or otherwise, the lawful institutions and measures of the national government, was largely discussed and strongly declared in the case of M' Culloch v. The State of Maryland. (a) In that case the State of Maryland had imposed a tax upon the Branch Bank of the United States established in that state, and assuming the bank to be constitutionally created and lawfully established in that state, the question arose on the validity of the state tax. It was adjudged that the state governments had no right to tax any of the constitutional means employed by the government of the Union to execute its constitutional powers, nor to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress, to carry into effect the powers vested in the national government.

To define and settle the bounds of the restriction of the power of taxation in the states, and especially when that restriction was deduced from the implied powers of the general government, was a great and difficult undertaking; but it appears to have been, in this instance, most wisely and most successfully performed. It was declared by the court, that it was not to be denied that the power of taxation was to be concurrently exercised by the two governments; but such was the paramount character of the Constitution of the United States, that it had a capacity to withdraw any subject from the action even of this power; and it might restrain a state from any exercise of it which may be incompatible with, and repugnant to, the constitutional laws of the Union. The great principle that governed the case was, that the Constitution, and the laws made in pursuance thereof, were supreme, and that they controlled the constitution and laws of the respective *426 states, and could not be controlled by them. It was of

*

the very essence of supremacy to remove all obstacles to its action within its own sphere, and so to modify every power vested in subordinate governments, as to exempt its own operations from their influence. A supreme power must control every other power which is repugnant to it. The right of taxation in the states extends to all subjects over which its sovereign power extends, and no further. The sovereignty of a state extends to everything which exists by its own authority, or is introduced by its permission; but it does not extend to those means which are employed by Congress to carry into execution their constitutional (a) 4 Wheaton, 316.

powers. The power of state taxation is to be measured by the extent of state sovereignty, and this leaves to a state the command of all its resources, and the unimpaired power of taxing the people and property of the state. But it places beyond the reach of state power all those powers conferred on the government of the Union, and all those means which are given for the purpose of carrying those powers into execution. This principle relieves from clashing sovereignty; from interfering powers; from a repugnancy between a right in one government to pull down what there is an acknowledged right in another to build up; from the incompatibility of a right in one government to destroy what there is a right in another to preserve. The power to tax would involve the power to destroy, and the power to destroy might defeat and render useless the power to create. There would be a plain repugnance in conferring on one government the power to control the constitutional measures of another, which other, with respect to those very measures, was declared to be supreme over that which exerts the control. If the right of the states to tax the means employed by the general government did really exist, then the declaration that the Constitution and the laws made in pursuance thereof should be the supreme law of the land would be empty and unmeaning declamation. If the states might tax one instrument employed by the government in the execution of its powers, they might tax every other * 427 instrument. They might tax the mail; they might tax the mint; they might tax the papers of the custom-house; they might tax judicial process; they might tax all the means employed by the government, to an excess which would defeat all the ends of government.

*

The claim of the states to tax the Bank of the United States was thus denied, and shown to be fallacious; and that there was a manifest repugnancy between the power of Maryland to tax, and the power of Congress to preserve, the institution of the Branch Bank. A tax on the operations of the bank was a tax on the operations of an instrument employed by the government of the Union to carry its powers into execution, and was consequently unconstitutional. A case could not be selected from the decisions of the Supreme Court of the United States, superior to this one of M'Culloch v. The State of Maryland, for the clear and satisfactory manner in which the supremacy of the laws of the

Union have been maintained by the court, and an undue assertion of state power overruled and defeated.

But the court were careful to declare that their decision was to be received with this qualification, that the states were not deprived of any resources of taxation which they originally possessed, and that the restriction did not extend to a tax paid by the real property of the bank, in common with the real property within the state; nor to a tax imposed upon the interest which the citizens of Maryland might hold in that institution, in common with other property of the same description throughout the state. (a) (x)

The decision pronounced in this case against the validity of the Maryland tax was made on the 7th of March, 1819; and it was on the 7th of February preceding that the legislature of the state of Ohio imposed a similar tax, to the amount of fifty thousand dollars annually, on the Branch Bank of the United States established in that state. Notwithstanding this decision, the officers of the State of Ohio proceeded to levy the tax, and that act brought up before the Supreme Court a renewed discus* 428 sion and consideration of the legality of such a tax. (a) It was attempted to withdraw this case from the influence and authority of the former decision, by the suggestion that the Bank of the United States was a mere private corporation, engaged in its own business, with its own views, and that its great end and principal object were private trade and private profit. It was

*

(a) In Berney v. Tax Collector, 2 Bailey (S. C.), 654, a state tax on dividends arising from stock in the Bank of the United States, owned by a citizen of the state, was adjudged to be constitutional. And in the case of The Union Bank v. The State, 9 Yerger, 490, it was held that state bank stock, as individual property, might be taxed, when owned by residents of the state; but that the stock held by non-resident stockholders was not subject to the taxing power of the state, for it must be a tax in personam, and stock is a chose in action, and has no locality, and follows the person of the owner.

(a) Osborn v. Bank of the United States, 9 Wheaton, 738.

(x) Taxation by a State of stockholders in national banks within its limits is valid. Van Slyke v. Wisconsin, 154 U. S. 581; First Nat. Bank v. Herbert, 44 Fed. Rep. 158. National bank stock may be sold on execution under state legislation. In re Braden's Estate (Penn.), 30 Atl. Rep. 746 (Jan. '95.) The property of a

national bank cannot be attached by process from a State court before final judg ment, though the bank is insolvent. U. S. Rev. Stats. § 5242; National S. Bank r. Butler, 129 U. S. 223; Raynor v. Pacifie Bank, 93 N. Y. 371; Planters' L. & S. Bank v. Berry, 91 Ga. 264.

admitted, that if that were the case, the bank would be subject to the taxing power of the state, as any individual would be. But it was not the case. The bank was not created for its own sake, or for private purposes. It has never been supposed that Congress could create such a corporation. It was not a private, but a public corporation, created for public and national purposes, and as an instrument necessary and proper for carrying into effect the powers vested in the government of the United States. The business of lending and dealing in money for private purposes was an incidental circumstance, and not the primary object; and the bank was endowed with this faculty, in order to enable it to effect the great public ends of the institution, and without such faculty and business the bank would want a capacity to perform its public functions. And if the trade of the bank was essential to its character as a machine for the fiscal operations of the government, that trade must be exempt from state control, and a tax upon that trade bears upon the whole machine, and was, consequently, inadmissible, and repugnant to the Constitution. In Weston v. The City Council of Charleston, (b) it was decided that a state tax on stock issued for loans made to the United States was unconstitutional. The court considered it to be a tax on the power given to Congress to borrow money on the credit of the United States, and thereby to diminish the means of the United States used in the exercise of its powers, and that it was, consequently, repugnant to the Constitution. By declaring the powers of the general government supreme, the Constitution has shielded its action in the exercise of its powers from * 429 any restraining or controlling action of the local governments. (a) 1 (x)

(b) 2 Peters, 449.

(a) A decision upon the same principle was made in the case of Dobbins v. The Commissioners of Erie County, 16 Peters, 435, where it was held that an officer of the United States was not liable to be rated and assessed for his office by state rates and levies; for this would be to diminish the recompense secured by law to the

ments may likewise lose all jurisdiction over places purchased by

officer. In the case of Melcher v. The City of Boston, in the Sup. Judicial Court of Massachusetts, March, 1845, [9 Metcalf, 73,] it was stated as a question undecided, whether a tax assessed upon the income of an officer of the United States would not be lawful, and not within the case of Dobbins. It was decided in the Massachusetts case, that a clerk in a post-office was not an officer exempted from taxation of his income.