State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 19

CONGRESSIONAL RECORD:
OONTAINING

THE PROCEEDINGS AND DEBATES
OF THE

SIXTY-FIRS~

CONGRESS, SECOND SESSION.

VOLUME XLV.

. ....
.
.
...

WASHINGTON:
GOVERNMENT PRINTING OFFICE.

1910.

'1694

CONGRESSIONAL RECORD-SENATE.

FEBRUARY

10,

r espondent•. membcl'9 of the 1olnt Committee on Printing of Cougren,
Mr. OLARK ot Wyoming. I ol!er the resolution I send to
on or belore the 7lb da7 of Februar7, 1910.
the desk.
W&rnHT, J'u•I'The VI CE-PRESIDENT. The Senntor from Wyoming offers
A true COPJ'·
Test:
a resolution, which the Secretary will stste.
J. R. YOITNO, Qkrl:,
The Secretary read the resolution, as follows:
B7 H. BINOlliM, A ..ut<111I Oler&:,
Senate resolution 178.
an.In.st lbree members of lblll bod7 named In said rule, to wit: SenRuoh:ed, That tbe Secretar1 of the Senate respectfull7 communicate
atore Ru:o Suoor, J ONATHA."i Boon~ Jr., and DU~CCI u. ~...
and lo caualog lbe u.ld rule to be served upon them, In the opinion of to Mr. Justice Wrtaht. justice or the supreme court of the District of
the &Date tberebl uolawfoU7 lnnded tbe constitutional prh1Jeges Columbia, the 'l'lewa ot the Senate upon lbe question of the jurllldlctlon
and preroc-Una o lbe Senate and of sald Senators, and wu wl.lboot of Rid court In the cue of The Valle7 Paper CompaJIJ' (Incorporated),
jurlldletion to grant said rule; and sa.ld Senators are dtttc:ted to m&ke plalnU1f, "· The Joint Committee an Printing of Co~ etc., fn
which a rule to lbow cauM wu :made bf said Justice on lbe 24 da7 of
no appearance ln Nlepo111e lbereto.
February, A. D. 1910, u upressed In S. a. 173.

Mr. McOUMBER. Mr. President, as I intend to vote against
the resolution, I desire ln a very few words to gh·e my reasons
!or so doing.
I find here u1>0n our statute books a law passed by both
liouses ot Congress and signed by the President ot the United
States. Thn.t law coustllutes certain persons a board to arblttate upon the matter of letting contracts with respect to public
printing. I can not understand that t:hiS board acts in any legislative capacity In passing or acting upon anything that is submJtted ln the shape ot a bid. It Is not carrying out a leglslntlve !unction 1n any way. It exists only as a board tor thn.t
pn.rtlcular pur1>0se by virtue ot the law under which it ls
created, and Is not 11ctlng as a Senate committee or performing
the tuuctlonB o/. such a commJttee, which functions relate
purely to the mnlter ot enncUng legislation and not to the matter of carrying that legislation into et'fect after it has become a
law.
It I understand this law at au, It creates cert11in indh-ldunl
rights. The mllll or the company or the corporation which
puts In a bid In conformity with the lnw ls entitled to barn certain tblngs done by th11t committee or that board. He has a
legal right, it he conl.orms to the requirements of the law, to
compel the bonrd to com1>ly with the requirements Incumbent
upon It. If we ndmlt thnt. and admit that there may be a question whether the lndh'ldunl or the corporation hn.s complied
with the law, then we must admlt that there Is some power to
try thnt right, and the only power that I know ot Ues ultimately
1n the courts; or else we must say that there ls one law upon
our statute books which the courts can neither construe nor
en.force; that there ls one law which most depend entirely u1>0n
the Senate or upon the Douse tor its ell!cacy as a Jaw.
I can not be!Jeve th.at thnt ls the legal status of the individual
or the corporation which has complied with the requirements of
the law we have passed.
Mr. SUTHERLAND. Mr. President-Mr. McCOllIBER. 111 one moment Now, under what authority does tills board act? Does It act under the authority of
the Sennte for tho purpose ot performing legislative !unctions,
or does it act under the 11uthorlty ot a law that has been passed
by Congi·ess; and l! Lt acts under tbe law, then is lt not subject
to eYery legal proceeding for the enforcement ot that law?
Now I wlll listen to the Senator from Utah.
Mr. SUTHERLAND. The Senator from North Dakota suggested that under the action pro1>0sed by this commJttee we
would have a situation where the courts would be powerless
to interpret one law ot Congress. I think when I suggest It to
the Senator he will see that he can go still further. Under our
form of government we have three departments-<>ne char ged
with the duty of maklng laws, another with the duty of executing laws, and a third with the duty of Interpreting the laws.
We have a situation here where the same body makes the law,
executes the law, and finally interprets it, performing all three
functions.
Mr. McCUMBER. Without any right of appeal to anyone.
It seems to me that that leaves the case 11t least sufficiently
doubt:!ul, so thn.t any Senator, without any resolution, acting
upon his own lnJtlaUve, can either appear or refuse to appear;
and I would prefer to lea,·e It to the individual Senator who
has been summoned to appear before that court to appear or not.
as be may deslre. If be appears, he can plead spectnlly to
the jurisdiction, nod cnn take an appeal I! it is decided against
him. If be does not appear and contempt proceedings are the
1lnsl result ot that nonappearance, he stlll would hn.ve the
right to appeal and to try bis case iD the courts. And I tor
one am not lo favor of the Senate, on such a doubtful case,
11t lenst ae this seems to me to be, to take the lnitlBtive and
eay lbat the court shall not pass upou Its own jurisdiction,
either the court of first resort or the appellate court For thn.t
r eason I sh111l record my vote against the resolution.
'
TlTe VICE-PnESIDIDNT. The question ls on agreeing to the
resolution submitted by the Senator from Wyoming.
The resoluUon was agreed to.

The resolution was considered by nnaul.mous consent and
agreed to.
lUSSISSIPl'l BIV.£11 lllllDOE AT ST. LOUUI, YO.

J\Ir. CULLOM. I ask leave to call up the bill (H. n. 19399)
lo extend the time for the completion of bridge across the
MISSl$Slppl River at St. Louls, Mo., by the St. Louls Electric
Bridge Company.
,
By unlllllmous consent the Senate, as in CommJttee of tho
)Vbolc, p roceeded to consider the bill.
The bill was reported to the Senate without amendment,
ordered to 11 thlrd reading, rend the third- tlm~, and passed.
BANK OF CEBTAIN ARMY OFFI.C.£11S.

The VICE-PRESIDENT laid before the Senate the action
ot the IIouse o/. Represcntlltives returning to the Senate In
complluoce with its request the bill (S. 5i 9) to correct th•
lineal and relative rank ot certain officers of the United States
Army.
l!r. BRIGGS. I move that the votes by which tile bill
wns ordered to be engrossed tor a third reading, read the
thJrd time, and passed be reconsidered.
The motion was agreed to.
Mr. BRIGGS. I move that the blll be iDdefinltely PoSt
poncd.
The motion was agreed to.
l~COYE

TAL

Mr. BORA.II. I ask consent to call up Senate resolution 175.
The YICE-PilESIDENT. Without objection, Senate resolutlon li:> will be laid before the Senate.
Tbe i:iecretary read the resolutlou submitted by Mr. Boun
on the Stb lnstllnt, aB follows:
Sennte resolution 175.
Rc•oh:cd, That the Committee on the JodJclal'}' be, nnd Is hereby,
directed to report to the Senate as eal"ly as may be practicable whether,
In the opinion of the committee, the proposed amendment to tho Con·
atltullon ot tho Uolted States, 11a aubmltted to the States tor raUOc&tlon at the special 1e1111lon, would, If adopted. authorise Congress to lay
a lax upou Incomes derh•ed from state bonds and other munlcl1>al &e·
curltles or would authorlke Congress to ta:x the Instrumentalities or
meana and property ot tho State or the salary of stale omcera.

Mr. BOB.All. l\Ir. P r<'sldent, a tew weeks ago one of our most
dlstlogulsbcd and justly celebrated of public men, Governor
IIughes, ot New York, sent a mcs..c:age to the New York lcgls·
lnture recommending against the ratlllcation of the proposed
amendment to the Constitution pro\•ldlng for levying an lucome
tux without apportionment. It bas been assumed by the public
press, since the message of the governor, that ·u would be Jm·
possible, in view ot hie declaration, to secure the enactment of
the amendment. So firm a bold has the governor of New York
upon the public mlnd and so high Is the esteem In which he Is
held as a lawyer that it was regnrded as in a natnre conclusive
agninst the amendment Alter some considerable conslderntlon
of the matter It occurs to me that there are at least two sides
to the controversy, and, In my own opinion, the groands stated
tor the rejection are not such as should prernll agnlnst the
amendment. The governor stated in hls message ns follows:
I am ID favor of cooCerrl~ upon lbe Federal Go'l"ernment the power
to la7 and collect an Income tax without apportionment among the
Stat.ea according to population • • •. But the IJO"'er to tax ln·
comes ahould not be granted ln each terms as to subject to f ederal taxation the lncomca derived from boD<ls ti;sued by tbe State ltselt or thOllll
Issued b7 municipal goverumenta organized under the State"• author·
Icy • • •. You arc called upon to de9.I wlth a specific proposal to
amend tbe ConsUtuttoo • • • . This proposal Is that the Federal
Government ahaJI ha"re the power to lay and collect taxes on 1nco111.e1
''from tchatevcr •011roo derived!'

The contention of the gO'l'ernOr belng that if this proposed
amendment should be adopted it would confer upon the Gov·
crnmcnt the power to levy an Income tax UPon iDcomes derived from state and municipal bonds; and it would follow,
although be does not so state, as a matter of logic and a matter
of law, that It would conter the power to levy llll income true
upon the snlal'ies ot state omceL·s, c:x.ecutlve, judicial, and legls-

1910.

CONGRESSIONAL RECORD-SENATE.

latlve. In other words, the l)OSltlon of the goTel'llOr ls that !t
would confer OJ\OD the NattoMI Government the power to tax
the lnstrumentalltlcs and means of state gonmment. and !or
that rettson Ile opposee It.
It Is eurlou11 to ob~rre. llr. President. tbJlt this ts precl11ely
the Mme objection thnt was urged to the langwtge contn.IDed in
tLe taxing power of the Xatlonal Constitution nt the ti.me of Its
submt.t;slon to the thirteen States for ratlftcatlon. It was contended upou the pnrt of tho~ who opposed its adoption that
the langut1ge of the NaUOOAl Const:Itutton was such as to enable the :National Got"crnmcnt to impose a tax UJ>Oll the tnstro·
mentalities and means of state got"ernments, to thereby embarrass the state l;On?mments, llDd in the end to proctlcall1
demooy them as independent and ecpnrnte SOTerelgntles. The
argument wlll bued in those d:IYfl upon the plenary power
which wt111 ,h·en to the National Got"ernment to tnx, lt being
contended that the lftoi;wige conl"eyed power to tu all property of whntever kind or from wllate,·er source derived, nnd
that thl8 would '1'"e the power to tax the instrumentnl1tles and
wcnns of the State.
When Mr. Ilnmnton came to answer that argument in his
Fcderollst articles be did not recede from the proposltlon that
full power bad been gll"en to the Federal Go,•ernment to tax.
11\' Ktttted tbnt tbe 11ower ot the ll'ederal Gol"erument to tnx was
wlthout llmlt, unqualified. plenary, and that 1t should be llO;
tbat It wne lntcnded to be so; and that tbat was the only reasonable conmoctlon whJch could be placed ul)On It. Be gtl\·e hla
reasons in tbt> fo1lo\vlni E<tnlement. quoting from tbe thirtytlrst number of the l'cdernlL>l:
A eo•ernment ool;ht to <'ODtalD ln lbll'lf tftlT poW'er ttqt1lalte to
the full aC<-ompllsbiuent oC tbfl ubjecta c:ommltted to It.a care aD(} to
tho complt-to execution of the tnala for wblcb It le nwponalb1e; !re.
from en·rr utber control but a rep.rd to tho public goOd and to the
1eu~ ot the people.
Aa the dutle. of 1ul)f'rlnttodlnir the natlooal deteoM and of 1«Urlo~
the public (><.'llce anlo1t torelrn or dom~tJc "rlolt-noe lo•oltt a pro'f1tloo
tor cuualties aod d1op.ni to whle.b no s-lble 1Jm1ts can be aal;ne.1,
, the po"Ker ot malLllla that pro'"bla ociPt to know no o~ bouoda
than the HIC'!'nd~ ot the N'atlon and t.tie rsocirces of the eommuolty.
Afl rn.oue la the -nUal ugto.e b; wlllch the mea.oa of an.,..erla,;
th& national ul1u•ocl• maat be J>rot"Ured, the power of [lt'O(Urln• that
artlclt- lo la full extt'nt m~t oeceuarll1 be comprehended In that ot
prof'ldlo~ fur tboee exlnndes.
Aa tlleoor.r and pmctlc-e CQnapltt t11 pro"re that the power of pronrtq
rt..-eoue la unanlllni; "be11 cxettlM'd o,·rr tho Slates In their eolletU\'o
Cllp&c!Ua the V~nal Gonoroment moat or o~ty be lD...eated 'lrllh
an unquallJled po'll"cr of taxation I•~ ordinary ~

I am not goln~ to a111Umc that the E'trect of this tax would be
nny other thnn that which Go\·ernor Ilughes suggests. For the
purpo~ of the remarks I pro1~ to make to-day I shall assnme
that It would hnn~ the cn:eet tor which It ls contended wit.bout
dl!;Cu1<~lng thnt question.
The amendment which bu been submitted reads as follows:
Coo...-a aball bnc po'll"er lo Ill)' and coUect taxes on Income. tron:1

whate\·er aource dt'rlvoo without apportionment

3lllODg

Stat• aud wlU.Out reprd to any CCDIUS or t'nu.meraUon.

the

1141Ytta.I

The worcls upon which tbe gol"ernor lays stress nre "from
whnteH!r i:ourcc derh·cd," be belle\'lni; them to include Incomes
from the source• I hA ,.e ~u1:1tested.
I submit for tile coo11ldcrat1on of the Senate. first, that thla
amendment, 1t adopted, \\111 ndd nothlng to the power of the
National Governmcut lo lnr and collect taxes in the way ot
power; that the power of tbe National Got"ernment at the
pr~cnt time, as I llnve 811.ld. Is full, complete, unllmlted, and
unfettered, Sll\C as to ~r10rts from the States, \Thlch hrul
nothing to do with Ille nri:umcnt here.
It I• true tbllt tltere are two rnle11 with reference to tho
manner In which the Congress ball exercise the poW"er--that of
uniformity aud thD.t of OJlllOrUonment-bnt as to the power
lb;<>lf, 11uttlog ai;ltle for the moment I.be manner ot Its exercL"4!,
I submit t.b4t the pot>·er Is nt the pre.sent time l"ested in ConIO"C"'S without nny ll1ultnUon, uu!ettcred in en!·l'J 6'lll&e ot the
term.
l:lccootlJy, I lm·lte the attention of the Senate to the proJ>ORltloo U1t1t the word.'! "Crom whate·q~r eource derll"ed" ndd nothing to the force or tftrength of the amendment Itself. When the
COD!ltltnUon anye ti.int the Cons.trl'Sll ahAll ha"re power to lay
nnd collect tnxc,q, It conn•ys nu tbe power tlut It would oonl"ey
1t It &1lcl "•hall lla\·e I;owcr to lay and collect taxes upon property trom whatever oourcc derlH!d." It we should bave said ln
this amcntlmcnt tbat Cougrc~ shllll llat"e power to lay and
collect tnxcs upon lnCOIUl'9 wllhout apportionment, It would
necehllrily, in eoo.atltutloual Jttlrlance, lnclnde ftll inoomes of
wllnlever nature or from wlltltc,·er source derived
I reAl<On from this basla: We find in the Con.stltution nt the
prceent time thls power lbat Con~ shall have power to lay
and collect tnxes, aud lbe court llila held that it includes taxes

1695

upon n.ll klnds of property and from wbatel"er sotrree It may bo
tlerh·cd. Therefore the addlni; of the words "from wbate"er
source dert\"ed" does.. not ampUty the power conferred or mnke
It mean any other than it would mean it the lt"Ords hnd been
entirely omitted from tbe amendment.
Third, the amendment did not deal. does not purport to deal,
11nd wa1 not intended to deal with the question of power. It
Intended to dool, and does deal, alone with the manner a!
~erclslng that power which Is already complete, tbnt wbl<'h le
nl~ndy without any limit. The eole obstacle to be remoT"ed by
tbo;ic who eongbt to change the Constitution was that of apportionment. No one htls el"er contended that It was not within
the po''"cr of Congre:;s to lay a tn.x upon Incomes. Thnt power
has belonicd to ConlD'l?$S from its organization, under the original tnxlug power of Congress. 'Whether apportioned or un·
apportioned was It matter of dlscul'Slon, and concern1Di; which
courts o.nd lawyers dllrcred; but the Power to impose an income tax upon nil proJ)erty, "from whntet"er source derh"ed,"
wns ne,·er doubled, eo far ne I know, by either court or lawyers
1n this country.
As n bnsls, therefore, of my o.rgument to-day, I desire to sllow
U1at tho power of Congrese to tax Is at the present time unlimited, and has b<'Cll so constroed; that. so fnr n.s express provl&l.ona o! the Constitution nre concerned, there ls no reoaon
why we could not Impose a tax UJ)On state bonds n.nd municipal
bonde or upon tbe &'\larles of state officers at the present time.
It the governor were asked why we do not impose n tax upon
stale bonds nt the present time, to wh.'lt provision of the Constitution woukl he direct our attention? U the governor were
asked whnt limitation Is there upon the taxing power of Congr".~" to what provision o! the Constltution or language therein
would be direct our attention?
It the &Ot"ernor were asked upon what prlnclple the Supreme
Court has behl that you enn not tax the ln."'irumentalltlt'!' of
the State, to wlult principle would he direct our o.ttentiou? U
he w<:ro aaked what chan~ 111 being made by this a1DCDdment
In thnt principle upon which the court has held that you can
not tax the lnoome from state bonds, what change could be possibly 8Ufgest?
In other word!', Mr. Presldent. the principles upon which the
Supremo Court baa held that notwlthstnnd.lng the completeneie
of the taxing power now In Congress :rou can not tu the instrunK'ntallties ot n State are principles which are imbedtled
in, lntt-rwoven with, and a rmrt ot the t.exture o! the whole instroment. are In no sense changed by tb.IB :i.mendment, nor
could they be by any words which are contained in tt.
Tile Supreme Court of the United States, ln Pacttic Company
~. Soule (7 Wn.IJ., 433), sald:
Tht' taxlo~ J)O'll'tr 11 rl•~n In the most compreh~n•l•e term... The
ont.r lhDIUtlona lmll09td a.re that direct tl.xes, Including tbe e11pltat1on
tax. 1boll be epportloued; that duttc.. lmposta, and ud~es aball Ile ultorm, ao(I uo duly etall be Imposed upon articles exported trom an.r
State. With l b - c.xcepU0119-

Tba t ls, unlfol'mity ond apportionment nnd ex-Porte from
Slntes-

Of tho POICCT u ,,. GU rupccta vritettCt"cd.
It wlll be conceded tbnt tbe question of e.."tports le not lnvoh·cd In this controversy, and can not be. Then, It we appo rtion an income tn:t nt tbls time, under what prohibition or

tllo eacrclH

11mltntlon ot tbe Constltution nre we inhibited from lnyln~ It
upon state bonds? I ask that quei;tion so ns to dlf'close more
fully n.a I proet.>cd that the reuon.Jug is based upon prlnelples
which are not alrected by this amendment, and which can not
poeslbl1 be eo, becaufr-0 of the lan:tuo~ employed.
Again, tbe Supreme Conrt l'llld, in Ycazle ~. F~nno (8 Wall.):
Xotbl~ It t'IMrtr from the dl.Kusslona lo the coonotfoo and Uie
dl£Nsalooa whlcb pnieedf'<I dul ratUlnitlou b.r the ~ numtrr
ot States than tlle PUJ"JIOlle to irlft thla J>O'l't'tt (to lt't'Y taxe111 to <.'nD·
~ ea to the taxatJon of e'l"eryt.blao: ex~pt export.a la It.a tul~t ut~t.
• • • )fore eomr•re.'lea.ln •ord• coul.J not hau bttn used.
• • • The word• u-1 eertalol.r dNc'rtbe the wbolt' po"Ker, a"<l It
wea the ID.teatlou of tile coonntloo that the whole power ahould be
colllerred.

In Mr. r omero..r's work on the Constitution. l"Olume 1, J1d!;9
lSS, be aaya:
Dttaiue thf' :-;atlon 14

thu~

paramount Its taring J>O'll't'r la iropttme ;

It ma.r be applied to all s11hJC<'ta: It may be exerted upon all lodlvl.Joals,
and upon enl')' apeda o! proptrty.
Tllnt Is tbc announcement by n. constltution:il writer ot tho
prlnclplc wlllch bas ~ ewbeddetl ln the decli:lons of the Supreme Court ot the United States from tile tl.lne the grent Chief
Justlee Mnrabnll first toolc hold ot the taxlng clanRe nnd construed It. Yen mort>, It hos been a part nod purcel of tbe accepted ju1·lsprudence ot this country since Alex.noder llamllton

1696

CONGRESSI ONAL RECORD-SENATE.

interpreted the Constitution in the articles knowB as the "FederaUst."
1 ask, If to-day under tho present taxing clause of the Constltution we c.<i n tax all propei·ty of whatever species, trom whatever
source .derhed, what inh1bltton ls there against our taxing
every state bond of the State of New York, and the municipal
bondS of New York, at the present time, so far as the provision
ot the Constitution is concerned? Certainly no one will contend that the present taxing clause Is not full enough to cover
all property, of whatever klnd and from whatever source derived. It bas always been so construed. If it were to be construed alone, it would undoubtedly be sumcleut to enable us to
tax state bonds. But it can not be construed standing alone;
neither could this amendment. The rules of construction which
control th1s ])resent unlimited taxing clause woul.d control in
the snme way aod for precisely the same reasons the proposed
amendment.
•
In the late case of Nichol v. Ames (173 U. S., 515) the
Supreme Court said :
It (Congress) bas power from that instrument (tho Constitution) to
Ja:,y and collect taxes, dutles, imposts and excise$ ln order to pay the
debts and provide for the common delense and general weU:are, and the
onl,y constltutlonal restraint upon the power iB that all duties, lmpQSta, and excises shall be unlform throughout the United States, and
that no capitation or other dlrec:t tax shall be laid unless In proportion
to the census or enumeration directed to be taken, and no tax or duty
can be laid on articles exported trom any State. Thus guarded, the
whole power ot ta.xatlon rests with Congress.
.
Agaln, ln Bank v. Billings (4 Pet., 514) Chief Justice Marshall said:
Tbe power of leglslatlon and, consequently, of taxation operates on
all persons and property belonging to the body politic.
Mr. Hnmllton, in bis RePort on Manufactures, snid:
The National Leglslt1ture has express authority to lay and collec:t
taxes, duties, imposts, and excises; to pay the debt11 and provide tor the
common defense and general wel1are, with no other qwtllflcatlons than
that all duties, imposts, nnd exclses shall be uniform througbout tbe
United States ; that no capitation or " ther dlrec:t tax aho.11 be lnld
o
unless ln proportion to numbers ascertained by a c.insu11 or enumeration
taken on the principle prescribed ln the Const:ltutlou; and that no tax
or duty shall be laJd on articles exported from any State. These three
quaUflcatJons excepted, t.be power to raise money Is plMary and falle/fnHe.

Thus the whole power of taxation rests with Congress. When
you exclude exports trom States and conform to the rule of
uniformity and of apportionment, there is no llm1tatlon upon
tbe taxing Power of the National Government as It exists at the
present time. I submit that it would be dlmcult to tlnd language which would convey more than the full and complete
Power which ls now conferred by the Constitution.
I sny, therefore, that already Congress ls given absolute
Power; and if the reasonlng of the dlstingulshed governor were
correct, the language being full and complete, conveying alJ
power, we could tnx state bonds and municipal securities and
state sala.rles at the present time.
But there is another controlllng reason why we can not <lo so.
which reason is omitted in the message and which is not atrected
by this amendment in any manner. The 11.rst time the question
arose as to power of one sovereignty to tax the means or instrumentalities of another so\·erelgnty was 1n the case of McCulloch v. Maryland. In that case, as all lawyers well remember,
there was an attempt on the part of tbe State of Maryland to
tax the stOCk of the United. States Bank. The United States Bank
having been organ!zed as an instrumentality of the Nntlonal
Government to carry out certain functions of g1·anted power, it
was held that it was not a taxable article. In that case Chief
Justice Marshall considered this question and gave us the basis
upon which hD.s been built the entire structure of law which
prevents one nationality from taxing the instrumentalities and
means of another.
In the first place, it was admitted by the Ohlef Jasttce tbat
there was no provision of the Constitution which controlled
the subject-matter. It was stated by the Chief Justice that
there was neither any lim1tatlon nor grant of power which prevented the States from tax.Ing the Instrumentalities of the
National GoverDJDent, and he stated in hls declslon that, therefore, the taxing power of the National Government being complete, the inhibition bad to be found somewhere other thnn that
of the taxing clause Itself. He said, in McCulloch v. Maryland
(4 Wheat.):
'.('here ts no express provision (of the Constitution) for the case, bttt
the claim·
That is, the exemption trom taxationhas been sustained on a principle which so entirely pei.-vades the Constitution, Is so lntermJxed with the m11terlal11 which compose It, so
interwoven with Its web1 ao blended with Its texture as to be incapable
of being separated trom 1t without rend~&' It Into abreda.
.

I

FEBRUARY

10,

UPon what principle, stated a little more fully, but .never
more comprehensively, did the Cblet Justice argue that you
could not tax the instrumentalities of Government? UPon
the theory that the Constitution as a whole created two separate and distinct sovereignties independent of each other in
their specific and reserved powers, and tbat however full the
grant of Power of taxation m1gbt be in the Constitution, there
must always be subtracted from that power the right of the
dllterent sovereignties to perform their functions as such. In
other words, said the Ohief Justice, to construe it otherwl.Se
would be to rend the whole fabric into shreds.
It was not, therefore, because of the fact that the taxing
clause of the Constitution bad any llm!tatlons either express
or Implied in Hs language, lt was not because -the language
!ailed to convey all the po\ver of the National Goverlllllent to
tax, but because of the universal rule that every component
part of the Constitution must be construed in the light of
every other part of it; and that lt all must be construed as a
whole in the llght of the designs and purposes and objects to
be accomplished when the instrument was written. Those designs and purposes were to create a national government In its
own sphere, independent and separate and distinct from the
state governments and to create the <>tate sovereignties, which
'
.
~
In their reseITed powers are separate, distinct, and independent
of the National GoYernment.
There is one tb!ng that we overlook tu nrgulng this question,
and lt seems to me to be the vice of the distinguished goYernor's argument rt is that the state governments, in their
separate and independent sovereignties, in their reser,•ed powers, a1·e just as much beyond the jurlsdictlon and control of the
National Government ns the National Government In lts sovereignty is beyond the control and jurisdiction of the state
governments.
In a later case, in RaUroad Company v. Peniston (18 Wall.,
Bl), the Supreme Court said:
The States are, and they must ever be, coexistent with the National
Government. Neither llUlJ destroy the other. 8'.enco the Federal ,
ConstJtutlon must rec:elve a practical construction. l l:s llmltatlons and
I ts Implied problbltlonll must not be extended so tar as to destroy the
necessary powers ot the State or prevent their efficient exercise.
Again, the court in United Stntes v. Rnilway Company (17
Wall., 327) said:
'Xhe r1gbt of the States to admln!ster their own a«alrs, through
tbelr legislative, executive, and judicial departments, In their own manner, through their own agencies, Is conceded by the uniform dec:lsJone
or this court and by the practice ot the Federal Government from Its
organization. This carr ies with It an exe1J1ption ot those agencies and
~trumenta from the taxing power ot the Federal Government.
I call attention also to the following citations and autborltles, all bearing out the same line of reasoning:
The taxing power ot the United States Is subject to an implied restraint arising from the existence ot the powers In the State which are
obviously intended to be beyond the control ot the General Government.
(Hare on the Constitution, vol. 1, p. 265.)
'!'his clause with reference to taxation ls without any express restriction except th.a~ already referred to and explained-uniformity and
apportionment and exports In the State. Despite this, It bas been decided that the United States can not tax the salary or a. state ollicer
or a state munlclpal corporation or process of etate courts or a railroad owued b7 a State. This decision rests upon the strong ground
that the powe.r of Con~ven under this full grant as contained
[n the language of the Constitution-to pass a tax la.w Is restricted to
11. law which iB necessary and proper to carry Its taxJng jlOwer lnto
elfed, and as taxation ot a state !Tancb!se by the Federal Government
is au lntrlngemeut upon the reserve power and autonomy of the State,
and as the power to tax without llmltatlon Is the power to destroy!
exec:utlon by the Unlted States of a power which Involves the tota.
destruction of state tunctlons was not only not proper, but radically
improper. (Tucker.)
Tbe re'l"enue act ot 1898 (United States v. Owen, 100 Fed. Rep.,
70) provided that a stamp tax of 50 cents should be imposed
upon "all bonds of any description except such as may be requJred in legal proceedings not otherwise provided tor in this
section." It was held that a tax: could not be required upon
u saloon keeper's bond required by the statutes ot the Smte,
notwithstanding this law. The court sald:
These cases establish the prlnclple that the great law ot sclf-presenatlon, the Inherent attribute of sovereignty, exempts any and all meallJI
and ln.s trnmentalltles ot state government trom federal taxation.
Rules of Construction, trom Mr. Story:
1 . The first and fundamental rule ln tbe lnterpreta tlon ot all lnstrn·
ments Is to construe them according to the sense of tbe :Instrument and
the lntentlon ot the parties.
2. There llUlY be ob6cnrlty as to the meaulng from tbe doubtful char·
acter ot the words used, from other clauses In the same Instrument, or
from Inaccuracy or repugnanc1 between the words and the apparent In·
tentlon derived from the whole structure of the lnslruroent or lhl
avowed object.
S. In construing the Constitution ot the United States, we are ln
the first tn~tance to consider what are tts nature nnd o'bject, Its scope
and destgu as apparent from the structure of the Instrument vteved u
a whole a11d also viewed in its component parta.