1. Licenses under the Act of June 30, 1864, "to provide internal
revenue to support the government" &c., 13 Stat. at Large 223,
and the amendatory acts, conveyed to the licensee no authority to
carry on the licensed business within a state.
2. The requirement of payment for such licenses is only a mode
of imposing taxes on the licensed business, and the prohibition,
under penalties, against carrying on the business without license
is only a mode of enforcing the payment of such taxes.
3. The provisions of the act of Congress requiring such licenses
and imposing penalties for not taking out and paying for them are
not contrary to the Constitution or to public policy.
4. The provisions in the Act of July 13, 1866, "to reduce
internal taxation" &c., 14 Stat. at Large 93, for the imposing
of special taxes, in lieu of requiring payment for licenses,
removes whatever ambiguity existed in the previous laws, and are in
harmony with the Constitution and public policy.
5. The recognition by the acts of Congress of the power and
right of the
Page 72 U. S. 463
states to tax, control, or regulate any business carried on
within its limits is entirely consistent with an intention on the
part of Congress to tax such business for national purposes.
Congress, by an internal revenue act of 1864, subsequently
amended, enacted that no persons should be engaged in certain
trades or businesses, including those of selling lottery tickets
and retail dealing in liquors, until they should have obtained a
"license" [Footnote 1
] from the
By an amendatory act of 1866, the word "special
was substituted in the place of the word "license" in the former
A party exercising any business for which a "license" was
necessary, or on which the "special tax" was imposed, without
having obtained the former or paid the latter, was made liable,
under the acts respectively, both to the tax and to fine or
imprisonment, or both. By the two principal acts, respectively, it
was provided that no license so granted, or special tax so laid,
should be construed to authorize any business within a state
prohibited by the laws thereof or so as to prevent the taxation by
the state of the same business.
In New York and New Jersey, selling lottery tickets, as in
Massachusetts retailing liquors (except in special cases, not
important to be noted) is, by statute, wholly forbidden. Such
selling or dealing is treated as an offense against public morals,
made subject to indictment, fine, and imprisonment, and in one or
more of the states named, high vigilance is enjoined on all
magistrates to discover and to bring the offenders to justice, and
grand juries are to be specially charged to present them.
In this condition of statute law, national and state, seven
cases were brought before this Court.
They all arose under the provisions of the internal revenue acts
relating to licenses for selling liquors and dealing in lotteries,
and to special taxes on the latter business. [Footnote 2
The first came before the Court upon a certificate of
Page 72 U. S. 464
from the Circuit Court of the United States for the Northern
District of New York.
It was argued at the last term, with the five next cases, which
came here upon writs of error to the Circuit Court of the United
States for the District of New Jersey.
During the present term, another case of the same general
character, coming from the Circuit Court for the District of
Massachusetts was argued, with two others, similar except in one
particular to the New York and New Jersey cases, and coming here
upon a certificate of division from the Circuit Court for the
Southern District of New York.
In the first case, Vassar, a citizen and resident of the State
of New York, was indicted for selling lottery tickets in that state
without having first obtained and paid for a license under the
internal revenue acts of Congress. He demurred to the indictment,
and the division of opinion arose upon the question presented by
the demurrer and joinder.
In the five cases from New Jersey, citizens and residents of
that state were severally indicted for the same offense. They set
up, by way of plea the statute of New Jersey prohibiting the
business, for carrying on which, without obtaining a license and
payment of the required duty, they were indicted. The district
attorney demurred to each of these pleas, and in each case there
was a judgment for the defendants upon demurrer and joinder.
In the case from Massachusetts, the defendant was indicted for
carrying on the business of retailing liquors without license, to
which indictment there was a demurrer. A statement of facts was
agreed on to the effect that the defendant was a retail dealer as
charged, and that this business was prohibited by the laws of the
commonwealth. And the division of opinion occurred on the question
presented by the pleadings and this agreed statement.
The general question in these cases was can the defendants be
legally convicted upon the several indictments found against them
for not having complied with the acts of Congress by taking out and
paying for the required licenses to
Page 72 U. S. 465
carry on the business in which they were engaged, such business
being wholly prohibited by the laws of the several states in which
it was carried on?
In one of the two remaining cases, the defendant was indicted
for being engaged in the business of a lottery dealer, and in the
other for being engaged in the business of a lottery ticket dealer,
in New York without having paid the special tax required by law. In
each case there was a demurrer and joinder in demurrer. The
division of opinion occurred upon the pleadings, and the question
certified was the same in each case.
In these two cases, therefore, the general question was could
the defendants be legally convicted upon an indictment for being
engaged in a business on which a special tax is imposed by acts of
Congress without having paid such a special tax, notwithstanding
that such business was and is wholly prohibited by the laws of New
Page 72 U. S. 468
THE CHIEF JUSTICE, having stated the case, delivered the opinion
of the Court.
In the argument of all the cases here before the Court it was
strenuously maintained by counsel for the defendants that the
imposition of penalties for carrying on any business prohibited by
state laws, without payment for the license or special tax required
by Congress, is contrary to public
Page 72 U. S. 469
policy, and illustrations of this supposed contrariety were
drawn from hypothetical cases of the license of crime for
We will dispose of this objection before proceeding to consider
the other important questions which these cases present.
It is not necessary to decide whether or not Congress may, in
any case, draw revenue by law from taxes on crime. There are
undoubtedly fundamental principles of morality and justice which no
legislature is at liberty to disregard, but it is equally undoubted
that no court, except in the clearest cases, can properly impute
the disregard of those principles to the legislature.
And it is difficult to perceive wherein the legislation we are
called upon to consider is contrary to public policy.
This Court can know nothing of public policy except from the
Constitution and the laws and the course of administration and
decision. It has no legislative powers. It cannot amend or modify
any legislative acts. It cannot examine questions as expedient or
inexpedient, as politic or impolitic. Considerations of that sort
must in general be addressed to the legislature. Questions of
policy determined there are concluded here.
There are cases, it is true, in which arguments drawn from
public policy must have large influence, but these are cases in
which the course of legislation and administration do not leave any
doubt upon the question what the public policy is, and in which
what would otherwise be obscure or of doubtful interpretation, may
be cleared and resolved by reference to what is already received
The cases before us are not of this sort. The legislature has
thought fit by enactments clear of all ambiguity to impose
penalties for unlicensed dealing in lottery tickets and in liquors.
These enactments, so long as they stand unrepealed and unmodified,
express the public policy in regard to the subjects of them. The
proposition that they are contrary to public policy is therefore a
contradiction in terms or it is intended as a denial of their
expediency or their propriety. If
Page 72 U. S. 470
intended in the latter sense, the proposition is one of which
courts cannot take cognizance.
We come now to examine a more serious objection to the
legislation of Congress in relation to the dealings in controversy.
It was argued for the defendants in error that a license to carry
on a particular business gives an authority to carry it on; that
the dealings in controversy were parcel of the internal trade of
the state in which the defendants resided; that the internal trade
of a state is not subject, in any respect, to legislation by
Congress, and can neither be licensed nor prohibited by its
authority; that licenses for such trade, granted under acts of
Congress, must therefore be absolutely null and void; and,
consequently, that penalties for carrying on such trade without
such license could not be constitutionally imposed.
This series of propositions, and the conclusion in which it
terminates, depends on the postulate that a license necessarily
confers an authority to carry on the licensed business. But do the
licenses required by the acts of Congress for selling liquor and
lottery tickets confer any authority whatever?
It is not doubted that where Congress possesses constitutional
power to regulate trade or intercourse, it may regulate by means of
licenses as well as in other modes, and in case of such regulation,
a license will give to the licensee authority to do whatever is
authorized by its terms.
Thus, Congress having power to regulate commerce with foreign
nations, and among the several states and with the Indian tribes,
may without doubt provide for granting coasting licenses, licenses
to pilots, licenses to trade with the Indians, and any other
licenses necessary or proper for the exercise of that great and
extensive power, and the same observation is applicable to every
other power of Congress to the exercise of which the granting of
licenses may be incident. All such licenses confer authority and
give rights to the licensee.
But very different considerations apply to the internal commerce
or domestic trade of the states. Over this commerce and trade
Congress has no power of regulation nor
Page 72 U. S. 471
any direct control. This power belongs exclusively to the
states. No interference by Congress with the business of citizens
transacted within a state is warranted by the Constitution except
such as is strictly incidental to the exercise of powers clearly
granted to the legislature. The power to authorize a business
within a state is plainly repugnant to the exclusive power of the
state over the same subject. It is true that the power of Congress
to tax is a very extensive power. It is given in the Constitution,
with only one exception and only two qualifications. Congress
cannot tax exports, and it must impose direct taxes by the rule of
apportionment, and indirect taxes by the rule of uniformity. Thus
limited, and thus only, it reaches every subject, and may be
exercised at discretion. But it reaches only existing subjects.
Congress cannot authorize a trade or business within a state in
order to tax it.
If, therefore, the licenses under consideration must be regarded
as giving authority to carry on the branches of business which they
license, it might be difficult, if not impossible, to reconcile the
granting of them with the Constitution.
But it is not necessary to regard these laws as giving such
authority. So far as they relate to trade within state limits, they
give none and can give none. They simply express the purpose of the
government not to interfere by penal proceedings with the trade
nominally licensed if the required taxes are paid. The power to tax
is not questioned, nor the power to impose penalties for nonpayment
of taxes. The granting of a license therefore must be regarded as
nothing more than a mere form of imposing a tax, and of implying
nothing except that the licensee shall be subject to no penalties
under national law if he pays it.
This construction is warranted by the practice of the government
from its organization. As early as 1794, retail dealers in wines or
in foreign distilled liquors were required to obtain and pay for
licenses and renew them annually, and penalties were imposed for
carrying on the business without compliance with the law. [Footnote 3
] In 1802, these license
Page 72 U. S. 472
the other excise or internal taxes, which had been imposed under
the exigencies of the time, being no longer needed, were abolished.
] In 1813, revenue
from excise was again required, and laws were enacted for the
licensing of retail dealers in foreign merchandise, as well as to
retail dealers in wines and various descriptions of liquors.
] These taxes also
were abolished after the necessity for them had passed away, in
1817. [Footnote 6
] No claim was
ever made that the licenses thus required gave authority to
exercise trade or carry on business within a state. They were
regarded merely as a convenient mode of imposing taxes on several
descriptions of business and of ascertaining the parties from whom
such taxes were to be collected.
With this course of legislation in view, we cannot say that
there is anything contrary to the Constitution in these provisions
of the recent or existing internal revenue acts relating to
Nor are we able to perceive the force of the other objection
made in argument that the dealings for which licenses are required
being prohibited by the laws of the state, cannot be taxed by the
national government. There would be great force in it if the
licenses were regarded as giving authority, for then there would be
a direct conflict between national and state legislation on a
subject which the Constitution places under the exclusive control
of the states.
But as we have already said, these licenses give no authority.
They are mere receipts for taxes. And this would be true had the
internal revenue act of 1864, like those of 1794 and 1813, been
silent on this head. But it was not silent. It expressly provided,
in section sixty-seven, that no license provided for in it should,
if granted, be construed to authorize any business within any state
or territory prohibited by the laws thereof, or so as to prevent
the taxation of the same business by the state. This provision not
only recognizes the full control by the states of business carried
on within their limits, but extends the same principle, so far
Page 72 U. S. 473
as such business licensed by the national government is
concerned, to the territories.
There is nothing hostile or contradictory, therefore, in the
acts of Congress to the legislation of the states. What the latter
prohibits the former, if the business is found existing
notwithstanding the prohibition, discourages by taxation. The two
lines of legislation proceed in the same direction and tend to the
same result. It would be a judicial anomaly as singular as
indefensible if we should hold a violation of the laws of the state
to be a justification for the violation of the laws of the
These considerations require an affirmative answer to the first
general question, whether the several defendants, charged with
carrying on business prohibited by state laws without the licenses
required by acts of Congress, can be convicted and condemned to pay
the penalties imposed by these acts.
The remaining question is whether the defendant, indicted for
carrying on a business on which a special tax is imposed by the
internal revenue law but which is prohibited by the laws of New
York, can be convicted and condemned to pay the penalty imposed for
not having paid that tax.
What has been already said sufficiently indicates our judgment
upon this question.
Congress, in framing the act of 1866, has carefully guarded
against any misconstruction of the legislative intention by
substituting throughout the term "special tax" for the word
"license." This judicious legislation has removed all future
possibility of the error which has been common among persons
engaged in particular branches of business, that they derived from
the licenses they obtained under the internal revenue laws, an
authority for carrying on the licensed business independently of
state regulation and control. And it throws, moreover, upon the
previous legislation all the right of a declaratory enactment. It
fully confirms, if confirmation were needed, the view we have
already expressed that the requirement of payment for licenses
under former laws was a mere form of special taxation.
Page 72 U. S. 474
The act of 1866 contains the same provision in respect to the
effect of special taxes which the original act of 1864 contained in
respect to licenses. It provides expressly that the payment of the
taxes imposed by it shall not exempt any person carrying on a trade
or business from any penalty or punishment provided by state laws
for carrying on such trade or business, or authorize the
commencement or continuance of any such trade or business contrary
to state laws, or prevent the imposition of any duty or any tax on
such trade or business by state authority.
It was insisted by counsel that whatever might be the power, it
could not have been the intention of Congress to tax any business
prohibited by state laws. And the argument from public policy was
much relied upon in support of this view.
We think it unnecessary to repeat the answer already made to
this argument when urged against the requirements of licenses. It
is, if possible, less cogent against the direct imposition of a tax
on a prohibited business than against the indirect imposition.
It may, however, be properly said that the law of 1866 was
enacted after the arguments of the last term, and that Congress
imposed these special taxes with the distinct understanding that
several branches of business thus taxed were prohibited by state
legislation. This is conclusive as to the intention. The hypothesis
we are asked to adopt would nullify some of the plainest provisions
of the act, and is inadmissible. The question must be answered
Upon the whole, we conclude:
1. That licenses under the act of 1864 and the amendatory acts
conveyed to the licensee no authority to carry on the licensed
business within a state.
2. That the requirement of payment for such licenses is only a
mode of imposing taxes on the licensed business, and that the
prohibition, under penalties, against carrying on the business
without license is only a mode of enforcing the payment of such
3. That the provisions of the acts of Congress requiring
Page 72 U. S. 475
such licenses and imposing penalties for not taking out and
paying for them are not contrary to the Constitution or to public
4. That the provisions in the act of 1866 for the imposing of
special taxes in lieu of requiring payment for licenses removes
whatever ambiguity existed in the previous laws, and are in harmony
with the Constitution and public policy.
5. That the recognition by the acts of Congress of the power and
right of the states to tax, control, or regulate any business
carried on within its limits is entirely consistent with an
intention on the part of Congress to tax such business for national
It follows that in the case from the Northern District of New
York, the question certified must be answered in the
That in the five cases from the District of New Jersey, the
several judgments must be reversed and the several causes remanded
to the circuit court for new trial in conformity with this
That in the case from the District of Massachusetts, the two
questions certified must be answered in the affirmative, and
That in each of the two cases from the Southern District of New
York, the following answer must be returned to the circuit court,
"That the law imposing the special tax in the indictment
mentioned, and for the nonpayment of which said indictment was
preferred and found is valid and not unconstitutional."
All of which is ordered accordingly.
13 Stat. at Large 248, 249, 252, 472, 485; 14
113, 116, 137, 301.
13 Stat. at Large 252, 472, 485, and 14 id.
1 state. at Large 377.
2 Stat. at Large 148.