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to the important objects, for which the government was created. It ought, therefore, on the principles settled in the case of M'Culloch v. The State of Maryland to be exempt from state taxation, and consequently from being taxed by corporations, deriving their power from states.

§ 1046. "It is admitted, that the power of the government to borrow money cannot be directly opposed; and that any law, directly obstructing its operations, would be void. But a distinction is taken between direct opposition, and those measures, which may consequentially affect it; that is, a law prohibiting loans to the United States, would be void; but a tax on them to any amount is allowable. It is, we think, impossible not to perceive the intimate connexion, which exists between these two modes of acting on the subject. It is not the want of original power in an independent sovereign state, to prohibit loans to a foreign government, which restrains the legislature from direct opposition to those made by the United States. The restraint is imposed by our constitution. The American people have conferred the power of borrowing money on their government; and by making that government supreme, have shielded its action, in the exercise of this power, from the action of the local governments. The grant of the power is incompatible with a restraining or controlling power; and the declaration of supremacy is a declaration, that no such restraining or controlling power shall be exercised. The right to tax the contract to any extent, when made, must operate upon the power to borrow, before it is exercised, and have a sensible influence on the contract. The extent of this influence depends on

the will of a distinct government. To any extent, however inconsiderable, it is a burthen on the operations of government. It may be carried to an extent, which will arrest them entirely.

§1047. "It is admitted by the counsel for the defendants, that the power to tax stock must affect the terms, on which loans will be made. But this objection, it is said, has no more weight, when urged against the application of an acknowledged power to government stock, than if urged against its application to lands sold by the United States. The distinction is, we think, apparent. When lands are sold, no connexion remains between the purchaser and the government. The lands purchased become a part of the mass of property in the country, with no implied exemption from common burthens. All lands are derived from the general or particular government, and all lands are subject to taxation. Lands sold are in the condition of money borrowed and repaid. Its liability to taxation, in any form it may then assume, is not questioned. The connexion between the borrower and the lender is dissolved. It is no burthen on loans; it is no impediment to the power of borrowing, that the money, when repaid, loses its exemption from taxation. But a tax upon debts due from the government stands, we think, on very different principles from a tax on lands, which the government has sold. The Federalist has been quoted in the argument, and an eloquent and well merited eulogy has been bestowed on the great statesman, who is supposed to be the author of the number, from which the quotation was made. This high authority was also relied upon in the case of M'Culloch v. The State of Maryland, and was considered by the Court. Without

repeating, what was then said, we refer to it, as exhibiting our view of the sentiments expressed on this subject by the authors of that work.

§ 1048. "It has been supposed, that a tax on stock comes within the exceptions stated in the case of M'Culloch v. The State of Maryland. We do not think so. The bank of the United States is an instrument, essential to the fiscal operations of the government; and the power, which might be exercised to its destruction, was denied. But property, acquired by that corporation in a state, was supposed to be placed in the same condition with property acquired by an individual. The tax on government stock is thought by this Court to be a tax on the contract, a tax on the power to borrow money on the credit of the United States, and consequently to be repugnant to the constitution."

1049. It is observable, that these decisions turn upon the point, that no state can have authority to tax an instrument of the United States, or thereby to diminish the means of the United States, used in the exercise of powers confided to it. But there is no prohibition upon any state to tax any bank or other corporation created by its own authority, unless it has restrained itself, by the charter of incorporation, from the power of taxation.1 This subject, however, will more properly fall under notice in some future discussions. It may be added, that congress may, without doubt, tax state banks; for it is clearly within the taxing power confided to the general government. When congress tax the chartered institutions of the states, they tax their

1 Providence Bank v. Billings, 4 Peters's R. 514.

own constituents; and such taxes must be uniform.1 But when a state taxes an institution created by congress, it taxes an instrument of a superior and independent sovereignty, not represented in the state legisla


1 M'Culloch v. Maryland, 4 Wheat. R. 316, 435.

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§ 1050. HAVING finished this examination of the power of taxation, and of the accompanying restrictions and prohibitions, the other powers of congress will be now examined in the order, in which they stand in the eighth section.

§ 1051. The next, is the power of congress "to bor"row money on the credit of the United States." This power seems indispensable to the sovereignty and existence of a national government. Even under the confederation this power was expressly delegated.1 The remark is unquestionably just, that it is a power inseparably connected with that of raising a revenue, and with the duty of protection, which that power imposes upon the general government. Though in times of profound peace it may not be ordinarily necessary to anticipate the revenues of a state; yet the experience of all nations must convince us, that the burthen and expenses of one year, in time of war, may more than equal the ordinary revenue of ten years. Hence, a debt is almost unavoidable, when a nation is plunged into a state of war. The least burthensome mode of contracting a debt is by a loan. Indeed, this recourse becomes the more necessary, because the ordinary duties upon importations are subject to great diminution and fluctuations in times of war; and a resort to direct taxes for the whole supply would, under such circum

1 Article 9.

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