Veazie Bank agt. Fenno. circulation, under the name of United States notes, made payable to bearer, but not expressed to be payable on demand, to the amount of $150,000,000, and this amount was increased by subsequent acts to $450,000,000 of which $50,000,000 were to be held in reserve and only to be issued for a special purpose and under special directions as to withdrawal from circulation. (Act of July 11, 1862, 12 U. S. St., 532; act of March 3, 1863, 12 U. S. St., 710.) These notes, until after the close of the war, were always convertible into, or receivable at par for bonds payable in coin, and bearing coin interest at a rate not less than five per cent; and the acts by which they were authorized declared them to be lawful money and a legal tender. This currency, issued directly by the government for the disbursement of the war and other expenditures, could not obviously be a proper object of taxation; but on the 25th of February, 1863, was passed the act authorizing national banking associations (12 U. S. St., 670), in which, for the first time during many years, congress recognized the expediency and duty of imposing a tax upon currency. By this act a tax of ten per cent annually was imposed on the circulation of the associations authorized by it. Soon after, by the act of March 3, 1863 (12 U. S. St., 712), a similarly lighter tax of one per cent annually was imposed on the circulation of state banks in certain proportions to their capital and of two per cent on the excess, and the same act reduced the tax on the national associations to the same rate. Both acts also imposed taxes on capital and deposits, which need not be noticed here. At a later date, by the act of June 3, 1864 (13, U. S. St., 111), which was substituted for the act of February 25, 1863, authorizing national banking associations, the rate of tax on circulation was continued and applied to the whole amount of it, and the shares of their stockholders were also subject to taxation by the states; and a few days afterwards by the act of June 30, 1864 (13, U. S. St., 277), to provide ways and means Veazie Bank agt. Fenno. for the support of the government, the tax on the circulation of the state banks was also continued at the same annual rate of one per cent, as before, but payment was required in monthly instalments of one-twelfth of one per cent, with monthly reports from each state bank of the amount in circulation. It can hardly be doubted that the object of this provision was to inform the proper authorities of the exact amount of paper money in circulation, with a view to its regulation by law. It was the first step taken by congress in that direction, and it was followed, some months later, by the act of March 3, 1865, amendatory of the prior internal revenue acts, the sixth section of which provides "that every national banking association, state bank or state banking association shall pay a tax of ten per centum on the amount of the notes of any state bank or state banking association paid out by them after the 1st day of July, 1866." (13, U. S. St., 484.) The same provision was re-enacted, with a more extended application, on the 13th of July, 1866, in these words: 66 Every national banking association, state bank or state banking association shall pay a tax of ten per centum on the amount of notes of any person, state bank or state banking institution used for circulation and paid out by them after the 1st day of August, 1866, and such tax shall be assessed and paid in such manner as shall be prescribed by the commissioner of internal revenue." (14, U. S. St., 146.) The constitutionality of the last provision is now drawn in question, and the brief statement of the recent legislation of congress has been made for the purpose of placing in a clear light its scope and bearing, especially as developed in the provisions just cited. 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 issue of the United States and of national bank Veazie Bank agt. Fenno. 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 per cent imposed on state banks or national. banks, paying out the notes of individual or state banks used for circulation, is repugnant to the constitution of the United States. It is presented by a certificate of division of opinion between the judges of the circuit court of the United States for the district of Maine, in a suit brought by the president, directors and company of the Vcazie Bank against Jeremiah Fenno, collector of internal revenue, for the recovery of the tax, penalty and costs, paid by the bank to the collector under protest, and to avoid distraint. The Veazie bank is a corporation chartered by the state of Maine, with authority to issue bank notes for circulation; and the notes on which the tax imposed by the act was collected were issued under this authority. There is nothing in the case showing that the bank sustained any relation to the state as a financial agent, or that its authority to issue notes was conferred or exercised with any special reference to other than private interests. The case was presented to the circuit court upon an agreed statement of facts, and upon a prayer for instructions to the jury the judges found themselves opposed in opinion on three questions, the first of which was this-whether the second clause of the ninth section of the act of congress of the 13th of July, 1866, under which the tax in this case was levied and collected, is a valid and constitutional law. The other two questions differ from this in form only, and need not be recited. In support of the position that the act of congress, so far as it provides for the levy and collection of the 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 Veazie Bank agt. Fenno. granted by the state, and that congress has no power to pass any law with that intent or effect. The first of these propositions will be first examined. The difficulty of defining with accuracy the terms used in the clauses of the constitution which confer the power 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. The general intent of the constitution, however, seems clear. The general government, administered by the congress of the confederation, had been reduced to the verge of impotency by the necessity of relying for revenue upon requisitions on the states; and it has a leading object in the adoption of the constitution, to relieve the government to be organized under it from this necessity and confer upon it ample power to provide revenue by the taxation of persons and property. And nothing is clearer, from the discussions in the convention and the discussions which preceded final ratification by the necessary number of states, than the purpose to give the power to congress as to the taxation of everything except exports in its fullest extent. The purpose is apparent, also, from the terms in which the taxing power is granted. The power is "to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States." More comprehensive words could not have been used. Exports only are, by another provision, excluded from its application. There are, indeed, certain virtual limitations arising from the principles of the constitution itself. It would undoubtedly be an abuse of the power if so exercised as to impair the separate existence and independent self-government (County of Lane vs. State of Oregon, 7 Wall., 73) of the state, or if exercised for ends inconsistent with the limited grants of power in the constitution. And there are directions as to the mode of exercising the power. If congress sees fit to impose a capitation or other Veazie Bank agt. Fenno. If direct tax, it must be laid in proportion to the census. congress determines to impose duties, imposts and excises, they must be uniform throughout the United States. These are not properly limitations of power. They are simply rules prescribing the mode in which it shall be exercised by them. It still extends to every object of taxation except exports, and may be applied to every object of taxation to which it extends, in such measure as congress may determine. The comprehensiveness of the power thus given to congress may serve to explain, at least, the absence of any attempt by members of the convention to decline, even in the debate, the terms of the grant. The words used certainly described the whole power, and it was the intention of the convention, that the whole power should be conferred. The definition of particular words, therefore, became unimportant. It may be said, indeed, that this observation, however just in its application to the general grant of power, cannot be applied to the rules by which different descriptions of taxes are laid and collected. Direct taxes must be laid and collected by the rule of apportionment. Duties, imposts and excises must be laid and collected under the rule of uniformity. The meaning of the first rule is very clear, but there has always been a diversity of opinion as to the subjects to which it is to be applied. The sense of congress has been shown, as we think quite clearly, in every act imposing direct taxes. In each of these acts a gross sum has been levied upon the United States, and the total amount has been apportioned to the several states, according to their respective numbers of inhabitants as ascertained by the last preceding census. Having been apportioned, provision is made for the imposition of the tax upon the subjects In 1798, when specified in the acts fixing its total sum. the first direct tax was imposed, the total amount was fixed at $2,000,000 (authorities cited). In 1813 the amount of the second direct tax was fixed at $3,000,000. In 1815 the third at $6,000,000, and it was made an annual tax. In |