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.