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TAXATION OF GOVERNMENT BONDS.

THE recent decision of the Supreme Court of the United States, in the case of the Bank of the Commonwealth, of New-York, involving the right of States and cities to tax government bonds, renders desirable the re-publication of the celebrated case of M'CULLOH vs. THE STATE OF MARYLAND, decided at the February term, 1819. This case may be found reported at length in WHEATON'S Reports, Vol. IV. Another, and a condensed report of the case, may be found in the fourth volume of "Reports of Decisions in the Supreme Court of the United States; with notes and a digest, by B. R. CURTIS, one of the Associate Justices of the Court." The latter series comprises twenty-two volumes octavo, embracing the decisions from WHEATON 1, to HOWARD, and is published by Messrs. LITTLE, BROWN & Co., Boston.

The case of M'CULLOH vs. STATE OF MARYLAND was an appeal from the Court of Appeals of that State. The judges of the United States Supreme Court, during the February term, of 1819, were the following, which list also shows the years they were on the bench of this court:

JOHN MARSHALL, Chief Justice, 1801-1836; BUSHROD WASHINGTON, of Virginia, 1788-1829; THOMAS TODD, of Ky., 1807-1826, (absent;) WILLIAM JOHNSON, of South Carolina, 1804-1834; GABRIEL DUVALL, of Maryland, 1811-1836; BrockHolst LIVINGSTON, of New-York, 1806-1823, JOSEPH STORY, of Massachusetts, 1811-1845; WILLIAM WIRT, Attorney-General of the United States.

M'CULLOH VS. THE STATE Of Maryland et al.

The act incorporating the Bank of the United States (3 Stats. at Large, 266) is a law made in pursuance of the Constitution.

The power to establish branch in the State of Maryland might properly be exercised by the bank itself.

The law of Maryland, imposing a tax on the operations of the bank, is unconstitu tional.

ERROR to the Court of Appeals of the State of Maryland.

This was an action of debt, brought by the defendant in error, JOHN JAMES, who sued as well for himself as for the State of Maryland, in the county court of Baltimore County, in the said State, against the plaintiff in error, M'CULLOH, to recover certain penalties under the act of the legislature of Maryland, hereafter mentioned. Judgment being rendered against the plaintiff in error, upon the following statement of facts, agreed and submitted to the court by the parties, was affirmed by the Court of Appeals of the State of Maryland, the highest court of law of said State and the cause was brought, by writ of error, to this court.

It is admitted by the parties in this cause, by their counsel, that there was passed, on the 10th day of April, 1816, by the Congress of the United States, an act, entitled "An act to incorporate the subscribers to the Bank of the United States ;" and that there was passed, on the 11th day

of February, 1818, by the general assembly of Maryland, an act, entitled "An act to impose a tax on all banks, or branches thereof, in the State of Maryland, not chartered by the legislature," which said acts are made part of this statement, and it is agreed may be read from the statute books in which they are respectively printed. It is further admitted, that the president, directors and company of the Bank of the United States, incorporated by the act of Congress aforesaid, did organize themselves, and go into full operation in the city of Philadelphia, in the State of Pennsylvania, in pursuance of the said act, and that they did, on the day of eighteen hundred and seventeen, establish a branch. of the said bank, or an office of discount and deposit, in the city of Baltimore, in the State of Maryland, which has from that time, until the first day of May, eighteen hundred and eighteen, ever since transacted and carried on business as a bank, or office of discount and deposit, and as a branch of the said Bank of the United States, by issuing bank notes and discounting promissory notes, and performing other operations usual and customary for banks to do and perform, under the authority and by the direction of the said president, directors and company of the Bank of the United States, established at Philadelphia, as aforesaid. It is further admitted, that the said president, directors and company of the said bank had no authority to establish the said branch, or office of discount and deposit, at the city of Baltimore, from the State of Maryland, otherwise than the said State having adopted the Constitution of the United States, and composing one of the States of the Union. It is further admitted, that JAMES WILLIAM M'CULLOH, the defendant below, being the cashier of the said branch, or office of discount and deposit, did, on the several days set forth in the declaration in this cause, issue the said respective bank notes therein described, from the said branch or office. to a certain GEORGE WILLIAMS, in the city of Baltimore, in part payment of a promissory note of the said WILLIAMS, discounted by the said branch or office, which said respective bank notes were not, nor was either of them, so issued on stamped paper, in the manner prescribed by the act of assembly aforesaid. It is further admitted, that the said president, directors and company of the Bank of the United States, and the said branch, or office of discount and deposit, have not, nor has either of them, paid in advance, or otherwise, the sum of fifteen thousand dollars, to the treasurer of the Western Shore, for the use of the State of Maryland, before the issuing of the said notes, or any of them, nor since those periods. And it is further admitted, that the treasurer of the Western Shore of Maryland, under the direction of the governor and council of the said State, was ready, and offered to deliver to the said president, directors and company of the said bank, and to the said branch, or office of discount and deposit, stamped paper of the kind and denomination required and described in the said act of assembly.

The question submitted to the court for their decision in this case is as to the validity of the said act of the general assembly of Maryland, on the ground of its being repugnant to the Constitution of the United States, and the act of Congress aforesaid, or to one of them. Upon the foregoing statement of facts, and the pleadings in this cause, (all errors in which are hereby agreed to be mutually released,) if the court should

be of opinion that the plaintiffs are entitled to recover, then judgment, it is agreed, shall be entered for the plaintiffs, for twenty-five hundred dollars, and costs of suit. But if the court should be of opinion that the plaintiffs are not entitled to recover upon th statement and pleadings aforesaid, then judgment of non pros. shall be entered, with costs, to the defendant.

It is agreed that either party may appeal from the decision of the County Court to the Court of Appeals, and from the decision of the Court of Appeals to the Supreme Court of the United States, according to the modes and usages of law, and have the same benefit of this statement of facts, in the same manner as could be had if a jury had been sworn and impanelled in this cause, and a special verdict had been found, or these facts had appeared and been stated in an exception taken to the opinion of the court, and the court's direction to the jury thereon.

Copy of the act of the legislature of the State of Maryland, referred to in the preceding statement.

An Act to impose a Tax on all Banks or Branches thereof in the State of Maryland, not chartered by the Legislature.

Be it enacted, by the General Assembly of Maryland, That if any bank has established, or shall, without authority from the State, first had and obtained, establish any branch, office of discount and deposit, or office of pay and receipt, in any part of this State, it shall not be lawful for the said branch, office of discount and deposit, or office of pay and receipt, to issue notes in any manner, of any other denomination than five, ten, twenty, fifty, one hundred, five hundred and one thousand dollars, and no note shall be issued except on stamped paper of the following denominations; that is to say, every five dollar note shall be upon a stamp of ten cents; every ten dollar note upon a stamp of twenty cents; every twenty dollar note upon a stamp of thirty cents; every fifty dollar note upon a stamp of fifty cents; every one hundred dollar note upon a stamp of one dollar; every five hundred dollar note upon a stamp of ten dollars, and every thousand dollar note upon a stamp of twenty dollars; which paper shall be furnished by the treasurer of the Western Shore, under the direction of the governor and council, to be paid for upon delivery: Provided always, That any institution of the above description may relieve itself from the operation of the provisions aforesaid, by paying annually, in advance, to the treasurer of the Western Shore, for the use of the State, the sum of fifteen thousand dollars.

And be it enacted, That the president, cashier, each of the directors and officers of every institution established, or to be established as aforesaid, offending against the provisions aforesaid, shall forfeit a sum of five hundred dollars for each and every offence; and every person having any agency in circulating any note aforesaid, not stamped as aforesaid directed, shall forfeit a sum not exceeding one hundred dollars; every penalty aforesaid to be recovered by indictment, or action of debt, in the County Court of the county where the offence shall be committed, one-half to the informer, and the other half to the use of the State.

And be it enacted, That this act shall be in full force and effect from and after the first day of May next.

WEBSTER & PINKNEY, for the plaintiff in error.

HOPKINSON, JONES & MARTIN, for the defendant.

The Attorney-General was also heard for the plaintiff, by reason of the interest of the United States.

MARSHALL, C. J., delivered the opinion of the court.

In the case now to be determined, the defendant, a sovereign State, denies the obligation of a law enacted by the legislature of the Union; and the plaintiff, on his part, contests the validity of an act which has been passed by the legislature of that State. The Constitution of our country, in its most interesting and vital parts, is to be considered; the conflicting powers of the government of the Union and of its members, as marked in that Constitution, are to be discussed; and an opinion given, which may essentially influence the great operations of the government. No tribunal can approach such a question without a deep sense of its importance, and of the awful responsibility involved in its decision. But it must be decided peacefully, or remain a source of hostile legislation, perhaps of hostility of a still more serious nature; and if it is to be so decided, by this tribunal alone can the decision be made. On the Supreme Court of the United States has the Constitution of our country devolved this important duty.

The first question made in the cause is, has Congress power to incorporate a bank?

It has been truly said, that this can scarcely be considered as an open question, entirely unprejudiced by the former proceedings of the nation respecting it. The principle now contested was introduced at a very early period of our history, has been recognized by many successive legislatures, and has been acted upon by the judicial department, in cases of peculiar delicacy, as a law of undoubted obligation.

It will not be denied, that a bold and daring usurpation might be resisted, after an acquiescence still longer and more complete than this. But it is conceived that a doubtful question, one on which human reason may pause, and the human judgment be suspended, in the decision of which the great principles of liberty are not concerned, but the respective powers of those who are equally the representatives of the people, are to be adjusted; if not put at rest by the practice of the government, ought to receive a considerable impression from that practice. An exposition of the Constitution, deliberately established by legislative acts, on the faith of which an immense property has been advanced, ought not to be lightly disregarded.

The power now contested was exercised by the first Congress elected under the present Constitution. The bill for incorporating the Bank of the United States did not steal upon an unsuspecting legislature, and pass unobserved. Its principle was completely understood, and was opposed with equal zeal and ability. After being resisted, first in the fair and cpen field of debate, and afterwards in the executive cabinet, with as

much persevering talent as any measure has ever experienced, and being supported by arguments which convinced minds as pure and as intelligent as this country can boast, it became a law. The original act was permitted to expire; but a short experience of the embarrassments to which the refusal to revive it exposed the government, convinced those who were most prejudiced against the measure of its necessity, and induced the passage of the present law. It would require no ordinary share of intrepidity to assert, that a measure adopted under these circumstances, was a bold and plain usurpation, to which the Constitution gave no coun

tenance.

These observations belong to the cause; but they are not made under the impression that, were the question entirely new, the law would be found irreconcilable with the Constitution.

In discussing this question, the counsel for the State of Maryland have deemed it of some importance, in the construction of the Constitution, to consider that instrument not as emanating from the people, but as the act of sovereign and independent States. The powers of the general government, it has been said, are delegated by the States, who alone are truly sovereign; and must be exercised in subordination to the States, who alone possess supreme dominion.

It would be difficult to sustain this proposition. The convention which framed the Constitution was, indeed, elected by the State legislatures. But the instrument, when it came from their hands, was a mere proposal, without obligation, or pretensions to it. It was reported to the then existing Congress of the United States, with a request that it might "be submitted to a convention of delegates, chosen in each State, by the people thereof, under the recommendation of its legislature, for their assent and ratification." This mode of proceeding was adopted; and by the convention, by Congress and by the State legislatures, the instrument was submitted to the people. They acted upon it, in the only manner in which they can act safely, effectively and wisely, on such a subject, by assembling in convention. It is true, they assembled in their several States; and where else should they have assembled? No political dreamer was ever wild enough to think of breaking down the lines which separate the States, and of compounding the American people into one common mass: Of consequence, when they act, they act in their States. But the measures they adopt do not, on that account, cease to be the measures of the people themselves, or become the measures of the State governments.

From these conventions the Constitution derives its whole authority. The government proceeds directly from the people; is "ordained and established" in the name of the people, and is declared to be ordained, "in order to form a more perfect union, establish justice, insure domestic tranquillity and secure the blessings of liberty to themselves and to their posterity." The assent of the States, in their sovereign capacity, is implied in calling a convention, and thus submitting that instrument to the people. But the people were at perfect liberty to accept or reject it; and their act was final. It required not the affirmance, and could not be negatived by the State governments. The Constitution, when thus adopted, was of complete obligation, and bound the State sovereignties.

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