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exempt from state taxation, and, consequently, from being taxed by corporations deriving their power from states.

It is admitted that the power of the government to borrow money cannot be directly opposed, and that any law directly obstructing its operation would be void; but a distinction is taken between direct opposition and those measures which may consequentially affect it; that is, that 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 burden on the operations of government. It may be carried to an extent which shall arrest them entirely.

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 burdens. 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 burden 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.

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.

We are, therefore, of opinion that the judgment of the con

stitutional court of the state of South Carolina, reversing the order made by the court of common pleas, awarding a prohibition to the city council of Charleston, to restrain them from levying a tax imposed on six and seven per cent. stock of the United States, under an ordinance to raise supplies to the use of the city of Charleston, for the year 1823, is erroneous in this: that the said constitutional court adjudged that the said ordinance was not repugnant to the constitution of the United States; whereas, this court is of opinion that such repugnancy does exist. We are, therefore, of opinion that the said judgment ought to be reversed and annulled, and the cause remanded to the constitutional court for the state of South Carolina, that farther proceedings may be had therein according to law.

2 Pet. 469.

CRAIG AND OTHERS v. THE STATE OF MISSOURI.

JANUARY TERM, 1830.

[4 Peters's Reports, 411 - 465.]

IN 1821 the state of Missouri established loan offices, from which certificates issued bearing two per cent. interest, and receivable for debts due the state. Craig and others borrowed some of these certificates, and gave their note therefor. The note was not paid, and the state sued them. The state courts having decided against Craig, he sued out his writ of error to the United States supreme court, the opinion of which was given by the chief justice as follows:

THIS is a writ of error to a judgment rendered in the court of last resort, in the state of Missouri, affirming a judgment obtained by the state in one of its inferior courts against Hiram Craig and others, on a promissory note.

The judgment is in these words: "And afterwards, at a court," &c.," the parties came into court by their attorneys, and, neither party desiring a jury, the cause is submitted to the court; therefore, all and singular the matters and things being seen and heard by the court, it is found by them that the said defendants did assume upon themselves, in manner and form as the plaintiff by her counsel alleged. And the court also find that the consideration, for which the writing declared upon and the assumpsit was made, was for the loan of loan-office certificates, loaned by the state at her loan office at Chariton; which certificates were issued, and the loan made, in the manner pointed out by an act of the legislature of the said state of Missouri, approved the twenty-seventh day of June, 1821, entitled "An Act for the Establishment of Loan Offices," and the acts amendatory and supplementary thereto and the court do

further find that the plaintiff has sustained damages by reason of the non-performance of the assumptions and undertakings of them, the said defendants, to the sum of two hundred and thirty-seven dollars and seventy-nine cents, and do assess her damages to that sum. Therefore it is considered," &c.

The first inquiry is into the jurisdiction of the court.

The twenty-fifth section of the judicial act declares "that a final judgment or decree, in any suit in the highest court of law or equity of a state, in which a decision in the suit could be had, where is drawn in question" "the validity of a statute of, or an authority exercised under, any state, on the ground of their being repugnant to the constitution, treaties, or laws of the United States, and the decision in favor of such their validity," may be reexamined, and reversed or affirmed, in the supreme court of the United States."

To give jurisdiction to this court, it must appear in the record, 1. That the validity of a statute of the state of Missouri was drawn in question, on the ground of its being repugnant to the constitution of the United States; 2. That the decision was in favor of its validity.

1. To determine whether the validity of a statute of the state was drawn in question, it will be proper to inspect the pleadings in the cause, as well as the judgment of the court.

The declaration is on a promissory note, dated on the first day of August, 1822, promising to pay to the state of Missouri, on the first day of November, 1822, at the loan office in Chariton, the sum of one hundred and ninety-nine dollars, ninety-nine cents, and the two per cent. per annum, the interest accruing on the certificates borrowed, from the first of October, 1821. This note is obviously given for certificates loaned under the "Act for the Establishment of Loan Offices." That act directs that loans on personal securities shall be made of sums less than two hundred dollars. This note is for one hundred and ninety-nine dollars, ninety-nine cents. The act directs that the certificates issued by the state shall carry two per cent. interest from the date, which interest shall be calculated

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