Veazie Bank vs. Fenno [1869]

Chase, C. J.... It will be seen that when the policy of taxing bank circulation was first adopted in 1863, Congress was inclined to discriminate for, rather than against, the circulation of the State banks; but that when the country had been sufficiently furnished with a national currency by the issues of United States notes and of National bank notes, the discrimination was turned, and very decidedly turned, in the opposite direction.

The general question now before us is, whether or not the tax of ten percent., imposed on State banks . . . is repugnant to the Constitution of the United States.

In support of the position that the act of Congress, so far as it provides for the levy and collection of this tax, is repugnant to the Constitution, two propositions have been argued with much force and earnestness.

The first is that the tax in question is a direct tax, and has not been apportioned among the States agreeably to the Constitution.
The second is that the act imposing the tax impairs a franchise granted by the State, and that Congress has no power to pass any law with that intent or effect....

The difficulty of defining with accuracy the terms used in the clause of the Constitution which confers the powers of taxation upon Congress, was felt in the Convention which framed that instrument, and has always been experienced by courts when called upon to determine their meaning.... _

Much diversity of opinion has availed upon the question, what are direct taxes? Attempts to answer it by reference to the definitions of political economists hat been frequently made, but without satisfactory results. The enumeration of the different kinds of taxes which Congress was authorized to impose was probably made with very little reference to this question The great work of Adam Smith, the first comprehensive treatise on political economy in the English language, had then been recently published ; but in this work, though there are passages which refer to the characteristic difference between direct and indirect taxations there is nothing which affords any valuable light on the use of the words "direct tad in the Constitution.

We are obliged, therefore, to resort to his- historical evidence, and to seek the meaning of words in the use and in the opinion of those whose relations to the government, and means of knowledge, warranted them in speak with authority.

And, considered in this light, the meanwhile and application of the rule, as to direct taxes; appears to us quite clear.
It is, as we think, distinctly shown in every act of Congress on the subject....

This review shows that personal property, contracts, occupations, and the like, have never been regarded by Congress as proper subjects of direct tax....

It may rightly be affirmed, therefore, that in the practical construction of the Constitution by Congress, direct taxes have been limited tto taxes on land and appurtenances and taxes on polls or capitation taxes.

And this construction is entitled to great consideration especially in the absence of anything adverse to it in the discussions of Convention which framed, and of the convention which framed, and the Constitution. . .

It follows necessarily that the power to tax without apportionment extends to all other objects . Taxes on other objects are included under the heads of taxes not direct, duties, posts, and excises, and must be laid and collected by the rule of uniformity. The tax under consideration is a tax on bank circulation , and may very well be classed under head of duties. Certainly it is not, in the sense
of the Constitution, a direct tax. It may be said to come within the same category of taxation as the tax on incomes of
insurance companies, . . .

It is insisted, however, that the tax in the case before us is excessive, and so excessive as to indicate a purpose on the part of Congress to destroy the franchise of the bank, end is, therefore, beyond the constitutional power of Congress.

The first answer to this is that the judicial cannot prescribe to the legislative departments of the government limitations upon exercise of its acknowledged powers. The power to tax may be exercised oppressively an persons, but the responsibility of the Mature is not to the courts, but to the le by whom its members are elected. if a particular tax bears heavily upon a corporation , or a class of corporations, it cannot for that reason only, be pronounced contrary to the Constitution.

But there is another answer which vindicates equally the wisdom and power of Congress.

It cannot be doubted that under the Constitution the power to provide a circulation of coin is given to Congress. And it is settled by the uniform practice of the government and by repeated decisions, that Congress may constitutionally authorize the mission of bills of credit. It is not important here, to decide whether the quality of legal tender, in payment of debts, can be constitutionally imparted to these bills- it is enough to say, that there can be no question of the power of the government to emit them; to make them receivable in payment of debts to itself; to fit them for use by those who see fit to use them in all the transactions of commerce; to provide for their redemption; to make them a currency, uniform in value and description, and convenient and useful for circulation. These powers, until recently were only partially and occasionally exercised. Lately, however, Congress has undertaken to supply a currency for the entire country . . .

Having thus, in the exercise of undisputed constitutional powers, undertaken to provide a currency for the whole country, it cannot be questioned that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation. To this end, Congress has denied the quality of legal tender to foreign coins, and has provided by law against the imposition of counterfeit and base coin on the community. To the same end, Congress may restrain, by suitable enactments, , the circulation as money of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for that country must be futile.
Viewed in this light, as well as in the other light of a duty on contracts or property, we cannot doubt the constitutionality of the law: under consideration....

NELSON, J., delivered a dissenting opinion in which DAVIS, J., concurred.