion + of the power of the government that confers it. To tax it is + not only derogatory to the dignity but subversive of the + powers of the government, and repugnant to its paramount + sovereignty. + +[Footnote 1: _Railroad Company v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: 127 U.S., 1.] + +It is true that the Court was here discussing the right of a state to +tax franchises granted by the United States, and not the converse of +that question. The reasoning of the Court would seem, however, to apply +with equal force to the right of the United States to tax a franchise +granted by a state acting within the scope of its sovereign authority. + +Patent rights and copyrights are special privileges or franchises +granted by the sovereign or government, and under the United States +Constitution the right to grant patents and copyrights is expressly +conferred on Congress. It has been held repeatedly that patent rights +and copyrights are not taxable by the states[1]. As said by the New York +Court of Appeals in a case involving the power of the state to tax +copyrights:[2] + + To concede a right to tax them would be to concede a power to + impede or burden the operation of the laws enacted by Congress + to carry into execution a power vested in the National + Government by the Constitution. + +[Footnote 1: _People ex rel. Edison, &c., Co., v. Assessors_, 156 N.Y., +417; _People ex rel. v. Roberts_, 159 N.Y., 70; _In Re Sheffield_, 64 +Fed. Rep., 833; _Commonwealth v. Westinghouse, &c., Co._, 151 Pa., 265.] + +[Footnote 2: 159 N.Y., p. 75.] + +Apparently the same rule would be applicable were the granting of patent +rights, like the granting of ordinary corporate franchises, a +prerogative reserved under our system of government to the states +instead of being expressly conferred on the United States. By parity of +reasoning, the Federal Government in that case would have no power to +tax them. + +It is familiar law, reiterated over and over again by the Supreme Court, +that Congress cannot tax the means or instrumentalities employed by the +states in exercising their powers and functions, any more than a state +can tax the instrumentalities similarly employed by the General +Government. Thus, it has been held that Congress cannot tax a municipal +corporation (being a portion of the sovereign power of the state) upon +its municipal revenues[1]; that Congress cannot impose a tax upon the +salary of a judicial officer of a state[2]; that Congress cannot tax a +bond given in pursuance of a state law to secure a liquor license.[3] + +[Footnote 1: _United States vs. Railroad Co._, 17 Wall., 322.] + +[Footnote 2: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 3: _Ambrosini v. United States_, 185 U.S., 1.] + +In the light of these decisions it is not apparent how Congress can tax +the franchises of those state corporations (and they are many and +important) which perform some public or quasi-public function. A state, +to carry out its purposes of internal improvement, charters an +intrastate railway or ferry company with power to charge tolls and +exercise the right of eminent domain. Is not the grant of corporate +existence and privileges to such a corporation one of the means or +instrumentalities employed by the state for carrying out its legitimate +functions, and is not a tax by the Federal Government upon the exercise +by such a corporation of its corporate powers an interference with such +means or instrumentalities? + +In any discussion of the right of Congress to tax the agencies of or +franchises granted by a state, the distinction must be borne in mind +between a tax upon _property_ acquired by means of the franchise from +the state and a tax upon the exercise of the franchise itself. The +former tax may be perfectly valid where the latter would be +unconstitutional. Thus, the Supreme Court has upheld a tax by a state +upon the real and personal property (as distinct from the franchises) of +a railway company chartered by Congress for private gain, while +conceding that the state could not tax the franchises, because to do so +would be a direct obstruction to federal powers.[1] + +[Footnote 1: _Union Pacific Railroad Company vs. Peniston_, 18 Wall., +5.] + +It remains to notice briefly one or two Supreme Court decisions which +are relied upon by the sponsors of the new tax law. Reference has +already been made to the decision in the Spreckels case[1] which upheld +the validity of the tax imposed by the War Revenue Act of 1898 upon the +gross receipts of corporations engaged in the businesses of refining +petroleum and refining sugar. The Court held the tax to be an excise tax +"in respect of the carrying on or doing the business of refining sugar," +and such it obviously was. It was not a tax upon the privilege or +franchise of doing business in a corporate capacity, like the tax now +under debate. On the contrary, the act expressly applied to "every +person, firm, corporation, or company carrying on or doing the business +of refining sugar...." The case, therefore, has no bearing on the point +we are discussing. Had the act applied only to corporations, a different +question would have been involved. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_. 192 U.S., 397.] + +The case of _Veazie Bank vs. Fenno_,[1] upholding the statute which +taxed out of existence the circulation of the state banks, has +frequently been cited as an authority sustaining the right of Congress +to levy a tax upon a franchise or privilege granted by a state. It is +true that in that case the eminent counsel for the bank (Messrs. Reverdy +Johnson and Caleb Cushing) argued unsuccessfully "that the act imposing +the tax impaired a franchise granted by the state, and that Congress had +no power to pass any law which could do that;"[2] and that two justices +dissented on that ground. The conclusive answer to this argument, was, +however, that the power of the states to grant the particular right or +privilege in question was subordinate to powers expressly conferred on +Congress by the Constitution; that Congress was given power under the +Constitution to provide a currency for the whole country, and the act in +question was legislation appropriate to that end. The case does not +hold that Congress has any general power to tax franchises or privileges +granted by a state. + +[Footnote 1: 8 Wall., 533.] + +[Footnote 2: See 8 Wall., p. 535.] + +The scope of this chapter does not admit of further reference to the +decisions. It is strongly urged, however, that none of them, rightly +construed, will be found to sustain the right of the General Government +to impose a tax upon the exercise of franchises granted by a state in +the exercise of its independent sovereignty, and that such a decision +would mark a new departure in our jurisprudence. + +In the debates in Congress over the bill many good lawyers appear to +have assumed, somewhat too hastily, that the tax in question was an +excise tax on business or occupation like that involved in the Spreckels +case, and that the only constitutional question, therefore, was one of +classification under the provision of the Constitution that excises +shall be uniform throughout the United States. No less eminent a +constitutional lawyer than Senator Bailey of Texas, in a colloquy with +the junior Senator from New York, put the matter thus:[1] + + Mr. Root: May I ask the Senator from Texas if I am right in + inferring from the statement which he has just made that he + does not seriously question the constitutional power of the + Congress to impose this tax on corporations? + + Mr. Bailey: Mr. President, I answer the Senator frankly that I + do not.... I think the rule was and is that Congress can levy + any tax it pleases except an export tax. Of course a direct + tax must be apportioned and an indirect tax must be uniform. + But the uniformity rule simply requires that wherever the + subject of taxation is found, the tax shall operate equally + upon it. + + I believe that Congress can tax all red-headed men engaged in + a given line of business if it pleases.... I have no doubt if + the tax fell upon every red-headed man in Massachusetts the + same as in Mississippi or Texas and all other states, the law + imposing such a tax would be perfectly valid. + +[Footnote 1: _Congressional Record_ for July 6, 1909, pp. 4251 to 4252.] + +The difficulty with this reasoning is that it overlooks the fact that +the privilege of being red-headed is not a franchise granted by a +sovereign state. From the viewpoint of constitutional law it may well be +that Congress can tax a privilege conferred by the gods where it would +be powerless to tax a franchise granted by the Legislature of New +Jersey. + + + + +XI + +THE CORPORATION TAX DECISION + + +The immediate consequences of the decision of the United States Supreme +Court[1] affirming the constitutionality of the federal corporation tax +are so slight that its profound significance is likely to be overlooked. +Until it was merged with the general income tax the exaction was not +burdensome and proved easy of collection. The thing upon which it +fell--the privilege of doing business in a corporate capacity--is an +abstraction which makes little appeal to the sympathies or the moral +sense. The public, more concerned with present conditions than with the +passing of a theory, is indifferent. + +[Footnote 1: _Flint v. Stone Tracy Co._, 220 U.S., 107] + +Thus it has sometimes been with the turning points in the affairs of +nations. They came quietly and without observation, and it remained for +the historians to mark the actual parting of the ways. + +The Supreme Court holds, and in its opinion reiterates many times, that +the tax is upon the _privilege of doing business in a corporate +capacity_. + +Right here is the crux of the matter. Corporate capacity is not a right +granted by the National Government. It is something which Congress can +neither give nor take away. In the division of powers which marked the +creation of our dual government the power to confer corporate capacity +was reserved to the states. The decision, therefore, comes to this: +Congress can by taxation burden the exercise of a privilege which only a +state can grant. And the power to tax, it must be remembered, involves +the power to destroy. This seems a long step from the theory of the men +who founded the Republic. + +Nearly fifty years ago the Supreme Court stated the theory as follows: + + The states are, and they must ever be, co-existent with the + National Government. Neither may destroy the other. Hence the + Federal Constitution must receive a practical construction. + Its limitations and its implied prohibitions must not be + extended so far as to destroy the necessary powers of the + States, or prevent their efficient exercise.[1] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5.] + +The court buttresses its decision by the argument _ex necessitate_--that +to hold otherwise would open the way for men to withdraw their business +activities from the reach of federal taxation and thus cripple the +National Government. The Court says: + + The inquiry in this connection is: How far do the implied + limitations upon the taxing power of the United States over + objects which would otherwise be legitimate subjects of + federal taxation, withdraw them from the reach of the Federal + Government in raising revenue, because they are pursued under + franchises which are the creation of the states?... Let it be + supposed that a group of individuals, as partners, were + carrying on a business upon which Congress concluded to lay an + excise tax. If it be true that the forming of a state + corporation would defeat this purpose, by taking the necessary + steps required by the state law to create a corporation and + carrying on the business under rights granted by a state + statute, the federal tax would become invalid and that source + of national revenue be destroyed, except as to the business in + the hands of individuals or partnerships. It cannot be + supposed that it was intended that it should be within the + power of individuals acting under state authority thus to + impair and limit the exertion of authority which may be + essential to national existence. + +This argument will not bear scrutiny. It apparently loses sight of the +vital distinction between a tax on the mere doing of business and a tax +on the privilege of doing that business in a corporate capacity. These +are two very different things. The right of Congress to tax the doing of +business was not disputed. It had been expressly upheld in the +well-known case of _Spreckels Sugar Refining Co. v. McClain_,[1] which +involved a tax on the business of refining sugar, whether done by a +corporation or by individuals. The tax under consideration, however, +goes further and fastens upon something new--something which in the case +of individuals or partnerships has no existence at all--which comes into +being only by the exercise of the sovereign power of a state. The +opponents of the tax, far from attempting to narrow the existing field +of federal taxation, were in fact resisting an encroachment by Congress +on an entirely new field, created by, and theretofore reserved +exclusively to, the separate states. It was conceded that Congress could +tax a business when done by individuals and could tax the same business +when done by a corporation. The inquiry was: Does the act of a state in +clothing the individuals with corporate capacity create a new subject +matter for taxation by the General Government? That was the real +question before the Court, and the decision answers it in the +affirmative. + +[Footnote 1: 192 U.S., 397.] + +Other illustrations of the same apparent confusion of thought are to be +found in the opinion. For example, it is said (citing various cases +involving a tax on business where the party taxed was a corporation): + + We think it is the result of the cases heretofore decided in + this Court, that such _business activities_, though exercised + because of state-created franchises, are not beyond the taxing + power of the United States. + +Here again the Court seems to lose sight of the distinction between a +tax on "business activities" and a tax on the privilege of conducting +such activities in a corporate capacity. + +It is futile, however, to quarrel with the logic of the opinion. The +question is closed and the Court, by affirming the judgments appealed +from, has committed itself to the theory that the Federal Government +may, by taxation, burden the exercise of a privilege which only a state +can confer. With the expediency of that theory as applied to present-day +political conditions we are not now concerned. The object of this +chapter is to point out that the decision marks a distinct departure +from the earlier doctrine that the two sovereignties, federal and state, +are upon an equality within their respective spheres. + +In view of the centralizing forces which are tending to transform these +sovereign states into mere political subdivisions of a nation, the +decision is of great significance. Moreover, in a very practical way it +touches the right of each state under the compact evidenced by the +Federal Constitution to manage its internal affairs free from compulsion +or interference by the other states. To illustrate: In some parts of the +country the anti-corporation feeling runs high. Many men if given their +way would tax the larger corporations out of existence. Under this +decision the way is open whenever a majority can be secured in Congress. +An increase in the tax rate is all that would be necessary. Make the +rate ten per cent. or twenty per cent. instead of one per cent. and the +thing is accomplished. + +New York may deem it good policy to encourage the carrying on of +industry in a corporate form. Texas may take a different view and +conclude that the solution of the trust problem lies in suppressing +certain classes of corporations altogether. Under this decision it lies +within the power of Texas and her associates if sufficiently numerous to +impose their view on New York and make it impossible for her domestic +industries to be carried on profitably in a corporate form. And yet the +possibility of impressing the will of one state or group of states upon +another state with respect to her internal affairs is the very thing +which the founders of the republic sought most carefully to avoid. Had +it been understood in 1787 that the grant of taxing powers to the +General Government involved such a curtailment of state independence, +few states, in all probability, would have been ready to ratify the +Constitution. + + + + +XII + +THE FEDERAL GOVERNMENT AND THE TRUSTS + + +The curbing of monopolies and combinations in restraint of trade was no +part of the functions of the Federal Government as planned by the +framers of the Constitution. To their minds such matters, under the dual +system of government which they were establishing, belonged to the +states. The Constitution was designed to limit the National Government +to functions absolutely needed for the national welfare. All other +powers were "reserved to the states respectively or to the people." + +As time went on, however, and industries expanded it was seen that the +power of no single state was adequate to control concerns operating in +many states at the same time. The need of action by the General +Government became manifest. Power in Congress to legislate on the +subject, albeit somewhat indirectly, was found in the Commerce Clause of +the Constitution, and in the year 1890 the Sherman Anti-Trust Act was +enacted. + +Few statutes have aroused more discussion or been the subject of more +perplexity and misunderstanding. President Taft's remark, made after the +decisions of the Supreme Court in the Standard Oil and Tobacco Trust +cases,[1] that "the business community now knows or ought to know where +it stands," was received with incredulity approaching derision. Yet from +a lawyer's point of view (and it must be borne in mind that the +President was a lawyer and is now Chief Justice of the Court) the +statement cannot be controverted. The decisions in the Standard Oil and +Tobacco cases did in fact dispel whatever uncertainty remained as to +what the Sherman Act means. + +[Footnote 1: _Standard Oil Co. v. United States_, 221 U.S., 1. + +_United States v. American Tobacco Co._, id., 106.] + +The Sherman Act[1] declares unlawful every contract, combination, or +conspiracy in restraint of interstate trade, and every attempt to +monopolize interstate trade. The legal uncertainties that have arisen in +its enforcement have not been with respect to the meaning of the terms +"restraint of trade" and "monopoly," although the popular impression is +to the contrary. In 1890, when the statute was passed, contracts in +restraint of trade and monopolies were already unlawful at common law, +and these terms, by a long series of decisions both here and in England, +had been defined as definitely as the nature of the subject matter +permitted. While incapable (like the term "fraud") of precise definition +covering all forms which the ingenuity of man might devise, nevertheless +their meaning and scope were well within the understanding of any man of +reasonable intelligence. Whatever legal uncertainties have arisen have +been chiefly owing to two questions: first, What is _interstate_ trade +within the meaning of the act? and second, Did the act enlarge the +common-law rule as to what restraints were unlawful? + +[Footnote 1: "An Act to protect trade and commerce against unlawful +restraints and monopolies," approved July 2, 1890.] + +The act was nearly shipwrecked at the outset on the first of these +questions. In the famous Knight case,[1] the first case under the +Sherman Act to reach the Supreme Court, it was held that the +transactions by which the American Sugar Refining Company obtained +control of the Philadelphia refineries and secured a virtual monopoly +could not be reached under the act because they bore no direct relation +to interstate commerce. The effect of this decision naturally was to +cast doubt upon the efficacy of the statute and encourage the trust +builders. Perhaps the case was rightly decided in view of the peculiar +form in which the issues were presented by the pleadings. In the light +of later decisions, however, it is safe to assert that the Court would +now find little difficulty in applying the remedies provided by the +Sherman Act to a similar state of facts, properly presented. While no +prudent lawyer would care to attempt a comprehensive definition of what +constitutes interstate commerce, it may at least be said that the +tendency of the courts has been and is toward a constant broadening of +the term to meet the facts of present-day business. + +[Footnote 1: _United States v. E.C. Knight Company_, 156 U.S., 1.] + +The other question--Did the Sherman Act change the common-law rule as to +what restraints and monopolies are forbidden?--has been even more +troublesome. The lawyers in Congress who framed the law believed that it +did not. This is the testimony of Senator Hoar in his Autobiography, and +as he was a member of the Senate Judiciary Committee which reported the +act in its present form, and claims to have drawn it himself, his +testimony is entitled to belief. The Supreme Court, however, in this +particular went further than was expected. In the Trans-Missouri +Freight Association case,[1] which reached the Supreme Court two years +after the Knight case, that tribunal decided by a five-to-four majority +that the words "_every_ contract ... in restraint of trade" extended the +operation of the law beyond the technical common-law meaning of the +terms employed so as in fact to include all contracts in restraint of +interstate trade without exception or limitation. This theory was +strongly combated by the minority of the court, speaking through Justice +(afterwards Chief Justice) White, and was denounced by many eminent +lawyers, notably the late James C. Carter, then leader of the New York +Bar, who predicted that sooner or later it must be abandoned as +untenable. Their protests were well founded. The theory, carried to its +logical conclusion, would have prohibited a great variety of +transactions theretofore deemed reasonable and proper, and would have +brought large business to a standstill. As a matter of fact, it was +never carried to its logical conclusion, and six years later it was +expressly repudiated by Justice Brewer; one of the five, in the course +of his concurring opinion in the Northern Securities case.[2] Justice +Brewer said that while he believed the Trans-Missouri case had been +rightly decided he also believed that in some respects the reasons given +for the judgment could not be sustained. + + Instead of holding that the Anti-Trust Act included all + contracts, reasonable or unreasonable, in restraint of + interstate trade, the ruling should have been that the + contracts there presented were unreasonable restraints of + interstate trade, and as such within the scope of the Act.... + Whenever a departure from common-law rules and definitions is + claimed, the purpose to make the departure should be clearly + shown. Such a purpose does not appear and such a departure was + not intended. + +[Footnote 1: _United States v. Trans-Missouri Association_, 166 U.S., +290.] + +[Footnote 2: _Northern Securities Company v. United States_, 193 U.S., +197.] + +Nevertheless, the troublesome question remained, to plague lawyers and +the community generally, until it was finally put at rest and the +statute once more planted on the firm ground of common-law rule and +definition by the decisions in the Standard Oil and Tobacco cases. + +What, then, is this common-law rule which President Taft found so clear? +No one has discussed it more lucidly than did the youthful Circuit Judge +Taft himself in delivering the opinion of the Circuit Court of Appeals +in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two +associates on the bench, the late Justices Harlan and Lurton, concurred. +The rule may be briefly stated as follows: + +Every contract or combination whose primary purpose and effect is to fix +prices, limit production, or otherwise restrain trade is unlawful, +provided the restraint be direct, material, and substantial. + +Where, however, the restraint of trade is not direct, but merely +ancillary or collateral to some lawful contract or transaction, it is +not unlawful, provided it is _reasonable_, that is to say, not broader +than is required for the protection of the party in whose favor the +restraint is imposed. + +[Footnote 1: _United States v. Addyston Pipe & Steel Co._, 85 Fed. Rep., +271.] + +A familiar illustration is the sale of a business and its goodwill, +accompanied by a covenant on the part of the vendor not to compete. Such +a covenant is collateral to the sale, and if not broader than is +reasonably required for the protection of the vendee it will be upheld, +although a similar agreement, standing alone and not collateral to a +sale or other lawful transaction, would be in direct restraint of trade +and unlawful. + +So much for the alleged uncertainty of the law. Candid men must agree +with President Taft that in the light of the Supreme Court decisions it +is reasonably clear what the Sherman Law means. But the fact that "the +business community now knows or ought to know where it stands" with +respect to the law does not greatly help the business situation. The +real difficulty lies, not in the uncertainty of the law, but in the fact +that the law does not fit actual present-day conditions. This is partly +because many of the trusts were organized with full knowledge that they +involved a violation of law but in the belief that the law could not or +would not be effectively enforced. The realization that this belief was +mistaken has thrown a good many people into a state of very genuine +bewilderment, but it is an uncertainty, not as to what is firm ground, +but as to how to get out of a bog, once having gotten in. For the most +part, however, the general feeling of insecurity is due not so much to +having knowingly overstepped the law, as to a change in economic +conditions. The spirit of the time is one of coöperation and +combination. It is manifested in the churches and colleges as well as in +the marketplace. In the industrial arena, the tendency has been +intensified by the invention of new machines and the resulting +aggregations of fixed capital in forms designed for particular uses and +incapable of diversion into other channels. Such rules of the common or +customary law as were the outgrowth of an era of mobile capital and free +competition no longer fit the conditions under which we are living. + +In a conflict between economic forces and legal enactment there can +finally be but one outcome. The law must sooner or later adapt itself to +life conditions. The real problem to-day is--how shall this adaptation +be accomplished; how can statutes be framed which shall check abuses +without falling under the wheels of social progress? Right here a swarm +of half-informed theorizers are rushing in where trained economists fear +to tread. It is difficult and dangerous ground, but there is at least +one measure of legal reform--take away the right of one corporation to +hold stock in another--which might be urged with confidence were it not +for the existence of sundry oppressive and conflicting state laws. + +The abolition by law of the holding-company device is no new suggestion. +It was strongly urged years ago by the late Edward B. Whitney. It was +the keystone of the famous "Seven Sisters" statutes,[1] enacted with +loud acclaim in New Jersey at the behest of Governor Woodrow Wilson (but +subsequently repealed and thrown into the discard). Such a measure would +be more effective and far-reaching than the public supposes. Nearly all +the so-called trusts have been organized and are being held together in +whole or in part, by the holding-company device. In many cases this has +been done merely as an innocent measure of convenience. The device, +however, is a perversion of the corporate machine to uses not +contemplated by its inventors and fraught with danger. It is too +powerful a weapon in the hands of those alive to its possibilities, +enabling a small group of men with a relatively insignificant investment +of capital to control a country-wide industry. Take the simplest +possible illustration: The industry of manufacturing a particular +commodity is carried on by a number of corporations scattered throughout +the country with an aggregate capitalization of, say, $10,000,000. A, B, +and C form a holding company to acquire a bare majority of the stock of +each corporation, say $5,100,000 in the aggregate. They dispose of 49 +per cent. of the holding company's stock to the public, retaining a +working majority. At one step they have secured absolute control of a +$10,000,000 industry with an investment of little more than one-quarter +of that amount, and by pursuing the same process further they can reduce +the investment necessary for controlling the industry almost to the +vanishing point. + +[Footnote 1: Laws of New Jersey of 1913, chaps. 13-19.] + +It is needless to enlarge on the possible abuses of the holding-company +device. They are coming to light more and more. The remedy, however, is +not so simple as it seems at first blush. A summary abolition of the +holding-company device would result in great injury and hardship to +industry. In the present condition of the corporation laws of certain of +the states, the right of large corporations to operate through local +subsidiary corporations is a practical necessity. Otherwise they would +be subjected to well-nigh intolerable exactions and interference. It has +been the policy in some states in dealing with foreign corporations to +attempt to impose, under the guise of fees for the privilege of doing +business in the state, a tax on all their property and business wherever +situated. Some of the attempts have been nullified by the Supreme Court +as violative of the prohibition of the Fourteenth Amendment against +taking property without due process of law, but these decisions have +not wholly remedied the evil or checked the ingenuity of state +legislators. In some jurisdictions great corporations seem to be +regarded as fair game for which there is no closed season. + +Right here the scheme of federal incorporation brought forward during +President Taft's administration has many attractions to offer. It would +do away with the principal excuse for the holding-company device, and +pave the way for its abolition. It should satisfy the general public +because it would clothe the Government with enormously increased powers +of regulation and control; it should be attractive to the corporations +because it would afford relief from many of the intolerable +restrictions, not always fair or intelligent, imposed by state +legislatures. Under present conditions the right of a corporation of one +state to do business in another (other than business of an interstate +character) rests merely upon comity and may be granted or refused upon +such terms as interest or prejudice may dictate. The right of a federal +corporation to do business in the several states, on the other hand, +rests upon the powers conferred on Congress by the Constitution and is +not subject to the whims of state lawmakers. Such a corporation is not +"foreign" in the states into which its activity extends and state laws +aimed at foreign corporations will not hit it. Moreover a corporation +with a federal charter can always take its controversies into the +federal courts (except when Congress expressly forbids)[1]--a right of +extreme practical value where anti-corporation feeling or local +prejudice is strong. + +[Footnote 1: The Act of Jan. 28, 1915, took away this right in the case +of railroad companies incorporated under federal charter (38 Stat. +804).] + +The scheme of federal incorporation presents some constitutional +questions. As pointed out in a previous chapter, the Constitution +nowhere expressly confers on Congress the right to grant corporate +charters. Under Chief Justice Marshall's doctrine of "Implied Powers," +however, it has become well settled that Congress has implied power to +charter a corporation whenever that is an appropriate means of +exercising one of the powers expressly conferred, for example, the power +to regulate interstate commerce. The most serious constitutional +question appears to be whether Congress can authorize such a corporation +to manufacture, the process of manufacturing not being an activity of an +interstate character. In any event, the difficulty could be surmounted +by a constitutional amendment. In these days of facile amendment such a +thing seems quite within the range of possibility. + +The scheme of federal incorporation is by no means new. In the +Convention of 1787 which framed the Constitution, Mr. Madison advocated +giving Congress the power to grant charters of incorporation. The +proposition, however, did not find favor, Mr. King suggesting that it +might foster the creation of mercantile monopolies.[1] + +[Footnote 1: See Farrand, "Records of the Federal Convention," Vol. II, +pp. 615-616, 620.] + +This objection would scarcely be urged to-day, when the country-wide +operations of the so-called "trusts" have given them a national +character and made their control by federal power a practical necessity. + + + + +XIII + +WHAT OF THE FUTURE? + + +In the preceding pages we have observed from various viewpoints the +impressive phenomenon of federal encroachment upon state power. It must +have become obvious to the most casual reader that the tide is running +swiftly and has already carried far. Hamilton was mistaken when he +predicted in the _Federalist_[1] that the National Government would +never encroach upon the state authorities. + +[Footnote 1: _Federalist_, Numbers XVII, XXXI.] + +What then of the future? Is the Constitution hopelessly out of date? Are +the states to be submerged and virtually obliterated in the drift toward +centralization? No thoughtful patriot can view such a possibility +without the gravest misgivings. The integrity of the states was a +cardinal principle of our governmental scheme. Abandon that and we are +adrift from the moorings which to the minds of statesmen of past +generations constituted the safety of the republic. + +No mere appeal to precedents and governmental theory will check the +current. The Americans are a practical people, moving forward with +conscious power toward the attainment of their aims, along the lines +which seem to them most direct. They are more interested in results than +in methods or theories. Experience has demonstrated that federal control +often spells uniformity and efficiency where state control had meant +divisions and weakness. They favor federal control because it gets +results. + +There is another aspect of the matter, however. The burden of federal +bureaucracy is beginning to be felt by the average man. He is being +regulated more and more, in his meats and drinks, his morals and the +activities of his daily life, from Washington. If he will only stop and +think he must realize that no one central authority can supervise the +daily lives of a hundred million people, scattered over half a +continent, without becoming top-heavy. He must realize, too, that, even +if such a centralization of power and responsibility were humanly +possible, our National Government is unsuited for the task. The +electorate is too numerous and heterogeneous; its interests and needs +are too diverse. Shall the conduct of citizens of Mississippi be +prescribed by vote of congressmen from New York, or supervised at the +expense of New York taxpayers? Will an educational system suitable for +Massachusetts necessarily fit the young of Georgia? Such suggestions +carry their own answer. In the very nature of things there is bound to +be a reaction against centralization sooner or later. The real question +is whether it will come in time to save the present constitutional +scheme. + +The makers of the Constitution never intended that the people of one +state should regulate, or pay for supervising, the conduct of citizens +of another state. They made a division of governmental powers between +nation and states along broad and obvious lines. To the Federal +Government were entrusted matters of a strictly national +character--foreign relations, interstate commerce, fiscal and monetary +system, post office, patents and copyrights. Everything else was +reserved, to the states or the people. Here was a scheme at once +explicit and elastic. Explicit as to the nature of the functions to be +performed by the National Government; elastic enough to permit the +exercise of all other powers reasonably incidental to the powers +expressly granted. The Constitution is not, and never was intended to +be, a strait-jacket. + +Proofs abound of the adequacy of the constitutional scheme to deal with +changing conditions. For example, when the Constitution was adopted, +railroads, the most powerful economic force in our present civilization, +were unknown. Nevertheless, the Constitution contains adequate provision +for dealing with the railroads. They are instruments of interstate +commerce and may be controlled by the Federal Government under the +express grant of power to regulate such commerce. Similar considerations +apply in the case of those nationwide industrial combinations popularly +known as "trusts." Their activities are largely in the field of +interstate commerce and are subject to control as such by the Federal +Government. Theoretically, only such activities of the railroads and +trusts as are of an interstate character fall within the federal +jurisdiction. Everything else lies within the jurisdiction of the +states. However, a practical people will not long permit matters which +are essentially single and entire in their nature (for example, railroad +classifications and rates) to be split up merely for purposes of legal +jurisdiction and control. In such matters, therefore, some measure of +federal encroachment is inevitable in order that industry and progress +shall not be hampered. The encroachment, however, is more apparent than +real. The industries are national in scope, and all the activities of +each are more or less interwoven and interdependent. Hence state +regulation of the intrastate activities may sometimes be overruled as an +interference with federal regulation of the interstate commerce. There +is nothing in this which involves any real violation of the +Constitution. It is merely an application of Marshall's doctrine of +implied powers. + +Social welfare legislation presents a very different problem. Some of +the most dangerous assaults upon the Constitution to-day are being made +in that field. The leaven of socialistic ideas is working. +Representative government is becoming more paternalistic. Legislation +dealing with conduct and social and economic conditions is being +demanded by public sentiment in constantly increasing measure. Such +legislation for the most part affects state police power and lies +clearly outside the scope of the powers conferred by the Constitution on +the National Government. Moreover, "the insulated chambers afforded by +the several states" (to borrow a phrase of Justice Oliver Wendell +Holmes) are ideal fields for social experiment. If an experiment +succeed, other states will follow suit. If it prove disastrous, the +damage is localized. The nation as a whole remains unharmed. The +sponsors for such legislation, however, are seldom content to deal with +the states. Reform was ever impatient. The state method seems too slow, +and the difficulty of securing uniformity too formidable. Moreover, it +often happens that some states are indifferent to the reform proposed or +even actively hostile. Accordingly, recourse is had to Congress, and +Congress looks for a way to meet the popular demand. There being no +direct way, and public sentiment being insistent, Congressmen find +themselves under the painful necessity of circumventing the Constitution +they have sworn to uphold. The desired legislation is enacted under the +guise of an act to regulate commerce or raise revenue, and the task of +upholding the Constitution is passed to the Supreme Court. + +Such subterfuges, far from arousing public condemnation, are praised by +the unthinking as far-sighted statesmanship. It is popular nowadays to +apply the term "forward-looking" to people who would make the National +Government an agency for social-welfare work, and to characterize as +"lacking in vision" anyone who interposes a constitutional principle in +the path of a social reform. Friends of progress sometimes forget that +the real forward-looking man is he who can see the pitfall ahead as well +as the rainbow; the man of true vision is one whose view of the stars is +steadied by keeping his feet firmly on the ground. + +It cannot be reiterated too often that, under our political system, +legislation in the nature of police regulation (except in so far as it +affects commerce or foreign relations) is the province of the states, +not of the National Government. This is not merely sound constitutional +law; it is good sense as well. Regulations salutary for Scandinavian +immigrants of the northwest may not fit the Creoles of Louisiana. In the +long run the police power will be exercised most advantageously for all +concerned by local authority. + +The present tendency toward centralization cannot go on indefinitely. A +point must be reached sooner or later when an over-centralized +government becomes intolerable and breaks down of its own weight. As an +eminent authority has put it: "If we did not have states we should +speedily have to create them."[1] The states thus created, however, +would not be the same. They would be mere governmental subdivisions, +without the independence, the historic background, the traditions, or +the sentiment of the present states. These influences, hitherto so +potent in our national life, would have been lost. + +[Footnote 1: Address of Supreme Court Justice Charles E. Hughes before +New York State Bar Association, January 14, 1916.] + +In a memorable address delivered in the year 1906 before the +Pennsylvania Society in New York, Elihu Root, then Secretary of State in +President Roosevelt's Cabinet, discussed the encroachments of federal +power and expressed the view that the only way in which the states could +maintain their power and authority was by awakening to a realization of +their own duties to the country at large. He said: + + The Governmental control which they (the people) deem just and + necessary they will have. It may be that such control would + better be exercised in particular instances by the governments + of the states, but the people will have the control they need + either from the states or from the National Government; and if + the states fail to furnish it in due measure, sooner or later + constructions of the Constitution will be found to vest the + power where it will be exercised--in the National Government. + The true and only way to preserve state authority is to be + found in the awakened conscience of the states, their + broadened views and higher standard of responsibility to the + general public; in effective legislation by the states, in + conformity to the general moral sense of the country; and in + the vigorous exercise for the general public good of that + state authority which is to be preserved. + +Those words, spoken fifteen years ago, were prophetic. Moreover, they +are as true to-day as when they were uttered. + +Will the people see these things in time? Americans with pride in their +country's past and confidence in her future dare not say No. The +awakening may be slow. Currents of popular will are not readily turned. +It is hard to make the people think. But if leaders and teachers do +their part American intelligence and prudence will assert themselves, +and the slogan of an awakened public sentiment may yet be: "Back to the +Constitution!" + + + + +APPENDIX + +CONSTITUTION OF THE UNITED STATES OF AMERICA + + +WE THE PEOPLE of the United States, in Order to form a more perfect +Union, establish Justice, insure domestic Tranquility, provide for the +common defence, promote the general Welfare, and secure the Blessings of +Liberty to ourselves and our Posterity, do ordain and establish this +CONSTITUTION for the United States of America. + + +ARTICLE I. + +SECTION 1. All legislative Powers herein granted shall be vested in a +Congress of the United States, which shall consist of a Senate and House +of Representatives. + +SECTION 2. The House of Representatives shall be composed of Members +chosen every second Year by the People of the several States, and the +Electors in each State shall have the Qualifications requisite for +Electors of the most numerous Branch of the State Legislature. + +No Person shall be a Representative who shall not have attained to the +Age of twenty-five Years, and been seven Years a Citizen of the United +States, and who shall not, when elected, be an Inhabitant of that State +in which he shall be chosen. + +Representatives and direct Taxes shall be apportioned among the several +States which may be included within this Union, according to their +respective Numbers which shall be determined by adding to the whole +Number of free Persons, including those bound to Service for a Term of +Years, and excluding Indians not taxed, three-fifths of all other +Persons. The actual Enumeration shall be made within three Years after +the first Meeting of the Congress of the United States, and within every +subsequent Term of ten Years, in such Manner as they shall by Law +direct. The Number of Representatives shall not exceed one for every +thirty Thousand, but each State shall have at Least one Representative; +and until such enumeration shall be made, the State of New Hampshire +shall be entitled to chuse three, Massachusetts eight, Rhode Island and +Providence Plantations one, Connecticut five, New York six, New Jersey +four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, +North Carolina five, South Carolina five, and Georgia three. + +When vacancies happen in the Representation from any State, the +Executive Authority thereof shall issue Writs of Election to fill such +Vacancies. + +The House of Representatives shall chuse their Speaker and other +Officers; and shall have the sole Power of Impeachment. + +SECTION 3. The Senate of the United States shall be composed of two +Senators from each State, chosen by the Legislature thereof, for six +Years; and each Senator shall have one Vote. + +Immediately after they shall be assembled in Consequence of the first +Election, they shall be divided as equally as may be into three Classes. +The Seats of the Senators of the first Class shall be vacated at the +Expiration of the second Year, of the second Class at the Expiration of +the fourth Year, and of the third Class at the Expiration of the sixth +Year, so that one third may be chosen every second Year; and if +Vacancies happen by Resignation, or otherwise, during the Recess of the +Legislature of any State, the Executive thereof may make temporary +Appointments until the next Meeting of the Legislature, which shall then +fill such Vacancies. + +No Person shall be a Senator who shall not have attained to the Age of +thirty Years, and been nine Years a Citizen of the United States, and +who shall not, when elected, be an Inhabitant of that State for which he +shall be chosen. + +The Vice President of the United States shall be President of the +Senate, but shall have no Vote, unless they be equally divided. + +The Senate shall chuse their other Officers, and also a President pro +tempore, in the Absence of the Vice President, or when he shall exercise +the Office of President of the United States. + +The Senate shall have the sole Power to try all Impeachments. When +sitting for that Purpose, they shall be on Oath or Affirmation. When the +President of the United States is tried, the Chief Justice shall +preside: And no Person shall be convicted without the Concurrence of two +thirds of the Members present. + +Judgment in Cases of Impeachment shall not extend further than to +removal from Office, and disqualification to hold and enjoy any Office +of honor, Trust or Profit under the United States: but the Party +convicted shall nevertheless be liable and subject to Indictment, +Trial, Judgment and Punishment, according to Law. + +SECTION 4. The Times, Places and Manner of holding Elections for +Senators and Representatives, shall be prescribed in each State by the +Legislature thereof; but the Congress may at any time by Law make or +alter such Regulations, except as to the Places of chusing Senators. + +The Congress shall assemble at least once in every Year, and such +Meeting shall be on the first Monday in December, unless they shall by +Law appoint a different Day. + +SECTION 5. Each House shall be the Judge of the Elections, Returns and +Qualifications of its own Members, and a Majority of each shall +constitute a Quorum to do Business; but a smaller Number may adjourn +from day to day, and may be authorized to compel the Attendance of +absent Members, in such Manner, and under such Penalties as each House +may provide. + +Each House may determine the Rules of its Proceedings, punish its +Members for disorderly Behavior, and, with the Concurrence of two +thirds, expel a Member. + +Each House shall keep a Journal of its Proceedings, and from time to +time publish the same, excepting such Parts as may in their Judgment +require Secrecy; and the Yeas and Nays of the Members of either House on +any question shall, at the Desire of one fifth of those Present, be +entered on the Journal. + +Neither House, during the Session of Congress, shall, without the +Consent of the other, adjourn for more than three days, nor to any other +Place than that in which the two Houses shall be sitting. + +SECTION 6. The Senators and Representatives shall receive a +Compensation for their Services, to be ascertained by Law, and paid out +of the Treasury of the United States. They shall in all Cases, except +Treason, Felony and Breach of the Peace, be privileged from Arrest +during their Attendance at the Session of their respective Houses, and +in going to and returning from the same; and for any Speech or Debate in +either House, they shall not be questioned in any other Place. + +No Senator or Representative shall, during the Time for which he was +elected, be appointed to any civil Office under the Authority of the +United States, which shall have been created, or the Emoluments whereof +shall have been encreased during such time; and no Person holding any +Office under the United States, shall be a Member of either House during +his Continuance in Office. + +SECTION 7. All Bills for raising Revenue shall originate in the House of +Representatives; but the Senate may propose or concur with Amendments as +on other Bills. + +Every Bill which shall have passed the House of Representatives and the +Senate, shall, before it become a Law, be presented to the President of +the United States; If he approve he shall sign it, but if not he shall +return it, with his Objections to that House in which it shall have +originated, who shall enter the Objections at large on their Journal, +and proceed to reconsider it. If after such Reconsideration two thirds +of that House shall agree to pass the Bill, it shall be sent, together +with the Objections, to the other House, by which it shall likewise be +reconsidered, and if approved by two thirds of that House, it shall +become a Law. But in all such Cases the Votes of both Houses shall be +determined by Yeas and Nays, and the Names of the Persons voting for +and against the Bill shall be entered on the Journal of each House +respectively. If any Bill shall not be returned by the President within +ten Days (Sundays excepted) after it shall have been presented to him, +the Same shall be a Law, in like Manner as if he had signed it, unless +the Congress by their Adjournment prevent its Return, in which Case it +shall not be a Law. + +Every Order, Resolution, or Vote to which the Concurrence of the Senate +and House of Representatives may be necessary (except on a question of +Adjournment) shall be presented to the President of the United States; +and before the Same shall take Effect, shall be approved by him, or +being disapproved by him, shall be repassed by two thirds of the Senate +and House of Representatives, according to the Rules and Limitations +prescribed in the Case of a Bill. + +SECTION 8. The Congress shall have Power To lay and collect Taxes, +Duties, Imposts and Excises, to pay the Debts and provide for the common +Defence and general Welfare of the United States; but all Duties, +Imposts and Excises shall be uniform throughout the United States; + +To borrow Money on the credit of the United States; + +To regulate Commerce with foreign Nations, and among the several States, +and with the Indian Tribes; + +To establish an uniform Rule of Naturalization, and uniform Laws on the +subject of Bankruptcies throughout the United States; + +To coin Money, regulate the Value thereof, and of foreign Coin, and fix +the Standard of Weights and Measures; + +To provide for the Punishment of counterfeiting the Securities and +current Coin of the United States; + +To establish Post Offices and post Roads; + +To promote the Progress of Science and useful Arts, by securing for +limited Times to Authors and Inventors the exclusive Right to their +respective Writings and Discoveries; + +To constitute Tribunals inferior to the supreme Court; + +To define and punish Piracies and Felonies committed on the high Seas, +and Offences against the Law of Nations; + +To declare War, grant Letters of Marque and Reprisal, and make Rules +concerning Captures on Land and Water; + +To raise and support Armies, but no Appropriation of Money to that Use +shall be for a longer Term than two Years; + +To provide and maintain a Navy; + +To make Rules for the Government and Regulation of the land and naval +Forces; + +To provide for calling forth the Militia to execute the Laws of the +Union, suppress Insurrections and repel Invasions; + +To provide for organizing, arming, and disciplining, the Militia, and +for governing such Part of them as may be employed in the Service of the +United States, reserving to the States respectively, the Appointment of +the Officers, and the Authority of training the Militia according to the +discipline prescribed by Congress; + +To exercise exclusive Legislation in all Cases whatsoever, over such +District (not exceeding ten Miles square) as may, by Cession of +particular States, and the Acceptance of Congress, become the Seat of +the Government of the United States, and to exercise like Authority over +all Places purchased by the Consent of the Legislature of the State in +which the Same shall be, for the Erection of Forts, Magazines, Arsenals, +dock-Yards, and other needful Buildings;--And + +To make all Laws which shall be necessary and proper for carrying into +Execution the foregoing Powers, and all other Powers vested by this +Constitution in the Government of the United States, or in any +Department or Officer thereof. + +SECTION 9. The Migration or Importation of such Persons as any of the +States now existing shall think proper to admit, shall not be prohibited +by the Congress prior to the Year one thousand eight hundred and eight, +but a Tax or duty may be imposed on such Importation, not exceeding ten +dollars for each Person. + +The Privilege of the Writ of Habeas Corpus shall not be suspended, +unless when in Cases of Rebellion or Invasion the public Safety may +require it. + +No Bill of Attainder or ex post facto Law shall be passed. + +No Capitation, or other direct, tax shall be laid, unless in Proportion +to the Census or Enumeration herein before directed to be taken. + +No Tax or Duty shall be laid on Articles exported from any State. + +No Preference shall be given by any Regulation of Commerce or Revenue to +the Ports of one State over those of another: nor shall Vessels bound +to, or from, one State, be obliged to enter, clear, or pay Duties in +another. + +No Money shall be drawn from the Treasury, but in Consequence of +Appropriations made by Law; and a regular Statement and Account of the +Receipts and Expenditures of all public Money shall be published from +time to time. + +No Title of Nobility shall be granted by the United States: And no +Person holding any Office of Profit or Trust under them, shall, without +the Consent of the Congress, accept of any present, Emolument, Office, +or Title, of any kind whatever, from any King, Prince, or foreign State. + +SECTION 10. No State shall enter into any Treaty, Alliance, or +Confederation; grant Letters of Marque and Reprisal; coin Money; emit +Bills of Credit; make any Thing but gold and silver Coin a Tender in +Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law +impairing the Obligation of Contracts, or grant any Title of Nobility. + +No State shall, without the Consent of the Congress, lay any Imposts or +Duties on Imports or Exports, except what may be absolutely necessary +for executing its inspection Laws: and the net Produce of all Duties and +Imposts, laid by any State on Imports or Exports, shall be for the Use +of the Treasury of the United States; and all such Laws shall be subject +to the Revision and Controul of the Congress. + +No State shall, without the Consent of Congress, lay any Duty of +Tonnage, keep Troops, or Ships of War in time of Peace, enter into any +Agreement or Compact with another State, or with a foreign Power, or +engage in War, unless actually invaded, or in such imminent Danger as +will not admit of delay. + + +ARTICLE II. + +SECTION 1. The executive Power shall be vested in a President of the +United States of America. He shall hold his Office during the Term of +four Years, and, together with the Vice President, chosen for the same +Term, be elected, as follows + +Each State shall appoint, in such Manner as the Legislature thereof may +direct, a Number of Electors, equal to the whole Number of Senators and +Representatives to which the State may be entitled in the Congress: but +no Senator or Representative, or Person holding an Office of Trust or +Profit under the United States, shall be appointed an Elector. + +The electors shall meet in their respective States, and vote by ballot +for two Persons, of whom one at least shall not be an Inhabitant of the +same State with themselves. And they shall make a List of all the +Persons voted for, and of the Number of Votes for each; which List they +shall sign and certify, and transmit sealed to the Seat of the +Government of the United States, directed to the President of the +Senate. The President of the Senate shall, in the Presence of the Senate +and House of Representatives, open all the Certificates, and the Votes +shall then be counted. The Person having the greatest Number of Votes +shall be the President, if such Number be a Majority of the whole Number +of Electors appointed; and if there be more than one who have such +Majority, and have an equal Number of Votes, then the House of +Representatives shall immediately chuse by Ballot one of them for +President; and if no Person have a Majority, then from the five highest +on the List the said House shall in like Manner chuse the President. But +in chusing the President, the Votes shall be taken by States, the +Representation from each State having one Vote; A quorum for this +Purpose shall consist of a Member or Members from two thirds of the +States, and a Majority of all the States shall be necessary to a Choice. +In every Case, after the Choice of the President, the Person having the +greatest Number of Votes of the Electors shall be the Vice President. +But if there should remain two or more who have equal Votes, the Senate +shall chuse from them by Ballot the Vice President. + +The Congress may determine the Time of chusing the Electors, and the Day +on which they shall give their Votes; which Day shall be the same +throughout the United States. + +No Person except a natural born Citizen, or a Citizen of the United +States, at the time of the Adoption of this Constitution, shall be +eligible to the Office of President; neither shall any Person be +eligible to that Office who shall not have attained to the Age of thirty +five Years, and been fourteen Years a Resident within the United States. + +In Case of the Removal of the President from Office, or of his Death, +Resignation, or Inability to discharge the Powers and Duties of the said +Office, the same shall devolve on the Vice President, and the Congress +may by Law provide for the Case of Removal, Death, Resignation, or +Inability, both of the President and Vice President, declaring what +Officer shall then act as President, and such Officer shall act +accordingly, until the Disability be removed, or a President shall be +elected. + +The President shall, at stated Times, receive for his Services, a +Compensation, which shall neither be encreased nor diminished during the +Period for which he shall have been elected, and he shall not receive +within that Period any other Emolument from the United States, or any of +them. + +Before he enter on the Execution of his Office, he shall take the +following Oath or Affirmation:--"I do solemnly swear (or affirm) that I +will faithfully execute the Office of President of the United States, +and will to the best of my Ability, preserve, protect and defend the +Constitution of the United States." + +SECTION 2. The President shall be Commander in Chief of the Army and +Navy of the United States, and of the Militia of the several States, +when called into the actual Service of the United States; he may require +the Opinion, in writing, of the principal Officer in each of the +executive Departments, upon any Subject relating to the Duties of their +respective Offices, and he shall have Power to grant Reprieves and +Pardons for Offences against the United States, except in Cases of +Impeachment. + +He shall have Power, by and with the Advice and Consent of the Senate, +to make Treaties, provided two thirds of the Senators present concur; +and he shall nominate, and by and with the Advice and Consent of the +Senate, shall appoint Ambassadors, other public Ministers and Consuls, +Judges of the supreme Court, and all other Officers of the United +States, whose Appointments are not herein otherwise provided for, and +which shall be established by Law: but the Congress may by Law vest the +Appointment of such inferior Officers, as they think proper, in the +President alone, in the Courts of Law, or in the Heads of Departments. + +The President shall have Power to fill up all Vacancies that may happen +during the Recess of the Senate, by granting Commissions which shall +expire at the End of their next Session. + +SECTION 3. He shall from time to time give to the Congress Information +of the State of the Union, and recommend to their Consideration such +Measures as he shall judge necessary and expedient; he may, on +extraordinary Occasions, convene both Houses, or either of them, and in +Case of Disagreement between them, with Respect to the Time of +Adjournment, he may adjourn them to such Time as he shall think proper; +he shall receive Ambassadors and other public Ministers; he shall take +Care that the Laws be faithfully executed, and shall Commission all the +Officers of the United States. + +SECTION 4. The President, Vice President and all civil Officers of the +United States, shall be removed from Office on Impeachment for, and +Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors. + + +ARTICLE III. + +SECTION 1. The judicial Power of the United States, shall be vested in +one supreme Court, and in such inferior Courts as the Congress may from +time to time ordain and establish. The Judges, both of the supreme and +inferior Courts, shall hold their Offices during good Behaviour, and +shall, at stated Times, receive for their Services, a Compensation, +which shall not be diminished during their Continuance in Office. + +SECTION 2. The judicial Power shall extend to all Cases, in Law and +Equity, arising under this Constitution, the Laws of the United States, +and Treaties made, or which shall be made, under their Authority;--to +all Cases affecting Ambassadors, other public Ministers and Consuls;--to +all Cases of admiralty and maritime Jurisdiction;--to Controversies to +which the United States shall be a Party;--to Controversies between two +or more States;--between a State and Citizens of another +State;--between Citizens of different States,--between Citizens of the +same State claiming Lands under Grants of different States, and between +a State, or the Citizens thereof, and foreign States, Citizens or +Subjects. + +In all Cases affecting Ambassadors, other public Ministers and Consuls, +and those in which a State shall be Party, the supreme Court shall have +original Jurisdiction. In all the other Cases before mentioned, the +supreme Court shall have appellate Jurisdiction, both as to Law and +Fact, with such Exceptions, and under such Regulations as the Congress +shall make. + +The Trial of all Crimes, except in Cases of Impeachment, shall be by +Jury; and such Trial shall be held in the State where the said Crimes +shall have been committed; but when not committed within any State, the +Trial shall be at such Place or Places as the Congress may by Law have +directed. + +SECTION 3. Treason against the United States, shall consist only in +levying War against them, or in adhering to their Enemies, giving them +Aid and Comfort. No Person shall be convicted of Treason unless on the +Testimony of two Witnesses to the same overt Act, or on Confession in +open Court. + +The Congress shall have Power to declare the Punishment of Treason, but +no Attainder of Treason shall work Corruption of Blood, or Forfeiture +except during the Life of the Person attainted. + + +ARTICLE IV. + +SECTION 1. Full Faith and Credit shall be given in each State to the +public Acts, Records, and judicial Proceedings of every other State. +And the Congress may by general Laws prescribe the Manner in which such +Acts, Records and Proceedings shall be proved, and the Effect thereof. + +SECTION 2. The Citizens of each State shall be entitled to all +Privileges and Immunities of Citizens in the several States. + +A person charged in any State with Treason, Felony, or other Crime, who +shall flee from Justice, and be found in another State, shall on Demand +of the executive Authority of the State from which he fled, be delivered +up, to be removed to the State having Jurisdiction of the Crime. + +No Person held to Service or Labour in one State, under the Laws +thereof, escaping into another, shall, in Consequence of any Law or +Regulation therein, be discharged from such Service or Labour, but shall +be delivered up on Claim of the Party to whom such Service or Labour may +be due. + +SECTION 3. New States may be admitted by the Congress into this Union; +but no new State shall be formed or erected within the Jurisdiction of +any other State; nor any State be formed by the Junction of two or more +States, or Parts of States, without the Consent of the Legislatures of +the States concerned as well as of the Congress. + +The Congress shall have Power to dispose of and make all needful Rules +and Regulations respecting the Territory or other Property belonging to +the United States; and nothing in this Constitution shall be so +construed as to Prejudice any Claims of the United States, or of any +particular State. + +SECTION 4. The United States shall guarantee to every State in this +Union a Republican Form of Government, and shall protect each of them +against Invasion; and on Application of the Legislature, or of the +Executive (when the Legislature cannot be convened) against domestic +Violence. + + +ARTICLE V. + +The Congress, whenever two thirds of both Houses shall deem it +necessary, shall propose Amendments to this Constitution, or, on the +Application of the Legislatures of two thirds of the several States, +shall call a Convention for proposing Amendments, which, in either Case, +shall be valid to all Intents and Purposes, as Part of this +Constitution, when ratified by the Legislatures of three fourths of the +several States, or by Conventions in three fourths thereof, as the one +or the other Mode of Ratification may be proposed by the Congress; +Provided that no Amendment which may be made prior to the Year One +thousand eight hundred and eight shall in any Manner affect the first +and fourth Clauses in the Ninth Section of the first Article; and that +no State, without its Consent, shall be deprived of its equal Suffrage +in the Senate. + + +ARTICLE VI. + +All Debts contracted and Engagements entered into, before the Adoption +of this Constitution, shall be as valid against the United States under +this Constitution, as under the Confederation. + +This Constitution, and the Laws of the United States which shall be made +in Pursuance thereof; and all Treaties made, or which shall be made, +under the Authority of the United States, shall be the supreme Law of +the Land; and the Judges in every State shall be bound thereby, any +Thing in the Constitution or Laws of any State to the Contrary +notwithstanding. + +The Senators and Representatives before mentioned, and the Members of +the several State Legislatures, and all executive and judicial Officers, +both of the United States and of the several States, shall be bound by +Oath or Affirmation, to support this Constitution; but no religious Test +shall ever be required as a Qualification to any Office or public Trust +under the United States. + + +ARTICLE VII. + +The Ratification of the Conventions of nine States shall be sufficient +for the Establishment of this Constitution between the States so +ratifying the Same. + +Done in Convention by the Unanimous Consent of the States present the +Seventeenth Day of September in the Year of our Lord one thousand seven +hundred and Eighty seven, and of the Independence of the United States +of America the Twelfth IN WITNESS whereof We have hereunto subscribed +our Names. + +G'o: WASHINGTON---- +_Presidt. and deputy from Virginia_ + +_New Hampshire_ { JOHN LANGDON + { NICHOLAS GILMAN + +_Massachusetts_ { NATHANIEL GORHAM + { RUFUS KING + +_Connecticut_ { WM. SAML. JOHNSON + { ROGER SHERMAN + +_New York_ ALEXANDER HAMILTON + + { WIL: LIVINGSTON +_New Jersey_ { DAVID BREARLEY + { WM. PATERSON + { JONA: DAYTON + + { B. FRANKLIN + { THOMAS MIFFLIN + { ROBT. MORRIS +_Pennsylvania_ { GEO. CLYMER + { THOS. FITZSIMONS + { JARED INGERSOLL + { JAMES WILSON + { GOUV MORRIS + + { GEO: READ + { GUNNING BEDFORD Jun +_Delaware_ { JOHN DICKINSON + { RICHARD BASSETT + { JACO: BROOM + + { JAMES McHENRY +_Maryland_ { DAN OF ST THOS JENIFER + { DANL. CARROLL + +_Virginia_ { JOHN BLAIR-- + { JAMES MADISON JR. + + { WM. BLOUNT +_North Carolina_ { RICHD. DOBBS SPAIGHT + { HU WILLIAMSON + + { J. RUTLEDGE +_South Carolina_ { CHARLES COTESWORTH PINCKNEY + { CHARLES PINCKNEY + { PIERCE BUTLER + +_Georgia_ { WILLIAM FEW + { ABR. BALDWIN + +_Attest_ WILLIAM JACKSON _Secretary_ + + + + +AMENDMENTS + + +[ARTICLE I.] + +Congress shall make no law respecting an establishment of religion, or +prohibiting the free exercise thereof; or abridging the freedom of +speech, or of the press; or the right of the people peaceably to +assemble, and to petition the Government for a redress of grievances. + + +[ARTICLE II.] + +A well regulated Militia, being necessary to the security of a free +State, the right of the people to keep and bear Arms, shall not be +infringed. + + +[ARTICLE III.] + +No Soldier shall, in time of peace be quartered in any house, without +the consent of the Owner, nor in time of war, but in a manner to be +prescribed by law. + + +[ARTICLE IV.] + +The right of the people to be secure in their persons, houses, papers, +and effects, against unreasonable searches and seizures, shall not be +violated, and no Warrants shall issue, but upon probable cause, +supported by Oath or affirmation, and particularly describing the place +to be searched, and the persons or things to be seized. + + +[ARTICLE V.] + +No person shall be held to answer for a capital, or otherwise infamous +crime, unless on a presentment or indictment of a Grand Jury, except in +cases arising in the land or naval forces, or in the Militia, when in +actual service in time of War or public danger; nor shall any person be +subject for the same offence to be twice put in jeopardy of life or +limb; nor shall be compelled in any Criminal Case to be a witness +against himself, nor be deprived of life, liberty, or property, without +due process of law; nor shall private property be taken for public use, +without just compensation. + + +[ARTICLE VI.] + +In all criminal prosecutions, the accused shall enjoy the right to a +speedy and public trial, by an impartial jury of the State and district +wherein the crime shall have been committed, which district shall have +been previously ascertained by law, and to be informed of the nature and +cause of the accusation; to be confronted with the witnesses against +him; to have compulsory process for obtaining Witnesses in his favor, +and to have the Assistance of Counsel for his defence. + + +[ARTICLE VII.] + +In suits at common law, where the value in controversy shall exceed +twenty dollars, the right of trial by jury shall be preserved, and no +fact tried by a jury shall be otherwise re-examined in any Court of the +United States, than according to the rules of the common law. + + +[ARTICLE VIII.] + +Excessive bail shall not be required, nor excessive fines imposed, nor +cruel and unusual punishments inflicted. + + +[ARTICLE IX.] + +The enumeration in the Constitution, of certain rights, shall not be +construed to deny or disparage others retained by the people. + + +[ARTICLE X.] + +The powers not delegated to the United States by the Constitution, nor +prohibited by it to the States, are reserved to the States respectively, +or to the people. + + +[ARTICLE XI.] + +The Judicial power of the United States shall not be construed to extend +to any suit in law or equity, commenced or prosecuted against one of the +United States by Citizens of another State, or by Citizens or Subjects +of any Foreign State. + + +[ARTICLE XII.] + +The Electors shall meet in their respective states, and vote by ballot +for President and Vice-President, one of whom, at least, shall not be an +inhabitant of the same state with themselves; they shall name in their +ballots the person voted for as President, and in distinct ballots the +person voted for as Vice-President, and they shall make distinct lists +of all persons voted for as President, and of all persons voted for as +Vice-President, and of the number of votes for each, which lists they +shall sign and certify, and transmit sealed to the seat of the +government of the United States, directed to the President of the +Senate;--The President of the Senate shall, in the presence of the +Senate and House of Representatives, open all the certificates and the +votes shall then be counted;--The person having the greatest number of +votes for President, shall be the President, if such number be a +majority of the whole number of Electors appointed; and if no person +have such majority, then from the persons having the highest numbers not +exceeding three on the list of those voted for as President, the House +of Representatives shall choose immediately, by ballot, the President. +But in choosing the President, the votes shall be taken by states, the +representation from each state having one vote; a quorum for this +purpose shall consist of a member or members from two-thirds of the +states, and a majority of all the states shall be necessary to a choice. +And if the House of Representatives shall not choose a President +whenever the right of choice shall devolve upon them, before the fourth +day of March next following, then the Vice-President shall act as +President, as in the case of the death or other constitutional +disability of the President. The person having the greatest number of +votes as Vice-President, shall be the Vice-President, if such number be +a majority of the whole number of Electors appointed, and if no person +have a majority, then from the two highest numbers on the list, the +Senate shall choose the Vice-President; a quorum for the purpose shall +consist of two-thirds of the whole number of Senators, and a majority of +the whole number shall be necessary to a choice. But no person +constitutionally ineligible to the office of President shall be eligible +to that of Vice-President of the United States. + + +[ARTICLE XIII.] + +SECTION 1. Neither slavery nor involuntary servitude, except as a +punishment for crime whereof the party shall have been duly convicted, +shall exist within the United States, or any place subject to their +jurisdiction. + +SECTION 2. Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XIV.] + +SECTION 1. All persons born or naturalized in the United States, and +subject to the jurisdiction thereof, are citizens of the United States +and of the State wherein they reside. No State shall make or enforce any +law which shall abridge the privileges or immunities of citizens of the +United States; nor shall any State deprive any person of life, liberty, +or property, without due process of law; nor deny to any person within +its jurisdiction the equal protection of the laws. + +SECTION 2. Representatives shall be apportioned among the several States +according to their respective numbers, counting the whole number of +persons in each State, excluding Indians not taxed. But when the right +to vote at any election for the choice of electors for President and +Vice-President of the United States, Representatives in Congress, the +Executive and Judicial officers of a State, or the members of the +Legislature thereof, is denied to any of the male inhabitants of such +State, being twenty-one years of age, and citizens of the United States, +or in any way abridged, except for participation in rebellion, or other +crime, the basis of representation therein shall be reduced in the +proportion which the number of such male citizens shall bear to the +whole number of male citizens twenty-one years of age in such State. + +SECTION 3. No person shall be a Senator or Representative in Congress, +or elector of President and Vice-President, or hold any office, civil or +military, under the United States, or under any State, who, having +previously taken an oath, as a member of Congress, or as an officer of +the United States, or as a member of any State legislature, or as an +executive or judicial officer of any State, to support the Constitution +of the United States, shall have engaged in insurrection or rebellion +against the same, or given aid or comfort to the enemies thereof. But +Congress may by a vote of two-thirds of each House, remove such +disability. + +SECTION 4. The validity of the public debt of the United States, +authorized by law, including debts incurred for payment of pensions and +bounties for services in suppressing insurrection or rebellion, shall +not be questioned. But neither the United States nor any State shall +assume or pay any debt or obligation incurred in aid of insurrection or +rebellion against the United States, or any claim for the loss or +emancipation of any slave; but all such debts, obligations and claims +shall be held illegal and void. + +SECTION 5. The Congress shall have power to enforce, by appropriate +legislation, the provisions of this article. + + +[ARTICLE XV.] + +SECTION 1. The right of citizens of the United States to vote shall not +be denied or abridged by the United States or by any State on account of +race, color, or previous condition of servitude. + +SECTION 2. The Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XVI.] + +The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several States, +and without regard to any census or enumeration. + + +[ARTICLE XVII.] + +The Senate of the United States shall be composed of two Senators from +each State, elected by the people thereof, for six years; and each +Senator shall have one vote. The electors in each State shall have the +qualifications requisite for electors of the most numerous branch of the +state legislatures. + +When vacancies happen in the representation of any State in the Senate, +the executive authority of such State shall issue writs of election to +fill such vacancies: Provided, That the legislature of any State may +empower the executive thereof to make temporary appointment until the +people fill the vacancies by election as the legislature may direct. + +This amendment shall not be so construed as to affect the election or +term of any Senator chosen before it becomes valid as part of the +Constitution. + + +[ARTICLE XVIII.] + +SECTION 1. After one year from the ratification of this article the +manufacture, sale, or transportation of intoxicating liquors within, the +importation thereof into, or the exportation thereof from the United +States and all territory subject to the jurisdiction thereof for +beverage purposes is hereby prohibited. + +SEC. 2. The Congress and the several States shall have concurrent power +to enforce this article by appropriate legislation. + +SEC. 3. This article shall be inoperative unless it shall have been +ratified as an amendment to the Constitution by the legislatures of the +several States, as provided in the Constitution, within seven years from +the date of the submission hereof to the States by the Congress. + + +[ARTICLE XIX.] + +The right of citizens of the United States to vote shall not be denied +or abridged by the United States or by any State on account of sex. + +Congress shall have power to enforce this article by appropriate +legislation. + + + + + +End of Project Gutenberg's Our Changing Constitution, by Charles Pierson + +*** END OF THE PROJECT GUTENBERG EBOOK 14104 *** diff --git a/LICENSE.txt b/LICENSE.txt new file mode 100644 index 0000000..6312041 --- /dev/null +++ b/LICENSE.txt @@ -0,0 +1,11 @@ +This eBook, including all associated images, markup, improvements, +metadata, and any other content or labor, has been confirmed to be +in the PUBLIC DOMAIN IN THE UNITED STATES. + +Procedures for determining public domain status are described in +the "Copyright How-To" at https://www.gutenberg.org. + +No investigation has been made concerning possible copyrights in +jurisdictions other than the United States. Anyone seeking to utilize +this eBook outside of the United States should confirm copyright +status under the laws that apply to them. diff --git a/README.md b/README.md new file mode 100644 index 0000000..4bb2265 --- /dev/null +++ b/README.md @@ -0,0 +1,2 @@ +Project Gutenberg (https://www.gutenberg.org) public repository for +eBook #14104 (https://www.gutenberg.org/ebooks/14104) diff --git a/old/14104-8.txt b/old/14104-8.txt new file mode 100644 index 0000000..5d8e825 --- /dev/null +++ b/old/14104-8.txt @@ -0,0 +1,4791 @@ +The Project Gutenberg EBook of Our Changing Constitution, by Charles Pierson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Our Changing Constitution + +Author: Charles Pierson + +Release Date: November 20, 2004 [EBook #14104] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK OUR CHANGING CONSTITUTION *** + + + + +Produced by John Hagerson, Kevin Handy, Linda Cantoni, and the PG +Online Distributed Proofreading Team. + + + + + + +OUR CHANGING CONSTITUTION + +BY + +CHARLES W. PIERSON + + +[Illustration: decorative anchor] + + +GARDEN CITY NEW YORK + +DOUBLEDAY, PAGE & COMPANY + +1922 + + +COPYRIGHT, 1922, BY DOUBLEDAY, PAGE & COMPANY + +ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION INTO FOREIGN +LANGUAGES, INCLUDING THE SCANDINAVIAN + +PRINTED IN THE UNITED STATES AT THE COUNTRY LIFE PRESS, GARDEN CITY, +N.Y. + + + + +PREFACE + + +Citizens of the United States are wont to think of their form of +government, a political system based on a written constitution, as +something fixed and stable. In reality, it is undergoing a profound +change. The idea which constituted its most distinctive feature, and in +the belief of many represents America's most valuable contribution to +the science of government, is being forgotten. Formed to be "an +indestructible Union composed of indestructible states," our dual system +is losing its duality. The states are fading out of the picture. + +The aim of this volume is to point out the change and discuss some of +its aspects. A few chapters have already appeared in print. "Our +Changing Constitution" and "Is the Federal Corporation Tax +Constitutional?" were published in the _Outlook_. "The Corporation Tax +Decision" appeared in the _Yale Law Journal_. "Can Congress Tax the +Income from State and Municipal Bonds?" was printed in the New York +_Evening Post_. All of these have been more or less revised and some new +matter has been added. + + + + +CONTENTS + + +I. THE SALIENT FEATURE OF THE CONSTITUTION 1 + +The American Constitution, its origin and contents. Wherein its novelty +and greatness lay. Importance of maintaining the equilibrium established +between national and state power. View of John Fiske. + +II. THE SUPREME COURT OF THE UNITED STATES 3 + +Place of the Court in the constitutional scheme. Its most important +function. Personnel of the Court. Its power moral rather than physical. +Its chief weapon the power to declare legislative acts unconstitutional. +Limitations on this power--political questions; necessity of an actual +controversy; abuses of legislative power. Erroneous popular impressions. +Impairment of the constitutional conscience. + +III. OUR CHANGING CONSTITUTION 18 + +Change in popular attitude toward the Constitution. Causes of the change +(growth of national consciousness, wars, foreign relations, influence of +later immigrants and their descendants, desire to obtain federal +appropriations, economic development, railroads, free trade among the +states). Methods by which change has been put into effect +(constitutional amendment, treaties, federal legislation under cover of +power to regulate commerce and lay taxes). Attitude of the Supreme +Court. Differences of opinion in the Court. + +IV. THE EIGHTEENTH OR PROHIBITION AMENDMENT 35 + +History and radical character of amendment. Efforts to defeat it in the +courts. Unusual course taken by Supreme Court. Discussion of its true +place in the development of American constitutional law. Less a point of +departure than a spectacular manifestation of a change already under +way. Effect of the change on the principle of local self-government. + +V. THE NINETEENTH OR WOMAN SUFFRAGE AMENDMENT 49 + +Attitude of the Constitution toward question of suffrage qualifications. +Effect of Civil War amendments. Growth of woman suffrage movement and +adoption of Suffrage Amendment. How far the amendment constitutes a +federal encroachment on state power. Effect of woman suffrage on +questions of governmental theory. + +VI. CONGRESS VERSUS THE SUPREME COURT--THE CHILD LABOR LAWS 59 + +The child labor question. Philanthropic and commercial aspects. Attempt +of Congress to legislate under power to regulate commerce. Decision of +Supreme Court holding law unconstitutional. The decision explained. +Reënactment of law by Congress under cover of power to lay taxes. +Arguments for and against constitutionality of new enactment. + +VII. STATE RIGHTS AND THE SUPREME COURT 69 + +The Supreme Court at first a bulwark of national power; to-day the +defender of the states. Explanation of this apparent change. Attitude of +the Court in the first period. The period of Chief Justice Marshall. The +period of Chief Justice Taney. The Reconstruction Period. Attitude of +the Court to-day. Reasons why the Court is unable to prevent federal +encroachment. Attitude of Hamilton and Marshall toward state rights +misunderstood. + +VIII. THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT 85 + +America's embarrassing position if the late war had come before adoption +of Income Tax Amendment. Limitations of federal taxing power under the +Constitution. Meaning of "uniformity." Apportionment of "direct taxes." +The Supreme Court decision in the Income Tax cases in 1894 a reversal of +long settled ideas. The Income Tax Amendment an example of recall of +judicial decisions. Implied limitations on federal taxing power +(compensation of federal judges, due process clause of the Constitution, +no power to tax property or governmental activities of the states). + +IX. CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? 97 + +No express prohibition of such taxation; it lies in an implied +limitation inherent in our dual system of government. Discussion of +doctrine and its development by the Supreme Court. Effect of the Income +Tax Amendment. Present dissatisfaction with doctrine and efforts to +abolish it. + +X. IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL? 106 + +Nature of the tax. An interference with state power to grant corporate +franchises. Nature of our dual government and Supreme Court decisions on +the subject discussed. The debate in Congress. + +XI. THE CORPORATION TAX DECISION 122 + +Importance of the decision likely to be overlooked. Criticism of the +Court's arguments. Effects of the decision. + +XII. THE FEDERAL GOVERNMENT AND THE TRUSTS 129 + +Origin and history of Sherman Act. Its meaning now clear. Earlier +uncertainties owing chiefly to two questions--What is interstate trade +and Does the act enlarge the common-law rule as to what restraints were +unlawful? How these questions have been settled. Statement of the +common-law rule. Incompatibility between the law and present economic +conditions. Suggestions for legal reform. The holding company device, +its abuses and the possibility of abolishing it. Advantages of the +scheme of federal incorporation. + +XIII. WHAT OF THE FUTURE? 143 + +Rapid progress and present extent of federal encroachment on state +power. Growth of federal bureaucracy. A reaction against centralization +inevitable sooner or later. Adequacy of Constitution to deal with +changing conditions. The railroads and the trusts. Dangerous assaults +upon Constitution in field of social welfare legislation. Exercise of +police power a matter for local authority. Elihu Root's view. Outlook +for the future. + +APPENDIX 153 + + + + +OUR CHANGING CONSTITUTION + + + + +I + +THE SALIENT FEATURE OF THE CONSTITUTION + + +Few documents known to history have received as much praise as the +United States Constitution. Gladstone called it "the most wonderful work +ever struck off at a given time by the brain and purpose of man." The +casual reader of the Constitution will be at a loss to account for such +adulation. It will seem to him a businesslike document, outlining a +scheme of government in terse and well-chosen phrases, but he is apt to +look in vain for any earmarks of special inspiration. To understand the +true greatness of the instrument something more is required than a mere +reading of its provisions. + +The Constitution was the work of a convention of delegates from the +states, who met in Philadelphia in May, 1787, and labored together for +nearly four months. They included a large part of the best character +and intellect of the country. George Washington presided over their +deliberations. The delegates had not been called together for the +purpose of organizing a new government. Their instructions were limited +to revising and proposing improvements in the Articles of the existing +Confederation, whose inefficiency and weakness, now that the cohesive +power of common danger in the war of the Revolution was gone, had become +a byword. This task, however, was decided to be hopeless, and with great +boldness the convention proceeded to disregard instructions and prepare +a wholly new Constitution constructed on a plan radically different from +that of the Articles of Confederation. The contents of the Constitution, +as finally drafted and submitted for ratification, may be described in +few words. It created a legislative department consisting of a Senate +and a House of Representatives, an executive department headed by a +President, and a judicial department headed by a Supreme Court, and +prescribed in general terms the qualifications, powers, and functions of +each. It provided for the admission of new states into the Union and +that the United States should guarantee to every state a republican form +of government. It declared that the Constitution and the laws of the +United States made in pursuance thereof, and treaties, should be the +supreme law of the land. It provided a method for its own amendment. +Save for a few other brief clauses, that was all. There was no +proclamation of Democracy; no trumpet blast about the rights of man such +as had sounded in the Declaration of Independence. On the contrary, the +instrument expressly recognized human slavery, though in discreet and +euphemistic phrases. + +Wherein, then, did the novelty and greatness of the Constitution lie? +Its novelty lay in the duality of the form of government which it +created--a nation dealing directly with its citizens and yet composed of +sovereign states--and in its system of checks and balances. The world +had seen confederations of states. It was familiar with nations +subdivided into provinces or other administrative units. It had known +experiments in pure democracy. The constitutional scheme was none of +these. It was something new, and its novel features were relied upon as +a protection from the evils which had developed under the other plans. +The greatness of the Constitution lay in its nice adjustment of the +powers of government, notably the division of powers which it effected +between the National Government and the states. The powers conferred on +the National Government were clearly set forth. All were of a strictly +national character. They covered the field of foreign relations, +interstate and foreign commerce, fiscal and monetary system, post office +and post roads, patents and copyrights, and jurisdiction over certain +specified crimes. All other powers were reserved to the states or the +people. In other words, the theory was (to quote Bryce's "The American +Commonwealth") "local government for local affairs; general government +for general affairs only." + +The Constitution as it left the hands of its framers was not entirely +satisfactory to anybody. Owing to the discordant interests and mutual +jealousies of the states, it was of necessity an instrument of many +compromises. One of the great compromises was that by which the small +states were given as many senators as the large. Another is embalmed in +the provisions recognizing slavery and permitting slaves to count in the +apportionment of representatives. (The number of a state's +representatives was to be determined "by adding to the whole number of +free persons ... three-fifths of all other persons.") Another was the +provision that direct taxes should be apportioned among the states +according to population. With all its compromises, however, the +Constitution embodied a great governmental principle, full of hope for +the future of the country, and the state conventions to which it was +submitted for ratification were wise enough to accept what was offered. +Ratification by certain of the states was facilitated by the publication +of that remarkable series of papers afterward known as the "Federalist." +These were the work of Alexander Hamilton, James Madison, and John Jay, +and first appeared in New York newspapers. + +One of the objections to the new Constitution in the minds of many +people was the absence of a "bill of rights" containing those provisions +for the protection of individual liberty and property (e.g., trial by +jury, freedom of speech, protection from unreasonable searches and +seizures) which had come down from the early charters of English +liberties. In deference to this sentiment a series of ten brief +amendments were proposed and speedily ratified. Another amendment (No. +XI) was soon afterward adopted for the purpose of doing away with the +effect of a Supreme Court decision. Thereafter, save for a change in +the manner of electing the President and Vice-president, the +Constitution was not again amended until after the close of the Civil +War, when Amendments XIII, XIV, and XV, having for their primary object +the protection of the newly enfranchised Negroes, were adopted. The +Constitution was not again amended until the last decade, when the +Income Tax Amendment, the amendment providing for the election of +Senators by popular vote, the Prohibition Amendment, and the Woman +Suffrage Amendment were adopted in rapid succession. Some of these will +be discussed in later chapters. + +It is interesting to note that two of the amendments (No. XI, designed +to prevent suits against a state without its permission by citizens of +another state, and No. XVI, paving the way for the Income Tax) were +called forth by unpopular decisions of the Supreme Court, and virtually +amounted to a recall of those decisions by the people. These instances +demonstrate the possibility of a recall of judicial decisions by +constitutional methods, and tend to refute impatient reformers who +preach the necessity of a more summary procedure. Such questions, +however, lie outside the scope of this book. We emphasize here the fact +that the great achievement of the Constitution was the creation of a +dual system of government and the apportionment of its powers. That was +what made it "one of the longest reaches of constructive statesmanship +ever known in the world."[1] It offered the most promising solution yet +devised for the problem of building a nation without tearing down local +self-government. + +[Footnote 1: Fiske: "The Critical Period of American History," p. 301.] + +John Fiske, the historian, writing of the importance of preserving the +constitutional equilibrium between nation and states, said:[1] + + If the day should ever arrive (which God forbid!) when the + people of the different parts of our country shall allow their + local affairs to be administered by prefects sent from + Washington, and when the self-government of the states shall + have been so far lost as that of the departments of France, or + even so far as that of the counties of England--on that day + the progressive political career of the American people will + have come to an end, and the hopes that have been built upon + it for the future happiness and prosperity of mankind will be + wrecked forever. + +[Footnote 1: Id., p. 238.] + +If allowance be made for certain extravagances of statement, these words +will serve as a fitting introduction to the discussions which follow. + + + + +II + +THE SUPREME COURT OF THE UNITED STATES + + +The Constitution effected an apportionment of the powers of government +between nation and states. The maintenance of the equilibrium thus +established was especially committed to the Supreme Court. This novel +office, the most important of all its great functions, makes the Court +one of the most vital factors of the entire governmental scheme and +gives it a unique preëminence among the judicial tribunals of the world. + +How the office has been performed, and whether the constitutional +equilibrium is actually being maintained, are the questions to be +considered in this book. Before taking them up, however, it will be +useful to glance briefly at the Court itself and inquire how it is +equipped for its difficult task. + +The United States Supreme Court at present is composed of nine judges. +The number originally was six. It now holds its sessions at the Capitol +in Washington, in the old Senate Chamber which once echoed with the +eloquence of the Webster-Hayne debate. The judges are nominated by the +President, and their appointment, like that of ambassadors, must be +confirmed by the Senate. The makers of the Constitution took the utmost +care to insure the independence of the Court. Its members hold office +during good behavior, that is to say for life. They cannot be removed +except by impeachment for misconduct. Only one attempt has ever been +made to impeach a judge of the Supreme Court[1] and that attempt failed. +Still further to insure their freedom from legislative control, the +Constitution provides that the compensation of the judges shall not be +diminished during their continuance in office.[2] + +[Footnote 1: Justice Samuel Chase of Maryland in 1804-5.] + +[Footnote 2: It is interesting to observe that this Court, safeguarded +against popular clamor and composed of judges appointed for life, has +consistently shown itself more progressive and more responsive to modern +ideas than have most of the state Supreme Courts whose members are +elected directly by the people and for limited terms only.] + +From the time of John Jay, the first Chief Justice, down to the present +day the men appointed to membership in the Court have, for the most +part, been lawyers of the highest character and standing, many of whom +had already won distinction in other branches of the public service. +The present Chief Justice (Taft) is an ex-President of the United +States. Among the other members of the Court are a former Secretary of +State of the United States (Justice Day); two former Attorneys General +of the United States (Justices McKenna and McReynolds); a former Chief +Justice of Massachusetts (Justice Oliver Wendell Holmes, the +distinguished son and namesake of an illustrious father); a former Chief +Justice of Wyoming (Justice Van Devanter); and a former Chancellor of +New Jersey (Justice Pitney). + +It is well that the personnel of the Court has been such as to command +respect and deference, for in actual power the judiciary is by far the +weakest of the three coördinate departments (legislative, executive, +judicial) among which the functions of government were distributed by +the Constitution. The power of the purse is vested in Congress: it alone +can levy taxes and make appropriations. The Executive is +Commander-in-Chief of the Army and Navy and wields the appointing power. +The Supreme Court controls neither purse nor sword nor appointments to +office. Its power is moral rather than physical. It has no adequate +means of enforcing its decrees without the coöperation of other +branches of the Government. + +That coöperation has not always been forthcoming. In the year 1802, +Congress, at the instigation of President Jefferson, the inveterate +enemy of Chief Justice Marshall, suspended the sessions of the Court for +more than a year by abolishing the August term. In 1832, when the State +of Georgia defied the decree of the Court in a case involving the status +of the Cherokee Indians, the other departments of the Federal Government +gave no aid and President Andrew Jackson is reported to have remarked: +"John Marshall has made the decision, now let him execute it." In 1868, +Congress, in order to forestall decision in a case pending before the +Court, hastily repealed the statute on which the jurisdiction of the +Court depended.[1] Such instances, however, have been rare. The +law-abiding instinct is strong in the American people, and for the most +part the decisions of the Supreme Court have been received with respect +and unquestioning obedience. + +[Footnote 1: See _ex parte McCardle_, 6 Wall. (Supreme Court Reports), +318; 7 _id._, 506.] + +The chief weapon in the arsenal of the Court is the power to declare +legislative acts void on the ground that they overstep limits +established by the people in the Constitution. This power has been +frequently exercised. It is stated that the congressional statutes thus +nullified have not numbered more than thirty, while at least a thousand +state laws have been nullified.[1] + +[Footnote 1: Brief of Solicitor General James M. Beck in the Child Labor +Tax cases. It is to be borne in mind that there are forty-eight state +legislatures and only one Congress.] + +The assumption of this power in the Court to declare statutes +unconstitutional has been bitterly assailed, and is still denounced in +some quarters, as judicial usurpation originated by John Marshall. + +On the historical side this objection is not well founded. Various state +courts had exercised the power to declare statutes unconstitutional +before the Supreme Court came into existence.[1] The framers of the +Constitution clearly intended that such a power should be exercised by +the Supreme Court.[2] Moreover, a somewhat similar power appears to have +been exercised long before in England,[3] though it gave place later to +the present doctrine of the legal omnipotence of Parliament. + +[Footnote 1: See Bryce: "The American Commonwealth," Vol. I, p. 250.] + +[Footnote 2: See e.g., "Federalist," No. LXXVIII.] + +[Footnote 3: See opinion of Lord Coke in Bonham's Case, 8 Coke's +Reports, 118, decided in 1610.] + +On the side of reason and logic, the argument in favor of the power +formulated more than a century ago by Chief Justice Marshall has never +been adequately answered and is generally accepted as final. He said:[1] + + The powers of the legislature are defined and limited; and + that those limits may not be mistaken or forgotten, the + Constitution is written. To what purpose are powers limited, + and to what purpose is that limitation committed to writing, + if these limits may, at any time, be passed by those intended + to be restrained?... The Constitution is either a superior + paramount law, unchangeable by ordinary means, or it is on a + level with ordinary legislative acts, and, like other acts, is + alterable when the legislature shall please to alter it. If + the former part of the alternative be true, then a legislative + act, contrary to the Constitution, is not law: if the latter + part be true, then written constitutions are absurd attempts, + on the part of the people, to limit a power in its own nature + illimitable. + +[Footnote 1: _Marbury v. Madison_, 1 Cranch, 176.] + +It would seem at first blush that the power in the Court to declare +legislative acts unconstitutional affords a complete safeguard against +congressional encroachment on the prerogatives of the states. Such is +not the fact, however. The veto power of the Court by no means covers +the entire field of legislative activity. In the Convention which +framed the Constitution, attempts were made to give to the judiciary, in +conjunction with the executive, complete power of revision over +legislative acts, but all such propositions were voted down.[1] As +matters stand, there may be violations of the Constitution by Congress +(or for that matter by the executive) of which the Court can take no +cognizance. + +[Footnote 1: See e.g., Farrand: "Records of the Federal Convention," +Vol. I, pp. 138 et seq.; Vol. II, p. 298.] + +For one thing, the Court cannot deal with questions of a political +character. The function of the Court is judicial only. Upon this ground +it was decided that the question which of two rival governments in the +State of Rhode Island was the legitimate one was for the determination +of the political department of government rather than the courts;[1] +that the question, whether the adoption by a state of the initiative and +referendum violated the provision of the Federal Constitution +guaranteeing to every state a republican form of government, was +political and therefore beyond the jurisdiction of the Court.[2] In 1867 +a sovereign state sought to enjoin the President of the United States +from enforcing an act of Congress alleged to be unconstitutional. The +Supreme Court, without determining the constitutionality of the act, +declined to interfere with the exercise of the President's political +discretion.[3] In the famous Dred Scott case[4] the effort of the +Supreme Court to settle a political question accomplished nothing save +to impair the influence and prestige of the Court. + +[Footnote 1: _Luther v. Borden_, 7 Howard, 1.] + +[Footnote 2: _Pacific Telephone Co. v. Oregon_, 223 U.S., 118.] + +[Footnote 3: _State of Mississippi v. Andrew Johnson_, 4 Wall., 475.] + +[Footnote 4: _Dred Scott v. Sandford_, 19 Howard, 393.] + +The power of the Court to declare legislative acts unconstitutional is +subject to another important limitation. The judicial power is limited +by the Constitution to actual cases and controversies between opposing +parties. The Court cannot decide moot questions or act as an adviser for +other departments of the government. A striking illustration is found in +the so-called Muskrat case.[1] Congress having legislated concerning the +distribution of property of the Cherokee Indians, and doubts having +arisen as to the constitutional validity of the legislation, Congress +passed another act empowering one David Muskrat and other Cherokee +citizens to file suit, naming the United States as defendant, to settle +the question. The Supreme Court declined to take jurisdiction and +dismissed the suit, holding that it was not a case or controversy +between opposing parties within the meaning of the Constitution. + +[Footnote 1: _Muskrat v. United States_, 219 U.S., 346.] + +Still another limitation is encountered in cases involving abuse of +legislative power rather than lack of power. If Congress passes an act +within one of the powers expressly conferred upon it by the +Constitution, for example the power to lay taxes or the power to +regulate interstate commerce, the Supreme Court cannot interfere though +the incidental effect and ulterior purpose of the legislation may be to +intrude upon the field of state power. We shall have occasion to refer +to this limitation more than once in later chapters. + +An impression is abroad that the Supreme Court has plenary power to +preserve the Constitution. Hence the tendency of groups to demand, and +of legislators to enact, any kind of a law without regard to its +constitutional aspect, leaving that to be taken care of by the Court. + +Any such impression is erroneous and unfortunate. It puts upon the Court +a burden beyond its real powers. It undermines the sense of +responsibility which should exist among the elected representatives of +the people. It impairs what someone has called the constitutional +conscience, and weakens the vigilance of the people in preserving their +liberties. Men and women need to be reminded that the duty of upholding +the Constitution does not devolve upon the Supreme Court alone. It rests +upon all departments of government and, in the last analysis, upon the +people themselves. + + + + +III + +OUR CHANGING CONSTITUTION + + +In a celebrated case[1] decided a few years ago the Supreme Court of the +United States said: + + The Constitution is a written instrument. As such its meaning + does not alter. That which it meant when adopted it means now. + Being a grant of powers to a government its language is + general, and as changes come in social and political life it + embraces in its grasp all new conditions which are within the + scope of the powers in terms conferred. In other words, while + the powers granted do not change, they apply from generation + to generation to all things to which they are in their nature + applicable. This in no manner abridges the fact of its + changeless nature and meaning. Those things which are within + its grants of power, as those grants were understood when + made, are still within them, and those things not within them + remain still excluded.... + + To determine the extent of the grants of power we must, + therefore, place ourselves in the position of the men who + framed and adopted the Constitution, and inquire what they + must have understood to be the meaning and scope of those + grants. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437.] + +Thus speaks the voice whose word is law. + +Viewed in the sense intended--as the formulation of a legal rule for the +interpretation and construction of a written instrument--the statement +compels assent. As a statement of historical and political fact, +however, it would not be accepted so readily. An acute critic of our +institutions has said that the Constitution "has changed in the spirit +with which men regard it, and therefore in its own spirit."[1] Men +realize that the words of the Constitution, like the words of Holy Writ, +have not always meant the same thing to those who regulate their conduct +by its precepts; that the system of government which those words embody +has in reality changed, is changing to-day. + +[Footnote 1: Bryce: "The American Commonwealth," Vol. I, p. 400.] + +The makers of the Constitution represented the people of distinct and +independent states, jealous of their rights and of each other but +nevertheless impelled by experience of danger lately past and sense of +other perils impending to substitute for their loose and ill-working +confederation a more effective union. The most formidable obstacle, +apart from mutual jealousies, was a fear of loss of liberties, state and +individual, through encroachment of the central power. The instrument, +drawn with this fear uppermost, was designed to limit the National +Government to "the irreducible minimum of functions absolutely needed +for the national welfare."[1] To this end the powers granted were +specifically enumerated. All other powers were by express enactment[2] +"reserved to the States respectively, or to the people." + +[Footnote 1: Bryce, "The American Commonwealth," Vol. I, p. 324.] + +[Footnote 2: Tenth Amendment.] + +The strength of the popular sentiment against any encroachment of +federal power was speedily demonstrated in a striking and dramatic way. +Under the grant of power to determine controversies "between a state and +citizens of another state"[1] the Supreme Court in 1793 proceeded to +entertain a suit by one Chisholm, a citizen of South Carolina, against +the State of Georgia.[2] It had not been supposed that the grant of +power contemplated such a suit against a state without its consent. The +decision aroused an indescribable state of popular fury, not only in +Georgia but throughout the Union, and led to the adoption of a +constitutional amendment[3] prohibiting such suits in future. + +[Footnote 1: Art. III, Sec. 2.] + +[Footnote 2: See 2 Dallas, 419.] + +[Footnote 3: Eleventh Amendment.] + +There is a long step between such an attitude toward the Constitution +and the viewpoint which finds in it authority for the enactment by +Congress of White Slave and Child Labor laws. Obviously there has been a +profound change in what the Constitution means to its adherents. It will +be interesting to consider briefly what has caused the change of view, +and how it has been put into effect. + +To one searching for causes the most striking phenomenon is the growth +of a national consciousness. At the outset it was practically +non-existent. To-day its power has astonished enemy and friend alike. +Its growth has been due to both pressure from without and developments +within. Our foreign wars, especially the war with Germany, have drawn +the people together and enhanced the importance of interests purely +national. Some of our other foreign relations have brought into relief +the advantages of a strong central government as well as certain +inconveniences of our system as it left the hands of the framers. +Witness the embarrassment toward Italy growing out of lack of federal +jurisdiction in respect of the New Orleans riots, and the ever-present +danger to our relations with Japan from acts of the sovereign State of +California which the Federal Government is powerless to control. Among +developments from within was the Civil War, with its triumph for the +idea of national supremacy and an indissoluble union. Another, which has +hardly received the attention it deserves, has been the influence of the +large element of our population composed of immigrants since the +Revolution and their descendants. The state sovereignty doctrine was not +a mere political dogma but had its roots in history. It was an +expression of the pride of the inhabitants of the Thirteen Colonies in +their respective commonwealths. To them it stood for patriotism and +traditions. These feelings the later immigrant neither shared nor +understood. When he gave up his Old World allegiance and emigrated he +came to America, not to New York or Massachusetts. To him the nation was +everything, the state merely an administrative subdivision of the +nation. + +Another cause has been the desire to obtain aid in local matters from +the national treasury. This has proved an exceedingly potent and +insidious influence, leading state officials to surrender voluntarily +state prerogatives in exchange for appropriations of federal money. +Notable examples of this influence may be found in the field of river +and harbor improvements, the creation of various new bureaus in the +Department of Commerce, the enormous extension of the activities of the +Agricultural Department and the Bureau of Education. The temptation in +this direction is particularly strong among the less prosperous states, +for it means the expenditure in those states of federal moneys raised +chiefly from the taxpayers in wealthier states. + +The most potent influence of all, however, has been the matter of +internal economic development, stimulated by free trade among the +states. This development has gone on apace with little regard for state +lines. The invention of railways drew the different sections of the +country together in a common growth, and tended to make the barriers +interposed by state lines and state laws seem artificial and cumbersome. +In fact, they sometimes came to be regarded as intolerable and +destructive of progress. The spectacle of men clamoring for federal +control of their industries to escape the burdens of a diversified state +interference has been a frequent phenomenon of recent years.[1] + +[Footnote 1: See e.g. the efforts of the life insurance interests: _N.Y. +Life Ins. Co. v. Deer Lodge County_, 231 U.S., 495.] + +The foregoing enumeration by no means covers all the forces which have +been at work. In recent years a strong tendency toward centralization +and combination has developed, a tendency pervading all the interests +and activities of men. Moreover, new views have arisen concerning the +functions and scope of government, views challenging the _laissez faire_ +doctrines of earlier days and demanding a greater measure of +governmental interference with the affairs of the individual. These +tendencies, however, are not peculiar to America and lie outside the +scope of the present discussion. + +In considering the methods by which the change of spirit toward the +Constitution has been put into effect, one is struck by the +comparatively small part played by the only method contemplated by the +framers, viz., constitutional amendment. This method is entirely +practicable and fairly expeditious provided a sufficient number favor +the change proposed. In the one hundred years prior to the recent Income +Tax Amendment, however, only three amendments were enacted (Numbers +XIII, XIV, and XV), all of them dealing primarily with the abolition of +slavery and the civil rights of the Negro. The only one which need be +noticed here is Number XIV, which substituted a federal test of +citizenship for state tests and provided that no state should "deprive +any person of life, liberty, or property, without due process of law; +nor deny to any person within its jurisdiction the equal protection of +the laws." There was nothing new in these prohibitions. In substance +they are as old as Magna Charta and were already embodied in most if not +all of the state constitutions. The novelty lay in bringing the +question, whether a state had in fact denied due process of law to an +individual or corporation, within the jurisdiction of the federal +courts. From a legal viewpoint this was a change of great importance. To +the general student of constitutional government, however, it is less +significant than others presently to be mentioned. + +Right here it may be proper to notice a new theory of construction of +the Constitution, not yet accepted but strenuously urged and containing +enormous potentialities. This is the "doctrine of sovereign and inherent +power," i.e., the doctrine that powers of national scope for whose +exercise no express warrant is found in the Constitution are +nevertheless to be implied as inherent in the very fact of sovereignty. +This is a very different thing from the famous doctrine of implied +powers developed by Chief Justice Marshall--that all powers will be +implied which are suitable for carrying into effect any power expressly +granted. It is a favorite theory of what may be termed the Roosevelt +school. They consider that it is rendered necessary by the discovery of +fields suitable for legislative cultivation, lying outside the domain of +state power but not within the scope of any express grant of power to +the nation. As practical men they abhor the existence of such a +constitutional no man's land as nature abhors a vacuum. + +During the presidency of Mr. Roosevelt a determined effort was made by +the representatives of the Administration[1] to secure the recognition +by the Supreme Court of the doctrine of sovereign and inherent power. It +was claimed in the brief filed by the Attorney General and Solicitor +General that the doctrine had already been applied by the Court in the +Legal Tender cases.[2] The effort failed, however, the Court declaring +that any such power, if necessary to the nation, must be conferred +through constitutional amendment by the people, to whom all powers not +granted had been expressly reserved by the Tenth Amendment. + +[Footnote 1: In _Kansas v. Colorado_, 206 U.S., 46.] + +[Footnote 2: Bryce makes a statement to the same effect. "The American +Commonwealth," Vol. I, p. 383.] + +A method by which the federal power and jurisdiction have been much +extended has been the occupation by Congress, through legislation of an +exclusive character, of fields where the states had exercised a +concurrent jurisdiction. A familiar example is found in federal +bankruptcy laws. Another and striking example is the so-called "Carmack +Amendment" of the federal Interstate Commerce law. The question of +liability for loss or damage to goods in the hands of railways and other +carriers had been a fruitful field for state legislatures and state +courts. The Carmack Amendment brushed away at a single stroke whole +systems of state statutes and judicial decisions (in so far as they +affected traffic across state lines) and substituted a uniform system +under the control of the federal courts. + +The federal power has also been extended at the expense of the states +through the use of the treaty-making prerogative. The subjects upon +which Congress may legislate are limited by specific enumeration. The +treaty-making power, however, is not thus limited. Treaties may cover +any subject. It follows that while the Federal Government has no power +(for example) to regulate the descent of real property in the various +states the treaty-making power permits it, by treaties with foreign +nations, to destroy the alienage laws of the states.[1] Another very +recent example is afforded by the Migratory Bird Treaty with Great +Britain.[2] One will search the Constitution in vain for any grant of +power to the Federal Government to enact game laws. Nevertheless, under +this treaty, many state game laws have been practically annulled. + +[Footnote 1: _Hauenstein v. Lynham_, 100 U.S., 483.] + +[Footnote 2: Sustained by the Supreme Court in _Missouri v. Holland_, +252 U.S., 416.] + +But the most far-reaching method by which federal power under the +Constitution has been extended has been the adaptation--some will say +the perversion--by Congress of old grants of power to new ends. Under +the spur of public sentiment Congress has discovered new legislative +possibilities in familiar clauses of the Constitution as one discovers +new beauties in a familiar landscape. The clause offering the greatest +possibilities has been the so-called Commerce Clause, which grants to +Congress power "to regulate commerce with foreign nations, and among the +several states."[1] Under this grant of power Congress has enacted, and +the courts have upheld, a great mass of social and economic legislation +having to do only remotely with commerce. For example, the Sherman Act +and other anti-trust legislation, ostensibly mere regulations of +commerce, but actually designed for the control and suppression of +trusts and monopolies; the federal Pure Food and Drugs Act, designed to +prevent the adulteration or mis-branding of foods and drugs and check +the abuses of the patent-medicine industry;[2] the act for the +suppression of lotteries, making it a crime against the United States to +carry or send lottery tickets or advertisements across state lines;[3] +an act to prevent the importation of prize-fight films.[4] These are +only a few among many similar statutes which might be mentioned. In all +of them the motive is clear. There is no concealment about it. Their +primary object is to suppress or regulate the trusts, lotteries, +patent-medicine frauds. The regulation of commerce is merely a matter of +words and legal form. + +[Footnote 1: Art. I, Sec. 8.] + +[Footnote 2: _Hipolite Egg Company v. United States_, 220 U.S., 45.] + +[Footnote 3: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 4: _Weber v. Freed_, 239 U.S., 325.] + +Especially noteworthy is the rapidly expanding body of social +legislation--federal Employers' Liability Act, Hours of Service acts, +Child Labor Law, White Slave Act and the like, all drawn with an eye to +the commerce clause but designed to accomplish objects quite distinct +from the regulation of commerce. + +As already said, the Commerce Clause has been found most available for +purposes of such legislation. Other clauses have, however, served their +turn. For example, the grant of power to lay taxes was utilized to +destroy an extensive industry obnoxious to the dairy interests--the +manufacture of oleomargarine artificially colored to look like +butter.[1] Also to invade the police power of the States in respect of +the regulation of the sale and use of narcotic drugs.[2] Also to check +speculation and extortion in the sale of theatre tickets![3] The power +to borrow money and create fiscal agencies was utilized to facilitate +the making of loans upon farm security at low rates of interest through +the incorporation of Federal land banks or Joint Stock land banks.[4] + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +[Footnote 2: Narcotic Drug Act. Held constitutional in _United States v. +Doremus_, 249 U.S., 86; _Webb v. United States_, 249 U.S., 96.] + +[Footnote 3: Revenue Act of 1921, Title VIII, subdivisions 2 and 3.] + +[Footnote 4: _Smith v. Kansas City Title Co._, 255 U.S., 180.] + +It would be an insult to intelligence to claim that legislation such as +this, wearing the form of revenue measure or regulation of commerce but +in reality enacted with a different motive, does not involve an enormous +extension of the national power beyond what the makers of the +Constitution supposed they were conferring or intended to confer. What, +then, of the declaration by the Supreme Court with which we began, that +"to determine the extent of the grants of power we must place ourselves +in the position of the men who framed and adopted the Constitution, and +inquire what they must have understood to be the meaning and scope of +these grants." The answer must be that the Court itself has not always +adhered strictly to this test. The Court has taken the position that +when power exists under the Constitution to legislate upon a given +subject--say interstate commerce or taxation--it is not for the +judiciary to seek to correct abuses by Congress of that power, or to +question Congressional motives. As said in the decision sustaining the +constitutionality of the oleomargarine law:[1] + + The judiciary is without authority to avoid an act of Congress + lawfully exerting the taxing power, even in a case where to + the judicial mind it seems that Congress had, in putting such + power in motion, abused its lawful authority by levying a tax + which was unwise or oppressive, or the result of the + enforcement of which might be to indirectly affect subjects + not within the powers delegated to Congress, nor can the + judiciary inquire into the motive or purpose of Congress in + adopting a statute levying an excise tax within its + constitutional power. + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +The Court, however, has had great difficulty with these cases and +developed sharp differences of opinion. For example, the case upholding +the anti-lottery statute as a valid exercise of the power to regulate +commerce[1] was twice ordered for reargument and finally decided by a +bare majority of 5 to 4. The Child Labor Law of 1916 was declared +unconstitutional[2] and the Narcotic Drug Act was sustained[3] by a +similar vote, 5 to 4. In the Narcotic Drug case the four dissenting +justices, speaking through Chief Justice White, characterized portions +of the statute as "beyond the constitutional power of Congress to enact +... a mere attempt by Congress to exert a power not delegated, that is, +the reserved police power of the states." In the Lottery case the +dissenting opinion of the four, written by Chief Justice Fuller, +concludes: + + I regard this decision as inconsistent with the views of the + framers of the Constitution, and of Marshall, its great + expounder. Our form of government may remain notwithstanding + legislation or decision, but, as long ago observed, it is with + governments, as with religions, the form may survive the + substance of the faith. + +[Footnote 1: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86.] + +Whatever view one may hold to-day as to the question of expediency, no +thoughtful mind can escape the conclusion that, in a very real and +practical sense, the Constitution has changed. In a way change is +inevitable to adapt it to the conditions of the new age. There is +danger, however, that in the process of change something may be lost; +that present-day impatience to obtain desired results by the shortest +and most effective method may lead to the sacrifice of a principle of +vital importance. + +The men who framed the Constitution were well advised when they sought +to preserve the integrity of the states as a barrier against the +aggressions and tyranny of the majority acting through a centralized +power. The words "state sovereignty" acquired an odious significance in +the days of our civil struggle, but the idea for which they stand is +nevertheless a precious one and represents what is probably America's +most valuable contribution to the science of government. + +We shall do well not to forget the words of that staunch upholder of +national power and authority, Salmon P. Chase, speaking as Chief Justice +of the Supreme Court in a famous case growing out of the Civil War:[1] + + The preservation of the states, and the maintenance of their + governments, are as much within the design and care of the + Constitution as the preservation of the Union and the + maintenance of the National Government. The Constitution, in + all its provisions, looks to an indestructible Union composed + of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700.] + + + + +IV + +THE EIGHTEENTH AMENDMENT + + +Could Washington, Madison, and the other framers of the Federal +Constitution revisit the earth in this year of grace 1922, it is likely +that nothing would bewilder them more than the recent Prohibition +Amendment. Railways, steamships, the telegraph, the telephone, +automobiles, flying machines, submarines--all these developments of +science, unknown in their day, would fill them with amazement and +admiration. They would marvel at the story of the rise and downfall of +the German Empire; at the growth and present greatness of the Republic +they themselves had founded. None of these things, however, would seem +to them to involve any essential change in the beliefs and purposes of +men as they had known them. The Prohibition Amendment, on the contrary, +would evidence to their minds the breaking down of a principle of +government which they had deemed axiomatic, the abandonment of a purpose +which they had supposed immutable. As students of the science of +government they would realize that the most fundamental change which can +overtake a free people is a change in their frame of mind, for to that +everything else must sooner or later conform. + +The amendment was proposed by Congress in 1917 and proclaimed as having +been ratified in 1919.[1] + +[Footnote 1: 40 Stat. 1050, 1941.] + +The comparative ease and dispatch with which it was put through argue +alike the skill and vigor of its sponsors and the strength of the +sentiment behind them. Legal warfare over the amendment did not end, +however, with its ratification by the legislatures of the requisite +number of states. Passions had been aroused. Vast property interests +were menaced. Moreover, in the minds of students of government the +amendment stirred misgivings which were quite independent of the +sentimental and material considerations involved. Eminent counsel were +retained and a determined effort was made to defeat or nullify the +amendment in the courts. To this end suits were begun in various +jurisdictions to test its validity and enjoin the enforcement of the +Volstead Act, which sought to carry it into effect. Two sovereign +states (Rhode Island and New Jersey) joined in the attack and through +their respective Attorneys General brought original suits in the United +States Supreme Court to have the amendment declared invalid. Seven test +cases were argued together in the Supreme Court, five days in all being +devoted to the argument. It will be of interest to note some of the +reasons advanced against the validity of the amendment, as they are +summarized in the official report.[1] + +[Footnote 1: National Prohibition cases, 253 U.S., 350.] + +The Attorney General of the State of Rhode Island argued[1] that: + + The amendment is an invasion of the sovereignty of the + complaining state and her people, not contemplated by the + amending clause of the Constitution. The amending power ... is + not a substantive power but a precautionary safeguard inserted + incidentally to insure the ends set forth in that instrument + against errors and oversights committed in its formation. + Amendments, as the term indeed implies, are to be limited to + the correction of such errors.... + + It is "This Constitution" that may be amended. "This + Constitution" is not a code of transient laws but a framework + of government and an embodiment of fundamental principles. By + an amendment, the identity or purpose of the instrument is + not to be changed; its defects may be cured, but "This + Constitution" must remain. It would be the greatest absurdity + to contend that there was a purpose to create a limited + government and at the same time to confer upon that government + a power to do away with its own limitations. + +[Footnote 1: Id., pp. 354-356.] + +The Attorney General of the State of New Jersey:[1] + + attacked the amendment as an invasion of state sovereignty not + authorized by the amending clause and as not, properly + speaking, an amendment, but legislation, revolutionary in + character. + +[Footnote 1: 253 U.S., pp. 356-357.] + +The eminent Chicago lawyer, Levy Mayer, and ex-Solicitor General William +Marshall Bullitt, contended,[1] among other things, that + + the power of "amendment" contained in Art. V does not + authorize the invasion of the sovereign powers expressly + reserved to the states and the people by the Ninth and Tenth + Amendments, except with the consent of _all_ the states.... + + If amendment under Art. V were unlimited, three-fourths of the + legislatures would have it in their power to establish a state + religion and prohibit free exercise of other religious + beliefs; to quarter a standing army in the houses of citizens; + to do away with trial by jury and republican form of + government; to repeal the provision for a president; and to + abolish this court and with it the whole judicial power + vested by the Constitution. + +[Footnote 1: Id., pp. 357-361.] + +Elihu Root, preëminent as a constitutional lawyer, appeared as counsel +in one of the test cases. His main contention was summarized in his +brief as follows:[1] + + (a) That the authority to amend the Constitution is a + continuance of the constitution-making power and as such is a + power quite different and altogether distinct from the + law-making power under the Constitution. + + (b) That a grant of the one power does not include or imply a + grant of the other. + + (c) That the natural and ordinary meaning of the words used in + Article V of the Constitution [the article providing for + amendment] limits the power granted to the function of + constitution-making as distinguished from ordinary law-making. + + (d) That the purposes of the grant imply the same limitation. + + (e) That other parts of the Constitution--notably Article + I--express the same limitation. + + (f) That the existence of authority under Article V to enact + ordinary laws regulating the conduct of private citizens under + color of amendment, would be so in conflict with the + fundamental principles and spirit of the Constitution that + such a construction is not permissible. + +[Footnote 1: For the Reporter's Summary see 253 U.S., pp. 361-367.] + +There were other arguments of a more technical character. Article V of +the Constitution provides that the Congress shall propose amendments +"whenever two-thirds of both Houses shall deem it necessary." It was +urged that this required the affirmative vote of two-thirds of the +entire membership of both Houses, and that two-thirds of a quorum was +not sufficient. It was also urged that the proposal was fatally +defective because it did not on its face declare that both Houses deemed +the amendment necessary. It was also argued that the amendment had not +been effectively ratified in certain of the states where it had been +approved by the state legislature (notably Ohio) because under the +constitutions of those states it was subject to a referendum to the +people before becoming effective. The Supreme Court of Ohio had so +decided[1] and a referendum had actually been held in that state, +resulting in a rejection of the amendment by popular vote. Various +arguments were also advanced based on the puzzling phraseology of +Section 2 of the amendment that "the Congress and the several States +shall have _concurrent power_ to enforce this article by appropriate +legislation." The eminent constitutional lawyer, W.D. Guthrie, addressed +himself particularly to this phase of the controversy.[2] It was urged +with much force that the effect of these words was to save the rights of +the states, in respect of intrastate matters, by requiring their +concurrence in any legislation of Congress regulating such matters. + +[Footnote 1: See _Hawke v. Smith_, 253 U.S., 221.] + +[Footnote 2: 253 U.S., pp. 368-380.] + +All the arguments advanced were alike unavailing. The nine members of +the Supreme Court were unanimous in sustaining the validity of the +amendment, holding that it "by lawful proposal and ratification, has +become a part of the Constitution, and must be respected and given +effect the same as other provisions of that instrument."[1] The Court, +however, adopted the very unusual course of deciding the various cases +before it (affirming four, reversing one, and dismissing the original +bills filed by the states of Rhode Island and New Jersey) without any +written opinion. Speaking through Mr. Justice Van Devanter, the Court +merely announced its conclusions. This was an unprecedented procedure in +a case involving constitutional questions of such importance. It drew +criticism from some of the members of the Court itself. Chief Justice +White said:[2] + + I profoundly regret that in a case of this magnitude, + affecting as it does an amendment to the Constitution dealing + with the powers and duties of the national and state + governments, and intimately concerning the welfare of the + whole people, the court has deemed it proper to state only + ultimate conclusions without an exposition of the reasoning by + which they have been reached. + +and proceeded to announce the reasons which had actuated him personally. +Justice McKenna said:[3] + + The court declares conclusions only, without giving any + reasons for them. The instance may be wise--establishing a + precedent now, hereafter wisely to be imitated. It will + undoubtedly decrease the literature of the court if it does + not increase lucidity. + +[Footnote 1: Id., p. 386.] + +[Footnote 2: Id., p. 388.] + +[Footnote 3: 253 U.S., p. 393.] + +Perhaps a hint as to the reasons actuating the majority of the Court may +be found in the brief concurring memorandum of Mr. Justice McReynolds. +He said:[1] + + I do not dissent from the disposition of these causes as + ordered by the Court, but confine my concurrence to that. It + is impossible now to say with fair certainty what construction + should be given to the Eighteenth Amendment. Because of the + bewilderment which it creates, a multitude of questions will + inevitably arise and demand solution here. In the + circumstances, I prefer to remain free to consider these + questions when they arrive. + +[Footnote 1: Id., p. 392.] + +Justices McKenna and Clarke dissented from portions of the decision +dealing with the question of the proper construction of the grant of +"concurrent power" to Congress and the States, and wrote opinions +setting forth the grounds of their dissent. Both Justices, however, +concurred in affirming the validity of the amendment. + +Thus the legal battle was fought and lost. The amendment had withstood +attack and men's minds settled back to the practical question of its +enforcement. + +Upon that question, however difficult and interesting, we do not here +enter. Our present concern is to ascertain as nearly as may be the true +place of the amendment in the development of American constitutional +law. + +That it affords startling evidence of a radical departure from the views +of the founders of the Republic is beyond question. Such a blow at the +prerogatives of the states, such a step toward centralization, would +have been thought impossible by the men of 1787. It would be a mistake, +however, to view the departure as having originated with this amendment. +Rather is the amendment to be regarded as merely a spectacular +manifestation of a change which was already well under way. + +In the early days of the Republic the dominating purpose was the +protection of state prerogatives, so far as that was compatible with the +common safety. The first eleven amendments of the Federal Constitution +were all limitations upon federal power. Not until the people of the +various states had been drawn together and taught to think in terms of +the nation by a great Civil War was there any amendment which enlarged +the powers of the National Government. The three post-war amendments +(Nos. XIII, XIV, and XV) marked a distinct expansion of federal power +but one that seemed to find its justification, as it found its origin, +in the necessity for effectuating the purposes of the war and protecting +the newly enfranchised Negroes. + +A long period of seeming inactivity, more than forty years, elapsed +before another constitutional amendment was adopted.[1] The inaction, +however, was apparent rather than real. As matter of fact, a change was +all the time going on. In a very real sense the Constitution was being +altered almost from year to year. That the alterations did not take the +shape of formal written amendments was largely due to the tradition of +constitutional immobility. The idea had grown up that the machinery of +amendment provided by the Fathers was so slow and cumbersome that it was +impossible as a practical matter to secure a change by that method +except under stress of war or great popular excitement. That idea is now +exploded. We of to-day know better, having seen the Income Tax Amendment +(No. XVI), the Election of Senators by Popular Vote Amendment (No. +XVII), the Prohibition Amendment (No. XVIII), and the Woman Suffrage +Amendment (No. XIX) go through within a period of seven years. For +generations, however, the tradition of constitutional immobility held +sway and the forces of change worked through channels that seemed easier +and less obstructed. + +[Footnote 1: No. XVI, the Income Tax Amendment, ratified in 1913.] + +The principal channel has been congressional legislation. Congress has +found ways of reaching by indirection objects which could not be +approached directly. Under the express grants of power contained in the +Constitution statutes have been enacted which were really designed to +accomplish some ulterior object. A striking example is found in the +child labor laws, discussed more at length in a subsequent chapter. +Congress at first sought to regulate child labor by a statute enacted +ostensibly as a regulation of commerce under the Commerce Clause of the +Constitution. The Supreme Court held the Act unconstitutional as +exceeding the commerce power of Congress and invading the powers +reserved to the states.[1] Thereupon Congress practically reënacted it, +coupled with a provision for a prohibitive tax on the profits of +concerns employing child labor, as part of a revenue act enacted under +the constitutional grant of power to lay taxes.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 2: Revenue Act of 1918, Title XII.] + +The assumption by the National Government of jurisdiction over the +manufacture and sale of intoxicating liquors is no more of an +encroachment on the prerogatives of the states than is its assumption of +jurisdiction over child labor and the use of narcotic drugs. We come +back, therefore, to the proposition that the Prohibition Amendment is to +be regarded less as a departure in American fundamental law than as a +spectacular manifestation of a change already well under way. + +The change, however much students of our institutions may deplore it, is +not difficult to explain. The earlier solicitude for state rights was in +a sense accidental. It was based on sentiment and mutual jealousies +among the colonies rather than on any fundamental differences in race, +beliefs, or material interests. The traditions behind it, while strong, +were of comparatively recent growth. When they entered the Union the +colonies were still new and undeveloped. As men died and their sons +succeeded them prejudices gradually yielded and sentiment changed. +Moreover, various other forces--immigration, free trade among the +states, the growth of railways and other nationwide industries, foreign +wars--have been at work to obliterate state lines. + +Advocates of the old order see in the change a breaking down of the +principle of local self-government. To their minds the danger of +majority tyranny, made possible by a centralization of power in a +republic of such vast extent and varied interests, outweighs all the +advantages of national uniformity and efficiency. Advocates of the new +order think otherwise. They argue, moreover, that the states have become +too great and populous to serve as units for purposes of home rule; +that their boundaries are for the most part artificial and correspond to +no real distinctions in the ordinary life of men. They assert that the +instinct for local self-government remains as strong as it ever was, and +instance the resentment of New York City over interference from Albany. + +The average man gives little thought to the constitutional aspect of the +controversy. His interest in the prohibition movement is focused on +other features which seem to him of more immediate concern. And yet, did +he but realize it, the constitutional aspect transcends all the others +in its importance for the future welfare and happiness of himself, his +children, and his country. + + + + +V + +THE NINETEENTH AMENDMENT + + +A prudent man touches the question of woman suffrage gingerly. Many +fingers have been burnt in that fire and its embers are not yet dead. +Some mention of the Nineteenth Amendment seems necessary, however, in +any discussion of federal encroachment on state power, and it may be +possible to approach the suffrage movement from the standpoint of +constitutional law without getting upon controversial ground. + +The United States Constitution as originally adopted did not prescribe +who should be entitled to vote. That matter was left entirely in the +hands of the states. The Constitution provided[1] that, for the election +of members of the House of Representatives, "the electors in each state +shall have the qualifications requisite for electors of the most +numerous branch of the state legislature." It was further provided that +Senators should be chosen by the legislatures of the states[2] and that +the President and Vice-president should be chosen by presidential +electors appointed in such manner as the state legislatures might +direct.[3] These were the only elective federal officials. + +[Footnote 1: Article I, Section 2.] + +[Footnote 2: Article I, Section 3.] + +[Footnote 3: Article II, Section 1.] + +While the states were thus left in full control, it does not follow that +the matter was deemed wholly outside the proper scope of national +authority. No argument is necessary to demonstrate that the regulation +of the suffrage in national elections is or may be a matter of national +concern. The question of prescribing the qualifications of voters in +such elections was much debated in the Convention which framed the +Constitution.[1] Some members were in favor of prescribing a property +qualification and limiting the suffrage to freeholders. It was finally +decided, however, to accept the qualifications prescribed by state law. +In adopting this plan the Convention followed the line of least +resistance. The qualifications of voters in the various states +differed.[2] Most states required a property qualification, but some +did not. It was felt that to attempt to impose a uniform rule on all the +states would arouse opposition and create one more obstacle to be +overcome in the formidable task of getting the Constitution ratified. + +[Footnote 1: See e.g., Farrand, "Records of the Federal Convention," +Vol. II, p. 201 et seq.] + +[Footnote 2: For a statement of the qualifications in the various states +see _Minor v. Happersett_, 21 Wall., 162.] + +There the matter rested, with suffrage qualifications regulated entirely +by state law, until after the Civil War. Meanwhile, the states had been +abolishing property tests, and universal male suffrage had been written +into state constitutions. The cry for woman suffrage had begun, but as +yet it was only a still small voice, inaudible to legislators. + +After the Civil War the problem of protecting the emancipated slaves had +to be dealt with, and three constitutional amendments (Nos. XIII, XIV, +and XV) were adopted with that end primarily in view. Number XIII, +ratified in 1865, formally abolished slavery. Number XIV, ratified in +1868, extended citizenship to all persons born in the United States and +provided (among other things) that no state should abridge the +privileges or immunities of citizens of the United States. Number XV, +ratified in 1870, provided that "the right of citizens of the United +States to vote shall not be denied or abridged by the United States or +by any State on account of race, color, or previous condition of +servitude." Here was the entering wedge of federal interference. The +amendments did not purport to deal with woman suffrage, but the pioneers +of the suffrage movement thought they discovered in them a means of +advancing their cause and lost no time in putting the matter to the +test. Susan B. Anthony voted at Rochester, N.Y., in an election for a +representative in Congress, claiming that the restriction of voting to +males by the constitution and laws of New York was void as a violation +of the Fourteenth Amendment providing that "no state shall make or +enforce any law which shall abridge the privileges or immunities of +citizens of the United States." She was indicted for voting unlawfully, +and on her trial before Justice Hunt of the United States Supreme Court, +sitting at Circuit, the Court directed the jury to find a verdict of +guilty and imposed a fine of $100 and costs.[1] + +[Footnote 1: _United States v. Anthony_, 11 Blatchford, 200.] + +Mrs. Virginia Minor raised a similar question in the courts of Missouri. +The Missouri constitution limited the right to vote to male citizens. +Mrs. Minor applied for registration as a voter, and on being refused +brought suit against the Registrar of Voters on the ground that this +clause of the Missouri constitution was in violation of the Fourteenth +Amendment. The Missouri state courts decided against her, and the case +was taken to the Supreme Court of the United States where the decision +of the state courts was affirmed.[1] The Supreme Court held in effect +that while Mrs. Minor was a citizen that fact alone did not make her a +voter; that suffrage was not coextensive with citizenship, either when +the Constitution was adopted or at the date of the Fourteenth Amendment, +and was not one of the "privileges and immunities" guaranteed by that +amendment. + +[Footnote 1: _Minor v. Happersett_, 21 Wall., 162.] + +A similar decision was rendered in the matter of Mrs. Myra Bradwell's +application for a license to practise law in Illinois.[1] The Supreme +Court held that the right to practise law in the state courts was not a +privilege or immunity of a citizen of the United States within the +meaning of the Fourteenth Amendment, and affirmed the decision of the +Illinois Court denying Mrs. Bradwell's application. + +[Footnote 1: _Bradwell v. Illinois_, 16 Wall., 130.] + +The failure of these attempts to turn the Fourteenth Amendment to the +advantage of the woman suffrage movement in no wise checked the +movement or discouraged its leaders. They redoubled their efforts among +the separate states, and worked to such good purpose that the opposition +presently began to take on the aspect of a forlorn hope. "Votes for +Women" became an accomplished fact in many states, and appeared on the +verge of accomplishment in most of the others. Some states, however, +were still holding out when the leaders of the movement, impatient of +further delay and determined to coerce the recalcitrants, took the +matter into the national arena and procured the proposal and +ratification of an amendment to the Federal Constitution. The amendment +provides: + + The right of citizens of the United States to vote shall not + be denied or abridged by the United States or by any state on + account of sex. + +In other words, it adopts verbatim the phraseology of the Fifteenth +Amendment, merely substituting the word "sex" for the words "race, +color, or previous condition of servitude." + +So much for the historical background of the so-called Susan B. Anthony +Amendment. It remains to consider just how far the amendment +constitutes an encroachment by the Federal Government on the powers of +the states. + +In so far as it affects the qualifications of voters at national +elections (i.e., for president, senators, representatives) the +encroachment is more apparent than real. As has already been pointed +out, this is essentially a national question, and the Constitution +adopted the suffrage qualifications prescribed by state law, not as a +matter of principle, but for reasons of expediency and convenience. + +In so far, however, as the amendment imposes woman suffrage on the +states in elections of state and local officials the situation is +entirely different. That staunch advocate of national power, Alexander +Hamilton, said in the _Federalist_:[1] + + Suppose an article had been introduced into the Constitution, + empowering the United States to regulate the elections for the + particular states, would any man have hesitated to condemn it, + both as an unwarrantable transposition of power, and as a + premeditated engine for the destruction of the state + governments? + +[Footnote 1: _Federalist_ LIX.] + +What Hamilton scouted as impossible has been accomplished in the +Nineteenth Amendment. It in effect strikes out the word "male" from the +suffrage provisions of state constitutions. It overrides state policy +and interferes with the right of states to manage their own affairs. +From the theoretical standpoint a more serious inroad on state +prerogatives would be hard to find. Control of the suffrage is one of +the fundamental rights of a free state. It belonged to the North +American states before their union, and was not surrendered to the +National Government when the union was effected. Moreover, the +encroachment has a very practical side. To confer the suffrage on the +educated women of Connecticut was one thing; to confer it on the Negro +women of Alabama was quite a different matter, involving different +considerations. The amendment took no heed of such differences but +imposed a uniform rule on all the states, regardless of local prejudices +or conditions. + +It is true that a somewhat similar encroachment on state power had been +made by the Fifteenth Amendment, designed to enfranchise the Negroes. +That amendment, however, had its origin in conditions growing out of the +Civil War, and claimed its justification in the necessity for protecting +the freed slaves against hostile state action. It was avowedly an +emergency measure, and the success with which it has been nullified in +some quarters testifies to the unwisdom of forcing such measures upon +reluctant states. + +The conditions surrounding the adoption of the Nineteenth Amendment were +altogether different. Few people take seriously the alleged analogy +between the women and the slaves. The constitutional method--action +through the separate states--was being pursued with signal success. The +states were rapidly falling in line. Most of them had already granted +woman suffrage or were ready to grant it. There was no overmastering +need for coercing the states that were not yet ready. An impartial +student of the period will be apt to conclude that the Nineteenth +Amendment was the product of impatience rather than necessity. + +Someone may ask, "What effect will the granting of votes to women have +on the problem of preserving the constitutional equilibrium?" The +ultimate power lies with the voters, and the women with votes now equal +or outnumber the men. What is the reaction of women voters likely to be +toward questions of political theory? + +Ours is a governmental scheme of extreme complexity. As with animal +organisms so with political systems, the higher they rise in the scale +of development the more complicated they tend to become. An absolute +monarchy is simplicity itself compared with our dual system. To maintain +the proper adjustment of such a machine requires intelligence of a high +order. The machine will not run itself and male tinkers have abundantly +demonstrated that it is not fool-proof. But something more is required +than mere intelligence. There must be, at least among the leaders, an +instinct for governmental problems as distinguished from those of a +merely social or personal character; an ability to recognize and a +willingness to conform to underlying principles. + +How will the women voters meet this test? Granting (what few will +dispute) that their intelligence at least equals that of the men, will +they be as likely as men to look beyond the immediate social welfare +problem to the governmental principle at stake? Will an abstract +proposition hold its own in their minds against a concrete appeal? + +We do not attempt to answer these questions, but they contain food for +thought. + + + + +VI + +CONGRESS _versus_ THE SUPREME COURT--THE CHILD LABOR LAWS + + +The present Federal Revenue Act is noteworthy in more aspects than its +complexity and the disproportionate burden cast on possessors of great +wealth. To students of our form of government it is particularly +interesting because of provisions[1] purporting to impose a tax on +employers of child labor, for these represent an attempt by Congress to +nullify a decision of the Supreme Court and grasp a power belonging to +the states. The story of these provisions throws a flood of light on a +method by which our Constitution is being changed. + +[Footnote 1: Revenue Act of 1921, Title XII.] + +The evils of child labor have long engaged the attention of +philanthropists and lawmakers. In comparatively recent years child labor +laws are said to have been enacted in every state of the Union. These +statutes, however, lacked uniformity. Some of them were not stringent +enough to satisfy modern sentiment. Moreover, commercial considerations +entered into the reckoning. Industries in states where the laws were +stringent were found to be at a disadvantage in comparison with like +industries in states where the laws were lax, and this came to be +regarded as a species of unfair competition. The advantages of +uniformity and standardization seemed obvious from both the +philanthropic and the commercial viewpoints, and Congress determined to +take a hand in the matter. + +No well-informed person supposed for a moment that the regulation of +child labor was one of the functions of the General Government as those +functions were planned by the makers of the Constitution. The United +States Supreme Court had declared over and over again that such matters +were the province of the states; that "speaking generally, the police +power is reserved to the states and there is no grant thereof to +Congress in the Constitution."[1] For some years, however, Congress had +been finding ways to legislate indirectly upon matters which it had no +power to approach directly. Under the grant of power in the Constitution +"to regulate commerce with foreign nations and among the several +States,"[2] Congress had enacted laws purporting to regulate commerce +but in reality designed for the suppression or regulation of some other +form of activity. These enactments had for the most part been sustained +as constitutional by the Supreme Court (though with misgivings and sharp +differences of opinion), the Court holding that it could not pass on the +motives for congressional action. The enactment of a law regulating +child labor seemed therefore but another step along a trail already +blazed, and Congress determined to take that step. + +[Footnote 1: _Keller v. United States_, 213 U.S., 138.] + +[Footnote 2: Art. I, Sec. 8.] + +The statute enacted by Congress[1] prohibited transportation in +interstate commerce of goods made at a factory in which, within thirty +days prior to their removal therefrom, children under the age of +fourteen years had been employed or permitted to work, or children +between the ages of fourteen and sixteen had been employed or permitted +to work more than eight hours in any day, or more than six days in any +week, or after the hour of 7 P.M. or before the hour of 6 A.M. The +constitutionality of the act was at once challenged and suit brought to +test the question. The Supreme Court held, by a vote of five to +four,[2] that Congress had overstepped its power. The previous decisions +which had upheld somewhat similar inroads on the police power of the +states were distinguished and the act was declared unconstitutional. + +[Footnote 1: Act of September 1, 1916, 39 Stat., 675.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +The distinction drawn by the majority of the Court between this and +previous decisions was a narrow one and its validity has been questioned +by some writers. It has nowhere been more clearly explained than in an +address delivered before a body of lawyers by a former member of the +Court.[1] Mr. Hughes said: + + There has been in late years a series of cases sustaining the + regulation of interstate commerce, although the rules + established by Congress had the quality of police regulation. + This has been decided with respect to the interstate + transportation of lottery tickets, of impure food and drugs, + of misbranded articles, of intoxicating liquors, and of women + for the purpose of debauchery. It was held to be within the + power of Congress to keep "the channels of interstate commerce + free from immoral and injurious uses." But the Court in this + most recent decision has pointed out that in each of these + cases "the use of interstate commerce was necessary to the + accomplishment of harmful results." The Court, finding this + element to be wanting in the Child Labor Case, denied the + validity of the act of Congress. The Court found that the + goods shipped were of themselves harmless. They were permitted + to be freely shipped after thirty days from the time of + removal from the factory. The labor of production, it was + said, had been performed before transportation began and thus + before the goods became the subject of interstate commerce. + + The fundamental proposition thus established is that the power + over interstate commerce is not an absolute power of + prohibition, but only one of regulation, and that the prior + decisions in which prohibitory rules had been sustained rested + upon the character of the particular subjects there involved. + It was held that the authority over interstate commerce was to + regulate such commerce and not to give Congress the power to + control the states in the exercise of their police power over + local trade and manufacture. + +[Footnote 1: Charles E. Hughes, President's Address, Printed in Year +Book of New York State Bar Association, Vol. XLII, p. 227 et seq.] + +Congress did not receive this decision of the Supreme Court +submissively. On the contrary, plans were laid to nullify it. The effort +to legislate on child labor under cover of the power to regulate +commerce having failed, recourse was had to the constitutional grant of +power to lay taxes. Within six months after the decision of the Supreme +Court declaring the act unconstitutional was announced, another statute +similar in purpose and effect was enacted as part of a Federal Revenue +Act.[1] This act provided for an additional tax of ten per cent. of the +net profits received from the sale or distribution of the product of any +establishment in which children under the age of fourteen years had been +employed or permitted to work or children between the ages of fourteen +and sixteen had been employed or permitted to work more than eight hours +in any day or more than six days in any week or after the hour of 7 P.M. +or before the hour of 6 A.M. during any portion of the taxable year. In +other words, the law which had been declared void was substantially +reënacted, with the substitution of a prohibitive tax for the clause +prohibiting transportation in interstate commerce. + +[Footnote 1: Revenue Act of 1918, Title XII.] + +There was no pretense that this act was enacted for the purpose of +raising revenue. The revenue feature was merely legislative camouflage. +To quote the words of Justice Holmes in a recent case,[1] "Congress gave +it the appearance of a taxing measure in order to give it a coating of +constitutionality." + +[Footnote 1: _United States v. Jin Fuey Moy_, 241 U.S., 394.] + +The debate in the Senate was highly illuminating.[1] Its sponsors +admitted that the measure was not expected or intended to produce +revenue but was designed to regulate child labor and nullify the +decision of the Supreme Court. Senators learned in the law conceded that +if this purpose and effect were declared on the face of the act, or were +necessarily inferable from its provisions, it must inevitably be +declared unconstitutional. Reliance was placed, however, on the facts +that the act was entitled "A bill to raise revenue," and that its +provisions did not necessarily, on their face, belie this label. It was +argued that the Supreme Court would be bound, under its own previous +rulings, to treat the act as if it were what it purported on its face to +be--a revenue measure--and to ignore common knowledge and senatorial +admissions to the contrary. The measure passed the Senate by a +substantial majority and was enacted as part of the revenue bill then +under consideration, from which it has been carried forward into the +present revenue law. + +[Footnote 1: See "Congressional Record" of December 18, 1918.] + +There the matter stands at this writing. A District Court judge has +declared the new act unconstitutional but the question has not yet been +passed upon by the Supreme Court. + +It would be venturesome to attempt to predict what the Supreme Court +will do about it. Many constitutional lawyers seem to think that +Congress has succeeded in its attempt and that the act will be +sustained. Certainly there are strong precedents pointing that way. +Three in particular will be relied upon--the Veazie Bank case, the +Oleomargarine case and the Narcotic Drug Act case. + +In the Veazie Bank case[1] the Supreme Court upheld the validity of a +so-called tax law whose purpose and effect were to suppress the +circulation of notes of the state banks. In the Oleomargarine case[2] +the Court upheld a tax whose purpose and effect were to suppress the +manufacture and sale of oleomargarine artificially colored to look like +butter. In the Narcotic Drug case[3] the Court upheld a tax imposed by +the so-called Harrison Act[4] whose purpose was to regulate the sale and +use of narcotic drugs. In each of these cases there could be no doubt in +the mind of any intelligent man as to the motive for the enactment. The +Court has uniformly maintained, however, that + + when Congress acts within the limits of its constitutional + authority, it is not the province of the judicial branch of + the Government to question its motives.[5] + +[Footnote 1: _Veazie Bank v. Fenno_, 8 Wall., 533, decided in 1870.] + +[Footnote 2: _McCray v. United States_, 195 U.S., 27, decided in 1904.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86, decided in 1919.] + +[Footnote 4: 38 Stat., 785.] + +[Footnote 5: _Smith v. Kansas City Title Company_, 255 U.S., 180, 210.] + + +In the Narcotic Drug Act case[1] the Court held + + While Congress may not exert authority which is wholly + reserved to the states, the power conferred by the + Constitution to levy excise taxes, uniform throughout the + United States, is to be exercised at the discretion of + Congress; and, where the provisions of the law enacted have + some reasonable relation to this power, the fact that they may + have been impelled by a motive, or may accomplish a purpose, + other than the raising of revenue, cannot invalidate them; nor + can the fact that they affect the conduct of a business which + is subject to regulation by the state police power. + +[Footnote 1: _United States v. Doremus_, 249 U.S., 86.] + +It is true that, while the Supreme Court may not question congressional +motives, it cannot escape the obligation to construe a statute in the +light of its true nature and effect. The Court has said:[1] + + The direct and necessary result of a statute must be taken + into consideration when deciding as to its validity, even if + that result is not in so many words either enacted or + distinctly provided for. In whatever language a statute may be + framed, its purpose must be determined by its natural and + reasonable effect. + +[Footnote 1: _Collins v. New Hampshire_, 171 U.S., 30.] + +As already indicated, however, the nature and effect of a statute must +ordinarily be determined from the form and contents of the act itself, +rather than from outside sources, and the measure under consideration +purports to be a revenue act. + +In the light of the decisions and principles of interpretation to which +reference has been made, the case against the constitutionality of the +act may seem well-nigh hopeless. The fact remains, however, that +Congress has not met the fundamental objection raised by the Supreme +Court. The Court declared the former act unconstitutional, not only +because it transcended the power of Congress under the particular +provision of the Constitution then invoked, viz., the Commerce Clause, +but also on the broad ground of state rights, because it "exerts a power +as to a purely local matter to which the federal authority does not +extend." It is difficult to see how this objection is obviated by +reënacting the act as a revenue measure. Under the circumstances perhaps +the apprehensive foes of federal encroachment should withhold their +lamentations until the Supreme Court has spoken again.[1] + +[Footnote 1: Since this chapter was put into print the Court has spoken. +In _Bailey v. The Drexel Furniture Co._ (decided May 15, 1922) the Child +Labor Tax Law was pronounced unconstitutional. The Court, while +conceding that it must interpret the intent and meaning of Congress from +the language of the act, held that the act on its face is an attempt to +regulate matters of state concern by the use of a so-called tax as a +penalty. The opinion of the Court, written by Chief Justice Taft, is an +emphatic assertion of the duty and function of the Court to preserve the +constitutional equilibrium between nation and states.] + + + + +VII + +STATE RIGHTS AND THE SUPREME COURT + + +A century ago the United States Supreme Court was the bulwark of +national power against the assaults and pretensions of the states. +To-day it is the defender of the states against the encroachments of +national power. Let no one suppose, however, that this is because the +Court itself has faced about. On our revolving planet a ship may be +sailing toward the sun at sunrise and away from the sun in the afternoon +without having changed its course. The Supreme Court has been the most +consistent factor in our governmental scheme. While there have been +differences of viewpoint between liberal constructionists and strict +constructionists among its members, the Court on the whole has steered a +fairly straight course. What has really altered is the environment in +which the Court moves. The earth has been turning on its axis. The frame +of mind of the people who compose states and nation has changed. + +At the outset (to cling for a moment to our nautical metaphor) the Court +was obliged to put forth on an unknown sea. Its sailing orders under the +new Constitution were unique. Precedents, those charts and lighthouses +of the judicial mariner, were lacking. Progress was tentative and +groping. Little wonder therefore that at first the business of the Court +was meager and membership in its body seemed less attractive than +membership in the judiciary of a state. Robert Hanson Harrison, one of +President Washington's original appointees to the Supreme bench, +declined to serve, preferring to accept a state judicial office. John +Rutledge, another of the original appointees, resigned after a few +months, preferring the position of Chancellor of his native state to +which he had been chosen. John Jay, the first Chief Justice, resigned to +become Governor of New York, and later declined a reappointment as Chief +Justice in words indicating entire lack of faith in the powers and +future of the Court. + +Nevertheless, the first period of the Court was by no means barren of +achievement. A beginning was made. The supremacy of the national +authority under the new Constitution was asserted. So stoutly indeed was +it maintained in the memorable case of _Chisholm v. Georgia_,[1] that +the country was thrown into a ferment. The Court had entertained a suit +against a sovereign state by a private citizen of another state and +rendered a decision in favor of the private citizen. The legislature of +the sovereign state concerned (Georgia) responded by a statute +denouncing the penalty of death against anyone who should presume to +enforce any process upon the judgment within its jurisdiction. The +matter was taken up in Congress and resulted in the proposal, and +subsequent ratification by the states, of a constitutional amendment +designed to prevent such actions in future.[2] It has been the fashion +to speak of this incident as a striking example of the recall of +judicial decisions. Such indeed it was. The decision did not suit the +popular frame of mind and was promptly overruled in the method +prescribed by the Constitution. It went a long way, however, toward +establishing the Supreme Court as a power to be reckoned with on the +side of national supremacy and authority. + +[Footnote 1: 2 Dallas, 419, decided in 1793.] + +[Footnote 2: Amendment XI.] + +Three years later the Court again took occasion to assert the national +supremacy in no uncertain fashion. The case was _Ware v. Hylton_[1] and +the Court laid down the proposition that a treaty of the Federal +Government (in this case the treaty of peace with Great Britain) +nullified previous state laws dealing with the subject matter. It is an +interesting circumstance that one of the counsel on the losing side in +this case was John Marshall of Virginia, and that this was the only case +he ever argued before the tribunal through which he was destined to play +so momentous a part in history. + +[Footnote 1: 3 Dallas, 199, decided in 1796.] + +In the annals of the Supreme Court and the development of American +constitutional law the name of John Marshall stands preëminent. He was +appointed Chief Justice by President John Adams, and took his seat on +the Bench at the beginning of the new century (February 4, 1801). He was +without judicial experience, but his record in other fields of activity +and his well-known Federalist principles pointed him out as a man to be +reckoned with and explain the aversion with which he was viewed by +Thomas Jefferson, the incoming President. The breach between the +President and the Chief Justice was widened by some of the early +decisions of the latter upholding the supremacy of the National +Government and the powers of the Supreme Court, notably the famous case +of _Marbury v. Madison_,[1] in which was asserted the power of the Court +to declare an act of Congress void as in conflict with the Constitution. +Some years elapsed, however, before a case was decided which squarely +involved a conflict between the powers of the Federal Government and the +powers of a state. The issue came up in the case of _United States v. +Judge Peters_.[2] This case involved a conflict of jurisdiction between +the federal courts and the authorities of the State of Pennsylvania over +the distribution of some prize money. Marshall's decision was a strong +assertion of the federal jurisdiction and power. The Governor of +Pennsylvania, under sanction of the state legislature, called out the +state militia to resist enforcement of the judgment of the Court. +Matters were tense for a time and bloodshed seemed imminent but the +state finally backed down. + +[Footnote 1: 1 Cranch, 137.] + +[Footnote 2: 5 Cranch, 115, decided in 1809.] + +In the following year (1810) came the case of _Fletcher v. Peck_,[1] in +which for the first time a statute of a state was held by the Supreme +Court to be void as repugnant to the Federal Constitution. The State of +Georgia had sought by statute to destroy rights in lands acquired under +a previous act. It was held that the statute was unconstitutional as +impairing the obligation of contracts within the meaning of the +Constitution. + +[Footnote 1: 6 Cranch, 87.] + +In _Martin v. Hunter's Lessee_[1] was asserted the right of the Federal +Supreme Court to overrule the judgment of a state court on questions +arising under the Federal Constitution. The State of Virginia had denied +that right and the Supreme Court reversed the judgment of the Virginia +Court of Appeals. + +[Footnote 1: 1 Wheat., 304 (1816.)] + +In _McCulloch v. State of Maryland_,[1] a case involving an attempt by +the State of Maryland to tax the Bank of the United States, Marshall's +doctrine of implied powers was elaborated, and the judgment of the state +court upholding the tax was reversed. + +[Footnote 1: 4 Wheat., 316 (1819).] + +In the _Dartmouth College case_[1] the doctrine of the inviolability of +contracts against attack by state legislation was further developed. An +act of the state legislature of New Hampshire had sought to alter the +charter of Dartmouth College, and the New Hampshire courts had upheld +the legislature. The Supreme Court reversed the state court and declared +the statute unconstitutional under the clause of the Constitution which +declares that no state shall make any law impairing the obligation of +contracts. + +[Footnote 1: _Dartmouth College v. Woodward_, 4 Wheat., 518 (1819).] + +In the great case of _Gibbons v. Ogden_[1] the Court asserted the +paramount jurisdiction of the National Government over interstate +commerce. This was one of the most important and far-reaching of all +Marshall's decisions. An injunction had been granted by Chancellor Kent +and unanimously sustained by the Court of Errors of New York, +restraining Gibbons from navigating the Hudson River by steamboats +licensed by Congress for the coasting trade on the ground that he was +thereby infringing the exclusive right, granted by the legislature of +New York, to Robert R. Livingston and Robert Fulton to navigate the +waters of the state with vessels moved by steam. The Supreme Court +reversed the state courts and held the New York legislation void as an +interference with the right of Congress, under the Constitution, to +regulate interstate commerce. + +[Footnote 1: 9 Wheat., 1 (1824).] + +These were only a few of that series of great decisions which stand out +like mountain peaks on the horizon of our national life. Marshall's +judgments transformed a governmental experiment into something assured +and permanent. They confirmed the national supremacy and made the +Constitution workable. + +Marshall is known to history for his work in vindicating the national +power under the Constitution. That was the need in his day and he met it +with superlative wisdom and skill. It would be a mistake, however, to +suppose that he favored federal encroachment upon the powers reserved to +the states. On the contrary, he rendered decisions in favor of state +rights which would be notable were they not overshadowed by the greater +fame of the decisions which went to the building of the nation. + +With the passing of Marshall and the accession of Taney as Chief Justice +a new chapter opened in the history of the Court. The Federalists had +become extinct. Andrew Jackson had come into power and it had fallen to +his lot to fill a majority of the seats upon the bench by appointments +to vacancies. The result was at once apparent. Two cases[1] involving +important constitutional questions, which had been argued during +Marshall's lifetime but assigned for reargument on account of a division +in the Court, were now decided contrary to Marshall's known views and in +favor of a strict construction of national powers. Justice Story, +Marshall's longtime associate on the bench, dissented strongly in both +cases, lamenting the loss of Marshall's leadership and the change in the +viewpoint of the Court. + +[Footnote 1: _Mayor of New York v. Miln_, 11 Peters, 102; _Briscoe v. +Bank of Kentucky_, 11 Peters, 257, decided in 1837.] + +It would serve no useful purpose to enter upon a detailed consideration +of the various decisions upon constitutional questions made during the +twenty-eight years of Taney's Chief Justiceship. They were marked by +great diversity of views among the members of the Court. In some of +them, notably the famous Passenger cases,[1] the Court fell into a state +reminiscent of the confusion of tongues that arose at the building of +the Tower of Babel. The scope of certain of Marshall's decisions was +limited.[2] Upon the whole, however, the structure of constitutional law +which Marshall had reared was not torn down or greatly impaired. The +national supremacy was upheld. Taney and his associates were for the +most part patriotic men and eminent lawyers, proud of the Court and its +history and anxious to add to its prestige. It is regrettable that the +merits of some of them have been so obscured and their memory so clouded +by a well-meaning but unfortunate excursion into the field of political +passions. In the Dred Scott case[3] they thought to quiet agitation and +contribute to the peace of their country by passing judgment upon +certain angrily mooted questions of a political character. The effort +was a failure and brought upon their heads, and upon Chief Justice Taney +in particular, an avalanche of misrepresentation and obloquy. + +[Footnote 1: 7 Howard, 283 (1849).] + +[Footnote 2: Not always for the worse: vide the Charles River Bridge +case, 11 Peters, 420, imposing salutary restrictions on the doctrine of +the Dartmouth College case.] + +[Footnote 3: _Dred Scott v. Sandford_, 19 Howard, 393 (1857).] + +The suppression of the Great Rebellion brought an enormous increase in +the national power and in the popular will to national power. State +rights did not loom large in the popular or the legislative mind in +reconstruction days. Taney was dead. The Supreme Court had been +practically reconstituted by appointments made by President Lincoln and +his immediate successors and it seems to have been anticipated that the +new Court would take the view of national powers prevailing in Congress +and the country at large. In this the popular expectation was doomed to +disappointment. The Court displayed an unexpected solicitude for the +rights of the states and firmness against federal encroachment. Chief +Justice Salmon P. Chase, who had been President Lincoln's war Secretary +of the Treasury, went so far as to pronounce unconstitutional some of +his own official acts performed under the stress of war. + +In the great case of _State of Texas v. White_[1] the rights of Texas as +a sovereign state were asserted, though Texas had joined in the +Rebellion and was not represented in the national legislature. + +[Footnote 1: 7 Wall., 700 (1869).] + +In _The Collector v. Day_[1] it was held that Congress had no power to +tax the salary of a state official. + +[Footnote 1: 11 Wall., 113 (1871).] + +In the Slaughter House cases[1] an act of the Legislature of Louisiana, +granting to a corporation created by it exclusive rights to maintain +slaughter houses for the City of New Orleans and other territory, was +upheld, as a valid exercise of state police power, against claims that +the legislation violated rights secured under the newly adopted +amendments to the Federal Constitution (Amendments XIII, XIV, XV). The +opinion of the Court delivered by a Northern judge (Miller of Iowa) +stands as one of the bulwarks of state authority. + +[Footnote 1: 16 Wall., 36 (1873).] + +In a series of later cases various reconstruction acts of Congress +involving encroachments upon state rights were either held +unconstitutional or radically limited in their effect. For example, the +decision in _United States v. Cruikshank_[1] greatly limited the effect +of the so-called Federal Enforcement Act. The decision in _United States +v. Harris_[2] declared unconstitutional portions of an act of Congress +designed for the suppression of activities of the Ku-Klux variety. In +the so-called Civil Rights cases[3] certain provisions of the federal +Civil Rights Act, passed in furtherance of the purposes of the new +constitutional amendments and designed to secure to persons of color +equal enjoyment of the privileges of inns, public conveyances, theatres, +etc., were held unconstitutional as an encroachment on the rights of the +states. + +[Footnote 1: 92 U.S., 542 (1875).] + +[Footnote 2: 106 U.S., 629.] + +[Footnote 3: 109 U.S., 3.] + +These are but a few of the many decisions of the Supreme Court in the +reconstruction period upholding the rights of the states against +attempted federal encroachment arising from the conditions of the Civil +War. The nation owes a debt of gratitude to the men who composed the +Court at this time for their courage and firmness in the face of popular +clamor and passion. + +The solicitude of the Court for the rights of the states did not end +with the reconstruction period. It has continued down to the present +day. In the Income Tax cases[1] the Court held that a tax upon income +from bonds of a state municipal corporation was repugnant to the +Constitution as a tax upon the borrowing power of the state. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429 +(1895).] + +In _Keller v. United States_[1] the Court declared unconstitutional, as +an encroachment on the police power of the states, an act of Congress +making it a felony to harbor alien prostitutes, the Court declaring that +"speaking generally, the police power is reserved to the states and +there is no grant thereof to Congress in the Constitution." + +[Footnote 1: 213 U.S., 138 (1909).] + +In the Child Labor case[1] the Court held the federal Child Labor Law +of 1916 unconstitutional as invading the police power reserved to the +states. The Court said: + + This Court has no more important function than that which + devolves upon it the obligation to preserve inviolate the + constitutional limitations upon the exercise of authority, + federal and state, to the end that each may continue to + discharge, harmoniously with the other, the duties entrusted + to it by the Constitution.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251 (1918).] + +[Footnote 2: An even stronger assertion of state rights is found in the +Child Labor Tax Case (_Bailey v. The Drexel Furniture Co._) decided May +15, 1922, after this chapter had been put into print.] + +How is it then, someone may ask, if the Supreme Court is so zealous in +defense of the rights of the states, that those rights are being +encroached upon more and more by the National Government? The answer +must be that there has been a change in the popular frame of mind. The +desire for uniformity, standardization, efficiency, has outgrown the +earlier fears of a centralization of power. Congress has found ways, +under the constitutional grants of power to lay taxes and regulate +interstate commerce, to legislate in furtherance of the popular demands. +The Court is not strong enough (no governmental agency which could be +devised would be strong enough) to hold back the flood or permanently +thwart the popular will. In a government of the people everything has to +yield sooner or later to the deliberate wish of the majority. + +Some profess to view the recent encroachments of federal power as a +triumph of the principles advocated by Alexander Hamilton and John +Marshall over the principles of Thomas Jefferson. Such a claim does +Hamilton and Marshall an injustice. While they both stood for a strong +National Government, neither of them contemplated any encroachment by +that government on the principle of local self-government in local +matters or the police power of the states. + +Marshall in one of his most powerful and far-reaching pronouncements in +support of the national supremacy[1] speaks of + + that immense mass of legislation, which embraces everything + within the territory of a state not surrendered to the General + Government;... inspection laws, quarantine laws, health laws + of every description ... are component parts of this mass. + +[Footnote 1: _Gibbons v. Ogden_, 9 Wheat., 1, 203, 208.] + +Later in the same opinion he refers to + + the acknowledged power of a state to regulate its police, its + domestic trade, and to govern its own citizens. + + ... The power of regulating their own purely internal affairs + whether of trading or police. + +Hamilton devotes an entire number of the _Federalist_[1] to combatting +the idea that the rights of the states are in danger of being invaded by +the General Government. In another place[2] he returns to the idea + + that there is greater probability of encroachments by the + members upon the federal head, than by the federal head upon + the members + +and concludes that it is to be hoped that the people + + will always take care to preserve the constitutional + equilibrium between the general and the state governments. + +[Footnote 1: _Federalist_, Number XVII.] + +[Footnote 2: Id., Number XXXI.] + +That hope has failed of realization. The "constitutional equilibrium" of +which Hamilton wrote is not being preserved. Some will say that this is +an age of progress and we are improving upon Hamilton. Others, however, +think we are forgetting the wisdom of the Fathers. + + + + +VIII + +THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT + + +Had the World War come five years earlier the United States would have +been much handicapped and embarrassed in financing its share of the +struggle. One of the chief sources of national revenue during and since +the war, the income tax, would not have been available. The federal +income tax had been declared unconstitutional by the Supreme Court in +1895, and it was not until eighteen years later that the obstacle +pointed out by that decision was removed through the adoption of an +amendment to the Constitution. The Sixteenth or Income Tax Amendment was +proposed by Congress to the legislatures of the several states in 1909 +and took effect, having been ratified by three-fourths of the states, in +1913. Declared by its sponsors at the outset to be intended merely as a +recourse in case of emergency, the tax authorized by the amendment was +at once put into operation and there seems to be little likelihood that +it will ever be abandoned. + +Without the constitutional amendment no general income tax would be +practicable. And yet the amendment conferred no new power of taxation on +the National Government. To explain this seeming paradox it will be +necessary to consider briefly the scope and limitations of the federal +taxing power. + +One of the chief defects, perhaps the most vital defect of all, in the +Confederation which carried through the Revolutionary War and preceded +the Union, was its inability to raise revenue directly by taxation. The +Confederation was obliged to call upon the several states to furnish +their respective contributions or quotas, and requisitions upon the +states encountered delays and sometimes were ignored altogether. There +were no effective means of compulsion. + +With these facts before them the founders of the Union determined that +the new government should not be wrecked upon this rock at any rate, and +therefore insisted, against great opposition, in conferring upon it +powers of taxation which were practically unlimited in their reach. The +Constitution was made to provide that[1] + + the Congress shall have 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. + +[Footnote 1: Const., Art. I, Sec. 8, Clause 1.] + +The only tax which Congress was expressly forbidden to lay was a tax on +exports.[1] It was, however, provided that indirect taxes (duties, +imposts, and excises) should be uniform throughout the United States,[2] +and that direct taxes should be apportioned among the states according +to population.[3] The last mentioned provision was a concession to the +fears of the wealthier states lest their citizens be taxed unduly for +the benefit of the poorer states, and represented one of the great +compromises by which the ratification of the Constitution as a whole was +secured. + +[Footnote 1: Const., Art. I, Sec. 9, Clause 5.] + +[Footnote 2: Id., Art. I, Sec. 8, Clause 1.] + +[Footnote 3: Id., Art. I, Sec. 2, Clause 3. Sec. 9, Clause 4.] + +The Constitution nowhere specified just what taxes were to be deemed +"direct" (Madison in his notes of the Constitutional Convention records: +"Mr. King asked what was the precise meaning of direct taxation? No one +answd.")[1] or what kind of uniformity was intended by the provision +that indirect taxes should be uniform, and more than a century was to +elapse before either of these fundamental questions was finally +settled. The answer to the latter question (that the term "uniform" +refers purely to a geographical uniformity and is synonymous with the +expression "to operate generally throughout the United States") was +given by the Supreme Court in the year 1900 in the celebrated case of +_Knowlton v. Moore_,[2] and met with general approval. The answer to the +question of what constitutes a direct tax within the meaning of the +Constitution, given by the Supreme Court in 1895 in the Income Tax +cases,[3] met with a different reception. The decision upset +long-settled ideas, disarranged the federal taxing system, aroused +popular resentment, and ultimately led to the enactment of the Sixteenth +Amendment. + +[Footnote 1: Farrand, "Records of the Federal Convention," Vol. II, p. +350.] + +[Footnote 2: 178 U.S., 41.] + +[Footnote 3: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429.] + +The question had arisen early in the life of the Republic in the case of +_Hylton v. United States_, decided in 1796.[1] This litigation involved +the validity of a tax on carriages which had been imposed by Congress +without apportionment among the states. Alexander Hamilton argued the +case before the Supreme Court in support of the tax. The Court adopted +his view and sustained the tax, holding that it was a tax on consumption +and therefore a species of excise or duty. The Justices who wrote +opinions expressed doubt whether anything but poll taxes and taxes on +land were "direct" within the meaning of the Constitution. That point, +however, was not necessarily involved and was not decided, though later +generations came to assume that it had been decided. + +[Footnote 1: 3 Dallas, 171.] + +The tax on carriages was soon repealed and many years elapsed before the +question came up again. After the Civil War broke out, however, the need +of revenue became acute and various statutes taxing income without +apportionment among the states were enacted by Congress. These met with +general acquiescence. It was felt that they were emergency measures +necessitated by the war, and they were in fact abandoned as soon as +practicable after the war. A well-known lawyer, however (William M. +Springer of Illinois), did not acquiesce and refused to pay his income +tax, on the ground that it was a direct tax not levied in accordance +with the Constitution. In the action brought to test the question[1] it +appeared that the income on which Mr. Springer had been taxed was +derived in part from the practice of his profession as an attorney. To +this extent it was clearly an excise or duty, i.e., an indirect tax. As +it was incumbent upon Mr. Springer, by reason of the form of the action, +to demonstrate that the tax was void _in toto_ the Court could not do +otherwise than decide against him. In rendering its decision, however, +the Court took occasion to discuss the question as to what were direct +taxes within the meaning of the Constitution, and expressed the view +that the term included only capitation or poll taxes, and taxes on real +estate. There the matter rested until the year 1894 when Congress +enacted another income tax law. This time the argument from necessity +was lacking. The country was in a state of profound peace. Opposition to +the tax among the moneyed interests was widespread. Test suits were +brought and after most elaborate and exhaustive argument and reargument +the Hylton and Springer cases were distinguished and the act was held +unconstitutional.[2] The decision was by a closely divided Court (five +to four), the majority finally holding that "direct taxes" within the +meaning of the Constitution included taxes on personal property and the +income of personal property, as well as taxes on real estate and the +rents or income of real estate. This conclusion was fatal to the act. It +was conceded that the tax, in so far as it affected income derived from +a business or profession, was an indirect tax and therefore valid +without apportionment among the states, but the provisions for taxing +the income of real and personal property were held to be an essential +part of the taxing scheme invalidating the whole statute. + +[Footnote 1: _Springer v. United States_, 102 U.S., 586.] + +[Footnote 2: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +This momentous decision was almost as unpopular with Congress and the +general public as the decision in _Chisholm v. Georgia_ had been a +hundred years earlier. Many legislators were in favor of enacting +another income tax law forthwith and endeavoring to coerce the Court, +through the force of legislative and popular opinion, to overrule its +decision. Calmer counsels prevailed, however, and plans were initiated +to get over the difficulty by a constitutional amendment. Meanwhile, +steps were taken to eke out the national revenue by various excise +taxes, notably the so-called Federal Corporation Tax. This novel tax, +which was thought by many to involve a very serious encroachment by the +Federal Government on the powers of the states, will be discussed more +at length in later chapters.[1] + +[Footnote 1: See Chapters X and XI, infra.] + +The constitutional amendment as proposed by Congress and ratified by the +states provided: + +"The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several states, +and without regard to any census or enumeration." + +Thus far we have dealt only with such limitations upon the federal +taxing power as are expressly imposed by the Constitution. As has been +seen, the only express limitations are that direct taxes shall be +apportioned among the states, that indirect taxes shall be uniform, and +that exports shall not be taxed at all. There are, however, certain +other limitations which we proceed to notice briefly. + +The Constitution provides[1] that the compensation of federal judges +"shall not be diminished during their continuance in office." There is a +similar provision as to the compensation of the President.[2] No attempt +seems to have been made to tax the compensation of federal judges prior +to 1862. A statute of that year subjected the salaries of all civil +officers of the United States to an income tax and was construed by the +revenue officers as including the compensation of the President and the +judges. Chief Justice Taney, the head of the judiciary, wrote the +Secretary of the Treasury a letter[3] protesting against the tax as a +virtual diminution of judicial compensation in violation of the +constitutional provision. No heed was paid to the protest at the time +but some years later, upon the strength of an opinion by Attorney +General Hoar, the tax on the compensation of the President and the +judges was discontinued and the amounts theretofore collected were +refunded. There the matter rested until after the Income Tax Amendment, +when Congress again sought to impose a tax upon the income of the +President and the judges. A federal judge of a Kentucky district +contested the tax and the question came up before the Supreme Court for +final decision. On behalf of the revenue department it was urged that a +general income tax, operating alike on all classes, did not involve any +violation of the constitutional provision. It was also contended that +such a tax was expressly authorized by the Sixteenth Amendment giving +Congress power to tax incomes "from whatever source derived." The Court +in an exhaustive opinion[4] overruled both these contentions and held +the tax to be a violation of the Constitution. + +[Footnote 1: Art. 3, Sec. 1.] + +[Footnote 2: Art. 2, Sec. 1, Clause 6.] + +[Footnote 3: See 157 U.S., 701.] + +[Footnote 4: _Evans v. Gore_, 253 U.S., 245.] + +It has often been asserted that a limitation of the federal taxing power +is found in the "due process" clause of the Fifth Amendment of the +Constitution, providing that no person shall "be deprived of life, +liberty, or property without due process of law." This amendment relates +to the powers of the General Government. A similar limitation on the +powers of the states is found in the Fourteenth Amendment. Taxing laws +have frequently been attacked in the courts on the ground that, by +reason of some inequality or injustice in their provisions, the taxpayer +was deprived of his property without due process of law. In cases +involving state laws such objections have sometimes been sustained.[1] +There seems, however, to have been no case in which a federal taxing law +was declared invalid on this ground, and the Supreme Court has recently +remarked that it is "well settled that such clause (viz., the due +process clause of the Fifth Amendment) is not a limitation upon the +taxing power conferred upon Congress by the Constitution."[2] +Nevertheless, it is believed that if a federal tax were clearly imposed +for other than a public use, or were imposed on tangible property lying +outside the national jurisdiction, or were so arbitrary and without +basis for classification as to amount to confiscation, relief might be +obtained under the due process clause of the Fifth Amendment. + +[Footnote 1: See, e.g., _Union Tank Line Co. v. Wright_, 249 U.S., 275.] + +[Footnote 2: _Brushaber v. Union Pacific R.R._, 240 U.S., 24.] + +By far the most important and interesting of the implied limitations of +the federal taxing power remains to be noticed. That is the limitation +which prohibits the National Government from burdening by taxation the +property or revenues or obligations of a state, or the emoluments of a +state official, or anything connected with the exercise by a state of +one of its governmental functions. In other words, while the National +Government may tax income from bonds issued by England or France or +their cities, it is powerless to tax the income from bonds of Rhode +Island or the smallest of its towns. + +This implied limitation, nowhere categorically expressed but enunciated +in a series of decisions of the Supreme Court, has not always met with +acquiescence from the executive and legislative branches of the +Government. In fact, Congress is now engaged in an effort to do away +with it, at least in so far as concerns the right to tax the income from +state and municipal bonds. To-day, however, it still stands as one of +the most striking and unique characteristics of our governmental system. +It will be discussed more at length in the next chapter. + + + + +IX + +CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? + + +That is a question which is agitating a good many people just now. +Congress from time to time has seemed disposed to try it, in spite of +misgivings as to the constitutionality of such legislation.[1] A recent +Revenue Bill contained provisions taxing the income of future issues of +such obligations, and a motion for the elimination of those provisions +was defeated in the House 132 to 61. Meanwhile, protests were pouring in +from state and municipal officers assailing the justice and expediency +of such a tax. + +[Footnote 1: See, e.g., H. Report No. 767, 65th Cong., 2d Sess., +accompanying House Revenue Bill of 1918 as reported by Mr. Kitchin from +the Committee on Ways and Means, page 89.] + +It is not the purpose of this chapter to discuss the questions of +justice and expediency (as to which there is much to be said on both +sides) but rather to deal with the strictly legal aspects of the matter +and indicate briefly why such a tax cannot be laid without a change in +our fundamental law. + +Let it be said at the outset that no express provision of the United +States Constitution forbids. On the contrary, that instrument confers on +Congress the power to lay taxes without any restriction or limitation +save that exports shall not be taxed, that duties, imposts, and excises +shall be uniform throughout the United States, and that direct taxes +must be apportioned among the states in proportion to population. The +obstacle lies rather in an implied limitation inherent in our dual +system of government and formulated in decisions of the Supreme Court. + +The founders of this republic established a form of government wherein +the states, though subordinate to the Federal Government in all matters +within its jurisdiction, nevertheless remained distinct bodies politic, +each one supreme in its own sphere. In the famous phrase of Salmon P. +Chase, pronouncing judgment as Chief Justice of the Supreme Court[1]: + + The Constitution in all its provisions looks to an + indestructible Union, composed of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700, 725.] + +In a later case[1] another eminent justice (Samuel Nelson of New York) +put the matter thus: + + The General Government, and the states, although both exist + within the same territorial limits, are separate and distinct + sovereignties, acting separately and independently of each + other, within their respective spheres. The former, in its + appropriate sphere, is supreme; but the states within the + limits of their powers not granted, or, in the language of the + 10th Amendment, "reserved", are as independent of the General + Government as that government within its sphere is independent + of the states. + +[Footnote 1: _The Collector v. Day_, 11 Wall., 113, 124.] + +It follows that the two governments, national and state, must each +exercise its powers so as not to interfere with the free and full +exercise by the other of its powers. To do otherwise would be contrary +to the fundamental compact embodied in the Constitution--in other words, +it would be _unconstitutional_. + +This proposition was affirmed at an early day by Chief Justice John +Marshall in the great case of _McCulloch vs. The State of Maryland_,[1] +which involved the attempt of a state to tax the operations of a +national bank. That case is one of the landmarks of American +constitutional law. While it did not expressly decide that the Federal +Government could not tax a state instrumentality but only the converse, +i.e., that a state could not tax an instrumentality of the nation, the +Court has held in many subsequent decisions that the proposition +enunciated by the great Chief Justice works both ways. For example, it +has declared that a state cannot tax the obligations of the United +States because such a tax operates upon the power of the Federal +Government to borrow money[2] and conversely, that Congress cannot tax +the obligations of a state for the same reason;[3] that a state cannot +tax the emoluments of an official of the United States[4] and +conversely, that the United States cannot tax the salary of a state +official;[5] that a state cannot impose a tax on the property or +revenues of the United States[6] and conversely, that Congress cannot +tax the property or revenues of a state or a municipality thereof.[7] + +[Footnote 1: 4 Wheaton, 316.] + +[Footnote 2: _Weston v. City of Charleston_, 2 Pet., 449.] + +[Footnote 3: _Mercantile Bank v. New York_, 121 U.S., 138, 162.] + +[Footnote 4: _Dobbins v. Commissioner of Erie County_, 16 Pet., 435.] + +[Footnote 5: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 6: _Van Brocklin v. Tennessee_, 117 U.S., 151.] + +[Footnote 7: _United States v. Railroad Co._, 17 Wall., 322.] + +The Supreme Court has said (and many times reiterated in substance) that +the National Government "cannot exercise its power of taxation so as to +destroy the state governments, or embarrass their lawful action."[1] One +of the most distinguished writers on American Constitutional law +(Thomas M. Cooley, Chief Justice of the Supreme Court of Michigan and +afterward Chairman of the federal Interstate Commerce Commission) has +said: + + There is nothing in the Constitution which can be 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.[2] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: _Cooley's Constitutional Limitations_, 7th Ed., 684.] + +The question as to the right of Congress to levy an income tax on +municipal securities came up squarely in the famous Income Tax Cases[1] +involving the constitutionality of the Income Tax Law of 1804. While the +Supreme Court was sharply divided as to the constitutionality of other +features of the law, it was unanimous as to the lack of authority in the +United States to tax the interest on municipal bonds. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +The decision in those cases is the law to-day (except in so far as it +has been changed by the recent Sixteenth Amendment) with one possible +limitation. It has been held that state agencies and instrumentalities, +in order to be exempt from national taxation, must be of a strictly +governmental character; the exemption does not extend to agencies and +instrumentalities used by the state in carrying on an ordinary private +business. This was decided in the South Carolina Dispensary case.[1] The +State of South Carolina had taken over the business of selling liquor +and the case involved a federal tax upon such business. The Court, while +reaffirming the general doctrine, nevertheless upheld the tax on the +ground that the business was not of a strictly governmental character. +This decision suggests the possibility that if an attempt were made to +tax state and municipal bonds the Court might draw a distinction based +on the purpose for which the bonds were issued, and hold that only such +as were issued for strictly governmental purposes were exempt. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437, decided +in 1905.] + +It remains to consider the effect of the Sixteenth Amendment. + +After the Supreme Court had held the Income Tax Law of 1894 +unconstitutional on the ground that it was a direct tax and had not been +apportioned among the states in proportion to population the Sixteenth +Amendment to the Constitution was proposed and ratified. This amendment +provides that + + the Congress shall have power to lay and collect taxes on + incomes, from whatever source derived, without apportionment + among the several states, and without regard to any census or + enumeration. + +When the amendment was submitted to the states for approval some lawyers +apprehended that the words "incomes from whatever source derived" might +open the door to the taxation by the Government of income from state and +municipal bonds. Charles E. Hughes, then Governor of New York, sent a +special message to the Legislature opposing ratification of the +amendment on this ground. + +Other lawyers, notably Senator Elihu Root, took a different view of the +scope of the amendment, holding that it would not enlarge the taxing +power but merely remove the obstacle found by the Supreme Court to the +Income Tax Law of 1894, i.e., the necessity of apportionment among the +states in proportion to population. This latter view has now been +confirmed by the Supreme Court. In a case involving a tax on income from +exports the Court said:[1] + + The Sixteenth Amendment ... does not extend the taxing power + to new or excepted subjects, but merely removes all occasion, + which otherwise might exist, for an apportionment among the + states of taxes laid on income, whether it be derived from one + source or another.... + +[Footnote 1: _Peck v. Lowe_, 247 U.S., 165.] + +In a case decided a little earlier[1] the Court, speaking through Chief +Justice White, had said: + + By the previous ruling (i.e., in _Brushaber v. Union Pacific + Railway Co._, 240 U.S., 1) it was settled that the provisions + of the Sixteenth Amendment conferred no new power of + taxation.... + +[Footnote 1: _Stanton v. Baltic Mining Co._, 240 U.S., 103, 112.] + +From what has been said it will be evident that the doctrine of +exemption of state and municipal bonds from federal taxation is firmly +embedded in our law and has not been affected by the Sixteenth +Amendment. + +Whether it is a doctrine suited to present-day conditions is a question +outside the scope of this paper. + +The fear of federal encroachment, so strong in the minds of the makers +of our Constitution, has become little more than a tradition. To many it +doubtless will seem that any rule of law which operates to prevent the +nation, in the great exigency of war, from taxing a portion of the +property of its citizens is pernicious and should be changed. + +If this be the view of a sufficient number the change can and will be +made. Lawyers think, however, that it will have to be done by the +orderly method of constitutional amendment, not by passing taxing +statutes which a reluctant Court will be obliged to declare +unconstitutional. + +Just now the tide of popular sentiment is setting strongly toward such a +change. It was advocated in a recent Presidential message.[1] The +immunity enjoyed by state bond issues is coming to be regarded less as a +safeguard of state rights than as a means whereby the rich escape +federal income surtaxes. One is tempted to predict that the next formal +amendment of the Constitution will deal with this subject. If so, +another inroad will have been made by the General Government on the +failing powers of the states. + +[Footnote 1: Message of President Harding to Congress, December 6, +1921.] + + + + +X + +IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL?[1] + +[Footnote 1: Since this chapter was first published in 1909 as an +article in the _Outlook_ magazine the specific question propounded in +its title has been settled by the Supreme Court (_Flint v. Stone Tracy +Co._, 220 U.S., 107). The paper is here reproduced, however, in the +belief that its discussion of the principles of our dual system of +Government is as pertinent now as it was before.] + + +The most noteworthy enactment of the sixty-first Congress from a legal +point of view, to say nothing of its economic and political +significance, was the Corporation Tax Act. That Act, forming §38 of the +Tariff Law, provides-- + + That every corporation ... organized for profit and having a + capital stock represented by shares ... shall be subject to + pay annually a special excise tax with respect to the carrying + on or doing business by such corporation ... equivalent to one + per centum upon the entire net income over and above five + thousand dollars received by it from all sources, etc. + +The act goes on to require the corporations to make periodical reports +concerning their business and affairs, and confers on the Commissioner +of Internal Revenue a visitorial power to examine and compel further +returns. + +The genesis of the act is interesting. The growing demand for more +efficient regulation of the corporations, so pronounced during President +Roosevelt's Administration, had foreshadowed such legislation. It +remained, however, for President Taft to take the initiative and mould +the shape which the legislation was to take. + +In the course of the Senate debate on the new Tariff Act it had become +apparent that an influential party in Congress, backed by strong +sympathy outside, was bent upon passing a general income tax act. The +previous Income Tax Law had been pronounced unconstitutional by the +Supreme Court as violating the provision of the Constitution that all +direct taxes must be apportioned among the states in proportion to +population.[1] That decision, however, had been reached by a bare +majority of five to four. It had overruled previous decisions and +overturned doctrines that had been acquiesced in almost from the +foundation of the Government. A strong party was in favor of enacting +another income tax law and bringing the question again before the Court +in the hope that the Court as then constituted might be induced to +overrule or materially modify the doctrine of the Pollock case. The +President and his advisers viewed such a proposal with disfavor. To +their minds the proper way to establish the right of Congress to levy an +income tax was by an amendment to the Constitution, not by an assault +upon the Supreme Court. Accordingly on June 16, 1909, the President +transmitted a message to Congress[2] recommending a constitutional +amendment, and proposing, in order to meet the present need for more +revenue, an excise tax on corporations. The proposal, coupled as it was +with a suggestion that such an act might be made to serve for purposes +of federal supervision and control as well as revenue, met with favor +and was enacted into law. + +[Footnote 1: _Pollock vs. Farmers' Loan & Trust Co._, 157 U.S., 429.] + +[Footnote 2: _Congressional Record_, June 16, 1909, p. 3450.] + +President Taft, himself an eminent constitutional lawyer, in his message +recommending the law expressed full confidence in its constitutionality. +The same view was taken by able lawyers who surrounded him in the +capacity of advisers. The act is understood to have been drafted by Mr. +Wickersham, the Attorney General, and vouched for by Senator Elihu Root +and others of scarcely less authority in the domain of constitutional +law. + +Against opinions from such sources one takes the field with diffidence. +I venture, however, to outline briefly some reasons for doubting the +constitutionality of the act. + +At the outset it is essential to determine the exact nature of the tax. +Obviously it is not a tax upon income _as income_. If it were, it would +be obnoxious to the decision in the Pollock case as imposing a direct +tax without apportionment among the states. The language of the act, as +well as the declarations of its sponsors, clearly indicate that it is +intended, not as a direct tax on property, but as an excise tax on +privilege. The phraseology of the act itself is--"A special excise tax +with respect to the carrying on or doing business by such corporation," +etc. Undoubtedly Congress has power to impose an excise tax upon +occupation or business. This was expressly decided, in the case of the +businesses of refining petroleum and refining sugar, by the Spreckels +case,[1] referred to in President Taft's message. The message says: + + The decision of the Supreme Court in the case of Spreckels + Sugar Refining Company against McClain (192 U.S., 397) seems + clearly to establish the principle that such a tax as this is + an excise tax upon privilege and not a direct tax on property, + and is within the federal power without apportionment + according to population. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_, 192 U.S., 397.] + +What, then, is the privilege with respect to which the tax is imposed? +Is it, like the tax involved in the Spreckels case, the privilege of +doing the various kinds of business (manufacturing, mercantile, and the +rest) in which the corporations subject to the operation of the law are +engaged? Obviously not. No kind or kinds of business are specified in +the act. The tax falls not only on corporations doing every conceivable +kind of business, but also on the corporation that does no specific +business whatever--the corporation which, in the language of an eminent +judge, is merely "an incorporated gentleman of leisure."[1] Moreover, if +the tax were merely upon the privilege of doing business, it would seem +to be obnoxious to the cardinal principle of just taxation that taxes +should be uniform. In other words, if the privilege of doing a +business--say conducting a department store--were the thing taxed and +the only thing taxed, the rule of uniformity would seem to require that +a corporation and a copartnership conducting similar stores on opposite +corners of the street should both be taxed. Nothing inconsistent with +this view will be found in the Spreckels case. The party to that suit +was, to be sure, a corporation, but the act under which the tax was +imposed applied to individuals, firms, and corporations alike. + +[Footnote 1: Vann, J., in _People ex rel. vs. Roberts_, 154 N.Y., 1.] + +It must be concluded, therefore, that the tax is not upon the privilege +of doing the businesses in which the various corporations in the land +are engaged, but is rather a _tax upon the privilege of doing business +in a corporate capacity_, or, in other words, upon the exercise of the +corporate franchise. That this is so appears very clearly from the +message of President Taft. He says: + + This is an excise tax upon the privilege of doing business as + an artificial entity and of freedom from a general partnership + liability enjoyed by those who own the stock. + +Assuming, then, that this is the real nature of the tax, is it +constitutional? + +Unquestionably Congress may tax corporations organized under federal +laws upon their franchises; any sovereignty may tax the creatures of its +creation for the privilege of exercising their franchises; but how about +corporations chartered by the states and doing purely an intrastate +business? A state confers on John Doe and his associates the privilege +or franchise of doing business in a corporate capacity. Can Congress +impose a tax on the exercise of that privilege or franchise? The power +to tax involves the power to destroy.[1] If Congress can impose a tax of +one per cent., it can impose a tax of ten per cent. or fifty per cent., +and thus impair or destroy altogether the value of corporate charters +for business purposes. Does Congress possess such a power? The +Constitution puts no express limitation on the right of Congress to levy +excises except that they shall be "uniform throughout the United +States." But there are certain implied limitations inherent in our dual +system of government. The sovereignty and independence of the separate +states within their spheres are as complete as are the sovereignty and +independence of the General Government within its sphere.[2] Neither may +interfere with or encroach upon the other. + +[Footnote 1: _McCulloch vs. Maryland_, 4 Wheat., 316.] + +[Footnote 2: _The Collector vs. Day_, 11 Wall., 113, 124.] + +The right to grant corporate charters for ordinary business purposes is +an attribute of sovereignty belonging to the states, not to the General +Government. The United States is a government of enumerated powers. The +Constitution nowhere expressly confers upon Congress the right to grant +corporate charters, and it is well settled that this right exists only +in the limited class of cases where the granting of charters becomes +incidental to some power expressly conferred on Congress, e.g., the +power to establish a uniform currency, or the power to regulate +interstate commerce. On the other hand, the right of the separate states +to grant charters of incorporation is unquestionable. By the Tenth +Amendment of the Constitution it is expressly provided: "The powers not +delegated to the United States by the Constitution nor prohibited by it +to the states are reserved to the states respectively or to the people." +The Supreme Court long ago said: "A state may grant acts of +incorporation for the attainment of those objects which are essential to +the interests of society. _This power is incident to sovereignty._"[1] + +[Footnote 1: _Briscoe v. Bank of Kentucky_, 11 Peters, 257, 317.] + +The power to grant the franchise of corporate capacity being therefore +inherent in the sovereignty of the states, will not a tax imposed by +Congress upon the exercise of the franchise constitute an interference +with the power? If so the tax is unconstitutional. + +The Supreme Court has repeatedly held, that the National Government +"cannot exercise its power of taxation so as to destroy the state +governments or embarrass their lawful action."[1] In the case of +_California vs. Central Pacific R.R. Co._[2] the question was whether +franchises granted to the Central Pacific Railroad Company by the United +States were legitimate subjects of taxation by the State of California. +The Supreme Court, in language frequently quoted in subsequent cases, +discusses the nature and origin of franchises, concluding that a +franchise is "a right, privilege, or power of public concern" existing +and exercised by legislative authority. After enumerating various kinds +of franchises, the Court remarks: "No persons can make themselves a body +corporate and politic without legislative authority. Corporate capacity +is a franchise." The Court continues: + + In view of this description of the nature of a franchise, how + can it be possible that a franchise granted by Congress can be + subject to taxation by a state without the consent of + Congress? Taxation is a burden and may be laid so heavily as + to destroy the thing taxed or render it valueless. As Chief + Justice Marshall said in _McCulloch v. Maryland_, "The power + to tax involves the power to destroy."... It seems to us + almost absurd to contend that a power given to a person or + corporation by the United States may be subjected to taxation + by a state. The power conferred emanates from and is a portion + of the power of the government that confers it. To tax it is + not only derogatory to the dignity but subversive of the + powers of the government, and repugnant to its paramount + sovereignty. + +[Footnote 1: _Railroad Company v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: 127 U.S., 1.] + +It is true that the Court was here discussing the right of a state to +tax franchises granted by the United States, and not the converse of +that question. The reasoning of the Court would seem, however, to apply +with equal force to the right of the United States to tax a franchise +granted by a state acting within the scope of its sovereign authority. + +Patent rights and copyrights are special privileges or franchises +granted by the sovereign or government, and under the United States +Constitution the right to grant patents and copyrights is expressly +conferred on Congress. It has been held repeatedly that patent rights +and copyrights are not taxable by the states[1]. As said by the New York +Court of Appeals in a case involving the power of the state to tax +copyrights:[2] + + To concede a right to tax them would be to concede a power to + impede or burden the operation of the laws enacted by Congress + to carry into execution a power vested in the National + Government by the Constitution. + +[Footnote 1: _People ex rel. Edison, &c., Co., v. Assessors_, 156 N.Y., +417; _People ex rel. v. Roberts_, 159 N.Y., 70; _In Re Sheffield_, 64 +Fed. Rep., 833; _Commonwealth v. Westinghouse, &c., Co._, 151 Pa., 265.] + +[Footnote 2: 159 N.Y., p. 75.] + +Apparently the same rule would be applicable were the granting of patent +rights, like the granting of ordinary corporate franchises, a +prerogative reserved under our system of government to the states +instead of being expressly conferred on the United States. By parity of +reasoning, the Federal Government in that case would have no power to +tax them. + +It is familiar law, reiterated over and over again by the Supreme Court, +that Congress cannot tax the means or instrumentalities employed by the +states in exercising their powers and functions, any more than a state +can tax the instrumentalities similarly employed by the General +Government. Thus, it has been held that Congress cannot tax a municipal +corporation (being a portion of the sovereign power of the state) upon +its municipal revenues[1]; that Congress cannot impose a tax upon the +salary of a judicial officer of a state[2]; that Congress cannot tax a +bond given in pursuance of a state law to secure a liquor license.[3] + +[Footnote 1: _United States vs. Railroad Co._, 17 Wall., 322.] + +[Footnote 2: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 3: _Ambrosini v. United States_, 185 U.S., 1.] + +In the light of these decisions it is not apparent how Congress can tax +the franchises of those state corporations (and they are many and +important) which perform some public or quasi-public function. A state, +to carry out its purposes of internal improvement, charters an +intrastate railway or ferry company with power to charge tolls and +exercise the right of eminent domain. Is not the grant of corporate +existence and privileges to such a corporation one of the means or +instrumentalities employed by the state for carrying out its legitimate +functions, and is not a tax by the Federal Government upon the exercise +by such a corporation of its corporate powers an interference with such +means or instrumentalities? + +In any discussion of the right of Congress to tax the agencies of or +franchises granted by a state, the distinction must be borne in mind +between a tax upon _property_ acquired by means of the franchise from +the state and a tax upon the exercise of the franchise itself. The +former tax may be perfectly valid where the latter would be +unconstitutional. Thus, the Supreme Court has upheld a tax by a state +upon the real and personal property (as distinct from the franchises) of +a railway company chartered by Congress for private gain, while +conceding that the state could not tax the franchises, because to do so +would be a direct obstruction to federal powers.[1] + +[Footnote 1: _Union Pacific Railroad Company vs. Peniston_, 18 Wall., +5.] + +It remains to notice briefly one or two Supreme Court decisions which +are relied upon by the sponsors of the new tax law. Reference has +already been made to the decision in the Spreckels case[1] which upheld +the validity of the tax imposed by the War Revenue Act of 1898 upon the +gross receipts of corporations engaged in the businesses of refining +petroleum and refining sugar. The Court held the tax to be an excise tax +"in respect of the carrying on or doing the business of refining sugar," +and such it obviously was. It was not a tax upon the privilege or +franchise of doing business in a corporate capacity, like the tax now +under debate. On the contrary, the act expressly applied to "every +person, firm, corporation, or company carrying on or doing the business +of refining sugar...." The case, therefore, has no bearing on the point +we are discussing. Had the act applied only to corporations, a different +question would have been involved. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_. 192 U.S., 397.] + +The case of _Veazie Bank vs. Fenno_,[1] upholding the statute which +taxed out of existence the circulation of the state banks, has +frequently been cited as an authority sustaining the right of Congress +to levy a tax upon a franchise or privilege granted by a state. It is +true that in that case the eminent counsel for the bank (Messrs. Reverdy +Johnson and Caleb Cushing) argued unsuccessfully "that the act imposing +the tax impaired a franchise granted by the state, and that Congress had +no power to pass any law which could do that;"[2] and that two justices +dissented on that ground. The conclusive answer to this argument, was, +however, that the power of the states to grant the particular right or +privilege in question was subordinate to powers expressly conferred on +Congress by the Constitution; that Congress was given power under the +Constitution to provide a currency for the whole country, and the act in +question was legislation appropriate to that end. The case does not +hold that Congress has any general power to tax franchises or privileges +granted by a state. + +[Footnote 1: 8 Wall., 533.] + +[Footnote 2: See 8 Wall., p. 535.] + +The scope of this chapter does not admit of further reference to the +decisions. It is strongly urged, however, that none of them, rightly +construed, will be found to sustain the right of the General Government +to impose a tax upon the exercise of franchises granted by a state in +the exercise of its independent sovereignty, and that such a decision +would mark a new departure in our jurisprudence. + +In the debates in Congress over the bill many good lawyers appear to +have assumed, somewhat too hastily, that the tax in question was an +excise tax on business or occupation like that involved in the Spreckels +case, and that the only constitutional question, therefore, was one of +classification under the provision of the Constitution that excises +shall be uniform throughout the United States. No less eminent a +constitutional lawyer than Senator Bailey of Texas, in a colloquy with +the junior Senator from New York, put the matter thus:[1] + + Mr. Root: May I ask the Senator from Texas if I am right in + inferring from the statement which he has just made that he + does not seriously question the constitutional power of the + Congress to impose this tax on corporations? + + Mr. Bailey: Mr. President, I answer the Senator frankly that I + do not.... I think the rule was and is that Congress can levy + any tax it pleases except an export tax. Of course a direct + tax must be apportioned and an indirect tax must be uniform. + But the uniformity rule simply requires that wherever the + subject of taxation is found, the tax shall operate equally + upon it. + + I believe that Congress can tax all red-headed men engaged in + a given line of business if it pleases.... I have no doubt if + the tax fell upon every red-headed man in Massachusetts the + same as in Mississippi or Texas and all other states, the law + imposing such a tax would be perfectly valid. + +[Footnote 1: _Congressional Record_ for July 6, 1909, pp. 4251 to 4252.] + +The difficulty with this reasoning is that it overlooks the fact that +the privilege of being red-headed is not a franchise granted by a +sovereign state. From the viewpoint of constitutional law it may well be +that Congress can tax a privilege conferred by the gods where it would +be powerless to tax a franchise granted by the Legislature of New +Jersey. + + + + +XI + +THE CORPORATION TAX DECISION + + +The immediate consequences of the decision of the United States Supreme +Court[1] affirming the constitutionality of the federal corporation tax +are so slight that its profound significance is likely to be overlooked. +Until it was merged with the general income tax the exaction was not +burdensome and proved easy of collection. The thing upon which it +fell--the privilege of doing business in a corporate capacity--is an +abstraction which makes little appeal to the sympathies or the moral +sense. The public, more concerned with present conditions than with the +passing of a theory, is indifferent. + +[Footnote 1: _Flint v. Stone Tracy Co._, 220 U.S., 107] + +Thus it has sometimes been with the turning points in the affairs of +nations. They came quietly and without observation, and it remained for +the historians to mark the actual parting of the ways. + +The Supreme Court holds, and in its opinion reiterates many times, that +the tax is upon the _privilege of doing business in a corporate +capacity_. + +Right here is the crux of the matter. Corporate capacity is not a right +granted by the National Government. It is something which Congress can +neither give nor take away. In the division of powers which marked the +creation of our dual government the power to confer corporate capacity +was reserved to the states. The decision, therefore, comes to this: +Congress can by taxation burden the exercise of a privilege which only a +state can grant. And the power to tax, it must be remembered, involves +the power to destroy. This seems a long step from the theory of the men +who founded the Republic. + +Nearly fifty years ago the Supreme Court stated the theory as follows: + + The states are, and they must ever be, co-existent with the + National Government. Neither may destroy the other. Hence the + Federal Constitution must receive a practical construction. + Its limitations and its implied prohibitions must not be + extended so far as to destroy the necessary powers of the + States, or prevent their efficient exercise.[1] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5.] + +The court buttresses its decision by the argument _ex necessitate_--that +to hold otherwise would open the way for men to withdraw their business +activities from the reach of federal taxation and thus cripple the +National Government. The Court says: + + The inquiry in this connection is: How far do the implied + limitations upon the taxing power of the United States over + objects which would otherwise be legitimate subjects of + federal taxation, withdraw them from the reach of the Federal + Government in raising revenue, because they are pursued under + franchises which are the creation of the states?... Let it be + supposed that a group of individuals, as partners, were + carrying on a business upon which Congress concluded to lay an + excise tax. If it be true that the forming of a state + corporation would defeat this purpose, by taking the necessary + steps required by the state law to create a corporation and + carrying on the business under rights granted by a state + statute, the federal tax would become invalid and that source + of national revenue be destroyed, except as to the business in + the hands of individuals or partnerships. It cannot be + supposed that it was intended that it should be within the + power of individuals acting under state authority thus to + impair and limit the exertion of authority which may be + essential to national existence. + +This argument will not bear scrutiny. It apparently loses sight of the +vital distinction between a tax on the mere doing of business and a tax +on the privilege of doing that business in a corporate capacity. These +are two very different things. The right of Congress to tax the doing of +business was not disputed. It had been expressly upheld in the +well-known case of _Spreckels Sugar Refining Co. v. McClain_,[1] which +involved a tax on the business of refining sugar, whether done by a +corporation or by individuals. The tax under consideration, however, +goes further and fastens upon something new--something which in the case +of individuals or partnerships has no existence at all--which comes into +being only by the exercise of the sovereign power of a state. The +opponents of the tax, far from attempting to narrow the existing field +of federal taxation, were in fact resisting an encroachment by Congress +on an entirely new field, created by, and theretofore reserved +exclusively to, the separate states. It was conceded that Congress could +tax a business when done by individuals and could tax the same business +when done by a corporation. The inquiry was: Does the act of a state in +clothing the individuals with corporate capacity create a new subject +matter for taxation by the General Government? That was the real +question before the Court, and the decision answers it in the +affirmative. + +[Footnote 1: 192 U.S., 397.] + +Other illustrations of the same apparent confusion of thought are to be +found in the opinion. For example, it is said (citing various cases +involving a tax on business where the party taxed was a corporation): + + We think it is the result of the cases heretofore decided in + this Court, that such _business activities_, though exercised + because of state-created franchises, are not beyond the taxing + power of the United States. + +Here again the Court seems to lose sight of the distinction between a +tax on "business activities" and a tax on the privilege of conducting +such activities in a corporate capacity. + +It is futile, however, to quarrel with the logic of the opinion. The +question is closed and the Court, by affirming the judgments appealed +from, has committed itself to the theory that the Federal Government +may, by taxation, burden the exercise of a privilege which only a state +can confer. With the expediency of that theory as applied to present-day +political conditions we are not now concerned. The object of this +chapter is to point out that the decision marks a distinct departure +from the earlier doctrine that the two sovereignties, federal and state, +are upon an equality within their respective spheres. + +In view of the centralizing forces which are tending to transform these +sovereign states into mere political subdivisions of a nation, the +decision is of great significance. Moreover, in a very practical way it +touches the right of each state under the compact evidenced by the +Federal Constitution to manage its internal affairs free from compulsion +or interference by the other states. To illustrate: In some parts of the +country the anti-corporation feeling runs high. Many men if given their +way would tax the larger corporations out of existence. Under this +decision the way is open whenever a majority can be secured in Congress. +An increase in the tax rate is all that would be necessary. Make the +rate ten per cent. or twenty per cent. instead of one per cent. and the +thing is accomplished. + +New York may deem it good policy to encourage the carrying on of +industry in a corporate form. Texas may take a different view and +conclude that the solution of the trust problem lies in suppressing +certain classes of corporations altogether. Under this decision it lies +within the power of Texas and her associates if sufficiently numerous to +impose their view on New York and make it impossible for her domestic +industries to be carried on profitably in a corporate form. And yet the +possibility of impressing the will of one state or group of states upon +another state with respect to her internal affairs is the very thing +which the founders of the republic sought most carefully to avoid. Had +it been understood in 1787 that the grant of taxing powers to the +General Government involved such a curtailment of state independence, +few states, in all probability, would have been ready to ratify the +Constitution. + + + + +XII + +THE FEDERAL GOVERNMENT AND THE TRUSTS + + +The curbing of monopolies and combinations in restraint of trade was no +part of the functions of the Federal Government as planned by the +framers of the Constitution. To their minds such matters, under the dual +system of government which they were establishing, belonged to the +states. The Constitution was designed to limit the National Government +to functions absolutely needed for the national welfare. All other +powers were "reserved to the states respectively or to the people." + +As time went on, however, and industries expanded it was seen that the +power of no single state was adequate to control concerns operating in +many states at the same time. The need of action by the General +Government became manifest. Power in Congress to legislate on the +subject, albeit somewhat indirectly, was found in the Commerce Clause of +the Constitution, and in the year 1890 the Sherman Anti-Trust Act was +enacted. + +Few statutes have aroused more discussion or been the subject of more +perplexity and misunderstanding. President Taft's remark, made after the +decisions of the Supreme Court in the Standard Oil and Tobacco Trust +cases,[1] that "the business community now knows or ought to know where +it stands," was received with incredulity approaching derision. Yet from +a lawyer's point of view (and it must be borne in mind that the +President was a lawyer and is now Chief Justice of the Court) the +statement cannot be controverted. The decisions in the Standard Oil and +Tobacco cases did in fact dispel whatever uncertainty remained as to +what the Sherman Act means. + +[Footnote 1: _Standard Oil Co. v. United States_, 221 U.S., 1. + +_United States v. American Tobacco Co._, id., 106.] + +The Sherman Act[1] declares unlawful every contract, combination, or +conspiracy in restraint of interstate trade, and every attempt to +monopolize interstate trade. The legal uncertainties that have arisen in +its enforcement have not been with respect to the meaning of the terms +"restraint of trade" and "monopoly," although the popular impression is +to the contrary. In 1890, when the statute was passed, contracts in +restraint of trade and monopolies were already unlawful at common law, +and these terms, by a long series of decisions both here and in England, +had been defined as definitely as the nature of the subject matter +permitted. While incapable (like the term "fraud") of precise definition +covering all forms which the ingenuity of man might devise, nevertheless +their meaning and scope were well within the understanding of any man of +reasonable intelligence. Whatever legal uncertainties have arisen have +been chiefly owing to two questions: first, What is _interstate_ trade +within the meaning of the act? and second, Did the act enlarge the +common-law rule as to what restraints were unlawful? + +[Footnote 1: "An Act to protect trade and commerce against unlawful +restraints and monopolies," approved July 2, 1890.] + +The act was nearly shipwrecked at the outset on the first of these +questions. In the famous Knight case,[1] the first case under the +Sherman Act to reach the Supreme Court, it was held that the +transactions by which the American Sugar Refining Company obtained +control of the Philadelphia refineries and secured a virtual monopoly +could not be reached under the act because they bore no direct relation +to interstate commerce. The effect of this decision naturally was to +cast doubt upon the efficacy of the statute and encourage the trust +builders. Perhaps the case was rightly decided in view of the peculiar +form in which the issues were presented by the pleadings. In the light +of later decisions, however, it is safe to assert that the Court would +now find little difficulty in applying the remedies provided by the +Sherman Act to a similar state of facts, properly presented. While no +prudent lawyer would care to attempt a comprehensive definition of what +constitutes interstate commerce, it may at least be said that the +tendency of the courts has been and is toward a constant broadening of +the term to meet the facts of present-day business. + +[Footnote 1: _United States v. E.C. Knight Company_, 156 U.S., 1.] + +The other question--Did the Sherman Act change the common-law rule as to +what restraints and monopolies are forbidden?--has been even more +troublesome. The lawyers in Congress who framed the law believed that it +did not. This is the testimony of Senator Hoar in his Autobiography, and +as he was a member of the Senate Judiciary Committee which reported the +act in its present form, and claims to have drawn it himself, his +testimony is entitled to belief. The Supreme Court, however, in this +particular went further than was expected. In the Trans-Missouri +Freight Association case,[1] which reached the Supreme Court two years +after the Knight case, that tribunal decided by a five-to-four majority +that the words "_every_ contract ... in restraint of trade" extended the +operation of the law beyond the technical common-law meaning of the +terms employed so as in fact to include all contracts in restraint of +interstate trade without exception or limitation. This theory was +strongly combated by the minority of the court, speaking through Justice +(afterwards Chief Justice) White, and was denounced by many eminent +lawyers, notably the late James C. Carter, then leader of the New York +Bar, who predicted that sooner or later it must be abandoned as +untenable. Their protests were well founded. The theory, carried to its +logical conclusion, would have prohibited a great variety of +transactions theretofore deemed reasonable and proper, and would have +brought large business to a standstill. As a matter of fact, it was +never carried to its logical conclusion, and six years later it was +expressly repudiated by Justice Brewer; one of the five, in the course +of his concurring opinion in the Northern Securities case.[2] Justice +Brewer said that while he believed the Trans-Missouri case had been +rightly decided he also believed that in some respects the reasons given +for the judgment could not be sustained. + + Instead of holding that the Anti-Trust Act included all + contracts, reasonable or unreasonable, in restraint of + interstate trade, the ruling should have been that the + contracts there presented were unreasonable restraints of + interstate trade, and as such within the scope of the Act.... + Whenever a departure from common-law rules and definitions is + claimed, the purpose to make the departure should be clearly + shown. Such a purpose does not appear and such a departure was + not intended. + +[Footnote 1: _United States v. Trans-Missouri Association_, 166 U.S., +290.] + +[Footnote 2: _Northern Securities Company v. United States_, 193 U.S., +197.] + +Nevertheless, the troublesome question remained, to plague lawyers and +the community generally, until it was finally put at rest and the +statute once more planted on the firm ground of common-law rule and +definition by the decisions in the Standard Oil and Tobacco cases. + +What, then, is this common-law rule which President Taft found so clear? +No one has discussed it more lucidly than did the youthful Circuit Judge +Taft himself in delivering the opinion of the Circuit Court of Appeals +in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two +associates on the bench, the late Justices Harlan and Lurton, concurred. +The rule may be briefly stated as follows: + +Every contract or combination whose primary purpose and effect is to fix +prices, limit production, or otherwise restrain trade is unlawful, +provided the restraint be direct, material, and substantial. + +Where, however, the restraint of trade is not direct, but merely +ancillary or collateral to some lawful contract or transaction, it is +not unlawful, provided it is _reasonable_, that is to say, not broader +than is required for the protection of the party in whose favor the +restraint is imposed. + +[Footnote 1: _United States v. Addyston Pipe & Steel Co._, 85 Fed. Rep., +271.] + +A familiar illustration is the sale of a business and its goodwill, +accompanied by a covenant on the part of the vendor not to compete. Such +a covenant is collateral to the sale, and if not broader than is +reasonably required for the protection of the vendee it will be upheld, +although a similar agreement, standing alone and not collateral to a +sale or other lawful transaction, would be in direct restraint of trade +and unlawful. + +So much for the alleged uncertainty of the law. Candid men must agree +with President Taft that in the light of the Supreme Court decisions it +is reasonably clear what the Sherman Law means. But the fact that "the +business community now knows or ought to know where it stands" with +respect to the law does not greatly help the business situation. The +real difficulty lies, not in the uncertainty of the law, but in the fact +that the law does not fit actual present-day conditions. This is partly +because many of the trusts were organized with full knowledge that they +involved a violation of law but in the belief that the law could not or +would not be effectively enforced. The realization that this belief was +mistaken has thrown a good many people into a state of very genuine +bewilderment, but it is an uncertainty, not as to what is firm ground, +but as to how to get out of a bog, once having gotten in. For the most +part, however, the general feeling of insecurity is due not so much to +having knowingly overstepped the law, as to a change in economic +conditions. The spirit of the time is one of coöperation and +combination. It is manifested in the churches and colleges as well as in +the marketplace. In the industrial arena, the tendency has been +intensified by the invention of new machines and the resulting +aggregations of fixed capital in forms designed for particular uses and +incapable of diversion into other channels. Such rules of the common or +customary law as were the outgrowth of an era of mobile capital and free +competition no longer fit the conditions under which we are living. + +In a conflict between economic forces and legal enactment there can +finally be but one outcome. The law must sooner or later adapt itself to +life conditions. The real problem to-day is--how shall this adaptation +be accomplished; how can statutes be framed which shall check abuses +without falling under the wheels of social progress? Right here a swarm +of half-informed theorizers are rushing in where trained economists fear +to tread. It is difficult and dangerous ground, but there is at least +one measure of legal reform--take away the right of one corporation to +hold stock in another--which might be urged with confidence were it not +for the existence of sundry oppressive and conflicting state laws. + +The abolition by law of the holding-company device is no new suggestion. +It was strongly urged years ago by the late Edward B. Whitney. It was +the keystone of the famous "Seven Sisters" statutes,[1] enacted with +loud acclaim in New Jersey at the behest of Governor Woodrow Wilson (but +subsequently repealed and thrown into the discard). Such a measure would +be more effective and far-reaching than the public supposes. Nearly all +the so-called trusts have been organized and are being held together in +whole or in part, by the holding-company device. In many cases this has +been done merely as an innocent measure of convenience. The device, +however, is a perversion of the corporate machine to uses not +contemplated by its inventors and fraught with danger. It is too +powerful a weapon in the hands of those alive to its possibilities, +enabling a small group of men with a relatively insignificant investment +of capital to control a country-wide industry. Take the simplest +possible illustration: The industry of manufacturing a particular +commodity is carried on by a number of corporations scattered throughout +the country with an aggregate capitalization of, say, $10,000,000. A, B, +and C form a holding company to acquire a bare majority of the stock of +each corporation, say $5,100,000 in the aggregate. They dispose of 49 +per cent. of the holding company's stock to the public, retaining a +working majority. At one step they have secured absolute control of a +$10,000,000 industry with an investment of little more than one-quarter +of that amount, and by pursuing the same process further they can reduce +the investment necessary for controlling the industry almost to the +vanishing point. + +[Footnote 1: Laws of New Jersey of 1913, chaps. 13-19.] + +It is needless to enlarge on the possible abuses of the holding-company +device. They are coming to light more and more. The remedy, however, is +not so simple as it seems at first blush. A summary abolition of the +holding-company device would result in great injury and hardship to +industry. In the present condition of the corporation laws of certain of +the states, the right of large corporations to operate through local +subsidiary corporations is a practical necessity. Otherwise they would +be subjected to well-nigh intolerable exactions and interference. It has +been the policy in some states in dealing with foreign corporations to +attempt to impose, under the guise of fees for the privilege of doing +business in the state, a tax on all their property and business wherever +situated. Some of the attempts have been nullified by the Supreme Court +as violative of the prohibition of the Fourteenth Amendment against +taking property without due process of law, but these decisions have +not wholly remedied the evil or checked the ingenuity of state +legislators. In some jurisdictions great corporations seem to be +regarded as fair game for which there is no closed season. + +Right here the scheme of federal incorporation brought forward during +President Taft's administration has many attractions to offer. It would +do away with the principal excuse for the holding-company device, and +pave the way for its abolition. It should satisfy the general public +because it would clothe the Government with enormously increased powers +of regulation and control; it should be attractive to the corporations +because it would afford relief from many of the intolerable +restrictions, not always fair or intelligent, imposed by state +legislatures. Under present conditions the right of a corporation of one +state to do business in another (other than business of an interstate +character) rests merely upon comity and may be granted or refused upon +such terms as interest or prejudice may dictate. The right of a federal +corporation to do business in the several states, on the other hand, +rests upon the powers conferred on Congress by the Constitution and is +not subject to the whims of state lawmakers. Such a corporation is not +"foreign" in the states into which its activity extends and state laws +aimed at foreign corporations will not hit it. Moreover a corporation +with a federal charter can always take its controversies into the +federal courts (except when Congress expressly forbids)[1]--a right of +extreme practical value where anti-corporation feeling or local +prejudice is strong. + +[Footnote 1: The Act of Jan. 28, 1915, took away this right in the case +of railroad companies incorporated under federal charter (38 Stat. +804).] + +The scheme of federal incorporation presents some constitutional +questions. As pointed out in a previous chapter, the Constitution +nowhere expressly confers on Congress the right to grant corporate +charters. Under Chief Justice Marshall's doctrine of "Implied Powers," +however, it has become well settled that Congress has implied power to +charter a corporation whenever that is an appropriate means of +exercising one of the powers expressly conferred, for example, the power +to regulate interstate commerce. The most serious constitutional +question appears to be whether Congress can authorize such a corporation +to manufacture, the process of manufacturing not being an activity of an +interstate character. In any event, the difficulty could be surmounted +by a constitutional amendment. In these days of facile amendment such a +thing seems quite within the range of possibility. + +The scheme of federal incorporation is by no means new. In the +Convention of 1787 which framed the Constitution, Mr. Madison advocated +giving Congress the power to grant charters of incorporation. The +proposition, however, did not find favor, Mr. King suggesting that it +might foster the creation of mercantile monopolies.[1] + +[Footnote 1: See Farrand, "Records of the Federal Convention," Vol. II, +pp. 615-616, 620.] + +This objection would scarcely be urged to-day, when the country-wide +operations of the so-called "trusts" have given them a national +character and made their control by federal power a practical necessity. + + + + +XIII + +WHAT OF THE FUTURE? + + +In the preceding pages we have observed from various viewpoints the +impressive phenomenon of federal encroachment upon state power. It must +have become obvious to the most casual reader that the tide is running +swiftly and has already carried far. Hamilton was mistaken when he +predicted in the _Federalist_[1] that the National Government would +never encroach upon the state authorities. + +[Footnote 1: _Federalist_, Numbers XVII, XXXI.] + +What then of the future? Is the Constitution hopelessly out of date? Are +the states to be submerged and virtually obliterated in the drift toward +centralization? No thoughtful patriot can view such a possibility +without the gravest misgivings. The integrity of the states was a +cardinal principle of our governmental scheme. Abandon that and we are +adrift from the moorings which to the minds of statesmen of past +generations constituted the safety of the republic. + +No mere appeal to precedents and governmental theory will check the +current. The Americans are a practical people, moving forward with +conscious power toward the attainment of their aims, along the lines +which seem to them most direct. They are more interested in results than +in methods or theories. Experience has demonstrated that federal control +often spells uniformity and efficiency where state control had meant +divisions and weakness. They favor federal control because it gets +results. + +There is another aspect of the matter, however. The burden of federal +bureaucracy is beginning to be felt by the average man. He is being +regulated more and more, in his meats and drinks, his morals and the +activities of his daily life, from Washington. If he will only stop and +think he must realize that no one central authority can supervise the +daily lives of a hundred million people, scattered over half a +continent, without becoming top-heavy. He must realize, too, that, even +if such a centralization of power and responsibility were humanly +possible, our National Government is unsuited for the task. The +electorate is too numerous and heterogeneous; its interests and needs +are too diverse. Shall the conduct of citizens of Mississippi be +prescribed by vote of congressmen from New York, or supervised at the +expense of New York taxpayers? Will an educational system suitable for +Massachusetts necessarily fit the young of Georgia? Such suggestions +carry their own answer. In the very nature of things there is bound to +be a reaction against centralization sooner or later. The real question +is whether it will come in time to save the present constitutional +scheme. + +The makers of the Constitution never intended that the people of one +state should regulate, or pay for supervising, the conduct of citizens +of another state. They made a division of governmental powers between +nation and states along broad and obvious lines. To the Federal +Government were entrusted matters of a strictly national +character--foreign relations, interstate commerce, fiscal and monetary +system, post office, patents and copyrights. Everything else was +reserved, to the states or the people. Here was a scheme at once +explicit and elastic. Explicit as to the nature of the functions to be +performed by the National Government; elastic enough to permit the +exercise of all other powers reasonably incidental to the powers +expressly granted. The Constitution is not, and never was intended to +be, a strait-jacket. + +Proofs abound of the adequacy of the constitutional scheme to deal with +changing conditions. For example, when the Constitution was adopted, +railroads, the most powerful economic force in our present civilization, +were unknown. Nevertheless, the Constitution contains adequate provision +for dealing with the railroads. They are instruments of interstate +commerce and may be controlled by the Federal Government under the +express grant of power to regulate such commerce. Similar considerations +apply in the case of those nationwide industrial combinations popularly +known as "trusts." Their activities are largely in the field of +interstate commerce and are subject to control as such by the Federal +Government. Theoretically, only such activities of the railroads and +trusts as are of an interstate character fall within the federal +jurisdiction. Everything else lies within the jurisdiction of the +states. However, a practical people will not long permit matters which +are essentially single and entire in their nature (for example, railroad +classifications and rates) to be split up merely for purposes of legal +jurisdiction and control. In such matters, therefore, some measure of +federal encroachment is inevitable in order that industry and progress +shall not be hampered. The encroachment, however, is more apparent than +real. The industries are national in scope, and all the activities of +each are more or less interwoven and interdependent. Hence state +regulation of the intrastate activities may sometimes be overruled as an +interference with federal regulation of the interstate commerce. There +is nothing in this which involves any real violation of the +Constitution. It is merely an application of Marshall's doctrine of +implied powers. + +Social welfare legislation presents a very different problem. Some of +the most dangerous assaults upon the Constitution to-day are being made +in that field. The leaven of socialistic ideas is working. +Representative government is becoming more paternalistic. Legislation +dealing with conduct and social and economic conditions is being +demanded by public sentiment in constantly increasing measure. Such +legislation for the most part affects state police power and lies +clearly outside the scope of the powers conferred by the Constitution on +the National Government. Moreover, "the insulated chambers afforded by +the several states" (to borrow a phrase of Justice Oliver Wendell +Holmes) are ideal fields for social experiment. If an experiment +succeed, other states will follow suit. If it prove disastrous, the +damage is localized. The nation as a whole remains unharmed. The +sponsors for such legislation, however, are seldom content to deal with +the states. Reform was ever impatient. The state method seems too slow, +and the difficulty of securing uniformity too formidable. Moreover, it +often happens that some states are indifferent to the reform proposed or +even actively hostile. Accordingly, recourse is had to Congress, and +Congress looks for a way to meet the popular demand. There being no +direct way, and public sentiment being insistent, Congressmen find +themselves under the painful necessity of circumventing the Constitution +they have sworn to uphold. The desired legislation is enacted under the +guise of an act to regulate commerce or raise revenue, and the task of +upholding the Constitution is passed to the Supreme Court. + +Such subterfuges, far from arousing public condemnation, are praised by +the unthinking as far-sighted statesmanship. It is popular nowadays to +apply the term "forward-looking" to people who would make the National +Government an agency for social-welfare work, and to characterize as +"lacking in vision" anyone who interposes a constitutional principle in +the path of a social reform. Friends of progress sometimes forget that +the real forward-looking man is he who can see the pitfall ahead as well +as the rainbow; the man of true vision is one whose view of the stars is +steadied by keeping his feet firmly on the ground. + +It cannot be reiterated too often that, under our political system, +legislation in the nature of police regulation (except in so far as it +affects commerce or foreign relations) is the province of the states, +not of the National Government. This is not merely sound constitutional +law; it is good sense as well. Regulations salutary for Scandinavian +immigrants of the northwest may not fit the Creoles of Louisiana. In the +long run the police power will be exercised most advantageously for all +concerned by local authority. + +The present tendency toward centralization cannot go on indefinitely. A +point must be reached sooner or later when an over-centralized +government becomes intolerable and breaks down of its own weight. As an +eminent authority has put it: "If we did not have states we should +speedily have to create them."[1] The states thus created, however, +would not be the same. They would be mere governmental subdivisions, +without the independence, the historic background, the traditions, or +the sentiment of the present states. These influences, hitherto so +potent in our national life, would have been lost. + +[Footnote 1: Address of Supreme Court Justice Charles E. Hughes before +New York State Bar Association, January 14, 1916.] + +In a memorable address delivered in the year 1906 before the +Pennsylvania Society in New York, Elihu Root, then Secretary of State in +President Roosevelt's Cabinet, discussed the encroachments of federal +power and expressed the view that the only way in which the states could +maintain their power and authority was by awakening to a realization of +their own duties to the country at large. He said: + + The Governmental control which they (the people) deem just and + necessary they will have. It may be that such control would + better be exercised in particular instances by the governments + of the states, but the people will have the control they need + either from the states or from the National Government; and if + the states fail to furnish it in due measure, sooner or later + constructions of the Constitution will be found to vest the + power where it will be exercised--in the National Government. + The true and only way to preserve state authority is to be + found in the awakened conscience of the states, their + broadened views and higher standard of responsibility to the + general public; in effective legislation by the states, in + conformity to the general moral sense of the country; and in + the vigorous exercise for the general public good of that + state authority which is to be preserved. + +Those words, spoken fifteen years ago, were prophetic. Moreover, they +are as true to-day as when they were uttered. + +Will the people see these things in time? Americans with pride in their +country's past and confidence in her future dare not say No. The +awakening may be slow. Currents of popular will are not readily turned. +It is hard to make the people think. But if leaders and teachers do +their part American intelligence and prudence will assert themselves, +and the slogan of an awakened public sentiment may yet be: "Back to the +Constitution!" + + + + +APPENDIX + +CONSTITUTION OF THE UNITED STATES OF AMERICA + + +WE THE PEOPLE of the United States, in Order to form a more perfect +Union, establish Justice, insure domestic Tranquility, provide for the +common defence, promote the general Welfare, and secure the Blessings of +Liberty to ourselves and our Posterity, do ordain and establish this +CONSTITUTION for the United States of America. + + +ARTICLE I. + +SECTION 1. All legislative Powers herein granted shall be vested in a +Congress of the United States, which shall consist of a Senate and House +of Representatives. + +SECTION 2. The House of Representatives shall be composed of Members +chosen every second Year by the People of the several States, and the +Electors in each State shall have the Qualifications requisite for +Electors of the most numerous Branch of the State Legislature. + +No Person shall be a Representative who shall not have attained to the +Age of twenty-five Years, and been seven Years a Citizen of the United +States, and who shall not, when elected, be an Inhabitant of that State +in which he shall be chosen. + +Representatives and direct Taxes shall be apportioned among the several +States which may be included within this Union, according to their +respective Numbers which shall be determined by adding to the whole +Number of free Persons, including those bound to Service for a Term of +Years, and excluding Indians not taxed, three-fifths of all other +Persons. The actual Enumeration shall be made within three Years after +the first Meeting of the Congress of the United States, and within every +subsequent Term of ten Years, in such Manner as they shall by Law +direct. The Number of Representatives shall not exceed one for every +thirty Thousand, but each State shall have at Least one Representative; +and until such enumeration shall be made, the State of New Hampshire +shall be entitled to chuse three, Massachusetts eight, Rhode Island and +Providence Plantations one, Connecticut five, New York six, New Jersey +four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, +North Carolina five, South Carolina five, and Georgia three. + +When vacancies happen in the Representation from any State, the +Executive Authority thereof shall issue Writs of Election to fill such +Vacancies. + +The House of Representatives shall chuse their Speaker and other +Officers; and shall have the sole Power of Impeachment. + +SECTION 3. The Senate of the United States shall be composed of two +Senators from each State, chosen by the Legislature thereof, for six +Years; and each Senator shall have one Vote. + +Immediately after they shall be assembled in Consequence of the first +Election, they shall be divided as equally as may be into three Classes. +The Seats of the Senators of the first Class shall be vacated at the +Expiration of the second Year, of the second Class at the Expiration of +the fourth Year, and of the third Class at the Expiration of the sixth +Year, so that one third may be chosen every second Year; and if +Vacancies happen by Resignation, or otherwise, during the Recess of the +Legislature of any State, the Executive thereof may make temporary +Appointments until the next Meeting of the Legislature, which shall then +fill such Vacancies. + +No Person shall be a Senator who shall not have attained to the Age of +thirty Years, and been nine Years a Citizen of the United States, and +who shall not, when elected, be an Inhabitant of that State for which he +shall be chosen. + +The Vice President of the United States shall be President of the +Senate, but shall have no Vote, unless they be equally divided. + +The Senate shall chuse their other Officers, and also a President pro +tempore, in the Absence of the Vice President, or when he shall exercise +the Office of President of the United States. + +The Senate shall have the sole Power to try all Impeachments. When +sitting for that Purpose, they shall be on Oath or Affirmation. When the +President of the United States is tried, the Chief Justice shall +preside: And no Person shall be convicted without the Concurrence of two +thirds of the Members present. + +Judgment in Cases of Impeachment shall not extend further than to +removal from Office, and disqualification to hold and enjoy any Office +of honor, Trust or Profit under the United States: but the Party +convicted shall nevertheless be liable and subject to Indictment, +Trial, Judgment and Punishment, according to Law. + +SECTION 4. The Times, Places and Manner of holding Elections for +Senators and Representatives, shall be prescribed in each State by the +Legislature thereof; but the Congress may at any time by Law make or +alter such Regulations, except as to the Places of chusing Senators. + +The Congress shall assemble at least once in every Year, and such +Meeting shall be on the first Monday in December, unless they shall by +Law appoint a different Day. + +SECTION 5. Each House shall be the Judge of the Elections, Returns and +Qualifications of its own Members, and a Majority of each shall +constitute a Quorum to do Business; but a smaller Number may adjourn +from day to day, and may be authorized to compel the Attendance of +absent Members, in such Manner, and under such Penalties as each House +may provide. + +Each House may determine the Rules of its Proceedings, punish its +Members for disorderly Behavior, and, with the Concurrence of two +thirds, expel a Member. + +Each House shall keep a Journal of its Proceedings, and from time to +time publish the same, excepting such Parts as may in their Judgment +require Secrecy; and the Yeas and Nays of the Members of either House on +any question shall, at the Desire of one fifth of those Present, be +entered on the Journal. + +Neither House, during the Session of Congress, shall, without the +Consent of the other, adjourn for more than three days, nor to any other +Place than that in which the two Houses shall be sitting. + +SECTION 6. The Senators and Representatives shall receive a +Compensation for their Services, to be ascertained by Law, and paid out +of the Treasury of the United States. They shall in all Cases, except +Treason, Felony and Breach of the Peace, be privileged from Arrest +during their Attendance at the Session of their respective Houses, and +in going to and returning from the same; and for any Speech or Debate in +either House, they shall not be questioned in any other Place. + +No Senator or Representative shall, during the Time for which he was +elected, be appointed to any civil Office under the Authority of the +United States, which shall have been created, or the Emoluments whereof +shall have been encreased during such time; and no Person holding any +Office under the United States, shall be a Member of either House during +his Continuance in Office. + +SECTION 7. All Bills for raising Revenue shall originate in the House of +Representatives; but the Senate may propose or concur with Amendments as +on other Bills. + +Every Bill which shall have passed the House of Representatives and the +Senate, shall, before it become a Law, be presented to the President of +the United States; If he approve he shall sign it, but if not he shall +return it, with his Objections to that House in which it shall have +originated, who shall enter the Objections at large on their Journal, +and proceed to reconsider it. If after such Reconsideration two thirds +of that House shall agree to pass the Bill, it shall be sent, together +with the Objections, to the other House, by which it shall likewise be +reconsidered, and if approved by two thirds of that House, it shall +become a Law. But in all such Cases the Votes of both Houses shall be +determined by Yeas and Nays, and the Names of the Persons voting for +and against the Bill shall be entered on the Journal of each House +respectively. If any Bill shall not be returned by the President within +ten Days (Sundays excepted) after it shall have been presented to him, +the Same shall be a Law, in like Manner as if he had signed it, unless +the Congress by their Adjournment prevent its Return, in which Case it +shall not be a Law. + +Every Order, Resolution, or Vote to which the Concurrence of the Senate +and House of Representatives may be necessary (except on a question of +Adjournment) shall be presented to the President of the United States; +and before the Same shall take Effect, shall be approved by him, or +being disapproved by him, shall be repassed by two thirds of the Senate +and House of Representatives, according to the Rules and Limitations +prescribed in the Case of a Bill. + +SECTION 8. The Congress shall have Power To lay and collect Taxes, +Duties, Imposts and Excises, to pay the Debts and provide for the common +Defence and general Welfare of the United States; but all Duties, +Imposts and Excises shall be uniform throughout the United States; + +To borrow Money on the credit of the United States; + +To regulate Commerce with foreign Nations, and among the several States, +and with the Indian Tribes; + +To establish an uniform Rule of Naturalization, and uniform Laws on the +subject of Bankruptcies throughout the United States; + +To coin Money, regulate the Value thereof, and of foreign Coin, and fix +the Standard of Weights and Measures; + +To provide for the Punishment of counterfeiting the Securities and +current Coin of the United States; + +To establish Post Offices and post Roads; + +To promote the Progress of Science and useful Arts, by securing for +limited Times to Authors and Inventors the exclusive Right to their +respective Writings and Discoveries; + +To constitute Tribunals inferior to the supreme Court; + +To define and punish Piracies and Felonies committed on the high Seas, +and Offences against the Law of Nations; + +To declare War, grant Letters of Marque and Reprisal, and make Rules +concerning Captures on Land and Water; + +To raise and support Armies, but no Appropriation of Money to that Use +shall be for a longer Term than two Years; + +To provide and maintain a Navy; + +To make Rules for the Government and Regulation of the land and naval +Forces; + +To provide for calling forth the Militia to execute the Laws of the +Union, suppress Insurrections and repel Invasions; + +To provide for organizing, arming, and disciplining, the Militia, and +for governing such Part of them as may be employed in the Service of the +United States, reserving to the States respectively, the Appointment of +the Officers, and the Authority of training the Militia according to the +discipline prescribed by Congress; + +To exercise exclusive Legislation in all Cases whatsoever, over such +District (not exceeding ten Miles square) as may, by Cession of +particular States, and the Acceptance of Congress, become the Seat of +the Government of the United States, and to exercise like Authority over +all Places purchased by the Consent of the Legislature of the State in +which the Same shall be, for the Erection of Forts, Magazines, Arsenals, +dock-Yards, and other needful Buildings;--And + +To make all Laws which shall be necessary and proper for carrying into +Execution the foregoing Powers, and all other Powers vested by this +Constitution in the Government of the United States, or in any +Department or Officer thereof. + +SECTION 9. The Migration or Importation of such Persons as any of the +States now existing shall think proper to admit, shall not be prohibited +by the Congress prior to the Year one thousand eight hundred and eight, +but a Tax or duty may be imposed on such Importation, not exceeding ten +dollars for each Person. + +The Privilege of the Writ of Habeas Corpus shall not be suspended, +unless when in Cases of Rebellion or Invasion the public Safety may +require it. + +No Bill of Attainder or ex post facto Law shall be passed. + +No Capitation, or other direct, tax shall be laid, unless in Proportion +to the Census or Enumeration herein before directed to be taken. + +No Tax or Duty shall be laid on Articles exported from any State. + +No Preference shall be given by any Regulation of Commerce or Revenue to +the Ports of one State over those of another: nor shall Vessels bound +to, or from, one State, be obliged to enter, clear, or pay Duties in +another. + +No Money shall be drawn from the Treasury, but in Consequence of +Appropriations made by Law; and a regular Statement and Account of the +Receipts and Expenditures of all public Money shall be published from +time to time. + +No Title of Nobility shall be granted by the United States: And no +Person holding any Office of Profit or Trust under them, shall, without +the Consent of the Congress, accept of any present, Emolument, Office, +or Title, of any kind whatever, from any King, Prince, or foreign State. + +SECTION 10. No State shall enter into any Treaty, Alliance, or +Confederation; grant Letters of Marque and Reprisal; coin Money; emit +Bills of Credit; make any Thing but gold and silver Coin a Tender in +Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law +impairing the Obligation of Contracts, or grant any Title of Nobility. + +No State shall, without the Consent of the Congress, lay any Imposts or +Duties on Imports or Exports, except what may be absolutely necessary +for executing its inspection Laws: and the net Produce of all Duties and +Imposts, laid by any State on Imports or Exports, shall be for the Use +of the Treasury of the United States; and all such Laws shall be subject +to the Revision and Controul of the Congress. + +No State shall, without the Consent of Congress, lay any Duty of +Tonnage, keep Troops, or Ships of War in time of Peace, enter into any +Agreement or Compact with another State, or with a foreign Power, or +engage in War, unless actually invaded, or in such imminent Danger as +will not admit of delay. + + +ARTICLE II. + +SECTION 1. The executive Power shall be vested in a President of the +United States of America. He shall hold his Office during the Term of +four Years, and, together with the Vice President, chosen for the same +Term, be elected, as follows + +Each State shall appoint, in such Manner as the Legislature thereof may +direct, a Number of Electors, equal to the whole Number of Senators and +Representatives to which the State may be entitled in the Congress: but +no Senator or Representative, or Person holding an Office of Trust or +Profit under the United States, shall be appointed an Elector. + +The electors shall meet in their respective States, and vote by ballot +for two Persons, of whom one at least shall not be an Inhabitant of the +same State with themselves. And they shall make a List of all the +Persons voted for, and of the Number of Votes for each; which List they +shall sign and certify, and transmit sealed to the Seat of the +Government of the United States, directed to the President of the +Senate. The President of the Senate shall, in the Presence of the Senate +and House of Representatives, open all the Certificates, and the Votes +shall then be counted. The Person having the greatest Number of Votes +shall be the President, if such Number be a Majority of the whole Number +of Electors appointed; and if there be more than one who have such +Majority, and have an equal Number of Votes, then the House of +Representatives shall immediately chuse by Ballot one of them for +President; and if no Person have a Majority, then from the five highest +on the List the said House shall in like Manner chuse the President. But +in chusing the President, the Votes shall be taken by States, the +Representation from each State having one Vote; A quorum for this +Purpose shall consist of a Member or Members from two thirds of the +States, and a Majority of all the States shall be necessary to a Choice. +In every Case, after the Choice of the President, the Person having the +greatest Number of Votes of the Electors shall be the Vice President. +But if there should remain two or more who have equal Votes, the Senate +shall chuse from them by Ballot the Vice President. + +The Congress may determine the Time of chusing the Electors, and the Day +on which they shall give their Votes; which Day shall be the same +throughout the United States. + +No Person except a natural born Citizen, or a Citizen of the United +States, at the time of the Adoption of this Constitution, shall be +eligible to the Office of President; neither shall any Person be +eligible to that Office who shall not have attained to the Age of thirty +five Years, and been fourteen Years a Resident within the United States. + +In Case of the Removal of the President from Office, or of his Death, +Resignation, or Inability to discharge the Powers and Duties of the said +Office, the same shall devolve on the Vice President, and the Congress +may by Law provide for the Case of Removal, Death, Resignation, or +Inability, both of the President and Vice President, declaring what +Officer shall then act as President, and such Officer shall act +accordingly, until the Disability be removed, or a President shall be +elected. + +The President shall, at stated Times, receive for his Services, a +Compensation, which shall neither be encreased nor diminished during the +Period for which he shall have been elected, and he shall not receive +within that Period any other Emolument from the United States, or any of +them. + +Before he enter on the Execution of his Office, he shall take the +following Oath or Affirmation:--"I do solemnly swear (or affirm) that I +will faithfully execute the Office of President of the United States, +and will to the best of my Ability, preserve, protect and defend the +Constitution of the United States." + +SECTION 2. The President shall be Commander in Chief of the Army and +Navy of the United States, and of the Militia of the several States, +when called into the actual Service of the United States; he may require +the Opinion, in writing, of the principal Officer in each of the +executive Departments, upon any Subject relating to the Duties of their +respective Offices, and he shall have Power to grant Reprieves and +Pardons for Offences against the United States, except in Cases of +Impeachment. + +He shall have Power, by and with the Advice and Consent of the Senate, +to make Treaties, provided two thirds of the Senators present concur; +and he shall nominate, and by and with the Advice and Consent of the +Senate, shall appoint Ambassadors, other public Ministers and Consuls, +Judges of the supreme Court, and all other Officers of the United +States, whose Appointments are not herein otherwise provided for, and +which shall be established by Law: but the Congress may by Law vest the +Appointment of such inferior Officers, as they think proper, in the +President alone, in the Courts of Law, or in the Heads of Departments. + +The President shall have Power to fill up all Vacancies that may happen +during the Recess of the Senate, by granting Commissions which shall +expire at the End of their next Session. + +SECTION 3. He shall from time to time give to the Congress Information +of the State of the Union, and recommend to their Consideration such +Measures as he shall judge necessary and expedient; he may, on +extraordinary Occasions, convene both Houses, or either of them, and in +Case of Disagreement between them, with Respect to the Time of +Adjournment, he may adjourn them to such Time as he shall think proper; +he shall receive Ambassadors and other public Ministers; he shall take +Care that the Laws be faithfully executed, and shall Commission all the +Officers of the United States. + +SECTION 4. The President, Vice President and all civil Officers of the +United States, shall be removed from Office on Impeachment for, and +Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors. + + +ARTICLE III. + +SECTION 1. The judicial Power of the United States, shall be vested in +one supreme Court, and in such inferior Courts as the Congress may from +time to time ordain and establish. The Judges, both of the supreme and +inferior Courts, shall hold their Offices during good Behaviour, and +shall, at stated Times, receive for their Services, a Compensation, +which shall not be diminished during their Continuance in Office. + +SECTION 2. The judicial Power shall extend to all Cases, in Law and +Equity, arising under this Constitution, the Laws of the United States, +and Treaties made, or which shall be made, under their Authority;--to +all Cases affecting Ambassadors, other public Ministers and Consuls;--to +all Cases of admiralty and maritime Jurisdiction;--to Controversies to +which the United States shall be a Party;--to Controversies between two +or more States;--between a State and Citizens of another +State;--between Citizens of different States,--between Citizens of the +same State claiming Lands under Grants of different States, and between +a State, or the Citizens thereof, and foreign States, Citizens or +Subjects. + +In all Cases affecting Ambassadors, other public Ministers and Consuls, +and those in which a State shall be Party, the supreme Court shall have +original Jurisdiction. In all the other Cases before mentioned, the +supreme Court shall have appellate Jurisdiction, both as to Law and +Fact, with such Exceptions, and under such Regulations as the Congress +shall make. + +The Trial of all Crimes, except in Cases of Impeachment, shall be by +Jury; and such Trial shall be held in the State where the said Crimes +shall have been committed; but when not committed within any State, the +Trial shall be at such Place or Places as the Congress may by Law have +directed. + +SECTION 3. Treason against the United States, shall consist only in +levying War against them, or in adhering to their Enemies, giving them +Aid and Comfort. No Person shall be convicted of Treason unless on the +Testimony of two Witnesses to the same overt Act, or on Confession in +open Court. + +The Congress shall have Power to declare the Punishment of Treason, but +no Attainder of Treason shall work Corruption of Blood, or Forfeiture +except during the Life of the Person attainted. + + +ARTICLE IV. + +SECTION 1. Full Faith and Credit shall be given in each State to the +public Acts, Records, and judicial Proceedings of every other State. +And the Congress may by general Laws prescribe the Manner in which such +Acts, Records and Proceedings shall be proved, and the Effect thereof. + +SECTION 2. The Citizens of each State shall be entitled to all +Privileges and Immunities of Citizens in the several States. + +A person charged in any State with Treason, Felony, or other Crime, who +shall flee from Justice, and be found in another State, shall on Demand +of the executive Authority of the State from which he fled, be delivered +up, to be removed to the State having Jurisdiction of the Crime. + +No Person held to Service or Labour in one State, under the Laws +thereof, escaping into another, shall, in Consequence of any Law or +Regulation therein, be discharged from such Service or Labour, but shall +be delivered up on Claim of the Party to whom such Service or Labour may +be due. + +SECTION 3. New States may be admitted by the Congress into this Union; +but no new State shall be formed or erected within the Jurisdiction of +any other State; nor any State be formed by the Junction of two or more +States, or Parts of States, without the Consent of the Legislatures of +the States concerned as well as of the Congress. + +The Congress shall have Power to dispose of and make all needful Rules +and Regulations respecting the Territory or other Property belonging to +the United States; and nothing in this Constitution shall be so +construed as to Prejudice any Claims of the United States, or of any +particular State. + +SECTION 4. The United States shall guarantee to every State in this +Union a Republican Form of Government, and shall protect each of them +against Invasion; and on Application of the Legislature, or of the +Executive (when the Legislature cannot be convened) against domestic +Violence. + + +ARTICLE V. + +The Congress, whenever two thirds of both Houses shall deem it +necessary, shall propose Amendments to this Constitution, or, on the +Application of the Legislatures of two thirds of the several States, +shall call a Convention for proposing Amendments, which, in either Case, +shall be valid to all Intents and Purposes, as Part of this +Constitution, when ratified by the Legislatures of three fourths of the +several States, or by Conventions in three fourths thereof, as the one +or the other Mode of Ratification may be proposed by the Congress; +Provided that no Amendment which may be made prior to the Year One +thousand eight hundred and eight shall in any Manner affect the first +and fourth Clauses in the Ninth Section of the first Article; and that +no State, without its Consent, shall be deprived of its equal Suffrage +in the Senate. + + +ARTICLE VI. + +All Debts contracted and Engagements entered into, before the Adoption +of this Constitution, shall be as valid against the United States under +this Constitution, as under the Confederation. + +This Constitution, and the Laws of the United States which shall be made +in Pursuance thereof; and all Treaties made, or which shall be made, +under the Authority of the United States, shall be the supreme Law of +the Land; and the Judges in every State shall be bound thereby, any +Thing in the Constitution or Laws of any State to the Contrary +notwithstanding. + +The Senators and Representatives before mentioned, and the Members of +the several State Legislatures, and all executive and judicial Officers, +both of the United States and of the several States, shall be bound by +Oath or Affirmation, to support this Constitution; but no religious Test +shall ever be required as a Qualification to any Office or public Trust +under the United States. + + +ARTICLE VII. + +The Ratification of the Conventions of nine States shall be sufficient +for the Establishment of this Constitution between the States so +ratifying the Same. + +Done in Convention by the Unanimous Consent of the States present the +Seventeenth Day of September in the Year of our Lord one thousand seven +hundred and Eighty seven, and of the Independence of the United States +of America the Twelfth IN WITNESS whereof We have hereunto subscribed +our Names. + +G'o: WASHINGTON---- +_Presidt. and deputy from Virginia_ + +_New Hampshire_ { JOHN LANGDON + { NICHOLAS GILMAN + +_Massachusetts_ { NATHANIEL GORHAM + { RUFUS KING + +_Connecticut_ { WM. SAML. JOHNSON + { ROGER SHERMAN + +_New York_ ALEXANDER HAMILTON + + { WIL: LIVINGSTON +_New Jersey_ { DAVID BREARLEY + { WM. PATERSON + { JONA: DAYTON + + { B. FRANKLIN + { THOMAS MIFFLIN + { ROBT. MORRIS +_Pennsylvania_ { GEO. CLYMER + { THOS. FITZSIMONS + { JARED INGERSOLL + { JAMES WILSON + { GOUV MORRIS + + { GEO: READ + { GUNNING BEDFORD Jun +_Delaware_ { JOHN DICKINSON + { RICHARD BASSETT + { JACO: BROOM + + { JAMES McHENRY +_Maryland_ { DAN OF ST THOS JENIFER + { DANL. CARROLL + +_Virginia_ { JOHN BLAIR-- + { JAMES MADISON JR. + + { WM. BLOUNT +_North Carolina_ { RICHD. DOBBS SPAIGHT + { HU WILLIAMSON + + { J. RUTLEDGE +_South Carolina_ { CHARLES COTESWORTH PINCKNEY + { CHARLES PINCKNEY + { PIERCE BUTLER + +_Georgia_ { WILLIAM FEW + { ABR. BALDWIN + +_Attest_ WILLIAM JACKSON _Secretary_ + + + + +AMENDMENTS + + +[ARTICLE I.] + +Congress shall make no law respecting an establishment of religion, or +prohibiting the free exercise thereof; or abridging the freedom of +speech, or of the press; or the right of the people peaceably to +assemble, and to petition the Government for a redress of grievances. + + +[ARTICLE II.] + +A well regulated Militia, being necessary to the security of a free +State, the right of the people to keep and bear Arms, shall not be +infringed. + + +[ARTICLE III.] + +No Soldier shall, in time of peace be quartered in any house, without +the consent of the Owner, nor in time of war, but in a manner to be +prescribed by law. + + +[ARTICLE IV.] + +The right of the people to be secure in their persons, houses, papers, +and effects, against unreasonable searches and seizures, shall not be +violated, and no Warrants shall issue, but upon probable cause, +supported by Oath or affirmation, and particularly describing the place +to be searched, and the persons or things to be seized. + + +[ARTICLE V.] + +No person shall be held to answer for a capital, or otherwise infamous +crime, unless on a presentment or indictment of a Grand Jury, except in +cases arising in the land or naval forces, or in the Militia, when in +actual service in time of War or public danger; nor shall any person be +subject for the same offence to be twice put in jeopardy of life or +limb; nor shall be compelled in any Criminal Case to be a witness +against himself, nor be deprived of life, liberty, or property, without +due process of law; nor shall private property be taken for public use, +without just compensation. + + +[ARTICLE VI.] + +In all criminal prosecutions, the accused shall enjoy the right to a +speedy and public trial, by an impartial jury of the State and district +wherein the crime shall have been committed, which district shall have +been previously ascertained by law, and to be informed of the nature and +cause of the accusation; to be confronted with the witnesses against +him; to have compulsory process for obtaining Witnesses in his favor, +and to have the Assistance of Counsel for his defence. + + +[ARTICLE VII.] + +In suits at common law, where the value in controversy shall exceed +twenty dollars, the right of trial by jury shall be preserved, and no +fact tried by a jury shall be otherwise re-examined in any Court of the +United States, than according to the rules of the common law. + + +[ARTICLE VIII.] + +Excessive bail shall not be required, nor excessive fines imposed, nor +cruel and unusual punishments inflicted. + + +[ARTICLE IX.] + +The enumeration in the Constitution, of certain rights, shall not be +construed to deny or disparage others retained by the people. + + +[ARTICLE X.] + +The powers not delegated to the United States by the Constitution, nor +prohibited by it to the States, are reserved to the States respectively, +or to the people. + + +[ARTICLE XI.] + +The Judicial power of the United States shall not be construed to extend +to any suit in law or equity, commenced or prosecuted against one of the +United States by Citizens of another State, or by Citizens or Subjects +of any Foreign State. + + +[ARTICLE XII.] + +The Electors shall meet in their respective states, and vote by ballot +for President and Vice-President, one of whom, at least, shall not be an +inhabitant of the same state with themselves; they shall name in their +ballots the person voted for as President, and in distinct ballots the +person voted for as Vice-President, and they shall make distinct lists +of all persons voted for as President, and of all persons voted for as +Vice-President, and of the number of votes for each, which lists they +shall sign and certify, and transmit sealed to the seat of the +government of the United States, directed to the President of the +Senate;--The President of the Senate shall, in the presence of the +Senate and House of Representatives, open all the certificates and the +votes shall then be counted;--The person having the greatest number of +votes for President, shall be the President, if such number be a +majority of the whole number of Electors appointed; and if no person +have such majority, then from the persons having the highest numbers not +exceeding three on the list of those voted for as President, the House +of Representatives shall choose immediately, by ballot, the President. +But in choosing the President, the votes shall be taken by states, the +representation from each state having one vote; a quorum for this +purpose shall consist of a member or members from two-thirds of the +states, and a majority of all the states shall be necessary to a choice. +And if the House of Representatives shall not choose a President +whenever the right of choice shall devolve upon them, before the fourth +day of March next following, then the Vice-President shall act as +President, as in the case of the death or other constitutional +disability of the President. The person having the greatest number of +votes as Vice-President, shall be the Vice-President, if such number be +a majority of the whole number of Electors appointed, and if no person +have a majority, then from the two highest numbers on the list, the +Senate shall choose the Vice-President; a quorum for the purpose shall +consist of two-thirds of the whole number of Senators, and a majority of +the whole number shall be necessary to a choice. But no person +constitutionally ineligible to the office of President shall be eligible +to that of Vice-President of the United States. + + +[ARTICLE XIII.] + +SECTION 1. Neither slavery nor involuntary servitude, except as a +punishment for crime whereof the party shall have been duly convicted, +shall exist within the United States, or any place subject to their +jurisdiction. + +SECTION 2. Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XIV.] + +SECTION 1. All persons born or naturalized in the United States, and +subject to the jurisdiction thereof, are citizens of the United States +and of the State wherein they reside. No State shall make or enforce any +law which shall abridge the privileges or immunities of citizens of the +United States; nor shall any State deprive any person of life, liberty, +or property, without due process of law; nor deny to any person within +its jurisdiction the equal protection of the laws. + +SECTION 2. Representatives shall be apportioned among the several States +according to their respective numbers, counting the whole number of +persons in each State, excluding Indians not taxed. But when the right +to vote at any election for the choice of electors for President and +Vice-President of the United States, Representatives in Congress, the +Executive and Judicial officers of a State, or the members of the +Legislature thereof, is denied to any of the male inhabitants of such +State, being twenty-one years of age, and citizens of the United States, +or in any way abridged, except for participation in rebellion, or other +crime, the basis of representation therein shall be reduced in the +proportion which the number of such male citizens shall bear to the +whole number of male citizens twenty-one years of age in such State. + +SECTION 3. No person shall be a Senator or Representative in Congress, +or elector of President and Vice-President, or hold any office, civil or +military, under the United States, or under any State, who, having +previously taken an oath, as a member of Congress, or as an officer of +the United States, or as a member of any State legislature, or as an +executive or judicial officer of any State, to support the Constitution +of the United States, shall have engaged in insurrection or rebellion +against the same, or given aid or comfort to the enemies thereof. But +Congress may by a vote of two-thirds of each House, remove such +disability. + +SECTION 4. The validity of the public debt of the United States, +authorized by law, including debts incurred for payment of pensions and +bounties for services in suppressing insurrection or rebellion, shall +not be questioned. But neither the United States nor any State shall +assume or pay any debt or obligation incurred in aid of insurrection or +rebellion against the United States, or any claim for the loss or +emancipation of any slave; but all such debts, obligations and claims +shall be held illegal and void. + +SECTION 5. The Congress shall have power to enforce, by appropriate +legislation, the provisions of this article. + + +[ARTICLE XV.] + +SECTION 1. The right of citizens of the United States to vote shall not +be denied or abridged by the United States or by any State on account of +race, color, or previous condition of servitude. + +SECTION 2. The Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XVI.] + +The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several States, +and without regard to any census or enumeration. + + +[ARTICLE XVII.] + +The Senate of the United States shall be composed of two Senators from +each State, elected by the people thereof, for six years; and each +Senator shall have one vote. The electors in each State shall have the +qualifications requisite for electors of the most numerous branch of the +state legislatures. + +When vacancies happen in the representation of any State in the Senate, +the executive authority of such State shall issue writs of election to +fill such vacancies: Provided, That the legislature of any State may +empower the executive thereof to make temporary appointment until the +people fill the vacancies by election as the legislature may direct. + +This amendment shall not be so construed as to affect the election or +term of any Senator chosen before it becomes valid as part of the +Constitution. + + +[ARTICLE XVIII.] + +SECTION 1. After one year from the ratification of this article the +manufacture, sale, or transportation of intoxicating liquors within, the +importation thereof into, or the exportation thereof from the United +States and all territory subject to the jurisdiction thereof for +beverage purposes is hereby prohibited. + +SEC. 2. The Congress and the several States shall have concurrent power +to enforce this article by appropriate legislation. + +SEC. 3. This article shall be inoperative unless it shall have been +ratified as an amendment to the Constitution by the legislatures of the +several States, as provided in the Constitution, within seven years from +the date of the submission hereof to the States by the Congress. + + +[ARTICLE XIX.] + +The right of citizens of the United States to vote shall not be denied +or abridged by the United States or by any State on account of sex. + +Congress shall have power to enforce this article by appropriate +legislation. + + + + + +End of Project Gutenberg's Our Changing Constitution, by Charles Pierson + +*** END OF THIS PROJECT GUTENBERG EBOOK OUR CHANGING CONSTITUTION *** + +***** This file should be named 14104-8.txt or 14104-8.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/1/4/1/0/14104/ + +Produced by John Hagerson, Kevin Handy, Linda Cantoni, and the PG +Online Distributed Proofreading Team. + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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Thus, we do not necessarily +keep eBooks in compliance with any particular paper edition. + + +Most people start at our Web site which has the main PG search facility: + + https://www.gutenberg.org + +This Web site includes information about Project Gutenberg-tm, +including how to make donations to the Project Gutenberg Literary +Archive Foundation, how to help produce our new eBooks, and how to +subscribe to our email newsletter to hear about new eBooks. diff --git a/old/14104-8.zip b/old/14104-8.zip Binary files differnew file mode 100644 index 0000000..e585310 --- /dev/null +++ b/old/14104-8.zip diff --git a/old/14104.txt b/old/14104.txt new file mode 100644 index 0000000..ff8b163 --- /dev/null +++ b/old/14104.txt @@ -0,0 +1,4791 @@ +The Project Gutenberg EBook of Our Changing Constitution, by Charles Pierson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Our Changing Constitution + +Author: Charles Pierson + +Release Date: November 20, 2004 [EBook #14104] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK OUR CHANGING CONSTITUTION *** + + + + +Produced by John Hagerson, Kevin Handy, Linda Cantoni, and the PG +Online Distributed Proofreading Team. + + + + + + +OUR CHANGING CONSTITUTION + +BY + +CHARLES W. PIERSON + + +[Illustration: decorative anchor] + + +GARDEN CITY NEW YORK + +DOUBLEDAY, PAGE & COMPANY + +1922 + + +COPYRIGHT, 1922, BY DOUBLEDAY, PAGE & COMPANY + +ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION INTO FOREIGN +LANGUAGES, INCLUDING THE SCANDINAVIAN + +PRINTED IN THE UNITED STATES AT THE COUNTRY LIFE PRESS, GARDEN CITY, +N.Y. + + + + +PREFACE + + +Citizens of the United States are wont to think of their form of +government, a political system based on a written constitution, as +something fixed and stable. In reality, it is undergoing a profound +change. The idea which constituted its most distinctive feature, and in +the belief of many represents America's most valuable contribution to +the science of government, is being forgotten. Formed to be "an +indestructible Union composed of indestructible states," our dual system +is losing its duality. The states are fading out of the picture. + +The aim of this volume is to point out the change and discuss some of +its aspects. A few chapters have already appeared in print. "Our +Changing Constitution" and "Is the Federal Corporation Tax +Constitutional?" were published in the _Outlook_. "The Corporation Tax +Decision" appeared in the _Yale Law Journal_. "Can Congress Tax the +Income from State and Municipal Bonds?" was printed in the New York +_Evening Post_. All of these have been more or less revised and some new +matter has been added. + + + + +CONTENTS + + +I. THE SALIENT FEATURE OF THE CONSTITUTION 1 + +The American Constitution, its origin and contents. Wherein its novelty +and greatness lay. Importance of maintaining the equilibrium established +between national and state power. View of John Fiske. + +II. THE SUPREME COURT OF THE UNITED STATES 3 + +Place of the Court in the constitutional scheme. Its most important +function. Personnel of the Court. Its power moral rather than physical. +Its chief weapon the power to declare legislative acts unconstitutional. +Limitations on this power--political questions; necessity of an actual +controversy; abuses of legislative power. Erroneous popular impressions. +Impairment of the constitutional conscience. + +III. OUR CHANGING CONSTITUTION 18 + +Change in popular attitude toward the Constitution. Causes of the change +(growth of national consciousness, wars, foreign relations, influence of +later immigrants and their descendants, desire to obtain federal +appropriations, economic development, railroads, free trade among the +states). Methods by which change has been put into effect +(constitutional amendment, treaties, federal legislation under cover of +power to regulate commerce and lay taxes). Attitude of the Supreme +Court. Differences of opinion in the Court. + +IV. THE EIGHTEENTH OR PROHIBITION AMENDMENT 35 + +History and radical character of amendment. Efforts to defeat it in the +courts. Unusual course taken by Supreme Court. Discussion of its true +place in the development of American constitutional law. Less a point of +departure than a spectacular manifestation of a change already under +way. Effect of the change on the principle of local self-government. + +V. THE NINETEENTH OR WOMAN SUFFRAGE AMENDMENT 49 + +Attitude of the Constitution toward question of suffrage qualifications. +Effect of Civil War amendments. Growth of woman suffrage movement and +adoption of Suffrage Amendment. How far the amendment constitutes a +federal encroachment on state power. Effect of woman suffrage on +questions of governmental theory. + +VI. CONGRESS VERSUS THE SUPREME COURT--THE CHILD LABOR LAWS 59 + +The child labor question. Philanthropic and commercial aspects. Attempt +of Congress to legislate under power to regulate commerce. Decision of +Supreme Court holding law unconstitutional. The decision explained. +Reenactment of law by Congress under cover of power to lay taxes. +Arguments for and against constitutionality of new enactment. + +VII. STATE RIGHTS AND THE SUPREME COURT 69 + +The Supreme Court at first a bulwark of national power; to-day the +defender of the states. Explanation of this apparent change. Attitude of +the Court in the first period. The period of Chief Justice Marshall. The +period of Chief Justice Taney. The Reconstruction Period. Attitude of +the Court to-day. Reasons why the Court is unable to prevent federal +encroachment. Attitude of Hamilton and Marshall toward state rights +misunderstood. + +VIII. THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT 85 + +America's embarrassing position if the late war had come before adoption +of Income Tax Amendment. Limitations of federal taxing power under the +Constitution. Meaning of "uniformity." Apportionment of "direct taxes." +The Supreme Court decision in the Income Tax cases in 1894 a reversal of +long settled ideas. The Income Tax Amendment an example of recall of +judicial decisions. Implied limitations on federal taxing power +(compensation of federal judges, due process clause of the Constitution, +no power to tax property or governmental activities of the states). + +IX. CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? 97 + +No express prohibition of such taxation; it lies in an implied +limitation inherent in our dual system of government. Discussion of +doctrine and its development by the Supreme Court. Effect of the Income +Tax Amendment. Present dissatisfaction with doctrine and efforts to +abolish it. + +X. IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL? 106 + +Nature of the tax. An interference with state power to grant corporate +franchises. Nature of our dual government and Supreme Court decisions on +the subject discussed. The debate in Congress. + +XI. THE CORPORATION TAX DECISION 122 + +Importance of the decision likely to be overlooked. Criticism of the +Court's arguments. Effects of the decision. + +XII. THE FEDERAL GOVERNMENT AND THE TRUSTS 129 + +Origin and history of Sherman Act. Its meaning now clear. Earlier +uncertainties owing chiefly to two questions--What is interstate trade +and Does the act enlarge the common-law rule as to what restraints were +unlawful? How these questions have been settled. Statement of the +common-law rule. Incompatibility between the law and present economic +conditions. Suggestions for legal reform. The holding company device, +its abuses and the possibility of abolishing it. Advantages of the +scheme of federal incorporation. + +XIII. WHAT OF THE FUTURE? 143 + +Rapid progress and present extent of federal encroachment on state +power. Growth of federal bureaucracy. A reaction against centralization +inevitable sooner or later. Adequacy of Constitution to deal with +changing conditions. The railroads and the trusts. Dangerous assaults +upon Constitution in field of social welfare legislation. Exercise of +police power a matter for local authority. Elihu Root's view. Outlook +for the future. + +APPENDIX 153 + + + + +OUR CHANGING CONSTITUTION + + + + +I + +THE SALIENT FEATURE OF THE CONSTITUTION + + +Few documents known to history have received as much praise as the +United States Constitution. Gladstone called it "the most wonderful work +ever struck off at a given time by the brain and purpose of man." The +casual reader of the Constitution will be at a loss to account for such +adulation. It will seem to him a businesslike document, outlining a +scheme of government in terse and well-chosen phrases, but he is apt to +look in vain for any earmarks of special inspiration. To understand the +true greatness of the instrument something more is required than a mere +reading of its provisions. + +The Constitution was the work of a convention of delegates from the +states, who met in Philadelphia in May, 1787, and labored together for +nearly four months. They included a large part of the best character +and intellect of the country. George Washington presided over their +deliberations. The delegates had not been called together for the +purpose of organizing a new government. Their instructions were limited +to revising and proposing improvements in the Articles of the existing +Confederation, whose inefficiency and weakness, now that the cohesive +power of common danger in the war of the Revolution was gone, had become +a byword. This task, however, was decided to be hopeless, and with great +boldness the convention proceeded to disregard instructions and prepare +a wholly new Constitution constructed on a plan radically different from +that of the Articles of Confederation. The contents of the Constitution, +as finally drafted and submitted for ratification, may be described in +few words. It created a legislative department consisting of a Senate +and a House of Representatives, an executive department headed by a +President, and a judicial department headed by a Supreme Court, and +prescribed in general terms the qualifications, powers, and functions of +each. It provided for the admission of new states into the Union and +that the United States should guarantee to every state a republican form +of government. It declared that the Constitution and the laws of the +United States made in pursuance thereof, and treaties, should be the +supreme law of the land. It provided a method for its own amendment. +Save for a few other brief clauses, that was all. There was no +proclamation of Democracy; no trumpet blast about the rights of man such +as had sounded in the Declaration of Independence. On the contrary, the +instrument expressly recognized human slavery, though in discreet and +euphemistic phrases. + +Wherein, then, did the novelty and greatness of the Constitution lie? +Its novelty lay in the duality of the form of government which it +created--a nation dealing directly with its citizens and yet composed of +sovereign states--and in its system of checks and balances. The world +had seen confederations of states. It was familiar with nations +subdivided into provinces or other administrative units. It had known +experiments in pure democracy. The constitutional scheme was none of +these. It was something new, and its novel features were relied upon as +a protection from the evils which had developed under the other plans. +The greatness of the Constitution lay in its nice adjustment of the +powers of government, notably the division of powers which it effected +between the National Government and the states. The powers conferred on +the National Government were clearly set forth. All were of a strictly +national character. They covered the field of foreign relations, +interstate and foreign commerce, fiscal and monetary system, post office +and post roads, patents and copyrights, and jurisdiction over certain +specified crimes. All other powers were reserved to the states or the +people. In other words, the theory was (to quote Bryce's "The American +Commonwealth") "local government for local affairs; general government +for general affairs only." + +The Constitution as it left the hands of its framers was not entirely +satisfactory to anybody. Owing to the discordant interests and mutual +jealousies of the states, it was of necessity an instrument of many +compromises. One of the great compromises was that by which the small +states were given as many senators as the large. Another is embalmed in +the provisions recognizing slavery and permitting slaves to count in the +apportionment of representatives. (The number of a state's +representatives was to be determined "by adding to the whole number of +free persons ... three-fifths of all other persons.") Another was the +provision that direct taxes should be apportioned among the states +according to population. With all its compromises, however, the +Constitution embodied a great governmental principle, full of hope for +the future of the country, and the state conventions to which it was +submitted for ratification were wise enough to accept what was offered. +Ratification by certain of the states was facilitated by the publication +of that remarkable series of papers afterward known as the "Federalist." +These were the work of Alexander Hamilton, James Madison, and John Jay, +and first appeared in New York newspapers. + +One of the objections to the new Constitution in the minds of many +people was the absence of a "bill of rights" containing those provisions +for the protection of individual liberty and property (e.g., trial by +jury, freedom of speech, protection from unreasonable searches and +seizures) which had come down from the early charters of English +liberties. In deference to this sentiment a series of ten brief +amendments were proposed and speedily ratified. Another amendment (No. +XI) was soon afterward adopted for the purpose of doing away with the +effect of a Supreme Court decision. Thereafter, save for a change in +the manner of electing the President and Vice-president, the +Constitution was not again amended until after the close of the Civil +War, when Amendments XIII, XIV, and XV, having for their primary object +the protection of the newly enfranchised Negroes, were adopted. The +Constitution was not again amended until the last decade, when the +Income Tax Amendment, the amendment providing for the election of +Senators by popular vote, the Prohibition Amendment, and the Woman +Suffrage Amendment were adopted in rapid succession. Some of these will +be discussed in later chapters. + +It is interesting to note that two of the amendments (No. XI, designed +to prevent suits against a state without its permission by citizens of +another state, and No. XVI, paving the way for the Income Tax) were +called forth by unpopular decisions of the Supreme Court, and virtually +amounted to a recall of those decisions by the people. These instances +demonstrate the possibility of a recall of judicial decisions by +constitutional methods, and tend to refute impatient reformers who +preach the necessity of a more summary procedure. Such questions, +however, lie outside the scope of this book. We emphasize here the fact +that the great achievement of the Constitution was the creation of a +dual system of government and the apportionment of its powers. That was +what made it "one of the longest reaches of constructive statesmanship +ever known in the world."[1] It offered the most promising solution yet +devised for the problem of building a nation without tearing down local +self-government. + +[Footnote 1: Fiske: "The Critical Period of American History," p. 301.] + +John Fiske, the historian, writing of the importance of preserving the +constitutional equilibrium between nation and states, said:[1] + + If the day should ever arrive (which God forbid!) when the + people of the different parts of our country shall allow their + local affairs to be administered by prefects sent from + Washington, and when the self-government of the states shall + have been so far lost as that of the departments of France, or + even so far as that of the counties of England--on that day + the progressive political career of the American people will + have come to an end, and the hopes that have been built upon + it for the future happiness and prosperity of mankind will be + wrecked forever. + +[Footnote 1: Id., p. 238.] + +If allowance be made for certain extravagances of statement, these words +will serve as a fitting introduction to the discussions which follow. + + + + +II + +THE SUPREME COURT OF THE UNITED STATES + + +The Constitution effected an apportionment of the powers of government +between nation and states. The maintenance of the equilibrium thus +established was especially committed to the Supreme Court. This novel +office, the most important of all its great functions, makes the Court +one of the most vital factors of the entire governmental scheme and +gives it a unique preeminence among the judicial tribunals of the world. + +How the office has been performed, and whether the constitutional +equilibrium is actually being maintained, are the questions to be +considered in this book. Before taking them up, however, it will be +useful to glance briefly at the Court itself and inquire how it is +equipped for its difficult task. + +The United States Supreme Court at present is composed of nine judges. +The number originally was six. It now holds its sessions at the Capitol +in Washington, in the old Senate Chamber which once echoed with the +eloquence of the Webster-Hayne debate. The judges are nominated by the +President, and their appointment, like that of ambassadors, must be +confirmed by the Senate. The makers of the Constitution took the utmost +care to insure the independence of the Court. Its members hold office +during good behavior, that is to say for life. They cannot be removed +except by impeachment for misconduct. Only one attempt has ever been +made to impeach a judge of the Supreme Court[1] and that attempt failed. +Still further to insure their freedom from legislative control, the +Constitution provides that the compensation of the judges shall not be +diminished during their continuance in office.[2] + +[Footnote 1: Justice Samuel Chase of Maryland in 1804-5.] + +[Footnote 2: It is interesting to observe that this Court, safeguarded +against popular clamor and composed of judges appointed for life, has +consistently shown itself more progressive and more responsive to modern +ideas than have most of the state Supreme Courts whose members are +elected directly by the people and for limited terms only.] + +From the time of John Jay, the first Chief Justice, down to the present +day the men appointed to membership in the Court have, for the most +part, been lawyers of the highest character and standing, many of whom +had already won distinction in other branches of the public service. +The present Chief Justice (Taft) is an ex-President of the United +States. Among the other members of the Court are a former Secretary of +State of the United States (Justice Day); two former Attorneys General +of the United States (Justices McKenna and McReynolds); a former Chief +Justice of Massachusetts (Justice Oliver Wendell Holmes, the +distinguished son and namesake of an illustrious father); a former Chief +Justice of Wyoming (Justice Van Devanter); and a former Chancellor of +New Jersey (Justice Pitney). + +It is well that the personnel of the Court has been such as to command +respect and deference, for in actual power the judiciary is by far the +weakest of the three cooerdinate departments (legislative, executive, +judicial) among which the functions of government were distributed by +the Constitution. The power of the purse is vested in Congress: it alone +can levy taxes and make appropriations. The Executive is +Commander-in-Chief of the Army and Navy and wields the appointing power. +The Supreme Court controls neither purse nor sword nor appointments to +office. Its power is moral rather than physical. It has no adequate +means of enforcing its decrees without the cooeperation of other +branches of the Government. + +That cooeperation has not always been forthcoming. In the year 1802, +Congress, at the instigation of President Jefferson, the inveterate +enemy of Chief Justice Marshall, suspended the sessions of the Court for +more than a year by abolishing the August term. In 1832, when the State +of Georgia defied the decree of the Court in a case involving the status +of the Cherokee Indians, the other departments of the Federal Government +gave no aid and President Andrew Jackson is reported to have remarked: +"John Marshall has made the decision, now let him execute it." In 1868, +Congress, in order to forestall decision in a case pending before the +Court, hastily repealed the statute on which the jurisdiction of the +Court depended.[1] Such instances, however, have been rare. The +law-abiding instinct is strong in the American people, and for the most +part the decisions of the Supreme Court have been received with respect +and unquestioning obedience. + +[Footnote 1: See _ex parte McCardle_, 6 Wall. (Supreme Court Reports), +318; 7 _id._, 506.] + +The chief weapon in the arsenal of the Court is the power to declare +legislative acts void on the ground that they overstep limits +established by the people in the Constitution. This power has been +frequently exercised. It is stated that the congressional statutes thus +nullified have not numbered more than thirty, while at least a thousand +state laws have been nullified.[1] + +[Footnote 1: Brief of Solicitor General James M. Beck in the Child Labor +Tax cases. It is to be borne in mind that there are forty-eight state +legislatures and only one Congress.] + +The assumption of this power in the Court to declare statutes +unconstitutional has been bitterly assailed, and is still denounced in +some quarters, as judicial usurpation originated by John Marshall. + +On the historical side this objection is not well founded. Various state +courts had exercised the power to declare statutes unconstitutional +before the Supreme Court came into existence.[1] The framers of the +Constitution clearly intended that such a power should be exercised by +the Supreme Court.[2] Moreover, a somewhat similar power appears to have +been exercised long before in England,[3] though it gave place later to +the present doctrine of the legal omnipotence of Parliament. + +[Footnote 1: See Bryce: "The American Commonwealth," Vol. I, p. 250.] + +[Footnote 2: See e.g., "Federalist," No. LXXVIII.] + +[Footnote 3: See opinion of Lord Coke in Bonham's Case, 8 Coke's +Reports, 118, decided in 1610.] + +On the side of reason and logic, the argument in favor of the power +formulated more than a century ago by Chief Justice Marshall has never +been adequately answered and is generally accepted as final. He said:[1] + + The powers of the legislature are defined and limited; and + that those limits may not be mistaken or forgotten, the + Constitution is written. To what purpose are powers limited, + and to what purpose is that limitation committed to writing, + if these limits may, at any time, be passed by those intended + to be restrained?... The Constitution is either a superior + paramount law, unchangeable by ordinary means, or it is on a + level with ordinary legislative acts, and, like other acts, is + alterable when the legislature shall please to alter it. If + the former part of the alternative be true, then a legislative + act, contrary to the Constitution, is not law: if the latter + part be true, then written constitutions are absurd attempts, + on the part of the people, to limit a power in its own nature + illimitable. + +[Footnote 1: _Marbury v. Madison_, 1 Cranch, 176.] + +It would seem at first blush that the power in the Court to declare +legislative acts unconstitutional affords a complete safeguard against +congressional encroachment on the prerogatives of the states. Such is +not the fact, however. The veto power of the Court by no means covers +the entire field of legislative activity. In the Convention which +framed the Constitution, attempts were made to give to the judiciary, in +conjunction with the executive, complete power of revision over +legislative acts, but all such propositions were voted down.[1] As +matters stand, there may be violations of the Constitution by Congress +(or for that matter by the executive) of which the Court can take no +cognizance. + +[Footnote 1: See e.g., Farrand: "Records of the Federal Convention," +Vol. I, pp. 138 et seq.; Vol. II, p. 298.] + +For one thing, the Court cannot deal with questions of a political +character. The function of the Court is judicial only. Upon this ground +it was decided that the question which of two rival governments in the +State of Rhode Island was the legitimate one was for the determination +of the political department of government rather than the courts;[1] +that the question, whether the adoption by a state of the initiative and +referendum violated the provision of the Federal Constitution +guaranteeing to every state a republican form of government, was +political and therefore beyond the jurisdiction of the Court.[2] In 1867 +a sovereign state sought to enjoin the President of the United States +from enforcing an act of Congress alleged to be unconstitutional. The +Supreme Court, without determining the constitutionality of the act, +declined to interfere with the exercise of the President's political +discretion.[3] In the famous Dred Scott case[4] the effort of the +Supreme Court to settle a political question accomplished nothing save +to impair the influence and prestige of the Court. + +[Footnote 1: _Luther v. Borden_, 7 Howard, 1.] + +[Footnote 2: _Pacific Telephone Co. v. Oregon_, 223 U.S., 118.] + +[Footnote 3: _State of Mississippi v. Andrew Johnson_, 4 Wall., 475.] + +[Footnote 4: _Dred Scott v. Sandford_, 19 Howard, 393.] + +The power of the Court to declare legislative acts unconstitutional is +subject to another important limitation. The judicial power is limited +by the Constitution to actual cases and controversies between opposing +parties. The Court cannot decide moot questions or act as an adviser for +other departments of the government. A striking illustration is found in +the so-called Muskrat case.[1] Congress having legislated concerning the +distribution of property of the Cherokee Indians, and doubts having +arisen as to the constitutional validity of the legislation, Congress +passed another act empowering one David Muskrat and other Cherokee +citizens to file suit, naming the United States as defendant, to settle +the question. The Supreme Court declined to take jurisdiction and +dismissed the suit, holding that it was not a case or controversy +between opposing parties within the meaning of the Constitution. + +[Footnote 1: _Muskrat v. United States_, 219 U.S., 346.] + +Still another limitation is encountered in cases involving abuse of +legislative power rather than lack of power. If Congress passes an act +within one of the powers expressly conferred upon it by the +Constitution, for example the power to lay taxes or the power to +regulate interstate commerce, the Supreme Court cannot interfere though +the incidental effect and ulterior purpose of the legislation may be to +intrude upon the field of state power. We shall have occasion to refer +to this limitation more than once in later chapters. + +An impression is abroad that the Supreme Court has plenary power to +preserve the Constitution. Hence the tendency of groups to demand, and +of legislators to enact, any kind of a law without regard to its +constitutional aspect, leaving that to be taken care of by the Court. + +Any such impression is erroneous and unfortunate. It puts upon the Court +a burden beyond its real powers. It undermines the sense of +responsibility which should exist among the elected representatives of +the people. It impairs what someone has called the constitutional +conscience, and weakens the vigilance of the people in preserving their +liberties. Men and women need to be reminded that the duty of upholding +the Constitution does not devolve upon the Supreme Court alone. It rests +upon all departments of government and, in the last analysis, upon the +people themselves. + + + + +III + +OUR CHANGING CONSTITUTION + + +In a celebrated case[1] decided a few years ago the Supreme Court of the +United States said: + + The Constitution is a written instrument. As such its meaning + does not alter. That which it meant when adopted it means now. + Being a grant of powers to a government its language is + general, and as changes come in social and political life it + embraces in its grasp all new conditions which are within the + scope of the powers in terms conferred. In other words, while + the powers granted do not change, they apply from generation + to generation to all things to which they are in their nature + applicable. This in no manner abridges the fact of its + changeless nature and meaning. Those things which are within + its grants of power, as those grants were understood when + made, are still within them, and those things not within them + remain still excluded.... + + To determine the extent of the grants of power we must, + therefore, place ourselves in the position of the men who + framed and adopted the Constitution, and inquire what they + must have understood to be the meaning and scope of those + grants. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437.] + +Thus speaks the voice whose word is law. + +Viewed in the sense intended--as the formulation of a legal rule for the +interpretation and construction of a written instrument--the statement +compels assent. As a statement of historical and political fact, +however, it would not be accepted so readily. An acute critic of our +institutions has said that the Constitution "has changed in the spirit +with which men regard it, and therefore in its own spirit."[1] Men +realize that the words of the Constitution, like the words of Holy Writ, +have not always meant the same thing to those who regulate their conduct +by its precepts; that the system of government which those words embody +has in reality changed, is changing to-day. + +[Footnote 1: Bryce: "The American Commonwealth," Vol. I, p. 400.] + +The makers of the Constitution represented the people of distinct and +independent states, jealous of their rights and of each other but +nevertheless impelled by experience of danger lately past and sense of +other perils impending to substitute for their loose and ill-working +confederation a more effective union. The most formidable obstacle, +apart from mutual jealousies, was a fear of loss of liberties, state and +individual, through encroachment of the central power. The instrument, +drawn with this fear uppermost, was designed to limit the National +Government to "the irreducible minimum of functions absolutely needed +for the national welfare."[1] To this end the powers granted were +specifically enumerated. All other powers were by express enactment[2] +"reserved to the States respectively, or to the people." + +[Footnote 1: Bryce, "The American Commonwealth," Vol. I, p. 324.] + +[Footnote 2: Tenth Amendment.] + +The strength of the popular sentiment against any encroachment of +federal power was speedily demonstrated in a striking and dramatic way. +Under the grant of power to determine controversies "between a state and +citizens of another state"[1] the Supreme Court in 1793 proceeded to +entertain a suit by one Chisholm, a citizen of South Carolina, against +the State of Georgia.[2] It had not been supposed that the grant of +power contemplated such a suit against a state without its consent. The +decision aroused an indescribable state of popular fury, not only in +Georgia but throughout the Union, and led to the adoption of a +constitutional amendment[3] prohibiting such suits in future. + +[Footnote 1: Art. III, Sec. 2.] + +[Footnote 2: See 2 Dallas, 419.] + +[Footnote 3: Eleventh Amendment.] + +There is a long step between such an attitude toward the Constitution +and the viewpoint which finds in it authority for the enactment by +Congress of White Slave and Child Labor laws. Obviously there has been a +profound change in what the Constitution means to its adherents. It will +be interesting to consider briefly what has caused the change of view, +and how it has been put into effect. + +To one searching for causes the most striking phenomenon is the growth +of a national consciousness. At the outset it was practically +non-existent. To-day its power has astonished enemy and friend alike. +Its growth has been due to both pressure from without and developments +within. Our foreign wars, especially the war with Germany, have drawn +the people together and enhanced the importance of interests purely +national. Some of our other foreign relations have brought into relief +the advantages of a strong central government as well as certain +inconveniences of our system as it left the hands of the framers. +Witness the embarrassment toward Italy growing out of lack of federal +jurisdiction in respect of the New Orleans riots, and the ever-present +danger to our relations with Japan from acts of the sovereign State of +California which the Federal Government is powerless to control. Among +developments from within was the Civil War, with its triumph for the +idea of national supremacy and an indissoluble union. Another, which has +hardly received the attention it deserves, has been the influence of the +large element of our population composed of immigrants since the +Revolution and their descendants. The state sovereignty doctrine was not +a mere political dogma but had its roots in history. It was an +expression of the pride of the inhabitants of the Thirteen Colonies in +their respective commonwealths. To them it stood for patriotism and +traditions. These feelings the later immigrant neither shared nor +understood. When he gave up his Old World allegiance and emigrated he +came to America, not to New York or Massachusetts. To him the nation was +everything, the state merely an administrative subdivision of the +nation. + +Another cause has been the desire to obtain aid in local matters from +the national treasury. This has proved an exceedingly potent and +insidious influence, leading state officials to surrender voluntarily +state prerogatives in exchange for appropriations of federal money. +Notable examples of this influence may be found in the field of river +and harbor improvements, the creation of various new bureaus in the +Department of Commerce, the enormous extension of the activities of the +Agricultural Department and the Bureau of Education. The temptation in +this direction is particularly strong among the less prosperous states, +for it means the expenditure in those states of federal moneys raised +chiefly from the taxpayers in wealthier states. + +The most potent influence of all, however, has been the matter of +internal economic development, stimulated by free trade among the +states. This development has gone on apace with little regard for state +lines. The invention of railways drew the different sections of the +country together in a common growth, and tended to make the barriers +interposed by state lines and state laws seem artificial and cumbersome. +In fact, they sometimes came to be regarded as intolerable and +destructive of progress. The spectacle of men clamoring for federal +control of their industries to escape the burdens of a diversified state +interference has been a frequent phenomenon of recent years.[1] + +[Footnote 1: See e.g. the efforts of the life insurance interests: _N.Y. +Life Ins. Co. v. Deer Lodge County_, 231 U.S., 495.] + +The foregoing enumeration by no means covers all the forces which have +been at work. In recent years a strong tendency toward centralization +and combination has developed, a tendency pervading all the interests +and activities of men. Moreover, new views have arisen concerning the +functions and scope of government, views challenging the _laissez faire_ +doctrines of earlier days and demanding a greater measure of +governmental interference with the affairs of the individual. These +tendencies, however, are not peculiar to America and lie outside the +scope of the present discussion. + +In considering the methods by which the change of spirit toward the +Constitution has been put into effect, one is struck by the +comparatively small part played by the only method contemplated by the +framers, viz., constitutional amendment. This method is entirely +practicable and fairly expeditious provided a sufficient number favor +the change proposed. In the one hundred years prior to the recent Income +Tax Amendment, however, only three amendments were enacted (Numbers +XIII, XIV, and XV), all of them dealing primarily with the abolition of +slavery and the civil rights of the Negro. The only one which need be +noticed here is Number XIV, which substituted a federal test of +citizenship for state tests and provided that no state should "deprive +any person of life, liberty, or property, without due process of law; +nor deny to any person within its jurisdiction the equal protection of +the laws." There was nothing new in these prohibitions. In substance +they are as old as Magna Charta and were already embodied in most if not +all of the state constitutions. The novelty lay in bringing the +question, whether a state had in fact denied due process of law to an +individual or corporation, within the jurisdiction of the federal +courts. From a legal viewpoint this was a change of great importance. To +the general student of constitutional government, however, it is less +significant than others presently to be mentioned. + +Right here it may be proper to notice a new theory of construction of +the Constitution, not yet accepted but strenuously urged and containing +enormous potentialities. This is the "doctrine of sovereign and inherent +power," i.e., the doctrine that powers of national scope for whose +exercise no express warrant is found in the Constitution are +nevertheless to be implied as inherent in the very fact of sovereignty. +This is a very different thing from the famous doctrine of implied +powers developed by Chief Justice Marshall--that all powers will be +implied which are suitable for carrying into effect any power expressly +granted. It is a favorite theory of what may be termed the Roosevelt +school. They consider that it is rendered necessary by the discovery of +fields suitable for legislative cultivation, lying outside the domain of +state power but not within the scope of any express grant of power to +the nation. As practical men they abhor the existence of such a +constitutional no man's land as nature abhors a vacuum. + +During the presidency of Mr. Roosevelt a determined effort was made by +the representatives of the Administration[1] to secure the recognition +by the Supreme Court of the doctrine of sovereign and inherent power. It +was claimed in the brief filed by the Attorney General and Solicitor +General that the doctrine had already been applied by the Court in the +Legal Tender cases.[2] The effort failed, however, the Court declaring +that any such power, if necessary to the nation, must be conferred +through constitutional amendment by the people, to whom all powers not +granted had been expressly reserved by the Tenth Amendment. + +[Footnote 1: In _Kansas v. Colorado_, 206 U.S., 46.] + +[Footnote 2: Bryce makes a statement to the same effect. "The American +Commonwealth," Vol. I, p. 383.] + +A method by which the federal power and jurisdiction have been much +extended has been the occupation by Congress, through legislation of an +exclusive character, of fields where the states had exercised a +concurrent jurisdiction. A familiar example is found in federal +bankruptcy laws. Another and striking example is the so-called "Carmack +Amendment" of the federal Interstate Commerce law. The question of +liability for loss or damage to goods in the hands of railways and other +carriers had been a fruitful field for state legislatures and state +courts. The Carmack Amendment brushed away at a single stroke whole +systems of state statutes and judicial decisions (in so far as they +affected traffic across state lines) and substituted a uniform system +under the control of the federal courts. + +The federal power has also been extended at the expense of the states +through the use of the treaty-making prerogative. The subjects upon +which Congress may legislate are limited by specific enumeration. The +treaty-making power, however, is not thus limited. Treaties may cover +any subject. It follows that while the Federal Government has no power +(for example) to regulate the descent of real property in the various +states the treaty-making power permits it, by treaties with foreign +nations, to destroy the alienage laws of the states.[1] Another very +recent example is afforded by the Migratory Bird Treaty with Great +Britain.[2] One will search the Constitution in vain for any grant of +power to the Federal Government to enact game laws. Nevertheless, under +this treaty, many state game laws have been practically annulled. + +[Footnote 1: _Hauenstein v. Lynham_, 100 U.S., 483.] + +[Footnote 2: Sustained by the Supreme Court in _Missouri v. Holland_, +252 U.S., 416.] + +But the most far-reaching method by which federal power under the +Constitution has been extended has been the adaptation--some will say +the perversion--by Congress of old grants of power to new ends. Under +the spur of public sentiment Congress has discovered new legislative +possibilities in familiar clauses of the Constitution as one discovers +new beauties in a familiar landscape. The clause offering the greatest +possibilities has been the so-called Commerce Clause, which grants to +Congress power "to regulate commerce with foreign nations, and among the +several states."[1] Under this grant of power Congress has enacted, and +the courts have upheld, a great mass of social and economic legislation +having to do only remotely with commerce. For example, the Sherman Act +and other anti-trust legislation, ostensibly mere regulations of +commerce, but actually designed for the control and suppression of +trusts and monopolies; the federal Pure Food and Drugs Act, designed to +prevent the adulteration or mis-branding of foods and drugs and check +the abuses of the patent-medicine industry;[2] the act for the +suppression of lotteries, making it a crime against the United States to +carry or send lottery tickets or advertisements across state lines;[3] +an act to prevent the importation of prize-fight films.[4] These are +only a few among many similar statutes which might be mentioned. In all +of them the motive is clear. There is no concealment about it. Their +primary object is to suppress or regulate the trusts, lotteries, +patent-medicine frauds. The regulation of commerce is merely a matter of +words and legal form. + +[Footnote 1: Art. I, Sec. 8.] + +[Footnote 2: _Hipolite Egg Company v. United States_, 220 U.S., 45.] + +[Footnote 3: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 4: _Weber v. Freed_, 239 U.S., 325.] + +Especially noteworthy is the rapidly expanding body of social +legislation--federal Employers' Liability Act, Hours of Service acts, +Child Labor Law, White Slave Act and the like, all drawn with an eye to +the commerce clause but designed to accomplish objects quite distinct +from the regulation of commerce. + +As already said, the Commerce Clause has been found most available for +purposes of such legislation. Other clauses have, however, served their +turn. For example, the grant of power to lay taxes was utilized to +destroy an extensive industry obnoxious to the dairy interests--the +manufacture of oleomargarine artificially colored to look like +butter.[1] Also to invade the police power of the States in respect of +the regulation of the sale and use of narcotic drugs.[2] Also to check +speculation and extortion in the sale of theatre tickets![3] The power +to borrow money and create fiscal agencies was utilized to facilitate +the making of loans upon farm security at low rates of interest through +the incorporation of Federal land banks or Joint Stock land banks.[4] + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +[Footnote 2: Narcotic Drug Act. Held constitutional in _United States v. +Doremus_, 249 U.S., 86; _Webb v. United States_, 249 U.S., 96.] + +[Footnote 3: Revenue Act of 1921, Title VIII, subdivisions 2 and 3.] + +[Footnote 4: _Smith v. Kansas City Title Co._, 255 U.S., 180.] + +It would be an insult to intelligence to claim that legislation such as +this, wearing the form of revenue measure or regulation of commerce but +in reality enacted with a different motive, does not involve an enormous +extension of the national power beyond what the makers of the +Constitution supposed they were conferring or intended to confer. What, +then, of the declaration by the Supreme Court with which we began, that +"to determine the extent of the grants of power we must place ourselves +in the position of the men who framed and adopted the Constitution, and +inquire what they must have understood to be the meaning and scope of +these grants." The answer must be that the Court itself has not always +adhered strictly to this test. The Court has taken the position that +when power exists under the Constitution to legislate upon a given +subject--say interstate commerce or taxation--it is not for the +judiciary to seek to correct abuses by Congress of that power, or to +question Congressional motives. As said in the decision sustaining the +constitutionality of the oleomargarine law:[1] + + The judiciary is without authority to avoid an act of Congress + lawfully exerting the taxing power, even in a case where to + the judicial mind it seems that Congress had, in putting such + power in motion, abused its lawful authority by levying a tax + which was unwise or oppressive, or the result of the + enforcement of which might be to indirectly affect subjects + not within the powers delegated to Congress, nor can the + judiciary inquire into the motive or purpose of Congress in + adopting a statute levying an excise tax within its + constitutional power. + +[Footnote 1: _McCray v. United States_, 195 U.S., 27.] + +The Court, however, has had great difficulty with these cases and +developed sharp differences of opinion. For example, the case upholding +the anti-lottery statute as a valid exercise of the power to regulate +commerce[1] was twice ordered for reargument and finally decided by a +bare majority of 5 to 4. The Child Labor Law of 1916 was declared +unconstitutional[2] and the Narcotic Drug Act was sustained[3] by a +similar vote, 5 to 4. In the Narcotic Drug case the four dissenting +justices, speaking through Chief Justice White, characterized portions +of the statute as "beyond the constitutional power of Congress to enact +... a mere attempt by Congress to exert a power not delegated, that is, +the reserved police power of the states." In the Lottery case the +dissenting opinion of the four, written by Chief Justice Fuller, +concludes: + + I regard this decision as inconsistent with the views of the + framers of the Constitution, and of Marshall, its great + expounder. Our form of government may remain notwithstanding + legislation or decision, but, as long ago observed, it is with + governments, as with religions, the form may survive the + substance of the faith. + +[Footnote 1: _Champion v. Ames_, 188 U.S., 321.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86.] + +Whatever view one may hold to-day as to the question of expediency, no +thoughtful mind can escape the conclusion that, in a very real and +practical sense, the Constitution has changed. In a way change is +inevitable to adapt it to the conditions of the new age. There is +danger, however, that in the process of change something may be lost; +that present-day impatience to obtain desired results by the shortest +and most effective method may lead to the sacrifice of a principle of +vital importance. + +The men who framed the Constitution were well advised when they sought +to preserve the integrity of the states as a barrier against the +aggressions and tyranny of the majority acting through a centralized +power. The words "state sovereignty" acquired an odious significance in +the days of our civil struggle, but the idea for which they stand is +nevertheless a precious one and represents what is probably America's +most valuable contribution to the science of government. + +We shall do well not to forget the words of that staunch upholder of +national power and authority, Salmon P. Chase, speaking as Chief Justice +of the Supreme Court in a famous case growing out of the Civil War:[1] + + The preservation of the states, and the maintenance of their + governments, are as much within the design and care of the + Constitution as the preservation of the Union and the + maintenance of the National Government. The Constitution, in + all its provisions, looks to an indestructible Union composed + of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700.] + + + + +IV + +THE EIGHTEENTH AMENDMENT + + +Could Washington, Madison, and the other framers of the Federal +Constitution revisit the earth in this year of grace 1922, it is likely +that nothing would bewilder them more than the recent Prohibition +Amendment. Railways, steamships, the telegraph, the telephone, +automobiles, flying machines, submarines--all these developments of +science, unknown in their day, would fill them with amazement and +admiration. They would marvel at the story of the rise and downfall of +the German Empire; at the growth and present greatness of the Republic +they themselves had founded. None of these things, however, would seem +to them to involve any essential change in the beliefs and purposes of +men as they had known them. The Prohibition Amendment, on the contrary, +would evidence to their minds the breaking down of a principle of +government which they had deemed axiomatic, the abandonment of a purpose +which they had supposed immutable. As students of the science of +government they would realize that the most fundamental change which can +overtake a free people is a change in their frame of mind, for to that +everything else must sooner or later conform. + +The amendment was proposed by Congress in 1917 and proclaimed as having +been ratified in 1919.[1] + +[Footnote 1: 40 Stat. 1050, 1941.] + +The comparative ease and dispatch with which it was put through argue +alike the skill and vigor of its sponsors and the strength of the +sentiment behind them. Legal warfare over the amendment did not end, +however, with its ratification by the legislatures of the requisite +number of states. Passions had been aroused. Vast property interests +were menaced. Moreover, in the minds of students of government the +amendment stirred misgivings which were quite independent of the +sentimental and material considerations involved. Eminent counsel were +retained and a determined effort was made to defeat or nullify the +amendment in the courts. To this end suits were begun in various +jurisdictions to test its validity and enjoin the enforcement of the +Volstead Act, which sought to carry it into effect. Two sovereign +states (Rhode Island and New Jersey) joined in the attack and through +their respective Attorneys General brought original suits in the United +States Supreme Court to have the amendment declared invalid. Seven test +cases were argued together in the Supreme Court, five days in all being +devoted to the argument. It will be of interest to note some of the +reasons advanced against the validity of the amendment, as they are +summarized in the official report.[1] + +[Footnote 1: National Prohibition cases, 253 U.S., 350.] + +The Attorney General of the State of Rhode Island argued[1] that: + + The amendment is an invasion of the sovereignty of the + complaining state and her people, not contemplated by the + amending clause of the Constitution. The amending power ... is + not a substantive power but a precautionary safeguard inserted + incidentally to insure the ends set forth in that instrument + against errors and oversights committed in its formation. + Amendments, as the term indeed implies, are to be limited to + the correction of such errors.... + + It is "This Constitution" that may be amended. "This + Constitution" is not a code of transient laws but a framework + of government and an embodiment of fundamental principles. By + an amendment, the identity or purpose of the instrument is + not to be changed; its defects may be cured, but "This + Constitution" must remain. It would be the greatest absurdity + to contend that there was a purpose to create a limited + government and at the same time to confer upon that government + a power to do away with its own limitations. + +[Footnote 1: Id., pp. 354-356.] + +The Attorney General of the State of New Jersey:[1] + + attacked the amendment as an invasion of state sovereignty not + authorized by the amending clause and as not, properly + speaking, an amendment, but legislation, revolutionary in + character. + +[Footnote 1: 253 U.S., pp. 356-357.] + +The eminent Chicago lawyer, Levy Mayer, and ex-Solicitor General William +Marshall Bullitt, contended,[1] among other things, that + + the power of "amendment" contained in Art. V does not + authorize the invasion of the sovereign powers expressly + reserved to the states and the people by the Ninth and Tenth + Amendments, except with the consent of _all_ the states.... + + If amendment under Art. V were unlimited, three-fourths of the + legislatures would have it in their power to establish a state + religion and prohibit free exercise of other religious + beliefs; to quarter a standing army in the houses of citizens; + to do away with trial by jury and republican form of + government; to repeal the provision for a president; and to + abolish this court and with it the whole judicial power + vested by the Constitution. + +[Footnote 1: Id., pp. 357-361.] + +Elihu Root, preeminent as a constitutional lawyer, appeared as counsel +in one of the test cases. His main contention was summarized in his +brief as follows:[1] + + (a) That the authority to amend the Constitution is a + continuance of the constitution-making power and as such is a + power quite different and altogether distinct from the + law-making power under the Constitution. + + (b) That a grant of the one power does not include or imply a + grant of the other. + + (c) That the natural and ordinary meaning of the words used in + Article V of the Constitution [the article providing for + amendment] limits the power granted to the function of + constitution-making as distinguished from ordinary law-making. + + (d) That the purposes of the grant imply the same limitation. + + (e) That other parts of the Constitution--notably Article + I--express the same limitation. + + (f) That the existence of authority under Article V to enact + ordinary laws regulating the conduct of private citizens under + color of amendment, would be so in conflict with the + fundamental principles and spirit of the Constitution that + such a construction is not permissible. + +[Footnote 1: For the Reporter's Summary see 253 U.S., pp. 361-367.] + +There were other arguments of a more technical character. Article V of +the Constitution provides that the Congress shall propose amendments +"whenever two-thirds of both Houses shall deem it necessary." It was +urged that this required the affirmative vote of two-thirds of the +entire membership of both Houses, and that two-thirds of a quorum was +not sufficient. It was also urged that the proposal was fatally +defective because it did not on its face declare that both Houses deemed +the amendment necessary. It was also argued that the amendment had not +been effectively ratified in certain of the states where it had been +approved by the state legislature (notably Ohio) because under the +constitutions of those states it was subject to a referendum to the +people before becoming effective. The Supreme Court of Ohio had so +decided[1] and a referendum had actually been held in that state, +resulting in a rejection of the amendment by popular vote. Various +arguments were also advanced based on the puzzling phraseology of +Section 2 of the amendment that "the Congress and the several States +shall have _concurrent power_ to enforce this article by appropriate +legislation." The eminent constitutional lawyer, W.D. Guthrie, addressed +himself particularly to this phase of the controversy.[2] It was urged +with much force that the effect of these words was to save the rights of +the states, in respect of intrastate matters, by requiring their +concurrence in any legislation of Congress regulating such matters. + +[Footnote 1: See _Hawke v. Smith_, 253 U.S., 221.] + +[Footnote 2: 253 U.S., pp. 368-380.] + +All the arguments advanced were alike unavailing. The nine members of +the Supreme Court were unanimous in sustaining the validity of the +amendment, holding that it "by lawful proposal and ratification, has +become a part of the Constitution, and must be respected and given +effect the same as other provisions of that instrument."[1] The Court, +however, adopted the very unusual course of deciding the various cases +before it (affirming four, reversing one, and dismissing the original +bills filed by the states of Rhode Island and New Jersey) without any +written opinion. Speaking through Mr. Justice Van Devanter, the Court +merely announced its conclusions. This was an unprecedented procedure in +a case involving constitutional questions of such importance. It drew +criticism from some of the members of the Court itself. Chief Justice +White said:[2] + + I profoundly regret that in a case of this magnitude, + affecting as it does an amendment to the Constitution dealing + with the powers and duties of the national and state + governments, and intimately concerning the welfare of the + whole people, the court has deemed it proper to state only + ultimate conclusions without an exposition of the reasoning by + which they have been reached. + +and proceeded to announce the reasons which had actuated him personally. +Justice McKenna said:[3] + + The court declares conclusions only, without giving any + reasons for them. The instance may be wise--establishing a + precedent now, hereafter wisely to be imitated. It will + undoubtedly decrease the literature of the court if it does + not increase lucidity. + +[Footnote 1: Id., p. 386.] + +[Footnote 2: Id., p. 388.] + +[Footnote 3: 253 U.S., p. 393.] + +Perhaps a hint as to the reasons actuating the majority of the Court may +be found in the brief concurring memorandum of Mr. Justice McReynolds. +He said:[1] + + I do not dissent from the disposition of these causes as + ordered by the Court, but confine my concurrence to that. It + is impossible now to say with fair certainty what construction + should be given to the Eighteenth Amendment. Because of the + bewilderment which it creates, a multitude of questions will + inevitably arise and demand solution here. In the + circumstances, I prefer to remain free to consider these + questions when they arrive. + +[Footnote 1: Id., p. 392.] + +Justices McKenna and Clarke dissented from portions of the decision +dealing with the question of the proper construction of the grant of +"concurrent power" to Congress and the States, and wrote opinions +setting forth the grounds of their dissent. Both Justices, however, +concurred in affirming the validity of the amendment. + +Thus the legal battle was fought and lost. The amendment had withstood +attack and men's minds settled back to the practical question of its +enforcement. + +Upon that question, however difficult and interesting, we do not here +enter. Our present concern is to ascertain as nearly as may be the true +place of the amendment in the development of American constitutional +law. + +That it affords startling evidence of a radical departure from the views +of the founders of the Republic is beyond question. Such a blow at the +prerogatives of the states, such a step toward centralization, would +have been thought impossible by the men of 1787. It would be a mistake, +however, to view the departure as having originated with this amendment. +Rather is the amendment to be regarded as merely a spectacular +manifestation of a change which was already well under way. + +In the early days of the Republic the dominating purpose was the +protection of state prerogatives, so far as that was compatible with the +common safety. The first eleven amendments of the Federal Constitution +were all limitations upon federal power. Not until the people of the +various states had been drawn together and taught to think in terms of +the nation by a great Civil War was there any amendment which enlarged +the powers of the National Government. The three post-war amendments +(Nos. XIII, XIV, and XV) marked a distinct expansion of federal power +but one that seemed to find its justification, as it found its origin, +in the necessity for effectuating the purposes of the war and protecting +the newly enfranchised Negroes. + +A long period of seeming inactivity, more than forty years, elapsed +before another constitutional amendment was adopted.[1] The inaction, +however, was apparent rather than real. As matter of fact, a change was +all the time going on. In a very real sense the Constitution was being +altered almost from year to year. That the alterations did not take the +shape of formal written amendments was largely due to the tradition of +constitutional immobility. The idea had grown up that the machinery of +amendment provided by the Fathers was so slow and cumbersome that it was +impossible as a practical matter to secure a change by that method +except under stress of war or great popular excitement. That idea is now +exploded. We of to-day know better, having seen the Income Tax Amendment +(No. XVI), the Election of Senators by Popular Vote Amendment (No. +XVII), the Prohibition Amendment (No. XVIII), and the Woman Suffrage +Amendment (No. XIX) go through within a period of seven years. For +generations, however, the tradition of constitutional immobility held +sway and the forces of change worked through channels that seemed easier +and less obstructed. + +[Footnote 1: No. XVI, the Income Tax Amendment, ratified in 1913.] + +The principal channel has been congressional legislation. Congress has +found ways of reaching by indirection objects which could not be +approached directly. Under the express grants of power contained in the +Constitution statutes have been enacted which were really designed to +accomplish some ulterior object. A striking example is found in the +child labor laws, discussed more at length in a subsequent chapter. +Congress at first sought to regulate child labor by a statute enacted +ostensibly as a regulation of commerce under the Commerce Clause of the +Constitution. The Supreme Court held the Act unconstitutional as +exceeding the commerce power of Congress and invading the powers +reserved to the states.[1] Thereupon Congress practically reenacted it, +coupled with a provision for a prohibitive tax on the profits of +concerns employing child labor, as part of a revenue act enacted under +the constitutional grant of power to lay taxes.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251.] + +[Footnote 2: Revenue Act of 1918, Title XII.] + +The assumption by the National Government of jurisdiction over the +manufacture and sale of intoxicating liquors is no more of an +encroachment on the prerogatives of the states than is its assumption of +jurisdiction over child labor and the use of narcotic drugs. We come +back, therefore, to the proposition that the Prohibition Amendment is to +be regarded less as a departure in American fundamental law than as a +spectacular manifestation of a change already well under way. + +The change, however much students of our institutions may deplore it, is +not difficult to explain. The earlier solicitude for state rights was in +a sense accidental. It was based on sentiment and mutual jealousies +among the colonies rather than on any fundamental differences in race, +beliefs, or material interests. The traditions behind it, while strong, +were of comparatively recent growth. When they entered the Union the +colonies were still new and undeveloped. As men died and their sons +succeeded them prejudices gradually yielded and sentiment changed. +Moreover, various other forces--immigration, free trade among the +states, the growth of railways and other nationwide industries, foreign +wars--have been at work to obliterate state lines. + +Advocates of the old order see in the change a breaking down of the +principle of local self-government. To their minds the danger of +majority tyranny, made possible by a centralization of power in a +republic of such vast extent and varied interests, outweighs all the +advantages of national uniformity and efficiency. Advocates of the new +order think otherwise. They argue, moreover, that the states have become +too great and populous to serve as units for purposes of home rule; +that their boundaries are for the most part artificial and correspond to +no real distinctions in the ordinary life of men. They assert that the +instinct for local self-government remains as strong as it ever was, and +instance the resentment of New York City over interference from Albany. + +The average man gives little thought to the constitutional aspect of the +controversy. His interest in the prohibition movement is focused on +other features which seem to him of more immediate concern. And yet, did +he but realize it, the constitutional aspect transcends all the others +in its importance for the future welfare and happiness of himself, his +children, and his country. + + + + +V + +THE NINETEENTH AMENDMENT + + +A prudent man touches the question of woman suffrage gingerly. Many +fingers have been burnt in that fire and its embers are not yet dead. +Some mention of the Nineteenth Amendment seems necessary, however, in +any discussion of federal encroachment on state power, and it may be +possible to approach the suffrage movement from the standpoint of +constitutional law without getting upon controversial ground. + +The United States Constitution as originally adopted did not prescribe +who should be entitled to vote. That matter was left entirely in the +hands of the states. The Constitution provided[1] that, for the election +of members of the House of Representatives, "the electors in each state +shall have the qualifications requisite for electors of the most +numerous branch of the state legislature." It was further provided that +Senators should be chosen by the legislatures of the states[2] and that +the President and Vice-president should be chosen by presidential +electors appointed in such manner as the state legislatures might +direct.[3] These were the only elective federal officials. + +[Footnote 1: Article I, Section 2.] + +[Footnote 2: Article I, Section 3.] + +[Footnote 3: Article II, Section 1.] + +While the states were thus left in full control, it does not follow that +the matter was deemed wholly outside the proper scope of national +authority. No argument is necessary to demonstrate that the regulation +of the suffrage in national elections is or may be a matter of national +concern. The question of prescribing the qualifications of voters in +such elections was much debated in the Convention which framed the +Constitution.[1] Some members were in favor of prescribing a property +qualification and limiting the suffrage to freeholders. It was finally +decided, however, to accept the qualifications prescribed by state law. +In adopting this plan the Convention followed the line of least +resistance. The qualifications of voters in the various states +differed.[2] Most states required a property qualification, but some +did not. It was felt that to attempt to impose a uniform rule on all the +states would arouse opposition and create one more obstacle to be +overcome in the formidable task of getting the Constitution ratified. + +[Footnote 1: See e.g., Farrand, "Records of the Federal Convention," +Vol. II, p. 201 et seq.] + +[Footnote 2: For a statement of the qualifications in the various states +see _Minor v. Happersett_, 21 Wall., 162.] + +There the matter rested, with suffrage qualifications regulated entirely +by state law, until after the Civil War. Meanwhile, the states had been +abolishing property tests, and universal male suffrage had been written +into state constitutions. The cry for woman suffrage had begun, but as +yet it was only a still small voice, inaudible to legislators. + +After the Civil War the problem of protecting the emancipated slaves had +to be dealt with, and three constitutional amendments (Nos. XIII, XIV, +and XV) were adopted with that end primarily in view. Number XIII, +ratified in 1865, formally abolished slavery. Number XIV, ratified in +1868, extended citizenship to all persons born in the United States and +provided (among other things) that no state should abridge the +privileges or immunities of citizens of the United States. Number XV, +ratified in 1870, provided that "the right of citizens of the United +States to vote shall not be denied or abridged by the United States or +by any State on account of race, color, or previous condition of +servitude." Here was the entering wedge of federal interference. The +amendments did not purport to deal with woman suffrage, but the pioneers +of the suffrage movement thought they discovered in them a means of +advancing their cause and lost no time in putting the matter to the +test. Susan B. Anthony voted at Rochester, N.Y., in an election for a +representative in Congress, claiming that the restriction of voting to +males by the constitution and laws of New York was void as a violation +of the Fourteenth Amendment providing that "no state shall make or +enforce any law which shall abridge the privileges or immunities of +citizens of the United States." She was indicted for voting unlawfully, +and on her trial before Justice Hunt of the United States Supreme Court, +sitting at Circuit, the Court directed the jury to find a verdict of +guilty and imposed a fine of $100 and costs.[1] + +[Footnote 1: _United States v. Anthony_, 11 Blatchford, 200.] + +Mrs. Virginia Minor raised a similar question in the courts of Missouri. +The Missouri constitution limited the right to vote to male citizens. +Mrs. Minor applied for registration as a voter, and on being refused +brought suit against the Registrar of Voters on the ground that this +clause of the Missouri constitution was in violation of the Fourteenth +Amendment. The Missouri state courts decided against her, and the case +was taken to the Supreme Court of the United States where the decision +of the state courts was affirmed.[1] The Supreme Court held in effect +that while Mrs. Minor was a citizen that fact alone did not make her a +voter; that suffrage was not coextensive with citizenship, either when +the Constitution was adopted or at the date of the Fourteenth Amendment, +and was not one of the "privileges and immunities" guaranteed by that +amendment. + +[Footnote 1: _Minor v. Happersett_, 21 Wall., 162.] + +A similar decision was rendered in the matter of Mrs. Myra Bradwell's +application for a license to practise law in Illinois.[1] The Supreme +Court held that the right to practise law in the state courts was not a +privilege or immunity of a citizen of the United States within the +meaning of the Fourteenth Amendment, and affirmed the decision of the +Illinois Court denying Mrs. Bradwell's application. + +[Footnote 1: _Bradwell v. Illinois_, 16 Wall., 130.] + +The failure of these attempts to turn the Fourteenth Amendment to the +advantage of the woman suffrage movement in no wise checked the +movement or discouraged its leaders. They redoubled their efforts among +the separate states, and worked to such good purpose that the opposition +presently began to take on the aspect of a forlorn hope. "Votes for +Women" became an accomplished fact in many states, and appeared on the +verge of accomplishment in most of the others. Some states, however, +were still holding out when the leaders of the movement, impatient of +further delay and determined to coerce the recalcitrants, took the +matter into the national arena and procured the proposal and +ratification of an amendment to the Federal Constitution. The amendment +provides: + + The right of citizens of the United States to vote shall not + be denied or abridged by the United States or by any state on + account of sex. + +In other words, it adopts verbatim the phraseology of the Fifteenth +Amendment, merely substituting the word "sex" for the words "race, +color, or previous condition of servitude." + +So much for the historical background of the so-called Susan B. Anthony +Amendment. It remains to consider just how far the amendment +constitutes an encroachment by the Federal Government on the powers of +the states. + +In so far as it affects the qualifications of voters at national +elections (i.e., for president, senators, representatives) the +encroachment is more apparent than real. As has already been pointed +out, this is essentially a national question, and the Constitution +adopted the suffrage qualifications prescribed by state law, not as a +matter of principle, but for reasons of expediency and convenience. + +In so far, however, as the amendment imposes woman suffrage on the +states in elections of state and local officials the situation is +entirely different. That staunch advocate of national power, Alexander +Hamilton, said in the _Federalist_:[1] + + Suppose an article had been introduced into the Constitution, + empowering the United States to regulate the elections for the + particular states, would any man have hesitated to condemn it, + both as an unwarrantable transposition of power, and as a + premeditated engine for the destruction of the state + governments? + +[Footnote 1: _Federalist_ LIX.] + +What Hamilton scouted as impossible has been accomplished in the +Nineteenth Amendment. It in effect strikes out the word "male" from the +suffrage provisions of state constitutions. It overrides state policy +and interferes with the right of states to manage their own affairs. +From the theoretical standpoint a more serious inroad on state +prerogatives would be hard to find. Control of the suffrage is one of +the fundamental rights of a free state. It belonged to the North +American states before their union, and was not surrendered to the +National Government when the union was effected. Moreover, the +encroachment has a very practical side. To confer the suffrage on the +educated women of Connecticut was one thing; to confer it on the Negro +women of Alabama was quite a different matter, involving different +considerations. The amendment took no heed of such differences but +imposed a uniform rule on all the states, regardless of local prejudices +or conditions. + +It is true that a somewhat similar encroachment on state power had been +made by the Fifteenth Amendment, designed to enfranchise the Negroes. +That amendment, however, had its origin in conditions growing out of the +Civil War, and claimed its justification in the necessity for protecting +the freed slaves against hostile state action. It was avowedly an +emergency measure, and the success with which it has been nullified in +some quarters testifies to the unwisdom of forcing such measures upon +reluctant states. + +The conditions surrounding the adoption of the Nineteenth Amendment were +altogether different. Few people take seriously the alleged analogy +between the women and the slaves. The constitutional method--action +through the separate states--was being pursued with signal success. The +states were rapidly falling in line. Most of them had already granted +woman suffrage or were ready to grant it. There was no overmastering +need for coercing the states that were not yet ready. An impartial +student of the period will be apt to conclude that the Nineteenth +Amendment was the product of impatience rather than necessity. + +Someone may ask, "What effect will the granting of votes to women have +on the problem of preserving the constitutional equilibrium?" The +ultimate power lies with the voters, and the women with votes now equal +or outnumber the men. What is the reaction of women voters likely to be +toward questions of political theory? + +Ours is a governmental scheme of extreme complexity. As with animal +organisms so with political systems, the higher they rise in the scale +of development the more complicated they tend to become. An absolute +monarchy is simplicity itself compared with our dual system. To maintain +the proper adjustment of such a machine requires intelligence of a high +order. The machine will not run itself and male tinkers have abundantly +demonstrated that it is not fool-proof. But something more is required +than mere intelligence. There must be, at least among the leaders, an +instinct for governmental problems as distinguished from those of a +merely social or personal character; an ability to recognize and a +willingness to conform to underlying principles. + +How will the women voters meet this test? Granting (what few will +dispute) that their intelligence at least equals that of the men, will +they be as likely as men to look beyond the immediate social welfare +problem to the governmental principle at stake? Will an abstract +proposition hold its own in their minds against a concrete appeal? + +We do not attempt to answer these questions, but they contain food for +thought. + + + + +VI + +CONGRESS _versus_ THE SUPREME COURT--THE CHILD LABOR LAWS + + +The present Federal Revenue Act is noteworthy in more aspects than its +complexity and the disproportionate burden cast on possessors of great +wealth. To students of our form of government it is particularly +interesting because of provisions[1] purporting to impose a tax on +employers of child labor, for these represent an attempt by Congress to +nullify a decision of the Supreme Court and grasp a power belonging to +the states. The story of these provisions throws a flood of light on a +method by which our Constitution is being changed. + +[Footnote 1: Revenue Act of 1921, Title XII.] + +The evils of child labor have long engaged the attention of +philanthropists and lawmakers. In comparatively recent years child labor +laws are said to have been enacted in every state of the Union. These +statutes, however, lacked uniformity. Some of them were not stringent +enough to satisfy modern sentiment. Moreover, commercial considerations +entered into the reckoning. Industries in states where the laws were +stringent were found to be at a disadvantage in comparison with like +industries in states where the laws were lax, and this came to be +regarded as a species of unfair competition. The advantages of +uniformity and standardization seemed obvious from both the +philanthropic and the commercial viewpoints, and Congress determined to +take a hand in the matter. + +No well-informed person supposed for a moment that the regulation of +child labor was one of the functions of the General Government as those +functions were planned by the makers of the Constitution. The United +States Supreme Court had declared over and over again that such matters +were the province of the states; that "speaking generally, the police +power is reserved to the states and there is no grant thereof to +Congress in the Constitution."[1] For some years, however, Congress had +been finding ways to legislate indirectly upon matters which it had no +power to approach directly. Under the grant of power in the Constitution +"to regulate commerce with foreign nations and among the several +States,"[2] Congress had enacted laws purporting to regulate commerce +but in reality designed for the suppression or regulation of some other +form of activity. These enactments had for the most part been sustained +as constitutional by the Supreme Court (though with misgivings and sharp +differences of opinion), the Court holding that it could not pass on the +motives for congressional action. The enactment of a law regulating +child labor seemed therefore but another step along a trail already +blazed, and Congress determined to take that step. + +[Footnote 1: _Keller v. United States_, 213 U.S., 138.] + +[Footnote 2: Art. I, Sec. 8.] + +The statute enacted by Congress[1] prohibited transportation in +interstate commerce of goods made at a factory in which, within thirty +days prior to their removal therefrom, children under the age of +fourteen years had been employed or permitted to work, or children +between the ages of fourteen and sixteen had been employed or permitted +to work more than eight hours in any day, or more than six days in any +week, or after the hour of 7 P.M. or before the hour of 6 A.M. The +constitutionality of the act was at once challenged and suit brought to +test the question. The Supreme Court held, by a vote of five to +four,[2] that Congress had overstepped its power. The previous decisions +which had upheld somewhat similar inroads on the police power of the +states were distinguished and the act was declared unconstitutional. + +[Footnote 1: Act of September 1, 1916, 39 Stat., 675.] + +[Footnote 2: _Hammer v. Dagenhart_, 247 U.S., 251.] + +The distinction drawn by the majority of the Court between this and +previous decisions was a narrow one and its validity has been questioned +by some writers. It has nowhere been more clearly explained than in an +address delivered before a body of lawyers by a former member of the +Court.[1] Mr. Hughes said: + + There has been in late years a series of cases sustaining the + regulation of interstate commerce, although the rules + established by Congress had the quality of police regulation. + This has been decided with respect to the interstate + transportation of lottery tickets, of impure food and drugs, + of misbranded articles, of intoxicating liquors, and of women + for the purpose of debauchery. It was held to be within the + power of Congress to keep "the channels of interstate commerce + free from immoral and injurious uses." But the Court in this + most recent decision has pointed out that in each of these + cases "the use of interstate commerce was necessary to the + accomplishment of harmful results." The Court, finding this + element to be wanting in the Child Labor Case, denied the + validity of the act of Congress. The Court found that the + goods shipped were of themselves harmless. They were permitted + to be freely shipped after thirty days from the time of + removal from the factory. The labor of production, it was + said, had been performed before transportation began and thus + before the goods became the subject of interstate commerce. + + The fundamental proposition thus established is that the power + over interstate commerce is not an absolute power of + prohibition, but only one of regulation, and that the prior + decisions in which prohibitory rules had been sustained rested + upon the character of the particular subjects there involved. + It was held that the authority over interstate commerce was to + regulate such commerce and not to give Congress the power to + control the states in the exercise of their police power over + local trade and manufacture. + +[Footnote 1: Charles E. Hughes, President's Address, Printed in Year +Book of New York State Bar Association, Vol. XLII, p. 227 et seq.] + +Congress did not receive this decision of the Supreme Court +submissively. On the contrary, plans were laid to nullify it. The effort +to legislate on child labor under cover of the power to regulate +commerce having failed, recourse was had to the constitutional grant of +power to lay taxes. Within six months after the decision of the Supreme +Court declaring the act unconstitutional was announced, another statute +similar in purpose and effect was enacted as part of a Federal Revenue +Act.[1] This act provided for an additional tax of ten per cent. of the +net profits received from the sale or distribution of the product of any +establishment in which children under the age of fourteen years had been +employed or permitted to work or children between the ages of fourteen +and sixteen had been employed or permitted to work more than eight hours +in any day or more than six days in any week or after the hour of 7 P.M. +or before the hour of 6 A.M. during any portion of the taxable year. In +other words, the law which had been declared void was substantially +reenacted, with the substitution of a prohibitive tax for the clause +prohibiting transportation in interstate commerce. + +[Footnote 1: Revenue Act of 1918, Title XII.] + +There was no pretense that this act was enacted for the purpose of +raising revenue. The revenue feature was merely legislative camouflage. +To quote the words of Justice Holmes in a recent case,[1] "Congress gave +it the appearance of a taxing measure in order to give it a coating of +constitutionality." + +[Footnote 1: _United States v. Jin Fuey Moy_, 241 U.S., 394.] + +The debate in the Senate was highly illuminating.[1] Its sponsors +admitted that the measure was not expected or intended to produce +revenue but was designed to regulate child labor and nullify the +decision of the Supreme Court. Senators learned in the law conceded that +if this purpose and effect were declared on the face of the act, or were +necessarily inferable from its provisions, it must inevitably be +declared unconstitutional. Reliance was placed, however, on the facts +that the act was entitled "A bill to raise revenue," and that its +provisions did not necessarily, on their face, belie this label. It was +argued that the Supreme Court would be bound, under its own previous +rulings, to treat the act as if it were what it purported on its face to +be--a revenue measure--and to ignore common knowledge and senatorial +admissions to the contrary. The measure passed the Senate by a +substantial majority and was enacted as part of the revenue bill then +under consideration, from which it has been carried forward into the +present revenue law. + +[Footnote 1: See "Congressional Record" of December 18, 1918.] + +There the matter stands at this writing. A District Court judge has +declared the new act unconstitutional but the question has not yet been +passed upon by the Supreme Court. + +It would be venturesome to attempt to predict what the Supreme Court +will do about it. Many constitutional lawyers seem to think that +Congress has succeeded in its attempt and that the act will be +sustained. Certainly there are strong precedents pointing that way. +Three in particular will be relied upon--the Veazie Bank case, the +Oleomargarine case and the Narcotic Drug Act case. + +In the Veazie Bank case[1] the Supreme Court upheld the validity of a +so-called tax law whose purpose and effect were to suppress the +circulation of notes of the state banks. In the Oleomargarine case[2] +the Court upheld a tax whose purpose and effect were to suppress the +manufacture and sale of oleomargarine artificially colored to look like +butter. In the Narcotic Drug case[3] the Court upheld a tax imposed by +the so-called Harrison Act[4] whose purpose was to regulate the sale and +use of narcotic drugs. In each of these cases there could be no doubt in +the mind of any intelligent man as to the motive for the enactment. The +Court has uniformly maintained, however, that + + when Congress acts within the limits of its constitutional + authority, it is not the province of the judicial branch of + the Government to question its motives.[5] + +[Footnote 1: _Veazie Bank v. Fenno_, 8 Wall., 533, decided in 1870.] + +[Footnote 2: _McCray v. United States_, 195 U.S., 27, decided in 1904.] + +[Footnote 3: _United States v. Doremus_, 249 U.S., 86, decided in 1919.] + +[Footnote 4: 38 Stat., 785.] + +[Footnote 5: _Smith v. Kansas City Title Company_, 255 U.S., 180, 210.] + + +In the Narcotic Drug Act case[1] the Court held + + While Congress may not exert authority which is wholly + reserved to the states, the power conferred by the + Constitution to levy excise taxes, uniform throughout the + United States, is to be exercised at the discretion of + Congress; and, where the provisions of the law enacted have + some reasonable relation to this power, the fact that they may + have been impelled by a motive, or may accomplish a purpose, + other than the raising of revenue, cannot invalidate them; nor + can the fact that they affect the conduct of a business which + is subject to regulation by the state police power. + +[Footnote 1: _United States v. Doremus_, 249 U.S., 86.] + +It is true that, while the Supreme Court may not question congressional +motives, it cannot escape the obligation to construe a statute in the +light of its true nature and effect. The Court has said:[1] + + The direct and necessary result of a statute must be taken + into consideration when deciding as to its validity, even if + that result is not in so many words either enacted or + distinctly provided for. In whatever language a statute may be + framed, its purpose must be determined by its natural and + reasonable effect. + +[Footnote 1: _Collins v. New Hampshire_, 171 U.S., 30.] + +As already indicated, however, the nature and effect of a statute must +ordinarily be determined from the form and contents of the act itself, +rather than from outside sources, and the measure under consideration +purports to be a revenue act. + +In the light of the decisions and principles of interpretation to which +reference has been made, the case against the constitutionality of the +act may seem well-nigh hopeless. The fact remains, however, that +Congress has not met the fundamental objection raised by the Supreme +Court. The Court declared the former act unconstitutional, not only +because it transcended the power of Congress under the particular +provision of the Constitution then invoked, viz., the Commerce Clause, +but also on the broad ground of state rights, because it "exerts a power +as to a purely local matter to which the federal authority does not +extend." It is difficult to see how this objection is obviated by +reenacting the act as a revenue measure. Under the circumstances perhaps +the apprehensive foes of federal encroachment should withhold their +lamentations until the Supreme Court has spoken again.[1] + +[Footnote 1: Since this chapter was put into print the Court has spoken. +In _Bailey v. The Drexel Furniture Co._ (decided May 15, 1922) the Child +Labor Tax Law was pronounced unconstitutional. The Court, while +conceding that it must interpret the intent and meaning of Congress from +the language of the act, held that the act on its face is an attempt to +regulate matters of state concern by the use of a so-called tax as a +penalty. The opinion of the Court, written by Chief Justice Taft, is an +emphatic assertion of the duty and function of the Court to preserve the +constitutional equilibrium between nation and states.] + + + + +VII + +STATE RIGHTS AND THE SUPREME COURT + + +A century ago the United States Supreme Court was the bulwark of +national power against the assaults and pretensions of the states. +To-day it is the defender of the states against the encroachments of +national power. Let no one suppose, however, that this is because the +Court itself has faced about. On our revolving planet a ship may be +sailing toward the sun at sunrise and away from the sun in the afternoon +without having changed its course. The Supreme Court has been the most +consistent factor in our governmental scheme. While there have been +differences of viewpoint between liberal constructionists and strict +constructionists among its members, the Court on the whole has steered a +fairly straight course. What has really altered is the environment in +which the Court moves. The earth has been turning on its axis. The frame +of mind of the people who compose states and nation has changed. + +At the outset (to cling for a moment to our nautical metaphor) the Court +was obliged to put forth on an unknown sea. Its sailing orders under the +new Constitution were unique. Precedents, those charts and lighthouses +of the judicial mariner, were lacking. Progress was tentative and +groping. Little wonder therefore that at first the business of the Court +was meager and membership in its body seemed less attractive than +membership in the judiciary of a state. Robert Hanson Harrison, one of +President Washington's original appointees to the Supreme bench, +declined to serve, preferring to accept a state judicial office. John +Rutledge, another of the original appointees, resigned after a few +months, preferring the position of Chancellor of his native state to +which he had been chosen. John Jay, the first Chief Justice, resigned to +become Governor of New York, and later declined a reappointment as Chief +Justice in words indicating entire lack of faith in the powers and +future of the Court. + +Nevertheless, the first period of the Court was by no means barren of +achievement. A beginning was made. The supremacy of the national +authority under the new Constitution was asserted. So stoutly indeed was +it maintained in the memorable case of _Chisholm v. Georgia_,[1] that +the country was thrown into a ferment. The Court had entertained a suit +against a sovereign state by a private citizen of another state and +rendered a decision in favor of the private citizen. The legislature of +the sovereign state concerned (Georgia) responded by a statute +denouncing the penalty of death against anyone who should presume to +enforce any process upon the judgment within its jurisdiction. The +matter was taken up in Congress and resulted in the proposal, and +subsequent ratification by the states, of a constitutional amendment +designed to prevent such actions in future.[2] It has been the fashion +to speak of this incident as a striking example of the recall of +judicial decisions. Such indeed it was. The decision did not suit the +popular frame of mind and was promptly overruled in the method +prescribed by the Constitution. It went a long way, however, toward +establishing the Supreme Court as a power to be reckoned with on the +side of national supremacy and authority. + +[Footnote 1: 2 Dallas, 419, decided in 1793.] + +[Footnote 2: Amendment XI.] + +Three years later the Court again took occasion to assert the national +supremacy in no uncertain fashion. The case was _Ware v. Hylton_[1] and +the Court laid down the proposition that a treaty of the Federal +Government (in this case the treaty of peace with Great Britain) +nullified previous state laws dealing with the subject matter. It is an +interesting circumstance that one of the counsel on the losing side in +this case was John Marshall of Virginia, and that this was the only case +he ever argued before the tribunal through which he was destined to play +so momentous a part in history. + +[Footnote 1: 3 Dallas, 199, decided in 1796.] + +In the annals of the Supreme Court and the development of American +constitutional law the name of John Marshall stands preeminent. He was +appointed Chief Justice by President John Adams, and took his seat on +the Bench at the beginning of the new century (February 4, 1801). He was +without judicial experience, but his record in other fields of activity +and his well-known Federalist principles pointed him out as a man to be +reckoned with and explain the aversion with which he was viewed by +Thomas Jefferson, the incoming President. The breach between the +President and the Chief Justice was widened by some of the early +decisions of the latter upholding the supremacy of the National +Government and the powers of the Supreme Court, notably the famous case +of _Marbury v. Madison_,[1] in which was asserted the power of the Court +to declare an act of Congress void as in conflict with the Constitution. +Some years elapsed, however, before a case was decided which squarely +involved a conflict between the powers of the Federal Government and the +powers of a state. The issue came up in the case of _United States v. +Judge Peters_.[2] This case involved a conflict of jurisdiction between +the federal courts and the authorities of the State of Pennsylvania over +the distribution of some prize money. Marshall's decision was a strong +assertion of the federal jurisdiction and power. The Governor of +Pennsylvania, under sanction of the state legislature, called out the +state militia to resist enforcement of the judgment of the Court. +Matters were tense for a time and bloodshed seemed imminent but the +state finally backed down. + +[Footnote 1: 1 Cranch, 137.] + +[Footnote 2: 5 Cranch, 115, decided in 1809.] + +In the following year (1810) came the case of _Fletcher v. Peck_,[1] in +which for the first time a statute of a state was held by the Supreme +Court to be void as repugnant to the Federal Constitution. The State of +Georgia had sought by statute to destroy rights in lands acquired under +a previous act. It was held that the statute was unconstitutional as +impairing the obligation of contracts within the meaning of the +Constitution. + +[Footnote 1: 6 Cranch, 87.] + +In _Martin v. Hunter's Lessee_[1] was asserted the right of the Federal +Supreme Court to overrule the judgment of a state court on questions +arising under the Federal Constitution. The State of Virginia had denied +that right and the Supreme Court reversed the judgment of the Virginia +Court of Appeals. + +[Footnote 1: 1 Wheat., 304 (1816.)] + +In _McCulloch v. State of Maryland_,[1] a case involving an attempt by +the State of Maryland to tax the Bank of the United States, Marshall's +doctrine of implied powers was elaborated, and the judgment of the state +court upholding the tax was reversed. + +[Footnote 1: 4 Wheat., 316 (1819).] + +In the _Dartmouth College case_[1] the doctrine of the inviolability of +contracts against attack by state legislation was further developed. An +act of the state legislature of New Hampshire had sought to alter the +charter of Dartmouth College, and the New Hampshire courts had upheld +the legislature. The Supreme Court reversed the state court and declared +the statute unconstitutional under the clause of the Constitution which +declares that no state shall make any law impairing the obligation of +contracts. + +[Footnote 1: _Dartmouth College v. Woodward_, 4 Wheat., 518 (1819).] + +In the great case of _Gibbons v. Ogden_[1] the Court asserted the +paramount jurisdiction of the National Government over interstate +commerce. This was one of the most important and far-reaching of all +Marshall's decisions. An injunction had been granted by Chancellor Kent +and unanimously sustained by the Court of Errors of New York, +restraining Gibbons from navigating the Hudson River by steamboats +licensed by Congress for the coasting trade on the ground that he was +thereby infringing the exclusive right, granted by the legislature of +New York, to Robert R. Livingston and Robert Fulton to navigate the +waters of the state with vessels moved by steam. The Supreme Court +reversed the state courts and held the New York legislation void as an +interference with the right of Congress, under the Constitution, to +regulate interstate commerce. + +[Footnote 1: 9 Wheat., 1 (1824).] + +These were only a few of that series of great decisions which stand out +like mountain peaks on the horizon of our national life. Marshall's +judgments transformed a governmental experiment into something assured +and permanent. They confirmed the national supremacy and made the +Constitution workable. + +Marshall is known to history for his work in vindicating the national +power under the Constitution. That was the need in his day and he met it +with superlative wisdom and skill. It would be a mistake, however, to +suppose that he favored federal encroachment upon the powers reserved to +the states. On the contrary, he rendered decisions in favor of state +rights which would be notable were they not overshadowed by the greater +fame of the decisions which went to the building of the nation. + +With the passing of Marshall and the accession of Taney as Chief Justice +a new chapter opened in the history of the Court. The Federalists had +become extinct. Andrew Jackson had come into power and it had fallen to +his lot to fill a majority of the seats upon the bench by appointments +to vacancies. The result was at once apparent. Two cases[1] involving +important constitutional questions, which had been argued during +Marshall's lifetime but assigned for reargument on account of a division +in the Court, were now decided contrary to Marshall's known views and in +favor of a strict construction of national powers. Justice Story, +Marshall's longtime associate on the bench, dissented strongly in both +cases, lamenting the loss of Marshall's leadership and the change in the +viewpoint of the Court. + +[Footnote 1: _Mayor of New York v. Miln_, 11 Peters, 102; _Briscoe v. +Bank of Kentucky_, 11 Peters, 257, decided in 1837.] + +It would serve no useful purpose to enter upon a detailed consideration +of the various decisions upon constitutional questions made during the +twenty-eight years of Taney's Chief Justiceship. They were marked by +great diversity of views among the members of the Court. In some of +them, notably the famous Passenger cases,[1] the Court fell into a state +reminiscent of the confusion of tongues that arose at the building of +the Tower of Babel. The scope of certain of Marshall's decisions was +limited.[2] Upon the whole, however, the structure of constitutional law +which Marshall had reared was not torn down or greatly impaired. The +national supremacy was upheld. Taney and his associates were for the +most part patriotic men and eminent lawyers, proud of the Court and its +history and anxious to add to its prestige. It is regrettable that the +merits of some of them have been so obscured and their memory so clouded +by a well-meaning but unfortunate excursion into the field of political +passions. In the Dred Scott case[3] they thought to quiet agitation and +contribute to the peace of their country by passing judgment upon +certain angrily mooted questions of a political character. The effort +was a failure and brought upon their heads, and upon Chief Justice Taney +in particular, an avalanche of misrepresentation and obloquy. + +[Footnote 1: 7 Howard, 283 (1849).] + +[Footnote 2: Not always for the worse: vide the Charles River Bridge +case, 11 Peters, 420, imposing salutary restrictions on the doctrine of +the Dartmouth College case.] + +[Footnote 3: _Dred Scott v. Sandford_, 19 Howard, 393 (1857).] + +The suppression of the Great Rebellion brought an enormous increase in +the national power and in the popular will to national power. State +rights did not loom large in the popular or the legislative mind in +reconstruction days. Taney was dead. The Supreme Court had been +practically reconstituted by appointments made by President Lincoln and +his immediate successors and it seems to have been anticipated that the +new Court would take the view of national powers prevailing in Congress +and the country at large. In this the popular expectation was doomed to +disappointment. The Court displayed an unexpected solicitude for the +rights of the states and firmness against federal encroachment. Chief +Justice Salmon P. Chase, who had been President Lincoln's war Secretary +of the Treasury, went so far as to pronounce unconstitutional some of +his own official acts performed under the stress of war. + +In the great case of _State of Texas v. White_[1] the rights of Texas as +a sovereign state were asserted, though Texas had joined in the +Rebellion and was not represented in the national legislature. + +[Footnote 1: 7 Wall., 700 (1869).] + +In _The Collector v. Day_[1] it was held that Congress had no power to +tax the salary of a state official. + +[Footnote 1: 11 Wall., 113 (1871).] + +In the Slaughter House cases[1] an act of the Legislature of Louisiana, +granting to a corporation created by it exclusive rights to maintain +slaughter houses for the City of New Orleans and other territory, was +upheld, as a valid exercise of state police power, against claims that +the legislation violated rights secured under the newly adopted +amendments to the Federal Constitution (Amendments XIII, XIV, XV). The +opinion of the Court delivered by a Northern judge (Miller of Iowa) +stands as one of the bulwarks of state authority. + +[Footnote 1: 16 Wall., 36 (1873).] + +In a series of later cases various reconstruction acts of Congress +involving encroachments upon state rights were either held +unconstitutional or radically limited in their effect. For example, the +decision in _United States v. Cruikshank_[1] greatly limited the effect +of the so-called Federal Enforcement Act. The decision in _United States +v. Harris_[2] declared unconstitutional portions of an act of Congress +designed for the suppression of activities of the Ku-Klux variety. In +the so-called Civil Rights cases[3] certain provisions of the federal +Civil Rights Act, passed in furtherance of the purposes of the new +constitutional amendments and designed to secure to persons of color +equal enjoyment of the privileges of inns, public conveyances, theatres, +etc., were held unconstitutional as an encroachment on the rights of the +states. + +[Footnote 1: 92 U.S., 542 (1875).] + +[Footnote 2: 106 U.S., 629.] + +[Footnote 3: 109 U.S., 3.] + +These are but a few of the many decisions of the Supreme Court in the +reconstruction period upholding the rights of the states against +attempted federal encroachment arising from the conditions of the Civil +War. The nation owes a debt of gratitude to the men who composed the +Court at this time for their courage and firmness in the face of popular +clamor and passion. + +The solicitude of the Court for the rights of the states did not end +with the reconstruction period. It has continued down to the present +day. In the Income Tax cases[1] the Court held that a tax upon income +from bonds of a state municipal corporation was repugnant to the +Constitution as a tax upon the borrowing power of the state. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429 +(1895).] + +In _Keller v. United States_[1] the Court declared unconstitutional, as +an encroachment on the police power of the states, an act of Congress +making it a felony to harbor alien prostitutes, the Court declaring that +"speaking generally, the police power is reserved to the states and +there is no grant thereof to Congress in the Constitution." + +[Footnote 1: 213 U.S., 138 (1909).] + +In the Child Labor case[1] the Court held the federal Child Labor Law +of 1916 unconstitutional as invading the police power reserved to the +states. The Court said: + + This Court has no more important function than that which + devolves upon it the obligation to preserve inviolate the + constitutional limitations upon the exercise of authority, + federal and state, to the end that each may continue to + discharge, harmoniously with the other, the duties entrusted + to it by the Constitution.[2] + +[Footnote 1: _Hammer v. Dagenhart_, 247 U.S., 251 (1918).] + +[Footnote 2: An even stronger assertion of state rights is found in the +Child Labor Tax Case (_Bailey v. The Drexel Furniture Co._) decided May +15, 1922, after this chapter had been put into print.] + +How is it then, someone may ask, if the Supreme Court is so zealous in +defense of the rights of the states, that those rights are being +encroached upon more and more by the National Government? The answer +must be that there has been a change in the popular frame of mind. The +desire for uniformity, standardization, efficiency, has outgrown the +earlier fears of a centralization of power. Congress has found ways, +under the constitutional grants of power to lay taxes and regulate +interstate commerce, to legislate in furtherance of the popular demands. +The Court is not strong enough (no governmental agency which could be +devised would be strong enough) to hold back the flood or permanently +thwart the popular will. In a government of the people everything has to +yield sooner or later to the deliberate wish of the majority. + +Some profess to view the recent encroachments of federal power as a +triumph of the principles advocated by Alexander Hamilton and John +Marshall over the principles of Thomas Jefferson. Such a claim does +Hamilton and Marshall an injustice. While they both stood for a strong +National Government, neither of them contemplated any encroachment by +that government on the principle of local self-government in local +matters or the police power of the states. + +Marshall in one of his most powerful and far-reaching pronouncements in +support of the national supremacy[1] speaks of + + that immense mass of legislation, which embraces everything + within the territory of a state not surrendered to the General + Government;... inspection laws, quarantine laws, health laws + of every description ... are component parts of this mass. + +[Footnote 1: _Gibbons v. Ogden_, 9 Wheat., 1, 203, 208.] + +Later in the same opinion he refers to + + the acknowledged power of a state to regulate its police, its + domestic trade, and to govern its own citizens. + + ... The power of regulating their own purely internal affairs + whether of trading or police. + +Hamilton devotes an entire number of the _Federalist_[1] to combatting +the idea that the rights of the states are in danger of being invaded by +the General Government. In another place[2] he returns to the idea + + that there is greater probability of encroachments by the + members upon the federal head, than by the federal head upon + the members + +and concludes that it is to be hoped that the people + + will always take care to preserve the constitutional + equilibrium between the general and the state governments. + +[Footnote 1: _Federalist_, Number XVII.] + +[Footnote 2: Id., Number XXXI.] + +That hope has failed of realization. The "constitutional equilibrium" of +which Hamilton wrote is not being preserved. Some will say that this is +an age of progress and we are improving upon Hamilton. Others, however, +think we are forgetting the wisdom of the Fathers. + + + + +VIII + +THE FEDERAL TAXING POWER AND THE INCOME TAX AMENDMENT + + +Had the World War come five years earlier the United States would have +been much handicapped and embarrassed in financing its share of the +struggle. One of the chief sources of national revenue during and since +the war, the income tax, would not have been available. The federal +income tax had been declared unconstitutional by the Supreme Court in +1895, and it was not until eighteen years later that the obstacle +pointed out by that decision was removed through the adoption of an +amendment to the Constitution. The Sixteenth or Income Tax Amendment was +proposed by Congress to the legislatures of the several states in 1909 +and took effect, having been ratified by three-fourths of the states, in +1913. Declared by its sponsors at the outset to be intended merely as a +recourse in case of emergency, the tax authorized by the amendment was +at once put into operation and there seems to be little likelihood that +it will ever be abandoned. + +Without the constitutional amendment no general income tax would be +practicable. And yet the amendment conferred no new power of taxation on +the National Government. To explain this seeming paradox it will be +necessary to consider briefly the scope and limitations of the federal +taxing power. + +One of the chief defects, perhaps the most vital defect of all, in the +Confederation which carried through the Revolutionary War and preceded +the Union, was its inability to raise revenue directly by taxation. The +Confederation was obliged to call upon the several states to furnish +their respective contributions or quotas, and requisitions upon the +states encountered delays and sometimes were ignored altogether. There +were no effective means of compulsion. + +With these facts before them the founders of the Union determined that +the new government should not be wrecked upon this rock at any rate, and +therefore insisted, against great opposition, in conferring upon it +powers of taxation which were practically unlimited in their reach. The +Constitution was made to provide that[1] + + the Congress shall have 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. + +[Footnote 1: Const., Art. I, Sec. 8, Clause 1.] + +The only tax which Congress was expressly forbidden to lay was a tax on +exports.[1] It was, however, provided that indirect taxes (duties, +imposts, and excises) should be uniform throughout the United States,[2] +and that direct taxes should be apportioned among the states according +to population.[3] The last mentioned provision was a concession to the +fears of the wealthier states lest their citizens be taxed unduly for +the benefit of the poorer states, and represented one of the great +compromises by which the ratification of the Constitution as a whole was +secured. + +[Footnote 1: Const., Art. I, Sec. 9, Clause 5.] + +[Footnote 2: Id., Art. I, Sec. 8, Clause 1.] + +[Footnote 3: Id., Art. I, Sec. 2, Clause 3. Sec. 9, Clause 4.] + +The Constitution nowhere specified just what taxes were to be deemed +"direct" (Madison in his notes of the Constitutional Convention records: +"Mr. King asked what was the precise meaning of direct taxation? No one +answd.")[1] or what kind of uniformity was intended by the provision +that indirect taxes should be uniform, and more than a century was to +elapse before either of these fundamental questions was finally +settled. The answer to the latter question (that the term "uniform" +refers purely to a geographical uniformity and is synonymous with the +expression "to operate generally throughout the United States") was +given by the Supreme Court in the year 1900 in the celebrated case of +_Knowlton v. Moore_,[2] and met with general approval. The answer to the +question of what constitutes a direct tax within the meaning of the +Constitution, given by the Supreme Court in 1895 in the Income Tax +cases,[3] met with a different reception. The decision upset +long-settled ideas, disarranged the federal taxing system, aroused +popular resentment, and ultimately led to the enactment of the Sixteenth +Amendment. + +[Footnote 1: Farrand, "Records of the Federal Convention," Vol. II, p. +350.] + +[Footnote 2: 178 U.S., 41.] + +[Footnote 3: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429.] + +The question had arisen early in the life of the Republic in the case of +_Hylton v. United States_, decided in 1796.[1] This litigation involved +the validity of a tax on carriages which had been imposed by Congress +without apportionment among the states. Alexander Hamilton argued the +case before the Supreme Court in support of the tax. The Court adopted +his view and sustained the tax, holding that it was a tax on consumption +and therefore a species of excise or duty. The Justices who wrote +opinions expressed doubt whether anything but poll taxes and taxes on +land were "direct" within the meaning of the Constitution. That point, +however, was not necessarily involved and was not decided, though later +generations came to assume that it had been decided. + +[Footnote 1: 3 Dallas, 171.] + +The tax on carriages was soon repealed and many years elapsed before the +question came up again. After the Civil War broke out, however, the need +of revenue became acute and various statutes taxing income without +apportionment among the states were enacted by Congress. These met with +general acquiescence. It was felt that they were emergency measures +necessitated by the war, and they were in fact abandoned as soon as +practicable after the war. A well-known lawyer, however (William M. +Springer of Illinois), did not acquiesce and refused to pay his income +tax, on the ground that it was a direct tax not levied in accordance +with the Constitution. In the action brought to test the question[1] it +appeared that the income on which Mr. Springer had been taxed was +derived in part from the practice of his profession as an attorney. To +this extent it was clearly an excise or duty, i.e., an indirect tax. As +it was incumbent upon Mr. Springer, by reason of the form of the action, +to demonstrate that the tax was void _in toto_ the Court could not do +otherwise than decide against him. In rendering its decision, however, +the Court took occasion to discuss the question as to what were direct +taxes within the meaning of the Constitution, and expressed the view +that the term included only capitation or poll taxes, and taxes on real +estate. There the matter rested until the year 1894 when Congress +enacted another income tax law. This time the argument from necessity +was lacking. The country was in a state of profound peace. Opposition to +the tax among the moneyed interests was widespread. Test suits were +brought and after most elaborate and exhaustive argument and reargument +the Hylton and Springer cases were distinguished and the act was held +unconstitutional.[2] The decision was by a closely divided Court (five +to four), the majority finally holding that "direct taxes" within the +meaning of the Constitution included taxes on personal property and the +income of personal property, as well as taxes on real estate and the +rents or income of real estate. This conclusion was fatal to the act. It +was conceded that the tax, in so far as it affected income derived from +a business or profession, was an indirect tax and therefore valid +without apportionment among the states, but the provisions for taxing +the income of real and personal property were held to be an essential +part of the taxing scheme invalidating the whole statute. + +[Footnote 1: _Springer v. United States_, 102 U.S., 586.] + +[Footnote 2: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +This momentous decision was almost as unpopular with Congress and the +general public as the decision in _Chisholm v. Georgia_ had been a +hundred years earlier. Many legislators were in favor of enacting +another income tax law forthwith and endeavoring to coerce the Court, +through the force of legislative and popular opinion, to overrule its +decision. Calmer counsels prevailed, however, and plans were initiated +to get over the difficulty by a constitutional amendment. Meanwhile, +steps were taken to eke out the national revenue by various excise +taxes, notably the so-called Federal Corporation Tax. This novel tax, +which was thought by many to involve a very serious encroachment by the +Federal Government on the powers of the states, will be discussed more +at length in later chapters.[1] + +[Footnote 1: See Chapters X and XI, infra.] + +The constitutional amendment as proposed by Congress and ratified by the +states provided: + +"The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several states, +and without regard to any census or enumeration." + +Thus far we have dealt only with such limitations upon the federal +taxing power as are expressly imposed by the Constitution. As has been +seen, the only express limitations are that direct taxes shall be +apportioned among the states, that indirect taxes shall be uniform, and +that exports shall not be taxed at all. There are, however, certain +other limitations which we proceed to notice briefly. + +The Constitution provides[1] that the compensation of federal judges +"shall not be diminished during their continuance in office." There is a +similar provision as to the compensation of the President.[2] No attempt +seems to have been made to tax the compensation of federal judges prior +to 1862. A statute of that year subjected the salaries of all civil +officers of the United States to an income tax and was construed by the +revenue officers as including the compensation of the President and the +judges. Chief Justice Taney, the head of the judiciary, wrote the +Secretary of the Treasury a letter[3] protesting against the tax as a +virtual diminution of judicial compensation in violation of the +constitutional provision. No heed was paid to the protest at the time +but some years later, upon the strength of an opinion by Attorney +General Hoar, the tax on the compensation of the President and the +judges was discontinued and the amounts theretofore collected were +refunded. There the matter rested until after the Income Tax Amendment, +when Congress again sought to impose a tax upon the income of the +President and the judges. A federal judge of a Kentucky district +contested the tax and the question came up before the Supreme Court for +final decision. On behalf of the revenue department it was urged that a +general income tax, operating alike on all classes, did not involve any +violation of the constitutional provision. It was also contended that +such a tax was expressly authorized by the Sixteenth Amendment giving +Congress power to tax incomes "from whatever source derived." The Court +in an exhaustive opinion[4] overruled both these contentions and held +the tax to be a violation of the Constitution. + +[Footnote 1: Art. 3, Sec. 1.] + +[Footnote 2: Art. 2, Sec. 1, Clause 6.] + +[Footnote 3: See 157 U.S., 701.] + +[Footnote 4: _Evans v. Gore_, 253 U.S., 245.] + +It has often been asserted that a limitation of the federal taxing power +is found in the "due process" clause of the Fifth Amendment of the +Constitution, providing that no person shall "be deprived of life, +liberty, or property without due process of law." This amendment relates +to the powers of the General Government. A similar limitation on the +powers of the states is found in the Fourteenth Amendment. Taxing laws +have frequently been attacked in the courts on the ground that, by +reason of some inequality or injustice in their provisions, the taxpayer +was deprived of his property without due process of law. In cases +involving state laws such objections have sometimes been sustained.[1] +There seems, however, to have been no case in which a federal taxing law +was declared invalid on this ground, and the Supreme Court has recently +remarked that it is "well settled that such clause (viz., the due +process clause of the Fifth Amendment) is not a limitation upon the +taxing power conferred upon Congress by the Constitution."[2] +Nevertheless, it is believed that if a federal tax were clearly imposed +for other than a public use, or were imposed on tangible property lying +outside the national jurisdiction, or were so arbitrary and without +basis for classification as to amount to confiscation, relief might be +obtained under the due process clause of the Fifth Amendment. + +[Footnote 1: See, e.g., _Union Tank Line Co. v. Wright_, 249 U.S., 275.] + +[Footnote 2: _Brushaber v. Union Pacific R.R._, 240 U.S., 24.] + +By far the most important and interesting of the implied limitations of +the federal taxing power remains to be noticed. That is the limitation +which prohibits the National Government from burdening by taxation the +property or revenues or obligations of a state, or the emoluments of a +state official, or anything connected with the exercise by a state of +one of its governmental functions. In other words, while the National +Government may tax income from bonds issued by England or France or +their cities, it is powerless to tax the income from bonds of Rhode +Island or the smallest of its towns. + +This implied limitation, nowhere categorically expressed but enunciated +in a series of decisions of the Supreme Court, has not always met with +acquiescence from the executive and legislative branches of the +Government. In fact, Congress is now engaged in an effort to do away +with it, at least in so far as concerns the right to tax the income from +state and municipal bonds. To-day, however, it still stands as one of +the most striking and unique characteristics of our governmental system. +It will be discussed more at length in the next chapter. + + + + +IX + +CAN CONGRESS TAX THE INCOME FROM STATE AND MUNICIPAL BONDS? + + +That is a question which is agitating a good many people just now. +Congress from time to time has seemed disposed to try it, in spite of +misgivings as to the constitutionality of such legislation.[1] A recent +Revenue Bill contained provisions taxing the income of future issues of +such obligations, and a motion for the elimination of those provisions +was defeated in the House 132 to 61. Meanwhile, protests were pouring in +from state and municipal officers assailing the justice and expediency +of such a tax. + +[Footnote 1: See, e.g., H. Report No. 767, 65th Cong., 2d Sess., +accompanying House Revenue Bill of 1918 as reported by Mr. Kitchin from +the Committee on Ways and Means, page 89.] + +It is not the purpose of this chapter to discuss the questions of +justice and expediency (as to which there is much to be said on both +sides) but rather to deal with the strictly legal aspects of the matter +and indicate briefly why such a tax cannot be laid without a change in +our fundamental law. + +Let it be said at the outset that no express provision of the United +States Constitution forbids. On the contrary, that instrument confers on +Congress the power to lay taxes without any restriction or limitation +save that exports shall not be taxed, that duties, imposts, and excises +shall be uniform throughout the United States, and that direct taxes +must be apportioned among the states in proportion to population. The +obstacle lies rather in an implied limitation inherent in our dual +system of government and formulated in decisions of the Supreme Court. + +The founders of this republic established a form of government wherein +the states, though subordinate to the Federal Government in all matters +within its jurisdiction, nevertheless remained distinct bodies politic, +each one supreme in its own sphere. In the famous phrase of Salmon P. +Chase, pronouncing judgment as Chief Justice of the Supreme Court[1]: + + The Constitution in all its provisions looks to an + indestructible Union, composed of indestructible states. + +[Footnote 1: _Texas v. White_, 7 Wall., 700, 725.] + +In a later case[1] another eminent justice (Samuel Nelson of New York) +put the matter thus: + + The General Government, and the states, although both exist + within the same territorial limits, are separate and distinct + sovereignties, acting separately and independently of each + other, within their respective spheres. The former, in its + appropriate sphere, is supreme; but the states within the + limits of their powers not granted, or, in the language of the + 10th Amendment, "reserved", are as independent of the General + Government as that government within its sphere is independent + of the states. + +[Footnote 1: _The Collector v. Day_, 11 Wall., 113, 124.] + +It follows that the two governments, national and state, must each +exercise its powers so as not to interfere with the free and full +exercise by the other of its powers. To do otherwise would be contrary +to the fundamental compact embodied in the Constitution--in other words, +it would be _unconstitutional_. + +This proposition was affirmed at an early day by Chief Justice John +Marshall in the great case of _McCulloch vs. The State of Maryland_,[1] +which involved the attempt of a state to tax the operations of a +national bank. That case is one of the landmarks of American +constitutional law. While it did not expressly decide that the Federal +Government could not tax a state instrumentality but only the converse, +i.e., that a state could not tax an instrumentality of the nation, the +Court has held in many subsequent decisions that the proposition +enunciated by the great Chief Justice works both ways. For example, it +has declared that a state cannot tax the obligations of the United +States because such a tax operates upon the power of the Federal +Government to borrow money[2] and conversely, that Congress cannot tax +the obligations of a state for the same reason;[3] that a state cannot +tax the emoluments of an official of the United States[4] and +conversely, that the United States cannot tax the salary of a state +official;[5] that a state cannot impose a tax on the property or +revenues of the United States[6] and conversely, that Congress cannot +tax the property or revenues of a state or a municipality thereof.[7] + +[Footnote 1: 4 Wheaton, 316.] + +[Footnote 2: _Weston v. City of Charleston_, 2 Pet., 449.] + +[Footnote 3: _Mercantile Bank v. New York_, 121 U.S., 138, 162.] + +[Footnote 4: _Dobbins v. Commissioner of Erie County_, 16 Pet., 435.] + +[Footnote 5: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 6: _Van Brocklin v. Tennessee_, 117 U.S., 151.] + +[Footnote 7: _United States v. Railroad Co._, 17 Wall., 322.] + +The Supreme Court has said (and many times reiterated in substance) that +the National Government "cannot exercise its power of taxation so as to +destroy the state governments, or embarrass their lawful action."[1] One +of the most distinguished writers on American Constitutional law +(Thomas M. Cooley, Chief Justice of the Supreme Court of Michigan and +afterward Chairman of the federal Interstate Commerce Commission) has +said: + + There is nothing in the Constitution which can be 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.[2] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: _Cooley's Constitutional Limitations_, 7th Ed., 684.] + +The question as to the right of Congress to levy an income tax on +municipal securities came up squarely in the famous Income Tax Cases[1] +involving the constitutionality of the Income Tax Law of 1804. While the +Supreme Court was sharply divided as to the constitutionality of other +features of the law, it was unanimous as to the lack of authority in the +United States to tax the interest on municipal bonds. + +[Footnote 1: _Pollock v. Farmers Loan & Trust Co._, 157 U.S., 429; same +case on rehearing, 158 U.S., 601.] + +The decision in those cases is the law to-day (except in so far as it +has been changed by the recent Sixteenth Amendment) with one possible +limitation. It has been held that state agencies and instrumentalities, +in order to be exempt from national taxation, must be of a strictly +governmental character; the exemption does not extend to agencies and +instrumentalities used by the state in carrying on an ordinary private +business. This was decided in the South Carolina Dispensary case.[1] The +State of South Carolina had taken over the business of selling liquor +and the case involved a federal tax upon such business. The Court, while +reaffirming the general doctrine, nevertheless upheld the tax on the +ground that the business was not of a strictly governmental character. +This decision suggests the possibility that if an attempt were made to +tax state and municipal bonds the Court might draw a distinction based +on the purpose for which the bonds were issued, and hold that only such +as were issued for strictly governmental purposes were exempt. + +[Footnote 1: _South Carolina v. United States_, 199 U.S., 437, decided +in 1905.] + +It remains to consider the effect of the Sixteenth Amendment. + +After the Supreme Court had held the Income Tax Law of 1894 +unconstitutional on the ground that it was a direct tax and had not been +apportioned among the states in proportion to population the Sixteenth +Amendment to the Constitution was proposed and ratified. This amendment +provides that + + the Congress shall have power to lay and collect taxes on + incomes, from whatever source derived, without apportionment + among the several states, and without regard to any census or + enumeration. + +When the amendment was submitted to the states for approval some lawyers +apprehended that the words "incomes from whatever source derived" might +open the door to the taxation by the Government of income from state and +municipal bonds. Charles E. Hughes, then Governor of New York, sent a +special message to the Legislature opposing ratification of the +amendment on this ground. + +Other lawyers, notably Senator Elihu Root, took a different view of the +scope of the amendment, holding that it would not enlarge the taxing +power but merely remove the obstacle found by the Supreme Court to the +Income Tax Law of 1894, i.e., the necessity of apportionment among the +states in proportion to population. This latter view has now been +confirmed by the Supreme Court. In a case involving a tax on income from +exports the Court said:[1] + + The Sixteenth Amendment ... does not extend the taxing power + to new or excepted subjects, but merely removes all occasion, + which otherwise might exist, for an apportionment among the + states of taxes laid on income, whether it be derived from one + source or another.... + +[Footnote 1: _Peck v. Lowe_, 247 U.S., 165.] + +In a case decided a little earlier[1] the Court, speaking through Chief +Justice White, had said: + + By the previous ruling (i.e., in _Brushaber v. Union Pacific + Railway Co._, 240 U.S., 1) it was settled that the provisions + of the Sixteenth Amendment conferred no new power of + taxation.... + +[Footnote 1: _Stanton v. Baltic Mining Co._, 240 U.S., 103, 112.] + +From what has been said it will be evident that the doctrine of +exemption of state and municipal bonds from federal taxation is firmly +embedded in our law and has not been affected by the Sixteenth +Amendment. + +Whether it is a doctrine suited to present-day conditions is a question +outside the scope of this paper. + +The fear of federal encroachment, so strong in the minds of the makers +of our Constitution, has become little more than a tradition. To many it +doubtless will seem that any rule of law which operates to prevent the +nation, in the great exigency of war, from taxing a portion of the +property of its citizens is pernicious and should be changed. + +If this be the view of a sufficient number the change can and will be +made. Lawyers think, however, that it will have to be done by the +orderly method of constitutional amendment, not by passing taxing +statutes which a reluctant Court will be obliged to declare +unconstitutional. + +Just now the tide of popular sentiment is setting strongly toward such a +change. It was advocated in a recent Presidential message.[1] The +immunity enjoyed by state bond issues is coming to be regarded less as a +safeguard of state rights than as a means whereby the rich escape +federal income surtaxes. One is tempted to predict that the next formal +amendment of the Constitution will deal with this subject. If so, +another inroad will have been made by the General Government on the +failing powers of the states. + +[Footnote 1: Message of President Harding to Congress, December 6, +1921.] + + + + +X + +IS THE FEDERAL CORPORATION TAX CONSTITUTIONAL?[1] + +[Footnote 1: Since this chapter was first published in 1909 as an +article in the _Outlook_ magazine the specific question propounded in +its title has been settled by the Supreme Court (_Flint v. Stone Tracy +Co._, 220 U.S., 107). The paper is here reproduced, however, in the +belief that its discussion of the principles of our dual system of +Government is as pertinent now as it was before.] + + +The most noteworthy enactment of the sixty-first Congress from a legal +point of view, to say nothing of its economic and political +significance, was the Corporation Tax Act. That Act, forming Sec.38 of the +Tariff Law, provides-- + + That every corporation ... organized for profit and having a + capital stock represented by shares ... shall be subject to + pay annually a special excise tax with respect to the carrying + on or doing business by such corporation ... equivalent to one + per centum upon the entire net income over and above five + thousand dollars received by it from all sources, etc. + +The act goes on to require the corporations to make periodical reports +concerning their business and affairs, and confers on the Commissioner +of Internal Revenue a visitorial power to examine and compel further +returns. + +The genesis of the act is interesting. The growing demand for more +efficient regulation of the corporations, so pronounced during President +Roosevelt's Administration, had foreshadowed such legislation. It +remained, however, for President Taft to take the initiative and mould +the shape which the legislation was to take. + +In the course of the Senate debate on the new Tariff Act it had become +apparent that an influential party in Congress, backed by strong +sympathy outside, was bent upon passing a general income tax act. The +previous Income Tax Law had been pronounced unconstitutional by the +Supreme Court as violating the provision of the Constitution that all +direct taxes must be apportioned among the states in proportion to +population.[1] That decision, however, had been reached by a bare +majority of five to four. It had overruled previous decisions and +overturned doctrines that had been acquiesced in almost from the +foundation of the Government. A strong party was in favor of enacting +another income tax law and bringing the question again before the Court +in the hope that the Court as then constituted might be induced to +overrule or materially modify the doctrine of the Pollock case. The +President and his advisers viewed such a proposal with disfavor. To +their minds the proper way to establish the right of Congress to levy an +income tax was by an amendment to the Constitution, not by an assault +upon the Supreme Court. Accordingly on June 16, 1909, the President +transmitted a message to Congress[2] recommending a constitutional +amendment, and proposing, in order to meet the present need for more +revenue, an excise tax on corporations. The proposal, coupled as it was +with a suggestion that such an act might be made to serve for purposes +of federal supervision and control as well as revenue, met with favor +and was enacted into law. + +[Footnote 1: _Pollock vs. Farmers' Loan & Trust Co._, 157 U.S., 429.] + +[Footnote 2: _Congressional Record_, June 16, 1909, p. 3450.] + +President Taft, himself an eminent constitutional lawyer, in his message +recommending the law expressed full confidence in its constitutionality. +The same view was taken by able lawyers who surrounded him in the +capacity of advisers. The act is understood to have been drafted by Mr. +Wickersham, the Attorney General, and vouched for by Senator Elihu Root +and others of scarcely less authority in the domain of constitutional +law. + +Against opinions from such sources one takes the field with diffidence. +I venture, however, to outline briefly some reasons for doubting the +constitutionality of the act. + +At the outset it is essential to determine the exact nature of the tax. +Obviously it is not a tax upon income _as income_. If it were, it would +be obnoxious to the decision in the Pollock case as imposing a direct +tax without apportionment among the states. The language of the act, as +well as the declarations of its sponsors, clearly indicate that it is +intended, not as a direct tax on property, but as an excise tax on +privilege. The phraseology of the act itself is--"A special excise tax +with respect to the carrying on or doing business by such corporation," +etc. Undoubtedly Congress has power to impose an excise tax upon +occupation or business. This was expressly decided, in the case of the +businesses of refining petroleum and refining sugar, by the Spreckels +case,[1] referred to in President Taft's message. The message says: + + The decision of the Supreme Court in the case of Spreckels + Sugar Refining Company against McClain (192 U.S., 397) seems + clearly to establish the principle that such a tax as this is + an excise tax upon privilege and not a direct tax on property, + and is within the federal power without apportionment + according to population. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_, 192 U.S., 397.] + +What, then, is the privilege with respect to which the tax is imposed? +Is it, like the tax involved in the Spreckels case, the privilege of +doing the various kinds of business (manufacturing, mercantile, and the +rest) in which the corporations subject to the operation of the law are +engaged? Obviously not. No kind or kinds of business are specified in +the act. The tax falls not only on corporations doing every conceivable +kind of business, but also on the corporation that does no specific +business whatever--the corporation which, in the language of an eminent +judge, is merely "an incorporated gentleman of leisure."[1] Moreover, if +the tax were merely upon the privilege of doing business, it would seem +to be obnoxious to the cardinal principle of just taxation that taxes +should be uniform. In other words, if the privilege of doing a +business--say conducting a department store--were the thing taxed and +the only thing taxed, the rule of uniformity would seem to require that +a corporation and a copartnership conducting similar stores on opposite +corners of the street should both be taxed. Nothing inconsistent with +this view will be found in the Spreckels case. The party to that suit +was, to be sure, a corporation, but the act under which the tax was +imposed applied to individuals, firms, and corporations alike. + +[Footnote 1: Vann, J., in _People ex rel. vs. Roberts_, 154 N.Y., 1.] + +It must be concluded, therefore, that the tax is not upon the privilege +of doing the businesses in which the various corporations in the land +are engaged, but is rather a _tax upon the privilege of doing business +in a corporate capacity_, or, in other words, upon the exercise of the +corporate franchise. That this is so appears very clearly from the +message of President Taft. He says: + + This is an excise tax upon the privilege of doing business as + an artificial entity and of freedom from a general partnership + liability enjoyed by those who own the stock. + +Assuming, then, that this is the real nature of the tax, is it +constitutional? + +Unquestionably Congress may tax corporations organized under federal +laws upon their franchises; any sovereignty may tax the creatures of its +creation for the privilege of exercising their franchises; but how about +corporations chartered by the states and doing purely an intrastate +business? A state confers on John Doe and his associates the privilege +or franchise of doing business in a corporate capacity. Can Congress +impose a tax on the exercise of that privilege or franchise? The power +to tax involves the power to destroy.[1] If Congress can impose a tax of +one per cent., it can impose a tax of ten per cent. or fifty per cent., +and thus impair or destroy altogether the value of corporate charters +for business purposes. Does Congress possess such a power? The +Constitution puts no express limitation on the right of Congress to levy +excises except that they shall be "uniform throughout the United +States." But there are certain implied limitations inherent in our dual +system of government. The sovereignty and independence of the separate +states within their spheres are as complete as are the sovereignty and +independence of the General Government within its sphere.[2] Neither may +interfere with or encroach upon the other. + +[Footnote 1: _McCulloch vs. Maryland_, 4 Wheat., 316.] + +[Footnote 2: _The Collector vs. Day_, 11 Wall., 113, 124.] + +The right to grant corporate charters for ordinary business purposes is +an attribute of sovereignty belonging to the states, not to the General +Government. The United States is a government of enumerated powers. The +Constitution nowhere expressly confers upon Congress the right to grant +corporate charters, and it is well settled that this right exists only +in the limited class of cases where the granting of charters becomes +incidental to some power expressly conferred on Congress, e.g., the +power to establish a uniform currency, or the power to regulate +interstate commerce. On the other hand, the right of the separate states +to grant charters of incorporation is unquestionable. By the Tenth +Amendment of the Constitution it is expressly provided: "The powers not +delegated to the United States by the Constitution nor prohibited by it +to the states are reserved to the states respectively or to the people." +The Supreme Court long ago said: "A state may grant acts of +incorporation for the attainment of those objects which are essential to +the interests of society. _This power is incident to sovereignty._"[1] + +[Footnote 1: _Briscoe v. Bank of Kentucky_, 11 Peters, 257, 317.] + +The power to grant the franchise of corporate capacity being therefore +inherent in the sovereignty of the states, will not a tax imposed by +Congress upon the exercise of the franchise constitute an interference +with the power? If so the tax is unconstitutional. + +The Supreme Court has repeatedly held, that the National Government +"cannot exercise its power of taxation so as to destroy the state +governments or embarrass their lawful action."[1] In the case of +_California vs. Central Pacific R.R. Co._[2] the question was whether +franchises granted to the Central Pacific Railroad Company by the United +States were legitimate subjects of taxation by the State of California. +The Supreme Court, in language frequently quoted in subsequent cases, +discusses the nature and origin of franchises, concluding that a +franchise is "a right, privilege, or power of public concern" existing +and exercised by legislative authority. After enumerating various kinds +of franchises, the Court remarks: "No persons can make themselves a body +corporate and politic without legislative authority. Corporate capacity +is a franchise." The Court continues: + + In view of this description of the nature of a franchise, how + can it be possible that a franchise granted by Congress can be + subject to taxation by a state without the consent of + Congress? Taxation is a burden and may be laid so heavily as + to destroy the thing taxed or render it valueless. As Chief + Justice Marshall said in _McCulloch v. Maryland_, "The power + to tax involves the power to destroy."... It seems to us + almost absurd to contend that a power given to a person or + corporation by the United States may be subjected to taxation + by a state. The power conferred emanates from and is a portion + of the power of the government that confers it. To tax it is + not only derogatory to the dignity but subversive of the + powers of the government, and repugnant to its paramount + sovereignty. + +[Footnote 1: _Railroad Company v. Peniston_, 18 Wall., 5, 30.] + +[Footnote 2: 127 U.S., 1.] + +It is true that the Court was here discussing the right of a state to +tax franchises granted by the United States, and not the converse of +that question. The reasoning of the Court would seem, however, to apply +with equal force to the right of the United States to tax a franchise +granted by a state acting within the scope of its sovereign authority. + +Patent rights and copyrights are special privileges or franchises +granted by the sovereign or government, and under the United States +Constitution the right to grant patents and copyrights is expressly +conferred on Congress. It has been held repeatedly that patent rights +and copyrights are not taxable by the states[1]. As said by the New York +Court of Appeals in a case involving the power of the state to tax +copyrights:[2] + + To concede a right to tax them would be to concede a power to + impede or burden the operation of the laws enacted by Congress + to carry into execution a power vested in the National + Government by the Constitution. + +[Footnote 1: _People ex rel. Edison, &c., Co., v. Assessors_, 156 N.Y., +417; _People ex rel. v. Roberts_, 159 N.Y., 70; _In Re Sheffield_, 64 +Fed. Rep., 833; _Commonwealth v. Westinghouse, &c., Co._, 151 Pa., 265.] + +[Footnote 2: 159 N.Y., p. 75.] + +Apparently the same rule would be applicable were the granting of patent +rights, like the granting of ordinary corporate franchises, a +prerogative reserved under our system of government to the states +instead of being expressly conferred on the United States. By parity of +reasoning, the Federal Government in that case would have no power to +tax them. + +It is familiar law, reiterated over and over again by the Supreme Court, +that Congress cannot tax the means or instrumentalities employed by the +states in exercising their powers and functions, any more than a state +can tax the instrumentalities similarly employed by the General +Government. Thus, it has been held that Congress cannot tax a municipal +corporation (being a portion of the sovereign power of the state) upon +its municipal revenues[1]; that Congress cannot impose a tax upon the +salary of a judicial officer of a state[2]; that Congress cannot tax a +bond given in pursuance of a state law to secure a liquor license.[3] + +[Footnote 1: _United States vs. Railroad Co._, 17 Wall., 322.] + +[Footnote 2: _Collector v. Day_, 11 Wall., 113.] + +[Footnote 3: _Ambrosini v. United States_, 185 U.S., 1.] + +In the light of these decisions it is not apparent how Congress can tax +the franchises of those state corporations (and they are many and +important) which perform some public or quasi-public function. A state, +to carry out its purposes of internal improvement, charters an +intrastate railway or ferry company with power to charge tolls and +exercise the right of eminent domain. Is not the grant of corporate +existence and privileges to such a corporation one of the means or +instrumentalities employed by the state for carrying out its legitimate +functions, and is not a tax by the Federal Government upon the exercise +by such a corporation of its corporate powers an interference with such +means or instrumentalities? + +In any discussion of the right of Congress to tax the agencies of or +franchises granted by a state, the distinction must be borne in mind +between a tax upon _property_ acquired by means of the franchise from +the state and a tax upon the exercise of the franchise itself. The +former tax may be perfectly valid where the latter would be +unconstitutional. Thus, the Supreme Court has upheld a tax by a state +upon the real and personal property (as distinct from the franchises) of +a railway company chartered by Congress for private gain, while +conceding that the state could not tax the franchises, because to do so +would be a direct obstruction to federal powers.[1] + +[Footnote 1: _Union Pacific Railroad Company vs. Peniston_, 18 Wall., +5.] + +It remains to notice briefly one or two Supreme Court decisions which +are relied upon by the sponsors of the new tax law. Reference has +already been made to the decision in the Spreckels case[1] which upheld +the validity of the tax imposed by the War Revenue Act of 1898 upon the +gross receipts of corporations engaged in the businesses of refining +petroleum and refining sugar. The Court held the tax to be an excise tax +"in respect of the carrying on or doing the business of refining sugar," +and such it obviously was. It was not a tax upon the privilege or +franchise of doing business in a corporate capacity, like the tax now +under debate. On the contrary, the act expressly applied to "every +person, firm, corporation, or company carrying on or doing the business +of refining sugar...." The case, therefore, has no bearing on the point +we are discussing. Had the act applied only to corporations, a different +question would have been involved. + +[Footnote 1: _Spreckels Sugar Refining Co. vs. McClain_. 192 U.S., 397.] + +The case of _Veazie Bank vs. Fenno_,[1] upholding the statute which +taxed out of existence the circulation of the state banks, has +frequently been cited as an authority sustaining the right of Congress +to levy a tax upon a franchise or privilege granted by a state. It is +true that in that case the eminent counsel for the bank (Messrs. Reverdy +Johnson and Caleb Cushing) argued unsuccessfully "that the act imposing +the tax impaired a franchise granted by the state, and that Congress had +no power to pass any law which could do that;"[2] and that two justices +dissented on that ground. The conclusive answer to this argument, was, +however, that the power of the states to grant the particular right or +privilege in question was subordinate to powers expressly conferred on +Congress by the Constitution; that Congress was given power under the +Constitution to provide a currency for the whole country, and the act in +question was legislation appropriate to that end. The case does not +hold that Congress has any general power to tax franchises or privileges +granted by a state. + +[Footnote 1: 8 Wall., 533.] + +[Footnote 2: See 8 Wall., p. 535.] + +The scope of this chapter does not admit of further reference to the +decisions. It is strongly urged, however, that none of them, rightly +construed, will be found to sustain the right of the General Government +to impose a tax upon the exercise of franchises granted by a state in +the exercise of its independent sovereignty, and that such a decision +would mark a new departure in our jurisprudence. + +In the debates in Congress over the bill many good lawyers appear to +have assumed, somewhat too hastily, that the tax in question was an +excise tax on business or occupation like that involved in the Spreckels +case, and that the only constitutional question, therefore, was one of +classification under the provision of the Constitution that excises +shall be uniform throughout the United States. No less eminent a +constitutional lawyer than Senator Bailey of Texas, in a colloquy with +the junior Senator from New York, put the matter thus:[1] + + Mr. Root: May I ask the Senator from Texas if I am right in + inferring from the statement which he has just made that he + does not seriously question the constitutional power of the + Congress to impose this tax on corporations? + + Mr. Bailey: Mr. President, I answer the Senator frankly that I + do not.... I think the rule was and is that Congress can levy + any tax it pleases except an export tax. Of course a direct + tax must be apportioned and an indirect tax must be uniform. + But the uniformity rule simply requires that wherever the + subject of taxation is found, the tax shall operate equally + upon it. + + I believe that Congress can tax all red-headed men engaged in + a given line of business if it pleases.... I have no doubt if + the tax fell upon every red-headed man in Massachusetts the + same as in Mississippi or Texas and all other states, the law + imposing such a tax would be perfectly valid. + +[Footnote 1: _Congressional Record_ for July 6, 1909, pp. 4251 to 4252.] + +The difficulty with this reasoning is that it overlooks the fact that +the privilege of being red-headed is not a franchise granted by a +sovereign state. From the viewpoint of constitutional law it may well be +that Congress can tax a privilege conferred by the gods where it would +be powerless to tax a franchise granted by the Legislature of New +Jersey. + + + + +XI + +THE CORPORATION TAX DECISION + + +The immediate consequences of the decision of the United States Supreme +Court[1] affirming the constitutionality of the federal corporation tax +are so slight that its profound significance is likely to be overlooked. +Until it was merged with the general income tax the exaction was not +burdensome and proved easy of collection. The thing upon which it +fell--the privilege of doing business in a corporate capacity--is an +abstraction which makes little appeal to the sympathies or the moral +sense. The public, more concerned with present conditions than with the +passing of a theory, is indifferent. + +[Footnote 1: _Flint v. Stone Tracy Co._, 220 U.S., 107] + +Thus it has sometimes been with the turning points in the affairs of +nations. They came quietly and without observation, and it remained for +the historians to mark the actual parting of the ways. + +The Supreme Court holds, and in its opinion reiterates many times, that +the tax is upon the _privilege of doing business in a corporate +capacity_. + +Right here is the crux of the matter. Corporate capacity is not a right +granted by the National Government. It is something which Congress can +neither give nor take away. In the division of powers which marked the +creation of our dual government the power to confer corporate capacity +was reserved to the states. The decision, therefore, comes to this: +Congress can by taxation burden the exercise of a privilege which only a +state can grant. And the power to tax, it must be remembered, involves +the power to destroy. This seems a long step from the theory of the men +who founded the Republic. + +Nearly fifty years ago the Supreme Court stated the theory as follows: + + The states are, and they must ever be, co-existent with the + National Government. Neither may destroy the other. Hence the + Federal Constitution must receive a practical construction. + Its limitations and its implied prohibitions must not be + extended so far as to destroy the necessary powers of the + States, or prevent their efficient exercise.[1] + +[Footnote 1: _Railroad Co. v. Peniston_, 18 Wall., 5.] + +The court buttresses its decision by the argument _ex necessitate_--that +to hold otherwise would open the way for men to withdraw their business +activities from the reach of federal taxation and thus cripple the +National Government. The Court says: + + The inquiry in this connection is: How far do the implied + limitations upon the taxing power of the United States over + objects which would otherwise be legitimate subjects of + federal taxation, withdraw them from the reach of the Federal + Government in raising revenue, because they are pursued under + franchises which are the creation of the states?... Let it be + supposed that a group of individuals, as partners, were + carrying on a business upon which Congress concluded to lay an + excise tax. If it be true that the forming of a state + corporation would defeat this purpose, by taking the necessary + steps required by the state law to create a corporation and + carrying on the business under rights granted by a state + statute, the federal tax would become invalid and that source + of national revenue be destroyed, except as to the business in + the hands of individuals or partnerships. It cannot be + supposed that it was intended that it should be within the + power of individuals acting under state authority thus to + impair and limit the exertion of authority which may be + essential to national existence. + +This argument will not bear scrutiny. It apparently loses sight of the +vital distinction between a tax on the mere doing of business and a tax +on the privilege of doing that business in a corporate capacity. These +are two very different things. The right of Congress to tax the doing of +business was not disputed. It had been expressly upheld in the +well-known case of _Spreckels Sugar Refining Co. v. McClain_,[1] which +involved a tax on the business of refining sugar, whether done by a +corporation or by individuals. The tax under consideration, however, +goes further and fastens upon something new--something which in the case +of individuals or partnerships has no existence at all--which comes into +being only by the exercise of the sovereign power of a state. The +opponents of the tax, far from attempting to narrow the existing field +of federal taxation, were in fact resisting an encroachment by Congress +on an entirely new field, created by, and theretofore reserved +exclusively to, the separate states. It was conceded that Congress could +tax a business when done by individuals and could tax the same business +when done by a corporation. The inquiry was: Does the act of a state in +clothing the individuals with corporate capacity create a new subject +matter for taxation by the General Government? That was the real +question before the Court, and the decision answers it in the +affirmative. + +[Footnote 1: 192 U.S., 397.] + +Other illustrations of the same apparent confusion of thought are to be +found in the opinion. For example, it is said (citing various cases +involving a tax on business where the party taxed was a corporation): + + We think it is the result of the cases heretofore decided in + this Court, that such _business activities_, though exercised + because of state-created franchises, are not beyond the taxing + power of the United States. + +Here again the Court seems to lose sight of the distinction between a +tax on "business activities" and a tax on the privilege of conducting +such activities in a corporate capacity. + +It is futile, however, to quarrel with the logic of the opinion. The +question is closed and the Court, by affirming the judgments appealed +from, has committed itself to the theory that the Federal Government +may, by taxation, burden the exercise of a privilege which only a state +can confer. With the expediency of that theory as applied to present-day +political conditions we are not now concerned. The object of this +chapter is to point out that the decision marks a distinct departure +from the earlier doctrine that the two sovereignties, federal and state, +are upon an equality within their respective spheres. + +In view of the centralizing forces which are tending to transform these +sovereign states into mere political subdivisions of a nation, the +decision is of great significance. Moreover, in a very practical way it +touches the right of each state under the compact evidenced by the +Federal Constitution to manage its internal affairs free from compulsion +or interference by the other states. To illustrate: In some parts of the +country the anti-corporation feeling runs high. Many men if given their +way would tax the larger corporations out of existence. Under this +decision the way is open whenever a majority can be secured in Congress. +An increase in the tax rate is all that would be necessary. Make the +rate ten per cent. or twenty per cent. instead of one per cent. and the +thing is accomplished. + +New York may deem it good policy to encourage the carrying on of +industry in a corporate form. Texas may take a different view and +conclude that the solution of the trust problem lies in suppressing +certain classes of corporations altogether. Under this decision it lies +within the power of Texas and her associates if sufficiently numerous to +impose their view on New York and make it impossible for her domestic +industries to be carried on profitably in a corporate form. And yet the +possibility of impressing the will of one state or group of states upon +another state with respect to her internal affairs is the very thing +which the founders of the republic sought most carefully to avoid. Had +it been understood in 1787 that the grant of taxing powers to the +General Government involved such a curtailment of state independence, +few states, in all probability, would have been ready to ratify the +Constitution. + + + + +XII + +THE FEDERAL GOVERNMENT AND THE TRUSTS + + +The curbing of monopolies and combinations in restraint of trade was no +part of the functions of the Federal Government as planned by the +framers of the Constitution. To their minds such matters, under the dual +system of government which they were establishing, belonged to the +states. The Constitution was designed to limit the National Government +to functions absolutely needed for the national welfare. All other +powers were "reserved to the states respectively or to the people." + +As time went on, however, and industries expanded it was seen that the +power of no single state was adequate to control concerns operating in +many states at the same time. The need of action by the General +Government became manifest. Power in Congress to legislate on the +subject, albeit somewhat indirectly, was found in the Commerce Clause of +the Constitution, and in the year 1890 the Sherman Anti-Trust Act was +enacted. + +Few statutes have aroused more discussion or been the subject of more +perplexity and misunderstanding. President Taft's remark, made after the +decisions of the Supreme Court in the Standard Oil and Tobacco Trust +cases,[1] that "the business community now knows or ought to know where +it stands," was received with incredulity approaching derision. Yet from +a lawyer's point of view (and it must be borne in mind that the +President was a lawyer and is now Chief Justice of the Court) the +statement cannot be controverted. The decisions in the Standard Oil and +Tobacco cases did in fact dispel whatever uncertainty remained as to +what the Sherman Act means. + +[Footnote 1: _Standard Oil Co. v. United States_, 221 U.S., 1. + +_United States v. American Tobacco Co._, id., 106.] + +The Sherman Act[1] declares unlawful every contract, combination, or +conspiracy in restraint of interstate trade, and every attempt to +monopolize interstate trade. The legal uncertainties that have arisen in +its enforcement have not been with respect to the meaning of the terms +"restraint of trade" and "monopoly," although the popular impression is +to the contrary. In 1890, when the statute was passed, contracts in +restraint of trade and monopolies were already unlawful at common law, +and these terms, by a long series of decisions both here and in England, +had been defined as definitely as the nature of the subject matter +permitted. While incapable (like the term "fraud") of precise definition +covering all forms which the ingenuity of man might devise, nevertheless +their meaning and scope were well within the understanding of any man of +reasonable intelligence. Whatever legal uncertainties have arisen have +been chiefly owing to two questions: first, What is _interstate_ trade +within the meaning of the act? and second, Did the act enlarge the +common-law rule as to what restraints were unlawful? + +[Footnote 1: "An Act to protect trade and commerce against unlawful +restraints and monopolies," approved July 2, 1890.] + +The act was nearly shipwrecked at the outset on the first of these +questions. In the famous Knight case,[1] the first case under the +Sherman Act to reach the Supreme Court, it was held that the +transactions by which the American Sugar Refining Company obtained +control of the Philadelphia refineries and secured a virtual monopoly +could not be reached under the act because they bore no direct relation +to interstate commerce. The effect of this decision naturally was to +cast doubt upon the efficacy of the statute and encourage the trust +builders. Perhaps the case was rightly decided in view of the peculiar +form in which the issues were presented by the pleadings. In the light +of later decisions, however, it is safe to assert that the Court would +now find little difficulty in applying the remedies provided by the +Sherman Act to a similar state of facts, properly presented. While no +prudent lawyer would care to attempt a comprehensive definition of what +constitutes interstate commerce, it may at least be said that the +tendency of the courts has been and is toward a constant broadening of +the term to meet the facts of present-day business. + +[Footnote 1: _United States v. E.C. Knight Company_, 156 U.S., 1.] + +The other question--Did the Sherman Act change the common-law rule as to +what restraints and monopolies are forbidden?--has been even more +troublesome. The lawyers in Congress who framed the law believed that it +did not. This is the testimony of Senator Hoar in his Autobiography, and +as he was a member of the Senate Judiciary Committee which reported the +act in its present form, and claims to have drawn it himself, his +testimony is entitled to belief. The Supreme Court, however, in this +particular went further than was expected. In the Trans-Missouri +Freight Association case,[1] which reached the Supreme Court two years +after the Knight case, that tribunal decided by a five-to-four majority +that the words "_every_ contract ... in restraint of trade" extended the +operation of the law beyond the technical common-law meaning of the +terms employed so as in fact to include all contracts in restraint of +interstate trade without exception or limitation. This theory was +strongly combated by the minority of the court, speaking through Justice +(afterwards Chief Justice) White, and was denounced by many eminent +lawyers, notably the late James C. Carter, then leader of the New York +Bar, who predicted that sooner or later it must be abandoned as +untenable. Their protests were well founded. The theory, carried to its +logical conclusion, would have prohibited a great variety of +transactions theretofore deemed reasonable and proper, and would have +brought large business to a standstill. As a matter of fact, it was +never carried to its logical conclusion, and six years later it was +expressly repudiated by Justice Brewer; one of the five, in the course +of his concurring opinion in the Northern Securities case.[2] Justice +Brewer said that while he believed the Trans-Missouri case had been +rightly decided he also believed that in some respects the reasons given +for the judgment could not be sustained. + + Instead of holding that the Anti-Trust Act included all + contracts, reasonable or unreasonable, in restraint of + interstate trade, the ruling should have been that the + contracts there presented were unreasonable restraints of + interstate trade, and as such within the scope of the Act.... + Whenever a departure from common-law rules and definitions is + claimed, the purpose to make the departure should be clearly + shown. Such a purpose does not appear and such a departure was + not intended. + +[Footnote 1: _United States v. Trans-Missouri Association_, 166 U.S., +290.] + +[Footnote 2: _Northern Securities Company v. United States_, 193 U.S., +197.] + +Nevertheless, the troublesome question remained, to plague lawyers and +the community generally, until it was finally put at rest and the +statute once more planted on the firm ground of common-law rule and +definition by the decisions in the Standard Oil and Tobacco cases. + +What, then, is this common-law rule which President Taft found so clear? +No one has discussed it more lucidly than did the youthful Circuit Judge +Taft himself in delivering the opinion of the Circuit Court of Appeals +in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two +associates on the bench, the late Justices Harlan and Lurton, concurred. +The rule may be briefly stated as follows: + +Every contract or combination whose primary purpose and effect is to fix +prices, limit production, or otherwise restrain trade is unlawful, +provided the restraint be direct, material, and substantial. + +Where, however, the restraint of trade is not direct, but merely +ancillary or collateral to some lawful contract or transaction, it is +not unlawful, provided it is _reasonable_, that is to say, not broader +than is required for the protection of the party in whose favor the +restraint is imposed. + +[Footnote 1: _United States v. Addyston Pipe & Steel Co._, 85 Fed. Rep., +271.] + +A familiar illustration is the sale of a business and its goodwill, +accompanied by a covenant on the part of the vendor not to compete. Such +a covenant is collateral to the sale, and if not broader than is +reasonably required for the protection of the vendee it will be upheld, +although a similar agreement, standing alone and not collateral to a +sale or other lawful transaction, would be in direct restraint of trade +and unlawful. + +So much for the alleged uncertainty of the law. Candid men must agree +with President Taft that in the light of the Supreme Court decisions it +is reasonably clear what the Sherman Law means. But the fact that "the +business community now knows or ought to know where it stands" with +respect to the law does not greatly help the business situation. The +real difficulty lies, not in the uncertainty of the law, but in the fact +that the law does not fit actual present-day conditions. This is partly +because many of the trusts were organized with full knowledge that they +involved a violation of law but in the belief that the law could not or +would not be effectively enforced. The realization that this belief was +mistaken has thrown a good many people into a state of very genuine +bewilderment, but it is an uncertainty, not as to what is firm ground, +but as to how to get out of a bog, once having gotten in. For the most +part, however, the general feeling of insecurity is due not so much to +having knowingly overstepped the law, as to a change in economic +conditions. The spirit of the time is one of cooeperation and +combination. It is manifested in the churches and colleges as well as in +the marketplace. In the industrial arena, the tendency has been +intensified by the invention of new machines and the resulting +aggregations of fixed capital in forms designed for particular uses and +incapable of diversion into other channels. Such rules of the common or +customary law as were the outgrowth of an era of mobile capital and free +competition no longer fit the conditions under which we are living. + +In a conflict between economic forces and legal enactment there can +finally be but one outcome. The law must sooner or later adapt itself to +life conditions. The real problem to-day is--how shall this adaptation +be accomplished; how can statutes be framed which shall check abuses +without falling under the wheels of social progress? Right here a swarm +of half-informed theorizers are rushing in where trained economists fear +to tread. It is difficult and dangerous ground, but there is at least +one measure of legal reform--take away the right of one corporation to +hold stock in another--which might be urged with confidence were it not +for the existence of sundry oppressive and conflicting state laws. + +The abolition by law of the holding-company device is no new suggestion. +It was strongly urged years ago by the late Edward B. Whitney. It was +the keystone of the famous "Seven Sisters" statutes,[1] enacted with +loud acclaim in New Jersey at the behest of Governor Woodrow Wilson (but +subsequently repealed and thrown into the discard). Such a measure would +be more effective and far-reaching than the public supposes. Nearly all +the so-called trusts have been organized and are being held together in +whole or in part, by the holding-company device. In many cases this has +been done merely as an innocent measure of convenience. The device, +however, is a perversion of the corporate machine to uses not +contemplated by its inventors and fraught with danger. It is too +powerful a weapon in the hands of those alive to its possibilities, +enabling a small group of men with a relatively insignificant investment +of capital to control a country-wide industry. Take the simplest +possible illustration: The industry of manufacturing a particular +commodity is carried on by a number of corporations scattered throughout +the country with an aggregate capitalization of, say, $10,000,000. A, B, +and C form a holding company to acquire a bare majority of the stock of +each corporation, say $5,100,000 in the aggregate. They dispose of 49 +per cent. of the holding company's stock to the public, retaining a +working majority. At one step they have secured absolute control of a +$10,000,000 industry with an investment of little more than one-quarter +of that amount, and by pursuing the same process further they can reduce +the investment necessary for controlling the industry almost to the +vanishing point. + +[Footnote 1: Laws of New Jersey of 1913, chaps. 13-19.] + +It is needless to enlarge on the possible abuses of the holding-company +device. They are coming to light more and more. The remedy, however, is +not so simple as it seems at first blush. A summary abolition of the +holding-company device would result in great injury and hardship to +industry. In the present condition of the corporation laws of certain of +the states, the right of large corporations to operate through local +subsidiary corporations is a practical necessity. Otherwise they would +be subjected to well-nigh intolerable exactions and interference. It has +been the policy in some states in dealing with foreign corporations to +attempt to impose, under the guise of fees for the privilege of doing +business in the state, a tax on all their property and business wherever +situated. Some of the attempts have been nullified by the Supreme Court +as violative of the prohibition of the Fourteenth Amendment against +taking property without due process of law, but these decisions have +not wholly remedied the evil or checked the ingenuity of state +legislators. In some jurisdictions great corporations seem to be +regarded as fair game for which there is no closed season. + +Right here the scheme of federal incorporation brought forward during +President Taft's administration has many attractions to offer. It would +do away with the principal excuse for the holding-company device, and +pave the way for its abolition. It should satisfy the general public +because it would clothe the Government with enormously increased powers +of regulation and control; it should be attractive to the corporations +because it would afford relief from many of the intolerable +restrictions, not always fair or intelligent, imposed by state +legislatures. Under present conditions the right of a corporation of one +state to do business in another (other than business of an interstate +character) rests merely upon comity and may be granted or refused upon +such terms as interest or prejudice may dictate. The right of a federal +corporation to do business in the several states, on the other hand, +rests upon the powers conferred on Congress by the Constitution and is +not subject to the whims of state lawmakers. Such a corporation is not +"foreign" in the states into which its activity extends and state laws +aimed at foreign corporations will not hit it. Moreover a corporation +with a federal charter can always take its controversies into the +federal courts (except when Congress expressly forbids)[1]--a right of +extreme practical value where anti-corporation feeling or local +prejudice is strong. + +[Footnote 1: The Act of Jan. 28, 1915, took away this right in the case +of railroad companies incorporated under federal charter (38 Stat. +804).] + +The scheme of federal incorporation presents some constitutional +questions. As pointed out in a previous chapter, the Constitution +nowhere expressly confers on Congress the right to grant corporate +charters. Under Chief Justice Marshall's doctrine of "Implied Powers," +however, it has become well settled that Congress has implied power to +charter a corporation whenever that is an appropriate means of +exercising one of the powers expressly conferred, for example, the power +to regulate interstate commerce. The most serious constitutional +question appears to be whether Congress can authorize such a corporation +to manufacture, the process of manufacturing not being an activity of an +interstate character. In any event, the difficulty could be surmounted +by a constitutional amendment. In these days of facile amendment such a +thing seems quite within the range of possibility. + +The scheme of federal incorporation is by no means new. In the +Convention of 1787 which framed the Constitution, Mr. Madison advocated +giving Congress the power to grant charters of incorporation. The +proposition, however, did not find favor, Mr. King suggesting that it +might foster the creation of mercantile monopolies.[1] + +[Footnote 1: See Farrand, "Records of the Federal Convention," Vol. II, +pp. 615-616, 620.] + +This objection would scarcely be urged to-day, when the country-wide +operations of the so-called "trusts" have given them a national +character and made their control by federal power a practical necessity. + + + + +XIII + +WHAT OF THE FUTURE? + + +In the preceding pages we have observed from various viewpoints the +impressive phenomenon of federal encroachment upon state power. It must +have become obvious to the most casual reader that the tide is running +swiftly and has already carried far. Hamilton was mistaken when he +predicted in the _Federalist_[1] that the National Government would +never encroach upon the state authorities. + +[Footnote 1: _Federalist_, Numbers XVII, XXXI.] + +What then of the future? Is the Constitution hopelessly out of date? Are +the states to be submerged and virtually obliterated in the drift toward +centralization? No thoughtful patriot can view such a possibility +without the gravest misgivings. The integrity of the states was a +cardinal principle of our governmental scheme. Abandon that and we are +adrift from the moorings which to the minds of statesmen of past +generations constituted the safety of the republic. + +No mere appeal to precedents and governmental theory will check the +current. The Americans are a practical people, moving forward with +conscious power toward the attainment of their aims, along the lines +which seem to them most direct. They are more interested in results than +in methods or theories. Experience has demonstrated that federal control +often spells uniformity and efficiency where state control had meant +divisions and weakness. They favor federal control because it gets +results. + +There is another aspect of the matter, however. The burden of federal +bureaucracy is beginning to be felt by the average man. He is being +regulated more and more, in his meats and drinks, his morals and the +activities of his daily life, from Washington. If he will only stop and +think he must realize that no one central authority can supervise the +daily lives of a hundred million people, scattered over half a +continent, without becoming top-heavy. He must realize, too, that, even +if such a centralization of power and responsibility were humanly +possible, our National Government is unsuited for the task. The +electorate is too numerous and heterogeneous; its interests and needs +are too diverse. Shall the conduct of citizens of Mississippi be +prescribed by vote of congressmen from New York, or supervised at the +expense of New York taxpayers? Will an educational system suitable for +Massachusetts necessarily fit the young of Georgia? Such suggestions +carry their own answer. In the very nature of things there is bound to +be a reaction against centralization sooner or later. The real question +is whether it will come in time to save the present constitutional +scheme. + +The makers of the Constitution never intended that the people of one +state should regulate, or pay for supervising, the conduct of citizens +of another state. They made a division of governmental powers between +nation and states along broad and obvious lines. To the Federal +Government were entrusted matters of a strictly national +character--foreign relations, interstate commerce, fiscal and monetary +system, post office, patents and copyrights. Everything else was +reserved, to the states or the people. Here was a scheme at once +explicit and elastic. Explicit as to the nature of the functions to be +performed by the National Government; elastic enough to permit the +exercise of all other powers reasonably incidental to the powers +expressly granted. The Constitution is not, and never was intended to +be, a strait-jacket. + +Proofs abound of the adequacy of the constitutional scheme to deal with +changing conditions. For example, when the Constitution was adopted, +railroads, the most powerful economic force in our present civilization, +were unknown. Nevertheless, the Constitution contains adequate provision +for dealing with the railroads. They are instruments of interstate +commerce and may be controlled by the Federal Government under the +express grant of power to regulate such commerce. Similar considerations +apply in the case of those nationwide industrial combinations popularly +known as "trusts." Their activities are largely in the field of +interstate commerce and are subject to control as such by the Federal +Government. Theoretically, only such activities of the railroads and +trusts as are of an interstate character fall within the federal +jurisdiction. Everything else lies within the jurisdiction of the +states. However, a practical people will not long permit matters which +are essentially single and entire in their nature (for example, railroad +classifications and rates) to be split up merely for purposes of legal +jurisdiction and control. In such matters, therefore, some measure of +federal encroachment is inevitable in order that industry and progress +shall not be hampered. The encroachment, however, is more apparent than +real. The industries are national in scope, and all the activities of +each are more or less interwoven and interdependent. Hence state +regulation of the intrastate activities may sometimes be overruled as an +interference with federal regulation of the interstate commerce. There +is nothing in this which involves any real violation of the +Constitution. It is merely an application of Marshall's doctrine of +implied powers. + +Social welfare legislation presents a very different problem. Some of +the most dangerous assaults upon the Constitution to-day are being made +in that field. The leaven of socialistic ideas is working. +Representative government is becoming more paternalistic. Legislation +dealing with conduct and social and economic conditions is being +demanded by public sentiment in constantly increasing measure. Such +legislation for the most part affects state police power and lies +clearly outside the scope of the powers conferred by the Constitution on +the National Government. Moreover, "the insulated chambers afforded by +the several states" (to borrow a phrase of Justice Oliver Wendell +Holmes) are ideal fields for social experiment. If an experiment +succeed, other states will follow suit. If it prove disastrous, the +damage is localized. The nation as a whole remains unharmed. The +sponsors for such legislation, however, are seldom content to deal with +the states. Reform was ever impatient. The state method seems too slow, +and the difficulty of securing uniformity too formidable. Moreover, it +often happens that some states are indifferent to the reform proposed or +even actively hostile. Accordingly, recourse is had to Congress, and +Congress looks for a way to meet the popular demand. There being no +direct way, and public sentiment being insistent, Congressmen find +themselves under the painful necessity of circumventing the Constitution +they have sworn to uphold. The desired legislation is enacted under the +guise of an act to regulate commerce or raise revenue, and the task of +upholding the Constitution is passed to the Supreme Court. + +Such subterfuges, far from arousing public condemnation, are praised by +the unthinking as far-sighted statesmanship. It is popular nowadays to +apply the term "forward-looking" to people who would make the National +Government an agency for social-welfare work, and to characterize as +"lacking in vision" anyone who interposes a constitutional principle in +the path of a social reform. Friends of progress sometimes forget that +the real forward-looking man is he who can see the pitfall ahead as well +as the rainbow; the man of true vision is one whose view of the stars is +steadied by keeping his feet firmly on the ground. + +It cannot be reiterated too often that, under our political system, +legislation in the nature of police regulation (except in so far as it +affects commerce or foreign relations) is the province of the states, +not of the National Government. This is not merely sound constitutional +law; it is good sense as well. Regulations salutary for Scandinavian +immigrants of the northwest may not fit the Creoles of Louisiana. In the +long run the police power will be exercised most advantageously for all +concerned by local authority. + +The present tendency toward centralization cannot go on indefinitely. A +point must be reached sooner or later when an over-centralized +government becomes intolerable and breaks down of its own weight. As an +eminent authority has put it: "If we did not have states we should +speedily have to create them."[1] The states thus created, however, +would not be the same. They would be mere governmental subdivisions, +without the independence, the historic background, the traditions, or +the sentiment of the present states. These influences, hitherto so +potent in our national life, would have been lost. + +[Footnote 1: Address of Supreme Court Justice Charles E. Hughes before +New York State Bar Association, January 14, 1916.] + +In a memorable address delivered in the year 1906 before the +Pennsylvania Society in New York, Elihu Root, then Secretary of State in +President Roosevelt's Cabinet, discussed the encroachments of federal +power and expressed the view that the only way in which the states could +maintain their power and authority was by awakening to a realization of +their own duties to the country at large. He said: + + The Governmental control which they (the people) deem just and + necessary they will have. It may be that such control would + better be exercised in particular instances by the governments + of the states, but the people will have the control they need + either from the states or from the National Government; and if + the states fail to furnish it in due measure, sooner or later + constructions of the Constitution will be found to vest the + power where it will be exercised--in the National Government. + The true and only way to preserve state authority is to be + found in the awakened conscience of the states, their + broadened views and higher standard of responsibility to the + general public; in effective legislation by the states, in + conformity to the general moral sense of the country; and in + the vigorous exercise for the general public good of that + state authority which is to be preserved. + +Those words, spoken fifteen years ago, were prophetic. Moreover, they +are as true to-day as when they were uttered. + +Will the people see these things in time? Americans with pride in their +country's past and confidence in her future dare not say No. The +awakening may be slow. Currents of popular will are not readily turned. +It is hard to make the people think. But if leaders and teachers do +their part American intelligence and prudence will assert themselves, +and the slogan of an awakened public sentiment may yet be: "Back to the +Constitution!" + + + + +APPENDIX + +CONSTITUTION OF THE UNITED STATES OF AMERICA + + +WE THE PEOPLE of the United States, in Order to form a more perfect +Union, establish Justice, insure domestic Tranquility, provide for the +common defence, promote the general Welfare, and secure the Blessings of +Liberty to ourselves and our Posterity, do ordain and establish this +CONSTITUTION for the United States of America. + + +ARTICLE I. + +SECTION 1. All legislative Powers herein granted shall be vested in a +Congress of the United States, which shall consist of a Senate and House +of Representatives. + +SECTION 2. The House of Representatives shall be composed of Members +chosen every second Year by the People of the several States, and the +Electors in each State shall have the Qualifications requisite for +Electors of the most numerous Branch of the State Legislature. + +No Person shall be a Representative who shall not have attained to the +Age of twenty-five Years, and been seven Years a Citizen of the United +States, and who shall not, when elected, be an Inhabitant of that State +in which he shall be chosen. + +Representatives and direct Taxes shall be apportioned among the several +States which may be included within this Union, according to their +respective Numbers which shall be determined by adding to the whole +Number of free Persons, including those bound to Service for a Term of +Years, and excluding Indians not taxed, three-fifths of all other +Persons. The actual Enumeration shall be made within three Years after +the first Meeting of the Congress of the United States, and within every +subsequent Term of ten Years, in such Manner as they shall by Law +direct. The Number of Representatives shall not exceed one for every +thirty Thousand, but each State shall have at Least one Representative; +and until such enumeration shall be made, the State of New Hampshire +shall be entitled to chuse three, Massachusetts eight, Rhode Island and +Providence Plantations one, Connecticut five, New York six, New Jersey +four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, +North Carolina five, South Carolina five, and Georgia three. + +When vacancies happen in the Representation from any State, the +Executive Authority thereof shall issue Writs of Election to fill such +Vacancies. + +The House of Representatives shall chuse their Speaker and other +Officers; and shall have the sole Power of Impeachment. + +SECTION 3. The Senate of the United States shall be composed of two +Senators from each State, chosen by the Legislature thereof, for six +Years; and each Senator shall have one Vote. + +Immediately after they shall be assembled in Consequence of the first +Election, they shall be divided as equally as may be into three Classes. +The Seats of the Senators of the first Class shall be vacated at the +Expiration of the second Year, of the second Class at the Expiration of +the fourth Year, and of the third Class at the Expiration of the sixth +Year, so that one third may be chosen every second Year; and if +Vacancies happen by Resignation, or otherwise, during the Recess of the +Legislature of any State, the Executive thereof may make temporary +Appointments until the next Meeting of the Legislature, which shall then +fill such Vacancies. + +No Person shall be a Senator who shall not have attained to the Age of +thirty Years, and been nine Years a Citizen of the United States, and +who shall not, when elected, be an Inhabitant of that State for which he +shall be chosen. + +The Vice President of the United States shall be President of the +Senate, but shall have no Vote, unless they be equally divided. + +The Senate shall chuse their other Officers, and also a President pro +tempore, in the Absence of the Vice President, or when he shall exercise +the Office of President of the United States. + +The Senate shall have the sole Power to try all Impeachments. When +sitting for that Purpose, they shall be on Oath or Affirmation. When the +President of the United States is tried, the Chief Justice shall +preside: And no Person shall be convicted without the Concurrence of two +thirds of the Members present. + +Judgment in Cases of Impeachment shall not extend further than to +removal from Office, and disqualification to hold and enjoy any Office +of honor, Trust or Profit under the United States: but the Party +convicted shall nevertheless be liable and subject to Indictment, +Trial, Judgment and Punishment, according to Law. + +SECTION 4. The Times, Places and Manner of holding Elections for +Senators and Representatives, shall be prescribed in each State by the +Legislature thereof; but the Congress may at any time by Law make or +alter such Regulations, except as to the Places of chusing Senators. + +The Congress shall assemble at least once in every Year, and such +Meeting shall be on the first Monday in December, unless they shall by +Law appoint a different Day. + +SECTION 5. Each House shall be the Judge of the Elections, Returns and +Qualifications of its own Members, and a Majority of each shall +constitute a Quorum to do Business; but a smaller Number may adjourn +from day to day, and may be authorized to compel the Attendance of +absent Members, in such Manner, and under such Penalties as each House +may provide. + +Each House may determine the Rules of its Proceedings, punish its +Members for disorderly Behavior, and, with the Concurrence of two +thirds, expel a Member. + +Each House shall keep a Journal of its Proceedings, and from time to +time publish the same, excepting such Parts as may in their Judgment +require Secrecy; and the Yeas and Nays of the Members of either House on +any question shall, at the Desire of one fifth of those Present, be +entered on the Journal. + +Neither House, during the Session of Congress, shall, without the +Consent of the other, adjourn for more than three days, nor to any other +Place than that in which the two Houses shall be sitting. + +SECTION 6. The Senators and Representatives shall receive a +Compensation for their Services, to be ascertained by Law, and paid out +of the Treasury of the United States. They shall in all Cases, except +Treason, Felony and Breach of the Peace, be privileged from Arrest +during their Attendance at the Session of their respective Houses, and +in going to and returning from the same; and for any Speech or Debate in +either House, they shall not be questioned in any other Place. + +No Senator or Representative shall, during the Time for which he was +elected, be appointed to any civil Office under the Authority of the +United States, which shall have been created, or the Emoluments whereof +shall have been encreased during such time; and no Person holding any +Office under the United States, shall be a Member of either House during +his Continuance in Office. + +SECTION 7. All Bills for raising Revenue shall originate in the House of +Representatives; but the Senate may propose or concur with Amendments as +on other Bills. + +Every Bill which shall have passed the House of Representatives and the +Senate, shall, before it become a Law, be presented to the President of +the United States; If he approve he shall sign it, but if not he shall +return it, with his Objections to that House in which it shall have +originated, who shall enter the Objections at large on their Journal, +and proceed to reconsider it. If after such Reconsideration two thirds +of that House shall agree to pass the Bill, it shall be sent, together +with the Objections, to the other House, by which it shall likewise be +reconsidered, and if approved by two thirds of that House, it shall +become a Law. But in all such Cases the Votes of both Houses shall be +determined by Yeas and Nays, and the Names of the Persons voting for +and against the Bill shall be entered on the Journal of each House +respectively. If any Bill shall not be returned by the President within +ten Days (Sundays excepted) after it shall have been presented to him, +the Same shall be a Law, in like Manner as if he had signed it, unless +the Congress by their Adjournment prevent its Return, in which Case it +shall not be a Law. + +Every Order, Resolution, or Vote to which the Concurrence of the Senate +and House of Representatives may be necessary (except on a question of +Adjournment) shall be presented to the President of the United States; +and before the Same shall take Effect, shall be approved by him, or +being disapproved by him, shall be repassed by two thirds of the Senate +and House of Representatives, according to the Rules and Limitations +prescribed in the Case of a Bill. + +SECTION 8. The Congress shall have Power To lay and collect Taxes, +Duties, Imposts and Excises, to pay the Debts and provide for the common +Defence and general Welfare of the United States; but all Duties, +Imposts and Excises shall be uniform throughout the United States; + +To borrow Money on the credit of the United States; + +To regulate Commerce with foreign Nations, and among the several States, +and with the Indian Tribes; + +To establish an uniform Rule of Naturalization, and uniform Laws on the +subject of Bankruptcies throughout the United States; + +To coin Money, regulate the Value thereof, and of foreign Coin, and fix +the Standard of Weights and Measures; + +To provide for the Punishment of counterfeiting the Securities and +current Coin of the United States; + +To establish Post Offices and post Roads; + +To promote the Progress of Science and useful Arts, by securing for +limited Times to Authors and Inventors the exclusive Right to their +respective Writings and Discoveries; + +To constitute Tribunals inferior to the supreme Court; + +To define and punish Piracies and Felonies committed on the high Seas, +and Offences against the Law of Nations; + +To declare War, grant Letters of Marque and Reprisal, and make Rules +concerning Captures on Land and Water; + +To raise and support Armies, but no Appropriation of Money to that Use +shall be for a longer Term than two Years; + +To provide and maintain a Navy; + +To make Rules for the Government and Regulation of the land and naval +Forces; + +To provide for calling forth the Militia to execute the Laws of the +Union, suppress Insurrections and repel Invasions; + +To provide for organizing, arming, and disciplining, the Militia, and +for governing such Part of them as may be employed in the Service of the +United States, reserving to the States respectively, the Appointment of +the Officers, and the Authority of training the Militia according to the +discipline prescribed by Congress; + +To exercise exclusive Legislation in all Cases whatsoever, over such +District (not exceeding ten Miles square) as may, by Cession of +particular States, and the Acceptance of Congress, become the Seat of +the Government of the United States, and to exercise like Authority over +all Places purchased by the Consent of the Legislature of the State in +which the Same shall be, for the Erection of Forts, Magazines, Arsenals, +dock-Yards, and other needful Buildings;--And + +To make all Laws which shall be necessary and proper for carrying into +Execution the foregoing Powers, and all other Powers vested by this +Constitution in the Government of the United States, or in any +Department or Officer thereof. + +SECTION 9. The Migration or Importation of such Persons as any of the +States now existing shall think proper to admit, shall not be prohibited +by the Congress prior to the Year one thousand eight hundred and eight, +but a Tax or duty may be imposed on such Importation, not exceeding ten +dollars for each Person. + +The Privilege of the Writ of Habeas Corpus shall not be suspended, +unless when in Cases of Rebellion or Invasion the public Safety may +require it. + +No Bill of Attainder or ex post facto Law shall be passed. + +No Capitation, or other direct, tax shall be laid, unless in Proportion +to the Census or Enumeration herein before directed to be taken. + +No Tax or Duty shall be laid on Articles exported from any State. + +No Preference shall be given by any Regulation of Commerce or Revenue to +the Ports of one State over those of another: nor shall Vessels bound +to, or from, one State, be obliged to enter, clear, or pay Duties in +another. + +No Money shall be drawn from the Treasury, but in Consequence of +Appropriations made by Law; and a regular Statement and Account of the +Receipts and Expenditures of all public Money shall be published from +time to time. + +No Title of Nobility shall be granted by the United States: And no +Person holding any Office of Profit or Trust under them, shall, without +the Consent of the Congress, accept of any present, Emolument, Office, +or Title, of any kind whatever, from any King, Prince, or foreign State. + +SECTION 10. No State shall enter into any Treaty, Alliance, or +Confederation; grant Letters of Marque and Reprisal; coin Money; emit +Bills of Credit; make any Thing but gold and silver Coin a Tender in +Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law +impairing the Obligation of Contracts, or grant any Title of Nobility. + +No State shall, without the Consent of the Congress, lay any Imposts or +Duties on Imports or Exports, except what may be absolutely necessary +for executing its inspection Laws: and the net Produce of all Duties and +Imposts, laid by any State on Imports or Exports, shall be for the Use +of the Treasury of the United States; and all such Laws shall be subject +to the Revision and Controul of the Congress. + +No State shall, without the Consent of Congress, lay any Duty of +Tonnage, keep Troops, or Ships of War in time of Peace, enter into any +Agreement or Compact with another State, or with a foreign Power, or +engage in War, unless actually invaded, or in such imminent Danger as +will not admit of delay. + + +ARTICLE II. + +SECTION 1. The executive Power shall be vested in a President of the +United States of America. He shall hold his Office during the Term of +four Years, and, together with the Vice President, chosen for the same +Term, be elected, as follows + +Each State shall appoint, in such Manner as the Legislature thereof may +direct, a Number of Electors, equal to the whole Number of Senators and +Representatives to which the State may be entitled in the Congress: but +no Senator or Representative, or Person holding an Office of Trust or +Profit under the United States, shall be appointed an Elector. + +The electors shall meet in their respective States, and vote by ballot +for two Persons, of whom one at least shall not be an Inhabitant of the +same State with themselves. And they shall make a List of all the +Persons voted for, and of the Number of Votes for each; which List they +shall sign and certify, and transmit sealed to the Seat of the +Government of the United States, directed to the President of the +Senate. The President of the Senate shall, in the Presence of the Senate +and House of Representatives, open all the Certificates, and the Votes +shall then be counted. The Person having the greatest Number of Votes +shall be the President, if such Number be a Majority of the whole Number +of Electors appointed; and if there be more than one who have such +Majority, and have an equal Number of Votes, then the House of +Representatives shall immediately chuse by Ballot one of them for +President; and if no Person have a Majority, then from the five highest +on the List the said House shall in like Manner chuse the President. But +in chusing the President, the Votes shall be taken by States, the +Representation from each State having one Vote; A quorum for this +Purpose shall consist of a Member or Members from two thirds of the +States, and a Majority of all the States shall be necessary to a Choice. +In every Case, after the Choice of the President, the Person having the +greatest Number of Votes of the Electors shall be the Vice President. +But if there should remain two or more who have equal Votes, the Senate +shall chuse from them by Ballot the Vice President. + +The Congress may determine the Time of chusing the Electors, and the Day +on which they shall give their Votes; which Day shall be the same +throughout the United States. + +No Person except a natural born Citizen, or a Citizen of the United +States, at the time of the Adoption of this Constitution, shall be +eligible to the Office of President; neither shall any Person be +eligible to that Office who shall not have attained to the Age of thirty +five Years, and been fourteen Years a Resident within the United States. + +In Case of the Removal of the President from Office, or of his Death, +Resignation, or Inability to discharge the Powers and Duties of the said +Office, the same shall devolve on the Vice President, and the Congress +may by Law provide for the Case of Removal, Death, Resignation, or +Inability, both of the President and Vice President, declaring what +Officer shall then act as President, and such Officer shall act +accordingly, until the Disability be removed, or a President shall be +elected. + +The President shall, at stated Times, receive for his Services, a +Compensation, which shall neither be encreased nor diminished during the +Period for which he shall have been elected, and he shall not receive +within that Period any other Emolument from the United States, or any of +them. + +Before he enter on the Execution of his Office, he shall take the +following Oath or Affirmation:--"I do solemnly swear (or affirm) that I +will faithfully execute the Office of President of the United States, +and will to the best of my Ability, preserve, protect and defend the +Constitution of the United States." + +SECTION 2. The President shall be Commander in Chief of the Army and +Navy of the United States, and of the Militia of the several States, +when called into the actual Service of the United States; he may require +the Opinion, in writing, of the principal Officer in each of the +executive Departments, upon any Subject relating to the Duties of their +respective Offices, and he shall have Power to grant Reprieves and +Pardons for Offences against the United States, except in Cases of +Impeachment. + +He shall have Power, by and with the Advice and Consent of the Senate, +to make Treaties, provided two thirds of the Senators present concur; +and he shall nominate, and by and with the Advice and Consent of the +Senate, shall appoint Ambassadors, other public Ministers and Consuls, +Judges of the supreme Court, and all other Officers of the United +States, whose Appointments are not herein otherwise provided for, and +which shall be established by Law: but the Congress may by Law vest the +Appointment of such inferior Officers, as they think proper, in the +President alone, in the Courts of Law, or in the Heads of Departments. + +The President shall have Power to fill up all Vacancies that may happen +during the Recess of the Senate, by granting Commissions which shall +expire at the End of their next Session. + +SECTION 3. He shall from time to time give to the Congress Information +of the State of the Union, and recommend to their Consideration such +Measures as he shall judge necessary and expedient; he may, on +extraordinary Occasions, convene both Houses, or either of them, and in +Case of Disagreement between them, with Respect to the Time of +Adjournment, he may adjourn them to such Time as he shall think proper; +he shall receive Ambassadors and other public Ministers; he shall take +Care that the Laws be faithfully executed, and shall Commission all the +Officers of the United States. + +SECTION 4. The President, Vice President and all civil Officers of the +United States, shall be removed from Office on Impeachment for, and +Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors. + + +ARTICLE III. + +SECTION 1. The judicial Power of the United States, shall be vested in +one supreme Court, and in such inferior Courts as the Congress may from +time to time ordain and establish. The Judges, both of the supreme and +inferior Courts, shall hold their Offices during good Behaviour, and +shall, at stated Times, receive for their Services, a Compensation, +which shall not be diminished during their Continuance in Office. + +SECTION 2. The judicial Power shall extend to all Cases, in Law and +Equity, arising under this Constitution, the Laws of the United States, +and Treaties made, or which shall be made, under their Authority;--to +all Cases affecting Ambassadors, other public Ministers and Consuls;--to +all Cases of admiralty and maritime Jurisdiction;--to Controversies to +which the United States shall be a Party;--to Controversies between two +or more States;--between a State and Citizens of another +State;--between Citizens of different States,--between Citizens of the +same State claiming Lands under Grants of different States, and between +a State, or the Citizens thereof, and foreign States, Citizens or +Subjects. + +In all Cases affecting Ambassadors, other public Ministers and Consuls, +and those in which a State shall be Party, the supreme Court shall have +original Jurisdiction. In all the other Cases before mentioned, the +supreme Court shall have appellate Jurisdiction, both as to Law and +Fact, with such Exceptions, and under such Regulations as the Congress +shall make. + +The Trial of all Crimes, except in Cases of Impeachment, shall be by +Jury; and such Trial shall be held in the State where the said Crimes +shall have been committed; but when not committed within any State, the +Trial shall be at such Place or Places as the Congress may by Law have +directed. + +SECTION 3. Treason against the United States, shall consist only in +levying War against them, or in adhering to their Enemies, giving them +Aid and Comfort. No Person shall be convicted of Treason unless on the +Testimony of two Witnesses to the same overt Act, or on Confession in +open Court. + +The Congress shall have Power to declare the Punishment of Treason, but +no Attainder of Treason shall work Corruption of Blood, or Forfeiture +except during the Life of the Person attainted. + + +ARTICLE IV. + +SECTION 1. Full Faith and Credit shall be given in each State to the +public Acts, Records, and judicial Proceedings of every other State. +And the Congress may by general Laws prescribe the Manner in which such +Acts, Records and Proceedings shall be proved, and the Effect thereof. + +SECTION 2. The Citizens of each State shall be entitled to all +Privileges and Immunities of Citizens in the several States. + +A person charged in any State with Treason, Felony, or other Crime, who +shall flee from Justice, and be found in another State, shall on Demand +of the executive Authority of the State from which he fled, be delivered +up, to be removed to the State having Jurisdiction of the Crime. + +No Person held to Service or Labour in one State, under the Laws +thereof, escaping into another, shall, in Consequence of any Law or +Regulation therein, be discharged from such Service or Labour, but shall +be delivered up on Claim of the Party to whom such Service or Labour may +be due. + +SECTION 3. New States may be admitted by the Congress into this Union; +but no new State shall be formed or erected within the Jurisdiction of +any other State; nor any State be formed by the Junction of two or more +States, or Parts of States, without the Consent of the Legislatures of +the States concerned as well as of the Congress. + +The Congress shall have Power to dispose of and make all needful Rules +and Regulations respecting the Territory or other Property belonging to +the United States; and nothing in this Constitution shall be so +construed as to Prejudice any Claims of the United States, or of any +particular State. + +SECTION 4. The United States shall guarantee to every State in this +Union a Republican Form of Government, and shall protect each of them +against Invasion; and on Application of the Legislature, or of the +Executive (when the Legislature cannot be convened) against domestic +Violence. + + +ARTICLE V. + +The Congress, whenever two thirds of both Houses shall deem it +necessary, shall propose Amendments to this Constitution, or, on the +Application of the Legislatures of two thirds of the several States, +shall call a Convention for proposing Amendments, which, in either Case, +shall be valid to all Intents and Purposes, as Part of this +Constitution, when ratified by the Legislatures of three fourths of the +several States, or by Conventions in three fourths thereof, as the one +or the other Mode of Ratification may be proposed by the Congress; +Provided that no Amendment which may be made prior to the Year One +thousand eight hundred and eight shall in any Manner affect the first +and fourth Clauses in the Ninth Section of the first Article; and that +no State, without its Consent, shall be deprived of its equal Suffrage +in the Senate. + + +ARTICLE VI. + +All Debts contracted and Engagements entered into, before the Adoption +of this Constitution, shall be as valid against the United States under +this Constitution, as under the Confederation. + +This Constitution, and the Laws of the United States which shall be made +in Pursuance thereof; and all Treaties made, or which shall be made, +under the Authority of the United States, shall be the supreme Law of +the Land; and the Judges in every State shall be bound thereby, any +Thing in the Constitution or Laws of any State to the Contrary +notwithstanding. + +The Senators and Representatives before mentioned, and the Members of +the several State Legislatures, and all executive and judicial Officers, +both of the United States and of the several States, shall be bound by +Oath or Affirmation, to support this Constitution; but no religious Test +shall ever be required as a Qualification to any Office or public Trust +under the United States. + + +ARTICLE VII. + +The Ratification of the Conventions of nine States shall be sufficient +for the Establishment of this Constitution between the States so +ratifying the Same. + +Done in Convention by the Unanimous Consent of the States present the +Seventeenth Day of September in the Year of our Lord one thousand seven +hundred and Eighty seven, and of the Independence of the United States +of America the Twelfth IN WITNESS whereof We have hereunto subscribed +our Names. + +G'o: WASHINGTON---- +_Presidt. and deputy from Virginia_ + +_New Hampshire_ { JOHN LANGDON + { NICHOLAS GILMAN + +_Massachusetts_ { NATHANIEL GORHAM + { RUFUS KING + +_Connecticut_ { WM. SAML. JOHNSON + { ROGER SHERMAN + +_New York_ ALEXANDER HAMILTON + + { WIL: LIVINGSTON +_New Jersey_ { DAVID BREARLEY + { WM. PATERSON + { JONA: DAYTON + + { B. FRANKLIN + { THOMAS MIFFLIN + { ROBT. MORRIS +_Pennsylvania_ { GEO. CLYMER + { THOS. FITZSIMONS + { JARED INGERSOLL + { JAMES WILSON + { GOUV MORRIS + + { GEO: READ + { GUNNING BEDFORD Jun +_Delaware_ { JOHN DICKINSON + { RICHARD BASSETT + { JACO: BROOM + + { JAMES McHENRY +_Maryland_ { DAN OF ST THOS JENIFER + { DANL. CARROLL + +_Virginia_ { JOHN BLAIR-- + { JAMES MADISON JR. + + { WM. BLOUNT +_North Carolina_ { RICHD. DOBBS SPAIGHT + { HU WILLIAMSON + + { J. RUTLEDGE +_South Carolina_ { CHARLES COTESWORTH PINCKNEY + { CHARLES PINCKNEY + { PIERCE BUTLER + +_Georgia_ { WILLIAM FEW + { ABR. BALDWIN + +_Attest_ WILLIAM JACKSON _Secretary_ + + + + +AMENDMENTS + + +[ARTICLE I.] + +Congress shall make no law respecting an establishment of religion, or +prohibiting the free exercise thereof; or abridging the freedom of +speech, or of the press; or the right of the people peaceably to +assemble, and to petition the Government for a redress of grievances. + + +[ARTICLE II.] + +A well regulated Militia, being necessary to the security of a free +State, the right of the people to keep and bear Arms, shall not be +infringed. + + +[ARTICLE III.] + +No Soldier shall, in time of peace be quartered in any house, without +the consent of the Owner, nor in time of war, but in a manner to be +prescribed by law. + + +[ARTICLE IV.] + +The right of the people to be secure in their persons, houses, papers, +and effects, against unreasonable searches and seizures, shall not be +violated, and no Warrants shall issue, but upon probable cause, +supported by Oath or affirmation, and particularly describing the place +to be searched, and the persons or things to be seized. + + +[ARTICLE V.] + +No person shall be held to answer for a capital, or otherwise infamous +crime, unless on a presentment or indictment of a Grand Jury, except in +cases arising in the land or naval forces, or in the Militia, when in +actual service in time of War or public danger; nor shall any person be +subject for the same offence to be twice put in jeopardy of life or +limb; nor shall be compelled in any Criminal Case to be a witness +against himself, nor be deprived of life, liberty, or property, without +due process of law; nor shall private property be taken for public use, +without just compensation. + + +[ARTICLE VI.] + +In all criminal prosecutions, the accused shall enjoy the right to a +speedy and public trial, by an impartial jury of the State and district +wherein the crime shall have been committed, which district shall have +been previously ascertained by law, and to be informed of the nature and +cause of the accusation; to be confronted with the witnesses against +him; to have compulsory process for obtaining Witnesses in his favor, +and to have the Assistance of Counsel for his defence. + + +[ARTICLE VII.] + +In suits at common law, where the value in controversy shall exceed +twenty dollars, the right of trial by jury shall be preserved, and no +fact tried by a jury shall be otherwise re-examined in any Court of the +United States, than according to the rules of the common law. + + +[ARTICLE VIII.] + +Excessive bail shall not be required, nor excessive fines imposed, nor +cruel and unusual punishments inflicted. + + +[ARTICLE IX.] + +The enumeration in the Constitution, of certain rights, shall not be +construed to deny or disparage others retained by the people. + + +[ARTICLE X.] + +The powers not delegated to the United States by the Constitution, nor +prohibited by it to the States, are reserved to the States respectively, +or to the people. + + +[ARTICLE XI.] + +The Judicial power of the United States shall not be construed to extend +to any suit in law or equity, commenced or prosecuted against one of the +United States by Citizens of another State, or by Citizens or Subjects +of any Foreign State. + + +[ARTICLE XII.] + +The Electors shall meet in their respective states, and vote by ballot +for President and Vice-President, one of whom, at least, shall not be an +inhabitant of the same state with themselves; they shall name in their +ballots the person voted for as President, and in distinct ballots the +person voted for as Vice-President, and they shall make distinct lists +of all persons voted for as President, and of all persons voted for as +Vice-President, and of the number of votes for each, which lists they +shall sign and certify, and transmit sealed to the seat of the +government of the United States, directed to the President of the +Senate;--The President of the Senate shall, in the presence of the +Senate and House of Representatives, open all the certificates and the +votes shall then be counted;--The person having the greatest number of +votes for President, shall be the President, if such number be a +majority of the whole number of Electors appointed; and if no person +have such majority, then from the persons having the highest numbers not +exceeding three on the list of those voted for as President, the House +of Representatives shall choose immediately, by ballot, the President. +But in choosing the President, the votes shall be taken by states, the +representation from each state having one vote; a quorum for this +purpose shall consist of a member or members from two-thirds of the +states, and a majority of all the states shall be necessary to a choice. +And if the House of Representatives shall not choose a President +whenever the right of choice shall devolve upon them, before the fourth +day of March next following, then the Vice-President shall act as +President, as in the case of the death or other constitutional +disability of the President. The person having the greatest number of +votes as Vice-President, shall be the Vice-President, if such number be +a majority of the whole number of Electors appointed, and if no person +have a majority, then from the two highest numbers on the list, the +Senate shall choose the Vice-President; a quorum for the purpose shall +consist of two-thirds of the whole number of Senators, and a majority of +the whole number shall be necessary to a choice. But no person +constitutionally ineligible to the office of President shall be eligible +to that of Vice-President of the United States. + + +[ARTICLE XIII.] + +SECTION 1. Neither slavery nor involuntary servitude, except as a +punishment for crime whereof the party shall have been duly convicted, +shall exist within the United States, or any place subject to their +jurisdiction. + +SECTION 2. Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XIV.] + +SECTION 1. All persons born or naturalized in the United States, and +subject to the jurisdiction thereof, are citizens of the United States +and of the State wherein they reside. No State shall make or enforce any +law which shall abridge the privileges or immunities of citizens of the +United States; nor shall any State deprive any person of life, liberty, +or property, without due process of law; nor deny to any person within +its jurisdiction the equal protection of the laws. + +SECTION 2. Representatives shall be apportioned among the several States +according to their respective numbers, counting the whole number of +persons in each State, excluding Indians not taxed. But when the right +to vote at any election for the choice of electors for President and +Vice-President of the United States, Representatives in Congress, the +Executive and Judicial officers of a State, or the members of the +Legislature thereof, is denied to any of the male inhabitants of such +State, being twenty-one years of age, and citizens of the United States, +or in any way abridged, except for participation in rebellion, or other +crime, the basis of representation therein shall be reduced in the +proportion which the number of such male citizens shall bear to the +whole number of male citizens twenty-one years of age in such State. + +SECTION 3. No person shall be a Senator or Representative in Congress, +or elector of President and Vice-President, or hold any office, civil or +military, under the United States, or under any State, who, having +previously taken an oath, as a member of Congress, or as an officer of +the United States, or as a member of any State legislature, or as an +executive or judicial officer of any State, to support the Constitution +of the United States, shall have engaged in insurrection or rebellion +against the same, or given aid or comfort to the enemies thereof. But +Congress may by a vote of two-thirds of each House, remove such +disability. + +SECTION 4. The validity of the public debt of the United States, +authorized by law, including debts incurred for payment of pensions and +bounties for services in suppressing insurrection or rebellion, shall +not be questioned. But neither the United States nor any State shall +assume or pay any debt or obligation incurred in aid of insurrection or +rebellion against the United States, or any claim for the loss or +emancipation of any slave; but all such debts, obligations and claims +shall be held illegal and void. + +SECTION 5. The Congress shall have power to enforce, by appropriate +legislation, the provisions of this article. + + +[ARTICLE XV.] + +SECTION 1. The right of citizens of the United States to vote shall not +be denied or abridged by the United States or by any State on account of +race, color, or previous condition of servitude. + +SECTION 2. The Congress shall have power to enforce this article by +appropriate legislation. + + +[ARTICLE XVI.] + +The Congress shall have power to lay and collect taxes on incomes, from +whatever source derived, without apportionment among the several States, +and without regard to any census or enumeration. + + +[ARTICLE XVII.] + +The Senate of the United States shall be composed of two Senators from +each State, elected by the people thereof, for six years; and each +Senator shall have one vote. The electors in each State shall have the +qualifications requisite for electors of the most numerous branch of the +state legislatures. + +When vacancies happen in the representation of any State in the Senate, +the executive authority of such State shall issue writs of election to +fill such vacancies: Provided, That the legislature of any State may +empower the executive thereof to make temporary appointment until the +people fill the vacancies by election as the legislature may direct. + +This amendment shall not be so construed as to affect the election or +term of any Senator chosen before it becomes valid as part of the +Constitution. + + +[ARTICLE XVIII.] + +SECTION 1. After one year from the ratification of this article the +manufacture, sale, or transportation of intoxicating liquors within, the +importation thereof into, or the exportation thereof from the United +States and all territory subject to the jurisdiction thereof for +beverage purposes is hereby prohibited. + +SEC. 2. The Congress and the several States shall have concurrent power +to enforce this article by appropriate legislation. + +SEC. 3. This article shall be inoperative unless it shall have been +ratified as an amendment to the Constitution by the legislatures of the +several States, as provided in the Constitution, within seven years from +the date of the submission hereof to the States by the Congress. + + +[ARTICLE XIX.] + +The right of citizens of the United States to vote shall not be denied +or abridged by the United States or by any State on account of sex. + +Congress shall have power to enforce this article by appropriate +legislation. + + + + + +End of Project Gutenberg's Our Changing Constitution, by Charles Pierson + +*** END OF THIS PROJECT GUTENBERG EBOOK OUR CHANGING CONSTITUTION *** + +***** This file should be named 14104.txt or 14104.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/1/4/1/0/14104/ + +Produced by John Hagerson, Kevin Handy, Linda Cantoni, and the PG +Online Distributed Proofreading Team. + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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