The watchman and southron. (Sumter, S.C.) 1881-1930, April 17, 1895, Image 1
TF.s SUMTER WATCHMAN, Established Aprii,.l850. "Be Just and Fear not-Let all the Ends thou Aims't at, be thy Country's, thy God's and Truth's." THE TKUE SOUTHRON, Established jane, 1366
Consolidated Aug. 2,1881. SUMTER, S. C., "WEDNESDAY, APRIL 17, 1895. . New Series-Vol. XIV. No. 86.
tl)t W&t?l?xm bouillis
Published E?ery Wednesday,
-BY
J>3\ G-, Osteer
SUMTER, S. C.
TERM3 I
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ADVERTISEMENT:
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be made at reduced rates.
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interests will be charged foras-advertisemen
Obituaries and tributes of respect will
charged for.
The Plutocrats Rejoice.
The Supreme Court Decide
Against the Legality of
the Income Tax Law.
WASHINGTON, April 8.-The ai
nouncement of the decision of tl
Supreme Court of the United States
the income tax cases to-day was mac
io the presence of a crowded cou
room, the spectators' lobby bein
thronged t6 its utmost capacity. Ti
members of the court, except Mr. Assi
ciate Justice Jackson, entered tr.
chamber promptly at noon. A fe
cases of minor importance were di
posed of and the Chief Justice aonoam
ed that at the conclusion of the sittin
on Thursday, the court would adjour
over Good Friday and several orders c
the court, after which the great, case c
the day was read by him. He saic
amid al mose painful stillness: "I ai
charged with the duty of annouocin
the opinion and judgment of the com
ia the case of Chas. Pollock vs. th
Farmers Loan and Trust Company e
al." The conclusions of the court wer
stated to be as follows :
1. That by the Constitution, Feder?
taxation rs divided into two gres
classes : Direct taxes and duties, im
ports and excises.
2. That the imposition of direc
taxes ia governed by the rule of ap
portion ment among the several States
according to numbers, and the impost
tioo of duties, imports and excises b;
the role of uniformity throughout tbi
United States.
3. That the principle that taxatioi
and representation go together was in
tended to be and was prescribed in th
Constitution by the establishment o
the rule of apportionment among th
several States, so that such apportion
ment should be according to number
in each State.
4. That the States surrendered theil
power to levy imports and to r?gul?t*
commerce to the'general government
and gave it the concurrent power t(
levy direct taxes in reliance on the pro
tection afforded by the rules prescribed
and that the compromises of the Con?
stitution cannot be disturbed by legis
lative action.
5. That these conclusions result from
the text of the Constitution and are
supported by the historical evidence
furnished by the circumstances sur?
rounding the framing and adoptioo ol
that instrument and the views of those
who framed and adopted it
6. That the understanding and ex?
pectation at the time of the adoption ol
the Constitution was that direct taxes
would not be levied by the general
government except under the pressure
of extraordinary exigences aid such
has been the practice down to August
15, 1894. If the power to do so is to
be exercised as aq ordinary and usual
means of supply, that fact furnishes
an additional reason for circumspection
io disposing of the present case.
7. That taxes on real estate belong
to the class of direet taxes aod that the
taxes on the rent or income of real es?
tate, which is the incident of its owner?
ship, belong to the same class.
8. That by no previous decision of
this court has this question been adju?
dicated to the contrary of the conclu?
sions DOW announced. That so much
of the act of August 15. 1894, as
attempts to impose a tax upon the rent
or income of real estate without appor?
tionment is invalid. The court is
further of opinion that the act of
August 15, 1894, is invalid, so far as
it attempts to levy a tax upon the in?
come derived from muncipal bonds.
As a municipal corporation is the repre?
sentative of the State and one of the
instrumentalities of the State govern?
ment, the property and revenues of
municipal corporations are not subjects
of Federal taxation, nor is the income
derived from State, county aod muni?
cipal securities, since taxation on the
interest therefrom operates on the
power to borrow before it is exercised
and has a sensible influence on the con?
tract, and therefore such a tax is a tax
on the power of the States and their
instrumentalities to borrow money, aod
consequently repugnant to the Coo
stiutioD.
Upon each of the other questioo ar?
gued at the bar, to wit :
* , 1. Whether the void provisions as to
rents and income from real estate in?
validates the whole act?
2. Whether as to the income from
personal property as suob, the act is
unconstitutional as laying direct taxe
3. Whether any part of the tax,
not considered as a direct tax, is i
valid, for want of uniformity on eith
of tbe grounds suggested ?-the justic
who heard the argument are equal
divided and therefore no opinion is e
pressed.
The result is that the decree of t'
Circuit Court is reversed and the eau
remanded with directions to enter
decree in favor of complainant io r
specfc only of the voluntary payment
the tax on the rents and income of i
real estate and that which it holds
trust, and on the income from the m
nicipal bonds owned or so held by ir..
The Chief Justice said that the Juri
diction of courts of equity to prevei
diversion of funds by breach of tru
or illegal payment of the funds h?
been frequently affirmed by the cour
The question was not raised iu tl
court below, but had been expliciti
waived on the argument of the ca?
and the court felt justified in proc?c<
ing to a decision of the case on i
--
merits. He said that the power to d;
cide a law uoconstitional Was use
with reluctance, but the responsibilit
could not be evaded when the necei
iity arose. The contentions respectin
this law were: 1. That a tax OD rew
was a tax on rea1 estate and that n<
being laid according to apportionmet
it was invalid; (2). That it was not uu
form and a vioiation of the constitr,
tional requirement that such tax?
shall be laid with uniformity. Ucde
this head, came the exceptions iu fav?,
of those persons who were not in po.
session of an income of ?4,000; of OJU
tual insurance companies, saving
banks and partnerships, ail organize
for and doing the same business as tba
of corporations authorized by th
States. These exceptions, it was held
were arbitrary and capricious and no
based apon souod public policy; (3)
That income* from investments i:
State and municipal bonds could not b
taxed.
The Chief Justice proceeded to a con
sideration of the constitutional require
meats with respect of the imposition o
two forms of taxation., direct and indi
rect, and said that the framers of th
Constitution intended to make tin
consent of those who were expected t<
pay, essential to the validity of ao^
tax They had just come out of a coo
flic; upon the great principle of taxa
tioo without representation and the]
were intended to go together-tha
Congress should KO impose a tax that i
would fall with eveo force'and effec
upon all of the constituents of thosi
who voted for it. Tue States repre
sented in the constitutional convention
said the Justice, surrendered theit
right to levy imports, excises and
duties to the government. They look?
ed forward to the time whee greai
States to the west of* them would bc
coming into the Union and wheo thej
gave up that right, they did so with con
fidence ?bat the rule of uniformity
would be observed in the laying ol
taxes by the Congress.
The first question to be considered,
said Chief Justice Faller, was whether
or not a tax OD rents is a direct tas
witbio the meaning of the Constitution,
It had always been held, he said, that
a tax co estate, real or personal, was a
direct tax, bat it might be that the
Constitution had a different meaning,
and that it was to be applied to tbie
case ID that view, it became neces?
sary to inquire what were direct taxes
at the time the Constitution was
adopted. The Chief Justice theo made
extensive quotations from the history
of the debate io the convention OD the
subject of taxation The iofereoce
from them, he said, was that the gen?
eral distinction between direct aod in?
direct taxation was well understood by
the members of' the convention aod
that the expectation was that a direct
tax would be the last resort of Con?
gress. The celebrated case of Ryton
vs. the United States, decided March 3,
1796, was theo referred to at great
'length, the one io which it was held
that a tax OD carriages was Dot a direct
tax. Thc several opinions filed by
the justices were quoted aod Mr. Chief
Justice Faller asserted that io none of
them was there any expression of opin?
ion as to whether or not anything ex?
cept land aod capitation taxes was a di?
rect tax, but they were confined to the
case at hand. The case, be said, seemed
to tarn upon the declaration of Hamil?
ton as to what constituted direct taxes.
If there had been a refereoce to the de?
cisions of the country from which the
United States derived its jurisprudence
it would have beeo fatal, for io Great
Britain income taxes had always beeo
treated as direct taxes.
? The opinion then proceeded to review
the decisioDs made by tbs Supreme
Court io cases arieiog under the law of
1861. which, the Chief Justice naid,
counsel had contended declared that an
income tax was not a direct tax, and
must be regarded as controlling io the
case under review. The principle of
stare decisis, he continued, applied only
to cases as are directly in poiut. No
court had ever held itself bound by
any part of a decision nor necessary to
decide the case before it. The duty of
any court charged with the construc?
tion of constitutional provisions was
oot to exteod a decision io a question
if an error of principle was lil
thereby to be perpetuated or corni
ted. In the light of these observatit
the opinion considered the decisi
down to that, in the Springer case,
concluded that they were? all dis
gui>hable from the oce in hand. '
Springer case was no exception to
rule, ioasmuch as it did not present
point raised in this case. I3 a tax
rents, a tax on real estate. The co
the opinion continued, was unabli
see any distinction between a tax
real estate aDd a tax on the rents a
ing from such real estate. What is I?
but the iocome thereof? was ask
The constitutional requirement '
that direct taxes should be laid only
apportionment among the States
cording to population, and this tax 1
a direct tax. There was no distioct
betweeu an annual tax on the value
the land and a tax on the land its
Constitutional provisions it was sa
could not be thus evaded ; it was
substance, and not the form or shad
that was to prevail in construing the
Upon this point there were maDy 1
cisions and some of them were quoti
"What the Constitution intended
prevent," said the Chief Justice, "v
that no tax should be laid on the re
dents of any State by the represen
lives of other States." The exercise
the power to levy taxes was to be 1
stricted to extraordinary occasions.
In conclusion, therefore, upon tl
point, the Chief Justice announced tl:
the court were of the opinion that tl
part or lue law imposiug taxes up
rents obtained from real estate was
valid.
Next io order, the opinion consider
the third objection to the law-that
imposed a tax upon the incomes deriv
from investments in State and muni
pal bonds, and was therefore invalid.
Chief Justice Fniler reasserted t
general principle that a tax on gover
ment bonds was held to be a tax 1
contracts, and prejudicial to the pub
interest. It was therefore obvious th
such a tax on the power of States
municipalities to make contracts w
prejudical to public policy and tberefo
unconstitutional.
On the other matters involved in tl
case of Hyde vs, the Continental Tru
Company of New York city, and in tl
case of John G. Moore vs. Joseph I
Miller, commissioner of internal rev
nue, for an iojuoctios to restrain the
from proceeding to carry out the lav
appealed from the courts of the Di
trict of Columbia, Chief Justice F?lle
6tated that the court wai equally divu
ed. The judgment of the lower cour
as far as it related to the payment 1
the tax on rents and State and munie
pal bonds, was reversed. In the Mooi
case, the effect of the court's action
to affirm the refusal of an iojuctio
agaiost the commissioner of interns
revenue.
Justices Field and White read inde
pendent dissenting opinions.
Justice Field devoted some time to
review of the provisions regardin
rents, and denounced the priocipl
sought to be established by the iocom
tax law. Many of his conclusions wer
in conformity with those expressed b
the Chief Justice. He also atracke?
the law 00 account of its lack of unifor
mity and dwelt upon its exemptions an
! the many discriminations found therein
! Taking up the exemption of mutual io
! surance companies, be declared tba
they were conducted 00 lines id?ntica
with those on which large corporation
! were conducted-for the mutual bene
fit of stockholders. He inveigbec
against the exemption of saving an<
building associations, which were no
charitable institutions, but cooductec
for either money-making or money-sell
ing. All these exemptions stamped th<
law as cla68 legislation of the most pro?
nounced character. The law violatec
every right and comity guaranteed
under the Constitution. That there
should be aoy doubt about the subject
surpassed his comprehension. If the
census figures did not oonvince one ol
the magnitude and injustice of the ex?
emptions granted, be did not think
Congress could be convinced, "though
ooe rose from the dead" to convince it.
The law was also invalid in that it
levied a tax upon the salaries of the
101 judges of the United States, many
I of whom received small salaries. If the
provisions of the Constitution could be
set aside by the arbitrary act of Con?
gress, where, be asked, would this
power eod ? It was but a stepping
stone to other and greater acts that
would eventually open the way for a
war between the poor and the rich.
Such a power assumed by Congresses
and permitted to go unchallenged,
would make the hour when tbe deca
j dence of the nation would commence.
If the limit by the exemption could be
! fixed at ?4,000, future Congresses
! might fix it at $15,000 or $20,0U0,
! thus compelling one class alone to pay
the tax. Or the limit might be fixed
? at su eli an amount an a board of walk?
ing del?gales might determine to be
I necessary.
Io conclusion, Justice Field an
' nounced his opinion that thc whole law
j of IS94 should be declared to be uull
j and void.
Justice White prefaced his disscnt
; ing opinion with the statement that the
I custom of rendering long d'.jents in a
court of last resort was more honored
in the breach than in the observance.
Their only effect was to weaken the
efficacy of the opinion nf the court.
Jus tice White said he should not speak
to-day, but for fthe fact that the court
had overruled and set aside established
precedents and the settled and uniform
doctrine of the Supreme Court down to
the present time. He regretted at thia
late day, the court should thus over?
throw and nullify an act of Coogress,
supported and affirmed by all text
writers and by every decision of the
Supreme Court of the United States.
When the fathers construed our form of
government, they gave it, not limited,
but unlimited power to levy taxes, with
but one exception-that of taxing ex?
ports. The assertion that the constitu?
tional power of Congress was limited,
he thought, the fundamental error io
the reasoning of the majority of this
court. The great question before the
court was "ls the income tax a direct
tax?'' Thal; question was practically
decided a hundred years ago and he did
not deem it necessary to enter into an
elaborate review of the cases that had
been decided. In briefly reviewing the
case presented to the court, he observed
that the arguments made and the cita?
tions used in this case were the came
as those brought out in the Hyton case
and now this court was asked to again
take up the question adjudicated by a
unanimous court a hundred years ago.
Justice Harlan was of the opinion
that a tax upon gains, profits and in?
come derived from the rent of lands
was not a direct tax: that under nu?
merous decisions of this court the in?
come derived from municipal bonds ?
was not tue subject of specific taxation
in any form by the United States. In
other matters, he was in accord with
Justice White.
At 2.35 the court concluded the read?
ing of the opinion.
Upon the question of the constitu?
tionality of the taxation of incomes of
State and municipal bonds, the court
was unanimously ir. the negative.
Upon the question of taxation of rents
the court stood as follows : Affirming
Justices Harlan and White. Against
the law-Chief Justice Fuller, Justices
Field, Gray, Brewer, Brown and
Shira8.
Upon the question of the constitu?
tionality of the law, the court is said to
be divided as follows : For the law
Justices Harlan, Brewer, Brown and
WThite. Against the law-CSief Jus?
tice Fuller, Justices Field, Gray and
Shiras.
Hill is Happy.
.The Senator Jubilant at the
Maiming of His Pet Abomi?
nation.
WASHINGTON, April 3.-Senator
Hill of New York, who, more thao any
one else, antagonized the enactment of
the income tax law wheo it was
before the Renate, was an interested
spectator and close listener in the court
room when the opinion was banded
down to-day. His preseoce was acci?
dental, however, as he was called here
from Albany, N. Y., to argue a New
York case that was on the calendar for
to-day. He is greatly pleased at the
result of the, case and discussed the
effect of the decision. "I was
naturally gratified/' he said, "at the
decision of the court by a vote of 6 to
2 on two importaot questions involved
io thc act. They are both questions I
had carefully coosidered and vigorous?
ly pressed io thc Senate amoog other
objections to the law. For myself, I
have never had any doubt that the tax
imposed by the income tax law is a
direct tax in all its features and, hence,
an unconstitutional tax. I naturally
thiok the opinions of Justices Fuller
and Field are very able and convincing
and will receive the approval of the bar
throughout the United States. There
never was any good reason for the
eoactmeot of the iocome lax law It
was pressed upon Congress by a lot of
Populists, socialists, cranks and distur?
bers and their views were unwisely
adopted. It was class legislation of the
worst kiod. From apolitical poiot of
view, it was the height of folly to adopt
legislation of that character. It had
never beeo laid down as a Democratic
priociple, nor adopted io any platform.
It was foisted OD the party in an effort
to get votes from a class of people who
did Dot vote the ticket in conseqceDce
of our adoptioo of the law, aod never
will. It antagonized the business com?
munity, delayed the adoption of a tariff
reform bill and has injured the Demo?
cratic party ever since. The effect of
the decision, will, in my judgment, be j
excellent for the country. I have no '<
question but that the whole act will
eventually be declared unconstitutional, j
The first aot of the next Congress
.should be to repeal the law and atone
for our bluoders ; unfortunately the
Republicans will get the benefit of the
repeal, lt would be the most ?uprcme
folly ou the part of the Democratic
party to attempt to maintain an iocome
tax law, now when some of its princi?
pal features have already been declared
to be unconstitutional, by a vote of 6
to 2, aod wheo the whole act is believed
to be iovalid by at least ooe-half of the
judges who heard the argument. The
true policy for the country aod the
Democratic party to pursue is to let
the general government collect its rev?
enues by tariff taxes and a limited
amouut of internal revenue taxatioo
strictly so-called-and perm t the States
to impose direct taxes.
'?The invalidating that part of the
law applying to income derived from
rents is far reaching in its consequences.
It will materially reduce the revenues
expected aod deprive the act of one of
the principal arguments advanced at
the time in the favor of its passage,
vix : To reach the rents derived by
owners of real estate who reside in
foreign countries. The law is unjusti?
fiable and un-democratic aod I rejoice
that it has met at least a portion of its
death blow : the rest will follow io due
time."
Referring to the State be represents,
Senator Hill continued : "The decision
is cf great benefit to the business in?
terests of New York State.' The
amount of mun icipal bonds held by the
corporations and citizens of New York
is enormous. I do not recall the
figures, but I have seen the aggregate
stated assuming* more than ?100,000,
000. The decision relieves them from
the payment of the tax on the income
from these investments. The decision
relative to municipal bonds, being
placed on the ground that the munici?
pality is an instrument of State govern?
ment, virtually decides that railroad and
other corporations which pay the State
of New York (and some other States) a
certain part of their earnings for the
support of the State government, are
not taxable under the income tax law.
The railroads and other corporations
are created by the State, not the gen?
eral government, aod the taxes are
special taxes used for the government
and are just as much an instrumental?
ity of State government as is a State !
bond, a municipal bond or any other j
means which tne State has created for I
the purpose of raising revenue.''
Japan's Terras of Peace.
Seven of Eight Conditions Ac?
cepted by LI HUD g Chang.
WASHINGTON, April 10.-The cable
announcement that seven of the eight
Japanese conditions have been accepted
by Peace Commissioner Li Hung Chang
is very grat:fying to diplomats here,
who have no longer aoy doubt that a
peaceful termination will speedily result.
As understood in Washington the
eight conditions were as follows.
1. Independence of Corea.
2. Cession of Formosa.
3. Cessiou of Lian ToDg Promontory
iocluding Port Arthur.
4 War indemnity.
5. Admission of machinery into
China and permisssion to foreigners to
establish factories.
6. Modification of likin tax and exten?
sion of system of transit passes for im?
ports.
7. Opening certain Chinese riverg to
commerce, including the Yang-tse-Kiang
to Chung KiDg, the &iang from Han
Kow on the Yang-tse to Siang Tan Ki
ang, Canton River to Ouachow and
WoosuDg and its canals as far as
Suchow and Hang Chow.
8. Railway privileges and similar con?
cessions to Japanese and foreign capi?
talists.
In adition to these conditions it is be?
lieved certain promises have heeo or
will be exacted from China, the terms
of which are to remain secret. The
condition which, it is thought, has not
yet beeo accepted by Li Hung Chang
is that numbered three above, provid?
ing for thc occupation of a portion of
the territory known as the Regent's
Sword and Citadel of Port Arthur.
That this would be most strenuously op?
posed by China has all along been un?
doubted, and it has been predicted that
it might prove a stumbling block of
such dimensions as to prevent peace
unless gome compromise could be
agreed upon as to the length of occupa?
tion, the'Cbinese being likely to insist
that it should not be permanent. All
other conditions, except that of in?
demnity, have been the subject of diplo?
matic consideration for many years, and
all treaty Powers are as deeply interest?
ed tn them as Japan bag been. The
United States have been particular?
ly active in urging the abolition of the
likin tax, which is not unlike the octroi j
of Prance, though less reasonable and
lest limited than the French system.
The independence of Corea has always
been in contention, and the United
States have firmly maintained that Corea
was ro be treated as an independent
nation pince her minister at Washing?
ton was recognized ten years ago.
Highest of all in Leavening Pen
The Income Tax.
Commissioner Miller Issues
Final Instructions.
WASHINGTON-, April ll.-Commis?
sioner Miller today, arter several
days consideration of the changed
condition of the income tax law, but
still in the absence of the full text of
the Supreme Court decision, issued
supplemental instructions to the
sixty-three internal revenue collec?
tors. These instructions may be
followed by others to meet special
cases as they arise. The instructions
were handed to the Southern Asso?
ciated Press for distribution, and will
not be telegraphed to collectors of
internal revenue except in the far
West. They are as follows :
1. Interest received from State,
county and municipal bonds or secu?
rities, and rents from real estate, are
not taxable as income, but persons or
corporations receiving said interests
or rents shall include in their returns
as receipts the full amount thereof
received or accrued within the year
for which the return is made and
shall deduct the same as not subiect
to taxation.
2. The amounts actually paid for
taxes, insurance and repairs on rea!
estate my be deducted iron: income,
as heretofore provided by the law and
regulations.
3. All persons or corporations that
heretofore rendered income tax re?
turns for the year 159-1 to a collector
or deputy collector, including therein
interest received from State, county
or municipal bonds, or from rents
from real estate, may have the
amounts of said interest and rents
deducted from their income by duly
making an affidavit to that effect and
j delivering the same to the collector
i or deputy collector to whom the
I original return was rendered
4 The collector, upon receipts of
the prescribed affidavit, shall attach
said affidavit to the return of the
affiant heretofore made, and shall
make the correction in said return in
conformity with the facts stated in
said affidavit and forward said
amended return, with the affidavit
attached, to the Commissioner of In?
ternal Revenue. Jos. S. MILLER.
j Commissioner of Internal Revenue.
! Approved :
J. G-. CARLISLE,
Secretary of the Treasury.
These telegrams were sent to col?
lectors:
WASHINGTON, Ap iii 18 -Have the
affidavits and instructions printed
and distributed immediately to all
persons who have rendered returns.
All returns received here will be for?
warded to you by mail. Correct same
by attaching affidavit and making de?
duction as shown therein. Require
all persons in making returns in fu?
ture to show clearly the rents includ?
ed and deducted were received only
from real estate and include nothing
whatever paid for rent or U6c of pro?
perty and franchise.
Jos. S. MILLER, Commissioner.
WASHINGTON, April ll.-If neces?
sary for accommodation of persons
filing income tax returns, you will
keep your office open for business
from 8 a. m. to 6 p. m , up to and
including the 15th inst.
Jos S. MILLER, Commissioner.
"There is no power vested in this
department/' telegraped Commission?
er, late this afternoon, "to extend
the time for making returns under the
income tax law "
With the supplemental instructions
sent to collectors of internal revenue
to-day, together with the telegrams
as to keeping open their offices be?
yond the regular hours. Commission?
er Miller has closed up as complete?
ly as he can his connection with the
' enforcement of what remains of the
income tax law Collectors and those
Subject to the law must do the rest
and must do it be for? the close of
j business on next Monday, April 15,
! or else be subject tc the penalties
I imposed by the law.
Those who never read the advertisements
io their newspapers miss more ihan they
nresume. Jonathan Kenison, ?if Bolan,
Worth Co , Iowa, who had bee? troubled
! with rheumatism in his back, arms and
! shoulders read an item in his paper about
: hjw a prominent German citizen of Ft. Mad
! ison had been cured. He procured the same
medicine, and to use his own words: "It
I cured me right up" He also save: S,A
neighbor and his wife were both sick in bed
with rheumatism. Their boy w?e over to wy
house and said they were so bad be had to do
the cooking, I told him of CbHmberlain's
Pain Balm and how it had cored me, he got
a bottle and it cured them up in a week. 50
cent bottles for pale by Dr. A. J. China.
Choice writing: Paper ten cents per
box at H. a. Osteen & Co's.
vcr.- Latest U. S. Gov't Report
Baking
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