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in Austin v. Tennessee (1900), 179 U. S. 343, in which it was held that a paper box containing ten cigarettes is not an original package within the meaning of the decision in Brown v. Maryland. See also Schollenberger v. Pennsylvania (1898), 171 U. S. 1 (holding that a ten-pound box of oleomargarine is an original package), May & Co. v. New Orleans (1900), 178 U. S. 496; Cook v. Marshall County (1905), 196 U. S. 261, and Purity Extract Co. v. Lynch (1912), 226 U. S. 192. Rather inconsistently a peddler who sells in the original package goods which he has imported is held to be engaged in retail trade, and a local tax is sustained as a tax on the business of peddling, Wagner v. City of Covington (1919), 251 U. S. 95.

The "original package doctrine" has been much criticized. See The License Cases (1847), 5 Howard, 504, 615; Brown v. Houston (1885), 114 U. S. 622; and Prentice and Egan, The Commerce Clause of the Federal Constitution, 66. Chief Justice Taney was counsel for the State of Maryland in Brown v. Maryland. In the License Cases (1847), 5 Howard, 504, 575, he said:

I at that time persuaded myself that I was right, and thought the decision of the court restricted the powers of the State more than a sound construction of the constitution of the United States would warrant. But further and more mature reflection has convinced me that the rule laid down by the supreme court is a just and safe one, and, perhaps, the best that could have been adopted for preserving the right of the United States on the one hand, and of the States on the other, and preventing collision between them.

Since the decision in Swift & Co. v. United States (1905), 196 U. S. 375, which has been described by Chief Justice Taft as "a milestone in the interpretation of the commerce clause of the Constitution," the Court has shown an increasing disposition to treat the great movements of interstate commerce as a unit and to decline to take them from Federal jurisdiction by resolving them into their elements. The principle stated by Mr. Justice Holmes in the Swift case, that "commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business," has come to be the governing rule of the courts. Such phrases as "free and unburdened flow," "current of commerce," "streams of commerce," "continuity of movement," and "a stream or current of interstate commerce," occur with increasing frequency and indicate the purpose of the Supreme Court to fit "the commerce clause to the real and practical essence of modern business growth." A company was in the Habit of purchasing grain in Kentucky to be transported at once to its mill in Tennessee. In furtherance of that purpose the contracts of purchase provided for the delivery of the grain to a common carrier. It was held that the purchase of the grain and its transportation to another State constituted essentially one transaction, the buying being incidental to the transportation, Dahnke-Walker Co. v. Bondurant (1921), 257 U. S. 282. In passing upon the validity of the North Dakota Grain Grading and Inspection Act, in Lemke v. Farmers' Grain Co. (1922), 258 U. S. 50, the Court said:

The record shows that North Dakota is a great grain-growing State, producing annually large crops, particularly wheat, for transportation beyond its borders. Complainant, and other buyers of like character, are owners of elevators and purchasers of grain in North Dakota to be shipped to and sold at terminal markets in other States, the principal markets being at Minneapolis and Duluth. There is practically no market in North Dakota for the grain purchased by complainant. The Minneapolis prices are received at the elevator of the complainant from Minneapolis four times daily, and are posted for the information of those interested. To these figures the buyer adds the freight and his "spread," or margin of profit. The purchases are generally made with the intention of shipping the grain to Minneapolis. The grain is placed in the elevator for shipment and loaded at once upon cars for shipment to Minneapolis and elsewhere outside the State of North Dakota. The producers know the basis upon which the grain is bought, but whoever pays the highest price gets the grain, Minneapolis, Duluth or elsewhere. This method of purchasing, shipment and sale is the general and usual course of business in the grain trade at the elevator of complainant and others similarly situated. The market for grain bought at Embden is outside the State of North Dakota, and it is an unusual thing to get an offer from a point within the State. After the grain is loaded upon the cars it is generally consigned to a commission merchant at Minneapolis. At the terminal market the grain is inspected and graded by inspectors licensed under Federal law. That such a course of dealing constitutes interstate commerce, there can be no question.. . . The testimony shows that practically all the wheat purchased by the complainant was for shipment to and sale in the Minneapolis market. That was the course of business and determined the interstate character of the transactions.

In Chicago Board of Trade v. Olsen (1923), 262 U. S. 1, the Court upheld the Grain Futures Act of September 21, 1922, 42 Stat. 998, by the same reasoning which it had applied in Stafford v. Wallace (1922), 258 U. S. 495. "The sales on the Chicago Board of Trade are just as indispensable to the continuity of the flow of wheat from the West to the mills and distributing points of the East and Europe, as are the Chicago sales of cattle to the flow of stock toward the feeding places and slaughter and packing houses of the East."

SECTION 3. WHAT IS A REGULATION OF COMMERCE.

CASE OF THE STATE FREIGHT TAX.

READING RAILROAD COMPANY v. PENNSYLVANIA.

SUPREME COURT OF THE UNITED STATES. 1873.
15 Wallace, 232.

Error to the Supreme Court of Pennsylvania.

[In 1864 the Legislature of Pennsylvania passed an act requiring every company transporting freight in the State, except turn-pike, plank-road and bridge companies, to pay a tax at specified rates on each two thousand pounds so carried. The Reading Railroad Company, a Pennsylvania corporation operating a railway wholly within Pennsylvania, paid the tax but sued to recover that portion which had been paid on freight destined for points outside of Pennsylvania and which had been carried in a continuous course of transportation partly in cars of the Reading Company and partly in vessels. Judgment for the Company in the lower court was set aside by the Supreme Court of Pennsylvania, 62 Pa. St. 286. The Company then sued out a writ of error.]

MR. JUSTICE STRONG delivered the opinion of the court..

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The case presents the question whether the statute in question, so far as it imposes a tax upon freight taken up within the State and carried out of it, or taken up outside the State and delivered within it, or, in different words, upon all freight other than that taken up and delivered within the State, is not repugnant to the provision of the Constitution of the United States which ordains "that Congress shall have power to regulate commerce with foreign nations and among the several States," or in conflict with the provision that "no State shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws."

The question is a grave one. It calls upon us to trace the line, always difficult to be traced, between the limits of State sovereignty in imposing taxation, and the power and duty of the Federal government to protect and regulate interstate com

merce.

It has repeatedly been held that the constitutionality, or unconstitutionality of a State tax is to be determined, not by

the form or agency through which it is to be collected, but by the subject upon which the burden is laid.

Upon what, then, is the tax imposed by the act of August 25th, 1864, to be considered as laid? Where does the substantial burden rest? Very plainly it was not intended to be, nor is it in fact, a tax upon the franchise of the carrying companies, or upon their property, or upon their business measured by the number of tons of freight carried. On the contrary, it is expressly laid upon the freight carried. The companies are required to pay to the State treasurer for the use of the Commonwealth, "on each two thousand pounds of freight so carried," a tax at the specified rate. And this tax is not proportioned to the business done in transportation. It is the same whether the freight be moved one mile or three hundred. If freight be put upon a road and carried at all, tax is to be paid upon it, the amount of the tax being determined by the character of the freight. And when it is observed that the act provides "where the same freight shall be carried over and upon different but continuous lines, said freight shall be chargeable with tax as if it had been carried upon one line, and the whole tax shall be paid by such one of said companies as the State treasurer may select and notify thereof," no room is left for doubt. The provision demonstrates that the tax has no reference to the business of the companies. In the case of connected lines thousands of tons may be carried over the line of one company without any liability of that company to pay the tax. The State treasurer is to decide which of several shall pay the whole. There is still another provision in the act which shows that the burden of the tax was not intended to be imposed upon the companies designated by it, neither upon their franchises, their property, or their business. The provision is as follows: "Corporations whose lines of improvements are used by others for the transportation of freight, and whose only earnings arise from tolls charged for such use, are authorized to add the tax hereby imposed to said tolls, and to collect the same therewith." Evidently this contemplates a liability for the tax beyond that of the company required to pay it into the treasury, and it authorizes the burden to be laid upon the freight carried, in exemption of the corporatión owning the roadway. It carries the tax over and beyond the carrier to the thing carried. Improvement companies, not themselves authorized to act as carriers, but having only power to construct and maintain roadways, charging tolls for the use thereof, are generally limited by their

charters in the rates of toll they are allowed to charge. Hence the right to increase the tolls to the extent of the tax was given them in order that the tax might come from the freight transported, and not from the treasury of the companies. It required no such grant to companies which not only own their roadway, but have the right to transport thereon. Though the tolls they may exact are limited, their charges for carriage are not. They can, therefore, add the tax to the charge for transportation without further authority. In view of these provisions of the statute it is impossible to escape from the conviction that the burden of the tax rests upon the freight transported, or upon the con signor or consignee of the freight (imposed because the freight is transported), and that the company authorized to collect the tax and required to pay it into the State treasury is, in effect, only a tax-gatherer.

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Then, why is not a tax upon freight transported from State to State a regulation of interstate transportation, and, therefore, a regulation of commerce among the States? Is it not prescribing a rule for the transporter, by which he is to be controlled in bringing the subjects of commerce into the State, and in taking them out? The present case is the best possible illustration. The legislature of Pennsylvania has in effect declared that every ton of freight taken up within the State and carried out, or taken up in other States and brought within her limits, shall pay a specified tax. The payment of that tax is a condition upon which is made dependent the prosecution of this branch of commerce. And as there is no limit to the rate of taxation she may impose, if she can tax at all, it is obvious the condition. may be made so onerous that an interchange of commodities with other States would be rendered impossible. The same power that may impose a tax of two cents per ton upon coal carried out of the State, may impose one of five dollars. Such an imposition, whether large or small, is a restraint of the privilege or right to have the subjects of commerce pass freely from one State to another without being obstructed by the intervention of State lines. It would hardly be maintained, we think, that had the State established custom-houses on her borders, wherever a railroad or canal comes to the State line, and demanded at these houses a duty for allowing merchandise to enter or to leave the State upon one of those railroads or canals, such an imposition would not have been a regulation of commerce with her sister States. Yet it is difficult to see any substantial difference be

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